Exhibit 10.2

 

SEVENTH AMENDMENT TO

SENIOR FIRST PRIORITY SECURED PROMISSORY NOTE

 

This SEVENTH AMENDMENT TO SENIOR FIRST PRIORITY SECURED PROMISSORY NOTE (this
“Seventh Amendment”) is made as of December 10, 2013 by and between Prospect
Global Resources, Inc., a Delaware corporation (“Maker”), and the Karlsson
Group, Inc., an Arizona corporation (“Holder”), with respect to the following
facts:

 

RECITALS

 

WHEREAS, Maker issued to Holder that certain Senior First Priority Secured
Promissory Note dated August 1, 2012 (the “Original Note”), whereby the Maker
promised to pay to Holder the principal sum of One Hundred Twenty-Five Million
Dollars ($125,000,000);

 

WHEREAS, American West Potash, LLC, a Delaware limited liability company
(“AWP”), Prospect Global Resources, Inc., a Nevada corporation (“Prospect
Nevada”), Apache County Land & Ranch, LLC, a Nevada limited liability company
(“Apache”), Maker and Holder entered into that certain Extension Agreement (the
“Extension Agreement”) dated as of April 15, 2013;

 

WHEREAS, Maker and Holder entered into an Amendment to Senior First Priority
Secured Promissory Note dated April 15, 2013 (“First Amendment” and the Original
Note as amended thereby and as otherwise amended, restated or modified from time
to time, the “Note”);

 

WHEREAS, AWP, Prospect Nevada, Apache, Maker and Holder entered into that
certain Second Extension Agreement dated as of June 26, 2013;

 

WHEREAS, Maker and Holder entered into a Second Amendment to Senior First
Priority Secured Promissory Note dated as of June 26, 2013;

 

WHEREAS, Maker and Holder entered into a Third Amendment to Senior First
Priority Secured Promissory Note dated as of September 9, 2013;

 

WHEREAS, Maker and Holder entered into a Fourth Amendment to Senior First
Priority Secured Promissory Note dated as of September 13, 2013;

 

WHEREAS, Maker and Holder entered into a Fifth Amendment to Senior First
Priority Secured Promissory Note dated as of November 13, 2013;

 

WHEREAS, Maker and Holder entered into a Sixth Amendment to Senior First
Priority Secured Promissory Note dated as of December 3, 2013;

 

WHEREAS, AWP, Prospect Nevada, Apache, Maker and Holder entered into that
certain Fourth Extension Agreement (the “Fourth Extension Agreement”) dated as
of December 10, 2013; and

 

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WHEREAS, it is a condition to the effectiveness of the Fourth Extension
Agreement that Maker and Holder modify the Note.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Maker and Holder hereby agree as follows:

 

AGREEMENT

 

1.                                      Defined Terms.  All capitalized terms
used but not otherwise defined herein shall have the meanings ascribed to them
in the Note.

 

2.                                      Amendments.

 

(a)                                 Amendment to Section 2.2.  Section 2.2 of
the Note is amended and restated to read in its entirety as follows:

 

“Payments Other Than Interest or Principal.  Maker shall pay to Holder,
designating in writing such payments as payments under this section of this
Note, the following amounts, as additional consideration for the Holder’s sale
of its membership interest in American West Potash, LLC under the Purchase
Agreement and not as prepayments of principal under this Note, (i) a payment
equal to the 2012 453A Amount on or before the Initial 453A Payment Date, (ii) a
payment equal to the 2013 453A Amount on or before the Initial 453A Payment
Date, (iii) a payment equal to the 2014 453A Amount on or before February 10,
2015, and, (iv) along with each payment of principal pursuant to Section 3.2 of
this Note, and at the Maturity Date, the Principal Payment Tax Gross-Up Amount
or amount due under Section 3.5 with respect to such payment; provided, however,
that no Principal Payment Tax Gross-Up Amount or amount under Section 3.5 shall
be due with respect to the first $200,000 of pre-payments under Section 3.2(a). 
For purposes hereof, the “Initial 453A Payment Date” shall mean the earlier of
(i) March 10, 2014; and (ii) the date of occurrence of the first Event of
Default to occur under this Note on or after November 14, 2013.  For the
avoidance of doubt, no payment made pursuant to any other provision of this
Note, including but not limited to Section 3.2(c) hereof, shall satisfy in whole
or any part Maker’s obligation to make the payments set forth in this
Section 2.2.”

