Unassociated Document


    JOINT
VENTURE AGREEMENT

    


    THIS
AGREEMENT is made and entered into and shall be effective as of
the  5th day
of August, 2010, by and between Aqua Verde, LLC (“AV”) and STW Resources Holding
Corp. (“STW”), (each a “Party” and collectively the “Parties”).

    


    WHEREAS: STW and AV desire to process
and reclaim any water including frac flowback and produced water (“produced
water”) from operations conducted by the Assigned Contracts (as defined
below).

    


    WHEREAS: AV currently has executed or
is in discussions about executing Master Services Agreements (MSAs) and Master
Services Contracts (MSCs) with several natural gas drilling companies including
“*”, “*”, “*” and “*” in the Denver-Julesburg Basin (the “DJ Basin”)
natural gas geological formation located in Colorado, U.S.A. (each an “Assigned
Contract” and collectively the “Assigned Contracts”) that call for the
processing and reclamation of the produced water from their oil & gas
drilling operations and water processing for supply to drilling operators and/or
municipalities (the “Water Reclamation” or “Business”).   In
addition, STW and AV agree to collectively work together through the Joint
venture to procure water reclamation contracts with “*” in the Delaware
Basin located in Texas, U.S.A.

    


    WHEREAS: the Parties desire to
participate in the Business through a Joint Venture on the terms and subject to
the conditions set out herein;

    


    WHEREAS: the Joint Venture
shall be governed by a governance document;

    


    WHEREAS: One or more separate
entities (the “SPV”) to be wholly owned by the Joint Venture may need to be
established for each site and/or contract for the purposes of financing the
acquisition of equipment for such site. Each SPV shall have an operations and
maintenance (“O&M”) agreement. Exhibit “A” to this Agreement includes a
graphical representation of the proposed structure; and

    


    WHEREAS: the Parties have agreed to
enter into this Agreement (a) to form and structure the Joint Venture, (b) to
define their respective contributions and responsibilities, and (c) to provide
for the distribution and sharing of the profits derived from the Joint Venture -
all as set out and defined in this Agreement.

    


    NOW THEREFORE,
in consideration of the mutual covenants, terms and conditions herein,
and good and valuable consideration, the receipt and sufficiency of which is
mutually acknowledged, the Parties have agreed as follows:

    


    
      	
              1.0

            	
              Formation and
      Structure of Joint Venture

            


    

    


    
      	
               
      

            	
              1.1

            	
              Joint Venture
      Vehicle: The
      Parties hereby form and constitute themselves a joint venture operating
      under a limited liability company to be formed under the laws of the state
      of (to be determined), with the name “Water Reclamation Partners, LLC
      (herein referred to as the “Joint Venture” or “JV”), effective as of the
      date of this Agreement, for the purpose of engaging in the Business in the
      manner hereinafter set out.

            


    

     

    
      
        	
                ____STW

              	
                Page
      1

              	
                ____AV

              


      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              1.2

            	
              Nominees: The
      Business will be carried on for and on behalf of the Joint Venture by one
      or more nominee corporate entities (preferably limited liability
      companies) (hereinafter referred to individually or collectively as the
      “SPV”) to be incorporated under the corporate laws of the state of (to be
      determined) with a certificate of formation and a company agreement in
      such form and containing such provisions as shall be required by the state
      of (to be determined), acceptable to STW, and taking into account the
      nature and requirements of the
Business.

            


    

    


    
      	
               
      

            	
              1.3

            	
              Ownership: At
      all times during the continuance of the term of this Agreement, STW shall
      own 51% of the membership interest in the JV and will have exclusive
      control and management of the Business of the Joint Venture as conducted
      through and by the JV for and on behalf of the Joint
      Venture.  AV shall own 49% of the membership interest in the
      JV.

