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  26.7













































 

  Exhibit 10.1    
    


[*The
terms of the Permitted Preferred Stock and Permitted Junior Debt, set forth on Schedules C-1 and C-2 of this agreement, have been omitted from this agreement in connection
with a request for confidential treatment. The omitted information has been filed separately with the Securities and Exchange Commission as part of the request for confidential treatment. The omitted
information is indicated by a blank and marked with an asterisk.] 






 

AMENDED AND RESTATED

SECURITIES PURCHASE AGREEMENT

by and among

PROSPECT GLOBAL RESOURCES INC.,

CERTAIN GUARANTORS NAMED HEREIN,

and

THE PURCHASERS NAMED HEREIN

for

$100,000,000

in

10% CONVERTIBLE SPRINGING SECOND-LIEN NOTES DUE 2020

Dated as of December 21, 2012  


 



  






 
 TABLE OF CONTENTS  



 

 







							
	 
	 	 
	 	 
	 	Page 
	

   ARTICLE I AUTHORIZATION OF NOTES
	
 	
A-9
	

   ARTICLE II SALE AND PURCHASE OF SECURITIES
	
 	
A-9
	 
	 	 2.1
	 	 Sale and Purchase
	 	

A-9
	 
	 	2.2	 	 Fees and Expenses
	 	A-9
	 
	 	2.3	 	 Purchase Price Allocation
	 	A-10
	

   ARTICLE III CLOSING
	
 	
A-10
	 
	 	 3.1
	 	 Closing
	 	

A-10
	 
	 	3.2	 	 Deliveries
	 	A-10
	 
	 	3.3	 	 Apollo Warrants
	 	A-11
	

   ARTICLE IV JOINT CONDITIONS TO CLOSING
	
 	
A-11
	 
	 	 4.1
	 	 Shareholder Approval
	 	

A-11
	 
	 	4.2	 	 No Order
	 	A-11
	

   ARTICLE V COMPANY CONDITIONS TO CLOSING
	
 	
A-11
	 
	 	 5.1
	 	 Representations and Warranties
	 	

A-11
	 
	 	5.2	 	 Performance; No Default
	 	A-11
	 
	 	5.3	 	 Officer's Certificate
	 	A-11
	 
	 	5.4	 	 IRS Forms W-8/W-9
	 	A-12
	

   ARTICLE VI PURCHASERS CONDITIONS TO CLOSING
	
 	
A-12
	 
	 	 6.1
	 	 Representations and Warranties
	 	

A-12
	 
	 	6.2	 	 Performance; No Default
	 	A-12
	 
	 	6.3	 	 Compliance Certificates
	 	A-12
	 
	 	6.4	 	 Investors Rights Agreement
	 	A-12
	 
	 	6.5	 	 Royalty Agreement
	 	A-12
	 
	 	6.6	 	 Opinions of Counsel
	 	A-12
	 
	 	6.7	 	 Definitive Feasibility Study
	 	A-12
	 
	 	6.8	 	 EPC/EPCM Retention
	 	A-13
	 
	 	6.9	 	 Permits
	 	A-13
	 
	 	6.10	 	 Key Hire
	 	A-13
	 
	 	6.11	 	 Confirmatory Reports
	 	A-13
	 
	 	6.12	 	 Off-Take Agreement
	 	A-13
	 
	 	6.13	 	 No Material Adverse Changes
	 	A-13
	 
	 	6.14	 	 Purchase Permitted By Applicable Law, Etc. 
	 	A-14
	 
	 	6.15	 	 Private Placement Number
	 	A-14
	 
	 	6.16	 	 Funding Instructions
	 	A-14
	 
	 	6.17	 	 Proceedings and Documents
	 	A-14
	 
	 	6.18	 	 Guarantee and Collateral Documents
	 	A-14
	 
	 	6.19	 	 Certificate of Designation
	 	A-14
	 
	 	6.20	 	 Karlsson Agreements
	 	A-14
	 
	 	6.21	 	 Purchaser Expenses
	 	A-14
	 
	 	6.22	 	 Amendment Confirmation
	 	A-14
	 
	 	6.23	 	 Bylaws Amendment
	 	A-15





 

 A-2







 
 







							
	 
	 	 
	 	 
	 	Page 
	

   ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	
 	
A-15
	 
	 	 7.1
	 	 Organization; Power and Authority
	 	

A-15
	 
	 	7.2	 	 Authorization, Etc. 
	 	A-15
	 
	 	7.3	 	 Execution; Due Authority
	 	A-16
	 
	 	7.4	 	 No Conflicts
	 	A-16
	 
	 	7.5	 	 Consents, Approvals or Waivers
	 	A-17
	 
	 	7.6	 	 Legal and Governmental Proceedings
	 	A-17
	 
	 	7.7	 	 Compliance With Laws
	 	A-17
	 
	 	7.8	 	 Licenses and Permits
	 	A-17
	 
	 	7.9	 	 Company SEC Documents
	 	A-18
	 
	 	7.10	 	 No Material Adverse Effect
	 	A-18
	 
	 	7.11	 	 Exchange Act
	 	A-18
	 
	 	7.12	 	 Price Manipulation
	 	A-19
	 
	 	7.13	 	 Class of Notes
	 	A-19
	 
	 	7.14	 	 Status Under Investment Company Act
	 	A-19
	 
	 	7.15	 	 Restrictions on Sale of Notes, Etc. 
	 	A-19
	 
	 	7.16	 	 Company Controls and Procedures
	 	A-19
	 
	 	7.17	 	 Public Accounting Firm
	 	A-20
	 
	 	7.18	 	 Financial Statements; Material Liabilities
	 	A-20
	 
	 	7.19	 	 Title to Property; Leases
	 	A-20
	 
	 	7.20	 	 Environmental Matters
	 	A-21
	 
	 	7.21	 	 Intellectual Property
	 	A-23
	 
	 	7.22	 	 Taxes
	 	A-23
	 
	 	7.23	 	 Compliance with ERISA
	 	A-23
	 
	 	7.24	 	 Material Labor Disputes; Labor Laws
	 	A-24
	 
	 	7.25	 	 Mineral Rights
	 	A-25
	 
	 	7.26	 	 Insurance Coverage
	 	A-26
	 
	 	7.27	 	 Restrictions on Subsidiaries
	 	A-26
	 
	 	7.28	 	 No Registration Rights
	 	A-26
	 
	 	7.29	 	 Antitakeover Provisions
	 	A-26
	 
	 	7.30	 	 No General Solicitation
	 	A-27
	 
	 	7.31	 	 Material Contracts
	 	A-27
	 
	 	7.32	 	 Voting Agreements
	 	A-27
	 
	 	7.33	 	 Compliance with Money Laundering Laws
	 	A-27
	 
	 	7.34	 	 Compliance with OFAC
	 	A-27
	 
	 	7.35	 	 Compliance with Other Laws, Regulations and Instruments
	 	A-27
	 
	 	7.36	 	 Solvency
	 	A-28
	 
	 	7.37	 	 Use of Proceeds
	 	A-28
	 
	 	7.38	 	 Brokers' Fees
	 	A-28
	 
	 	7.39	 	 Collateral Documents
	 	A-28
	 
	 	7.40	 	 Covenants
	 	A-28
	

   ARTICLE VIII REPRESENTATIONS OF THE PURCHASERS
	
 	
A-28
	 
	 	 8.1
	 	 Organization; Power and Authority
	 	

A-28
	 
	 	8.2	 	 Execution; Due Authority
	 	A-28
	 
	 	8.3	 	 No Conflicts
	 	A-28
	 
	 	8.4	 	 Purchase for Investment
	 	A-29
	 
	 	8.5	 	 Accredited Investor
	 	A-29
	 
	 	8.6	 	 Brokers' Fees
	 	A-29





 

 A-3







 
 







							
	 
	 	 
	 	 
	 	Page 
	

   ARTICLE IX CERTAIN INTERIM COVENANTS
	
 	
A-29
	 
	 	 9.1
	 	 Operation of Business
	 	

A-29
	 
	 	9.2	 	 Access to Information; Consultation
	 	A-33
	 
	 	9.3	 	 Reasonable Best Efforts
	 	A-35
	 
	 	9.4	 	 Reservation of Shares
	 	A-36
	 
	 	9.5	 	 Shareholders Meeting
	 	A-36
	 
	 	9.6	 	 Proxy
	 	A-36
	 
	 	9.7	 	 Non-Solicitation
	 	A-37
	 
	 	9.8	 	 Additional Common Stock Issuances
	 	A-40
	 
	 	9.9	 	 Affiliate Agreement Modifications. 
	 	A-40
	 
	 	9.10	 	 Off-take Agreement
	 	A-41
	 
	 	9.11	 	 Board and Observer Rights
	 	A-41
	 
	 	9.12	 	 KG Default Cure
	 	A-42
	 
	 	9.13	 	 Preemptive Rights
	 	A-42
	 
	 	9.14	 	 Standstill
	 	A-44
	 
	 	9.15	 	 Certain Tax Matters. 
	 	A-44
	 
	 	9.16	 	 Benefit Plans
	 	A-44
	 
	 	9.17	 	 FCPA
	 	A-44
	 
	 	9.18	 	 Supplemental Payment
	 	A-45
	 
	 	9.19	 	 Further Assurances
	 	A-45
	

   ARTICLE X TERMINATION
	
 	
A-45
	 
	 	 10.1
	 	 Right to Terminate
	 	

A-45
	 
	 	10.2	 	 Effect of Termination
	 	A-46
	 
	 	10.3	 	 Fees and Expenses
	 	A-46
	 
	 	10.4	 	 Amendment
	 	A-46
	 
	 	10.5	 	 Waiver
	 	A-47
	

   ARTICLE XI INDEMNIFICATION
	
 	
A-47
	 
	 	 11.1
	 	 Purchaser Indemnification
	 	

A-47
	 
	 	11.2	 	 Company Indemnification
	 	A-47
	 
	 	11.3	 	 Indemnification Actions
	 	A-48
	 
	 	11.4	 	 Limitations
	 	A-49
	

   ARTICLE XII VOTING
	
 	
A-51
	 
	 	 12.1
	 	 Voting
	 	

A-51
	 
	 	12.2	 	 No Adverse Actions
	 	A-51
	

   ARTICLE XIII CONVERSION
	
 	
A-51
	 
	 	 13.1
	 	 Conversion Right
	 	

A-51
	 
	 	13.2	 	 Conversion
	 	A-52
	 
	 	13.3	 	 Mechanics of Conversion
	 	A-52
	 
	 	13.4	 	 Adjustment Upon Issuance of Shares of Common Stock
	 	A-54
	 
	 	13.5	 	 Adjustment for Change in Capital Stock
	 	A-56
	 
	 	13.6	 	 Adjustment for Other Distributions
	 	A-57
	 
	 	13.7	 	 Adjustment for Cash Dividends
	 	A-58
	 
	 	13.8	 	 Adjustment for Company Tender Offer
	 	A-59
	 
	 	13.9	 	 When Adjustment May Be Deferred
	 	A-60
	 
	 	13.10	 	 When No Adjustment Required
	 	A-60





 

 A-4







 
 







							
	 
	 	 
	 	 
	 	Page 
	 
	 	13.11	 	 Notice of Adjustment
	 	A-61
	 
	 	13.12	 	 Voluntary Decrease
	 	A-61
	 
	 	13.13	 	 Notice of Certain Transactions
	 	A-61
	 
	 	13.14	 	 Effect of Reclassification, Consolidation, Merger or Sale
	 	A-62
	 
	 	13.15	 	 Simultaneous Adjustments
	 	A-63
	 
	 	13.16	 	 Successive Adjustments
	 	A-63
	 
	 	13.17	 	 Limitation on Adjustments
	 	A-63
	

   ARTICLE XIV INFORMATION COVENANTS
	
 	
A-63
	 
	 	 14.1
	 	 Financial Statements
	 	

A-63
	 
	 	14.2	 	 Requirements as to Financial Statements. 
	 	A-64
	 
	 	14.3	 	 Information; Miscellaneous
	 	A-64
	 
	 	14.4	 	 Notification of Default
	 	A-66
	

   ARTICLE XV GENERAL COVENANTS
	
 	
A-66
	 
	 	 15.1
	 	 Use of Proceeds
	 	

A-66
	 
	 	15.2	 	 Compliance with Laws
	 	A-66
	 
	 	15.3	 	 Approvals
	 	A-66
	 
	 	15.4	 	 Maintenance of Corporate Existence, etc
	 	A-66
	 
	 	15.5	 	 Payment of Notes
	 	A-66
	 
	 	15.6	 	 Payment of Taxes, etc
	 	A-66
	 
	 	15.7	 	 Books and Records. 
	 	A-67
	 
	 	15.8	 	 Environmental Covenants
	 	A-67
	 
	 	15.9	 	 Maintenance of Project Assets
	 	A-68
	 
	 	15.10	 	 Accuracy of Information
	 	A-68
	 
	 	15.11	 	 Insurance. 
	 	A-68
	 
	 	15.12	 	 Business Activities; No Amendment of Organizational Documents. 
	 	A-70
	 
	 	15.13	 	 Indebtedness
	 	A-70
	 
	 	15.14	 	 Liens
	 	A-71
	 
	 	15.15	 	 Investments
	 	A-72
	 
	 	15.16	 	 Restricted Payments, etc
	 	A-72
	 
	 	15.17	 	 Mergers, etc
	 	A-72
	 
	 	15.18	 	 Asset Dispositions, etc
	 	A-73
	 
	 	15.19	 	 Transactions with Affiliates
	 	A-73
	 
	 	15.20	 	 Restrictive Agreements, etc
	 	A-73
	 
	 	15.21	 	 Inconsistent Agreements
	 	A-73
	 
	 	15.22	 	 Bank Accounts
	 	A-73
	 
	 	15.23	 	 Acquisitions
	 	A-73
	 
	 	15.24	 	 Collateral and Guarantees. 
	 	A-74
	 
	 	15.25	 	 Further Assurances
	 	A-74
	 
	 	15.26	 	 Future Covenants
	 	A-75
	 
	 	15.27	 	 Repurchase at the Option of Purchasers Upon Change of Control
	 	A-75
	

   ARTICLE XVI EVENTS OF DEFAULT
	
 	
A-76
	

   ARTICLE XVII REMEDIES ON DEFAULT, ETC. 
	
 	
A-77
	 
	 	 17.1
	 	 Acceleration of Maturity; Rescission
	 	

A-77
	 
	 	17.2	 	 Other Remedies
	 	A-77
	 
	 	17.3	 	 Waiver of Past Defaults and Events of Default
	 	A-78
	 
	 	17.4	 	 Control by Majority
	 	A-78





 

 A-5







 
 







							
	 
	 	 
	 	 
	 	Page 
	 
	 	17.5	 	 Limitation on Suits
	 	A-78
	 
	 	17.6	 	 Rights of Holders to Receive Payment
	 	A-78
	 
	 	17.7	 	 Collection Suit by the Purchasers
	 	A-78
	 
	 	17.8	 	 Priorities
	 	A-78
	

   ARTICLE XVIII REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES; TRANSFER OF APOLLO PREFERRED SHARES
	
 	
A-78
	 
	 	 18.1
	 	 Registration of Notes
	 	

A-78
	 
	 	18.2	 	 Transfer and Exchange of Notes
	 	A-79
	 
	 	18.3	 	 Replacement of Notes
	 	A-79
	 
	 	18.4	 	 Transfer of Apollo Preferred Shares
	 	A-79
	

   ARTICLE XIX PAYMENTS ON NOTES
	
 	
A-79
	

   ARTICLE XX EXPENSES, ETC. 
	
 	
A-80
	 
	 	 20.1
	 	 Transaction Expenses
	 	

A-80
	 
	 	20.2	 	 Survival
	 	A-80
	

   ARTICLE XXI MODIFICATION AND WAIVER
	
 	
A-80
	 
	 	 21.1
	 	 Requisite Consent of Holders
	 	

A-80
	 
	 	 21.2
	 	 Revocation and Effects of Consents
	 	

A-81
	 
	 	21.3	 	 Notation on Exchange of Notes
	 	A-82
	

   ARTICLE XXII NOTICES
	
 	
A-82
	

   ARTICLE XXIII GUARANTEE OF NOTES
	
 	
A-83
	 
	 	 23.1
	 	 Note Guarantee
	 	

A-83
	 
	 	23.2	 	 Execution and Delivery of Note Guarantee
	 	A-83
	 
	 	23.3	 	 Release of Guarantors
	 	A-84
	 
	 	23.4	 	 Waiver of Subrogation
	 	A-84
	

   ARTICLE XXIV CONFIDENTIAL INFORMATION
	
 	
A-84
	

   ARTICLE XXV SUBSTITUTION OF PURCHASER
	
 	
A-85
	

   ARTICLE XXVI MISCELLANEOUS
	
 	
A-86
	 
	 	 26.1
	 	 Successors and Assigns
	 	

A-86
	 
	 	26.2	 	 Legal Holidays
	 	A-86
	 
	 	26.3	 	 Accounting Terms
	 	A-86
	 
	 	26.4	 	 Severability
	 	A-86
	 
	 	26.5	 	 Construction, Etc. 
	 	A-86
	 
	 	26.6	 	 Counterparts
	 	A-87
	 
	 	26.7	 	 Table of Contents, Headings, Etc. 
	 	A-87
	 
	 	26.8	 	 Construction
	 	A-87
	 
	 	26.9	 	 Governing Law
	 	A-87
	 
	 	26.10	 	 Jurisdiction and Process; Waiver of Jury Trial
	 	A-87
	 
	 	26.11	 	 Disclosure of Tax Information
	 	A-88
	 
	 	26.12	 	 Statements Required in Certificate
	 	A-88
	 
	 	26.13	 	 [Intentionally Deleted]
	 	A-88
	 
	 	26.14	 	 Specific Performance
	 	A-88
	 
	 	26.15	 	 Time of the Essence
	 	A-88





 

 A-6







 




 






					
	SCHEDULE A	 	—	 	Information Relating to Purchasers
	SCHEDULE B	 	—	 	Defined Terms
	SCHEDULE C-1	 	—	 	Terms of Permitted Preferred Stock
	SCHEDULE C-2	 	—	 	Terms of Permitted Junior Debt
	SCHEDULE C-3	 	—	 	Terms of Notes in Karlsson Default
	EXHIBIT A	 	—	 	Form of 10% Convertible Springing Second-Lien Notes due 2020
	EXHIBIT B-1	 	—	 	Form of Purchaser Conversion Notice
	EXHIBIT B-2	 	—	 	Form of Company Conversion Notice
	EXHIBIT C	 	—	 	Form of Certificate of Designation
	EXHIBIT D	 	—	 	Minimum Offtake Arrangements
	EXHIBIT E-1	 	—	 	Form of Series A Warrant
	EXHIBIT E-2	 	—	 	Form of Series B Warrant




 

 A-7









 








































 
 

  AMENDED AND RESTATED
  SECURITIES PURCHASE AGREEMENT    
    


        AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of December 21,
2012, by and among PROSPECT GLOBAL RESOURCES INC., a Nevada corporation (the "Company"), the Subsidiaries of the Company party hereto from time to time as
GUARANTORS (as defined below) and the PURCHASERS named in Schedule A hereto (the "Purchasers"). 


        WHEREAS,
the Company and the Purchasers entered into a Securities Purchase Agreement dated as of November 29, 2012 (the "Original Agreement") and wish
to amend and restate the Original Agreement; 


        NOW,
THEREFORE, in consideration of the premises below and of the mutual covenants and agreements contained herein, the parties hereto hereby agree that the Original Agreement is amended
and restated as follows: 


        WHEREAS,
the Company is engaged, through its Subsidiaries, in the exploration and planning for construction and operation of a potash mine and related facilities to mine and develop the
potash deposit located on lands owned or leased by the Company or its Subsidiaries or on which the Company or its Subsidiaries otherwise have a right to mine, in the Holbrook Basin of eastern Arizona
(the "Holbrook Project"); 


        WHEREAS,
subject to the terms and conditions of this Agreement, the Purchasers are paying the Company $100,000,000, and the Company is issuing: (a) to the Notes Purchasers named
in Schedule A hereto (the "Notes Purchasers"), $100,000,000 aggregate principal amount of 10.0% Convertible Springing Second Lien Notes due 2020 (the
"Notes"), (b) to the Royalty Purchasers, Series A warrants for the purchase of up to 25,925,926 shares of Common Stock of the Company, in substantially the
form set out in Exhibit E-1 (the "Series A Warrants"), and Series B warrants for the purchase of up to 21,538,461 shares of Common Stock
of the Company, in substantially the form set out in Exhibit E-2 (the "Series B Warrants" and together with the Series A Warrants, the
"Apollo Warrants"), (c) to the Preferred Share Purchaser named in Schedule A hereto (the "Preferred Share Purchaser"), the
Apollo Preferred Shares, (d) to the Notes Purchasers, upon certain circumstances contemplated by this Agreement, newly issued shares of Common Stock of the Company (together with the Notes, the
Apollo Warrants and the Apollo Preferred Shares, the "Securities") and (e) to the Royalty Purchasers named in Schedule A hereto (the "Royalty
Purchasers"), certain royalty interests in the Company; 


        WHEREAS,
the Board of Directors of the Company has determined that this Agreement and the transactions contemplated hereby are in the best interests of the Company, and its shareholders,
and has previously approved this Agreement and the transactions contemplated hereby (the "Transactions"); 


        WHEREAS,
prior to or contemporaneously with the execution and delivery of the Original Agreement by the parties hereto, as a condition and inducement to the willingness of the Purchasers
to enter into the Original Agreement, certain shareholders of the Company and certain of the Purchasers entered into Support Agreements (the "Support Agreements"), in
respect of the shares of Common Stock held by such shareholders; 


        WHEREAS,
concurrently with the execution and delivery of the Original Agreement by the parties hereto, as a condition and inducement to the willingness of the Purchasers to enter into
the Original Agreement, and in partial consideration for the payment by the Purchasers of the Purchase Price, Buffalo Management LLC ("Buffalo"), the Royalty
Purchasers and the Company entered into a Royalty Agreement, of even date with the Original Agreement (the "Royalty Agreement"), which provides for, among other things,
Buffalo and the Royalty Purchasers sharing evenly an annual royalty payment that was previously payable from the Company solely to Buffalo; 


A-8







 

        WHEREAS,
concurrently with the execution and delivery of the Original Agreement by the parties hereto, as a condition and inducement to the willingness of the Purchasers to enter into
the Original Agreement, the Purchasers and the Company entered into an Investors Rights Agreement, of even date with the Original Agreement (the "Investors Rights
Agreement"), which provides for certain governance and other rights for the Purchasers; 


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


 
 

  ARTICLE I    
    
    AUTHORIZATION OF NOTES    
    


        Subject to the terms and conditions of this Agreement, the Company will, at the Closing, authorize the issuance and sale of
$100,000,000 aggregate principal amount of Notes. The Notes shall be substantially in the form set out in Exhibit A and shall otherwise be governed by this Agreement. 


 
 

  ARTICLE II    
    
    SALE AND PURCHASE OF SECURITIES    
    


 
 
        2.1    Sale and Purchase.
    Subject to the terms and conditions of this Agreement, the Company will issue, sell and grant to each Purchaser, respectively, in the proportions set forth below, at the Closing (except
for the Apollo Warrants, which shall be issued one Business Day after the receipt of Requisite Shareholder Approval) (and the Purchasers will purchase and accept from the Company at the Closing
(except for the Apollo Warrants, which shall be accepted one Business Day after the receipt of Requisite Shareholder Approval)), for the aggregate purchase price of $100,000,000 (the
"Purchase Price"), payable by each Purchaser in cash on the Closing Date in the amount to be specified to the Company prior to the Closing by the Purchasers: 



        (a)   Notes
in the principal amount specified opposite such Notes Purchaser's name in Schedule A; 



        (b)   Subject
to the terms of Section 9.8, a number of shares of Common Stock as provided in Section 9.8, allocated pro rata among the Notes Purchasers in
proportion to the principal amount of Notes purchased by them; 


        (c)   Subject
to the terms of the Royalty Agreement, the royalty payments contemplated by the Royalty Agreement (the "Royalty"), allocated to the
Royalty Purchasers in proportion to the percentage specified opposite such Royalty Purchaser's name in Schedule A; 


        (d)   Series A
Warrants, allocated to the Royalty Purchasers in proportion to the percentage specified opposite such Royalty Purchaser's name in Schedule A, to
be delivered to Royalty Purchasers on the Business Day after the date on which the Requisite Shareholder Approval is obtained (or such later date as specified by the Majority Purchasers by notice to
the Company); 


        (e)   Series B
Warrants, allocated to the Royalty Purchasers in proportion to the percentage specified opposite such Royalty Purchaser's name in Schedule A, to
be delivered to Royalty Purchasers on the Business Day after the date on which the Requisite Shareholder Approval is obtained (or such later date as specified by the Majority Purchasers by notice to
the Company); and 


        (f)    Apollo
Preferred Shares, allocated to the Preferred Share Purchaser. 