 

(b)                                 Amendment to Section 3.2(c). 
Section 3.2(c) of the Note is amended by adding the following sentence at the
end thereof:

 

“Notwithstanding anything herein to the contrary, the ten percent (10%)
prepayment requirement set forth in this Section 3.2(c) shall not apply to the
first $1,000,000 in Qualified Financings (such initial $1,000,000 in Qualified
Financings, the “Winter 2013/14 Qualified Financings”) that Prospect Nevada
arranges on or after December 10, 2013 and of which it receives the proceeds on
or before March 10, 2014.”

 

(c)                                  Addition of Section 3.4.  Section 3.4 of
the Note, previously deleted by the First Amendment, is inserted into the Note
in the following form:

 

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“Prepayment Discount.  In the event that Maker makes payments under the Note
totaling Twenty-Five Million Dollars ($25,000,000) on or after December 10, 2013
and on or before March 10, 2014, whether through one or multiple payments, and
whether pursuant to Section 2.2, Section 3.2 or Section 3.3, then all of Maker’s
obligations under this Note shall be deemed to have been satisfied in full by
Maker as of the date of such payment, or, in the case of multiple payments, the
date on which the last such payment is made.”

 

(d)                                 Amendment to Section 5.6.  Section 5.6 of
the Note is amended to read in its entirety as follows:

 

5.6                               “Failure of Parent to Fund Escrow.  Prospect
Nevada shall fail, for any reason, to deposit into the escrow account
established pursuant to the Escrow Agreement (the “Escrow Account”): 
(A) $2,000,000 from the Roth Offering (as defined in the Second Extension
Agreement) within two (2) business days of receipt of funds from the Roth
Offering; (B) from the proceeds of any Qualified Financing (other than the Roth
Offering, the Fall 2013 Qualified Financings, or the Winter 2013/14 Qualified
Financings), within one (1) business day of receipt of the funds raised in such
Qualified Financing, fifty percent (50%) of the proceeds of any Qualified
Financing net of third party payments in satisfaction of transaction expenses or
fees/commissions in connection with such Qualified Financing in an amount not to
exceed the Funding Expense Cap (as defined in that certain Second Extension
Agreement dated as of June 26, 2013 among Maker, Holder and the other parties
thereto (the “Second Extension Agreement”)); or (C) from the proceeds of the
Fall 2013 Qualified Financings, within one (1) business day of receipt of funds
from such Qualified Financings, the lesser of (i) $300,000, and (ii) fifty
percent (50%) of the proceeds of such Qualified Financings net of third party
payments in satisfaction of transaction expenses or fees/commissions in
connection with such Qualified Financings in an amount not to exceed the Funding
Expense Cap, until such time as deposits aggregating $12,000,000 have been made
into the Escrow Account on or after June 26, 2013.”

 

(e)                                  New Section 5.13.  The following new
Section 5.13 is hereby added after Section 5.12 of the Note:

 

5.13                        “Section 3.4 Prepayment.  Maker shall not have
prepaid the Note in the full amount of Twenty-Five Million Dollars ($25,000,000)
on or after December 10, 2013 and on or before March 10, 2014 in accordance with
Section 3.4 of the Note.”