            


    

    


    
      	
               
      

            	
              1.4

            	
              Steering
      Committee: STW and AV hereby establish a committee (the
      "Steering Committee") for the purpose of managing and directing the joint
      pursuits of the Parties under the terms of and consistent with the
      provisions of this Agreement.  The Steering Committee shall be
      composed of two (2) representatives (each a "Steering Committee
      Representative") from each Party.  Decisions
      requiring  approval of the Steering Committee and functions to
      be performed include, but are not limited to: (a)  analysis and
      evaluation of  projects and project opportunities, (b)
      coordination of proposal preparation  and  business
      development activities, (c) any project-specific profit-sharing
      arrangements; and (d) any other matter submitted to the Steering Committee
      by either of the Parties for consideration/decision. Except to the
      extent set forth herein, all decisions made by the Steering Committee
      shall require a majority vote.  In the event of an impasse by
      the Steering Committee Representatives, the Parties’ Steering Company
      Representatives will attempt a second vote.   Should it
      result that the vote is at an impasse, then a vote shall be taken of the
      limited liability company members of the JV, from which a majority vote of
      the limited liability company members shall break the
    impasse.

            


    

    


    
      	
               
      

            	
              1.5

            	
              Unanimous
      Approval: The following shall require the unanimous consent of both
      Parties: (i) a merger or consolidation in which the JV is a constituent
      party or a subsidiary of the JV is a constituent party and the JV issues
      units of its membership interest pursuant to such merger or consolidation;
      or (ii) the sale, lease, transfer, exclusive license or other disposition,
      in a single transaction or series of related transactions, by the JV or
      any subsidiary of the JV of all or substantially all the assets of the JV
      and its subsidiaries taken as a whole,  or the sale or
      disposition (whether by merger or otherwise) of one or more subsidiaries
      of the JV; and (iii) any modification(s) to this
  Agreement.

            


    

    


    
      	
               
      

            	
              1.6

            	
              Outside
      Business: Nothing set forth herein shall in any way prevent STW or
      AV from engaging in business outside of the DJ Basin with any other entity
      for the purposes set forth in this
agreement.

            


    

     

    
      	
              ____STW

            	
              Page
      2

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              2.0

            	
              Objectives of Joint
      Venture

            


    

    


    
      	
               
      

            	
              2.1

            	
              The basic objective: The
      basic objective of the JV is to successfully conduct the Business, through
      the JV, in a safe and minimal risk manner designed to generate profits
      while ensuring preservation of the capital employed in the
      Business.

            


    

    


    
      	
               
      

            	
              2.2

            	
              Acknowledgement:
      The Parties acknowledge and accept that achievement of the basic objective
      of the Joint Venture requires the successful completion of each of the
      following transactions:

            


    

    


    
      	
               
      

            	
              (i)

            	
              The
      Parties will enter into or AV shall assign MSAs and MSCs with several
      natural gas drilling companies including but not limited to “*”, “*”, “*”
      and “*” that call for the processing and reclamation of the produced water
      in the DJ Basin from their oil & gas drilling operations and
      contracts/introductions to owners of water resources to be processed for
      recycling in drilling operations and/or for municipal
  use;

            


    

    


    
      	
               
      

            	
              (ii)

            	
              The
      JV will use commercially reasonable efforts to obtain the necessary
      equipment for each Assigned Contract, new contract and/or site project for
      Water Reclamation to generate profits for the Joint
    Venture.

            


    

    


    
      	
              3.0

            	
              Detailed
      Implementation of Joint Venture
Business

            


    

    


    
      	
               
      

            	
              3.1

            	
              Immediately following
      the execution of this Agreement: AV will assign all of its existing
      MSAs to the JV.

            


    

    


    
      	
               
      

            	
              3.2

            	
              Equipment
      Manufacturers: STW will work to provide the equipment for use by
      each MSA for Water Reclamation.  This equipment shall be
      assigned to the SPV utilizing such equipment (or to the JV if the Parties
      so desire) upon the payment in full of the principal and interest on any
      financing related to the purchase of such equipment (the “STW
      Loan”).

            


    

    


    
      	
               
      

            	
              3.3

            	
              Contracts assigned to
      the JV:  All contracts shall remain the property of the JV,
      whether further assigned to a specific SPV, retained by the JV, or
      returned the JV by a SPV.  In general, the JV will provide the total
      project cost and analysis and shall appoint the operators that will
      provide O&M services at each site.  STW will provide the
      equipment to reclaim the water. Initial set up costs will be paid pursuant
      to each Party’s respective ownership
interests.

