Exhibit 10.2

 

PROMISSORY NOTE

 

March 7, 2013

USD$5,592,857.14

 

FOR VALUE RECEIVED, Prospect Global Resources Inc., a Nevada corporation (the
“Issuer”), promises to pay to the order of Apollo Management VII, L.P., a
Delaware limited partnership (the “Holder”) on September 3, 2013 (the “Maturity
Date”), in lawful money of the United States of America in same day funds,
$5,592,857.14 (Five Million Five Hundred Ninety-Two Thousand Eight Hundred
Fifty-Seven Dollars and Forty-Two Cents).  The Issuer shall pay interest on the
amount outstanding under this Promissory Note (this “Promissory Note”) and any
overdue amounts thereon on the dates and at a rate per annum as hereinafter set
forth.  Interest hereunder shall be computed on the basis of a year of 365/366
days and paid for the actual number of days elapsed.

 

1.                                      Payments.  (a)  The Issuer hereby
unconditionally promises to pay to the Holder the full amount outstanding under
this Promissory Note on the Maturity Date.

 

(b)                                 The Issuer may, by giving not less than
three business days’ prior written notice to the Holder, prepay this Promissory
Note, in whole or in part, at any time, without premium or penalty.

 

(c)                                  Notwithstanding anything herein to the
contrary or otherwise, the Issuer shall be required to prepay this Promissory
Note with thirty-three percent (33%) of the net cash proceeds received by the
Issuer or any of its direct or indirect subsidiaries from the issuance or
incurrence of any indebtedness (including, without limitation, any debt
securities), the issuance or sale of any equity interests, or any other
financing, in each case after the date hereof, such prepayment to be made no
later than five (5) days after the receipt of such net cash proceeds by the
Issuer or any of its direct or indirect subsidiaries, as applicable.

 

2.                                      Interest Rate.  This Promissory Note
shall bear interest at a rate per annum equal to 11%, payable in cash on the
earliest of (i) the date this Promissory Note is prepaid in full or in part,
with respect to the principal amount so prepaid, (ii) the Maturity Date or
(iii) the date that this Promissory Note otherwise becomes due and payable.  In
the case of any overdue amounts of principal or interest, the Issuer shall pay
interest on such overdue amounts, on demand by the Holder, at a rate per annum
equal to the ordinary interest rate provided above, plus an additional 2.00% per
annum.

 

3.                                      Negative Pledge.  The Issuer shall not
incur any indebtedness for borrowed money that is secured by a lien on any asset
of the Issuer, or guaranteed by any subsidiary of the Issuer, unless,
concurrently, the Issuer causes this Promissory Note and the obligations
hereunder to be equally and ratably secured by the applicable assets and/or
guaranteed by the applicable subsidiary(ies).

 

4.                                      General Provisions Regarding Payments. 
The Issuer will pay all amounts due hereunder free and clear of and without
reduction for any taxes, levies, imposts, deductions, withholdings or charges
and without set-off or counterclaim, in United States Dollars available the same
day in New York, New York.

 

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5.                                      Representations and Warranties.  The
Issuer represents and warrants to the Holder:

 

(a)                                 The Issuer is duly organized, validly
existing and in good standing under the laws of the State of Nevada and has all
requisite power and authority to carry on its business as now conducted and to
execute this Promissory Note.

 

(b)                                 The execution, delivery and performance by
the Issuer of this Promissory Note is within the Issuer’s corporate powers and
has been duly authorized by all necessary corporate action.

 

(c)                                  The execution, delivery and performance by
the Issuer of this Promissory Note does not and will not (i) violate (x) any law
or governmental rule or regulation applicable to the Issuer, (y) the charter or
by-laws (or equivalent documents) of the Issuer, or (z) any, order, judgment or
decree of any court or other governmental authority binding on the Issuer;
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation of
the Issuer or any of its direct or indirect subsidiaries; (iii) result in or
require the creation or imposition of any lien upon any of the properties or
assets of the Issuer or any of its direct or indirect subsidiaries; (iv) require
any approval or consent of (A) stockholders, members or partners of the Issuer,
or (B) any person under any contractual obligation of the Issuer; or (v) require
any registration with, consent or approval of, or notice to, or other action to,
with or by, any governmental authority, except for such approvals or consents
which have been obtained on or before the date hereof, and solely with respect
to clauses (i)(x), (i)(z), (ii), (iv)(B), and (v), except for violations,
conflicts, liens, or failure to obtain approvals or consents which would not,
individually or in the aggregate, be reasonably expected to impair in any
material respect the Issuer’s ability to perform under this Promissory Note.