 
 
        2.2    Fees and Expenses.
    Within thirty (30) days of the date of the Original Agreement, the Company shall pay, upon invoice, to the Purchasers or any Affiliates of the Purchasers designated by the
Majority Purchasers (by wire transfer of immediately available funds to an account or accounts as 


A-9







 

directed
by the Majority Purchasers) reimbursement for all Purchaser Expenses incurred prior to the date of the Original Agreement and not previously reimbursed. At the Closing, the Company shall
cause (a) the Purchasers or any Affiliates of the Purchasers designated by the Majority Purchasers to receive from the Company (by wire transfer of immediately available funds to an account or
accounts as directed by the Majority Purchasers) reimbursement of Purchaser Expenses incurred through the Closing Date and not previously reimbursed and (b) Apollo Global Securities, LLC
(or another Affiliate of the Purchasers (designated by the Majority Purchasers at least two (2) Business Days prior to the Closing Date)) to receive from the Company a transaction fee (the
"Transaction Fee") in the amount of $2,000,000 (by wire transfer of immediately available funds to an account or accounts as directed by such designated Affiliate) (it
being understood and agreed that, if requested by the Majority
Purchasers, the Parties will memorialize in a separate letter agreement the Company's obligation to pay the Transaction Fee). 


 
 
        2.3    Purchase Price Allocation.
    The Purchase Price shall be allocated among the Notes, the Common Stock, the Royalty, the Apollo Preferred Shares and the Apollo Warrants contemplated by subsections (a) through
(e) of Section 2.1 in the reasonable discretion of the Purchasers, after consultation with the Company, and no parties shall take any actions, including filing any Tax returns or taking
any Tax positions, inconsistent with such allocation. 


 
 

  ARTICLE III    
    
    CLOSING    
    


 


        3.1    Closing.    The sale and purchase of the Securities (other than the Apollo
Warrants) to be issued to the Purchasers and of the Royalties to be granted to each Royalty Purchaser (the "Closing") shall occur at the offices of Wachtell, Lipton,
Rosen & Katz, 51 W. 52nd Street, New York, New York 10019, at 4:30 p.m., Eastern time, at a closing on the date that is twenty (20) Business Days following
the first date on which all conditions set forth in Articles IV, V and VI have been satisfied or waived (other than those conditions that by their nature are to be satisfied by actions taken at
the Closing, but subject to the satisfaction or waiver of such conditions) or on such other Business Day as may be agreed upon by the Company and the Majority Purchasers (the "Closing
Date"), provided, that if the Company has provided the Purchasers with a draft of the Definitive Feasibility Study no later than twenty (20) Business
Days prior to the date that all such conditions are satisfied or waived and the final Definitive Feasibility Study that is delivered to the Purchasers and publicly filed with the SEC in accordance
with Section 6.7 is consistent in all material respects with such draft of the Definitive Feasibility Study, then the Closing shall occur on a date that is ten (10) Business Days
following the satisfaction or waiver of all such conditions or on such other Business Day as may be agreed upon by the Company and the Majority Purchasers. 



 


        3.2    Deliveries.    At the Closing, the Company will deliver to (a) each Notes
Purchaser (i) the Notes to be purchased by such Notes Purchaser in the form of a single Note (or such greater number of Notes in denominations of at least $500,000 as such Purchaser may
request) dated the Closing Date and
registered in such Notes Purchaser's name (or in the name of its nominee) and (ii) certificates evidencing the Common Stock to be purchased by such Notes Purchaser pursuant to
Section 9.8, if any, and (b) to the Preferred Share Purchaser certificates evidencing the Apollo Preferred Shares to be purchased by such Preferred Share Purchaser, in each case against
delivery by each Purchaser to the Company of payment of immediately available funds in the amount of the purchase price therefor by wire transfer to an account number specified by the Company no later
than two (2) Business Days prior to the anticipated Closing Date. If at the Closing the Company shall fail to tender such Notes, Common Stock or Apollo Preferred Shares to any Purchaser as
provided above in this Article III, such Purchaser shall, at its election, be relieved of all obligations under this Agreement, including the payment of the Purchase Price described in this
Section 3.2. If any of the conditions specified in 


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Articles IV
and VI shall not have been fulfilled to the reasonable satisfaction of the Majority Purchasers, each Purchaser shall, at its election, be relieved of all obligations under this
Agreement. 


 
 
        3.3    Apollo Warrants.
    At 9:30 a.m., Eastern time, on the first Business Day following the receipt of the Requisite Shareholder Approval (or on such later date as specified by the Majority Purchasers by
notice to the Company), at the Wachtell Lipton offices referred to in Section 3.1, the Company shall issue and deliver to the Royalty Purchasers the Apollo Warrants. For the avoidance of doubt,
if any of the events referred to in Section 6 of the Apollo Warrants occur from and after the date of the Original Agreement through the date of issuance of the Apollo Warrants, the number of
shares of Common Stock for which such Apollo Warrants shall be exercisable and the exercise price therefor shall each be adjusted in the Apollo Warrants that are issued to the Royalty Purchasers in
such manner as they would have been adjusted if such Apollo Warrants were issued on the date of the Original Agreement. 


 
 

  ARTICLE IV    
    
    JOINT CONDITIONS TO CLOSING    
    



        The respective obligation of each of the parties hereto to effect the Closing shall be subject to the satisfaction (or waiver by the
Majority Purchasers and the Company) of the following conditions precedent: 



 
 
         4.1    Shareholder Approval.
    The Requisite Shareholder Approval shall have been obtained. 


 
 
        4.2    No Order.
    No Governmental Authority or court of competent jurisdiction shall have promulgated, enacted or issued any statute, rule, regulation, order, decree, injunction or ruling (whether
temporary, preliminary or permanent) which remains in effect and prohibits, prevents or otherwise enjoins the consummation of the Transactions. 



 
 

  ARTICLE V    
    
    COMPANY CONDITIONS TO CLOSING    
    



        The obligation of the Company to effect the Closing shall be subject to the satisfaction or waiver of the following conditions
precedent: 



 
 
         5.1    Representations and Warranties.
    The representations and warranties of the Purchasers in this Agreement shall be correct in all material respects (unless already qualified by materiality or material adverse effect, in
which case such representation or warranty shall be true and correct in all respects) at the time of the Closing (as if made on and as of the Closing), except for any representation and warranty which
speaks as of a particular date, in which case such representation and warranty shall be correct in all material respects (unless already qualified by materiality or material adverse effect, in which
case such representation or warranty shall be true and correct in all respects) as of such date. 


 
 
         5.2    Performance; No Default.
    The Purchasers shall have performed and complied in all material respects with all agreements and covenants contained in this Agreement required to be performed or complied with by them
prior to or at the Closing. 


 
 
        5.3    Officer's Certificate.
    Each Purchaser shall have furnished or caused to be furnished to the Company at the Closing a certificate of an officer of such Purchaser reasonably satisfactory to the Company as to the
satisfaction of the conditions set forth in Sections 5.1 and 5.2 at and as of the Closing. 



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        5.4    IRS Forms W-8/W-9.
    Each Purchaser shall have delivered to the Company a properly completed and duly executed applicable Internal Revenue Service Form W-9 (or, if such Purchaser is a
Foreign Purchaser, a completed applicable Internal Revenue Service W-8). 



 
 

  ARTICLE VI    
    
    PURCHASERS CONDITIONS TO CLOSING    
    


        The obligation of the Purchasers to effect the Closing shall be subject to the satisfaction or waiver of the following conditions
precedent: 



 
 
         6.1    Representations and Warranties.
    The representations and warranties of the Company in this Agreement shall be correct in all material respects (unless already qualified by materiality or Material Adverse Effect, in
which case such representation or warranty shall be true and correct in all respects) at the time of the Closing (as if made on and as of the Closing), except for any representation and warranty which
speaks as of a particular date, in which case such representation and warranty shall be correct in all material respects (unless already qualified by materiality or Material Adverse Effect, in which
case such representation or warranty shall be true and correct in all respects) as of such date. 


 
 
         6.2    Performance; No Default.
    The Company shall have performed and complied in all material respects with all agreements and covenants contained in this Agreement required to be performed or complied with by it prior
to or at the Closing and, after giving effect to the issue and sale of the Securities (and the application of the proceeds thereof as contemplated by Section 7.37) and the other Transactions,
no Default or Event of Default shall have occurred and be continuing. 


 
 
         6.3    Compliance Certificates.
    


 
 
        (a)    Officer's Certificate.
    The Company shall have furnished or caused to be furnished to the Purchasers at the Closing a Compliance Certificate as to the satisfaction of the conditions set forth in
Sections 6.1 and 6.2 at and as of the Closing. 


 
 
         (b)    Secretary's Certificate.
    The Company shall have delivered or caused to be delivered to the Purchasers a certificate of its and each Guarantor's Secretary or Assistant Secretary, dated the Closing Date,
certifying as to the articles or certificate of incorporation, bylaws and/or other organizational documents of the Company or such Guarantor, as applicable, and the resolutions attached thereto and
other corporate or other proceedings relating to the authorization, execution and delivery of the Notes, the Note Guarantees, this Agreement and/or the Original Agreement, as applicable. 


 
 
         6.4    Investors Rights Agreement.
    The Investors Rights Agreement shall be in full force and effect, and neither the Company nor any of its Subsidiaries shall have entered into any agreement or taken any other action in a
manner that is adverse to, or conflicts with, any of the Investors Group's (as defined in the Investors Rights Agreement) rights under the Investors Rights Agreement (including its director
designation rights and registration rights thereunder). 


 
 
         6.5    Royalty Agreement.
    The Royalty Agreement shall be in full force and effect. 


 
 
        6.6    Opinions of Counsel.
    Brownstein Hyatt Farber Schreck, LLP, counsel for the Company, shall have furnished to the Purchasers its written opinion, dated the date of the Closing, in form and substance
reasonably acceptable to the Purchasers, including opinions regarding the validity and enforceability of (a) the voting rights of the Notes and (b) the Certificate of Designation and the
Apollo Preferred Shares. 


 
 
        6.7    Definitive Feasibility Study.
    The Company shall have received, and delivered to the Purchasers and publicly filed with the SEC on Form 8-K, the final Definitive Feasibility Study, 



A-12







 

which
final Definitive Feasibility Study shows (a) that the Holbrook Project's Capital Costs are not in excess of 10% of the Current Capital Estimate, (b) that over the life of the mine
(measured on a reserves-only basis) the Holbrook Project's Operating Costs are not higher than $115/tonne (provided that Operating Costs in excess of
$115/tonne will be permissible to the extent the Company demonstrates, to the Majority Purchasers' reasonable satisfaction, that (x) such excess Operating Costs are being incurred based on a
tradeoff optimization study and (y) such tradeoffs that result in such excess Operating Costs are economically beneficial to the Company and add value to the Holbrook Project), (c) that
ore grades and mineable reserve and resources estimates are consistent with what was provided for in the PEA and (d) forecasted production levels, ramp up rates, royalty rates and all other key
commercial factors are consistent with what was provided for in the PEA (and in respect of royalty rates, including the royalties granted to the Karlsson Group Inc., Grandhaven
Energy LLC and Buffalo Management LLC in the amounts as publicly disclosed prior to the date of the Original Agreement). 


 
 
         6.8    EPC/EPCM Retention.
    The Company shall have retained an Engineering, Procurement and Construction ("EPC") firm or Engineering, Procurement and Construction Management
("EPCM") firm, reasonably satisfactory to the Majority Purchasers, for the provision of EPC or EPCM services in connection with the Holbrook Project. 



        6.9    Permits.    There shall have been no indication
that the Company will be unable to obtain any Necessary Permits no later than (a) December 31, 2013 for the Aquifer Protection Permit from the Arizona Department of Environmental
Quality, the permit to construct and operate a source of air pollutants from the Arizona Department of Environmental Quality, and approval of leases by the Arizona State Land Department,
(b) the applicable dates set forth on Schedule 6.9 for the applicable Necessary Permits listed on Schedule 6.9 and (c) December 31, 2013 for all of the other
Necessary Permits. 


 
 
        6.10    Key Hire.
    (a) The Project Manager (or person serving in an equivalent capacity) employed by the Company as of the Closing shall be reasonably acceptable to the Majority Purchasers (and shall have
been hired after consultation with the Purchasers), (b) the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer of the Company as of the Closing shall be reasonably
acceptable to the Majority Purchasers (it being understood that the persons serving in such roles as of the date of the Original Agreement are reasonably acceptable to the Purchasers for purposes of
this condition) and (c) if the Company shall have hired or fired after the date of the Original Agreement and prior to the Closing the Chief Commercial Officer or the Mine Manager (or other
executives or managers performing substantially similar roles), such hiring or firing shall have been reasonably acceptable to the Majority Purchasers (after consultation with the Purchasers). 


 
 
         6.11    Confirmatory Reports.
    The Purchasers shall have received, from their commercial and technical advisors, reports which verify in all material respects the conclusions of the final Definitive Feasibility Study
and generally support the continued commercial and technical viability of, and the market opportunity for, the Holbrook Project; provided, that if such reports are not
received by the Purchasers within twenty (20) Business Days of the public filing of the final Definitive Feasibility Study with the SEC in accordance with Section 6.7, this condition
shall be deemed waived; provided, further, that, for the avoidance of doubt, if such reports are received within such twenty
(20) Business Days but do not provide such verification and support, then this condition shall not be deemed to be satisfied. 


 
 
        6.12    Off-Take Agreement.
    The Company shall have used best efforts to enter into definitive agreements with respect to the Minimum Off-Take Arrangements. 


 
 
         6.13    No Material Adverse Changes.
    Neither the Company nor any of its Subsidiaries shall have sustained since the date of the Original Agreement any Material Adverse Effect. 



A-13







 

 
 
         6.14    Purchase Permitted By Applicable Law, Etc.
    If requested by a Purchaser, such Purchaser shall have received an Officer's Certificate from the Company certifying as to such matters of fact as such Purchaser may reasonably specify
to enable such Purchaser to determine whether its purchase of Notes shall (a) be permitted by the laws and regulations of each applicable jurisdiction, (b) not violate any applicable law
or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any Tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date of the Original Agreement. 


 
 
         6.15    Private Placement Number.
    A Private Placement Number issued by Standard & Poor's CUSIP Service Bureau shall have been obtained for the Notes. 



 
 
        6.16    Funding Instructions.
    The Purchasers shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the wiring information provided by the Company including
(a) the name and address of the transferee bank, (b) such transferee bank's ABA number and (c) the account name and number into which the Purchase Price is to be deposited. 


 
 
         6.17    Proceedings and Documents.
    All corporate and other proceedings in connection with the Transactions and all documents and instruments incident to such Transactions shall be satisfactory to the Majority Purchasers
and the Purchasers' counsel, and the Purchasers and the Purchasers' counsel shall have received all such counterpart originals or certified or other copies of such documents as the Majority Purchasers
or such counsel may reasonably request. 


 
 
         6.18    Guarantee and Collateral Documents.
    If the Springing Lien Trigger Date shall have occurred prior to the Closing Date, the Company and the Guarantors, as applicable, shall have duly executed and delivered to the Purchasers
such Collateral Documents and other agreements, instruments or filings, all in form and substance satisfactory to the Majority Purchasers, as the Majority Purchasers may reasonably request to create
and perfect Liens on the Collateral to secure the Obligations in favor of the Collateral Agent, together with such customary officer's certificates, opinions of counsel and other documents as the
Majority Purchasers may reasonably request in connection therewith. 


 
 
         6.19    Certificate of Designation.
    The Certificate of Designation shall have become effective (and shall remain in full force and effect as of the Closing) and the Company shall have delivered to the Purchasers at the
Closing the then-effective amended and restated Articles of Incorporation of the Company reflecting the Certificate of Designation. 


 
 
         6.20    Karlsson Agreements.
    (a) There shall have been, since such contracts were entered into, no amendments, waivers or modifications to any terms of any contracts entered into in connection with, or otherwise
relating to, the Karlsson Purchase, or any new contracts entered into with Karlsson or its Affiliates (unless previously consented to in writing by the Majority Purchasers in accordance with
Section 9.1(o)), (b) the Company and its Subsidiaries shall have performed all obligations under all such agreements associated with the Karlsson Purchase and (c) after giving
effect to the issue and sale of the Securities (and the application of the proceeds thereof as contemplated by Section 7.37) and the other Transactions, no default or event of default shall
have occurred and be continuing under the Karlsson Note. 


 
 
         6.21    Purchaser Expenses.
    The Company shall have paid at the Closing in accordance with Section 2.2 the Transaction Fee and all Purchaser Expenses incurred by the Purchasers to the extent not previously
paid. 


 
 
         6.22    Amendment Confirmation.
    The Company shall have received an amendment of or waiver (which shall be in full force and effect as of the Closing) under the agreements specified in Schedule 6.22 in the manner
described on such Schedule 6.22. 



A-14









 



































 




 
 
         6.23    Bylaws Amendment.
    The Company shall have effected such amendments to its Bylaws (which shall be in full force and effect as of the Closing) as are necessary or desirable, in the reasonable opinion of the
Majority Purchasers, to effect the voting and director-designation rights of the Notes and the Apollo Preferred Stock. 



 
 

  ARTICLE VII    
    
    REPRESENTATIONS AND WARRANTIES OF THE COMPANY    
    


        The Company represents and warrants to each Purchaser that, except as set forth in the applicable section of the Company Disclosure
Schedules: 



 
 
         7.1    Organization; Power and Authority.
    Each of the Company and its Subsidiaries is duly organized or incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation,
with all requisite power and authority (corporate or other) to own its properties and carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, or is subject to no material liability or disability by reason of the failure to be so qualified or in good standing in any such jurisdiction. 


 
 
         7.2    Authorization, Etc.
    


        (a)   The
Company has, as of the date of the Original Agreement, an authorized capitalization and issued and outstanding equity securities (including Convertible Securities or
Options) set forth on Schedule 7.2(a). 


        (b)   All
of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are
not subject to any preemptive or similar rights. Except as described in Schedule 7.2(b) or as permitted by Section 9.1 or consented to by the Majority Purchasers, there are no
outstanding rights (including preemptive rights), Options to acquire, or instruments convertible into or exchangeable or exercisable for, any shares of capital stock or other equity interest in the
Company or any of its Subsidiaries, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock or other equity interest of the
Company or any such Subsidiary, any such convertible or exchangeable or exercisable securities or any such rights or Options. All of the outstanding shares of capital stock or other equity interests
of AWP and PGRI Delaware have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of any
Liens, restrictions on voting or transfer or any other claim of any third party. None of the Company, PGRI Delaware of AWP own or hold, directly or indirectly, any interests in, capital stock of or
other securities (whether equity or debt) of any Person (other than securities of PGRI Delaware and AWP). No bonds, debentures, notes or other Indebtedness of the Company or any of its Subsidiaries
having the right to vote on any matters on which the Company's shareholders may vote are issued or outstanding unless consented to in writing by the Majority Purchasers. The issuance of the
Securities, the conversion of the Notes and the exercise of the Apollo Warrants will not entitle any holder of any equity interests in the Company or any of its Subsidiaries (including any holder of
Options or Convertible Securities) to any anti-dilution or similar adjustments or to any preemptive or similar rights. At Closing, there will be outstanding no other shares of
Series A Preferred Stock of the Company other than the Apollo Preferred Shares being issued hereunder. 


        (c)   The
Notes and the guarantees thereof by the Guarantors have been, or, when executed, will have been, duly authorized by all necessary action (corporate or other) and,
when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company and of
each of 



A-15







 

the
Guarantors, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws affecting
creditors' rights generally and subject to general principles of equity and implied covenants of good faith and fair dealing, regardless of whether considered in a proceeding in equity or at law (the
"Enforceability Exceptions"). When issued and sold against receipt of the Purchase Price as provided in
this Agreement, the Notes will not be subject to preemptive or similar rights of any shareholder of the Company and will be free of restrictions on transfer other than restrictions on transfer under
applicable Laws or as set forth herein. When issued, shares of Common Stock issuable upon conversion of the Notes, exercise of the Apollo Warrants and pursuant to Section 9.8 and the Apollo
Preferred Shares will have been duly authorized by all necessary corporate action and when so issued will be validly issued, fully paid and nonassessable, will not be subject to preemptive or similar
rights of any shareholder of the Company, will be free and clear of all Liens, and will be free of restrictions on transfer other than restrictions on transfer under applicable Laws or as set forth
herein. 


 
 
         7.3    Execution; Due Authority.
    


        (a)   The
execution, delivery and performance of the Original Agreement, this Agreement, the Investors Rights Agreement, the Apollo Warrants and the Royalty Agreement (and all
other documents required to be executed and delivered by the Company or any of the Guarantors) and the consummation of the transactions contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of the Company and each of the Guarantors, except for obtaining the Requisite Shareholder Approval. 


        (b)   This
Agreement, the Original Agreement, the Investors Rights Agreement and the Royalty Agreement have been duly executed and delivered by the Company (and, in the case
of the Royalty Agreement, AWP and PGRI Delaware) (and all documents required to be executed and delivered by the Company or any of the Guarantors at or prior to the Closing will be duly executed and
delivered by the Company and/or such Guarantors) and this Agreement, the Investors Rights Agreement and the Royalty Agreement constitute, and at the Closing (assuming the due and valid execution and
delivery of such documents by the other parties thereto) such documents will constitute, the valid and binding obligations of the Company and each of the Guarantors, enforceable in accordance with
their terms, except for the Enforceability Exceptions. The Apollo Warrants will, when issued, have been duly executed and delivered by the Company and will constitute the valid and binding obligations
of the Company, enforceable in accordance with their terms, except for the Enforceability Exceptions. 


 


        7.4   No
Conflicts. The issue and sale of the Securities and the compliance by the Company and its Subsidiaries with all of the provisions of the
Securities, this Agreement, the Investors Rights Agreement, the Apollo Warrants and the Royalty Agreement, and the consummation of the Transactions will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under, or give rise to any right of termination, cancellation, payment or acceleration under, any contract, indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries are a party or by which the Company or any of its Subsidiaries are bound or to which any
of the property or assets of the Company or any of its Subsidiaries are subject, nor will such action result in any violation of the provisions of the Second Amended and Restated Articles of
Incorporation or the Second Amended and Restated Bylaws of the Company (collectively, the "Company Organizational Documents") or any statute or any order, rule or
regulation of any court or Governmental Authority having jurisdiction over the Company or any of its Subsidiaries or any of their properties, except, with respect to any of the
foregoing (other than the violation of the provisions of the Company Organizational Documents), as would not reasonably be material to the Company and its Subsidiaries, taken as a whole, or as would
not have a material adverse effect on the ability 



A-16







 

of
each of the Company and the Guarantors to perform its obligations under this Agreement, in each case except as disclosed to the Purchasers in writing by the Company prior to the date of the
Original Agreement. 


 
 
        7.5    Consents, Approvals or Waivers.
    The execution, delivery and performance of this Agreement, the Investors Rights Agreement and the Royalty Agreement, including the issue and sale of the Notes and the Apollo Warrants and
the consummation of the Transactions, by the Company and the Guarantors will not be subject to any consent, approval or waiver from any Governmental Authority or other third Person, except
(a) the filing of the Certificate of Designation with the Secretary of State of the State of Nevada, (b) the Requisite Shareholder Approval, (c) as set forth on
Schedule 7.5 or as disclosed to the Purchasers in writing by the Company prior to the date of the Original Agreement and (d) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or "blue sky" laws in connection with the purchase and distribution of the Notes by the Purchasers. 


 
 
         7.6    Legal and Governmental Proceedings.
    There are no legal or governmental proceedings ("Proceedings") pending to which the Company or any of its Subsidiaries is a party or of which any property of
the Company or any of its Subsidiaries is subject which, individually or in the aggregate, is reasonably expected to be material to the Company and its Subsidiaries, taken as a whole, or would have a
material adverse effect on the ability of each of the Company and the Guarantors to perform its obligations under this Agreement, and, to the Knowledge of the Company and each of the Guarantors, no
such Proceedings are threatened or contemplated by Governmental Authorities or threatened by others. 


 
 
         7.7    Compliance With Laws.
    


        (a)   The
Company and its Subsidiaries are, and have been since February 11, 2011, in compliance in all material respects with all applicable Laws. No material change
is required in the Company or its Subsidiaries' processes, properties or procedures in connection with any applicable Laws, and none of the Company or its Subsidiaries has, prior to the date of the
Original Agreement, received any notice
or communication of any material noncompliance with any such Laws that has not been cured as of the date of the Original Agreement. 