            


    

    


    
      	
               
      

            	
              3.4

            	
              Pre-development
      expenses: As contemplated in each Water Reclamation
      Development Budget shall be included in the associated costs of the
      project and equipment purchases and shall be reimbursed to the respective
      parties through their respective ownership interests.  At
      present, no such expenses have been advanced by either party as to any
      specific project related to the Assigned
  Contracts.

            


    

     

    
      	
              ____STW

            	
              Page
      3

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              3.5

            	
              Withdrawal from an
      Assigned Contract:  With
      respect to any particular transaction involving an potential or actual
      Assigned Contract, either Party may notify the other of its desire not to
      proceed  with the development of such Assigned Contract;
      provided, that an election by either Party to withdraw from an Assigned
      Contract shall not affect the rights of the other Party to
      proceed  with such Assigned Contract (including establishing its
      own separate corporate entity to own and manage such withdrawn from
      Assigned Contract).  Any Party, which elects to withdraw in
      compliance with the terms of this section will be released from any
      liability or obligation under this Agreement with respect to the relevant
      Assigned Contract accruing from the date of withdrawal.  If any
      Party determines to withdraw from any Assigned Contract, such Party agrees
      that it shall use its reasonable efforts to withdraw from such Assigned
      Contract in a manner that permits the non-withdrawing Party to continue
      the proposal process for such Assigned Contract and causes the least harm
      possible to the non-withdrawing Party, provided that the withdrawing Party
      shall not be required to expend any further funds or incur additional
      liabilities to do so.  Notwithstanding anything herein to the
      contrary, the withdrawing Party shall be prohibited from participating in
      or pursuing any Assigned Contract alone with any other person or
      entity.

            


    

    


    
      	
              4.0

            	
              Contributions,
      Ownership and
Responsibilities

            


    

    


    
      	
               
      

            	
              4.1

            	
              Ownership: STW
      shall own 51% of the membership interests in the Joint
      Venture.

            


    

    


    
      	
               
      

            	
              4.2

            	
              STW
      Consideration and
      Responsibilities: STW shall be responsible for procurement,
      financing and delivery of the necessary equipment to each project
      location. STW shall also be responsible for the management of the JV
      including, but not limited to, overseeing the accounting, legal, financial
      and regulatory aspects of the JV.  Once one or more SPV’s are
      operational, the JV will be paid a monthly Administration Fee of $5,000.00
      (the “JV Administration Fee”) for its services to the SPV’s (with the
      Administration Fee to be increased or re-allocated among the SPV’s as more
      SPV’s are formed).

            


    

    


    Upon the
execution of this Agreement: (a) the “*” MSA with AV will be assigned to
the JV (or its SPV nominee), and (b) STW shall pay to AV or its designee an
initial Development Fee of 500,000 shares of STW common stock. In addition, upon
the execution and assignment of any Assigned Contracts, the two Supplemental
Development Fees below shall be payable to AV or its designee on a one-time
basis, based on the following schedule:

    


    
      	
               
      

            	
              (i)

            	
              At
      such time that any one or more of the Assigned Contracts are producing a
      minimum of 4,000 barrels/day of off-take for Water Reclamation over a 3
      month period, AV shall be issued 150,000 shares of STW common
      stock;

            


    

     

    
      	
              ____STW

            	
              Page
      4

            	
              ____AV

            

 

    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    
      	
               
      

            	
              (ii)

            	
              At
      such time that any one or more of the Assigned Contracts are producing a
      minimum of 10,000 barrels/day of off-take for Water Reclamation over a 3
      month period, AV shall be issued 150,000 shares of STW common
      stock.

            


    

    


    
      	
               
      

            	
              4.3

            	
              Aqua Verde
      Consideration and
      Responsibilities: AV will assign all its MSA’s and MSCs to the JV
      including but not limited to all the MSAs and MSCs set forth
      above.  All future MSAs and/or MSCs shall be negotiated by and
      executed by the JV.

            


    

    


    
      	
               
      

            	
              4.4

            	
              SPV
      Operation: The Parties shall jointly appoint an operator to
      provide operations and maintenance for each site location and to provide
      related billing and accounting
services.

