Unassociated Document


    THIS NOTE
HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE.  THE SECURITIES
ARE BEING OFFERED PURSUANT TO A SAFE HARBOR FROM REGISTRATION UNDER REGULATION D
PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  THE
SECURITIES ARE “RESTRICTED” AND MAY
NOT BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT,
PURSUANT TO REGULATION D OR PURSUANT TO AVAILABLE EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE ACT AND THE COMPANY WILL BE PROVIDED WITH
OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.  FURTHER HEDGING
TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE MADE EXCEPT IN COMPLIANCE WITH
THE ACT.

     

    


    STW
Resources Holding Corp.

     

    PROMISSORY
NOTE

    


     

    
      	
              Amount:
      $1,400,000

            	 	
                          Midland,
      Texas

            


    

     

    August
31, 2010

     

     

    FOR VALUE RECEIVED, the adequacy of
which is hereby acknowledged, STW Resources Holding Corp., a Nevada corporation
(“Borrower”), hereby promises to pay to the order of GE Ionics, Inc. (the
“Lender”), the principal sum of one million and four hundred thousand dollars
($1,400,000) (the “Principal Amount”), in lawful money of the United States of
America, thirteen (13) months from the date hereof (the “Maturity
Date”).

     

     Lender
is entitled to the benefits of this Note (“the Note”) and, subject to the terms
and conditions set forth herein and therein, may enforce the agreements
contained herein and therein and exercise the remedies provided for hereby and
thereby or otherwise available in respect hereto and thereto.

     

    
      	
              1.  

            	
              Seniority. The
      Note shall be senior to all other obligations of the Borrower, whether
      secured or unsecured.

            


    

    


    
      	
              2.  

            	
              Interest. The
      interest on the Principal Amount, commencing on the date hereof shall
      accrue and be calculated on the basis of a 365-day year for the actual
      days elapsed, and shall be at a rate of the WSJ Prime Rate (as published
      daily in the Wall Street Journal) plus two percent (2%) per annum paid
      upon the reducing balance of the Principal Amount, upon maturity of the
      Note. As of the date of this Agreement, the WSJ Prime Interest Rate is
      3.25%.

            


    

     

    
      
         

      

      
        Page
1

        
          

        

      

      
         

      

    

     

    
      	
              3.  

            	
              Repayment Schedule
      prior to maturity of  Note.  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.  Thereafter, 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.

            


    

    


    
      	
              4.  

            	
              Events of
      Default. The following events shall constitute an “Event of
      Default” under this Note: Failure by Borrower to pay principal,
      fees, or accrued interest when due.

            


    

    


    
      	
              5.  

            	
              Remedies Upon an Event
      of Default.  If an Event of Default shall occur for any
      reason whatsoever (and whether such occurrences shall be voluntary or
      involuntary, or come about or be effected by operation of law or pursuant
      to or in compliance with any judgment, decree, or order of any court, or
      any order, rule or regulation of any administrative or governmental body),
      or the discovery by Lender of the occurrence of any Event of Default,
      Lender shall have all of the rights and remedies under applicable law and,
      in addition, without limiting the foregoing, the right to (a) cure such
      defaults, with the result that all costs and expenses incurred or paid by
      Lender in effecting such cure shall bear interest at the highest rate
      permitted by law, and shall be payable upon demand; and (b) accelerate the
      maturity of the Note and demand the immediate payment thereof, without
      presentment, demand, protest or other notice of any kind, all of which are
      expressly waived, and the Lender shall have all of the rights, powers.,
      and remedies available under the terms of this Agreement and all
      applicable laws.

            


    

    


    To the
extent permitted by applicable law, Borrower hereby waives, and releases Lender
from, all errors and all rights of exemption, appeal, stay of execution,
inquisition, and other rights to which Borrower may otherwise be entitled under
the laws or the United States of America or of any state or possession of the
United States of America now in force and which may hereafter be
enacted.


    


    
      	
              6.  

            	
              Expenses.
      Borrower agrees to pay any and all expenses (including attorneys’ fees and
      expenses) incurred by the Lender which are incurred in endeavoring to
      collect any amounts payable hereunder which are not paid when due (whether
      by acceleration or otherwise) or in otherwise enforcing any rights under
      this Note.

