Exhibit 10.6

 

EXECUTION COPY

 

UNCONDITIONAL GUARANTY

 

This UNCONDITIONAL GUARANTY dated as of April 15, 2013 (the “Guaranty”), is
executed by Prospect Global Resources, Inc., a Nevada corporation (“Guarantor”),
to and for the benefit of The Karlsson Group, Inc., an Arizona corporation
(together with any of its affiliate or subsidiary corporations, or their
successors or assigns, being collectively referred to herein as the “Holder”).

 

RECITALS

 

WHEREAS, Guarantor owns one hundred percent (100%) of the issued and outstanding
shares of Prospect Global Resources, Inc., a Delaware corporation (“Maker”);

 

WHEREAS, on August 1, 2012, Maker issued in favor of Holder that certain Senior
First Priority Secured Promissory Note in the original principal amount of One
Hundred Twenty-Five Million Dollars ($125,000,000) (the “Original Note”);

 

WHEREAS, Maker and Holder entered into that certain Amendment to Senior First
Priority Secured Promissory Note dated as of the date hereof (the “Amendment”
and together with the Original Note, and as the same may hereafter be amended
from time to time, the “Note”);

 

WHEREAS, American West Potash LLC, a Delaware limited liability company, Maker,
Holder and Guarantor entered into that certain Extension Agreement dated as of
the date hereof (the “Extension Agreement”); and

 

WHEREAS, in consideration of Holder entering into the Amendment and the
Extension Agreement, Holder requires that Guarantor guarantee the due payment
and performance by Maker of all of Maker’s obligations to Holder under the Note.

 

NOW, THEREFORE, in consideration of the foregoing promises and for other good
and valuable consideration, Guarantor hereby agrees as follows.

 

AGREEMENT

 

NOW, THEREFORE, FOR VALUE RECEIVED, it is agreed that the preceding provisions
and preambles are an integral part hereof and that this Guaranty shall be
construed in light thereof, Guarantor hereby unconditionally and absolutely
guarantees to the Holder, irrespective of the validity, regularity or
enforceability of the Note, the payment in full to the Holder, promptly on
demand of the Holder, of the Guaranteed Debt.  The term “Guaranteed Debt” shall
mean (i) the Obligations, as such capitalized term is defined in the Note, and
(ii) all costs associated with the enforcement and perfection of Holder’s
security interests pursuant to that certain (x) Security Agreement, dated as of
August 1, 2012, by and among Holder, Maker and American West Potash, LLC, a
Delaware limited liability company, and (y) Pledge Agreement, dated as of
August 1, 2012, by and between Holder and Maker.

 

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1. Expenses. Guarantor agrees to pay all reasonable costs, including outside
attorneys’ and paralegals’ fees and expenses of every kind, paid or incurred by
the Holder in endeavoring to collect the Guaranteed Debt or any part thereof, or
in enforcing its rights in connection with any collateral securing the
Guaranteed Debt, or in enforcing this Guaranty, or in defending against any
defense, counterclaim, setoff or cross-claim based on any act of commission or
omission by the Holder with respect to the Guaranteed Debt, any collateral
securing the Guaranteed Debt, or in connection with any Repayment Claim (defined
below).

 

2. Bankruptcy. In case of any bankruptcy, reorganization, debt arrangement or
other proceeding under any insolvency law relating to the Maker, any
dissolution, liquidation or receivership proceeding is instituted by or against
the Maker, or any default by Guarantor of any of the covenants, terms and
conditions set forth herein, all of the Guaranteed Debt shall, without notice to
anyone, immediately become due or accrued and all amounts due hereunder shall be
payable by Guarantor.  Guarantor hereby expressly and irrevocably:  (a) waives,
to the fullest extent possible, on behalf of itself and its successors and
assigns (including any surety) and any other person, any and all rights at law
or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification, set off or to any other rights that could accrue to a surety
against a principal, a guarantor against a maker or obligor, an accommodation
party against the party accommodated, a holder or transferee against a maker, or
to the holder of a claim against any person, and which Guarantor may have or
hereafter acquire against any person in connection with or as a result of
Guarantor’s execution, delivery and/or performance of this Guaranty, or any
other documents to which Guarantor is a party or otherwise; (b) waives any
“claim” (as such term is defined in the United States Bankruptcy Code) of any
kind against the Maker, and further agrees that it shall not have or assert any
such rights against any person (including any surety), either directly or as an
attempted set off to any action commenced against Guarantor by the Holder or any
other person; and (c) acknowledges and agrees (i) that foregoing waivers are
intended to benefit the Holder and shall not limit or otherwise affect
Guarantor’s liability hereunder or the enforceability of this Guaranty, and
(ii) that the Maker and its successors and assigns are intended third party
beneficiaries of the foregoing waivers.