        (b)   None
of the Company, any of its Subsidiaries or Affiliates, or any director, officer or employee of the Company or any of its Subsidiaries or Affiliates, or any
consultant, agent, broker, representative or other person associated with or acting for or on behalf of the Company or any of its Subsidiaries or Affiliates, has taken or failed to take any action or
otherwise engaged in any conduct, directly or indirectly, that would constitute or otherwise result in a violation by any such Person of the Foreign Corrupt Practices Act (15 U.S.C.
§§78m(b), 78dd-1, 78dd-2, 78ff) (the "FCPA"), The Bribery Act of 2010 of the United Kingdom (the "UK Bribery
Act"), or any other applicable anti-corruption or other law, rule or regulation regarding bribery, political contributions, gifts, entertainment, hospitality or the
provision of other things of value or advantage, including, without limitation: directly or indirectly (i) making, offering or promising to make, or authorizing the making of, any unlawful
payment of money or other thing of value or advantage to any person; (ii) giving, offering or promising to give, or authorizing the giving of, any unlawful gift, political or charitable
contribution or other thing of value or advantage to any person; or (iii) requesting or receiving any unlawful payment, gift, political or charitable contribution or other thing of value or
advantage. 


 
 
         7.8    Licenses and Permits.
    The Company and its Subsidiaries possess all material licenses, certificates, permits and other authorizations ("Permits") issued by, and have made all
declarations and filings with, the appropriate Governmental Authorities that are necessary for the present conduct of their respective businesses, including ownership and lease of their respective
properties, as described in the Company SEC Documents, including the Holbrook Project, and neither the 



A-17







 

Company
nor any of its Subsidiaries have received notice of any revocation or modification of any material Permits (including any Necessary Permits) or has any reason to believe that any material
Permit (including any Necessary Permits) will not be renewed in the ordinary course. 


 
 
         7.9    Company SEC Documents.
    


        (a)   (i)
Each form, report, document, statement, schedule, prospectus, registration statement and definitive proxy statement filed by the Company with the SEC (the
"Company SEC Documents") since
February 11, 2011, and all Company SEC Documents filed after the date of this Agreement and prior to the Closing Date, (i) were and, in the case of Company SEC Documents filed after the
date of this Agreement, will be, as of their respective dates, prepared in all material respects in accordance with the applicable requirements of the Securities Act, the Exchange Act and the
Sarbanes-Oxley Act, as the case may be, and the rules and regulations thereunder and (ii) did not at the time they were filed (or, if amended or superseded by a subsequent filing, then on the
date of such filing), and in the case of such Company SEC Documents filed after the date of this Agreement, will not as of the time they are filed, contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Company SEC Document necessary in order to make the statements therein, in the light of the circumstances under which they were and will be
made, not misleading. To the Knowledge of the Company, as of the date of the Original Agreement, none of the Company SEC Documents is the subject of ongoing SEC review or outstanding SEC comment. 


        (b)   The
chief executive officer and chief financial officer of the Company have made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act,
and statements contained in such certificates are complete and correct, and the Company is otherwise in material compliance with all applicable provisions of the Sarbanes-Oxley Act. 


        (c)   As
of the date of the Original Agreement, the Company has disclosed, based on its most recent evaluation, to the Company's auditors and the audit committee of the Board
of Directors (i) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect in
any material respect the Company's ability to record, process, summarize and report its consolidated financial information; and (ii) any fraud known to management, whether or not material that
involved management or other employees who have a significant role in the Company's internal controls over financial reporting. As of the date of the Original Agreement, the Company has not received
any complaint or allegation in writing since February 11, 2011, regarding accounting, internal accounting controls or auditing matters, including any such complaint regarding improper
accounting or auditing matters. The Company and its consolidated Subsidiaries have established and maintain disclosure controls and procedures as defined in Rule 13a-15(e) under the
Exchange Act; such disclosures controls and procedures are reasonably designed to ensure that material information relating to the Company and its consolidated Subsidiaries is made known on a timely
basis to the individuals responsible for the preparation of the Company SEC Documents; and, as of the date of the Original Agreement, to the Knowledge of the Company, the Company has not identified
any material weaknesses in the design or operation of internal control over financial reporting. As of the date of the Original Agreement, to the Knowledge of the Company, there is no reason to
believe that its chief executive officer and chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to
Section 302 of the Sarbanes-Oxley Act when next due. 


 
 
        7.10    No Material Adverse Effect.
    Neither the Company nor any of its Subsidiaries has sustained since the Reference Balance Sheet Date any Material Adverse Effect. 


 
 
         7.11    Exchange Act.
    None of the Transactions (including, without limitation, the use of the proceeds from the sale of the Securities as described in Section 7.37) will violate or result in a 



A-18







 

violation
of Section 7 of the Exchange Act, or any rule or regulation promulgated thereunder, including, without limitation, Regulations T, U and X of the Board of Governors of the
Federal Reserve System. 


 
 
         7.12    Price Manipulation.
    Prior to the date of the Original Agreement, neither the Company nor any of its Affiliates have taken any action which is designed to or which has constituted or which might have been
expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the sale of any securities of the Company. 


 
 
         7.13    Class of Notes.
    When the Notes are issued and delivered pursuant to this Agreement, the Notes will not be of the same class (within the meaning of Rule 144A under the Securities Act) as
securities which are listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. 


 
 
         7.14    Status Under Investment Company Act.
    The Company is not, and after giving effect to the offering and sale of the Notes and the application of the proceeds thereof, will not be an "investment company," as such term is
defined in the United States Investment Company Act of 1940, as amended (the "Investment Company Act"). 



 
 
        7.15    Restrictions on Sale of Notes, Etc.
    


        (a)   Neither
the Company nor any of its Subsidiaries, nor any person acting on behalf of the Company or any of its Subsidiaries, has offered or sold the Notes by means of any
general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or, with respect to Notes sold outside the United States to non-U.S. persons
(as defined in Rule 902 under the Securities Act), by means of any directed selling efforts within the meaning of Rule 902 under the Securities Act, and the Company and any Affiliate of
the Company, and any person acting on its or their behalf, have complied with and will implement the "offering restriction" within the meaning of such Rule 902. 


        (b)   Within
the six (6) months preceding the date of the Original Agreement, neither the Company nor any of its Subsidiaries, nor any other person acting on behalf of
either the Company or any of its Subsidiaries, has since February 11, 2011 offered or sold to any person any Notes, or any securities of the same or a similar class as the Notes, other than
Notes offered or sold to the Purchasers hereunder. The Company and each of its Subsidiaries will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the
United States or to any U.S. person (as defined in Rule 902 under the Securities Act) of any Notes or any substantially similar security issued by the Company or any Guarantor, within six
(6) months subsequent to the date on which the distribution of the Notes has been completed (as notified to the Company by the Purchasers) is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer and sale of the Notes in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration
provisions of the Securities Act. 


 
 
         7.16    Company Controls and Procedures.
    


        (a)   The
Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in material conformity with GAAP; and
(iii) access to assets is permitted only in accordance with management's general or specific authorization. 


        (b)   Since
the date of the latest audited financial statements included in the Company's Annual Report on Form 10-K
("Form 10-K") for the fiscal year ended March 31, 2012, there has been no change in the Company's internal control over financial reporting that
has materially 



A-19







 

adversely
affected, or is reasonably likely to materially adversely affect, the Company's internal control over financial reporting. 



        (c)   The
Company maintains disclosure controls and procedures that have been designed to ensure that material information relating to the Company and its Subsidiaries is made
known to the Company's principal executive officer and principal financial officer by others within those entities, and such disclosure controls and procedures are effective. 


 
 
         7.17    Public Accounting Firm.
    Ehrhardt Keefe Steiner & Hottman PC, which has audited certain financial statements of the Company, is an independent registered public accounting firm as required by the
Securities Act and the rules and regulations of the SEC promulgated thereunder. 


 
 
         7.18    Financial Statements; Material Liabilities.
    


        (a)   Each
of the consolidated financial statements contained in the Company SEC Documents (including in each case all notes and schedules thereto), including any Company SEC
Documents filed after the date of the Original Agreement, complied or will comply, as of its respective date, in all material respects with all applicable accounting requirements and the rules and
regulations of the SEC with respect thereto, was or will be prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC), and fairly presented or will fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries as of their respective dates and the results of operations and the cash flows of the Company and its consolidated
Subsidiaries for the periods presented therein, except that any unaudited interim financial statements do not include all of the information and notes required by GAAP for complete financial
statements and are subject to normal year-end adjustments. 


        (b)   The
Company and its Subsidiaries are not subject to any Liabilities or obligations of any nature, whether or not accrued, absolute, contingent or otherwise and whether
due or to become due, other than Liabilities (i) as reflected or reserved against on the balance sheet for the quarter ended September 30, 2012, as contained in the Company SEC Documents
(the "Reference Balance Sheet"), or (ii) incurred in the ordinary course of business consistent with past practice since the date of the Reference Balance Sheet
that have not had, individually or in the aggregate, a Material Adverse Effect. 


 
 
         7.19    Title to Property; Leases.
    Except as would not adversely affect the Company's ability to economically construct and operate a potash mine and related facilities on such properties or otherwise conduct its
operations with respect to such properties or as disclosed to the Purchasers in writing by the Company prior to the date of the Original Agreement: each of the Company and each of the Subsidiaries
owns or leases all such properties as are necessary to the conduct of its operations as presently conducted; the Company and the Subsidiaries have good and marketable title to all surface real
property owned by them in fee simple, and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects of any kind (including
mining, zoning, use or building code restrictions that would prohibit or prevent the continued effective ownership, leasing, licensing or use of such property in the business of the Company and the
Subsidiaries) that would prevent the Company from conducting its business as it is now being conducted; any real property and buildings held under lease by the Company and the Subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the
Company and the Subsidiaries; the Company and the Subsidiaries hold either mining leases, mining concessions, mining claims or participating interests or other conventional property or proprietary
interests or rights, recognized in the jurisdiction in 



A-20







 

which
a particular property is located, in respect of the ore bodies and minerals located in properties in which the Company and its Subsidiaries have an interest under valid, subsisting and
enforceable title documents or other recognized and enforceable agreements or instruments, sufficient to permit the Company or applicable Subsidiary to explore the minerals relating thereto except
where the failure to have obtained such rights would individually or in the aggregate be, or reasonably expected to be, not material to the Company and its Subsidiaries, taken as a whole; all
property, leases or claims in which the Company or any Subsidiary has an interest or right have been validly located and recorded in accordance with all applicable laws and are valid and subsisting
except where the failure to be so would not be, or not reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole; the Company and its Subsidiaries have all necessary
surface rights, access rights and other necessary rights and interests relating to the properties in which the Company and its Subsidiaries have an interest, granting the Company or applicable
Subsidiary the right and ability to explore for minerals for development purposes as are appropriate in view of the rights and interest therein of the Company or applicable Subsidiary, with only such
exceptions as do not interfere with the currently conducted business of the Company or applicable Subsidiary or of the rights or interest so held, and each of the proprietary interests or rights and
each of the documents, agreements and instruments and obligations relating thereto referred to above is currently in good standing in the name of the Company or a Subsidiary except where the failure
to be so would not be, or not reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole; the Company is not aware of any reason that it is not or would not be entitled
to extract minerals from its properties and to do all of the exploration and development contemplated in the Company's current business plan except for such failures that would not individually or in
the aggregate be, or reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole; there are no pending or contemplated condemnation proceedings affecting the real
properties owned by the Company or its Subsidiaries with a fair market value in excess of $1,000,000 or any sale or disposition thereof in lieu of condemnation, and no real property owned by the
Company or its Subsidiaries with a fair market value in excess of $1,000,000, or any interest therein, is subject to any right of first refusal, option or other contractual right to purchase such
property or interest therein. 


 
 
         7.20    Environmental Matters.
    


        (a)   Except
as would not, individually or in the aggregate, be, or reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole: 



        (i)    To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries is, or has been, in violation of any U.S. federal, state, local or foreign law
(including common law), regulation, rule,
requirement, decision or order relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), natural resources, or wildlife, including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of Hazardous Substances (collectively,
"Materials of Environmental Concern"), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of, or
exposure to, Materials of Environmental Concern (collectively, "Environmental Laws"). As used herein, "Environmental Laws" means and includes, without limitation, those
laws set forth in Title 49 of the Arizona Revised Statutes; the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601 et seq.
("CERCLA"); the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the National Environmental Policy Act, §§ 4321 et
seq.; and the Clean Water Act, 33 U.S.C. §§ 1251 et seq. 



        (ii)   To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries is in violation or non-compliance with any Permits or other governmental
authorizations 




A-21







 


required
for the operation of the business of the Company or its Subsidiaries under applicable Environmental Laws. 



        (iii)  Neither
the Company nor any of its Subsidiaries has received any written communication, whether from a Governmental Authority, citizens group, employee or otherwise,
that alleges that the Company or any of its Subsidiaries is in violation of any Environmental Law. 


        (iv)  There
is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which the Company or any of its Subsidiaries
has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at
any location owned, leased or operated by the Company or any of its Subsidiaries, now or in the past (collectively, "Environmental Claims") pending or, to the Knowledge of
the Company or any of its Subsidiaries, threatened in writing against the Company or any of its Subsidiaries or any person or entity whose liability for any Environmental Claim the Company or any of
its Subsidiaries has retained or assumed either contractually or by operation of law; and 


        (v)   To
the Knowledge of the Company, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the
release, emission, discharge, presence or disposal of any Material of Environmental Concern (including CERCLA hazardous substances), that would be reasonably expected to result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against the Company or any of its Subsidiaries or any person or entity whose liability for any Environmental Claim the Company or
any of its Subsidiaries has retained or assumed either contractually or by operation of law. 




        (b)   To
the Knowledge of the Company, the Company has not used or permitted to be used, except in compliance with all Environmental Laws, any freehold, leasehold and other
real property interests or rights, or other rights relating to the Mineral Rights (including licenses from landholders permitting the use of land, leases, rights of way, occupancy rights, surface
rights and easements) to release, dispose, recycle, generate, manufacture, process, distribute, use, treat, store, transport or handle any Hazardous Substance. To the Knowledge of the Company, there
are not Hazardous Substance on, in or under any freehold, leasehold and other real property interests or rights, or other rights relating to the Mineral Rights (including licenses from landholders
permitting the use of land, leases, rights of way, occupancy rights, surface rights and easements) held, occupied or used, or formerly held, occupied or used, by the Company or its Subsidiaries. 


        (c)   None
of the Company, its Subsidiaries, the Mineral Rights or any real property of the Company or its Subsidiaries is subject to any current, nor, to the Knowledge of the
Company, any pending or threatened: 



        (i)    claim,
action, notice, demand, allegation, investigation, proceeding, application, order, judgment, requirement or directive which relates to environmental, natural
resources, Hazardous Substances, human health or safety matters, and which may require or result in any work, repairs, rehabilitation, reclamation, remediation, construction, obligations, liabilities
or expenditures (and, to the Knowledge of the Company, there is no basis for such a claim, action, notice, demand, allegation, investigation, proceeding, application, order, judgment, requirement or
directive); or 




A-22













 



































 





        (ii)   allegation,
demand, direction, order, notice or prosecution with respect to any Environmental Law applicable thereto including any Laws respecting the use, storage,
treatment, transportation, rehabilitation, reclamation, remediation or disposition of any Hazardous Substance and the Company has not settled any allegation of non-compliance with
Environmental Laws prior to prosecution. 




        (d)   The
Company has provided to the Purchasers a true and complete copy of each environmental audit, assessment, study or test of which it is aware as of the date of the
Original Agreement relating to the Holbrook Project and the Mineral Rights, including any environmental and social impact assessment study reports. 



        (e)   To
the Knowledge of the Company, there are no pending or proposed changes to Environmental Laws that would render illegal or materially restrict the operations of the
Company, its Subsidiaries or the Holbrook Project. 


 
 
         7.21    Intellectual Property.
    Except as would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, the Company and each of its Subsidiaries, own or possess sufficient
intellectual property and proprietary rights, including, without limitation, trademarks, service marks, trade names, patent rights, copyrights, licenses, approvals, trade secrets and all other similar
rights (collectively, the "Intellectual Property Rights") reasonably necessary to conduct their business as now conducted and the expected expiration of any of such
Intellectual Property Rights would not be material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole, and neither the Company nor any of its Subsidiaries, has
received any notice of infringements or conflict with asserted Intellectual Property Rights which would reasonably be material, individually or in the aggregate, to the Company and its Subsidiaries,
taken as a whole. 


 


        7.22    Taxes.    


        (a)   Except
as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole: (i) the Company, since
February 11, 2011, and each of its Subsidiaries have timely filed or caused to be filed all U.S. federal, state and foreign income, franchise and other Tax returns and reports required to be
filed by any of them or have properly requested extensions thereof, and have paid or caused to be paid all Taxes required to be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them, except, in each case, any Taxes that are being contested in good faith by appropriate proceedings and for which the Company and each of its
Subsidiaries, as applicable, has set aside on its books adequate accruals or reserves in accordance with GAAP; and (ii) the Company has made adequate charges, accruals and reserves, in
accordance with GAAP, in its consolidated financial statements contained in the Form 10-K for the fiscal year ended March 31, 2012 in respect of all U.S. federal, state and
foreign income, franchise and other Taxes for all periods as to which the tax liabilities of the Company since February 11, 2011 or any of its Subsidiaries, has not been finally determined.
Neither the Company since February 11, 2011 nor any of its Subsidiaries has received written notice from any Taxing authority that it has failed to timely file any Tax return or failed to
timely pay any Taxes owed by it. 


        (b)   The
Common Stock is (i) traded on a national securities exchange which is registered under Section 6 of the Exchange Act, and (ii) regularly quoted
by brokers or dealers holding themselves out to buy or sell the Common Stock at such quoted price, all within the meaning of Code Section 897 and the Treasury Regulations thereunder. 


 
 
         7.23    Compliance with ERISA.
    Except as would not reasonably be expected, either individually or in the aggregate, to be material to the Company and its Subsidiaries, taken as a whole: the Company and its
Subsidiaries and all "employee benefit plans" (as defined under 



A-23







 

Section 3(3)
of ERISA) established or maintained by the Company, its Subsidiaries or their ERISA Affiliates have been and are in compliance with their respective terms and all applicable Laws,
including ERISA and the Code; to the Knowledge of the Company, each Multiemployer Plan to which the Company, its Subsidiaries or an ERISA Affiliate contributes is in compliance with its terms and all
applicable Laws, including ERISA and the Code; no "reportable event" (as defined under Section 4043
of ERISA) has occurred or is reasonably expected to occur with respect to any Benefit Plan; no "single employer plan" (as defined in Section 4001 of ERISA) established or maintained by the
Company, its Subsidiaries or any ERISA Affiliate, if such plan were terminated, would have any "amount of unfunded benefit liabilities" (within the meaning of Section 4022(c) of ERISA), and
each such plan satisfies the minimum funding standards set forth in Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA, whether or not waived; neither the Company, its
Subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to incur any unsatisfied liability under (a) Title IV of ERISA with respect to termination of any Benefit Plan,
or withdrawal from any Multiemployer Plan, or (b) Sections 412, 4971, 4975 or 4980B of the Code; the PBGC has not instituted proceedings to terminate any Benefit Plan, and no condition
exists that would reasonably be expected to result in such proceedings being instituted or which would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Benefit Plan; with respect to each Benefit Plan, all premiums to the PBGC have been timely paid in full; there does not now exist, nor do any circumstances exist that
would reasonably be expected to result in any liability (x) under Title IV or Section 302 of ERISA, (y) under Sections 412 and 4971 of the Code or (z) as a result of
a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and without limiting the generality of the foregoing,
neither the Company nor any of its Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any transaction described in Section 4069 or Section 4204 or 4212 of ERISA;
the Company and its Subsidiaries have no liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof, except for health continuation
coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA and at no expense to the Company and its Subsidiaries; and with respect to each "employee benefit plan"
for which the Company, its Subsidiaries or any of their ERISA Affiliates would have any liability that is intended to be qualified under Section 401 of the Code (and the related trust), the
Internal Revenue Service has issued a favorable determination letter that has not been revoked, there are no circumstances and no events have occurred that could adversely affect the qualified status
of any such plan (or related trust), and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification. 


 
 
         7.24    Material Labor Disputes; Labor Laws.
    Employees of the Company and its Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees. No
labor organization or group of employees of the Company or any of its Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification
proceedings or petitions seeking a representation proceeding presently pending or threatened to be brought or filed, with the National Labor Relations Board or any other labor relations tribunal or
authority. There are no pending or, to the Knowledge of the Company, threatened strikes, lockouts, slowdowns or other material labor disputes against the Company or any of its Subsidiaries. To the
best of the Knowledge of the Company, the hours worked by and payments made to employees of the Company and each of its Subsidiaries have not been in material violation of the Fair Labor Standards Act
or any other applicable federal, state, local or foreign law dealing with such matters. Except for payroll yet to be paid for the Company's current payroll cycle (estimated to be in the rough amount
of approximately $150,000) and, as would otherwise not reasonably be expected, individually or in the aggregate, to be material to the Company and its Subsidiaries, taken as a whole, all payments 



A-24







 

known
to be due from the Company and each Guarantor, or for which any known claim has been made against the Company and each Guarantor, on account of wages and employee health and welfare insurance
and other benefits, have been paid or accrued as a liability on the books of the Company and each of its Subsidiaries. The consummation of the Transactions will not give rise to any right of
termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Company or any of its Subsidiaries is bound. It is understood that the Company may
need to create new positions and in doing so restructure the Company's personnel and contractor relations in connection with its continuing operations, which will be funded in part by the proceeds
from the Transaction. 


 
 
         7.25    Mineral Rights.
    Except as would not adversely affect the Company's ability to economically construct and operate a potash mine and related facilities with respect to such Mineral Rights or otherwise
conduct its operations with respect to such Mineral Rights or as disclosed to the Purchasers in writing by the Company prior to the date of the Original Agreement: 



        (a)   Schedule 7.25(a)
describes all Mineral Rights as of the date of the Original Agreement. The Company and its Subsidiaries holds all licenses and has all interests
in any mineral interests, mining concessions, mining tenements or other mineral rights necessary or appropriate to authorize and enable the Company and its Subsidiaries to explore, develop, construct
or operate the Holbrook Project as contemplated as of the date of the Original Agreement. As of the date of the final Definitive Feasibility Study, the Company and its Subsidiaries will hold all
licenses and have all interests in any mineral interests, mining concessions, mining tenements or other mineral rights necessary or appropriate to authorize and enable the Company and its Subsidiaries
to explore, develop, construct or operate the Holbrook Project as contemplated in the Definitive Feasibility Study. 


        (b)   The
Mineral Rights have been properly located and recorded in compliance with applicable Laws and, in respect of the Mineral Rights, are comprised of valid and
subsisting mineral claims. 


        (c)   The
Company or its Subsidiaries is the sole registered and beneficial owner of the Mineral Rights, with good and marketable title thereto, free and clear of any title
defect or Liens. 


        (d)   The
Mineral Rights constitute all of the right, title and interest necessary or appropriate to authorize and enable the Company to explore, develop, construct or operate
the Holbrook Project as contemplated as of the date of the Original Agreement. 


        (e)   The
Company has the right, free and clear of any Liens, to access and use the surface area where all of the Mineral Rights are located necessary to explore, develop,
construct or operate the Holbrook Project as contemplated as of the date of the Original Agreement, and the Company has paid to all surface area owners all rent, royalties, indemnification or other
amounts to which they are entitled, whether pursuant to any contract or by Law. 



        (f)    The
Company has the exclusive right to deal with the Mineral Rights, and there are no restrictions on the ability of the Company to use, transfer or exploit the Mineral
Rights except pursuant to applicable Laws. 


        (g)   No
Person other than the Company has any interest in the production or profits to be obtained in the future from the Mineral Rights or any royalty in respect thereof or
any right to acquire such interest. 




A-25







 


        (h)   There
are no farm-in or earn-in rights, rights of first refusal or similar rights or provisions which could materially affect the Mineral Rights
other than as disclosed in Item 3 of Schedule 7.18. 


        (i)    The
Company has not received any notice, whether written or oral, from any Governmental Authority or any Person, of any revocation or intention to revoke the interest of
the Company in any Mineral Rights. 


        (j)    The
Mineral Rights are in good standing under applicable Laws; all work required to be performed has been performed and all Taxes, rentals, fees, expenditures and other
payments in respect thereof have been paid or incurred and all filings in respect thereof have been made. 


        (k)   All
mining operations and all exploration activities in respect of the Mineral Rights have been conducted in accordance with good mining and engineering practices and
all material workers' compensation and health and safety regulations have been complied with. 


        (l)    There
are no Claims that have been commenced, are pending or, to the Knowledge of the Company, are threatened against the Company, nor is there a state of facts or
events that may give rise thereto, which could affect the title to or right to explore or develop the Mineral Rights. 





