Document:

ex10-2.htm

Exhibit 10.2

EXHIBIT “B”

ESCROW AGREEMENT

This Escrow Agreement (this “Agreement”), dated as of ________, 2014, is by and among STW Resources Holding Corp., a Nevada corporation (the “Company”); and D. Grant Seabolt, Jr., Esq., of the Seabolt Law Group, a Texas licensed lawyer (the “Escrow Agent”), as escrow agent, for the benefit of the Participants (the “Participants”) in the Company’s Share Purchase Agreement dated ________, 2014 (the “SPA”)  (“Company and Participants are collectively referred to as the Parties).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Participants are entering into the SPA to raise up to $500,000.00 or 5,000,000 units (the "Units"), each unit consisting of one share of common stock, par value $0.001 per share and one common stock purchase warrant exercisable at $0.25 per share, with all purchases resulting in cash proceeds to be used for the Company’s benefit as set forth in the SPA (the “Cash Proceeds”);

 

WHEREAS, Paragraph 5.3 of the SPA requires the Cash Proceeds to be used as follows:

 

The Company agrees to use the Net Proceeds from the Offering for the following purposes: technology, licensing, design, engineering, demo units for STW Water Process & Technologies, LLC, as well as for general operating expenses.

 

WHEREAS, the parties desire to set forth in this Agreement the terms and conditions pursuant to which the Escrow Amount will be deposited, held in and disbursed from the Escrow Account; and

 

WHEREAS, the Company and the Participants desire to secure the services of the Escrow Agent, and the Escrow Agent is willing to provide such services, pursuant to the terms and conditions of this Agreement;

 

NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are expressly acknowledged, the parties hereto agree as follows:

1.   Appointment of Escrow Agent; Resignation and Successor.

1.1.   Appointment of Escrow Agent.  The Participants and the Company hereby appoint the Escrow Agent as, and the Escrow Agent hereby accepts its appointment and designation as, Escrow Agent pursuant to the terms and conditions of this Agreement.

1.2.   Resignation of Escrow Agent; Appointment of Successor. The Escrow Agent may resign at any time by giving at least 30 days’ prior written notice of resignation to the Parties, such resignation to be effective on the date specified in such notice, whereupon the Escrow Agent will be discharged of and from any and all further obligations arising in connection with this Agreement.  Upon receipt of such notice, the Parties shall appoint a bank or trust company or title insurance company as successor escrow agent by a written instrument executed by the Parties delivered to the resigning Escrow Agent.  In the absence of a joint designation by the Parties, the Escrow Agent will use reasonable efforts to appoint a successor Escrow Agent, which shall be a bank, trust company or other financial institution with combined capital and surplus of at least $50,000,000.00, unless otherwise agreed by the Parties.  The successor Escrow Agent shall succeed to all of the rights and obligations of the resigning Escrow Agent as of the effective date of the resignation as if originally named in this Agreement.  Upon assignment of this Agreement, the resigning Escrow Agent shall duly transfer and deliver to the successor Escrow Agent the Escrow Fund (as defined in Section 2.1 of this Agreement) at the time held by the resigning Escrow Agent; provided, that if no successor Escrow Agent has been appointed on the effective date of resignation of the resigning Escrow Agent pursuant to this Agreement, the resigning Escrow Agent may deliver the Escrow Fund into a court of competent jurisdiction.  Upon completion of the alternative requirements of the immediately preceding sentence, Escrow Agent shall be discharged and released from all further duties, obligations, liabilities and responsibilities imposed upon Escrow Agent pursuant to the terms and provisions of this Agreement.

 

  

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2.   Establishment of Escrow.

2.1.   Escrow Fund.  Upon the date of signing of the SPA, but in any event, no later than August 29, 2014, the Participants shall deposit all Cash Proceeds with the Escrow Agent, in accordance with the SPA the escrowed amounts in immediately available funds, which thereafter shall be referred to as the “Escrow Fund”.  The Escrow Agent shall act as escrow agent and hold, safeguard and disburse the Escrow Fund pursuant to the terms and conditions of this Agreement and the SPA.  The Escrow Fund will not be subject to any lien or attachment of any creditor of any Party to this Agreement and will be used solely for the purposes and subject to the conditions set forth in this Agreement and the SPA.  Notwithstanding the foregoing, Escrow Agent shall not be liable or responsible for any liens, charges, encumbrances, actions, claims, damages, or attachments made by any Party for or against all or any portion of the Escrow Amount.