            


    

    


    
      	
               
      

            	
              4.5

            	
              New MSAs:
      During the term of this Agreement, any new contracts and MSAs shall be
      executed by the JV, and shall allow for the JV to assign them to a
      specific SPV.

            


    

    


    
      	
               
      

            	
              4.6

            	
              STW to appoint AV
      nominee to STW Board.  After execution of the Agreement,
      at STW’s next special or regular Board Meeting, it will appoint to its
      Board of Directors a nominee provided by AV, so long as said nominee meets
      the normal qualifications and requirements of a board member to a public
      corporation and voted on and approved by the Board of
      Directors.

            


    

    


    
      	
              5.0

            	
              SPV Expenses and
      Distribution of Net Profits

            


    

    


    
      	
               
      

            	
              5.1

            	
              SPV expenses:
      All expenses shall be paid by the SPV incurring such expense. Net Profits
      from each SPV (the “SPV Net Profit”) shall be distributed to the
      JV.

            


    

    


    
      	
               
      

            	
              5.2

            	
              Net
      Profit: For each SPV, the Net Profit shall be calculated as
      follows:

            


    

    Gross
Revenues of the SPV

    (Less)
all fees and expenses of the SPV, including but not limited to

    
      	
               
      

            	
              -

            	
              all
      professional fees;

            


    

    
      	
               
      

            	
              -

            	
              legal
      and regulatory expenses;

            


    

    
      	
               
      

            	
              -

            	
              operating
      & maintenance costs;

            


    

    
      	
               
      

            	
              -

            	
              equipment
      financing expenses; and

            


    

    
      	
               
      

            	
              -

            	
              any
      other necessary third-party operational
  services.

            


    

     

    
      	
              ____STW

            	
              Page
      5

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              6.0

            	
              Distribution and
      Allocation of Net Profits of
JV

            


    

    


    
      	
               
      

            	
              6.1

            	
              Distribution of net
      profits from the SPVs to the JV: The JV or as required, a newly
      formed company under the control of the JV shall receive all distributions
      of net profits from the SPVs into the Capital Account of the JV. This
      Account shall be used exclusively to receive and distribute such profits
      as hereinafter provided.

            


    

    


    
      	
               
      

            	
              6.2

            	
              JV Net
      Profit:  All of the Net Profits from the SPVs shall be
      received in the Capital Account and shall be allocated, applied and
      distributed as follows:

            


    

    
      	
               
      

            	
              1)

            	
              Firstly,
      the payment of all JV related expenses (corporate, legal, accounting,
      regulatory)

            


    

    
      	
               
      

            	
              2)

            	
              Secondly,
      to reimburse the Parties for any loans or contributions made to the JV or
      any other entity or SPV established pursuant to this
      Agreement.

            


    

    
      	
               
      

            	
              3)

            	
              Lastly,
      the payment of the Management Fee.

            


    

    
      	
               
      

            	
              4)

            	
              Split
      remaining profits pro rata to ownership
monthly.

            


    

    


    
      	
               
      

            	
              6.3

            	
              Record keeping and
      Accounting: The JV will provide a monthly accounting of receipts
      and disbursements of Net Profits from each SPV. The monthly return from
      the SPVs is on a commercially reasonable efforts basis, and it is expected
      that the disbursements of profits will vary month to month according to
      actual profits made. An annual reconciliation will be made for each
      project within 60 days of each year
end.

            


    

    


    
      	
              7.0

            	
              Term and
      Termination

            


    

    


    
      	
               
      

            	
              7.1

            	
              Term: The term
      of the Joint Venture shall commence on the date of execution of this
      Agreement, (hereinafter referred to as the “Effective Date”) and continue
      in full force and effect until the expiry of One (1) year, unless extended
      by mutual agreement of the Parties or sooner terminated as hereinafter
      provided.

