Document:

ex10-1.htm

Exhibit 10.1

 

 

VOTING AND SUPPORT AGREEMENT

This VOTING AND SUPPORT AGREEMENT (this “Agreement”) dated as of February 19, 2014, is entered into among Signet Jewelers Limited, a Bermuda corporation (“Parent”), Zale Corporation, a Delaware corporation (the “Company”), and Z Investment Holdings, LLC, a Delaware limited liability company and the warrantholder of the Company (the “Securityholder”).

WHEREAS, the Securityholder and the Company are parties to that certain Warrant and Registration Rights Agreement, dated as of May 10, 2010 (the “Warrant Agreement”), pursuant to which the Securityholder was granted certain Warrants (as defined in the Warrant Agreement);

WHEREAS, the Securityholder owns Warrants convertible into 11,064,684 shares of common stock, par value $0.01per share, of the Company (the “Company Common Stock,” and such Warrants, together with any other securities of the Company acquired by the Securityholder after the date hereof and during the term of this Agreement, and together with the Subject Shares (as defined below) the “Company Securities”); and

WHEREAS, concurrently with or following the execution of this Agreement, Parent, Carat Merger Sub, Inc., a Delaware corporation (“Merger Sub”), and the Company will enter into an Agreement and Plan of Merger dated as of the date hereof (as the same may be amended or supplemented, the “Merger Agreement”), pursuant to which MergerSub will merge with and into the Company;

WHEREAS, as a condition to its willingness to enter into the Merger Agreement (a copy of which has been provided to the Securityholder), Parent has required that the Securityholder execute and deliver this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements contained herein, the parties hereto agree as follows:

SECTION 1.        Defined Terms.  Capitalized terms used herein but not otherwise defined herein have the meanings assigned to such terms in the Merger Agreement.

SECTION 2.        Representations and Warranties of the Securityholder.  The Securityholder hereby represents and warrants to Parent as of the date hereof and as of the Closing Date as follows:

(a)          Authority; Execution and Delivery; Enforceability.

(i)           The Securityholder is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.  The Securityholder has all requisite corporate power and authority to enter into, execute and deliver this Agreement and to perform the obligations and consummate the transactions contemplated hereby.  The execution and delivery by the Securityholder of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of the Securityholder.  The Securityholder has duly

 

 

  

  

  

 

 

executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of the Securityholder, enforceable against the Securityholder in accordance with its terms, subject to applicable bankruptcy, insolvency, and other similar Laws affecting the rights and remedies of creditors generally and general principles of equity.

(ii)          The execution and delivery by the Securityholder of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any breach of, require the consent, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Securityholder under, any provision of any Contract to which the Securityholder is a party or by which any properties or assets of the Securityholder are bound or, subject to the consents and filings referred to in clause (iii) below, any provision of any Law applicable to the Securityholder or the properties or assets of the Securityholder.

(iii)         Except for (a) filings required under Sections 13(d) and 16 of the Exchange Act and (b) filings required under, and compliance with applicable requirements of, the HSR Act and, if applicable, Canadian antitrust authorities, no consent or approval of, or registration, declaration or filing with, any Governmental Authority or other Person is required to be obtained or made by or with respect to the Securityholder in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.

(b)          Company Securities.

(i)           The Securityholder is the record and beneficial owner of the Warrants, and upon its exercise of the Warrants in accordance with the terms of the Warrant Agreement, will be the record and beneficial owner of the Subject Shares, in each case, free and clear of all Liens and any other material limitation or restriction (including any restriction on the right to vote or otherwise transfer the Subject Shares) other than pursuant to this Agreement, the Merger Agreement and limitations on transfer under federal securities Law.  The Securityholder does not own, of record or beneficially, any shares of capital stock of the Company, or other rights to acquire shares of capital stock of the Company, in each case other than the Warrants and the Subject Shares.  The Securityholder has the sole right to dispose of the Warrants and the Subject Shares, and none of the Securityholder’s Company Securities is subject to any pledge, disposition, transfer or other agreement, arrangement or restriction, except as contemplated by this Agreement.

