EXHIBIT 10.14

 

GROSS ROYALTY AGREEMENT

 

 

This Gross Royalty Agreement (the “Agreement”) is entered into this 24th day of
January 2012, by and between Bleeding Rock LLC, a Utah limited liability company
(“BR”), and American Sands Energy Corp., a Delaware corporation (“ASEC”).

 

RECITALS

 

WHEREAS, on this date ASEC has entered into that certain License, Development
and Engineering Agreement with Universal Oil Recovery Corp. and SRS
International (the “License Agreement”);

 

WHEREAS, also on this date ASEC and BR have entered into that certain
Termination Agreement (the “Termination Agreement”) whereby the prior Operating
Agreement between Green River Resources, Inc., a Utah corporation, and BR was
terminated;

 

WHEREAS, as part of the consideration for BR entering into the Termination
Agreement, ASEC has agreed to grant BR the royalty provided for in this
agreement (the “Royalty”);

 

NOW, THEREFORE, in consideration of the mutual terms and conditions set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as follows:

 

1. Grant of Royalty. ASEC shall pay to BR a royalty equal to one and one-half
percent (1.5%) of the gross receipts (as defined below) for each Designated
Project (as defined in the License Agreement and hereinafter a “Designated
Project”) except for the Sunnyside Project (as defined in the Termination
Agreement and hereinafter the “Sunnyside Project”). For purposes of this
Agreement, “Gross Receipts” shall mean the receipt of all cash and non-cash
proceeds by ASEC from any Designated Project, except the Sunnyside Project
(hereinafter “Gross Receipts”).

 

2. Statements and Payments.

 

2.1 Royalty Statements. ASEC shall deliver to BR on or before the forty-fifth
(45th) day following the end of each calendar quarter during the term of this
Agreement and on the thirtieth (30th) day of the month following termination or
expiration of this Agreement, a complete and accurate statement (the “Royalty
Statement”) of Gross Receipts generated by ASEC from Designated Projects
(excluding the Sunnyside Project) for the immediately preceding calendar
quarter, or portion thereof, during the term of this Agreement (the “Royalty
Period”). The Royalty Statement shall be certified as accurate by an officer of
ASEC and shall include information as to the location of the Designated Project,
the name of the party, in the case the project being developed is with a third
party, the payment terms under the license or sublicense for the project, the
amount of Gross Receipts from the project, the amount of Royalty due, and any
other information BR may from time to time reasonably request. The Royalty
Statement shall be furnished to BR whether or not revenues from any Designated
Project have been received, and whether or not royalties have been earned by BR,
during the Royalty Period. Royalty Statements shall be in a form reasonably
acceptable to BR.

 

2.2 Payment of Royalty Fees. The amount shown in each Royalty Statement as being
due BR shall be paid simultaneously with the submission of the Royalty
Statement. ASEC’s Royalty Statements and all amounts payable to BR by ASEC shall
be submitted by check to the address of BR as provided in this Agreement or wire
transfer or such other means as BR may direct.

 

 

 

 

2.3 Corrections to Royalty Statements. The receipt and/or acceptance by BR of
any of the Royalty Statements furnished or royalties paid hereunder to BR (or
the cashing of any royalty checks paid hereunder) shall not preclude BR from
questioning the correctness of the statement or the amounts paid; provided that
ASEC is notified in writing within ten (10) days following the giving of the
Royalty Statement by ASEC or receipt of the royalty payment by BR, whichever
shall be later. In the event that any inconsistencies or mistakes are discovered
in the Royalty Statements or payments, and ASEC is duly notified, they shall
immediately be rectified by ASEC and the appropriate payment shall be made by
ASEC. In the event ASEC shall discover a mistake resulting in an overpayment in
any Royalty Statement, it shall be allowed to offset such amount in the next
Royalty Statement and payment made to BR.

 

2.4 Payments in U.S. Funds. All payments made hereunder shall be in United
States dollars drawn on a United States bank, unless otherwise specifically
agreed upon by the parties.

 

2.5 Time is of the Essence. Time is of the essence with respect to all payments
to be made hereunder by ASEC. Interest at a rate of five percent (5%) per annum
shall accrue on any amount due BR hereunder from and after the date upon which
the payment is due until the date of receipt of payment.

