MODIFICATION AGREEMENT

 

This Modification Agreement, dated as of February 9, 2012 (the “Agreement”),
sets forth the agreement of American Standard Energy Corp., a Delaware
corporation (the “Company”), and the parties identified as “Holders” on the
signature page hereto (the “Holders”). Defined terms not otherwise defined
herein shall have the meanings set forth in the Series B Warrant (as defined
below).

 

WHEREAS, the Holders purchased from the Company units consisting of (i) shares
of the Company’s common stock (the “Common Stock”); (ii) Series A Warrants to
purchase Common Stock at a per share exercise price of $9.00 (the “Series A
Warrants”); and (iii) Series B Warrants to purchase a number of shares of Common
Stock at a per share exercise price of $.001 (the “Series B Warrants”), pursuant
to a Securities Purchase Agreement (the “Purchase Agreement”) dated July 13,
2011.

 

WHEREAS, the Company and Holders desire to amend certain terms of the Series B
Warrant, waive certain provisions of the Series A Warrant and issue additional
consideration as described below.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company and Holders hereby agree as
follows:

 

1.            Modification of Series B Warrants. The Holders agree that in no
event shall the Warrant Shares or Adjusted Share Amount be greater than the
amounts designated as “Series B Warrant Shares” on Exhibit A attached hereto,
irrespective of any Adjustments or Dilutive Issuances (the “Modification”).

 

2.            Waiver of Anti-Dilution of Series A Warrants. The Holders hereby
waive any anti-dilution rights set forth in Section 2 of the Series A Warrants
(the “Waiver”) that are triggered pursuant to the issuance of the Series C
Warrants (as defined below) and the shares of Common Stock underlying the Series
C Warrants (the “Series C Warrant Shares” together with the Series C Warrants,
the “Securities”).

 

3.            Consideration. As consideration for the Modification and the
Waiver, the Company shall issue to the Holders five year Series C warrants, in
the form attached as Exhibit B hereto (the “Series C Warrants”), to purchase a
number of shares of Common Stock as set forth on Exhibit A attached hereto under
“Series C Warrant Shares”, exercisable at an exercise price of $3.00 per share.

 

4.            Closing. Within three (3) business days from the date on which all
conditions set forth in Section 5 herein have been met (the “Closing Date”), the
Company shall issue and deliver to the Holders the Series C Warrants in
accordance with the Holders’ delivery instructions set forth on Schedule I
hereto.

 

 

 

 

5.            Condition to Closing. This Agreement is subject to and conditioned
upon receipt of the consent of the holders of at least two-thirds of the shares
of Common Stock purchased pursuant to a securities purchase agreement dated
February 1, 2011.

 

6.            Holders’ Representations and Warranties. Each Holder hereby
represents and warrants to the Company as follows:

 

6.1           Own Account.   Holder understands that the Securities are
“restricted securities” and have not been registered under the 1933 Securities
Act, as amended (the “Securities Act”) or any applicable state securities law
and is acquiring the Securities as principal for its own account and not with a
view to or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to distribute or
regarding the distribution of such Securities in violation of the Securities Act
or any applicable state securities law (this representation and warranty not
limiting Holder’s right to sell the Securities in compliance with applicable
federal and state securities laws).   Holder is acquiring the Securities
hereunder in the ordinary course of its business.

 

6.2           Opportunities for Additional Information. Holder acknowledges that
Holder has had the opportunity to ask questions of and receive answers from, or
obtain additional information from, the executive officers of the Company
concerning the financial and other affairs of the Company.

 

6.3           Holder Status.  At the time Holder was offered the Securities, it
was, and as of the date hereof it is, and on each date on which it converts any
Series C Warrants it will be either: (i) an “accredited investor” as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act; or
(ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the
Securities Act.  Holder is not required to be registered as a broker-dealer
under Section 15 of the Exchange Act.

 

6.4           Experience of Holder.   Holder, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.   Holder is able to bear the economic risk of an
investment in the Securities and, at the present time, is able to afford a
complete loss of such investment. 

  

6.5           General Solicitation.   Holder is not obtaining the Securities as
a result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

 

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6.6           Rule 144. Holder understands that the Securities must be held
indefinitely unless such Securities are registered under the Securities Act or
an exemption from registration is available. Holder acknowledges that Holder is
familiar with Rule 144 of the rules and regulations of the Securities and
Exchange Commission, as amended, promulgated pursuant to the Securities Act
(“Rule 144”), and that Holder has been advised that Rule 144 permits resales
only under certain circumstances. Holder understands that to the extent that
Rule 144 is not available, Holder will be unable to sell any Securities without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.

 

6.7           The Holder has full power and authority to execute and deliver
this Agreement and to perform the obligations of the undersigned hereunder, and
the Agreement constitutes the valid and binding obligation of such Holder,
enforceable against the Holder in accordance with its terms.

