Exhibit 10.1

 

Employment Agreement

 

Employment Agreement (this “Agreement”) dated as of December 13, 2012, by and
between Prospect Global Resources Inc. a Nevada corporation (the “Company”), and
Mr. Damon Barber (the “Executive”).

 

WHEREAS, the Company recognizes that the Executive’s talents and abilities are
unique, and are integral to the success of the Company, and thus wishes to
secure the ongoing services of the Executive on the terms and conditions set
forth herein;

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants set
forth below, Company and the Executive agree as follows:

 

1.              Employment:  The Company hereby agrees to employ the Executive
as Executive Vice President and Chief Financial Officer (“CFO”) of the Company,
and the Executive hereby accepts such employment, commencing on December 13,
2012 (the “Effective Date”) on the terms and conditions set forth below.  The
Executive shall work exclusively for the Company; provided that nothing
contained herein shall preclude the Executive from managing personal
investments, participating in charitable, community, and academic activities,
and, after the first anniversary of the Effective Date, serving as an
independent member of the board of directors (and any board committees) of not
more than one for-profit business that does not compete with the Company so long
as such activities do not materially interfere with his obligations to the
Company.

 

2.              Compensation and Related Matters:

 

a.              Base Salary. During the Executive’s term of service commencing
on the Effective Date (the “Employment Period”), the Company shall pay the
Executive a base salary at the rate of not less than $450,000 per year (“Base
Salary”).  The Executive’s Base Salary shall be paid in accordance with the
Company’s normal payroll practice.  The Executive’s Base Salary shall be
reviewed at least annually by the Company in accordance with its procedures for
reviewing the compensation of senior officers, and may be increased, but not
decreased, in the Company’s discretion, other than as part of a general
reduction of senior management base compensation that does not apply
disproportionately to the Executive.  If the Executive’s Base Salary is
increased by the Company, such increased Base Salary shall then constitute the
Base Salary for all purposes of this agreement.

 

b.              Stock Options: Subject to approval by the Compensation
Subcommittee (the “Compensation Committee”) of the Governance, Nominating and
Compensation Committee of the Board, but in no event later than the

 

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Effective Date, the Executive will be granted options to purchase 1,000,000
shares (the “Options”) of the Company’s common stock (“Common Stock”) at the
greater of $2.60 or current market value (as determined pursuant to the
Company’s 2011 Employee Equity Incentive Plan).  The Options shall vest, subject
to acceleration as provided below, as follows:  333,334 Options on the later of
the Effective Date or the grant date; 333,333 Options on the one year
anniversary of the Effective Date and 333,333 Options on the second year
anniversary of the Effective Date, in each case so long as the Executive either
(i) is employed as the Company’s CFO on such date or (ii) has died or become
permanently disabled prior to such date and was employed as the Company’s CFO at
the time of death or disability.  The Executive shall also be eligible for
additional grants of equity or long-term incentive compensation, in the
Committee’s discretion, on the same basis as other senior executives of the
Company.  In the event of any conflict between the terms of this Agreement and
either the 2011 Employee Equity Incentive Plan or any agreement evidencing the
grant of the Options, the terms of this Agreement shall control.

 

Notwithstanding any provision to the contrary, the Options shall immediately
vest in full upon either a “Change in Control” or the termination of the
Executive’s services as CFO by the Company other than for “Cause” or by the
Executive for “Good Reason” (as all such terms are defined below).

 

For purposes of this Agreement, “Change in Control” shall mean the occurrence,
subsequent to the Effective Date, of any of the following: (A) by a transaction
or series of transactions, any “person” or “group” (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) other than Apollo Management VII, L.P. and its affiliates
(or any group of which they are a part) (“Apollo”), becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of more than 35% of the combined voting power of the Company’s then
outstanding securities (provided such person or group was not a beneficial owner
of more than 35% of the combined voting power of the Company’s then outstanding
securities as of the Effective Date); or (B) as a result of any merger,
consolidation, combination or sale or issuance of securities of the Company, or
as a result of or in connection with a contested election of directors, the
Continuing Directors (as defined below) cease to constitute a majority of the
Board of Directors of the Company (the “Board”).

 

For purposes of this Agreement, “Continuing Directors” means (A) the persons who
were directors of the Company as of the Effective Date, (B) any persons
nominated, designated, appointed or elected by or on behalf of Apollo and (C)
any new directors whose election or nomination was approved by at least a
majority of the directors either who were directors as of the Effective Date or
whose election or nomination was previously so approved.