(ii)          Upon its receipt of the Subject Shares after the exercise of the Warrants, the Securityholder will have the sole right to vote the Subject Shares, and none of the Securityholder’s Subject Shares is subject to any voting trust or other agreement, arrangement or restriction with respect to the voting of the Subject Shares.

 

 

  

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(c)          Takeover Proposals.  The Securityholder is not currently engaged in any discussions or negotiations with any Person (other than Parent and Merger Sub) regarding any Takeover Proposal.

(d)          Reliance by Parent.  The Securityholder understands and acknowledges that Parent is entering into the Merger Agreement in reliance upon the Securityholder’s execution and delivery of this Agreement and the representations, warranties, covenants and obligations of the Securityholder contained herein.

SECTION 3.        Representations and Warranties of Parent.  Parent hereby represents and warrants to the Securityholder as of the date hereof and as of the Closing Date as follows:

(a)          Authority; Execution and Delivery; Enforceability.  Parent is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation.  Parent has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby.  The execution and delivery by Parent of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary action on the part of Parent.  Parent has duly executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Parent, enforceable against Parent in accordance with its terms.  The execution and delivery by Parent of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the terms hereof will not, conflict with, or result in any breach of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or the loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of Parent under, any provision of any Contract to which Parent is a party or by which any properties or assets of Parent are bound or any provision of any Law applicable to Parent or the properties or assets of Parent.  Except for any filings required under the Exchange Act, no consent or approval of, or registration, declaration or filing with, any Governmental Authority is required to be obtained or made by or with respect to Parent in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.

SECTION 4.        Covenants of the Securityholder.  The Securityholder covenants and agrees as follows:

(a)          The Securityholder shall, in accordance with the terms of the Warrant Agreement, no later than the Business Day immediately preceding the record date to be established by the Company for the Company Stockholders Meeting, exercise its Cashless Exercise (as defined in the Warrant Agreement) right pursuant to Section 3.04 of the Warrant Agreement with respect to all shares of Company Common Stock underlying the Warrants, such that after receipt of the shares received upon such exercise, all such shares will be held of record by the Securityholder and will be eligible to vote at the Company Stockholder Meeting, and the Warrants shall be extinguished.  The shares of Company Common Stock issued upon the exercise of such Warrants, together with any other shares of Company Common Stock acquired

 

 

  

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by the Securityholder after the date hereof and during the term of this Agreement, shall be referred to as the “Subject Shares”.

 

(b)          Prior to the Expiration Date, at any Company Stockholders Meeting, and at any adjournment or postponement thereof, called to seek the Company Stockholder Approval or in any other circumstances upon which a vote with respect to the Merger Agreement, the Merger or any other transaction contemplated thereby is sought, the Securityholder shall vote (or cause to be voted), in person or by proxy, the Subject Shares in favor of (i) granting the Company Stockholder Approval and (ii) any proposal to adjourn any Company Stockholders Meeting which Parent supports.

(c)          Prior to the Expiration Date, at every meeting of shareholders of the Company or at any adjournment thereof or in any other circumstances upon which the Securityholder’s vote, consent or other approval is sought, the Securityholder shall vote (or cause to be voted) the Subject Shares against (i) any letter of intent, agreement in principle, memorandum of understanding, merger, acquisition, purchase or joint venture agreement or other agreement related to any Takeover Proposal or other merger agreement or merger (other than the Merger Agreement and the Merger), share exchange, consolidation, combination, dual listed structure, sale of substantial assets, issuance of securities, reorganization, recapitalization, dissolution, liquidation, winding up or other extraordinary transaction of or by the Company, (ii) any Takeover Proposal or Superior Proposal, (iii) any action, proposal, transaction or agreement which would reasonably be expected to result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement, and (iv) any amendment of the Company’s Articles of Incorporation or the Bylaws or other action, proposal or transaction involving the Company or any of its Subsidiaries, which amendment or other action, proposal or transaction would reasonably be expected to impede, interfere with, delay, frustrate, prevent or nullify any provision of the Merger Agreement or any other agreement contemplated by the Merger Agreement, the Merger or any other transaction contemplated thereby, inhibit the timely consummation of the transactions contemplated thereby or change in any manner the voting rights of any class of capital stock of the Company.  The Securityholder shall not commit or agree to take any action inconsistent with the foregoing.