 

3. Payment Order. All payments received by the Holder on account of the
Guaranteed Debt, from whatever source derived, shall be taken and applied by the
Holder toward the payment of the Guaranteed Debt and in such order of
application as the Holder may, in its sole discretion, from time to time elect. 
The Holder shall have the exclusive right to determine how, when and what
application of payments and credits, if any, whether derived from the Maker or
any other source, shall be made on the Guaranteed Debt and such determination
shall be conclusive upon Guarantor.

 

4. Guaranty Unconditional. This Guaranty shall in all respects be absolute and
unconditional, and shall remain in full force and effect with respect to
Guarantor until:  (i) written notice from the Holder to Guarantor as provided
for herein; or (ii) until all Guaranteed Debt created or existing before receipt
of such notice shall have been fully paid in cash.  In the event of the
dissolution of Guarantor, this Guaranty shall continue as to all of the
Guaranteed Debt theretofore incurred by the Maker even though the Guaranteed
Debt is renewed or the time of maturity of the Maker’s obligations is extended
with or without the consent of the successors

 

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or assigns of Guarantor. No failure, neglect or omission to enforce or exercise
any right against any other guarantor shall release or discharge Guarantor
hereunder.

 

5. No Discharge. Guarantor’s liability under this Guaranty shall in no way be
modified, affected, impaired, reduced, released or discharged by any of the
following (any or all of which may be done or omitted by the Holder in its sole
discretion, without notice to anyone):  (a) any acceptance by the Holder of any
new or renewal note or notes of the Maker, or of any security or collateral for,
or other guarantors or obligors upon, any of the Guaranteed Debt; (b) any change
in the time, place or manner of payment of, amount, or in any other term of, the
Guaranteed Debt or any other obligation of Maker under the Note, or any
rescission, waiver, amendment or other modification of the Note; (c) any taking,
exchange, substitution, release, impairment or non-perfection of any collateral
securing the Guaranteed Debt, or any taking, release, impairment, amendment,
waiver or other modification of any guaranty, for the Guaranteed Debt; and
(d) any change in the Maker’s name or the merger of the Maker into another
corporation.  Guarantor hereby consents to all acts of commission or omission of
the Holder set forth above and agrees that the standards by which good faith,
diligence, reasonableness and care are measured and determined shall be governed
solely by the terms and provisions hereof.

 

6. Waivers. In order to hold Guarantor liable hereunder, there shall be no
obligation on the part of the Holder, at any time, to resort to payment from the
Maker or to anyone else, or to any collateral, security, property, liens or
other rights and remedies whatsoever, all of which are hereby expressly waived
by Guarantor.

 

Guarantor hereby expressly waives diligence in collection or protection,
presentment, demand or protest or in giving notice to anyone of the protest,
dishonor, default, or nonpayment or of the creation or existence of any of the
Guaranteed Debt or of any security or collateral therefor or of the acceptance
of this Guaranty or indulgences hereunder.