 

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For purposes of this Agreement, “Cause” shall mean (A) the Executive’s
conviction by a court of competent jurisdiction as to which no further appeal
can be taken of a felony (other than a violation based on operation of a
vehicle) or entering the plea of nolo contendere to such crime by the Executive;
(B) the Executive’s commission of a crime involving fraud or intentional
dishonesty, which results in the Executive’s substantial personal enrichment and
material adverse effect to the Company; or (C) the Executive becoming subject to
any securities related sanctions related to the Company other than those based
on an act of the Company itself for which the Executive is charged solely as a
result of his position with the Company.

 

For purposes of this Agreement, “Good Reason” shall mean any of the following: 
(A) reduction of Executive’s title, position, responsibilities, authority or
duties to a level less than the title, position, responsibilities, authorities
or duties he occupied or possessed, on the date immediately preceding such
reduction; (B) a reduction in Executive’s Base Salary or Annual Bonus
opportunity, other than as part of a general reduction of senior management
compensation that does not apply disproportionately to the Executive; (C) the
Company requiring the Executive to be based at a materially different geographic
location, other than as part of a relocation of a significant portion of the
Company’s senior management; (D) the Company’s material breach of any provision
of this Agreement, or any other agreement between the Company and the Executive;
or (E) a failure by the Company to obtain the assumption of this Agreement by
any successor to or assignee of substantially all of the Company’s business
and/or assets.  Notwithstanding the foregoing, the Executive’s resignation shall
not be considered to be for Good Reason unless the Company receives, within 90
days following the date on which the Executive knows, or with the exercise of
reasonable diligence would know, of the occurrence of any of the events set
forth in clauses (A) through (E) above, written notice from the Executive
specifying the specific basis for his belief that he is entitled to terminate
employment for Good Reason, the Company fails to cure the event constituting
Good Reason within 30 days after receipt of such written notice thereof, and the
Executive terminates employment within 30 days following expiration of such cure
period.

 

c.               Annual Bonus: For each full fiscal year of the Company that
begins and ends during the Employment Period, and for the portion of the fiscal
year of the Company that begins in 2012 (“Fiscal Year 2012”), the Executive
shall be eligible to earn an annual cash bonus in such amount as shall be
determined by the Compensation Committee (the “Annual Bonus”);

 

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provided, that each Annual Bonus shall be no greater than 120% of the
then-current Base Salary (pro rated in the case of Fiscal Year 2012). The
Compensation Committee (or the Board if there is no Compensation Committee)
shall establish objective criteria to be used to determine the extent to which
performance goals have been satisfied.  These criteria shall be established, in
consultation with the Executive, within 60 days of the Effective Date in the
case of Fiscal Year 2012, and within the first 60 days of each subsequent fiscal
year.

 

d.              Vacation: The Executive shall be entitled to four weeks of
vacation per fiscal year. Vacation shall accrue to the Executive at rate of not
less than one week per quarter in advance. Once the Executive has accrued four
weeks of vacation, he shall accrue no further vacation, until and unless he uses
vacation. At that point, he shall accrue back to the maximum of four weeks of
vacation.

 

e.               Expenses: The Company will reimburse the Executive for all
expenses related to Company business, including, but not limited to travel,
marketing, communication, due diligence, legal fees and expenses, etc.

 

f.                Welfare, Pension and Incentive Benefit Plans: During the
Employment Period, the Executive (and his eligible spouse and dependents) shall
be entitled to participate in all the welfare benefit plans and programs
maintained by the Company from time to time for the benefit of its senior
executives generally including, without limitation, all medical,
hospitalization, dental, disability, accidental death and dismemberment and
travel accident insurance plans and programs.  In addition, during the
Employment Period, the Executive shall be eligible to participate in all
pension, retirement, savings and other employee benefit plans and programs
maintained from time to time by the Company for the benefit of its senior
executives generally.

 

g.               Professional Development.  The Company will reimburse the
Executive for education and professional development expenses related to courses
or programs selected by the Executive in the natural resources sector up to
$10,000 per calendar year. The Executive may take such courses during normal
business hours and will not be required to utilize vacation time.