 

(d)                                 This Promissory Note has been duly executed
and delivered by the Issuer and constitutes the legal, valid and binding
obligation of the Issuer, as applicable, enforceable in accordance with this
Promissory Note’s terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered in
a proceeding in equity or at law.

 

6.                                      Events of Default.  If any of the
following events (“Events of Default”) shall occur and be continuing:

 

(a)                                 the Issuer shall fail to make payment when
due, whether at stated maturity, by acceleration or otherwise, of any principal,
interest or other amount due hereunder;

 

(b)                                 any representation, warranty, certification
or other statement made by the Issuer herein (or in the Termination and Release
Agreement, dated as of the date hereof, pursuant to which this Promissory Note
is being issued)  shall be false in any material respect as of the date made, or
the Issuer shall fail to comply with Section 3 hereof;

 

(c)                                  the Issuer (or any direct or indirect
subsidiary thereof) shall default in the payment when due (after giving effect
to any applicable grace periods) of any principal of or interest on any
indebtedness in excess of $1,000,000; or any event specified in any note,

 

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agreement, indenture or other document evidencing or relating to any
indebtedness shall occur if the effect of such event is to cause, or (after
giving effect to any applicable grace periods) to permit the holder or holders
of such indebtedness (or a trustee or agent on behalf of such holder or holders)
to cause, such indebtedness to become due, or to be prepaid in full (whether by
redemption, purchase, offer to purchase or otherwise), prior to its stated
maturity; provided, however, a default under that certain Senior First Priority
Secured Promissory Note, dated as of August 1, 2012, issued by Prospect Global
Resources, Inc., a Delaware corporation, in favor of The Karlsson Group, Inc.,
an Arizona corporation, shall not be deemed an Event of Default unless the
indebtedness thereunder shall be accelerated or the holder thereof shall
otherwise exercise remedies in respect of such default;

 

(d)                                 any money judgment, writ or warrant of
attachment or similar process in any jurisdiction involving in the aggregate at
any time an amount in excess of $1,000,000 (to the extent not adequately covered
by insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against the Issuer (or any
direct or indirect subsidiary thereof) and shall remain undischarged, unvacated,
unbonded or unstayed for a period of 60 days;

 

(e)                                  the Issuer (or any direct or indirect
subsidiary thereof) pursuant to or within the meaning of the United States
bankruptcy code (or any equivalent or similar law (foreign or domestic)):
(i) commences a voluntary case; (ii) consents to the entry of an order for
relief against it in any involuntary case; (iii) consents to the appointment of
a custodian, conservator, liquidator, sequestrator, receiver, administrator,
trustee or other similar official of it or for any substantial part of its
property; or (iv) makes a general assignment for the benefit of its creditors or
takes any comparable action under any foreign laws relating to insolvency; or

 

(f)                                   a court of competent jurisdiction enters
an order or decree under the United States bankruptcy code (or any equivalent or
similar law (foreign or domestic)) and the order or decree remains unstayed and
in effect for 30 days: (i) for relief against the Issuer (or any direct or
indirect subsidiary thereof) in an involuntary case; (ii) appoints a custodian,
conservator, liquidator, sequestrator, receiver, administrator, trustee or other
similar official of the Issuer (or any direct or indirect subsidiary thereof) or
for any substantial part of its property; or (iii) orders the winding up or
liquidation of the Issuer (or any direct or indirect subsidiary thereof);

 

THEN, in the case of any Event of Default specified above, the Holder may, by
written notice to the Issuer, declare all amounts outstanding under this
Promissory Note to be forthwith due and payable, together with accrued interest,
whereupon the same shall become forthwith due and payable, without demand,
protest, presentment, notice of dishonor or any other notice or demand
whatsoever, all of which are hereby waived by the Issuer; provided that in the
case of the Events of Default specified in clause (e) or (f) above, without any
notice to the Issuer or any other act of the Holder, all amounts outstanding
under this Promissory Note shall automatically become forthwith due and payable,
together with accrued interest, without demand, protest, presentment, notice of
dishonor or any other notice or demand whatsoever, all of which are hereby
waived by the Issuer.