            


    

    


    
      	
               
      

            	
              7.2

            	
              Effect of a Breach:
      The term of this Agreement may be terminated by either Party on 30 days
      written notice to the breaching party and provided that the breaching
      party fails to cure such Breach during that 30 day period after such
      notice of such default. For purposes of this Agreement, Breach is defined
      to include: (i) non-performance of their responsibilities (as per the
      terms of this Agreement) by a Party; or (ii) if a Party has filed for
      and/or is subject to any bankruptcy, insolvency, reorganization or
      liquidation proceedings or other proceedings for relief under any
      bankruptcy law or any law for the relief of debtors instituted by or
      against the Party or any Subsidiary of the Party; or (iii) if a Party is
      subject to any litigation or claim that could have a Material Adverse
      Effect on the JV.

            


    

     

    
      	
              ____STW

            	
              Page
      6

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              7.3

            	
              Post-Termination
      Effects: The obligations  and
      rights  of  the  Parties  incurred  pursuant  to  any provision
      of this Agreement,  or  by virtue of any contract
      entered into by the Parties or any SPV formed pursuant to this
      Agreement, shall continue in full force and effect until such
      obligations have been
fulfilled.

            


    

    


    
      	
            	
              7.4

            	
              Survival of Certain Terms
      Post-termination:
      Upon termination or expiry of this Agreement, the respective covenants,
      agreements and obligations of the Parties to each other will cease, except
      for the following that shall remain in full force and effect until
      performed and satisfied:

            


    

    


    
      	
               
      

            	
              (1)

            	
              Any
      undistributed profits shall be distributed as provided in Article 6 of
      this Agreement;

            


    

    


    
      	
               
      

            	
              (2)

            	
              The
      Parties shall try to negotiate an agreement for the purchase of a Party’s
      interest by the other; or to sell the JV or any of its SPV’s to a
      third-party; or liquidates the assets. Proceeds from any sale or
      liquidation shall, after payments to creditors, be distributed as follows:
      (i) first to reimburse any outstanding O&M expenses at any SPV and to
      reimburse STW for any equipment financing expenses related to any SPV;
      (ii) pay any outstanding or accrued Management Fees; and (iii) rest to be
      distributed as per the Net Profit distribution described in Section 5.2.
      Notwithstanding anything to the contrary stated above, the reimbursement
      of O&M and equipment financing expenses shall have equal priority;
      and

            


    

    


    
      	
               
      

            	
              (3)

            	
              A
      final accounting of receipts and disbursements of profits from SPVs will
      be provided to by the JV.

            


    

    


    
      	
              8.0

            	
              Liability of
      Parties

            


    

    


    
      	
              8.1

            	
              Separate
      Expenses: Except as expressly provided in Section 3, each Party
      shall be responsible for its own expenses relating to its participation in
      the Business as contemplated herein, including without limitation, legal,
      accounting and travel expenses, and no Party shall be responsible or
      liable for any obligations of the other Party, without the express written
      approval of both Parties.

            


    

    


    
      	
              8.2

            	
              Individual Company
      Accounting: Each Party will be solely liable and responsible for
      the accounting for and payment of any and all applicable taxes, charges,
      imposts or levies imposed by any level of government or administrative
      authority in any jurisdiction by virtue of such Party’s receipt of any of
      the profits from the Business as contemplated
      herein.   Each Party holds the other harmless from claims
      by any such level of government or administrative authority with respect
      to taxes owed by the first mentioned Party as the recipient of such
      Profits.

            


    

     

    
      	
              ____STW

            	
              Page
      7

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              8.3

            	
              Reciprocal General
      Indemnification:  Each  Party, respectively, as
      indemnitor, will indemnify, defend and hold harmless the other Party and
      its  officers, directors, employees, Affiliates, agents and
      assigns, as indemnitees, from and  against  any and
      all losses, liabilities, damages, demands, claims, actions, judgments or
      causes of action, assessments, costs and expenses, including,
      without  limitation, interest, penalties and reasonable
      attorneys' and accountants' fees, (herein referred to collectively as
      "Losses") asserted against, resulting to, imposed upon or incurred or
      suffered by any such indemnitee as a result of, based upon or arising
      from, the failure by the indemnitor or its respective agents or employees
      to comply with any applicable Law, rule, or regulation of any authority
      having
      proper  jurisdiction,  or  the  breach  or
      nonfulfillment of any of the representations, covenants or agreements made
      by the indemnitor pursuant to
      this  Agreement,  excepting only such Losses as may be
      caused by  the negligence or misconduct of
      any  indemnitee or  its respective agents or
      employees.