 
 
        7.26    Insurance Coverage.
    The Company and its Subsidiaries carry, or are covered by, insurance with insurers of recognized financial responsibility in such amounts, with such deductibles and covering such risks
as the Company and its Subsidiaries deem adequate and prudent for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in
similar businesses. The Company and its Subsidiaries have no reason to believe that such insurance coverage cannot be renewed as and when such coverage expires or that similar coverage could not be
obtained from similar insurers at a cost that would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole (other than as a result of general market
conditions). As of the date of the Original Agreement, neither the Company nor any of its Subsidiaries has (a) received notice from any insurer or agent of such insurer that a material amount
of capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (b) any notice from its insurers that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business. 


 
 
        7.27    Restrictions on Subsidiaries.
    Except as provided in the Karlsson Agreements, no Subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a
party or is subject, from paying any dividends to the Company, from making any other distribution on such Subsidiary's capital stock, from repaying to the Company any loans or advances to such
Subsidiary from the Company or from transferring any of such Subsidiary's properties or assets to the Company or any other Subsidiary of the Company. 


 
 
        7.28    No Registration Rights.
    Schedule 7.28 sets forth all agreements as of the date of the Original Agreement pursuant to which any Person has the right to require the Company or any of its Subsidiaries to
register any securities for sale under the Securities Act. After the date of the Original Agreement, other than pursuant to the Investors Rights Agreement or as consented to by the Majority
Purchasers, no Person has received the right to require the Company or any of its Subsidiaries to register any securities for sale under the Securities Act. 


 
 
        7.29    Antitakeover Provisions.
    The Company's Board of Directors has taken all necessary actions so that no "business combination," "control share acquisition," or similar anti-takeover law or regulation is
applicable to the Transactions, including with respect to the issuance of the Securities or 


A-26







 

to
the execution, delivery or performance of this Agreement, the Original Agreement and the consummation of the Transactions. 


 
 
        7.30    No General Solicitation.
    None of the Company or any of its Affiliates (as defined in Rule 501(b) of Regulation D under the Securities Act), has, directly or through an agent, engaged in any form of
general solicitation or general advertising in connection with the offering of the Securities (as those terms are used in Regulation D) under the Securities Act or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act, and the Company has not entered into any contractual arrangement with respect to the distribution of the Securities
except for this Agreement. 


 
 
        7.31    Material Contracts.
    All Material Contracts of the Company or its Subsidiaries existing on the date of the Original Agreement are contained in the Company's electronic data room maintained through Merrill
Corporation, and (a) the Company is not, and, to the Knowledge of the Company, no other person is as of the date of the Original Agreement, in default under any Material Contract and
(b) no notice of default or breach has been received or delivered by the Company under any Material Contract, the resolution of which is currently outstanding, and to the Knowledge of the
Company no event or circumstances are occurring, have occurred or exist which would, but for the passage of time, constitute an event of default under any Material Contract, including any contracts
entered into in connection with, or otherwise relating to, the Karlsson Purchase. 


 
 
        7.32    Voting Agreements.
    To the Knowledge of the Company, except for the Support Agreements entered into in connection with the Transactions, as of the date of the Original Agreement, there are no existing
voting or similar agreements between the Company's shareholders which could reasonably be expected to adversely affect the ability of the Company to perform its obligations under this Agreement. 


 
 
        7.33    Compliance with Money Laundering Laws.
    The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of jurisdictions where the Company and its Subsidiaries conduct business, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "Money Laundering
Laws") and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect
to the Money Laundering Laws is pending or, to the Knowledge of the Company, threatened. 


 
 
        7.34    Compliance with OFAC.
    Neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its Subsidiaries, is
currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC"). The Company will not, directly or
indirectly, use the proceeds of the offering contemplated hereby, or lend, contribute or otherwise make available such proceeds to any person currently subject to any U.S. sanctions administered by
OFAC. 


 
 
        7.35    Compliance with Other Laws, Regulations and  Instruments.
    The Company and each of its Subsidiaries is in compliance with all Laws, regulations and orders (including any Environmental Laws, the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, Pub. L. 107-56, as it may be amended or otherwise modified from time to time (the
"Patriot Act"), margin regulations and ERISA) of any governmental agency or body applicable to it or its property and all indentures, agreements and other instruments
binding upon it or its property, except where the failure to do so, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a
whole. 


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        7.36    Solvency.    Immediately after giving effect to the Transactions, the Company and
its Subsidiaries on a consolidated basis, will be Solvent. 


 
 
        7.37    Use of Proceeds.
    The Company will apply the proceeds of the sale of the Securities as set forth in Section 15.1. 


 
 
        7.38    Brokers' Fees.
    No Person is entitled to any brokerage, financial advisory, finder's or similar fee or commission payable by any party hereto in connection with the Transactions based upon arrangements
made by or on behalf of the Company. 


 
 
        7.39    Collateral Documents.
    The Collateral Documents, when executed and delivered to the extent required herein, will create legal and valid Liens on all the Collateral in favor of the Collateral Agent, for the
benefit of the Purchasers and the other holders of Obligations, and such Liens will constitute perfected and continuing Liens on the Collateral, securing the Obligations, enforceable against the
applicable Obligor, and having priority over all other Liens on the Collateral, except (a) Liens resulting from mandatory provisions of applicable law and (b) Liens specifically and
expressly permitted to be incurred by this Agreement on a senior basis to the Obligations. 


 


        7.40    Covenants.    From the date of the Original Agreement through the date of this
Agreement, the Company complied in all material respects with its covenants and agreements in the Original Agreement. 


 
 

  ARTICLE VIII
  
    REPRESENTATIONS OF THE PURCHASERS    
    


        Each
of the Purchasers represents and warrants, solely as to itself, and on a several, not joint basis, to the Company that: 



 
 
         8.1    Organization; Power and Authority.
    Such Purchaser is duly organized or incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation, with all requisite power
and authority (corporate or other) to own its properties and carry on its business as now conducted and as proposed to be conducted, and is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required, or is subject to no material liability or disability by reason of the failure to be so qualified or in good standing in any such jurisdiction. 


 
 
         8.2    Execution; Due Authority.
    


        (a)   The
execution, delivery and performance of this Agreement, the Investors Rights Agreement and the Royalty Agreement (and all other documents required to be executed and
delivered by each Purchaser
and the consummation of the Transactions), to the extent such Purchaser is a party to such agreements, have been duly and validly authorized by all necessary corporate action on the part of such
Purchaser. 


        (b)   This
Agreement, the Investors Rights Agreement and the Royalty Agreement, to the extent such Purchaser is a party to such agreements, have been duly executed and
delivered by such Purchaser (and all documents required to be executed and delivered by such Purchaser at Closing will be duly executed and delivered by such Purchaser), and this Agreement
constitutes, and at the Closing (assuming the due and valid execution and delivery of such documents by the other parties thereto) such documents will constitute, the valid and binding obligations of
such Purchaser, enforceable in accordance with their terms, except for the Enforceability Exceptions. 


 
 
         8.3    No Conflicts.
    The purchase of the Securities and the compliance by such Purchaser with all of the provisions of the Notes and this Agreement and the consummation of the Transactions will not conflict
with or result in a breach or violation of any of the terms or provisions of, or 



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constitute
a default under, or give rise to any right of termination, cancellation, payment or acceleration under, any contract, indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which such Purchaser is a party or by which such Purchaser is bound or to which any of the property or assets of such Purchaser is subject, nor will such action result in any
violation of the provisions of the organizational documents of such Purchaser or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over such
Purchaser or any of its properties, except, with respect to any of the foregoing (other than the violation of the provisions of such Purchaser's organizational documents), as would not reasonably be
expected to have a material adverse effect on the ability of such Purchaser to perform its obligations under this Agreement or otherwise materially threaten or materially impede the consummation of
the Transactions. 




 
 
        8.4    Purchase for Investment.
    Each Security Purchaser severally represents that it (a) is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the
account of one or more pension or trust funds and not with a view to the distribution thereof; provided, however, that the disposition of such
Purchaser's property shall at all times be within such Purchaser's control and (b) understands that the Notes have not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not and will not be required to register the Notes. 


 
 
        8.5    Accredited Investor.
    Each Purchaser hereby represents and warrants to and agrees with the Company that it (a) is an "accredited investor" within the meaning of Rule 501 under the Securities Act
and, with respect to each Person who is a Purchaser as of the date of the Original Agreement, a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act,
(b) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Notes and it is able to bear the economic
risk of such investment and (c) has had the opportunity to perform due diligence with respect to the Company and the Transactions and to ask questions of and receive answers from the Company in
respect thereof. 


 
 
        8.6    Brokers' Fees.
    No Person is entitled to any brokerage, financial advisory, finder's or similar fee or commission payable by any Party hereto in connection with the Transactions based upon arrangements
made by or on behalf of the Purchasers. 


 
 

  ARTICLE IX
  
    CERTAIN INTERIM COVENANTS    
    



 
 
        9.1    Operation of Business.
    The Company covenants and agrees that, between the date of the Original Agreement and the Closing, unless the Majority Purchasers shall otherwise agree in writing, the Company shall, and
shall cause its Subsidiaries to, (i) operate and maintain its assets in the ordinary course of business consistent with past practice, (ii) use commercially reasonable efforts,
consistent with existing practices, to keep available the services of its employees and preserve relationships with all of its customers, suppliers, licensors, licensees, distributors, regulators and
creditors and (iii) use its commercially reasonable efforts to preserve substantially intact its business organization. Without limitation to the foregoing, except as contemplated or permitted
by this Agreement or as set forth in Schedule 9.1, the Company shall not (and shall cause its Subsidiaries not to), between the date of the Original Agreement and the Closing Date, directly or
indirectly, do, or propose to do, any of the following without the prior written consent of the Majority Purchasers (which consent will not be unreasonably withheld for approvals contemplated by
Sections 9.1(a), (b) (except for the size of the Board of Directors), (d), (g), (h), (n), (p), (q)(ii), (r), (s), and (v) (solely to the 


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extent
with respect to the foregoing clauses), so long as such actions do not have an adverse effect on the economic or governance interests of the Purchasers): 



        (a)   except
for filing the Certificate of Designation, amend or otherwise change, or waive any provision of, its articles of incorporation or bylaws (or similar
organizational documents), except for non-material changes undertaken for routine or administrative reasons which do not adversely affect the Purchasers; 



        (b)   alter
the size or powers of the Board of Directors (or creating or altering the size or powers of any committee thereof), except (i) that the Company shall be
permitted to increase the size of its Board of Directors by one member solely in connection with the grant of a director designation right to new investors in connection with capital-raising
transactions occurring after the date of the Original Agreement and (ii) for non-material changes to the powers of the Board of Directors or any committee undertaken for routine or
administrative reasons; 


        (c)   issue,
sell, register for sale, pledge, dispose of, grant, encumber or authorize the issuance, sale, registration, pledge, disposition, grant or encumbrance of any
shares of capital stock of any class of the Company or of its Subsidiaries (including Common Stock), or any Options, Convertible Securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including any phantom interest), of the Company or of its Subsidiaries, except for the: 



        (i)    issuance
of Common Stock (x) prior to the receipt of the Requisite Shareholder Approval, to the Persons listed on Schedule 9.1, unless such issuance would
result in any such Person (collectively with its Affiliates and Associates) Beneficially Owning seven and one-half percent (7.5%) or more of the then-outstanding Common Stock
or other equity of the Company (or voting power of the Company for the election of directors) or, (y) from and after the receipt of the Requisite Shareholder Approval, (A) in an
underwritten public offering involving a broad-based distribution or (B) to any Person, unless such issuance would result in any such Person (collectively with its Affiliates and Associates)
Beneficially Owning seven and one-half percent (7.5%) or more of the then-outstanding Common Stock or other equity of the Company (or voting power of the Company for the
election of directors)); 


        (ii)   from
and after the receipt of the Requisite Shareholder Approval, issuance to any Person or Persons of an amount of Permitted Preferred Stock that, when aggregated with
the amount of all prior and simultaneous permitted issuances of Permitted Preferred Stock and Permitted Junior Debt, does not exceed $75 million in the aggregate; 



        (iii)  the
issuance of the Notes to the Purchasers at the Closing; or 


        (iv)  the
issuance of shares of Common Stock, Options or other securities to employees, directors or consultants (who are natural persons) of the Company pursuant to Benefit
Plans existing on the date of the Original Agreement, as amended from time to time in accordance with Section 9.1(q)(i), or in accordance with certain written agreements entered into prior to
the date of the Original Agreement and disclosed to the Purchasers in writing prior to the date hereof (provided that (x) any such issuances are made in accordance
with the terms, conditions and limitations of such agreements as they existed as of the date of the Original Agreement and without effect to any amendments or other modifications thereof after the
date of the Original Agreement unless approved by the Majority Purchasers, and (y) as of the date of the Original Agreement, the Company has a firm obligation under such agreements to make such
issuances); 




        (d)   sell,
transfer, assign, mortgage, pledge, dispose of, encumber or authorize the sale, transfer, assignment, mortgage, pledge, disposition, or encumbrance of any material
assets or properties of the Company or any of its Subsidiaries, except (A) in the ordinary course of business 



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and
in a manner consistent with past practice, (B) pursuant to the Karlsson Agreements, as in effect on the date of the Original Agreement, or (C) acquisitions or dispositions for cash
consideration of assets with a value of less than $200,000 individually or in excess of $500,000 when aggregated with all other dispositions in a twelve (12)-month period; 


        (e)   declare,
set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for
such declarations, set-asides, dividends and other distributions made to or from any Subsidiary to or from the Company); 



        (f)    reclassify,
combine, split or subdivide, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, except in connection with
transactions between the Company and its wholly owned Subsidiaries and transactions among the Company's wholly owned Subsidiaries; 


        (g)   except
with respect to the acquisition of real property or interests in real property (which is covered by clause (h) below), acquire, in any individual or
related series of acquisitions, assets, securities or businesses, whether by purchase, transfer, assignment or otherwise, whether direct or indirect, and including investments in or formation of
partnerships or joint ventures with third parties, with a value in excess of $500,000 individually or $2,000,000 in any twelve (12)-month period when aggregated with all other acquisitions; 


        (h)   acquire,
in any individual or related series of acquisitions, any real property or interests in real property (including Mineral Rights) with a value in excess of
$750,000 or in excess of $1,500,000 in any twelve (12)-month period when aggregated with all other acquisitions; 


        (i)    incur
any Indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person (other than obligations of the Company or the Company's wholly owned Subsidiaries), or make any loans or advances, except, from and after the receipt of the Requisite
Shareholder Approval, an amount of Permitted Junior Debt that, when aggregated with the amount of all prior and simultaneous permitted issuances of Permitted Preferred Stock and Permitted Junior Debt,
does not exceed $75 million in the aggregate; 


        (j)    repay
or redeem any Indebtedness for borrowed money or debt securities outstanding as of the date of the Original Agreement, except for (i) the Karlsson Note,
(ii) scheduled repayments of principal and interest in accordance with the terms of any such Indebtedness or debt securities and (iii) repayments and redemptions in the ordinary course
of business consistent with past practice; 


        (k)   other
than pursuant to the Royalty Agreement and the Grandhaven Agreement, selling or granting of any royalty (or similar) interests in, or other rights to payment based
on the revenue of, the Company or its Subsidiaries or any assets or rights of the Company or its Subsidiaries; provided, that the Company shall be permitted to grant
royalties in connection with the acquisition of property in the ordinary course of business, if (a) such royalty interests are granted to the seller of the acquired property and relate solely
to the acquired property; and (b) either (i) such royalty interests are granted in connection with acquisitions of state-owned property, where the size of all state-owned properties as
to which royalties are sold or granted under this proviso in any twelve (12)-month period does not exceed 1,500 acres in the aggregate and the royalties granted are substantially consistent with the
published guidelines of the Arizona State Land Department, or (ii) the size of all non-state-owned properties as to which royalties are sold or granted under this proviso in any
twelve (12)-month period does not exceed 500 acres in the aggregate and such 



A-31







 

royalty
grants to the recipient only a percentage interest in gross Potash production from the acquired property, not to exceed the following percentages: 



        (i)    two
percent (2%) if Potash produced from the acquired property is sold at $200/tonne or less; 


        (ii)   three
percent (3%) if Potash produced from the acquired property is sold at a price less than or equal to $300/tonne but greater than $200/tonne; 


        (iii)  four
percent (4%) if Potash produced from the acquired property is sold at a price less than or equal to $400/tonne but greater than $300/tonne; 



        (iv)  five
percent (5%) if Potash produced from the acquired property is sold at a price less than or equal to $500/tonne but greater than $400/tonne; and 


        (v)   six
percent (6%) if Potash produced from the acquired property is sold at a price greater than $500/tonne; 




        (l)    making
any material changes to the nature of the business of the Company or its Subsidiaries or entry into any new business lines, including (i) entering into the
ownership, management, development or operation of any line of business not conducted as of the date of the Original Agreement by the Company and its Subsidiaries or (ii) materially changing or
exiting any line of business conducted as of the date of the Original Agreement by the Company and its Subsidiaries; 


        (m)  discontinuing
the Company's status as a public company or SEC-reporting company, changing the Company's jurisdiction of organization, or applying to list (or
materially altering or terminating its listing) on any stock exchange; 


        (n)   pay,
discharge, settle or satisfy any material litigation, arbitration, proceeding, claim, liability or obligation (absolute or accrued, asserted or unasserted,
contingent or otherwise), except with respect to any such proceedings or claims disclosed in the Company SEC Documents on or prior to the date of the Original Agreement; 


        (o)   amending,
waiving or otherwise modifying any terms of any contracts entered into in connection with, or otherwise relating to, the Karlsson Purchase, or entering into
any new contracts with Karlsson or its Affiliates that adversely affect the Purchasers in any respect, as determined in good faith by the Majority Purchasers; 



        (p)   enter
into, renew, extend, materially amend or terminate any contract with any EPCM or EPC firm, or any contract relating to shaft sinking; 


        (q)   (i)
accelerate any vesting of compensation or benefits or pay any compensation or benefits not otherwise due to employees of the Company or any of its Subsidiaries or
enter into, adopt or amend any Benefit Plan (including any employment agreements), other than (A) adopting a 401(k) plan (on terms customary for the industry in which the Company operates) or
(B) as required by applicable Law, a Benefit Plan in existence as of the date of the Original Agreement or a contract in existence as of the date of the Original Agreement or
(ii) increase or enhance the compensation or benefits of any employees of the Company or any of its Subsidiaries, other than as required by applicable Law or as required pursuant to the terms
of any contract as in effect on the date of the Original Agreement, by more than 3% annually, or in the case of any employee (other than the chief executive officer, chief operating officer or chief
financial officer) whose responsibilities have been increased, by more than 10%; 


        (r)   change
its methods of accounting (other than Tax accounting, which shall be governed by clause 9.1(s) below), except in accordance with changes in GAAP as
concurred in by the Company's independent auditors; 



A-32









 



































 




        (s)   except
(i) to the extent required or appropriate to conform to changes in applicable Tax Law, regulatory accounting requirements or GAAP or (ii) in the
ordinary course of business consistent with past practice, enter into any closing agreement with respect to material Taxes, settle or compromise any material liability for Taxes, make, revoke or
change any material Tax election, agree to any adjustment of any material Tax attribute, surrender any claim for a material refund of Taxes, execute or consent to any waiver extending the statutory
period of limitations with respect to the collection or assessment of material Taxes, file any material amended Tax return or obtain any material Tax ruling, change any annual Tax accounting period,
adopt or change any method of Tax accounting, or enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any material Tax; 


        (t)    enter
into any new, or amend or otherwise alter, any transaction with any Affiliate or Associates of the Company or its Subsidiaries, other than (i) transactions
solely among the Company and its Subsidiaries and (ii) the Royalty Agreement; 


        (u)   (i)
commencing a voluntary case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to the Company or any of its Subsidiaries, or seeking to adjudicate the Company or any of its
Subsidiaries bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Company or any
of its Subsidiaries or any indebtedness of the Company or any of its Subsidiaries, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for the Company or any
of its Subsidiaries or for all or any substantial part of the Company or any of its Subsidiaries' assets, (ii) the making of a general assignment for the benefit of the Company or any of its
Subsidiaries's creditors or (iii) liquidation, dissolution, reorganization or merger of or involving the Company or any of its Subsidiaries; or 



        (v)   enter
into any contract or otherwise obligate the Company or its Subsidiaries to do any of the foregoing. 




 
 
        9.2    Access to Information; Consultation.
    


        (a)   From
the date of the Original Agreement until the Closing Date, upon reasonable prior notice, the Company shall, and shall cause its Subsidiaries to, (i) afford
the Representatives of the Purchasers reasonable access, during normal business hours, upon reasonable notice, to the offices, properties, books and records of the Company and its Subsidiaries,
(ii) furnish or cause to be furnished to the Representatives of the Purchasers such additional financial and operating data and other information regarding the Company and its Subsidiaries as
the Purchasers may from time to time reasonably request (including furnishing to the Purchasers the Company's financial results in advance of any filing of any Company SEC Document containing such
financial results), and (iii) instructing the employees, counsel, financial advisors, auditors and other Representatives of the Company and its Subsidiaries to cooperate reasonably with the
Purchasers in its investigation of the Company and its Subsidiaries. No information or knowledge obtained by the Purchasers in any investigation pursuant to this Section 9.2 shall affect or be
deemed to modify any representation and warranty made by the Company in Article VII. 


        (b)   Without
limitation of Section 9.2(a), until the Closing Date, the Company shall provide the Purchasers: 



        (i)    the
information contemplated by Sections 14.1(a) and (b), provided, at any time during which the Company or any of its Subsidiaries
is subject to the periodic reporting requirements of the Exchange Act or voluntarily reports thereunder, the Company may satisfy its obligations pursuant to this Sections 9.2(b)(i) by filing or
causing any of its subsidiaries to file with the SEC 



A-33







 

(via
the EDGAR system) on a timely basis annual and quarterly reports including financial statements of the Company and its Subsidiaries and satisfying the requirements of the Exchange Act; 


        (ii)   as
soon as available, (A) a copy of the operating and capital expenditure budgets for the Company and its Subsidiaries for such fiscal year, (B) monthly
construction progress reports (containing detail on budget, schedule and key metrics), (C) monthly management accounts and periodic information packages relating to the operations and financial
performance of the Company and its Subsidiaries, in each case in such form as the Company and its Subsidiaries prepare in the ordinary course of business,
(D) a copy of all information packages (and any other materials, documents or information) provided to the board of directors (or similar governing body) of any of the Company and its
Subsidiaries or any director thereof (including notices, minutes, consents and regularly or specially compiled financial and operating data distributed to the members of such board or body at the same
time as such materials are distributed to such board or body) and (E) a copy of any information or reporting packages (and any other materials, certificates, documents or other information)
provided directly or indirectly (including through trustees or other agents) to any or all lenders to or debt financing sources of the Company and its Subsidiaries; 


        (iii)  (A)
copies of draft applications for any Necessary Permits with respect to the Holbrook Project no later than five (5) Business Days prior to the anticipated
filing of such application, (B) copies of any Permits received by the Company or its Subsidiaries with respect to the Holbrook Project within five (5) Business Days of receipt,
(C) copies of any material correspondence with any Governmental Authority with respect to any Permits within two (2) Business Days of receipt and (D) regular updates on any
material conversations with any Governmental Authority with respect to any Permits or status of Necessary Permits; 



        (iv)  regular
updates regarding any discussions regarding financing arrangements for the Holbrook Project with any source or potential source of the Project Financing
Facility, including notification of any material developments or changes in terms, and a copy of any term sheets or draft documentation relating thereto. The Company shall consult with the Purchasers
on a regular basis with regard to the Project Financing Facility and give due consideration to all reasonable advice and input suggested by the Purchasers in connection with the Project Financing
Facility; 


        (v)   prompt
written notice upon it becoming aware of (x) the breach of any of its representations or warranties hereunder or of any of its or its Subsidiaries'
covenants hereunder or (y) any fact, occurrence or development that may reasonably result in the non-satisfaction of any of the conditions in Article VI; and 


        (vi)  upon
the request of any Purchaser, an update meeting or telephone conference with the Purchasers on the status of the progress of the Definitive Feasibility Study, and
a copy of any materially updated draft of the Definitive Feasibility Study within two (2) Business Days of receipt. 




        (c)   Without
prejudice to the consent rights of the Purchasers contained in Section 9.1, the Company shall consult with the Purchasers, and in good faith consider any
comments or advice from the Purchasers, prior to and in the course of taking any of the following actions (and shall provide the Purchasers with regular updates to the status of discussions and
negotiations with respect to any such actions): (i) retention of any third-party consultant, advisor or finder/broker, (ii) retention or replacement of any senior manager or officer,
(iii) any debt or equity financing transactions, (iv) acquisition or disposition of a material amount of assets (including real property or Mineral Rights), (v) any actions with
respect to the Karlsson Agreements, (vi) entry into or modification of any off-take or other long-term purchase agreements for Potash or any other Material Contract of
the Company or its Subsidiaries, (vi) compensation decisions with respect to officers or employees and (vii) litigation involving the Company, its Subsidiaries or their assets. 