(d)          Subject to Section 6(d), the Securityholder shall not engage, nor shall it authorize or permit any investment banker, attorney, accountant or other representative or agent of the Securityholder to engage, directly or indirectly, in any activity that would be prohibited pursuant to Section 5.3 of the Merger Agreement.

(e)          Prior to the Expiration Date, the Securityholder shall not (i) directly or indirectly offer, sell, transfer, assign, exchange, pledge, encumber or otherwise dispose of (including by gift) (collectively, “Transfer”), or enter into any contract, option, agreement, understanding or other arrangement (including any profit sharing arrangement) with respect to a Transfer of, any of the Securityholder’s Company Securities, or any interest therein, to any Person (except for the Cashless Exercise referred to in Section 4(a)), (ii) enter into any voting arrangement, whether by proxy, voting agreement or otherwise, with respect to any of the Securityholder’s Subject Shares or (iii) commit or agree to take any of the foregoing actions.

 

 

  

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(f)           The Securityholder shall not issue any press release or make any other public statement with respect to the Merger Agreement, the documents contemplated therein, the Merger or any other transaction contemplated thereby without the prior consent of Parent.

(g)          The Securityholder hereby irrevocably and unconditionally waives and agrees not to exercise, assert or perfect any dissenters rights available to the Securityholder pursuant to Section 262 of the Delaware General Corporation Law.

SECTION 5.        Termination.  This Agreement shall terminate upon the earliest to occur of (i) the mutual consent of the parties hereto, (ii) the Effective Time, (iii) 45 days after the expiration of the End Date and (iii) the termination of the Merger Agreement in accordance with its terms (such earliest time, the “Expiration Date”).

SECTION 6.        Additional Matters.

(a)          The Securityholder shall promptly prepare and file all necessary filings, notices, statements, registrations, submissions of information, applications and other documents contemplated in Section 2(a)(iii) above, and use reasonable best efforts to obtain all approvals, consents and authorizations contemplated thereby; provided, however, that neither the Securityholder nor any of its controlling affiliates shall be required to divest, dispose of, lease, license or transfer any of its investments or assets.

(b)          The Securityholder shall, from time to time, execute and deliver, or cause to be executed and delivered, such additional or further consents, documents and other instruments as Parent may reasonably request for the purpose of effectively carrying out the transactions contemplated by this Agreement.

(c)          All rights, ownership and economic benefits of and relating to the Company Securities shall remain vested in and belong to the Securityholder, and Parent shall have no authority to manage, direct, superintend, restrict, regulate, govern or administer any of the policies or operations of the Company or exercise any power or authority to direct any Securityholder in the voting of any of the Company Securities, except as otherwise provided herein.

(d)          Parent acknowledges that the Securityholder is entering into this Agreement only in its capacity as a stockholder of the Company and nothing herein shall limit or affect any actions taken by any individual in such individual’s capacity as a director of the Company, nor shall any action taken in any such individual’s capacity as a director be deemed a breach of this Agreement.

(e)          If the Merger is consummated, and the amount of the Merger Consideration that would have been payable to the Securityholder under the Warrant upon consummation thereof (assuming no prior exercise of the Warrant) exceeds the amount of the Merger Consideration that becomes payable to the Securityholder upon consummation of the Merger in respect of the shares of Company Common Stock received by the Securityholder as a result of the Cashless Exercise of the Warrant pursuant to this Agreement (assuming Securityholder is the record holder of all of such shares at the Effective Time), Parent agrees to

 

 

  

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deliver to the Securityholder no later than five (5) Business Days after the consummation of the Merger a cash payment equal to the amount of such excess (if any).