            


    

    


    
      	
              8.4

            	
              Insurance  Each
      of AV and STW shall procure and maintain such policies of liability and
      property insurance as shall be reasonable and customary for companies and
      business activities of the nature and scope
      contemplated  herein.  Each Party agrees to provide
      information and certificates to the other from time to time to confirm
      compliance with this Section.  AV and STW agree that all
      policies of insurance procured hereunder shall contain waivers of
      subrogation, provided that neither Party shall be deemed to have waived
      subrogation in any case where the other Party has not complied with the
      requirements of procuring and maintaining coverage pursuant to this
      Section.

            


    

    


    
      	
              8.5

            	
              Other AV
      Commitments: Upon execution of this document, AV
      covenants that it will be responsible for paying Produced Water Solutions,
      Inc  (“PWS”) out of their distributable share of monies from the
      JV (including paying to STW any additional amounts if their JV share for
      some reason does not equate what PWS would have received).  AV
      indemnifies and holds STW harmless for any claims or causes of action
      brought by PWS against STW and/or the JV.  

            


    

    


    
      	
              9.0

            	
              Non-Circumvention and
      Confidentiality

            


    

    


    
      	
              9.1

            	
              Non-Circumvention:
      AV agrees not to circumvent STW by contacting any of the equipment
      manufactures to engage in Water Reclamation projects in the DJ Basin
      during the Term of this Agreement, so long as the JV Agreement is in
      effect and not terminated.  STW agrees not to conduct the
      Business with any other party for oil and gas related Water Reclamation
      projects in the DJ Basin, except with AV through the JV, so long as the JV
      Agreement is in effect and not
terminated.

            


    

    


    
      	
              9.2

            	
              Confidentiality:
      Each Party agrees to treat the information related to the other, this
      Agreement and/or the transactions contemplated herein that is obtained,
      whether by design or accident, during the negotiation and performance of
      this agreement as proprietary and strictly confidential, except as
      required by STW in compliance with the nature of public
      status.

            


    

     

    
      	
              ____STW

            	
              Page
      8

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              9.3

            	
              Third Party
      Disclosure: For greater certainty, the Parties agree that
      neither of them shall disclose to any third party (not directly involved
      in the facilitation or conduct of the transactions contemplated herein)
      any information regarding the nature, character or extent of the
      transactions in question or pertaining to any of the entities directly or
      indirectly involved.

            


    

    


    
      	
              9.4

            	
              Good Faith and Best
      Practices: The Parties shall act in the utmost good faith in
      this regard at all times. The confidentiality provisions set forth herein
      shall survive the termination of this Agreement and remain in full force
      and effect for 5 years after the termination of this
      Agreement.

            


    

    


    
      	
              9.5

            	
              Non-Solicitation of
      Employees  During the term of this Agreement, and for two
      (2) years thereafter, each Party agrees not to solicit or hire employees
      of the other Party unless the Party which is the current employer of the
      employee in question has consented in writing
  thereto.

            


    

    


    
      	
              10.0

            	
              Miscellaneous

            


    

    


    
      	
              10.1

            	
              Relationship of
      Parties -
      No
      Partnership.  The Parties hereto acknowledge and agree
      that this Agreement and the activities and projects to be pursued
      hereunder do not constitute a Party being an agent, partner, joint
      venturer or legal representative of the other Party for any purpose
      whatsoever, except for the limited purposes as joint venturers as set
      forth in this Agreement.  The Parties hereto further acknowledge
      and agree that a Party is not authorized to assume or create any
      obligation, liability or responsibility, express or implied, or to execute
      any document  or  instrument on behalf of, or in the
      name of the other Party or to bind the other Party  in any
      manner, without such  Party's prior written
      consent.  The Parties hereto also acknowledge and agree that the
      relationship intended by this Agreement is that of independent contractors
      and not just that of representatives, partners, or joint
      venturers.