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        9.3    Reasonable Best Efforts.
    


        (a)   Subject
to the terms and conditions of this Agreement, the Company shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable Law to consummate the Transactions, including (i) preparing and filing as promptly as practicable with any Governmental
Authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents,
(ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other third
party that are necessary, proper or advisable to consummate the Transactions, (iii) executing and delivering all documents required to be executed and delivered at the Closing and
(iv) vigorously defending or contesting any litigation or administrative proceeding, and seeking to have vacated, lifted, reversed or overturned any order, decree, injunction or ruling (whether
temporary, preliminary or permanent) that is in effect, and that seeks to or would prohibit, prevent, enjoin or materially restrain or delay the consummation of the Transactions. 


        (b)   The
Purchasers and the Company shall (i) promptly notify each other of any communication concerning this Agreement or the Transactions received by each of them
from any Governmental Authority and permit the other to review in advance any proposed communication concerning this Agreement, or the Transactions to any Governmental Authority; (ii) not
participate or agree to participate in any meeting or discussion with any Governmental Authority in respect of any filing, investigation or other inquiry concerning this Agreement, or the Transactions
unless it consults with the other in advance and, to the extent permitted by such Governmental Authority, gives the other the opportunity to attend and participate in such meeting or discussion; and
(iii) furnish each other with copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between such party and its Affiliates and
Representatives on the one hand, and any Governmental Authority or members of any such authority's staff on the other hand, with respect to this Agreement and the Transactions. 



        (c)   The
Purchasers and the Company each agrees that, from and after the date of the Original Agreement and prior to the Closing Date, and except as may be agreed in writing
by the other parties hereto or as may be permitted pursuant to this Agreement, it shall not, and shall not permit any of its Subsidiaries to, take any action (or agree to take any action) which could
reasonably be expected to delay the consummation of the Transactions or result in the failure to satisfy any condition to the consummation of the Transactions (it being understood and agreed that this
Section 9.3(c) shall in no event limit any party's right to terminate this Agreement in accordance with Article X). 



        (d)   Prior
to any conversion of the Notes or any exercise of the Apollo Warrants, the Company and the Majority Purchasers will determine if such conversion or exercise, as
applicable, will be subject to any filing or notification requirement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any similar requirement of any
Governmental Authority. If such conversion or exercise, as applicable, is subject to any such requirement, the Company and the applicable Purchaser(s) will use commercially reasonable efforts to make
any required filings or notifications as soon as practicable, will observe any applicable waiting periods and will make all commercially reasonable efforts to cause the termination of any such waiting
periods or the removal of any other impediments to conversion or exercise, as applicable. The Parties will furnish to each other such information and assistance as may be necessary to ensure the
expiration of any applicable waiting period or the removal of any other impediment to the consummation of such conversion or exercise, as applicable. The Parties will keep each other informed of any
communications with any Governmental Authority with respect to the foregoing. The Majority Purchasers shall direct any proceedings, negotiations or communications with any Governmental Authority with
respect to the foregoing. 


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        9.4    Reservation of Shares.
    The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of issuing and selling shares of Common Stock
upon exercise of the Apollo Warrants at the then current Warrant Price (as defined in each of the Apollo Warrants), conversion of the Notes at the then current Conversion Price and pursuant to
Section 9.8; and if at any time the number of shares required to be reserved exceeds seventy-five percent (75%) of the Company's authorized but unissued shares of Common Stock, the
Company shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. All shares
of Common Stock issued and sold upon exercise of the Apollo Warrants, conversion of the Notes or pursuant to Section 9.8 shall be validly issued, fully paid, nonassessable and free and clear of
any Liens. The Company shall use its reasonable best efforts to cause all such shares of Common Stock to be approved for listing on the Principal Market, subject to official notice of issuance. 



 
 
        9.5    Shareholders Meeting.
    The Company will take, in accordance with applicable Law and the Company Organization Documents, all action necessary to convene a meeting of its shareholders (the
"Shareholders Meeting") as promptly as practicable after the date of the Original Agreement (and in no event later than thirty (30) days after the date that the SEC
has informed the Company that it has no further comments on, or does not intend to review, the Proxy Statement), to consider and vote upon the Transactions, regardless of whether the Board of
Directors of the Company determines at any time that the Transactions are no longer advisable or recommends that the shareholders of the Company reject them or any other Adverse Recommendation Change
has occurred at any time. The Board of Directors of the Company shall recommend the approval of the Transactions (the "Board Recommendation"), unless permitted to make an
Adverse Recommendation Change pursuant to Section 9.7(c), and shall take all lawful action to solicit and obtain such approval by holders of a majority of the outstanding shares of Common Stock
(the "Requisite Shareholder Approval"). The Company may, and the Majority Purchasers may require the Company to, adjourn or postpone the Shareholders Meeting one or more
times, unless prior to such adjournment or postponement the Company shall have received an aggregate number of proxies sufficient for the Requisite Shareholder Approval, provided that the Company, on
the one hand, and the Majority Purchasers, on the other hand, may each only adjourn or postpone the Shareholders Meeting for no more than twenty (20) days in the aggregate. The Company shall,
upon the reasonable request of the Majority Purchasers, advise the Purchasers at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Shareholders Meeting
as to the aggregate tally of proxies received by the Company with respect to the Requisite Shareholder Approval. Without the prior written consent of the Majority Purchasers, the approval of the
Transactions shall be the only matter which the Company shall propose to be acted on by the shareholders of the Company at the Shareholders Meeting. Without limiting the generality of the foregoing,
the Company agrees that its obligations pursuant to this Section 9.5 shall not be affected by the commencement, proposal, disclosure or communication to the Company or any other Person of any
Competing Proposal. 


 


        9.6    Proxy.    


        (a)   The
Company shall prepare and file with the SEC, as promptly as practicable after the date of the Original Agreement but in no event later than five (5) Business
Days after the date of the Original Agreement, a proxy statement in preliminary form relating to the Transactions (such proxy statement, including any amendment or supplement thereto, the
"Proxy Statement"). The Company shall file with the SEC the definitive Proxy Statement and shall cause the mailing of the definitive Proxy Statement to the shareholders of
the Company to occur on the twelfth (12th) day (or, if such day is not a Business Day, the first Business Day subsequent to such calendar day) immediately following the filing of the
preliminary Proxy Statement with the SEC, or if not practicable, including as a result of outstanding comments from the SEC, then as promptly as practicable thereafter. The Company agrees, as to it
and its Subsidiaries, that the Proxy Statement will comply in all material respects with the applicable 


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provisions
of the Exchange Act and the rules and regulations thereunder. Each of the Company and the Purchasers covenants and agrees, as to it and its Affiliates, that none of the information supplied
by it or any of its Affiliates for inclusion or incorporation by reference in the Proxy Statement will, at the date of mailing to shareholders of the Company and at the time of the Shareholders
Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Board of Directors of the Company shall make the Board Recommendation with respect to the approval of the Transactions, unless permitted
to make an Adverse Recommendation Change pursuant to Section 9.7(c), and shall include such recommendation in the Proxy Statement. 


        (b)   The
Company shall afford the Purchasers a reasonable opportunity to review and comment on the Proxy Statement prior to its filing with the SEC, including any amendments
or supplements thereto, and shall give due consideration to all the reasonable additions, deletions or changes suggested thereto by the Purchasers. The Company will promptly advise the Purchasers if
at any time prior to the effective time of such Proxy Statement, the Company shall obtain knowledge of any facts that might make it necessary to amend or supplement the Proxy Statement in order to
make the statements contained therein not misleading or to comply with applicable Law. The Company shall promptly notify the Purchasers of the receipt of all comments from the SEC with respect to the
Proxy Statement and of any request by the SEC for any amendment or supplement thereto or for additional information and shall promptly provide to the Purchasers copies of all correspondence between
the Company and/or any of its Representatives and the SEC with respect to the Proxy Statement and shall provide the Purchasers an opportunity to review and comment on any such amendment, supplement or
response to the SEC and shall give due consideration to all the reasonable additions, deletions or changes suggested thereto by the Purchasers. Each Purchaser and the Company shall use its reasonable
best efforts promptly to provide responses to the SEC with respect to all comments received on the Proxy Statement from the SEC. To the extent required by applicable Law in the good faith judgment of
the Company, the Company shall, as promptly as reasonably practicable, prepare, file and distribute to its shareholders any supplement or amendment to the Proxy Statement if any event shall occur that
requires such action. 


 


        9.7    Non-Solicitation.    



        (a)   Subject
to Section 9.7(b), the Company hereby agrees that, from the date of the Original Agreement until the receipt of the Requisite Shareholder Approval, the
Company will not (and will cause its Representatives and Subsidiaries not to): (x) solicit, negotiate, encourage or otherwise discuss (including continuing any current discussions or
negotiations) with any Person other than Purchasers and their affiliates and advisors, (i) the sale, directly or indirectly, of any interest in the Company or its Subsidiaries (including any
debt or equity securities, other than ordinary course issuances of equity to employees, directors, and consultants and pursuant to contractual commitments existing as of the date of the Original
Agreement and disclosed to the Purchasers) or a significant portion of its assets, (ii) any other debt or equity financing of the Company or its Subsidiaries, (iii) any merger or
consolidation involving the Company or its Subsidiaries, or (iv) any recapitalization or restructuring involving the Company or its Subsidiaries (any such transaction described in
clauses (i) through (iv), for purposes of this Section, a "substitute transaction"); (y) furnish any non-public information concerning the
Company or its Subsidiaries to any Person, other than Purchasers and their affiliates and advisors, for the purpose of a substitute transaction; or (z) enter into any agreement with respect to
a substitute transaction with any Person other than Purchasers or their affiliates. In addition, the Company will (and will cause its Representatives and Subsidiaries to) (a) immediately
terminate all discussions and/or negotiations with any Person other than Purchasers which may reasonably be expected to lead to a substitute transaction and (b) immediately cease any and all
work (and not engage in any such work during the period set forth in this Section) with respect to any substitute transaction. Notwithstanding 


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anything
to the contrary in the foregoing, the Company and its Representatives shall be permitted to solicit, negotiate with, discuss with and provide non-public information to, or in
connection with, but may not sign definitive documents with respect to (or publicly disclose or take any other action or fail to take any action that would either cause the Company to have any public
disclosure obligations with respect to or that would result, or be reasonably likely to result, in any other Person publicly disclosing) a substitute transaction with or in connection with,
(a) any bank or other potential lender in connection with project finance debt funding in connection with the Project Finance Facility, (b) one or more lease counterparties in connection
with capital leases in respect of equipment for the Company's operations in connection with the Project Finance Facility, (c) Grandhaven Energy, LLC
("Grandhaven") in connection with the Grandhaven Agreement Amendment, (d) the acquisition of additional mineral and land interests in the Holbrooke Basin, and
(e) any transaction permitted without Majority Purchaser consent under Sections 9.1(c) and 9.1(i). For the avoidance of doubt, this Section 9.7(a) is not intended to prohibit
customary public company investor relations communications or discussions by the Company or its Representatives (it being understood and agreed that such permissible customary communications or
discussions shall not be deemed to include the provision of or communication of any of the reports (or portions thereof) that have been (or will be) prepared by or on behalf of the Purchasers or their
advisors, whether before, on or after the date of the Original Agreement, or any similar reports or information packages or any other information that is not otherwise publicly disclosed). 



        (b)   At
any time after the date of the Original Agreement and prior to obtaining the Requisite Shareholder Approval, the Company or its Board of Directors may
(i) furnish nonpublic information to any third party making an unsolicited Competing Proposal (provided, however, that prior to so furnishing such information, the Company receives from the
third party an executed Acceptable Confidentiality Agreement and all such information has previously been provided to the Purchasers or is provided to the Purchasers prior to or substantially
concurrently with the time it is provided to such third party), and (ii) engage in discussions or negotiations with such third party with respect to such Competing Proposal if and only if:
(x) such Competing Proposal did not otherwise result from a breach of this the Section 9.7, (y) such third party has submitted a Competing Proposal which the Board of Directors of
the Company determines in good faith, after consultation with its financial and legal advisors, constitutes, or could reasonably be expected to lead to, a Superior Proposal, and (z) the Board
of Directors of the Company determines in good faith, after consultation with legal counsel, that failure to take such action would be inconsistent with the directors' fiduciary duties under
applicable Law. Prior to taking any of the actions referred to in this Section 9.7(b), the Company shall notify the Purchasers orally and in writing that it proposes to furnish
non-public information and/or enter into discussions or negotiations as provided in this Section 9.7(b). 


        (c)   Except
as expressly permitted by this Section 9.7(c), the Board of Directors of the Company shall not (i) withdraw, qualify, or modify, or publicly propose
to withdraw, qualify, or modify, in a manner adverse to the Purchasers, the Board Recommendation; (ii) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any
Competing Proposal made or received after the date of the Original Agreement; (iii) subject to Section 9.7(f), (A) fail to publicly recommend against any Competing Proposal within
five (5) Business Days (or the Outside Date if earlier) after Majority Purchasers so request in writing, (B) fail to publicly reaffirm the Board Recommendation within five
(5) Business Days (or the Outside Date if earlier) if requested by the Majority Purchasers in writing, or (C) fail to include the Board Recommendation in the Proxy Statement, (any of the
actions described in clauses (i), (ii), and (iii) of this Section 9.7(c), an "Adverse Recommendation Change"); or (iv) cause or permit the
Company or any of its Subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, investment agreement or similar definitive agreement
(other than an Acceptable Confidentiality Agreement) with respect to any Competing Proposal. Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to obtaining the
Requisite Shareholder Approval, the Board of Directors of the Company shall be permitted to make an Adverse Recommendation Change with respect to a Superior Proposal, subject to 


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compliance
with Section 9.7(d), if the Board of Directors of the Company (A) has received an unsolicited Competing Proposal (which Competing Proposal did not arise out of any breach of
this Section 9.7) that, in the good faith determination of the Board of Directors of the Company, constitutes a Superior Proposal, after having complied with, and giving effect to all of the
adjustments which may be offered by the Purchasers pursuant to, Section 9.7(d), and (B) determines in good faith, after consultation with its legal advisors, that failure to take such
action would be inconsistent with the directors' fiduciary duties under applicable Law. 


        (d)   The
Company shall not be entitled to effect an Adverse Recommendation Change as permitted under Section 9.7(c) with respect to a Superior Proposal unless
(i) the Company has provided a written notice (a "Notice of Superior Proposal") to the Purchasers that the Company intends to take such action and describing the
material terms and conditions of the Superior Proposal that is the basis of such action (including the identity of the third party making such Superior Proposal) and attaching the most current
version, in an unredacted form, of any proposed agreement pursuant to which such Superior Proposal is proposed to be consummated, (ii) during the four (4) Business Day period following
the Purchasers' receipt of the Notice of Superior Proposal, the Company shall, and shall cause its Representatives to, negotiate with the Purchasers in good faith (to the extent the Purchasers desire
to negotiate) to make such adjustments to the terms and conditions of this Agreement and the other agreements contemplated hereby so that such Superior Proposal ceases to constitute a Superior
Proposal; and (iii) following the end of the four (4) Business Day period, the Board of Directors of the Company shall have determined in good faith, taking into account any changes to
this Agreement and the other agreements contemplated hereby proposed in writing by the Purchasers in response to the Notice of Superior Proposal or otherwise, that the Superior Proposal giving rise to
the Notice of Superior Proposal continues to constitute a Superior Proposal. Any material amendment to the financial terms or any other material amendment of such Superior Proposal shall require a new
Notice of Superior Proposal and the Company shall be required to comply again with the requirements of this Section 9.7(d). 



        (e)   From
and after the date of the Original Agreement, the Company shall, as promptly as reasonably practicable (and in any event within two (2) Business Days of
receipt), advise the Purchasers of receipt by the Company of any Competing Proposal or any request for non-public information in connection with any Competing Proposal, the status and
material terms and conditions of any such Competing Proposal or request (including the identity of the third party making such Competing Proposal) and a unredacted copy of any documentation, proposal
or written communication relating to such Competing Proposal or request, and shall as promptly as reasonably practicable (and in any event within two (2) Business Days of receipt) advise the
Purchasers of any material amendments to any such Competing Proposal or request. 



        (f)    Nothing
in this Section 9.7 shall prohibit the Board of Directors of the Company from taking and disclosing to the Company's stockholders a position contemplated
by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act, or other Law, if the Board of
Directors of the Company, after consultation with outside legal counsel, determines in good faith that the failure to so disclose such position would reasonably be expected to be inconsistent with the
directors' exercise of their fiduciary obligations under Law. 


        (g)   For
purposes of this Agreement: 



        (i)    "Competing
Proposal" means any bona fide written proposal or offer relating to (i) the sale, directly or indirectly, of any equity or
debt securities of the Company or its Subsidiaries or a significant portion of its assets or (ii) any other debt or equity financing of the Company or its Subsidiaries, (other than, in either
such case, those described in the last sentence of Section 9.7(a) or from the Purchasers or their Affiliates), that, in either such case, would result in gross proceeds to the Company or its
Subsidiaries of not less than the gross proceeds receivable in connection 



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with
this Agreement, the agreements contemplated hereby, and in the transactions hereby and thereby. 


        (ii)   "Superior
Proposal" means any Competing Proposal that (A) (x) if involving Common Stock or Equity-based Securities, has a per share
price or implied per share price per share of Common Stock greater than the per share price implied by the Notes and the Warrants, taken together, and (y) if involving any debt securities, has
an interest rate less than the interest rate of the Notes (including a cash portion thereof less than the cash portion of the Notes), a maturity date no shorter than the Notes, a ranking no higher
than the Notes, and a set of covenants no more restrictive than those of the Notes, and (B) is on terms that the Board of Directors of the Company determines in good faith, after consultation
with the Company's financial and legal advisors, and considering such factors as the Board of Directors of the Company considers in good faith to be appropriate (including the conditionality,
certainty of financing and the timing and likelihood of consummation of such proposal on the terms proposed), are more favorable to the Company and its shareholders from a financial point of view than
the Transactions (after giving effect to all adjustments to the terms thereof which may be offered by the Purchasers in writing (including pursuant to Section 9.7(d)). 




 
 
        9.8    Additional Common Stock Issuances.
    If the final Definitive Feasibility Study indicates that the estimated total Capital Costs (the "DFS Estimate") for the Holbrook Project exceeds the Current
Capital Estimate by 2.5% or more, then the Company shall issue to the Notes Purchasers at Closing, and for no additional consideration other than the Purchase Price: 



        (a)   if
the DFS Estimate is between 2.5% and 5.0% higher than the Current Capital Estimate, 3,993,095 shares of Common Stock; or 


        (b)   if
the DFS Estimate is between 5.0% and 10.0% higher than the Current Capital Estimate, 7,189,275 shares of Common Stock. 


        (c)   In
the event that the Company shall, after the date of the Original Agreement (i) issue, or declare a dividend or make a distribution on its shares of its Common
Stock in, shares of its Common Stock or Options or Convertible Securities (including without limitation the issuance of Common Stock, Options or other equity securities under a Benefits Plan (whether
or not in effect as of the date of the Original Agreement)), (ii) subdivide or reclassify the outstanding shares of its Common Stock into a greater
number of shares, or (iii) combine or reclassify the outstanding shares of its Common Stock into a smaller number of shares, then the number of shares of Common Stock receivable by the
Purchasers pursuant to subsections (a) and (b) shall be appropriately adjusted such that the Purchasers receive such number of shares of Common Stock in the aggregate that would entitle
the Purchasers to 3.6% and 6.3%, respectively, of the outstanding voting power of the Company for the election of directors (accounting for such issuance and the issuance of the Notes to the
Purchasers but not any exercise of any Options (including the Apollo Warrants) or other Convertible Securities outstanding as of the date of the Original Agreement),
provided that such adjustments are not required as a result of the exercise of any Option or Convertible Security outstanding as of the date of the Original Agreement. 




 
 
        9.9    Affiliate Agreement Modifications.
    The Company shall use reasonable best efforts to engage in discussions with Grandhaven for the termination of the Grandhaven Agreement in consideration for the potential issuance from
the Company to Grandhaven of Options to purchase Common Stock or Equity-based Securities, in each case on terms reasonably acceptable to the Majority Purchasers (the "Grandhaven
Agreement Amendment"), provided, for the avoidance of doubt, that the failure to enter into such a transaction with Grandhaven shall not itself be deemed to
be a failure of any of the closing conditions set forth in Article VI. 


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        9.10    Off-take Agreement.
    The Company shall use best efforts to enter into additional definitive agreements with respect to off-take arrangements with customers for Potash production on the terms
similar in all material respects as set forth in Exhibit D (the "Minimum Off-Take Arrangements"), as soon as practicable. 


 
 
        9.11    Board and Observer Rights.
    


        (a)   Promptly
after the date of the Original Agreement, unless prohibited by applicable Law or the rules of the Principal Market (and provided that the Company shall use
reasonable best efforts to remove any such prohibitions), the Company shall appoint one representative of the Purchasers designated in writing by the Purchasers (the "Purchaser
Designee") to the Board of Directors of the Company. Until the earlier of the Closing Date and the termination of this Agreement, at each annual or special meeting (or action by written
consent) of shareholders of the Company at which directors are to be elected to its Board of Directors, the Company will nominate and use its best efforts to cause the election to its Board of
Directors of the Purchaser Designee. In the event of the death, disability, resignation or removal of the Purchaser Designee, or in the event of the failure of the Purchaser Designee to be elected,
the Company's Board of Directors will promptly appoint to the Company's Board of Directors a replacement Purchaser Designee designated by the Purchasers to fill the resulting vacancy, and such
individual shall then be deemed the Purchaser Designee for all purposes hereunder; provided that if the Purchaser Designee is removed for cause, the replacement Purchaser
Designee will not be the same person who was removed. Until the earlier of the Closing Date and the termination of this Agreement, the Company's Board of Directors will not remove, or recommend to the
shareholders of the Company removal of, the Purchaser Designee without the prior written consent of the Purchasers. 


        (b)   Until
the earlier of the Closing Date and the termination of this Agreement, the Purchasers shall have the right to appoint one observer on the Company's Board of
Directors (the "Board Observer") (it being understood that a Board Observer shall have all the rights (other than voting rights) of a director on the Company's Board of
Directors, including (A) the right to attend all meetings of the Company's Board of Directors as an observer, (B) the right to receive advance notice of each meeting, including such
meeting's time and place, at the same time and in the same manner as such notice is provided to the members of the Company's Board of Directors, (C) the right to receive copies of all
materials, including notices, minutes, consents and regularly compiled financial and operating data distributed to the members of the Company's Board of Directors at the same time as such materials
are distributed to the Company's Board of Directors, and shall have the same access to information concerning the business and operations of the Company, and (D) the right to discuss the
affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company's Board of Directors, without voting). 



        (c)   At
or prior to Closing, in satisfaction of its obligations under the Investors Rights Agreement and the Company's Second Amended and Restated Articles of Incorporation
(as amended by the Certificate of Designation), the Company shall appoint four designees of the Purchasers to the Board of Directors of the Company and take all actions necessary to set the size of
its Board of Directors to nine members, provided, that if the Company has, pursuant to Section 9.1(b), added an additional director in connection with a capital-raising transaction, then the
Company shall appoint five designees of the Purchasers to the Board of Directors of the Company and take all actions necessary to set the size of its Board of Directors to eleven members. For
avoidance of doubt, from and after the Closing, the parties' obligations with respect to such director-designees shall be governed by the Investors Rights Agreement and the Company's Second Amended
and Restated Articles of Incorporation (as amended by the Certificate of Designation), and provided, further, that if, after the date of the Original Agreement, there is a change in applicable Law or
the rules of the Principal Market that prohibits the rights in this subsection (c), then the Company shall use reasonable best efforts to remove such prohibitions and, if it is unsuccessful in
doing so, the Company and the Majority Purchasers will discuss 


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in
good faith amendments to this subsection (c) to remove such prohibition (it being acknowledged that in no event will the Majority Purchasers be obligated to accept a lesser number of
directors than a number equal to the Purchaser Percentage Interest multiplied by the outstanding number of directors on the board of directors of the Company). 


 
 
        9.12    KG Default Cure.
    


        (a)   If
at any time prior to the full repayment of the Karlsson Note, the Company or any of its Subsidiaries is in payment default or any other default that would entitle the
holder of the Karlsson Note to accelerate the payment of obligations thereunder or is reasonably likely to be in such default within thirty (30) days, (i) the Company shall immediately
provide the Purchasers notice thereof, (ii) the Royalty Purchasers shall have the right (but not the obligation), assuming the default is not cured within the subsequent fifteen
(15) days, to purchase either (A) Common Stock or (B) notes issued by the Company or its Subsidiaries, in each case on the terms set forth in this Section 9.12 and for an
aggregate amount sufficient to (in the Majority Purchasers' sole discretion) either (x) pay off the Karlsson Note in full (including any principal, interest, expenses, penalties or any other
amounts outstanding) or (y) pay off such lesser amount as would be necessary to avoid or cure the default or anticipated default (as determined in the Majority Purchasers' reasonable
discretion) and (iii) the Company shall use such proceeds for such purpose. For the avoidance of doubt, this Section 9.12 (and the Royalty Purchasers' rights hereunder) shall apply (and
remain in effect) prior to, at or after the Closing until such time (if any) that this Agreement is terminated pursuant to Article X hereof. 