2.2.   Investment of Escrow Fund.  The Escrow Agent shall place any funds or other property in the Escrow Fund into the Escrow Agent’s Attorney Escrow Account with Citibank, N.A., a FDIC insured national bank, which is an IOLTA interest paying account, with all interest being paid to the State Bar of Texas. Escrow Agent shall use a bank, trust company or other financial institution with combined capital and surplus of at least $50,000,000.00, unless otherwise agreed by the Parties.  The Parties hereby acknowledge that Citibank, N.A. is an acceptable financial institution for deposit of the Escrow Fund.  Provided that Escrow Agent complies with the requirements of this Section 2.2, Escrow Agent shall not be liable or responsible for any loss of all or any portion of the Escrow Fund by the depositary bank through fault of the depositary bank.

3.   Distributions from the Escrow Fund.  The Escrow Agent shall make distributions from the Escrow Fund in compliance with the requirements set forth in Paragraph 5.3 of the SPA.

3.1.   Escrow Agent shall disburse funds in accordance with and upon receipt of an email from the Company's Chief Executive Officer setting forth the following information: amount of funds to be disbursed and use of such funds (the "Disbursement Email").

3.2.  Notwithstanding the provisions of Paragraph 5.3 of the SPA, if the Company or the Participants notifies Escrow Agent of any dispute between the Company and the Participants over the amount of the Escrow Fund to be paid to Participants, then the Escrow Agent shall hold such portion of the Escrow Fund (the “Disputed Amount”) and not disburse it until the earlier of receipt by the Escrow Agent of (i) Joint Instructions or (ii) a Final Award (as defined in Section 5 of this Agreement) specifying a release of monies to the Participants and/or the Company and the amounts of such monies to be released.  Upon the Escrow Agent’s receipt of the Joint Instructions or the Final Award (either of which shall be the “Termination Release Date”), the Escrow Agent shall disburse the Escrow Fund, or a portion thereof, in accordance with the terms of the Joint Instructions or Final Award.

3.3.  The parties acknowledge that the Escrow Agent is identified as a potential recipient of some of the Cash Proceeds as “in-house legal.”  All distributions of any of the Cash Proceeds to Escrow Agent as “in-house legal” shall be reviewed, verified and approved by the Company's Chief Executive Officer.

4.   Duties of Escrow Agent.

4.1.   Escrow Charges.  The Escrow Agent shall not charge for or be paid out of the Escrow Fund any fees solely for the establishment and maintenance of the escrow, except for any banking charges directly related to the handling of the Escrow Fund, such as wiring fees and postage (the “Escrow Charges”), except as expressly approved by the Company's Chief Executive Officer.  In no event shall the Escrow Agent be paid more than one half of one percent [0.005] of any Cash Proceeds [maximum of $2,500.00]). All Escrow Charges shall be paid by the Company.

4.2.   Additional Responsibilities.  The Escrow Agent’s acceptance of its duties pursuant to this Agreement is subject to the following terms and conditions:

 

  

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(a) The Company and the Participants jointly and severally agree to indemnify and hold harmless the Escrow Agent (and any successor escrow agent) from and against any and all losses, liabilities, claims, actions, damages and expenses, including reasonable attorneys’ fees and disbursements (“Losses”), arising out of and in connection with this Agreement, other than Losses attributable to the Escrow Agent’s willful misconduct, fraud or gross negligence.  Without limiting the foregoing, the Escrow Agent shall under no circumstance or event have any liability in connection with its investment or reinvestment of the Escrow Fund, in accordance with the terms of this Agreement, including, without limitation, any liability for any delays (not resulting from its willful misconduct, fraud or gross negligence) in the investment or reinvestment of the Escrow Fund, or any loss of interest incident to any such delays.  This indemnification will survive the release, discharge, termination and/or satisfaction of this Agreement.  Moreover, the Participants knowingly waives any conflict of interest of the Escrow Agent in its capacity as counsel for the Company with regard to the Powerhouse One Agreement.

(b) The Escrow Agent will incur no liability with respect to any action taken or suffered by it in reliance upon any notice, direction, instruction, consent, statement or other document believed by it to be genuine and duly authorized, nor for any other action or inaction, except its own willful misconduct, fraud or gross negligence.  The Escrow Agent will have no duty to inquire into or investigate the validity, accuracy or content of any document delivered to it.  The Escrow Agent will not be responsible for the validity or sufficiency of this Agreement.  In all questions arising under this Agreement, the Escrow Agent may rely on the advice or opinion of Escrow Agent’s counsel, and for anything done, omitted or suffered in good faith by the Escrow Agent based on such advice, the Escrow Agent will not be liable to anyone.  The Escrow Agent will not be required to take any action hereunder involving any expense unless the payment of such expense is made or provided for in a manner satisfactory to it.  The Escrow Agent will have no duties or responsibilities other than those expressly set forth in this Agreement and the implied duty of good faith and fair dealing.  The Escrow Agent may act in reliance upon any instrument or signature believed by it to be genuine and may assume that the person executing any document in connection with this Agreement has been duly authorized to do so.