 

Guarantor waives any and all defenses, claims and discharges of the Maker, or
any other obligor, pertaining to the Guaranteed Debt, in each case, only to the
extent permitted under applicable law.  Without limiting the generality of the
foregoing, but only to the extent permitted under applicable law, Guarantor will
not assert, plead or enforce against the Holder any defense of waiver, release,
discharge in bankruptcy, statute of limitations, res judicata, statute of
frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality
or unenforceability which may be available to the Maker or any other person
liable in respect of any of the Guaranteed Debt, or any setoff available against
the Holder to the Maker or any such other person, whether or not on account of a
related transaction.  Guarantor expressly agrees that, subject to applicable
law, it shall be and remain liable for any deficiency remaining after
foreclosure of any security interest securing the Guaranteed Debt, whether or
not the liability of the Maker or any other obligor for such deficiency is
discharged pursuant to statute or judicial decision. For the avoidance of doubt,
Guarantor waives any relief available under valuation and appraisement laws and
any and all rights or defenses based on suretyship or impairment of collateral
including, but not limited to, any rights or defenses arising by reason of:
(i) any “one action” or “anti-deficiency” law or any other law which may prevent
Holder from bringing any action, including a claim for deficiency, against
Guarantor, before or after Holder’s commencement or completion

 

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of any foreclosure action, either judicially or if permitted by applicable law
by exercise of a power of sale including, but not limited to, any right to a
fair market value hearing, any right to offset the amount owed by any amount
other than the amount paid at the trustee’s sale, any right to a statute of
limitations shorter than six (6) years, and the provisions of A.R.S. §§ 12-1566,
33-814, 33-725, and 33-727; (ii) any election of remedies by Holder which
destroys or otherwise adversely affects Guarantor’s subrogation rights or rights
to proceed against Holder for reimbursement, including without limitation, any
loss of rights Guarantor may suffer by reason of any law limiting, qualifying,
or discharging any indebtedness; (iii) any disability or other defense of Maker,
of any other guarantor, or of any other person, or by reason of the cessation of
Maker’s liability from any cause whatsoever, other than payment in full in legal
tender, of the Guaranteed Debt; (iv) any right to claim discharge of the
Guaranteed Debt on the basis of unjustified impairment of any collateral for the
Guaranteed Debt; (v) any statute of limitations, if at any time any action or
suit brought by Holder against Guarantor is commenced, there is outstanding
Guaranteed Debt which is not barred by any applicable statute of limitations; or
(vi) any defenses given to guarantors at law or in equity other than actual
payment and performance of the Guaranteed Debt. If payment is made by Maker,
whether voluntarily or otherwise, or by any third party, on the Guaranteed Debt
and thereafter Holder is forced to remit the amount of that payment to Maker’s
trustee in bankruptcy or to any similar person under any federal or state
bankruptcy law or law for the relief of debtors, the Guaranteed Debt shall be
considered unpaid for the purpose of the enforcement of this Guaranty or any
other obligor for such deficiency is discharged pursuant to statute or judicial
decision.

 

TO THE FULLEST EXTENT PERMITTED BY LAW, GUARANTOR UNCONDITIONALLY AND
IRREVOCABLY WAIVES ALL RIGHTS AND BENEFITS UNDER A.R.S. § 44-142, § 12-1641, ET
SEQ. AND RULE 17(F) OF THE ARIZONA RULES OF CIVIL PROCEDURE AND ANY SIMILAR
STATUTES OR RULES OF PROCEDURE. GUARANTOR WAIVES EVERY DEFENSE, CAUSE OF ACTION,
COUNTERCLAIM OR SETOFF, WHICH GUARANTOR MAY NOW HAVE OR HEREAFTER MAY HAVE TO
ANY ACTION BY THE HOLDER IN ENFORCING THIS GUARANTY.  AS FURTHER SECURITY, ANY
AND ALL DEBTS AND LIABILITIES NOW OR HEREAFTER ARISING AND OWING TO GUARANTOR BY
THE MAKER, OR TO ANY OTHER PARTY LIABLE TO THE HOLDER FOR THE GUARANTEED DEBT,
ARE HEREBY SUBORDINATED TO THE HOLDER’S CLAIMS AND ARE HEREBY ASSIGNED TO THE
HOLDER.  GUARANTOR HEREBY AGREES THAT GUARANTOR MAY BE JOINED AS A PARTY
DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED TO, A FORECLOSURE
PROCEEDING) INSTITUTED BY THE HOLDER AGAINST THE MAKER.  EACH MAKER, GUARANTOR
AND THE HOLDER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH
COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY SUCH LEGAL PROCEEDING IN WHICH
GUARANTOR AND THE HOLDER ARE ADVERSE PARTIES.  THIS PROVISION IS A MATERIAL
INDUCEMENT TO THE HOLDER GRANTING ANY FINANCIAL ACCOMMODATION TO THE MAKER AND
ACCEPTING THIS GUARANTY.