        (b)   If,
pursuant to Section 9.12(a), the Royalty Purchasers elect to purchase Common Stock, such Common Stock shall be issued to the Royalty Purchasers or their
respective designees at a per-share price equal to the lesser of (i) the then-applicable Conversion Price for the Notes (whether or not the Notes have actually been
issued) or (ii) the arithmetic average of the volume-weighted average price ("VWAP") of the Common Stock for the ten (10) Trading Day period immediately
preceding the date of such purchase. Such Common Stock, when issued, shall be duly and validly authorized and issued, fully paid and non-assessable and free and clear of any Liens,
restriction on voting or transfer or any other claim of any third party. In the event of any purchase of Common Stock pursuant to this Section 9.12(b), the Company shall enter into a
registration rights agreement with respect to such shares of Common Stock with the Royalty Purchasers, on the same terms as those set forth in Articles IV and V of the Investors Rights
Agreement, which registration rights agreement shall terminate upon the Closing. 


        (c)   If,
pursuant to Section 9.12(a), the Royalty Purchasers elect to purchase notes issued by the Company or its Subsidiaries, such notes will be nonconvertible and
issued on terms set forth in Schedule C-3 and such other terms customary for financings of such type and otherwise reasonably requested by the Majority Purchasers. 


 
 
        9.13    Preemptive Rights.
    


        (a)   The
Royalty Purchasers will have the preemptive rights set forth in this Section 9.13 with respect to any issuance of any Common Stock or Equity-based Securities
by the Company or any of its Subsidiaries that are issued from and after the date of the Original Agreement through the Closing (any such issuance other than those described in clauses (i),
(ii) and (iii) below, a "Preemptive Rights Issuance"), except for (i) issuances to employees, directors and consultants pursuant to and in accordance
with stock incentive plans of the Company that were publicly filed with the SEC prior to the date of the Original Agreement (provided that any such issuances are made in
accordance with the terms, conditions and limitations of such plans as they existed as of the date of the Original Agreement and without effect to any amendments or other modifications thereof after
the date of the Original Agreement unless approved by the Majority Purchasers) or in accordance with written agreements set forth in Schedule 9.13 (provided that
any such issuances are made in accordance with the terms, conditions and limitations of such agreements as they existed as of the date of the Original Agreement 


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and
without effect to any amendments or other modifications thereof after the date of the Original Agreement unless approved by the Majority Purchasers), (ii) issuances of shares of Common
Stock as consideration in any merger approved pursuant to Section 9.1, or (iii) issuances of shares of Common Stock pursuant to and in accordance with warrant agreements entered into
(and publicly filed with the SEC) prior to the date of the Original Agreement and previously disclosed to the Purchasers (provided that any such issuances are made in
accordance with the terms, conditions and limitations of such warrant agreements as they existed as of the date of the Original Agreement and without effect to any amendments or other modifications
thereof after the date of the Original Agreement unless approved by the Majority Purchasers). 


        (b)   If
the Company or any of its Subsidiaries at any time or from time to time, from and after the date of the Original Agreement through the Closing, effects one or more
Preemptive Rights Issuance, the Company shall give written notice to each Royalty Purchaser a reasonable period in advance of each such issuance (but in no event later than ten (10) days prior
to such issuance), which notice shall set forth the number and type of the securities to be issued, the issuance date, the offerees or transferees, the price per security, and all of the other terms
and conditions of such issuance, which shall be deemed updated by delivery of the final documentation for such issuance to each Royalty Purchaser. With respect to each such Preemptive Rights Issuance,
the Royalty Purchasers shall have the right, exercisable (by written notice to the Company (the "Preemptive Rights Notice")) at any time at or within thirty
(30) days following the Closing, to elect to purchase (or designate an Affiliate thereof (including, without limitation, another Royalty Purchaser) to purchase) a number of securities specified
in such Preemptive Rights Notice (which number may be any number up to but not exceeding such Royalty Purchaser's pro rata portion of the Preemptive
Rights Cap Amount applicable to such Preemptive Rights Issuance), on the same terms and conditions as such Preemptive Rights Issuance (it being understood and agreed that (i) the price per
security that the Royalty Purchasers shall pay shall be the same as the price per security set forth in the Preemptive Rights Notice, and (ii) the Royalty Purchasers shall not be required to
comply with any terms, conditions, obligations or restrictions (including, without limitation, any non-compete, standstill or other limitations but excluding any remaining period of a
transfer or lock-up restriction applicable at such time to other purchasers in such Preemptive Rights Issuance) not directly necessary for the effectuation of the sale or issuance of such
securities). The Royalty Purchasers shall, by notice to the Company, within thirty (30) days after the Closing, indicate which pre-Closing Preemptive Rights Issuances the Royalty
Purchasers are electing to exercise their preemptive rights with respect to and the number of securities the Royalty Purchasers are electing to purchase with respect to such pre-Closing
Preemptive Rights Issuances. If the Royalty Purchasers exercise their preemptive rights hereunder with respect to one or more Preemptive Rights Issuances, the Company shall (or shall cause such
Subsidiary to) issue to the Royalty Purchasers (or their designated Affiliates) the number of securities specified in the applicable Preemptive Rights Notices as soon as reasonably practicable
thereafter. For the avoidance of doubt, in the event that the issuance of Common Stock or Equity-based Securities in a Preemptive Rights Issuance involves the purchase of a package of securities that
includes Common Stock or Equity-based Securities and other securities in the same Preemptive Rights Issuance, each Royalty Purchaser shall have the right to acquire its applicable  pro rata portion of
such other securities, together with its applicable pro rata portion of such Common
Stock or Equity-based Securities, in the same manner described above (as to amount, price and other terms). 


        (c)   The
election by the Royalty Purchasers not to exercise its preemptive rights hereunder with respect to any Preemptive Rights Issuance shall not affect its right (other
than in respect of a reduction in the Purchaser Percentage Interest) as to any other Preemptive Rights Issuances. Each Royalty Purchaser shall be entitled to deliver its own notices and make its own
elections for purposes of this Section 9.13, and the non-exercise by any Royalty Purchaser shall not affect the rights of any other Royalty Purchaser under this Section 9.13. 


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        9.14    Standstill.    Without the prior consent of the Company, the Purchasers shall not
at any time until the one-year anniversary of the Closing, purchase or acquire any outstanding equity securities of the Company (including any Options or Convertible Securities of the
Company) (it being understood and agreed that, for the avoidance of doubt, such restriction shall not apply to any purchase or acquisition by the Purchasers pursuant to and in accordance with
Sections 9.8, 9.12 and 9.13, pursuant to the exercise or conversion of the Apollo Warrants or the Notes, pursuant to the Investors Rights Agreement (including Section 2.1 thereof) or as
otherwise contemplated by the Transactions). 


 
 
        9.15    Certain Tax Matters.
    


        (a)   The
Company shall not take any Tax position on any Tax return, in any Tax Proceeding, or otherwise in respect of the Notes, the other Securities or the Royalty without
the prior written consent of the Majority Purchasers, which consent will not be unreasonably withheld, conditioned or delayed. 


        (b)   The
Company shall provide to the Purchasers such cooperation, documentation and information relating to the Company, the other Securities, the Royalties and the
Transactions as the Purchasers may reasonably request in connection with (i) filing any Tax return, amended Tax return or claim for refund, (ii) determining a liability for Taxes or a
right to refund of Taxes, or (iii) conducting any Tax Proceeding. The Company shall make its employees reasonably available at the Company's cost to provide an explanation of any documents or
information provided pursuant to this Section 9.15(b). 


        (c)   Except
as required by applicable Law, all payments made by the Company hereunder, pursuant to the Securities or pursuant to the Royalty Agreement shall be made free and
clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other Taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (together with any interest, additions to Tax and penalties applicable thereto, "Indemnified
Taxes"). If any Indemnified Taxes are required to be withheld from any amounts payable by the Company to the Purchasers hereunder, pursuant to the Securities or pursuant to the Royalty
Agreement, the amounts so payable to the Purchasers shall be increased to the extent necessary to yield to the Purchasers (after payment of all Indemnified Taxes) interest or any such other amounts
payable hereunder or pursuant to the Securities at the rates or in the amounts specified in this Agreement or by the terms of the Securities, as applicable. Whenever any Indemnified Taxes are payable
by the Company, the Company shall timely pay such Indemnified Taxes and shall send to the Purchasers a certified copy of an original official receipt received by the Company showing payment thereof.
If the Company fails to pay any Indemnified Taxes when due to the appropriate Taxing Authority or fails to remit to the Purchasers the required receipts or other required documentary evidence, the
Company shall indemnify the Purchasers for any incremental Taxes, interest or penalties that may become payable by the Purchasers as a result of any such failure. 


 
 
        9.16    Benefit Plans.
    The Company agrees that (x) from the date of the Original Agreement through the Closing Date (and thereafter), it shall not take any action to accelerate the vesting of, or
otherwise provide a benefit to a holder of, an outstanding equity or equity-based compensation award as a result of any of the transactions contemplated hereby, including due to any such transaction
constituting a Change in Control or term of similar import (within the meaning of the governing documents applicable to such award) and (y) between the date of the Original Agreement and the
Closing Date, it shall obtain waivers (in a form satisfactory to the Majority Purchasers) from the Company employees party to the agreements listed on Schedule 9.16 to the effect that none of
the transactions contemplated hereby shall constitute a Change in Control for purposes of the applicable agreement. 


 


        9.17    FCPA.    As soon as practicable after the date of the Original Agreement, the
Company shall adopt a compliance program for the FCPA, which compliance program shall be consistent with the 


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prevailing
standards of other companies operating in the Company's industry and reasonably acceptable to the Majority Purchasers. 


 
 
        9.18    Supplemental Payment.
    In the event that the Company or its Subsidiaries become liable for a Supplemental Payment, the Company shall pay to the Notes Purchasers and the Royalty Purchasers an amount of cash
(the "Supplemental Payment Gross Up"), allocated among the Notes Purchasers and the Royalty Purchasers in the manner specified by the Majority Purchasers (which manner
shall be intended to reflect the relative percentage interests of ownership of Company securities of the Purchasers and their ultimate investors), equal to an amount that if such amount of the
Supplemental Payment Gross Up is divided by the sum of (i) such amount of the Supplemental Payment Gross Up and (ii) the amount of the Supplemental Payment, would represent a percentage
that is equal to the Investor Percentage Interest (as defined in the Investors Rights Agreement) at such time. Any such payment of the Supplemental Payment Gross Up shall be made at the same time as
the payment of the Supplemental Payment. 


 
 
        9.19    Further Assurances.
    After the Closing, each of the Company, the Guarantors and each Purchaser agrees to take such further actions and to execute, acknowledge and deliver all such further documents as are
reasonably requested by the other Parties for carrying out the purposes of this Agreement or of any document delivered pursuant to this Agreement or the Transactions. Without limitation of the
foregoing, upon the request of a Purchaser, the Company will enter into a management rights agreement, in customary form and reasonably acceptable to the Company. 


 
 

  ARTICLE X    
    
    TERMINATION    
    


 
 
        10.1    Right to Terminate.
    Notwithstanding anything to the contrary set forth in this Agreement, this Agreement may be terminated and the Transactions abandoned at any time prior to the Closing: 



        (a)   by
mutual written consent of the Company and the Majority Purchasers; or 


        (b)   by
the Company or the Majority Purchasers, if: 



        (i)    the
Closing shall not have been consummated on or before December 31, 2013 (the "Outside Date");
provided, however, that neither the Company, on the one hand, nor the Majority Purchasers, on the other hand, shall be entitled to terminate
this Agreement under this Section 10.1(b)(i) if such Party's breach of any provision of this Agreement shall have been the cause of, or otherwise resulted in, the failure of the Closing to
occur on or before the Outside Date; or 


        (ii)   a
court of competent jurisdiction or other Governmental Authority shall have issued a final, non-appealable order, decree or ruling permanently restraining,
enjoining or otherwise prohibiting the sale and purchase of the Notes or the other Transactions; provided, that the Party seeking to terminate this Agreement pursuant to
this Section 10.1(b)(ii)) shall have complied in all material respects with its obligations in Section 9.3; or 



        (iii)  the
Shareholders Meeting (including any permitted adjournments or postponements thereof) shall have been held and completed and the Requisite Shareholder Approval
shall not have been obtained at such Shareholders Meeting (or at any adjournment or postponement thereof, if applicable); or 




        (c)   by
the Majority Purchasers, if the Company shall have breached any of its representations or warranties in this Agreement or failed to perform any of its covenants in
this Agreement such that the conditions set forth in Sections 6.1 or 6.2 would not be capable of being satisfied on such date if such date was the Closing Date, and such breach or failure to
perform shall not have been 



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cured
or waived in writing prior to the earlier of (i) fifteen (15) days following notice of such breach or failure to the Company and (ii) the Outside Date;
provided, that Majority Purchasers shall not have the right to terminate this Agreement pursuant to this Section 10.1(c) if any Purchaser is then in material breach
of any of its representations or warranties in this Agreement or has failed to perform in any material respect any of its covenants in this Agreement; or 


        (d)   by
the Company, if any Purchaser shall have breached any of its representations or warranties in this Agreement or failed to perform any of its covenants in this
Agreement such that the conditions set forth in Sections 5.1 or 5.2 would not be capable of being satisfied on such date if such date was the Closing Date, and such breach or failure to perform
has not been cured or waived in writing prior to the earlier of (i) fifteen (15) days following notice of such breach or failure to the Purchasers and (ii) the Outside Date;
provided, that the Company shall have no right to terminate this Agreement pursuant to this Section 10.1(d) if the Company is then in material breach of any of its
representations or warranties
in this Agreement or has failed to perform in any material respect any of its covenants in this Agreement; or 




        (e)   by
the Majority Purchasers, if prior to obtaining the Requisite Shareholder Approval, the Board of Directors of the Company shall have made an Adverse Recommendation
Change or the Company has materially breached its obligations under Section 9.7. 


 
 
        10.2    Effect of Termination.
    In the event that the Closing Date does not occur as a result of any Party hereto exercising its rights to terminate this Agreement pursuant to this Article X, then this Agreement
shall be null and void and, except as otherwise expressly provided herein (including as provided for in Section 10.3), no Party shall have any rights or obligations under this Agreement, except
that nothing herein shall relieve any Party from liability for any wrongful failure or refusal to perform or observe in any material respect any agreement or covenant contained herein. In the event
the termination of this Agreement results from the wrongful failure or refusal of any Party to perform in any material respect any agreement or covenant herein, then the other Party shall be entitled
to all remedies available at law or in equity and shall be entitled to recover court costs and reasonable attorneys' fees in addition to any other relief to which such Party may be entitled. In the
event that a Party wrongfully terminates or repudiates this Agreement or wrongfully fails to consummate the Transactions, the remedies available to the other Party in equity shall include specific
performance as set forth in Section 26.14 of this Agreement and such other remedies as may be available to the other Party at Law. 


 
 
        10.3    Fees and Expenses.
    Except as otherwise specifically provided herein, each Party hereto is responsible for all costs and expenses incurred by it in connection with this Agreement, whether or not the
Transactions are consummated. In the event that this Agreement is terminated (a) by any Party pursuant to Section 10.1(b)(i) and, at the time of such termination, the Requisite
Shareholder Approval has not been obtained; (b) by any Party pursuant to Section 10.1(b)(iii); or (c) by the Majority Purchasers, pursuant to Section 10.1(c) or
Section 10.1(e), then the Company shall promptly (and in no event later than two (2) Business Days following such termination) (x) reimburse to the Purchasers or any Affiliates of
the Purchasers designated by the Majority Purchasers all Purchaser Expenses, to the extent not previously reimbursed, and (y) pay to the Royalty Purchasers (in proportion to the percentage
specified opposite each such Royalty Purchaser's name in Schedule A) a fee of $7.5 million (the "Company Termination Fee"), in the case of each of
(x) and (y) by wire transfer of immediately available funds to an account or accounts as directed by the Purchasers. 



 


        10.4    Amendment.    This Agreement may be amended by the parties hereto whether before
or after the Requisite Shareholder Approval is obtained; provided, however, that after the Requisite Shareholder Approval is obtained, no
amendment may be made that by Law, requires further approval by shareholders unless such further approval is first obtained. This Agreement may not be amended except by an instrument in writing signed
by the parties hereto. 


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        10.5    Waiver.    At any time, any Party hereto may, to the extent permitted by
applicable Law, (a) extend the time for the performance of any obligation or other act of any other Party hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the Party or Parties to be bound thereby. 


 
 

  ARTICLE XI    
    
    INDEMNIFICATION    
    


 
 
        11.1    Purchaser Indemnification.
    From and after the Closing, the Purchasers shall, on a several but not joint basis, indemnify, defend and hold harmless the Company and its Subsidiaries (and the officers, directors,
employees, partners, members and Affiliates of each of the foregoing) from and against all Damages incurred or suffered by such Persons: 



        (a)   caused
by or arising out of or resulting from any Purchaser's breach of any of its covenants or agreements contained in Article IX; or 


        (b)   caused
by or arising out of or resulting from any breach of any representation or warranty made by a Purchaser contained in Article VIII of this Agreement, as of
the Closing Date, as if made on such date, except for any representation and warranty which speaks as of a particular date, in which case, as of such particular date, or in the certificate delivered
by such Purchaser at Closing pursuant to Section 5.3; 




even
if such Damages are caused in whole or in part by the negligence (whether sole, joint, or concurrent), strict liability, or other legal fault of any Indemnified Person, but excepting in each case
Damages against which the Company would be required to indemnify a Purchaser (or related Indemnified Person) under Section 11.2(b) at the time the claim notice is presented by the Company.
"Damages" for purposes of this Article XI, means the amount of any liability, loss (including diminution of value), cost, expense, claim, award, or judgment
incurred or suffered by any Indemnified Person arising out of or resulting from the indemnified matter, whether attributable to personal injury or death, property damage, contract claims, torts or
otherwise including reasonable fees and expenses of attorneys, consultants, accountants, or other agents and experts reasonably incident to matters indemnified against, and the costs of investigation
and/or monitoring of such matters, and the costs of enforcement of the indemnity. 


 
 
        11.2    Company Indemnification.
    From and after the Closing, the Company shall indemnify, defend and hold harmless each Purchaser and its Affiliates (and the officers, directors, employees, partners and members of each
of the foregoing) against and from all Damages incurred or suffered by such Persons: 



        (a)   caused
by or arising out of or resulting from the Company or its Subsidiary's breach of any of the Company's covenants or agreements contained in Article IX; 


        (b)   caused
by or arising out of or resulting from any breach of any representation or warranty made by the Company contained in Article VII of this Agreement, as of
the Closing Date, as if made on such date, except for any representation and warranty which speaks as of a particular date, in which case, as of such particular date, or in the certificate delivered
by the Company at Closing pursuant to Section 6.3(a); 


        (c)   caused
by or arising out of or resulting from any Proceeding brought by any shareholders of the Company (including any derivative actions), any Governmental Authorities
or any other third party relating to the Company's authorization and execution of this Agreement, the Original 



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Agreement
or any agreement or instrument contemplated by this Agreement, the Original Agreement or the performance of the Transactions; or 


        (d)   solely
until such time as the Notes have been fully converted into Common Stock, caused by or arising out of in connection with, or as a result of (i) the
execution or delivery of this Agreement, the Original Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations thereunder or
the consummation of the Transactions, (ii) the use of the proceeds of the Notes purchased hereunder, including the development and operation of the Holbrook Project, (iii) any actual or
alleged presence or release of Hazardous Materials on or from any property owned or operated by the Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company
or any of its Subsidiaries, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory
and regardless of whether any Indemnitee is a party thereto, 




even
if such Damages are caused in whole or in part by the negligence (whether sole, joint, or concurrent), strict liability, or other legal fault of any Indemnified Person, but excepting in each case
Damages against which the Purchasers would be required to indemnify the Company under Section 11.1(a) at the time the claim notice is presented by the Purchasers. 


 
 
        11.3    Indemnification Actions.
    All claims for indemnification under Sections 11.1 and 11.2 shall be asserted and resolved as follows: 



        (a)   For
purposes of this Article XI, the term "Indemnifying Person" when used in connection with particular Damages shall mean the Person
having an obligation to indemnify another Person or Persons with respect to such Damages pursuant to this Article XI, and the term "Indemnified Person" when used in
connection with particular Damages shall mean a Person having the right to be indemnified with respect to such Damages pursuant to this Article XI. 


        (b)   To
make a claim for indemnification under Sections 11.1 or 11.2, an Indemnified Person shall notify the Indemnifying Person of its claim, including the specific
details of and specific basis under this Agreement for its claim (the "Claim Notice"). In the event that the claim for indemnification is based upon a claim by a third
Person against the Indemnified Person (a "Claim"), the Indemnified Person shall provide its Claim Notice promptly after the Indemnified Person has actual knowledge of the
Claim and shall enclose a copy of all papers (if any) served with respect to the Claim; provided, that the failure of any Indemnified Person to give notice of a Claim as
provided in this Section 11.3 shall not relieve the Indemnifying Person of its obligations under Section 11.1 or 11.2 except to the extent such failure materially prejudices the
Indemnifying Person's ability to defend against the Claim. In the event that the claim for indemnification is based upon an inaccuracy or breach of a representation, warranty, covenant or agreement,
the Claim Notice shall specify the representation, warranty, covenant or agreement that was inaccurate or breached. 



        (c)   In
the case of a claim for indemnification based upon a Claim, the Indemnifying Person shall have thirty (30) days from its receipt of the Claim Notice to notify
the Indemnified Person whether it admits or denies its liability to defend the Indemnified Person against such Claim under this Article XI. If the Indemnifying Person does not notify the
Indemnified Person within such thirty (30) day period regarding whether the Indemnifying Person admits or denies its liability to defend the Indemnified Person, the
Damages for which the Indemnified Person is seeking indemnity shall be conclusively deemed a liability of the Indemnifying Person hereunder. The Indemnified Person is authorized, prior to and during
such thirty (30) day period, to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Person and that is
not prejudicial to the Indemnifying Person. 



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        (d)   If
the Indemnifying Person admits its liability to indemnify the Indemnified Person, it shall have the right and obligation to diligently defend, at its sole cost and
expense, the Claim. The Indemnifying Person shall have full control of such defense and proceedings, including any compromise or settlement thereof. If requested by the Indemnifying Person, the
Indemnified Person agrees to cooperate in contesting any Claim, which the Indemnifying Person elects to contest (provided, however, that the
Indemnified Person shall not be required to bring any counterclaim or cross-complaint against any Person). The Indemnified Person may participate in, but not control, any defense or settlement of any
Claim controlled by the Indemnifying Person pursuant to this Section 11.3(d). An Indemnifying Person shall not, without the written consent of the Indemnified Person, settle any Claim or
consent to the entry of any judgment with respect thereto that (i) does not include, in the case of a settlement, an unconditional written release of the Indemnified Person from all liability
in respect of such Claim or (ii) may materially and adversely affect the Indemnified Person (other than as a result of money damages covered by the indemnity). 


        (e)   If
the Indemnifying Person does not admit its liability to indemnify the Indemnified Person or admits its liability, but fails to diligently defend or settle the Claim,
then the Indemnified Person shall have the right to defend against the Claim (at the sole cost and expense of the Indemnifying Person, if the Indemnified Person is entitled to indemnification
hereunder), with counsel of the Indemnified Person's choosing, subject to the right of the Indemnifying Person to admit its liability to indemnify the Indemnified Person and assume the defense of the
Claim at any time prior to settlement or final determination thereof. If the Indemnifying Person has not yet admitted its liability to indemnify the Indemnified Person, the Indemnified Person shall
send written notice to the Indemnifying Person of any proposed settlement and the Indemnifying Person shall have the option for ten days following receipt of such notice to (i) admit in writing
its liability for indemnification with respect to such Claim and (ii) if liability is so admitted, reject the proposed settlement. 


 




        11.4    Limitations.    



        (a)   The
representations and warranties of the parties in Articles VII and VIII, and the corresponding representations and warranties given in the certificates
delivered at the Closing pursuant to Sections 5.3 and 6.3(a), as applicable, shall survive the Closing for a period of eighteen (18) months, except that (i) the representations
and warranties of the Company contained in Section 7.1 (Organization; Power and Authority), 7.2 (Authorization, Etc), 7.3 (Execution; Due Authority); 7.4 (No Conflicts); 7.5 (Consents,
Approvals or Waivers); 7.7(b) (Compliance with Law), 7.22 (Taxes) and 7.40 (Covenants) (collectively, the "Fundamental Representations") shall survive the Closing
indefinitely, and the representations and warranties of the Company contained in Section 7.8 (License and Permits) and 7.20 (Environmental Matters) shall survive the Closing for three
(3) years. The covenants in this Agreement shall survive the Closing without time limit except as may otherwise be expressly provided herein. Representations, warranties, covenants and
agreements shall be of no further force and effect after the date of their expiration; provided, that there shall be no termination of any
bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant, or agreement prior to its expiration date. Subject to the foregoing, all representations
and warranties contained herein shall survive the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. 