 

3. Audit.

 

3.1 Accurate Books and Records. ASEC agrees to keep accurate books of account
and records at its principal place of business covering all transactions
relating to the License Agreement and pertaining to the items required to be
shown in ASEC’s Royalty Statements to be submitted pursuant hereto, including
without limitation, invoices, correspondence, banking, financial, and other
records. BR and its duly authorized representatives shall have the right, upon
five (5) days’ written notice, during normal business hours, to audit ASEC’s
books of account and records, and all other documents and material in the
possession or under the control of ASEC, with respect to the subject matter and
the terms of this Agreement and to make copies and extracts thereof. In the
event that any such audit reveals an underpayment by ASEC, ASEC shall within
thirty (30) days written notice remit payment to BR in the amount of such
underpayment, plus interest calculated at the rate of five percent (5%) per
annum, from the date such payment(s) were actually due until the date such
payment is actually made. In the event that any such underpayment is greater
than Twenty-Five Thousand Dollars ($25,000), ASEC shall reimburse BR for the
costs and expenses of such audit. In the event such audit shall reveal a mistake
resulting in an overpayment in any royalty payment, ASEC shall be allowed to
offset such amount in the next Royalty Statement and payment made to BR.
Following such an audit, any disagreement by either party in the amount owed
shall be resolved by arbitration as set forth in Section * hereof.

 

3.2 Return of Books and Records. All books of account and records of ASEC
covering all transactions relating to the Royalty granted herein shall be
retained by ASEC for at least one (1) year after the expiration or termination
of this Agreement for possible inspection by BR.

 

4. Miscellaneous.

 

4.1. Notices. All notices, deliveries, consents, waivers, requests,
instructions, or other communications required or permitted hereunder shall be
in writing, and shall be deemed to have been duly given if (a) delivered
personally (effective upon delivery), (b) sent by a reputable, established
national courier service (effective one business day after being delivered to
such courier service), or (c) mailed by certified mail, return receipt
requested, postage prepaid (effective three business days after being deposited
in the U.S. mail), addressed as follows (or to such other address as the
recipient may have furnished for such purpose pursuant to this Section):

 

 

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If to BR:

 

2610 Hillsden Drive

Holladay, UT 84117

Attn: William Gibbs, Manager

 

and:

 

If to ASEC:

 

4760 S. Highland Dr. Suite 341

Salt Lake City, UT 84117

Attn: William C. Gibbs, President

 

with a copy (which shall not constitute notice) to:

 

Ronald N. Vance, Attorney at Law

The Law Office of Ronald N. Vance & Associates, P.C.

1656 Reunion Avenue

Suite 250

South Jordan, UT 84095

 

or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.

 

4.2. Arbitration.

 

(a) Scope and Administration of Arbitration. Any controversy or claim arising
out of or relating to this Agreement, or the breach thereof, shall be settled by
arbitration administered by the American Arbitration Association (the “AAA”) in
accordance with its Commercial or other Arbitration Rules, including the
Optional Rules for Emergency Measures of Protection, and judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof.

 

(b) Venue. The place of arbitration shall be Salt Lake City, Utah.

 

(c) Choice of Law. The arbitrators are to interpret all controversies and claims
arising under or relating to this Agreement in accordance with the laws of the
State of Utah, without regard to its choice of law principles. In rendering an
award, the arbitrator is to determine the rights and obligations of the parties
according to the substantive and procedural laws of the State of Utah.

 

(d) Appointment of Arbitrators. Within 15 days after the commencement of
arbitration, each party shall select one person to act as arbitrator and the two
selected shall select a third arbitrator within ten (10) days of their
appointment. The arbitrators will be selected from a panel of persons having
experience with and knowledge of the subject matter of the Agreement, and at
least one of the arbitrators selected will be an attorney or a retired judge. If
the arbitrators selected by the parties are unable or fail to agree upon the
third arbitrator, the third arbitrator shall be selected by the AAA.

 

(e) Injunctive Relief. Either party may apply to the arbitrator seeking
injunctive relief until the arbitration award is rendered or the controversy is
otherwise resolved. Either party also may, without waiving any remedy under this
agreement, seek from any court having jurisdiction any interim or provisional
relief that is necessary to protect the rights or property of that party,
pending the establishment of the arbitral tribunal (or pending the arbitral
tribunal’s determination of the merits of the controversy); provided that such
interim or provisional relieve shall be sought solely by a court of competent
jurisdiction located in the County of Salt Lake, State of Utah, which court
shall apply the choice of law provision of this Section 4.2.

 

 

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(f) Costs and Fees. The arbitrators shall award to the prevailing party, if any,
as determined by the arbitrators, all of its costs and fees. “Costs and fees”
mean all reasonable pre-award expenses of the arbitration, including the
arbitrators’ fees, administrative fees, travel expenses, out-of-pocket expenses
such as copying and telephone, court costs, witness fees, and attorneys’ fees.