 

6.8           The Holders hereby acknowledge that the Series C Warrants and the
Series C Warrant Shares are not Registrable Securities, as defined in the
Registration Rights Agreement entered into by the Company and Holders dated July
13, 2011 and that the Company has no obligation to register the Series C
Warrants and the Series C Warrant Shares.

 

7.           The Company’s Representations and Warranties.

 

The Company hereby represents and warrants to the Holder as follows:

 

7.1           The Company is a corporation duly organized, validly existing and
in good standing under the laws of Delaware and has all requisite corporate
power and authority to enter into this Agreement and issue the Series C Warrants
pursuant hereto. This Agreement has been duly executed and delivered by or on
behalf of the Company and constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.

 

7.2           The issuance of the Series C Warrants have been duly authorized
and, upon exercise of the Series C Warrants, the Series C Warrant Shares will be
validly issued, fully paid and nonassessable. The Series C Warrants are not
subject to preemptive rights of any stockholder of the Company.

 

7.3           The Company shall use its commercially reasonable bests efforts to
maintain current public information in compliance with Rule 144(i)(2)
promulgated by the SEC under the Securities Act of 1933, as amended.

 

8.           Miscellaneous.

 

8.1           All communications hereunder will be in writing and, except as
otherwise provided, will be delivered at, or mailed by certified mail, return
receipt requested, or telegraphed to, the following addresses: if to the Holders
to: Pentwater Capital Management LP, Attention: Neal Nenadovic, 227 W. Monroe
Street, Suite 4000, Chicago, IL 60606, facsimile (312) 589-6499; if a copy to
the Company to: American Standard Energy Corp., 4800 North Scottsdale Road,
Suite 1400, Scottsdale, Arizona 85281, Attention: Chief Executive Officer, with
a copy to Blank Rome, LLP, Attention: Brad Shiffman, Esq., 405 Lexington Avenue,
New York, New York 10174.

 

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8.2           This Agreement shall be deemed to have been made and delivered in
New York City and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York. Each Holder and the Company (1) agree that any legal suit, action
or proceeding arising out of or relating to this Agreement, shall be instituted
exclusively in New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York, unless such
court shall have refused such jurisdiction, (2) waive any objection which each
Holder or the Company may have now or hereafter to the venue of any such suit,
action or proceeding, and (3) irrevocably consent to the jurisdiction of the New
York State Supreme Court, County of New York, and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. Each Holder and the Company further agree to accept and acknowledge
service of any and all process which may be served in any such suit, action or
proceeding in the New York State Supreme Court, County of New York, or in the
United States District Court for the Southern District of New York and agrees
that service of process upon each Holder or the Company, as the case may be,
mailed by certified mail to the Holder’s address or the Company’s address, as
the case may be, set forth on the signature page to this Agreement shall be
deemed in every respect effective service of process upon such Holder or the
Company, as the case may be, in any such suit, action or proceeding.

 

8.3           Each party hereto agrees to use its reasonable best efforts to
take any action which may be necessary or appropriate or reasonably requested by
the other party hereto in order to effectuate or implement the provisions of
this Agreement.

 

8.4           The rights and obligations of the parties under this Agreement
shall bind and inure to the benefit of the parties and their respective
successors and assigns.

 

8.5           This Agreement may be executed in separate counterparts, all of
which shall constitute one agreement.

 

8.6           All notices required or permitted to be given hereunder shall be
personally delivered, sent by courier service or mailed by certified or
registered mail, postage prepaid, to the respective parties at the addresses set
forth herein and shall be deemed given upon receipt.

 

[Signature Page Follows]

 

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

 

  HOLDERS:       PWCM MASTER FUND LTD.         By: /s/ David Zirin     David
Zirin     Director         PENTWATER EQUITY OPPORTUNITIES MASTER FUND LTD.      
  By: /s/ David Zirin     David Zirin     Director         OCEANA MASTER FUND
LTD.         By: /s/ David Zirin     David Zirin     Director         LMA SPC
FOR AND ON BEHALF OF THE MAP 98 SEGREGATED PORTFOLIO         By: /s/ David Zirin
    David Zirin     Authorized Signatory         COMPANY:       AMERICAN
STANDARD ENERGY CORP.         By: /s/ Scott Feldhacker     Scott Feldhacker    
Chief Executive Officer

 

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SCHEDULE I

 

DELIVERY INSTRUCTIONS

 

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EXHIBIT A

WARRANTS

 

Holder  Series B Warrant
Shares   Series C Warrant
Shares  PWCM Master Fund Ltd.   306,088    400,001              Pentwater Equity
Opportunities Master Fund Ltd.   975,652    1,275,000              Oceana Master
Fund Ltd.   420,869    550,000              LMA SPC for and on behalf of the MAP
98 Segregated Portfolio   210,434    274,999  Totals   1,913,043    2,500,000 

 

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