SECTION 7.        General Provisions.

(a)          Entire Agreement; Amendments.  This Agreement represents the entire understanding and agreement between the parties with respect to the subject matter herein and can be amended only by a written instrument signed by each of the parties.  No action taken pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein.  The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach.  No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and are not exclusive of any other remedies, equitable or legal.

(b)          Notice.  All notices and other communications hereunder shall be in writing and shall be deemed given (i) when delivered personally by hand (with written confirmation of receipt); (ii) when sent by facsimile (with written confirmation of transmission); or (iii) one (1) Business Day following the day sent by overnight courier (with written confirmation of receipt), in each case, to the parties at their respective addresses set forth below (or at such other address for a party as shall be specified by like notice):

If to Parent, to:

Signet Jewelers Limited

c/o Signet Group Services Ltd.

110 Cannon Street

London EC4N 6EU

England

Attn:  Group Company Secretary

Facsimile:  44 (207) 621-0835

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

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attention:  Andrea A. Bernstein and Michael E. Lubowitz

Facsimile:  (212) 310-8007

If to Securityholder, to:

Z Investment Holdings, LLC

c/o Golden Gate Private Equity, Inc.

 

 

  

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One Embarcadero Center, 39th Floor

San Francisco, CA 94104

Attention:  General Counsel

If to the Company, to:

 

Zale Corporation

901 W. Walnut Hill Lane

Irving, TX 75038

Attention:  General Counsel

Facsimile:  (972) 580-4934

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

Cravath, Swaine & Moore LLP

Worldwide Plaza

825 8th Ave

New York, NY 10019

Attention:  Eric L. Schiele

                   Ting S. Chen

Facsimile:  (212) 474 3700

 

(c)          Interpretation.  Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

(i)        Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa;

(ii)       The division of this Agreement into Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.  All references in this Agreement to any “Section” are to the corresponding Section of this Agreement unless otherwise specified;

(iii)      The words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise expressly requires;

(iv)      The word “including” or any variation thereof means “including, without limitation,” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it; and

(v)       The parties have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

 

  

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(d)          Severability.  If any term or other provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms, provisions and conditions of this Agreement shall nevertheless remain in full force and effect.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

(e)          Counterparts.  This Agreement may be executed in counterparts (each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement) and shall become effective when one (1) or more counterparts have been signed by each of the parties and delivered to the other parties.

(f)           Entire Agreement; No Third-Party Beneficiaries.  This Agreement and the Merger Agreement (a) constitute the entire agreement, and supersede all other prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof and (b) are not intended to and shall not confer upon any Person other than the parties hereto any rights or remedies hereunder.

(g)          Governing Law; Jurisdiction; Waiver of Jury Trial.

(i)           This Agreement, the Merger Agreement, and any other document or instrument delivered pursuant hereto, and all claims or causes of action (whether in contract or tort) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution, termination, performance or nonperformance of this Agreement (including any claim or cause of action based upon, arising out of or related to any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), shall be governed by the internal laws of the State of Delaware, without regard to its conflicts of law principles.

(ii)          All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in the Chancery Court of the State of Delaware in any such action or proceeding and irrevocably waive the defense of an inconvenient forum to the maintenance of any such action or proceeding.  The consents to jurisdiction set forth in this paragraph shall not constitute general consents to service of process in the State of Delaware and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any Person other than the parties hereto.  The parties hereto agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable law.

(iii)         Each of the parties hereto hereby irrevocably waives any and all rights to trial by jury in any legal proceeding arising out of or related to this Agreement or the Transactions.