            


    

    


    
      	
              7.  

            	
              Notices. All
      notices and other communications provided for herein shall be in writing
      and shall be deemed to have been duly given if delivered personally, sent
      by registered or certified mail, return receipt requested, postage
      prepaid, sent via overnight delivery service or sent via facsimile, and
      shall be effective (1) when personally delivered, (2) on the day following
      delivery to an overnight courier service if sent for delivery within the
      United States (or on the second business day following delivery to such
      courier service if sent for delivery outside the United States), (3) on
      the business day following receipt of transmission if sent via facsimile,
      or (4) on the fifth business day after the date of mailing if sent by
      registered or certified mail, in each case to the following
      addresses:

            


    

     

    
      
         

      

      
        Page
2

        
          

        

      

      
         

      

    

     

    
      	
              (a)  

            	
              If
      to the Borrower:

            


    

     

    Stanley
T. Weiner, CEO

    STW
Resources, Inc.

    619 West
Texas Ave, Suite 126

    Midland,
TX 79701

    E-Mail:
stw@stwresources.com

    


    With a
Copy to:

    


    D. Grant
Seabolt, Jr., Esq.

    Underwood
Perkins, PC

    5420
Lyndon B. Johnson Fwy, Suite 1900

    Dallas,
TX 75240

    Phone:  (972)
788-3310

    Fax:      
(972-788-3360

    E-Mail: 
gseabolt@uplawtx.com

    


    


    
      	
              (b)  

            	
              If
      to the Lender

            


    

     

    GE Water
& Process Technologies

    3006
Northup Way, Suite 200

    Bellevue,
WA 98004

    Attention:  William
F. Heins


    


    
      	
              8.  

            	
              Assignment.
      This Note shall be binding on the Borrower and its successors and
      permitted assigns, and shall be binding upon and inure to the benefit of
      the Lender, any future holder of this Note and their respective successors
      and permitted assigns.  The Borrower may not assign or transfer
      this Note or any of its rights or obligations hereunder (other than by
      operation of law) without the Lender’s prior written consent. The Lender
      may assign this Note to the maximum extent permitted by applicable
      law.

            


    

     

    
      	
              9.  

            	
              Waivers;
      Amendments. No delay or omission of Lender in exercising any right
      or power hereunder shall impair such right or power or be a waiver of any
      default or an acquiescence therein; and no single or partial exercise of
      any such right or power shall preclude other or further exercise thereof,
      or the exercise of any other right; and no waiver shall be valid unless in
      writing signed by Lender, and then only to the extent specifically set
      forth in such writing.  All remedies hereunder or by law
      afforded shall be cumulative and shall be available to Lender until the
      principal amount of and all interest on this Note have been paid in
      full.  No amendment of any provision of this Note shall be
      effective unless the same shall be in writing and signed by the Borrower
      and the Lender.

            


    

     

    
      
         

      

      
        Page
3

        
          

        

      

      
         

      

    

    


    
      	
              10.  

            	
              Governing Law.
      This Note shall be governed by and construed in accordance with the laws
      of the State of New York, without regard for the conflicts of laws
      principles thereof, 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.

            


    

     

    
      	
              11.  
    

            	
              Severability.
      In the event any one or more of the provisions contained in this Note
      shall for any reason be held to be invalid, illegal or unenforceable in
      any respect, such invalidity, illegality or unenforceability shall not
      affect any other provision hereof, and this Note shall be construed as if
      such invalid, illegal or unenforceable provision had never been contained
      herein.

            


    

    


    
      	
               
      

            	
              IN
      WITNESS WHEREOF, Borrower has executed this Note as of the date first
      above written.

            


    

    


    BORROWER:

     

    STW
Holding Corp.

     

    By:______________________

                  Signature

    Name:   Stanley
T. Weiner

    Title:    CEO
and President

    

      	
               
      

            	
                    
                IN
      WITNESS WHEREOF, Lender has executed this Note as of the date first above
      written.

              

            


    

     

     

    
      	
               
      

            	
               LENDER:

            


    

    


    G.E. Ionics, Inc.

    


    


    By:___________________________

            Signature

    


    Name:  William
F. Heins

    


    Title:

     

     

     

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