 

7. Repayment Claim; Setoff; Assignment. Should a claim (a “Repayment Claim”) be
made upon the Holder at any time for repayment of any amount received by the

 

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Holder in payment of the Guaranteed Debt, or any part thereof, whether received
from either Maker or the Guarantor pursuant hereto, or received by the Holder as
the proceeds of collateral, by reason of: (i) any judgment, decree or order of
any court or administrative body having jurisdiction over the Holder or any of
its property; or (ii) any settlement or compromise of any such Repayment Claim
effected by the Holder, in its sole discretion, with the claimant (including the
Maker), the Guarantors shall remain liable to the Holder for the amount so
repaid to the same extent as if such amount had never originally been received
by the Holder, notwithstanding any termination hereof or the cancellation of any
note or other instrument evidencing any of the Guaranteed Debt. If an Event of
Default (as defined in the Note) shall have occurred and be continuing, the
Holder may, without demand or notice of any kind to anyone, apply or set off any
balances, credits, deposits, accounts, moneys or other indebtedness at any time
credited by or due from the Holder to the Guarantor against the amounts due
hereunder and in such order of application as the Holder may from time to time
elect.  Any notification of intended disposition of any property required by law
shall be deemed reasonably and properly given if given in the manner provided by
the applicable statute.

 

8. Assignments and Discharge. Unless and until all of the Guaranteed Debt has
been paid in full, and to the extent permissible under applicable law, no
release or discharge of any other person, whether primarily or secondarily
liable for and obligated with respect to the Guaranteed Debt, or the institution
of bankruptcy, receivership, insolvency, reorganization, dissolution or
liquidation proceedings by or against Maker or any other person primarily or
secondarily liable for and obligated with respect to the Guaranteed Debt, or the
entry of any restraining or other order in any such proceedings, shall release
or discharge Guarantor, or any other guarantor of the Guaranteed Debt, or any
other person, firm or corporation liable to the Holder for the Guaranteed Debt.

 

All references herein to the Maker and Guarantor, respectively, shall be deemed
to include any successors or assigns, whether immediate or remote, to Maker or
Guarantor, as the case may be.

 

9. Miscellaneous. This Guaranty shall be governed by, and construed in
accordance with, the internal laws of the State of Arizona, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Arizona or any other jurisdiction) that would cause the application of laws
of any jurisdiction other than those of the State of Arizona.

 

Guarantor consents to the sole and exclusive jurisdiction and venue in the
Federal or State courts in the County of Maricopa, Arizona, and agree that all
disputes based on or arising out of this Guaranty shall only be submitted to and
determined by said courts, which shall have sole and exclusive jurisdiction.

 

Wherever possible each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Guaranty shall be prohibited by or invalid under such law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Guaranty.

 

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It is agreed that Guarantor’s liability is independent of any other guaranties
at any time in effect with respect to all or any part of the Guaranteed Debt,
and that Guarantor’s liability hereunder may be enforced regardless of the
existence of any such other guaranties.

 

No delay on the part of the Holder in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Holder of
any right or remedy shall preclude other or further exercise thereof, or the
exercise of any other right or remedy.  No modification, termination, discharge
or waiver of any of the provisions hereof shall be binding upon the Holder,
except as expressly set forth in a writing duly signed and delivered on behalf
of the Holder.