 

 

  

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(h)          Binding Effect; Assignment.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of Law or otherwise, by any of the parties without the prior written consent of the other parties, except that Parent may assign, in its sole discretion, any of or all its rights, interests and obligations under this Agreement to any wholly owned Subsidiary of Parent, but no such assignment shall relieve Parent or Merger Sub of any of their obligations hereunder.  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.  Any purported assignment not permitted under this Section 7(h) shall be null and void.

(i)           Remedies.  The parties agree that monetary damages would not be an adequate remedy and irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to one or more injunctions, temporary restraining orders of other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Chancery Court of the State of Delaware, without bond or other security being required, this being in addition to any other remedy to which they are entitled at law or in equity.  Each party agrees not to oppose the granting of such relief in the event the court determines that such a breach has occurred.

[Signature Page Follows]

 

 

 

 

 

 

 

  

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IN WITNESS WHEREOF, each party has duly executed this Agreement as of the date first written above.

 

	 	SIGNET JEWELERS LIMITED	 
	 	 	 	 
	 	By: 	/s/ Michael W. Barnes	 
	 	 	Name:  Michael W. Barnes	 
	 	 	Title:    Chief Executive Officer 	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Voting and Support Agreement]

 

  

  

  

 

 

	 	Z INVESTMENT HOLDINGS, LLC	 
	 	 	 	 
	 	By: 	/s/ Joshua Olshansky	 
	 	 	Name:  Joshua Olshansky	 
	 	 	Title:    Manager	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO VOTING AND SUPPORT AGREEMENT]

 

  

  

  

 

 

	 	ZALE CORPORATION	 
	 	 	 	 
	 	By: 	/s/ Theo Killion 	 
	 	 	Name:  Theo Killion	 
	 	 	Title:    Chief Executive Officer	 
	 	 	 	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[SIGNATURE PAGE TO VOTING AND SUPPORT AGREEMENT]Exhibit
10.1

 

This
warrant and the securities to be issued upon its exercise have not been registered under the U.S. Securities Act of 1933, as amended
(the “Act”), and the warrant may not be exercised by or on behalf of any U.S. person unless it is registered under
the Act or an exemption from such registration is available. The warrant may not be exercised within the United States and the
securities may not be delivered within the United States upon exercise unless registered under the Act or an exemption from such
registration is available. For a period of at least six months from the date of this warrant, it may not be offered or sold in
the United States or to U.S. persons (other than distributors) unless the securities are registered under the Act, or any exemption
from the registration requirements of the Act is available. In addition, hedging transactions involving shares of the issuer may
not be conducted unless in compliance with the Act.

 

	Warrant No. ___________	
        Warrant to Purchase

        575,000 Shares of Common Stock

        As Herein Described

 

WARRANT TO PURCHASE COMMON STOCK OF

 

AMERICAN SANDS ENERGY CORP.

 

This is to certify
that, for value received, Universal Oil Recovery LLC, or its successors and assigns (in each case, the “Holder”), is
entitled to purchase, subject to the provisions of this warrant (the “Warrant”), from American Sands Energy Corp.,
a Delaware corporation (the “Company”), at any time during the period from the date hereof (the “Commencement
Date”) until 5:00 p.m., Pacific time on November 15, 2023, five hundred seventy five thousand (575,000) shares (“Warrant
Shares”) of the Company’s Common Stock, par value $0.001 per share (the “Common Stock”) at a per share
price equal to $0.01 (the “Exercise Price”). The number of shares of Common Stock to be received upon exercise of this
Warrant shall be adjusted from time to time as set forth below. This Warrant also is subject to the following terms and conditions:

 

1.            Exercise of
Warrant. This Warrant may be exercised in full at any time from and after the date hereof and before the Expiration Date, but
if such date is a holiday on which chartered banking institutions are authorized to close, then on the next succeeding day which
shall not be such a holiday. Exercise shall be by presentation and surrender to the Company at its principal office, or at the
office of any transfer agent designated by the Company, of (i) this Warrant, (ii) the attached exercise form properly
executed, and (iii) a check for the Exercise Price for the number of Warrant Shares specified in the exercise form. Notwithstanding
any provisions herein to the contrary, if the Market Price Per Share (as defined in Section 3 below) is greater than the Exercise
Price (as adjusted to the last trading day prior to the exercise date), in lieu of exercising this Warrant for cash, the Holder
may elect to receive full shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled)
by surrender of this Warrant at the principal office of the Company together with a written notice of such election in which event
the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