 

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7.                                      Notices.  Any notice to be given under
this Promissory Note shall be in writing and shall be deemed to have been duly
given when received by the recipient.

 

8.                                      No Waiver.  No delay on the part of the
Holder in exercising any of its powers or rights, and no partial or single
exercise, shall constitute a waiver thereof.

 

9.                                      Amendments and Waivers.  Any provision
of this Promissory Note may be amended or waived, but only if such amendment or
waiver is in writing and signed by the Holder and the Issuer.

 

10.                               Successors and Assigns.  This Promissory Note
shall be binding upon the Issuer and its successors and assigns, for the benefit
of the Holder and its successors and assigns, except that the Issuer may not
assign or otherwise transfer its rights or obligations under this Promissory
Note without the prior written consent of the Holder.  The Holder may at any
time assign to one or more persons all or any portion of its rights under this
Promissory Note.

 

11.                               Expenses.  The Issuer agrees to pay or
reimburse the Holder for all reasonable out-of-pocket costs and expenses of the
Holder (including, without limitation, the reasonable fees and expenses of legal
counsel) in connection with any Event of Default and any enforcement or
collection proceedings resulting therefrom.

 

12.                               GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

 

13.                               Submission to Jurisdiction.  The Issuer and,
by its acceptance of this Promissory Note, the Holder, each agree as follows:

 

(a)                                 each such party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any federal court sitting in the Southern District of New York 
(or, to the extent that subject matter or personal jurisdiction does not exist
in any such federal court, then in any New York state court sitting in the
Borough of Manhattan in New York, New York; together with such federal courts,
the “New York Courts”), and any relevant appellate court, in any action or
proceeding arising out of or relating to this Promissory Note, or for
recognition or enforcement of any judgment, and each such party hereby
irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in the New York Courts;
provided that nothing in this Promissory Note shall affect any right that the
Holder may otherwise have to bring any action or proceeding relating to this
Promissory Note against the other party or its properties in the courts of any
other jurisdiction; and

 

(b)                                 each such party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Promissory
Note in any court referred to in subsection (a) of this Section, and each such
party also irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of any such suit, action or
proceeding in any such court.

 

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14.                               WAIVER OF JURY TRIAL.  THE ISSUER HEREBY
WAIVES AND, BY ITS ACCEPTANCE OF THIS NOTE, THE HOLDER HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS PROMISSORY NOTE.

 

15.                               Severability.  If any provision of this
Promissory Note is held to be invalid, illegal or unenforceable, the other
provisions of this Promissory Note, as the case may be, shall remain in full
force and effect.

 

16.                               Usury Savings.  Notwithstanding anything
herein to the contrary or otherwise, the Holder shall never be entitled to
receive as interest on the obligation evidenced hereby any amount in excess of
the maximum rate of interest permitted to be charged by applicable law.  In the
event that the Holder ever receives any such excess, such amount which would be
excessive interest shall be applied to the reduction of the principal sum
hereof, and if the principal sum is paid in full, any remaining excess shall
forthwith be paid to the Issuer.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of the
date first written above.

 

 

PROSPECT GLOBAL RESOURCES INC.

 

 

 

 

 

By:

/s/ Damon G. Barber

 

 

Name:

Damon G. Barber

 

 

Title:

Chief Financial Officer

 

 

 

Address for notices:

 

 

 

c/o Apollo Global Management, LLC

 

9 West 57th Street

 

New York, NY 10019

 

Attention: Laurie Medley

 

Facsimile: (646) 607-0528

 

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