 

(f)                                   Amendment to Section 8.7.  Section 8.7 of
the Note is hereby amended to read in its entirety as follows:

 

8.7                               “Successors and Assigns.  This Note shall be
binding upon and shall inure to the benefit of the Parties and their respective
successors and permitted assigns.  Maker may not assign its rights or
obligations hereunder without the prior written

 

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consent of Holder.  Holder may, without the consent of any Person, assign the
Note and/or the Loan Documents, in whole or in part, to any Person
notwithstanding anything to the contrary in the Loan Documents or the Membership
Interest Purchase Agreement dated as of May 30, 2012, including, without
limitation, the confidentiality and covenant not to compete undertakings
contained therein, and Holder (or any shareholder, director, agent, employee or
officer of Holder) may actively solicit purchasers of the Note, as more fully
set forth in Section 19 of the Fourth Extension Agreement, as defined below. 
Maker agrees that, for purposes of this Agreement, an “assignment” shall be
deemed to include, but not be limited to, a sale, a contribution to a new or
existing entity (including, but not limited to, a joint venture of which Holder
or any affiliate of Holder is a member) or an exchange with any such entity, or
any other transfer for any medium of value, including, without limitation,
equity securities, royalty interests, property rights or any form of contingent
consideration and notwithstanding whether such assignment is effected in a
private sale or under judicial supervision.  Notwithstanding the generality of
the foregoing, (i) it shall be a condition precedent to any assignment of this
Note as a result of which there will be multiple simultaneous holders of the
Note and/or the related rights under the Loan Documents that such holders shall
have put in place, between or among themselves, a written agreement (an “Agency
Agreement”), which includes agency provisions pursuant to the terms of which a
single administrative agent (the “Administrative Agent”) is appointed, with
which Maker and its affiliates will solely interface with respect to all rights
and obligations under the Note and the Loan Documents, and to which Maker and
its affiliates will remit all payments hereunder, and which Agency Agreement
will provide for the Administrative Agent to provide Maker with a copy of the
Agency Agreement, and any amendments thereto, upon execution of the same; and
(ii) it shall be a condition precedent to any assignment of this Note that any
assignee thereof agree to be bound by Sections 5(b)(3)-(5) of that certain
Fourth Extension Agreement dated as of December 10, 2013 by and among Maker,
Holder, Prospect Nevada, Company and Apache (the “Fourth Extension Agreement”).”

 

3.                                      Miscellaneous.

 

(a)                                 No Other Amendment.  Except as expressly
amended in this Seventh Amendment, all provisions of the Note shall remain in
full force and effect, and the parties thereto and hereto shall continue to have
all their rights and remedies under the Note.  In the event of a conflict
between the terms and provisions of this Seventh Amendment and the terms and
conditions of the Note, the provisions of this Seventh Amendment shall govern.

 

(b)                                 Relation to Note.  This Seventh Amendment
constitutes an integral part of the Note.  Upon the effectiveness of this
Seventh Amendment, each reference in the Note to “this Promissory Note,”
“hereunder,” “hereof,” or words of like import referring to the Note, shall mean
and be a reference to the Note as amended hereby.

 

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(c)                                  Successors and Assigns.  This Seventh
Amendment shall be binding on and shall inure to the benefit of the parties
hereto and their respective successors and assigns except as otherwise provided
herein.

 

(d)                                 Counterparts.  This Seventh Amendment may be
executed by the parties hereto on any number of separate counterparts, any of
which may be executed and transmitted by facsimile, and each of which shall be
deemed an original and all of which, taken together, shall be deemed to
constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Seventh Amendment to be
executed and delivered as of the date first above written.

 

 

MAKER:

 

 

 

PROSPECT GLOBAL RESOURCES, INC.,

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Damon Barber

 

Name: Damon Barber

 

Title: President, CEO and Secretary

 

 

ACKNOWLEDGED AND AGREED TO

 

EFFECTIVE AS OF DECEMBER 10, 2013:

 

 

 

THE KARLSSON GROUP, INC.,

 

an Arizona corporation

 

 

 

 

 

 

By:

/s/ Anders Karlsson

 

Name: Anders Karlsson

 

Title: President

 

 

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