 

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        X = Y (A-B)

        A

	 	 	 
	Where: 	X =	the number of shares of Common Stock to be issued to the Holder
	 	 	 
	 	Y =	the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being cancelled
	 	 	 
	 	A =	the Market Price Per Share (as defined below)
	 	 	 
	 	B =	Exercise Price (as adjusted to the last trading day prior to the exercise date)

 

If this Warrant is exercised in part only,
the Company or its transfer agent shall, upon surrender of the Warrant, execute and deliver a new Warrant evidencing the rights
of the Holder to purchase the remaining number of Warrant Shares purchasable hereunder. Upon receipt by the Company of this Warrant
in proper form for exercise, accompanied by payment as aforesaid, the Holder shall be deemed to be the holder of record of the
Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or
that certificates representing such Warrant Shares shall not then be actually delivered to the Holder.

 

For purposes of this Warrant, the term
“Market Price Per Share” shall be the closing trade price of such security on the principal exchange on which such
security is traded as reported by Bloomberg for the previous ten trading days, or, if no closing price is reported for such security
by Bloomberg, the average of the bid prices of any market makers for such security as reported in the “pink sheets”
by the National Quotation Bureau, Inc.

 

2.            Reservation
of Shares. The Company shall, at all times until the expiration of this Warrant, reserve for issuance and delivery upon exercise
of this Warrant the number of Warrant Shares which shall be required for issuance and delivery upon exercise of this Warrant. The
Company covenants that the shares of Common Stock issuable on exercise of the Warrant shall be duly and validly issued and fully
paid and non-assessable and free of liens, charges and all taxes with respect to the issue thereof.

 

3.            Fractional
Interests. The Company shall not issue any fractional shares or scrip representing fractional shares upon the exercise or exchange
of this Warrant. Rather, the Company shall round such share to the nearest whole share.

 

4.            No Rights
as Stockholder. This Warrant shall not entitle the Holder to any rights as a stockholder of the Company, either at law or in
equity. The rights of the Holder are limited to those expressed in this Warrant.

 

		5.	Adjustments.

 

5.1           Subdivision
or Combination of Shares. If the Company is recapitalized through the subdivision or combination of its outstanding shares
of Common Stock into a larger or smaller number of shares, the number of Warrant Shares shall be increased or reduced, as of the
record date for such recapitalization, in the same proportion as the increase or decrease in the outstanding shares of Common Stock,
and the Exercise Price shall be adjusted so that the aggregate amount payable for the purchase of all of the Warrant Shares issuable
hereunder immediately after the record date for such recapitalization shall equal the aggregate amount so payable immediately before
such record date.

 

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5.2           Dividends in
Common Stock or Securities Convertible into Common Stock. If the Company declares a dividend or distribution on Common Stock
payable in Common Stock or securities convertible into Common Stock, the number of shares of Common Stock for which this Warrant
may be exercised shall be increased, as of the record date for determining which holders of Common Stock shall be entitled to receive
such dividend, in proportion to the increase in the number of outstanding shares (and shares of Common Stock issuable upon conversion
of all such securities convertible into Common Stock) of Common Stock as a result of such dividend or distribution, and the Exercise
Price shall be adjusted so that the aggregate amount payable for the purchase of all the Warrant Shares issuable hereunder immediately
after the record date for such dividend or distribution shall equal the aggregate amount so payable immediately before such record
date.