 

3.              Responsibilities: As the CFO, the Executive will have the
responsibilities and authority customary for a chief financial officer of a
company comparable to the Company in the United States, and shall also assist
the Company’s President and Chief Executive Officer in developing the Company’s
strategic direction, identifying and pursuing acquisition targets, personnel
hiring, budget

 

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preparation, development of an annual operating plan and periodic long range
plans, overseeing all portfolio companies’ operations, budgets and strategic
direction, and compliance with all regulatory requirements developing and
implementing the Company’s business plan.  The CFO shall report directly to the
Chief Executive Officer.

 

4.              At-Will Employment; Severance: The Executive’s employment with
the Company is on an at-will basis.  If terminated by the Company for any reason
other than Cause, including a Change in Control, or by the Executive for Good
Reason, the Company shall provide severance to the Executive, payable in
installments, each of which shall be considered a separate “payment” for
purposes of Section 409A of the Internal Revenue Code (“Section 409A”), in
accordance with the Company’s normal payroll practice, of (i) six month’s Base
Salary if termination is effective on or prior to earlier of the date that the
Executive purchases a home in the Denver, Colorado metropolitan area (or signs a
rental lease for at least 12 months for such a home) or July 31, 2013 (the
“Trigger Date”), and 12 month’s Base Salary if termination is thereafter, (ii)
the Executive’s Annual Bonus for the fiscal year prior to the fiscal year in
which the termination occurs to the extent not paid prior to termination, (iii)
if termination is effective on or after the Trigger Date an Annual Bonus of 120%
of the then-current Base Salary, (iv) Base Salary through the date of
termination, and (v) accrued vacation, any reimbursement of all business and
professional development expenses incurred but not yet reimbursed, and any
benefits payable upon termination of employment under the Company’s employee
benefit plans (other than any severance pay plan).  In addition if termination
occurs after the Trigger Date the Company shall reimburse the Executive for
COBRA payments made by the Executive for himself and his eligible dependents for
12 months following termination by the Company for any reason other than Cause,
including a Change in Control, or by the Executive for Good Reason.

 

Notwithstanding the foregoing, the Executive shall not be entitled to receive
the severance pay and benefits described in the preceding paragraph (other than
Base Salary through the date of termination, accrued vacation, any reimbursement
of all business and professional development expenses incurred but not yet
reimbursed, and any benefits payable upon termination of employment under the
Company’s employee benefit plans), until the Executive has executed a general
release (the “Release”) of all claims against the Company arising out of his
employment, other than claims arising after the date of execution, the
Executive’s right to indemnification and continued coverage under the Company’s
Director’s and Officer’s policy, and claims that cannot by law be released.  The
Release shall be on commercially reasonable terms, in the form customarily used
by the Company for its senior executives, and shall also provide for the Company
to release any claims against the Executive not involving fraudulent or illegal
conduct.  In order to receive such severance, the

 

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Executive must have signed the Release, and the period provided therein for
revocation must have expired, by the sixtieth day after the date of
termination.  Payment of severance shall commence as soon as practical after the
revocation period has expired, provided that if the 60th day following the date
of termination falls in the calendar year after the year of termination, no form
of severance that is subject to Section 409A shall be paid until the first day
of the second calendar year.

 

The Executive shall not be required to mitigate damages in order to receive the
severance pay and benefits, and the Executive’s severance pay and benefits shall
not be offset by any compensation received by the Executive from other sources,
except to the extent that the Executive’s medical coverage is discontinued by
reason of his becoming covered by another medical plan in accordance with COBRA.

 

In the event of the Executive’s termination of employment by reason of death or
permanent disability, the Executive or his personal representative shall be
entitled to receive the Executive’s Annual Bonus for the fiscal year prior to
the fiscal year in which the termination occurs to the extent not paid prior to
termination, an Annual Bonus of 120% of the then-current Base Salary, Base
Salary through the date of termination, accrued vacation, any reimbursement of
all business and professional development expenses incurred but not yet
reimbursed, and any benefits payable upon termination of employment under the
Company’s employee benefit plans.

 

5.              Location: The Executive will be based in the Denver, Colorado,
metropolitan area.  During the Employment Period, the Company shall provide the
Executive with an office and appropriate equipment and support staff.  For a
period of 90 days commencing on the Effective Date (the “Relocation Period”),
the Company shall reimburse the Executive for all reasonable relocation expenses
incurred by the Executive during the Relocation Period, including commuting
expenses prior to relocation, temporary housing, moving expenses, and up to two
trips for the Executive and his spouse to search for a new residence.