 

10. Notice. All notices, requests, consents, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
given (a) when delivered by hand (with written confirmation of receipt);
(b) when received by the addressee if sent by a nationally recognized overnight
courier (receipt requested); (c) on the date sent by facsimile or e-mail of a
PDF document (with confirmation of transmission) if sent during normal business
hours of the recipient, and on the next business day if sent after normal
business hours of the recipient or (d) on the third day after the date mailed,
by certified or registered mail, return receipt requested, postage prepaid. Such
communications must be sent to the respective parties at the following addresses
(or at such other address for a party as shall be specified in a notice given in
accordance with this section):

 

If to Holder:

The Karlsson Group, Inc.

 

18 Ozone Avenue
Venice, CA 90291
Facsimile: 310-933-0262
E-mail: sevenciel@ca.rr.com
Attention: Michael Stone

 

 

with a copy, which shall not constitute notice, to:

Law Offices of Richard C. Weisberg

 

33 Derwen Road

 

Bala Cynwyd, PA 19004

 

Facsimile 215-689-1504

 

Email: weisberg@weisberg-law.com

 

Attention: Mr. Richard Weisberg

 

 

If to Guarantor:

Prospect Global Resources, Inc.

 

1401 17th Street, Suite 1550

 

Denver, CO 80202

 

Facsimile: 720-294-0402

 

E-Mail: DBarber@prospectGRI.com

 

Attention: Mr. Damon Barber

 

 

with a copy, which shall not constitute notice, to:

Eisner Kahan Gorry Chapman Ross & Jaffe, a Professional Corporation

 

9601 Wilshire Boulevard, Suite 700

 

Beverly Hills, CA 90210

 

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Facsimile: 310-855-3201
E-mail: meisner@eisnerlaw.com
Attention: Mr. Michael Eisner

 

11. Warranties.  The execution, delivery and performance of this Guaranty by
Guarantor are within the powers of Guarantor, have been duly authorized by all
necessary action on the part of Guarantor and do not and will not (i) require
any consent or approval of the board of directors, members or shareholders of
Guarantor which has not been obtained, (ii) violate any provision of the
governing documents of Guarantor or of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award presently in effect having
applicability to Guarantor; (iii) require the consent or approval of, or filing
or registration with, any governmental body, agency or authority, or (iv) result
in a breach of or constitute a default under, or result in the imposition of any
lien, charge or encumbrance upon any property of Guarantor pursuant to, any
indenture or other agreement or instrument under which Guarantor is a party or
by which it or any of its properties may be bound or affected.  The person or
persons executing and delivering this Guaranty for and on behalf of Guarantor,
is/are duly authorized to so act.  For so long as the Note remains outstanding,
Guarantor will continue to be a 100% owned subsidiary of Maker, and Holder, in
extending financial accommodations to Maker, is expressly acting and relying
upon the aforesaid representations and warranties.

 

This Guaranty:  (i) is valid, binding and enforceable in accordance with its
provisions, except as such enforceability may be limited by (a) bankruptcy,
insolvency, reorganization, moratorium or similar laws of general applicability
affecting the enforcement of creditors’ rights and (b) the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and no conditions exist to the
legal effectiveness of this Guaranty as to Guarantor; (ii) contains the entire
agreement between Guarantor and the Holder with respect to the subject matter
herein; (iii) is the final expression of their intentions; and (iv) supersedes
all negotiations, representations, warranties, commitments, offers, contracts
(of any kind or nature, whether oral or written) prior to or contemporaneous
with the execution hereof.  No prior or contemporaneous representations,
warranties, understandings, offers or agreements of any kind or nature, whether
oral or written, have been made by the Holder or relied upon by Guarantor in
connection with the execution hereof.  This Guaranty shall inure to the benefit
of the Holder and its successors and assigns.

 

[signature page immediately follows]

 

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IN WITNESS WHEREOF, Guarantor has executed and delivered this Unconditional
Guaranty as of the date set forth above.

 

 

 

PROSPECT GLOBAL RESOURCES, INC.,

 

a Nevada corporation

 

 

 

 

 

By:

/s/ Damon Barber

 

Name:

Damon Barber

 

Title:

President, CEO and Secretary

 

[Signature Page – Guaranty]

 

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