 

5.3           Merger, Sale
of Assets. If at any time while this Warrant, or any portion thereof, is outstanding and unexpired there shall be (i) a reorganization
(other than a combination, reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a reverse triangular
merger in which the Company is the surviving entity but the shares of the Company’s capital stock outstanding immediately
prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise,
or (iii) a sale or transfer of the Company’s properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the holder
of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon
payment of the Exercise Price then in effect, the number of shares of stock or other securities or property of the successor corporation
resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise
of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant
had been exercised immediately before such reorganization, merger, consolidation, sale or transfer, all subject to further adjustment
as provided in this Section 5. The foregoing provisions of this Section 5.3 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of any other corporation that are at the time receivable
upon the exercise of this Warrant. In all events, appropriate adjustment (as determined in good faith by the Company’s Board
of Directors) shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably
may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant.

 

5.4           Reclassification.
If the Company, at any time while this Warrant, or any portion thereof, remains outstanding and unexpired, shall change any of
the securities as to which purchase rights under this Warrant exist, by reclassification of securities or otherwise, into the same
or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise
Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 5.

 

    	3

    	 

    

 

 

5.5           Adjustment
of Exercise Price. Whenever the number of Warrant Shares purchasable upon the exercise of the Warrant is adjusted, the Exercise
Price with respect to the Warrant Shares shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment
by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately
prior to such adjustment, and of which the denominator shall be the number of Warrant Shares so purchasable immediately thereafter.

 

5.6           Notice of Adjustment.
Whenever the number of Warrant Shares purchasable upon the exercise of the Warrant or the Exercise Price of the Warrant Shares
is adjusted as provided herein, the Company shall mail to the Holder a notice of such adjustment or adjustments, prepared and signed
by the President or Secretary of the Company, which sets forth the number of Warrant Shares purchasable upon the exercise of the
Warrant and the Exercise Price of such Warrant Shares after such adjustment, a brief statement of the facts requiring such adjustment,
and the computation by which such adjustment was made.

 

		6.	Transfer or Loss of Warrant.

 

6.1           Transfer.
This Warrant may be transferred, exercised, exchanged or assigned (“Transfer” or “Transferred”), in whole
or in part, subject to the provisions of this Section 6.1. The Holder shall have the right to Transfer all or a part of this Warrant
and all or part of the Warrant Shares. The Company shall register on its books any Transfer of the Warrant, upon surrender of same
to the Company with a written instrument of Transfer duly executed by the registered Holder or by a duly authorized attorney. Upon
any such registration of a Transfer, new Warrant(s) shall be issued to the transferee(s) and the surrendered Warrant shall be cancelled
by the Company. A Warrant may also be exchanged, at the option of the Holder, for one or more new Warrants representing the aggregate
number of Warrant Shares evidenced by the Warrant surrendered. This Warrant and the Warrant Shares or any other securities (“Other
Securities”) received upon exercise of this Warrant or the conversion of the Warrant Shares shall be subject to restrictions
on transferability imposed by applicable law. This Warrant and the Warrant Shares may also be subject to restrictions on transferability
under various applicable laws.

 

6.2           Compliance
with Laws. The Holder represents and agrees that he/she/it will not transfer or assign this Warrant or the underlying shares
unless and until the Holder and the Company have complied with all applicable laws relating to such transfer, including all securities
laws.

 

6.3           Loss of Warrant.
Upon receipt by the Company of evidence reasonably satisfactory to it of loss, theft, destruction or mutilation of this Warrant
and, in the case of loss, theft or destruction, of reasonable satisfactory indemnification, or, in the case of mutilation, upon
surrender of this Warrant, the Company will execute and deliver, or instruct its transfer agent to execute and deliver, a new Warrant
of like tenor and date, any such lost, stolen or destroyed Warrant thereupon shall become void.

 

7.            No Impairment.
The Company will not, by amendment of its Articles of Incorporation or otherwise, 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, take all such action as may be necessary or appropriate
in order to protect the rights of the Holder against impairment.