            


    

    


    
      	
              10.2

            	
              Exclusivity The
      Parties further intend and do  hereby agree that all of the
      Parties' Affiliates and their employees,
      agents  or  representative  shall be bound
      by the terms of Exclusivity as set forth herein.  With
      regard to the Business in the DJ Basin, AV shall  treat STW as
      AV’s preferred provider, and  STW  shall treat
      AV  as  STW’s preferred provider.  This
      Exclusivity provision shall  not
      be interpreted in any  manner to require or obligate the
      Parties to work exclusively  with  each other
      with respect  to  potential  or  existing
      projects which fall outside the scope of the Business as specified in this
      Agrement.

            


    

    


    
      	
              10.2

            	
               No Oral
      Modifications: This Agreement sets 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.

            


    

     

    
      	
              ____STW

            	
              Page
      9

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              10.3

            	
              Governing Law,
      Remedies, Venue and Jurisdiction, Mediation:
      This Agreement shall be governed exclusively by the Laws of the State of
      Texas, and any actions, claims or proceedings shall be subject to the
      exclusive venue and jurisdiction of the state and Federal Courts in Texas.
      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. 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 any judgment and through all levels of
      appeals.  As a pre-condition to either Party instituting a suit
      against the other Party, the Parties shall withhold filing suit for a
      period of ninety (90) days, during which the Parties shall attempt to
      negotiate their differences, and if negotiations shall fail, then either
      Party may require the other Party to participate in mediation before a
      mutually agreed-upon mediator.  If the parties are unable to
      agree upon a mediator in fifteen (15) days, then either Party may petition
      a federal district court in Texas to appoint a mediator.  Only
      if the mediator subsequently declared an impasse may a Party go forward
      with its lawsuit against the other Party.  In the case
      applications to a federal district court for  extraordinary
      relief, such as temporary restraining order, the Parties shall participate
      in mediation prior to a hearing on the temporary
    injunction.

            


    

    


    
      	
              10.4

            	
              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

              
	 
      	
                Attn:
      Stanley Weiner and

              
	 
      	
                Grant
      Seabolt

              
	 
      	 
      
	
                With
      a Copy to:

              	
                David
      Filler, Esq.

              
	 
      	
                Levey
      Filler Rodriguez Kelso & DeBianchi, LLP

              
	 
      	
                1688
      Meridian Avenue, Suite 900

              
	 
      	
                Miami
      Beach, FL 33139

              
	 
      	
                (305)
      672-5007 Phone

              
	 
      	
                (305)
      672-0470 Fax

              
	 
      	 
      
	
                If
      to AV:

              	
                5275
      DTC Parkway, Suite

              
	 
      	
                Greenwood
      Village, CO 80111

              
	 
      	
                Attn:
      Robert D. Mordini, Jr.

              


      

    

    


    
      	
              10.5

            	
              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.

            


    

    


    
      	
              10.6

            	
              Severability:  In
      the event that any provision hereof 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.

            


    

     

    
      	
              ____STW

            	
              Page
      10

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              10.7

            	
              Entire
      Agreement:  This Agreement represents the entire
      agreement and understanding between the Parties concerning the termination
      of the Purchase Order and Teaming Agreement (collectively the
      “Agreements”), and supersedes and replaces any and all prior agreements
      and understandings concerning the
Agreements.

            


    

    


    
      	
              10.8

            	
              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.

            


    

    


    
      	
              10.9

            	
              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.

            


    

    


    
      	
              10.10

            	
              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.

            


    

    


    
      	
              10.11

            	
              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.

            


    

    


    
      	
              10.12

            	
              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.

            


    

    


    
      	
              10.13

            	
              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

            


    

     

    
      	
              ____STW

            	
              Page
      11

            	
              ____AV

            


    

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              (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 above.

    


    ACKNOWLEDGMENTS

    


    
      
        
          
            
              
                	
                        STW
      Resources Holding Corp.

                      
	 
      	 
      	 
      
	
                        By:

                      	 
      	 
      
	
                        Stanley
      T. Weiner, Chairman & CEO

                      
	 
      
	
                        Aqua
      Verde, LLC

                      
	 
      	 
      	 
      
	
                        By:

                      	 
      	 
      
	
                        Robert
      D. Mordini, Jr., Managing
Member

                      


              

            

          

        

      

    

     

    
      	
              ____STW

            	
              Page
      12

            	
              ____AV

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXHIBIT
A