 

(g) Reasoned Opinion. The award shall be in writing, shall be signed by a
majority of the arbitrators, and shall include a statement setting forth the
reasons for the disposition of any claim.

 

(h) Right to Appeal. Within 30 days of receipt of any award (which shall not be
binding if an appeal is taken), any party may notify the AAA of an intention to
appeal to a second arbitral tribunal, constituted in the same manner as the
initial tribunal. The appeal tribunal shall be entitled to adopt the initial
award as its own, modify the initial award or substitute its own award for the
initial award. The appeal tribunal shall not modify or replace the initial award
except for clear errors of law or because of clear and convincing factual
errors. The award of the appeal tribunal shall be final and binding, and
judgment may be entered by a court having jurisdiction thereof.

 

(i) Submission to Jurisdiction. Each party shall submit to any court of
competent jurisdiction for purposes of the enforcement of any award, order, or
judgment. Any award, order, or judgment pursuant to arbitration is final and may
be entered and enforced in any court of competent jurisdiction.

 

4.3. Expenses. Except as otherwise expressly provided herein, each party hereto
shall bear its own expenses with respect to this Agreement and the transactions
contemplated hereby.

 

4.4. Survival of Representations and Warranties. All covenants, representations
and warranties made herein shall survive the making of this Agreement and shall
continue in full force and effect for a period of one (1) year from the
Effective Date, at the end of which period no claim may be made with respect to
any such covenant, representation, or warranty unless such claim shall have been
asserted in writing to the indemnifying party during such period.

 

4.5. Waivers. The failure of a party hereto at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver by a party of any condition
or of any breach of any term, covenant, representation or warranty contained in
this Agreement shall be effective unless in writing, and no waiver in any one or
more instances shall be deemed to be a further or continuing waiver of any such
condition or breach in other instances or a waiver of any other condition or
breach of any other term, covenant, representation or warranty.

 

4.6. Interpretation. The headings preceding the text of Sections and Paragraphs
included in this Agreement are for convenience only and shall not be deemed part
of this Agreement or be given any effect in interpreting this Agreement. The use
of the masculine, feminine or neuter gender herein shall not limit any provision
of this Agreement. The use of the terms “including” or “include” shall in all
cases herein mean “including, without limitation” or “include, without
limitation,” respectively.

 

4.7. Assignment. Subject to the compliance with state and federal securities
laws, the Royalty may be assigned in whole or in part by BR. Prior to due
presentment for transfer or assignment of the Royalty or any part thereof, ASEC
may treat BR or any registered assign as the absolute owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than a duly authorized officer of ASEC) for all purposes and shall not be
affected by any notice to the contrary.

 

 

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4.8. No Third Party Beneficiaries. This Agreement is solely for the benefit of
the parties hereto and, to the extent provided herein, their respective
directors, officers, employees, agents and representatives, and no provision of
this Agreement shall be deemed to confer upon other third parties any remedy,
claim, liability, reimbursement, cause of action or other right.

 

4.9. Further Assurances. Upon the reasonable request of any party hereto, the
other party or parties hereto shall, of and after the date of this Agreement,
execute and deliver such other documents, releases, assignments and other
instruments as may be required to effectuate completely the transactions
contemplated by this Agreement.

 

4.10. Severability. If any provision of this Agreement shall be held invalid,
illegal or unenforceable, the validity, legality or enforceability of the other
provisions hereof shall remain in full force and shall not be affected thereby,
and there shall be deemed substituted for such invalid, illegal or unenforceable
provision a valid, legal and enforceable provision as similar as possible to the
provision at issue.

 

4.11. Entire Understanding. This Agreement sets forth the entire agreement and
understanding of the parties hereto and supersedes all prior agreements, letters
of intent, arrangements and understandings between the parties.

 

4.12. Exhibits and Schedules. Each of the exhibits, schedules, or similar
attachments referenced in this Agreement is

annexed hereto and is incorporated herein by this reference and expressly made a
part hereto.

 

4.13. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. Facsimile transmissions of any signed original
document, or transmission of any signed facsimile document, shall constitute
delivery of executed original. At the request of any of the parties, the parties
shall confirm signatures by signing and delivering an original document.

 

IN WITNESS WHEREOF, each of the parties has executed this Gross Royalty
Agreement the respective day and year set forth below:

 

 

    Bleeding Rock LLC         Date January ____, 2012 By /s/ William C. Gibbs  
    William C. Gibbs, Manager                             American Sands Energy
Corp.         Date January ____, 2012  By /s/ William C. Gibbs       William C.
Gibbs, President                                

 

 

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