 

    	4

    	 

    

 

8.            Holder’s
Representations Regarding the Warrant. With regard to the Warrant Shares that may be issued to the Holder upon exercise of
the Warrant, Holder represents and warrants to the Company that:

 

8.1           Holder has had
the opportunity to be represented by such legal and tax counsel and others, each of whom has been personally selected by Holder,
as Holder has found important or necessary to consult concerning this transaction, and any representation has included an examination
of applicable documents, and analysis of all tax, financial, corporate law and securities law aspects. Holder, his/her/its counsel
and advisors, and such other persons with whom Holder has found it important or necessary to consult, has sufficient knowledge
and experience in business and financial matters to evaluate the above information, and the merits and risks of the terms and conditions
of the Warrant, and to make an informed investment decision with respect thereto.

 

8.2           The Company has
made available to Holder, and to Holder’s counsel and advisors, prior to the date hereof:

 

(i)            the opportunity
to ask questions of, and to receive answers from, the Company, its representatives, concerning the terms and conditions of the
Warrant; and

 

(ii)           access to
obtaining information, documents, financial statements, records and books (A) relative to the Company, the business and investment
in the Company, and (B)  necessary to verify the accuracy of any information furnished to the Holder. All materials and
information requested by Holder, and Holder’s counsel and advisors, or others representing Holder, have been made available
and examined.

 

8.3           Holder is acquiring
the Warrant for his/her/its own account and not as a fiduciary or any other person and for investment purposes only and not with
a view for the transfer, assignment, resale, or distribution thereof, in whole or in part. Holder understands the meaning and legal
consequences of the foregoing representations and warranties.

 

8.4           Holder qualifies
as an “Accredited Investor” as defined in Rule 501 of Regulation D promulgated by the Securities and Exchange Commission.

 

9.            Notices.
All notices and other communications provided for in this Warrant shall be in writing and delivered, telecopied or mailed, first
class postage prepaid, addressed:

 

(i)      if
to the Company: 

 

American
Sands Energy Corp.

Attention:
Chief Financial Officer

 4760 Highland Drive, Ste. 341,

Salt
Lake City, Utah 84117

 

(ii)     if
to Holder, at the address set forth on the signature page hereto or as may be designated by notice to the Company;
and

 

(iii)    if
to any subsequent holder of the Warrant or Warrant Shares, to the address as may be hereafter specified by notice to the Company.

 

Any such notice or
communication shall be deemed to have been duly given when delivered, telecopied or mailed as aforesaid.

 

    	5

    	 

    

 

10.           Counterparts.
This Warrant may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.

 

IN WITNESS WHEREOF,
this Warrant is executed as of November 18, 2013.

 

 

	COMPANY: 	American Sands Energy Corp.
	 	 
	 	 By:	/s/
    William C. Gibbs                   
	 	 	
        Name:  William Gibbs

        Title:    Chief Executive Officer

 

	HOLDER:	Universal Oil Recovery LLC
	 	 
	 	 By:	/s/ Glenn McGinnis                   
	 	 	
        Name: Glenn McGinnis

        Title: Manager

 

 

Address for Notices:

 

 

    	6

    	 

    

 

Annex A

 

 

 

 

[FORM OF EXERCISE]

 

(To be executed upon exercise of Warrant)

 

 

The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant, to purchase                 
shares of Common Stock and herewith tenders payment for such shares of Common Stock

 

[_] in the amount of
$__________ by check made payable to “American Sands Energy Corp.”

 

[_] net exercise pursuant
to the formula in Section 1

 

 

The undersigned requests
that a certificate for such shares of Common Stock be registered in the name of _____________________, whose address is ____________________________.
If such number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned
requests that a new Warrant representing the remaining balance of the shares of Common Stock be registered in the name of _________________,
whose address is _________ ________________, and that such Warrant be delivered to _______________________, whose address is _____________________________.

 

Dated: _________________

 

Signature:                                                                                

(Signature must conform in all respects

to name of
Holder as specified on the 

face of the Warrant.)

 

 

 

 

    	7

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