(c) The Company and the Participants shall provide the Escrow Agent with appropriate Internal Revenue Service Forms W-9 for tax identification number certification.

(d) If at any time the Escrow Agent doubts what action it should take pursuant to this Agreement, the Escrow Agent may retain the Escrow Fund, or the portion thereof at issue, until the earlier of the Escrow Agent’s receipt of (i) a Final Award or (ii) a written notice executed by both the Company and the Participants directing delivery of the Escrow Fund, or the portion thereof at issue, in which event the Escrow Agent shall disburse the Escrow Fund in accordance with such order or notice.

5.  Notices.  All notices and other communications delivered or made pursuant to this Agreement must be in writing and will be deemed given if delivered personally, faxed, sent by nationally recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the address set forth under such recipient’s signature on the signature pages hereto (or at such other address for a party as such party specifies by like notice).  All such notices and other communications will be deemed to have been received (a) in the case of personal delivery, on the date of such delivery, (b) in the case of a facsimile, when the fax machine sending such fax acknowledges transmission, (c) in the case of delivery by nationally recognized overnight courier, on the day delivered to the recipient and (d) in the case of mailing, on the fifth business day following such mailing.

6.   Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute a single agreement.

7.   Waiver and Amendment.  This Agreement may be amended, supplemented, modified and/or rescinded only through an express written instrument signed by all parties or their respective heirs, successors and permitted assigns.  Any Party may specifically and expressly waive in writing any portion of this Agreement or any breach hereof, but only to the extent such provision is for the benefit of the waiving party, and no such waiver shall constitute a further or continuing waiver of any preceding or succeeding breach of the same or any other provision.  The consent by one party to any act for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or similar acts in the future, and no forbearance by a Party to seek a remedy for noncompliance or breach by another Party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach.

 

  

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8.   Entire Agreement.  This Agreement and the SPA set forth the entire agreement among the Parties with regard to the subject matter of this Agreement.  All agreements, covenants, representations and warranties, express or implied, oral and written, of the parties with regard to the subject matter of this Agreement are contained in this Agreement and the SPA referring to or implementing the provisions of this Agreement.  This is an integrated agreement.

9.   Severability.  Each provision of this Agreement is intended to be severable.  Should any provision of this Agreement or the application thereof be judicially declared to be or become illegal, invalid, unenforceable or void, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the Parties.

10.   Assignment.  Except as specifically provided otherwise in this Agreement, neither this Agreement nor any interest herein shall be assignable (voluntarily, involuntarily, by judicial process, operation of law, or otherwise), in whole or in part, by any party without the prior written consent of all other Parties.

11.   Heirs, Successors and Assigns; No Third Party Beneficiary.  Each of the terms, provisions, and obligations of this Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the parties and their respective legal representatives, heirs, successors and permitted assigns.  Nothing in this Agreement will be construed as giving any person, firm, corporation or other entity, other than the parties to this Agreement and their heirs, successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any provision hereof.

12.   Governing Law.  The validity, construction and performance of this Agreement, and any action arising out of or relating to this Agreement shall be governed by the laws of the State of Texas, without regard to the laws of the State of Texas as to choice or conflict of laws.

13.   Defined Terms.  Capitalized terms used in this Agreement without definition have the respective meanings given to them in the SPA.

 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above.

 

	
COMPANY

 

STW Resources Holding Corp.,

a Nevada corporation

 

 

_______________________________

By:  Stanley T. Weiner, its CEO

 

	  	
PARTICIPANTS

 

Signatures to the Subscription Agreements

constitute agreement,

 

 

ESCROW AGENT

 

Seabolt Law Group and D. Grant Seabolt, Jr., Esq.

 

____________________________________

By:  D. Grant Seabolt, Jr., its Principal

Address:

5307 E. Mockingbird Lane, 5th FL

Dallas, TX 75206

Texas Bar No. 17942500

Alabama Bar No. ASB-8352-E61Dex4-1.htm

Exhibit 4.1

 

Exhibit “A”

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

COMMON STOCK PURCHASE WARRANT

 STW RESOURCES HOLDING CORP.

 

Warrant Shares: ____________                                                                                Initial Exercise Date: __________, 2014

 

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _________________, or his registered assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the two year anniversary of the Initial Exercise Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from STW RESOURCES HOLDING CORP., a Nevada corporation (the “Company”), up to ___________ shares (the “Warrant Shares”) of Common Stock.  The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.                      Definitions.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the  Share Purchase Agreement (the “SPA”), dated ________________, among the Company and the Purchaser’s signatory thereto.