        (b)   The
indemnities in Sections 11.1(b) and 11.2(b) shall terminate as of the termination date of each respective representation or warranty that is subject to
indemnification, except in each case as to matters for which a Claim Notice for indemnity has been delivered to the Indemnifying Person on or before such termination date. 


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        (c)   Notwithstanding
anything to the contrary in this Agreement, for purposes of determining whether a representation or warranty has been breached for purposes of this
Article XI, each representation and warranty set forth in Article VII and Article VIII, shall be read without regard to and without giving effect to any "material," "materiality,"
"Material Adverse Effect", or similar qualifications, that may be contained in any such representation or warranty. 


        (d)   The
Company shall not have any liability for any Damages under Section 11.2(b), except for the Fundamental Representations, until the aggregate of all such claims
result in total Damages which are incurred or suffered by the Purchasers (or their related Indemnified Persons) that exceed $1,000,000 (the "Threshold"), in which case the
Purchasers shall be entitled to indemnification for all Damages incurred; provided, however, that the aggregate liability of the Company
pursuant to Section 11.2(b), except for the Fundamental Representations, shall not be in excess of an aggregate amount of $20,000,000 (the "Cap"). 


        (e)   The
Purchasers shall not have any liability for any Damages arising under Section 11.1(b) until the aggregate of all such claims result in total Damages which are
incurred or suffered by the Company that exceeds the Threshold, in which case the Company shall be entitled to indemnification for all Damages incurred; provided,
however, that the aggregate liability of the Purchasers pursuant to Section 11.1(b) shall not be in excess of an aggregate amount of the Cap. 



        (f)    If
any Damages sustained by an Indemnified Person are covered by an insurance policy or an indemnification, contribution or similar obligation of another Person (other
than an Affiliate of such Indemnified Person), both the Indemnified Person and the Indemnifying Person shall use commercially reasonable efforts to collect such insurance proceeds or indemnity,
contribution or similar payments. The amount of any Damages subject to indemnification shall be reduced by the amounts recoverable under applicable insurance policies or an indemnification,
contribution or similar obligation of another Person (other than an Affiliate of such Indemnified Person) with respect to claims related to such Damages (net of (i) any increase in premiums,
(ii) retroactive premiums, (iii) premium adjustments or (iv) any deductible incurred in obtaining such proceeds) and if any Indemnified Person receives such insurance proceeds or
indemnity, contribution or similar payments after the settlement of any indemnification claim, such Indemnified Person shall refund to the Indemnifying Party or parties the amount of such insurance
proceeds or indemnity, contribution or similar payments, up to the amount received in connection with such indemnification claim. It is the intention of the parties hereto that no insurer or third
party shall be entitled to any benefit or right it would not be entitled to receive in the absence of this Section 11.4(f). 


        (g)   Notwithstanding
anything to the contrary contained in this Agreement (other than the final proviso in this subsection (g)) or provided for under any applicable
Law, no Indemnifying Person shall be liable under this Article XI (other than under Section 11.2(c)) to any Indemnified Person, either in contract or in tort, for any loss of profits or
any consequential, incidental, exemplary, indirect, special or punitive damages of such Indemnified Person, including loss of future revenue, income or profits, whether or not the possibility of such
damages has been disclosed to the Indemnifying Person in advance or could have been reasonably foreseen by the Indemnifying Person; provided,
however? that nothing in this Section 11.4(g) shall limit the liability of an Indemnified Person under this Article XI for any loss of profits or
any consequential, incidental, exemplary, indirect, special or punitive damages, including loss of future revenue, income or profits relating to the breach or alleged breach hereof actually paid by an
Indemnified Person to a third party; and provided further that nothing in this Section 11.4(g) shall limit any claims based on diminution of value. 


        (h)   Each
Indemnified Person shall use commercially reasonable efforts to mitigate any Damages for which such Indemnified Person seeks indemnification (it is understood that
an Indemnified Person's failure to satisfy its obligations under this Section 11.4(h) shall constitute a breach of this Agreement by such Indemnified Person but that such failure shall not
limit such Indemnified Person's rights under 


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this
Article XI and shall not limit an Indemnifying Person's rights to reduce the amount payable by such Indemnifying Person for Damages to reflect such breach). Each Indemnified Person shall
use commercially reasonable efforts to pursue against Persons who are not parties to this Agreement any and all rights or benefits (including rights to be indemnified and held harmless or rights to be
reimbursed for, or to share, certain costs, expenses or Taxes) with respect to any matter that is indemnifiable under this Article XI. 


        (i)    Notwithstanding
anything to the contrary contained in this Agreement, from and after Closing this Article XI contains the Parties' exclusive remedy against each
other with respect to breaches of the representations, warranties, covenants and agreements of the Parties contained in Articles VII, VIII and IX (other than any such covenants and agreements
that are to be performed, in part or in full, after the Closing) and the affirmations of such representations, warranties, covenants and agreements contained in the certificate delivered by each Party
at Closing pursuant to Sections 5.3 and 6.3(a), as applicable. 


        (j)    For
Tax purposes, the parties agree that all indemnification payments made hereunder constitute adjustments to the Purchase Price and shall report any payments as such
on their Tax returns, unless otherwise required by applicable law. 


 
 

  ARTICLE XII    
    
    VOTING    
    


 


        12.1    Voting.    On any matter presented to the shareholders of the Company for their
action or consideration at any meeting of the shareholders of the Company or for action by written consent, each Purchaser shall be entitled to the number of votes equal to the number of shares of
Common Stock into which the Notes held by such Purchaser (as of the record date for determining shareholders entitled to vote on such matter) are convertible based on the then-effective
Conversion Price (including any adjustments pursuant to Article XIII) and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise
expressly provided herein or as required by Law, voting together with the Common Stock as a single class) and shall be entitled to notice of any such shareholders' meeting or action by written consent
in accordance with the Bylaws of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula shall be rounded down to the nearest
whole number. Notwithstanding the foregoing, the holders of Notes shall vote as a separate class on any matters as to which a separate class vote is required by applicable Law or as provided in
Section 12.2. 


 
 
        12.2    No Adverse Actions.
    As long as any Notes are outstanding, the Company shall not, without the affirmative vote or written consent of the holders of 67% of the then outstanding principal amount of Notes,
amend its articles of incorporation or bylaws in any manner that adversely affects the voting rights of the Notes, or enter into any agreement committing the Company to do any of the foregoing. 


 
 

  ARTICLE XIII    
    
    CONVERSION    
    


        At any time or times after the Closing, the Notes shall be convertible into shares of Common Stock, on the terms and conditions set
forth in this Article XIII. 


 
 
        13.1    Conversion Right.
    


        (a)   At
any time and from time to time on or after the Closing Date, each Purchaser shall be entitled to convert all or any portion of the outstanding and unpaid principal
and all or any portion of the accrued and unpaid interest on the Notes owned by such Purchaser (such amount to be the 


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"Conversion
Amount" for purposes of this Article XIII) into fully paid and nonassessable shares of Common Stock in accordance with Section 13.3, at the
Conversion Price (as defined below). 


        (b)   Upon
or at any time after the Conversion Milestone, the Company shall be entitled to cause the conversion of all or any portion of the outstanding and unpaid principal
and all or any portion of the accrued and unpaid interest on the Notes (such amount to be the "Conversion Amount" for purposes of this Article XIII) into fully paid
and nonassessable shares of Common Stock in accordance with Section 13.3, at the Conversion Price, provided that if the Company causes conversion
of less than all of the outstanding principal amount of the Notes, such conversions shall be made from each of the Purchasers on a pro rata basis in proportion to the principal amount of Notes held by
them. 


        (c)   The
Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up to the next whole share. The Company shall pay any and all transfer, stamp and similar Taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. 


 


        13.2    Conversion.    The number of shares of Common Stock issuable upon conversion of
any Conversion Amount pursuant to Section 13.1(a) or (b) shall be determined by dividing (x) the applicable Conversion Amount by (y) the Conversion Price. 


        (a)   "Initial
Conversion Price" means $2.70. 


        (b)   "Conversion
Price" as of any date herein, means the Initial Conversion Price as adjusted from time to time pursuant to this
Article XIII hereof. It is expressly acknowledged and agreed by the Company that the Conversion Price on the Closing Date may be lower than the Initial Conversion Price as a result of
adjustments to the Initial Conversion Price set forth in this Article XIII that are based on events occurring prior to the Closing Date. 


 
 
        13.3    Mechanics of Conversion.
    


        (a)   To
convert any Conversion Amount into shares of Common Stock on any date (a "Purchaser Conversion Date"), a Purchaser shall
(A) transmit for delivery, for receipt on or prior to 7:00 p.m., New York time, on such date, which must be a Business Day, a copy of an executed notice of conversion in the form
attached hereto as Exhibit B-1 (the "Purchaser Conversion Notice") to the Company and the Transfer Agent and (B) surrender the Notes to a common
carrier for delivery to the Company within three (3) Business Days following a conversion of the Notes. On or before the first (1st) Business Day following the date of receipt of a Purchaser
Conversion Notice, the Company shall transmit by facsimile a confirmation of receipt of such Purchaser Conversion Notice to such Purchaser and the Transfer Agent. On or before the third (3rd) Trading
Day following the date of receipt of a Purchaser Conversion Notice (a "Purchaser Share Delivery Date"), the Company shall
(x) provided, that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program and the shares are eligible to be
sold without restrictions (other than volume restrictions) under Rule 144 under the Securities Act, credit such aggregate number of shares of Common Stock to which such Purchaser shall be
entitled to such Purchaser's or its designee's balance account with DTC through its Deposit/Withdrawal At Custodian system or (y) otherwise, issue and deliver to the address as specified in the
Purchaser Conversion Notice, a certificate, registered in the name of such Purchaser or its designees, for the number of shares of Common Stock to which such Purchaser shall be entitled. If the
outstanding principal of the Notes is greater than the principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three
(3) Business Days after receipt of the Notes and at its own expense, issue and deliver to such Purchaser a new Note representing the outstanding principal not converted. The Person or Persons
entitled to receive the shares of Common Stock issuable upon a conversion of the Notes shall be treated for all purposes as the record purchaser of such shares of Common Stock on the Purchaser
Conversion Date, 


A-52







 

irrespective
of the date such shares are credited to such purchaser's account with DTC or the date of delivery of the certificates evidencing such Conversion Shares, as the case may be. 


        (b)   To
convert any Conversion Amount into shares of Common Stock on any date (a "Company Conversion Date"), the Company shall transmit for
delivery, for receipt on or prior to 7:00 p.m., New York time, on such date, which must be a Business Day, a copy of an executed notice of conversion in the form attached hereto as
Exhibit B-2 (the "Company Conversion Notice") to the Purchasers and the Transfer Agent and the Purchasers shall surrender the Notes to a common carrier
for delivery to the Company within three (3) Business Days following a conversion of the Notes. On or before the first (1st) Business Day following the date of receipt of a Company Conversion
Notice, each Purchaser shall transmit by facsimile a confirmation of receipt of such Company Conversion Notice to the Company and the Transfer Agent. On or before the third (3rd) Trading Day following
the date of receipt by the Purchasers of a Company Conversion Notice (a "Company Share Delivery Date" and together with a Purchase Share Delivery Date, a
"Share Delivery Date", the Company shall (x) provided, that the Transfer Agent is participating in the DTC Fast
Automated Securities Transfer Program and the shares are eligible to be sold without restrictions (other than volume restrictions) under Rule 144 under the Securities Act, credit such aggregate
number of shares of Common Stock to which each Purchaser shall be entitled to such Purchaser's balance account with DTC through its Deposit/Withdrawal At Custodian system or (y) if the Transfer
Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to each Purchaser a certificate, registered in the name of such Purchaser, for the number of shares
of Common Stock to which such Purchaser shall be entitled. If the outstanding principal of the Notes is greater than the principal portion of the Conversion Amount being converted, then the Company
shall as soon as practicable and in no event later than three (3) Business Days after receipt of the Notes and at its own expense, issue and deliver to each Purchaser a new Note representing
the outstanding principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of the Notes shall be treated for all purposes as the record
purchaser of such shares of Common Stock on the Company Conversion Date, irrespective of the date such shares are credited to the purchasers' account with DTC or the date of delivery of the
certificates evidencing such Conversion Shares, as the case may be. 


        (c)   If
the Company shall fail to issue a certificate to a Purchaser or credit such Purchaser's balance account with DTC, as applicable, for the number of shares of Common
Stock to which such Purchaser is entitled upon conversion of any Conversion Amount on or prior to the Share Delivery Date (a "Conversion Failure"), then (A) the
Company shall pay damages to the Purchasers for each trading day of such Conversion Failure in an amount equal to 1.5% of the product of (1) the sum of the number of shares of Common Stock not
issued to the Purchasers on or prior to the Share Delivery Date and to which the Purchasers is entitled, and (2) the Closing Sale Price of the Common Stock on the Share Delivery Date;  provided,
that the payment of such damages shall not relieve the Company from its obligation to deliver the shares to which the Purchasers are entitled
upon conversion of such Conversion Amount except to the extent of a voided Conversion Notice pursuant to clause (B) of this sentence and (B) the Purchasers, upon written notice to the
Company, may void its Conversion Notice with respect to any portion of the Conversion Amount in respect of which there has been a Conversion Failure, and retain or have returned, as the case may be,
any portion of the Notes in respect of which there has been a Conversion Failure; provided, that the voiding of a Conversion Notice shall not affect the Company's
obligations to pay any amounts which have accrued under the Notes prior to the date of such notice pursuant to this Section 13.3(c) or otherwise. In addition to the foregoing, if the Company
shall fail on or prior to the Share Delivery Date to issue and deliver a certificate to such Purchaser or credit such Purchaser's balance accounts with DTC for the number of shares of Common Stock to
which such Purchaser is entitled upon such Purchaser's conversion of any Conversion Amount or on any date of the Company's obligation to deliver shares of Common Stock as contemplated pursuant to
clause (ii) below, and if on or after such Share Delivery Date such Purchaser purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such
Purchaser 


A-53







 

of
Common Stock issuable upon such conversion that such Purchaser anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three
(3) Trading Days after such Purchaser's request and in such Purchaser's discretion, either (i) pay cash to such Purchaser in an amount equal to such Purchaser's total purchase price
(including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In
Price"), at which point the Company's obligation to issue and deliver such certificate or credit such Purchaser's balance account with DTC for the shares of Common Stock to which such
Purchaser is entitled upon such Purchaser's conversion of the applicable Conversion Amount shall terminate, or (ii) promptly honor its obligation to deliver to such Purchaser a certificate or
certificates representing such Common Stock or credit such Purchaser's balance account with DTC for the number of shares of Common Stock to which such Purchaser is entitled upon such Purchaser's
conversion hereunder (as the case may be) and pay cash to such Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares
of Common Stock, times (B) the Closing Sale Price on the Conversion Date. 


        (d)   In
the event that the Company receives a Conversion Notice from more than one Purchaser for the same Conversion Date and the Company can convert some, but not all, of
such portions of the Notes submitted for conversion, the Company shall convert from each Purchaser electing to have Notes converted on such date a pro rata amount of such Purchaser's portion of its
Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such Purchasers relative to the aggregate principal amount of all Notes submitted for
conversion on such date; provided, however, that nothing in this Section 13.3(d) shall be deemed
to release the Company from any such failure to convert. In the event of a dispute as to the number of shares of Common Stock issuable to a Purchaser in connection with a conversion of the Notes, the
Company shall issue to such Purchaser the number of shares of Common Stock not in dispute and resolve such dispute in accordance with the terms of this Agreement. 


 
 
        13.4    Adjustment Upon Issuance of Shares of Common  Stock.
    If and whenever on or after the date of the Original Agreement the Company issues or sells, or in accordance with this Section 13.4 is deemed to have issued or sold, any shares of
Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the "New Issuance
Price") less than a price equal to the Conversion Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to
as the "Applicable Price") (the foregoing a "Dilutive Issuance"), other than an issuance or sale or deemed issuance or sale covered by
Section 13.5, then the Conversion Price then in effect shall be reduced to a price determined in accordance with the following formula: 

 






							
	 	 	R1 = R ×	 	OS + A






  OS + B	 	 




 

 Where:


 






					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after such Dilutive Issuance;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to such Dilutive Issuance;
	

 	
 	
 OS =	
 	
 the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue or upon conversion or exchange of Convertible Securities (excluding the Notes) outstanding immediately prior to such issue (to the extent such Options or Convertible Securities have an exercise or conversion price
below R));




 

 A-54







 
 






					
	 	 	 A =	 	 the number of shares of Common Stock that would have been issued (or be deemed to have been issued) if such Dilutive Issuance had been issued at a price per share equal to R (determined by dividing the aggregate
consideration received by the Company in respect of such issue by R); and
	

 	
 	
 B =	
 	
 the number of shares of Common Stock issued (or deemed to have been issued) in such Dilutive Issuance.




 

         For
purposes of determining the adjusted Conversion Price under this Section 13.4, the following shall be applicable: 



 
 
         (A)    Issuance of Options.     If the Company in any manner grants or sells any Options and the lowest price per
 share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 13.4(A), the
"lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the
granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option. Except as contemplated below,
no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the
actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities. The Conversion Price will be readjusted to the extent that such Options are not
exercised prior to their expiration. 


 
 
         (B)    Issuance of Convertible Securities.     If the Company in any manner issues or sells any Convertible
 Securities and the lowest price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the
time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 13.4(B), the "lowest price per share for which one share of Common Stock
is issuable upon the conversion, exercise or exchange thereof" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share
of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or exchange of such Convertible Security. Except as contemplated below, no further adjustment of the
Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 13.4, except as
contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or sale. The Conversion Price will be readjusted to the extent that such Convertible Securities
are not converted prior to the last day on which they are convertible. 


 
 
         (C)    Change in Option Price or Rate of Conversion.     If the purchase or exercise price provided for in any
 Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of
any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the
Conversion Price in effect at the time of such increase or decrease shall 



A-55







 

be
adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional
consideration or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 13.4(C), if the terms of any Option or
Convertible Security that was outstanding as of the date of the Original Agreement are increased or decreased in the manner described in the immediately preceding sentence, then such Option or
Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 13.4(C) shall be made if such adjustment would result in an increase of the Conversion Price then in effect. 


 
 
         (D)    Calculation of Consideration Received.     In case any Option is issued in connection with the issue or
 sale of other securities of the Company, together comprising one integrated transaction in which no
specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. If any shares of Common Stock, Options or
Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the amount of consideration received by the Company
therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the
fair value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be
the arithmetic average of the VWAP of such security for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible
Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be
deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities
(as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined jointly by the Company and the Purchasers. If such parties are unable to
reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be
determined within five (5) Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser (an "Appraiser") jointly
selected by the Company and the Majority Purchasers; provided, that if the Company and the Majority Purchasers cannot agree on an Appraiser within such ten
(10) Trading Days, each will choose an Appraiser and the two Appraisers will choose a third Appraiser who will determine the fair value of such consideration. The determination of such
appraiser shall be final and binding upon all parties absent manifest error (provided such determination is approved by the Majority Purchasers) and the
fees and expenses of such appraiser shall be borne by the Company. 




 
 
        13.5    Adjustment for Change in Capital Stock.
    If, after the date of the Original Agreement, the Company: 



        (d)   pays
a dividend or makes another distribution to all or substantially all holders of Common Stock payable exclusively in shares of Common Stock; 


        (e)   subdivides
the outstanding shares of Common Stock into a greater number of shares; or 


        (f)    combines
the outstanding shares of Common Stock into a smaller number of shares; 




then
the Conversion Price will be adjusted based on the following formula: 

 






							
	 	 	R1 = R ×	 	OS1






  OS	 	 




 

 A-56







 

where:


 






					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the effective date of such subdivision or
combination, as the case may be;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to the open of business on the effective date of such
subdivision or combination, as the case may be;
	

 	
 	
 OS1 =	
 	
 the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to the open of business on the effective date
of such subdivision or combination, as the case may be; and
	

 	
 	
 OS =	
 	
 the number of shares of Common Stock outstanding immediately after such dividend or distribution, or immediately after the effective date of such subdivision or combination, as the case may be.




 

         Such
adjustment shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or the effective date for such
subdivision or combination. If any dividend or distribution of the type described in this Section 13.5 is declared but not so paid or made, or the outstanding shares of Common Stock are not
split or combined, as the case may be, the Conversion Price shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, or
split or combine the outstanding shares of Common Stock, as the case may be, to the Conversion Price that would then be in effect if such dividend, distribution, share split or share combination had
not been declared or announced. 


        If,
after an adjustment, a Purchaser upon conversion of its Note may receive shares of two or more classes of Capital Stock of the Company, the Conversion Price shall thereafter be
subject to adjustment upon the occurrence of an action taken with respect to any such class of Capital Stock as is contemplated by this Article XIII with respect to the Common Stock, on terms
comparable to those applicable to Common Stock in this Article XIII. 



 
 
        13.6    Adjustment for Other Distributions.
    If, after the date of the Original Agreement, the Company distributes to all or substantially all holders of its Common Stock any of its debt, securities or assets or any Options to
purchase securities of the Company (including securities or cash, but excluding (a) distributions of capital stock as to which an adjustment is required pursuant to Section 13.5,
(b) distributions of Options as to which an adjustment is required pursuant to Section 13.4, (c) dividends or other distributions paid exclusively in cash (as to which
Section 13.7 applies) and (d) any Spin-off to which the provisions set forth below in this Section 13.6 shall apply), the Conversion Price shall be decreased in
accordance with the formula: 

 






							
	 	 	R1 = R ×	 	M - F






  M	 	 




 

 where:


 






					
	 	 	 R1=	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;




 

 A-57







 
 






					
	 	 	 M =	 	 the average of the Closing Sale Prices of the Common Stock for the ten (10) consecutive Trading Day-period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution;
and
	

 	
 	
 F =	
 	
 the fair market value, as determined by the Board of Directors, of the portion of those assets, securities or Options to be distributed in respect of each share of Common Stock immediately prior to the open of
business on the Ex-Dividend Date for such distribution.




 

         With
respect to an adjustment pursuant to this Section 13.6 where there has been a payment of a dividend or other distribution on the Common Stock in shares of Capital Stock of
any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit, where such Capital Stock or similar equity interest is listed or quoted (or will be listed or
quoted upon consummation of the Spin-off) on a national securities exchange or reasonably comparable non-U.S. equivalent, which is referred to herein as a
"Spin-off," the Conversion Price will be decreased based on the following formula: 

 






							
	 	 	R1 = R ×	 	MP






  F + MP	 	 




 

 where:


 






					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for the Spin-off;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for the Spin-off;
	

 	
 	
 F =	
 	
 the average of the Closing Sale Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of the Common Stock over the first ten (10) consecutive
Trading Day period immediately following, and including, the Ex-Dividend Date for the Spin-off (such period, the "Valuation Period"); and
	

 	
 	
 MP =	
 	
 the average of the Closing Sale Prices of the Common Stock over the Valuation Period.




 

         The
adjustment to the Conversion Price under the preceding paragraph of this Section 13.6 will be made immediately after the open of business on the day after the last day of the
Valuation Period, but will be given effect as of the open of business on the Ex-Dividend Date for the Spin-off. For purposes of determining the Conversion Price, in respect of
any conversion during the ten (10) consecutive Trading Days commencing on the Ex-Dividend Date for any Spin-off, references within the portion of this
Section 13.6 related to Spin-offs to ten (10) consecutive Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including,
the Ex-Dividend Date for such Spin-off to, but excluding, the relevant Conversion Date. 


 
 
        13.7    Adjustment for Cash Dividends.
    If, after the date of the Original Agreement, the Company distributes to all or substantially all holders of its Common Stock any dividends payable exclusively in cash, the Conversion
Price shall be adjusted in accordance with the formula: 

 






							
	 	 	R1 = R ×	 	SP-C






  SP	 	 




 

 where:


 






					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;




 

 A-58







 
 






					
	 	 	 R =	 	 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 SP =	
 	
 the average of the Closing Sale Prices of Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution;
and
	

 	
 	
 C =	
 	
 the amount in cash per share the Company distributes to holders of Common Stock.




 

         The
adjustment shall become effective immediately after the open of business on the Ex-Dividend Date with respect to the distribution. 