 

6.              Representations and Warranties:

 

a.              The Company represents and warrants to the Executive that this
Agreement has been duly authorized, executed and delivered by the Company and,
assuming the due execution by the Executive, constitutes a legal, valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.

 

b.              The Executive has furnished the Company with true and complete
copies of any noncompete, confidentiality, or other restrictive covenant

 

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agreement to which he is a party, and the Company acknowledges receipt of such
agreements.  The Executive represents that such agreements will not preclude the
Executive from accepting employment by the Company or performing his obligations
in accordance with the provisions of this Agreement.  The Executive represents
and warrants that he is not a party to, or bound by, any other agreement that
would preclude him from entering into this Agreement and performing his
obligations hereunder.

 

7.              Indemnity:  The Company agrees that if the Executive is made a
party or is threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a “Proceeding”) by
reason of the fact that the Executive is or was a trustee, director, member,
agent or officer of the Company or any predecessor to the Company or any of
their affiliates or is or was serving at the request of the Company, any
predecessor to the Company or any of their affiliates as a trustee, director,
officer, member, employee or agent of another corporation or a partnership,
joint venture, limited liability company, trust or other enterprise, including,
without limitation, service with respect to employee benefit plans, whether or
not the basis of such Proceeding is alleged action in an official capacity as a
trustee, director, officer, member, employee or agent while serving as a
trustee, director, officer, member, employee or agent, the Executive shall be
indemnified and held harmless by the Company to the fullest extent authorized by
Nevada law, as the same exists or may hereafter be amended, against all Expenses
incurred or suffered by the Executive in connection therewith, and such
indemnification shall continue as to the Executive even if the Executive has
ceased to be an officer, director, trustee or agent, or is no longer employed by
the Company and shall inure to the benefit of his heirs, executors and
administrators.

 

a.              Expenses. As used in this Section 7, the term “Expenses” shall
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’
fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.

 

b.              Enforcement. If a claim or request under this Section 7 is not
paid by the Company or on its behalf, within 30 days after a written claim or
request has been received by the Company, the Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the Executive shall be
entitled to be paid also the expenses of prosecuting such suit. All obligations
for indemnification hereunder shall be subject to, and paid in accordance with,
applicable Colorado law.

 

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c.               Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses, but only in the
event that the Executive shall have delivered in writing to the Company (i) an
undertaking to reimburse the Company for Expenses with respect to which the
Executive is not entitled to indemnification and (ii) a statement of his good
faith belief that the standard of conduct necessary for indemnification by the
Company has been met.

 

d.              Insurance.  The Company will maintain a Director’s and Officer’s
Insurance Policy naming the Executive as a covered party in an amount deemed
mutually sufficient to the Company and the Executive.  The Company will use its
best commercial efforts to have this policy in place within 90 days of the
Effective Date.  The Executive shall continue to be covered by the policy
following the termination of his employment for any reason, at the same level of
coverage as the most senior executives in active employment.

 

8.              Nondisparagement.  During the term of his employment and
thereafter, the Executive will not make any negative or disparaging statements
or comments, either as fact or as opinion, about Company, its employees,
officers, directors, shareholders, vendors, products or services, business,
technologies, market position or performance, and the Company (including its
subsidiaries and affiliates) will not make, and agrees to use reasonable efforts
to cause its directors and senior executives to refrain from making, any
negative or disparaging statements or comments, either as fact or as opinion,
about the Executive (or authorizing any statements or comments to be reported as
being attributed to the Company).  Nothing in this Section 8 shall prohibit the
Executive or the Company from providing truthful information in response to a
subpoena or other legal process.

 

9.              Survival of Certain Provisions: All provisions of this
Agreement, including without limitation the representations, warranties and
covenants and indemnity provisions contained in Sections 2, 4, 6 and 7 of this
Agreement and the Company’s obligation to pay the Executive any compensation
earned pursuant hereto shall remain operative and in full force and effect
regardless of any completion or termination of this Agreement or the Executive’s
employment to the extent necessary to enable the parties to enforce their
respective rights hereunder, and shall be binding upon, and shall inure to the
benefit of, any successors, assigns, heirs and personal representatives of the
Company, the indemnified parties and any such person.