 

Section 2.                      Exercise.

 

a) Exercise of Warrant.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto; and, within 3 Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received  payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank.  Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice of Exercise is delivered to the Company.  Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases.  The Company shall deliver any objection to any Notice of Exercise Form within 1 Business Day of receipt of such notice.  In the event of any dispute or discrepancy, the records of the Holder shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

  

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b) Exercise Price.  The exercise price per share of the Common Stock under this Warrant shall be $0.25, subject to adjustment hereunder (the “Exercise Price”).

 

c) Mechanics of Exercise.

 

i. Delivery of Certificates Upon Exercise.  Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by physical delivery to the address specified by the Holder in the Notice of Exercise within 3 Trading Days from the delivery to the Company of the Notice of Exercise Form, surrender of this Warrant (if required) and payment of the aggregate Exercise Price as set forth above (the “Warrant Share Delivery Date”).  This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company.  The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(e)(v) prior to the issuance of such shares, have been paid.

 

ii. Delivery of New Warrants Upon Exercise.  If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights.  If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(e)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such exercise.

 

iv. No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

v. Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

vi. Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

  

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Section 3.                      Certain Adjustments.

 

a)           Reorganization, Consolidation, Merger, etc.; Reclassification.  In case at any time or from time to time, the Company shall effect any merger, reorganization, restructuring, reverse stock split, consolidation, sale of all or substantially all of the Company’s assets or any similar transaction or related transactions (each such transaction, a “Fundamental Change”), then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder of this Warrant, on the exercise hereof, at any time after the consummation of such Fundamental Change, shall receive, in lieu of the  Warrant Shares issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash) to which such Holder would have been entitled upon such consummation of a Fundamental Change if such Holder had so converted this Warrant, immediately prior thereto, all subject to further adjustment thereafter as provided in Section 3(d).

 

If the Company at any time shall, by reclassification or otherwise, change the Common Stock into the same or a different number of securities of any class or classes that may be issued or outstanding, this Warrant, as to the unpaid principal portion thereof and accrued interest thereon, shall thereafter be deemed to evidence the right to purchase an adjusted number of such securities and kind of securities as would have been issuable as the result of such change with respect to the Common Stock immediately prior to such reclassification or other change.

b)           Dissolution.  In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of this Warrant after the effective date of such dissolution pursuant to this Article to a bank or trust company (a “Trustee”) as trustee for the Holder of this Warrant.

c)           Continuation of Terms. Upon any Fundamental Change or transfer (and any dissolution following any transfer) referred to in this Article, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to any other securities and property receivable on the exercise of this Warrant after the consummation of such Fundamental Change or transfer or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 3(c). In the event this Warrant does not continue in full force and effect after the consummation of the transaction described in this Section 3, then only in such event will the Company’s securities and property (including cash, where applicable) receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by Section 3(b).

d)           Extraordinary Events Regarding Common Stock. In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described in this Section 3(d). The number of Warrant Shares that the Holder of this Warrant shall thereafter, on the exercise hereof as provided herein, be entitled to receive shall be adjusted to a number determined by multiplying the number of Warrant Shares that would otherwise (but for the provisions of this Section 3(d)) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 3(d) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise.

  

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e)                             

	
Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

Section 4.                      Transfer of Warrant.

 

a) Transferability.  Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Subscription Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled.  The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b) New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d) Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Subscription Agreement.

 

Section 5.                      Miscellaneous.

 

a) No Rights as Stockholder Until Exercise.  This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(e)(i), and only entitles Holder such rights as a stockholder on the shares issued pursuant to and upon the exercise of this Warrant.

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

  

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c) Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Subscription Agreement.

 

f) Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.  If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

  

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h) Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Subscription Agreement.

 

i) Limitation of Liability.  No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j) Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns.  Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.  The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l) Amendment.  This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders holding Warrants at least equal to 50% of the Warrant Shares issuable upon exercise of all then outstanding Warrants.

 

m) Severability.  Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings.  The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

(Signature Pages Follow)

 

  

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

	
STW RESOURCES HOLDING CORP.

 

 

	
By:__________________________________________

     Name:

     Title:

 

  

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NOTICE OF EXERCISE

TO:           STW RESOURCES HOLDING CORP.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of  lawful money of the United States.

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

(4)  Accredited Investor.  The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: _________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: ________________________________________________________________________________________

 

  

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ASSIGNMENT FORM

(To assign the foregoing Warrant, execute

this form and supply required information.

Do not use this form to exercise the Warrant.)

 

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

_______________________________________________ whose address is

_______________________________________________________________.

 

_______________________________________________________________

Dated:  ______________, _______

Holder’s Signature:             _____________________________

Holder’s Address:               _____________________________

_____________________________

 

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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