 

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10.       Notices: Any notice given with respect to this Agreement shall be in
writing and shall be mailed or delivered (a) if to the Company, at its offices
at 1401 17th Street, Suite 1550, Denver Colorado 80202, and (b) if to the
Executive, at *************, NC 28079, in either case with a copy to the
Company’s legal counsel, Jeff Knetsch, Brownstein Hyatt Farber Schreck, LLP, 410
17th Street, 22nd Floor, Denver, CO 80202.  Either party may change the address
to which notices shall be given by notice given in the same manner.

 

11.       Counterparts: This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

 

12.       Third Party Beneficiaries: This Agreement has been and is made solely
for the benefit of the parties hereto, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement.

 

13.       Validity: The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

 

14.       Dispute Resolution: If a dispute arises out of or relating to this
Agreement or the breach of this Agreement, and if the dispute cannot be settled
through direct discussions, the parties agree to first endeavor to settle the
dispute in an amicable manner by mediation. Mediation shall consist of an
informal, nonbinding conference or conferences between the parties and the
mediator jointly, and at the discretion of the mediator, then in separate
caucuses in which the mediator will seek to guide the parties to a resolution of
the case. Each party shall pick a mediator selector and the two mediator
selectors shall then pick and appoint a mediator.  The Company will pay all
mediation related costs, including , without limitation, the Executive’s costs
and reasonable fees, including attorneys’ fees, incurred in selecting a mediator
and obtaining counsel for purposes of the mediation.

 

15.       Choice of Law, Jurisdiction and Venue: This Agreement shall be
governed by, construed, and enforced in accordance with the laws of the State of
Colorado. Any and all actions, suits, or judicial proceedings upon any claim
arising from or relating to this Agreement, shall be instituted and maintained
in the State or Federal courts sitting in the State of Colorado.  Each party
waives the right to change of venue.

 

16.       Expenses:  The Company agrees to reimburse the Executive for up to
$10,000 in legal expenses in connection with the preparation and review of this
Agreement and all related documents.

 

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17.       Public Announcement:  No public announcement of the Executive’s hiring
or of this Agreement shall be made prior to the Effective Date.

 

18.       Miscellaneous: No provisions of this Agreement may be amended,
modified, or waived unless such amendment or modification is agreed to in
writing signed by the Executive and by a duly authorized officer or a director
of the Company, and such waiver is set forth in writing and signed by the party
to be charged. No waiver by either party hereto at any time of any breach by the
other party hereto of any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The respective rights and obligations
of the parties hereunder of this Agreement shall survive the Executive’s
termination of employment and the termination of this Agreement to the extent
necessary for the intended preservation of such rights and obligations.

 

19.       Section 409A:  It is the intent of the parties that all amounts
payable to the Executive pursuant to this Agreement or otherwise shall either be
exempt from Section 409A, or shall be paid in a manner that complies with all
requirements of Section 409A, and to the maximum extent possible this Agreement
shall be so construed.  Without limiting the generality of the foregoing, any
reimbursement of expenses that constitutes taxable income shall be paid to the
Executive not later than the last day of the year following the year in which
the expense is incurred, and, to the extent that any amount payable to the
Executive by reason of his termination of employment constitutes deferred
compensation subject to Section 409A, (A) if the Executive incurs a termination
of employment that does not constitute a “separation from service” as defined in
Section 409A, then Executive’s right to payment of such amount shall be vested
at the time of his termination of employment, but payment shall be deferred
until the Executive incurs a separation from service as so defined or dies, and
(B) if the Executive is a “specified employee” as defined in Section 409A at the
time he incurs a separation from service, any amount payable by reason of such
separation from service (including an amount deferred pursuant to (A)) shall not
be paid until the first day of the seventh month following the month that
includes the separation from service, or if earlier the date of the Executive’s
death.  Any amounts deferred pursuant to (A) or (B) shall be paid in a lump sum,
without interest, at the time specified in (A) or (B).

 

20.       Section Headings: The section headings in this Agreement are for
convenience of reference only, and they form no part of this Agreement and shall
not affect its interpretation.

 

[Signature page follows]

 

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The parties have executed this Agreement as of the date first written above.

 

 

Executive

 

Prospect Global Resources Inc.

 

 

 

 

 

 

/s/ Damon G. Barber

 

By: 

/s/ Patrick L. Avery

Damon G. Barber

 

 

Patrick L. Avery

 

 

 

President and Chief Executive Officer

 

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