 
 
        13.8    Adjustment for Company Tender Offer.
    If, after the date of the Original Agreement, the Company or any Subsidiary of the Company makes a payment to holders of Common Stock in respect of a tender or exchange offer, other than
an odd-lot offer, by the Company or any of its Subsidiaries for shares of Common Stock, to the extent that the cash and value of any other consideration included in the payment per share
of Common Stock exceeds the average of the Closing Sale Prices over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day following the last date on which
tenders or exchanges may be made pursuant to such tender or exchange offer ("Expiration Date"), the Conversion Price shall be decreased based on the following formula: 

 






							
	 	 	R1 = R ×	 	OS×SP






  F+(SP×OS')	 	 




 

 where:


 






					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Trading Day following the Expiration Date;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Trading Day following the Expiration Date;
	

 	
 	
 F =	
 	
 the fair market value, as determined by the Board of Directors, of the aggregate consideration payable in such tender or exchange offer (up to any maximum amount specified in the terms of the tender or exchange
offer) for all shares of Common Stock that the Company or any Subsidiary of the Company purchases in such tender or exchange offer, such fair market value to be measured as of the expiration time of the tender or exchange offer ("Expiration
Time");
	

 	
 	
 OS =	
 	
 the number of shares of Common Stock outstanding immediately prior to the Expiration Time (prior to giving effect to such tender offer or exchange offer);
	

 	
 	
 OS' =	
 	
 the number of shares of Common Stock outstanding immediately after the Expiration Time (after giving effect to such tender offer or exchange offer); and
	

 	
 	
 SP =	
 	
 the average of the Closing Sale Prices of Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day following the Expiration Date.




 

         The
adjustment to the Conversion Price under the preceding paragraph of this Section 13.8 will be made immediately after the open of business on the eleventh (11th) Trading Day
following the Expiration Date but will be given effect at the open of business on the Trading Day following the Expiration Date. For purposes of determining the Conversion Price, in respect of any
conversion during the ten (10) consecutive Trading Days commencing on the Trading Day following the Expiration Date, references within this Section 13.8 to ten (10) consecutive
Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day following the Expiration Time to, but excluding, the relevant
Conversion Date. 


A-59









 









































 
 
        13.9    When Adjustment May Be Deferred.
    No adjustment in the Conversion Price need be made unless the adjustment would require an increase or decrease of more than 1% of the Conversion Price. If the adjustment is not made
because the adjustment does not change the Conversion Price by more than one percent (1%), then the adjustment that is not made shall be carried forward and taken into account in any future
adjustment. Notwithstanding the foregoing, all such carried-forward adjustments shall be made with respect to the affected Notes on the Trading Day that is thirty (30) Trading Days prior to the
scheduled Maturity Date and thereafter any adjustment to the Conversion Price shall be made on each subsequent Scheduled Trading Day immediately preceding the scheduled Maturity Date. 


        All
calculations under this Article XIII shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be. 


 
 
        13.10    When No Adjustment Required.
    No adjustment need be made as a result of: 



        (a)   the
issuance of any shares of Common Stock by the Company upon conversion of the Notes; 


        (b)   the
issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in shares of Common Stock under any plan; 


        (c)   the
issuance of any shares of Common Stock or Options pursuant to any present or future employee, director or consultant Benefit Plan of the Company or any of its
Subsidiaries; provided that any such issuances are made in accordance with the terms, conditions and limitations of such plans as
they existed as of the date of the Original Agreement and without effect to any amendments or other modifications thereof after the date of the Original Agreement, unless previously approved by the
Majority Purchasers; 


        (d)   any
accrued and unpaid interest; 


        (e)   the
issuance of any shares of Common Stock pursuant to any Option outstanding as of the date of the Original Agreement or issuable pursuant to any agreement set forth in
Schedule 13.11(e), provided that such issuance of shares of Common Stock upon exercise of such Options or Convertible Securities (or under such agreements) is made
pursuant to the terms of such Options or Convertible Securities (or of such agreements) in effect on the date immediately preceding the date of the Original Agreement and the exercise, conversion or
similar price and the number of shares underlying such Option or Convertible Security (or the terms and conditions of such agreements) are not amended or changed after the date of the Original
Agreement and the other material terms of such Options or Convertible Securities are not otherwise amended or changed after the date of the Original Agreement, unless previously approved by the
Majority Purchasers; 


        (f)    the
issuance of the rights pursuant to any Company stockholders rights plan ("Stockholder Rights Plan"); 


        (g)   the
distribution of separate certificates representing the rights under a Stockholder Rights Plan; 


        (h)   the
exercise or redemption of the rights in accordance with any rights agreement under a Stockholder Rights Plan; or 


        (i)    the
termination or invalidation of the rights under a Stockholder Rights Plan. 




        If
any event described in Section 13.10(f) through (i) occurs, the Purchasers will receive the rights under such Stockholders Rights Plan upon conversion, unless, prior to
any conversion, the rights have separated from the Common Stock. If the rights have separated, the Conversion Price will be adjusted 


A-60







 

at
the time of separation as provided by Section 13.4 (subject to readjustment in the event of the expiration, termination or redemption of such rights). 



        No
adjustment need be made for a transaction referred to in Sections 13.5 through 13.8 if the Purchasers may participate in the transaction (as a result of holding the Notes, and
at the same time and upon the same terms as holders of Common Stock participate) on a basis that the Majority Purchasers determine to be fair and appropriate (excluding any participation through
exercise of any preemptive rights), and with notice of such participation to the Purchasers, in any of the events described in Sections 13.5 through 13.8 as if each Purchaser held a number of
shares of Common Stock equal to the Conversion Price, divided into by the Conversion Amount of Notes held by such Purchaser, without having to convert its Notes. 



 
 
        13.11    Notice of Adjustment.
    Whenever the Conversion Price is adjusted, the Company shall promptly or within three (3) Business Days mail to the Purchasers a notice of the adjustment. The Company shall file
with the trustee (if any) and the conversion agent (if any) such notice briefly stating the facts requiring the adjustment and the manner of computing it. The notice of adjustment shall be conclusive
evidence that the adjustment is correct, unless the Majority Purchasers, by notice to the Company within three (3) Business Days of receiving such notice of adjustment, disputes such
adjustment. If, after discussing in good faith for ten (10) Business Days, the parties are unable to reach agreement over the appropriate adjustment, such adjustment will be determined within
five (5) Business Days after such ten (10) Business Day period by an independent, reputable national accounting firm (an "Accounting Firm") jointly selected
by the Company and the Majority Purchasers; provided that if the Company and the Majority Purchasers cannot agree on an Accounting Firm within such ten (10) Business Day period, each will
choose an Accounting Firm and the two Accounting Firms will choose a third Accounting Firm who will determine the appropriate adjustment. The determination of the Accounting Firm shall be final and
binding upon all parties absent manifest error, and the fees and expenses of such Accounting Firm shall be borne by the party with whom the Accounting Firm most closely agrees. 


 
 
        13.12    Voluntary Decrease.
    The Company from time to time may (but is not required to) decrease the Conversion Price, as permitted by law, by any amount at any time for at least twenty (20) Business Days, so
long as the decrease is irrevocable during such period. In addition, the Company may also (but is not required to) decrease the Conversion Price to avoid or diminish any income Tax to holders of
Common Stock or rights to purchase Common Stock in connection with any dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the Conversion Price is decreased,
the Company shall mail to the Purchasers a notice of the decrease. The Company shall mail the notice at least fifteen (15) days before the date the decreased Conversion Price takes effect. The
notice shall state the decreased Conversion Price and the period it will be in effect. A voluntary decrease of the Conversion Price does not change or adjust the Conversion Price otherwise in effect
for purposes of Sections 13.4 through 13.8. 



 
 
        13.13    Notice of Certain Transactions.
    If: 



        (a)   the
Company takes any action that would require an adjustment in the Conversion Price pursuant to Section 13.4 through 13.8 (unless no adjustment is to occur,
pursuant to Section 13.10) or takes any action covered by Section 13.14; or 


        (b)   there
is a liquidation or dissolution of the Company, 




then
the Company shall mail to the Purchasers a notice stating the proposed record date for a dividend, distribution or subdivision or the proposed effective date of a combination, reclassification,
consolidation, merger, binding share exchange, transfer, liquidation or dissolution. The Company shall file and mail the notice at least fifteen (15) Trading Days before such date. Failure to
file or mail the notice or any defect in it shall not affect the validity of the transaction. 


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        13.14    Effect of Reclassification, Consolidation, Merger or  Sale.
    


        (a)   In
the event of: 



        (i)    any
reclassification of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value,
or as a result of a split, subdivision or combination covered by Section 13.5); 


        (ii)   a
consolidation, merger, combination or binding share exchange involving the Company; or 


        (iii)  any
sale or conveyance of all or substantially all of the property and assets of the Company to any other Person, 




in
each case as a result of which holders of Common Stock shall be entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock (any such
event, "Merger Event"), then the Company or the successor or purchasing Person, as the case may be, will ensure that the Purchasers shall be entitled at and after the
effective time of the Merger Event to convert their Notes into the type and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that the
Purchasers would have owned or been entitled to receive upon such Merger Event had they converted their Notes immediately prior to such Merger Event ("Reference
Property"); provided that at or prior to the time of such Merger Event, written equitable adjustments in the application of the provisions of this Article XIII shall be made so
that such provisions shall thereafter be applicable, as nearly as possible, in relation to any Common Stock or Reference Property thereafter deliverable upon conversion of the Notes. 


        (b)   With
respect to Notes surrendered for conversion after the effective date of any such Merger Event in lieu of shares of Common Stock otherwise provided for hereunder,
the Company shall deliver to the converting Purchaser a number of units of Reference Property (each such unit comprised of the kind and amount of shares of stock, securities or other property or
assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled to receive based on the Weighted
Average Consideration) equal to (A) the Conversion Amount of Notes to be converted, divided by (B) the Conversion Price. 



        (i)    The
Company will deliver cash in lieu of fractional units of Reference Property. 


        (ii)   For
purposes of this Section 13.14, the "Weighted Average Consideration" means the weighted average of the types and amounts of
consideration received by the holders of Common Stock entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock in any Merger Event who
affirmatively make such an election; provided that, if the types and amounts of consideration that holders of Common Stock would be entitled to receive with respect to or
in exchange for such Common Stock is based in part upon any form of shareholders election, the "Weighted Average Consideration" will be deemed to be (A) if holders of the majority of the shares
of Common Stock affirmatively make such an election, the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election or
(B) if the holders of a majority of the shares of Common Stock do not affirmatively make such an election, the types and amount of consideration actually received by such holders. 



        (iii)  The
Company shall notify the Purchasers of the Weighted Average Consideration as soon as practicable after the Weighted Average Consideration is determined. 




        (c)   The
above provisions of this Section 13.14 shall similarly apply to successive Merger Events. 


 
 
        13.15    Simultaneous Adjustments.
    In the event that this Article XIII requires adjustments to the Conversion Price under more than one of Sections 13.5, 13.6 and 13.7, and the record dates for the 


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distributions
giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of Section 13.5, second, the provisions of
Section 13.6, and third, the provisions of Section 13.7. 


 
 
        13.16    Successive Adjustments.
    After an adjustment to the Conversion Price under this Article XIII, any subsequent event requiring an adjustment under this Article XIII shall cause an adjustment to the
Conversion Price as so adjusted. 


 
 
        13.17    Limitation on Adjustments.
    The Company shall not take any action that would result in an adjustment pursuant to the foregoing provisions in this Article XIII if that adjustment would reduce the Conversion
Price below the then par value of the shares of Common Stock issuable upon conversion of the Notes. 


 
 

  ARTICLE XIV    
    
    INFORMATION COVENANTS    
    


        Each of the Obligors covenants that, from and after the Closing Date, so long as any of the Notes are outstanding: 



 
 
         14.1    Financial Statements.
    The Company shall deliver to each Purchaser: 



        (a)   as
soon as available and in any event within ninety (90) days after the end of its fiscal year, audited consolidated statements of income, owners' equity and cash
flows of the Company and its Subsidiaries for such fiscal year and the related consolidated audited balance sheet as at the end of such fiscal year, setting out in each case in comparative form the
corresponding figures for the preceding fiscal year, and an opinion of an independent public or chartered accountant of recognized international standing as is reasonably acceptable to the Purchasers,
which opinion shall (i) state that said financial statements fairly present in all material respects the financial condition and results of operations of the Company and its Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP and (ii) following the end of the fiscal year in which the Project Financing Facility Closing Date occurs contain no "going
concern" or like qualification; and 


        (b)   as
soon as available and in any event within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Company,
unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries, for such fiscal quarter and for the period from the beginning of the respective fiscal year to the end
of such period, and the related unaudited balance sheet, as at the end of such fiscal quarter, setting out in each case in comparative form the corresponding figures for the preceding fiscal quarter
or period, as applicable, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said financial statements fairly present in all material
respects the financial condition and results of operations of the Company and its Subsidiaries, in accordance with GAAP as at the end of, and for, such period (subject only to normal
year-end audit adjustments). 





Delivery
within the time period specified above of copies of the Company's Form 10-K or Quarterly Report on Form 10-Q
("Form 10-Q), as the case may be, prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the
requirements of this Section 14.1. 



 
 
        14.2    Requirements as to Financial Statements.
    



        (a)   Each
set of financial statements delivered by the Company pursuant to Section 14.1 shall be accompanied by a Compliance Certificate certifying that no Default or
Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and 




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is
continuing, describing the same, as well as any actions the Company intends to take in respect thereof. 


        (b)   Each
set of financial statements delivered pursuant to Section 14.1 will be prepared using GAAP, accounting practices and financial reference periods consistent
with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Company notifies the holders that there has been a change in
GAAP, the accounting practices or reference periods and it delivers to the holders: 



        (i)    a
description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial
Statements were prepared; and 


        (ii)   sufficient
information, in form and substance as may be reasonably required by the holders, to enable the holders to determine whether the covenants contained herein
have been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements. 





 
 
         14.3    Information; Miscellaneous.
    The Company shall deliver to each Purchaser: 



        (a)   copies
of all documents delivered by the Company to its (i) shareholders (or any class of them) or (ii) its creditors generally, in each case, within ten
(10) days of such documents being delivered; 


        (b)   copies
of all documents delivered by the Company to the agent or lenders under the Project Financing Facility within ten (10) days of such documents being
delivered, in each case excluding documents in respect of administrative matters but including any operating, engineering, financial, insurance, accounting or other reports; 



        (c)   promptly
upon becoming aware thereof, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against the
Company or any of its Subsidiaries, and which might, if adversely determined, have a Material Adverse Effect; 


        (d)   annually,
within twenty (20) Business Days of the annual renewal date of the insurance policies maintained in connection with the Holbrook Project, a memorandum
prepared by the Company summarizing the then-outstanding insurance coverage with respect to the Holbrook Project together with a certificate or certificates of insurance prepared by a
Responsible Officer and/or the relevant insurance carriers, as the case may be, and in form and substance satisfactory to the holders confirming that: 



        (i)    all
such insurance coverage is in full force and effect and all premiums payable in connection therewith have been paid; 


        (ii)   in
the opinion of the Responsible Officer, such insurance is sufficient for the purposes of the Holbrook Project and complies with the provisions of
Section 15.11; 


        (iii)  following
the Springing Lien Trigger Date, the Collateral Agent is named as an additional insured under all policies of insurance and loss payee under all policies of
insurance except third-party liability insurance; and 


        (iv)  the
insurers under such insurance policies have agreed in writing not to amend or terminate such policies without at least twenty (20) Business Days prior
written notice thereof to the Collateral Agent and have entered into such agreements as are required pursuant to Section 15.11. 





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        (e)   as
promptly as practicable after the occurrence of the relevant event, details as to any: 



        (i)    material
disputes with such of its insurance carriers as are providing insurance coverage with respect to the Holbrook Project; 


        (ii)   failure
to pay any insurance premium as and when required that might result in the cancellation of any insurance policy implemented in connection with, or relating to,
the Holbrook Project; 


        (iii)  material
reduction in the amount of, or any other material change in, insurance coverage maintained in connection with the Holbrook Project; 


        (iv)  occurrence
of any actual or reasonably expected liability or loss in an aggregate amount in excess of $500,000 which is covered by the terms of any policy of insurance
maintained in connection with the Holbrook Project; and 


        (v)   notices
received from any insurance carriers with respect to the cancellation of or proposed cancellation of any policy of insurance maintained in connection with the
Holbrook Project (and, in the case of the notification of any such details, stating the reasons therefor, together with any other information concerning the insurance coverage required to be
maintained pursuant to this Agreement as the Collateral Agent shall have reasonably requested); 




        (f)    promptly
upon the effectiveness or occurrence thereof, as the case may be, copies of any instrument, correspondence or other item of documentation implementing,
amending, supplementing or otherwise modifying the material provisions of the definitive documentation for the Project Finance Facility or other material Indebtedness; 



        (g)   without
limiting any other provision of this Section 14.3, as soon as possible (and in any event within three (3) Business Days) after any Obligor knows or
has reason to know of any event or circumstance which has a reasonable likelihood of having a Material Adverse Effect with respect to such Obligor, notice of such event or circumstance and describing
the same in reasonable detail; 


        (h)   promptly
following execution thereof, copies of all Project Documents; 



        (i)    (i)
not later than March 1st in each fiscal year, an annual operating and cash flow budget for the Holbrook Project for the next succeeding fiscal year
(showing expense and revenue, cash flows and capital expenditures on a monthly basis), in form and substance satisfactory to the holders and (ii) not later than the 20th day of each
month, a variance report against the corresponding (1) month and (2) the elapsed portion of the fiscal year, in each case, as set forth in the applicable annual report delivered pursuant
to clause (i) hereof; 


        (j)    promptly
following any Obligor becoming aware of the occurrence thereof, notice of any event or circumstance which entitles, or might reasonably be expected to entitle,
any Person to cancel, suspend or terminate any Approval of the nature referred to in Section 15.3; 



        (k)   promptly
following the occurrence thereof and without limiting the provisions of Section 15.8, notice of any event or circumstance which constitutes, or might
reasonably be expected to constitute, a material environmental spill or accident at the Holbrook Project; 


        (l)    promptly
upon the implementation thereof, copies of all documentation relating to each Hedging Agreement entered into by any Obligor; and 





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        (m)  promptly
as becomes available, such further information regarding the financial condition, business, assets and operations of any Obligor as any holder may reasonably
request. 





 
 
         14.4    Notification of Default.
    The Company shall notify the holders of any Default or Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of the occurrence thereof. 



 
 

  ARTICLE XV    
    
    GENERAL COVENANTS    
    


        Each of the Obligors covenants that, from and after the Closing Date, so long as any of the Notes are outstanding: 



 
 
         15.1    Use of Proceeds.
    The Company shall apply the proceeds of the sale of the Notes for (a) the purpose of financing the Holbrook Project (including, but not limited to, the costs associated with the
Definitive Feasibility Study and the initial drilling, engineering and permitting related thereto), (b) repayment of amounts due under the Karlsson Note and (c) general corporate
purposes. 


 
 
         15.2    Compliance with Laws.
    Each Obligor will, and will cause each of its Subsidiaries to, comply in all material respects with all laws to which it may be subject (including Environmental Laws). 


 


        15.3    Approvals.    Each Obligor will, and will cause each of its Subsidiaries to,
obtain, maintain in full force and effect, and comply in all material respects with, all Approvals as may be required or advisable from time to time for each Obligor to (i) execute, deliver,
perform and preserve its rights under any of the Note Documents or any Project Document executed or to be executed by it, (ii) following the Springing Lien Trigger Date, grant and perfect the
Liens granted or purported to be granted and perfected by it pursuant to any Collateral Document to which it is a party, (iii) maintain and operate its business in accordance with standard
industry practice, and (iv) own, lease, use or license the Project Assets in which it holds any interest and operate the Holbrook Project and the Mine in accordance with sound mining and
business practice. 


 
 
        15.4    Maintenance of Corporate Existence, etc.
    Each Obligor will, and will cause each of its Subsidiaries to, (i) do and cause to be done at all times all things necessary to maintain and preserve its corporate existence and
(ii) do and cause to be done at all times all things necessary to be duly qualified to do business and be in good standing (where such concept is relevant) as a foreign corporation, in each
jurisdiction where the nature of its business makes such qualification necessary. 


 
 
        15.5    Payment of Notes.
    The Company shall pay the principal and interest on the Notes in accordance with the terms of the Notes. The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue interest, to the extent lawful, at the rate specified in the Notes. 


 
 
         15.6    Payment of Taxes, etc.
    Each Obligor shall, and shall cause each of its Subsidiaries to, file all Tax returns (including all property Tax returns and other similar Tax returns applicable to the Holbrook
Project) required by applicable law to have been filed by it. Each Obligor shall, and shall cause each of its Subsidiaries to, pay and discharge, as the same may become due and payable, all Taxes,
assessments, fees and other governmental charges or levies against it or on any of its property as well as claims of any kind or character; provided,
however, that the foregoing shall not require any Person to pay or discharge any such Tax, assessment, fee, charge, levy or claim so long as it shall be diligently
contesting the validity or amount thereof in good faith by 



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appropriate
proceedings and shall have set aside on its books adequate reserves in accordance with GAAP with respect thereto. 


 
 
         15.7    Books and Records.
    


        (a)   Each
Obligor will, and will cause each of its Subsidiaries to, keep financial records and accounting and management information systems reflecting all of its business
affairs and transactions in accordance with applicable laws and produce financial statements in accordance with GAAP. 


        (b)   On
not less than three (3) days prior written notice where no Default or Event of Default has occurred or is continuing and on not less than
twenty-four (24) hours prior notice where a Default or Event of Default has occurred and is continuing, each Obligor will, and will cause each of its Subsidiaries to, permit any
advisers of the Purchasers, the holders or any of their respective representatives during reasonable business hours to inspect any and all of its properties and operations (including the Mine), to
visit all of its offices or any other location where relevant personnel or records are located, to discuss its financial matters with its officers, its banks and its independent chartered accountants
and certified public accountants, as the case may be (and hereby authorizes such independent chartered accountants or certified public accountants, as the case may be, to discuss its financial matters
with any of the foregoing Persons or its representatives whether or not any representative of the relevant Obligor is present), and to examine (and photocopy extracts from) any of its books or other
corporate records or any instrument, document or correspondence relating to any of the Project Documents. Without limiting the generality of the foregoing, each Obligor shall, and shall cause each of
its Subsidiaries to, provide all relevant and necessary assistance to: 



        (i)    any
advisors to the Purchasers in connection with the performance of their respective duties to the Purchasers (including the review of all matters relating to the
development and operation of the Holbrook Project (including environmental issues) and the preparation of any reports in connection therewith); and 



        (ii)   the
holders in connection with the exercise of their rights hereunder and under each other Note Document. 




        (c)   The
Company shall pay any fees of such chartered accountants or certified public accountants incurred in connection with this Section 15.7. 


        (d)   It
is expressly understood that none of the advisors to the Purchasers nor any holder assumes any obligation to any Obligor or any other party in respect of the
operation, development, exploration and production of the Holbrook Project. 


 
 
        15.8    Environmental Covenants.
    Each Obligor will, and will cause each of its Subsidiaries to and will use commercially reasonable efforts to cause each other Project Party to: 



        (a)   use
and operate the Mine, the Project Assets and all of the facilities and properties related thereto in material compliance with all applicable Environmental Laws and
applicable permits and Approvals; 


        (b)   keep
all material Approvals and Permits relating to environmental matters related to the Holbrook Project in effect; 


        (c)   remain
in material compliance with, and handle all Hazardous Substances in material compliance with, all applicable Environmental Laws; 


        (d)   (i)
promptly notify the holders and provide copies upon receipt of all material written claims, complaints, notices or inquiries relating to the condition of the
facilities and properties related to the Holbrook Project and the Project Assets or compliance with the 




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Environmental
Laws relating to the Holbrook Project, and (ii) promptly cure any non-compliance which is the subject matter of any actions and proceedings relating to such
Environmental Laws in accordance with the requirements of any applicable Governmental Authority; and 



        (e)   provide
such information and certifications which the holders may reasonably request from time to time to evidence compliance with this Section (including in connection
with any environmental audit to determine compliance therewith). 




 
 
         15.9    Maintenance of Project Assets.
    Each Obligor will, and will cause each of its Subsidiaries to, maintain, preserve, protect and keep: 



        (a)   all
of its ownership, lease, use, license and other interests in the Project Assets (including all Mining Rights) as are necessary for it to be able to operate the Mine
substantially in accordance with sound mining and business practice; and 


        (b)   all
of the Project Assets owned by it in good repair, working order, and condition, and make necessary and proper repairs, renewals, and replacements so that the
business carried on in connection therewith may be properly conducted at all times, unless the continued maintenance of any of such Project Assets is no longer necessary or economically desirable for
the operation of the Mine, such operation to be substantially in accordance with sound mining and business practice. 




 
 
         15.10    Accuracy of Information.
    Each Obligor will ensure that all factual information hereafter furnished by or on behalf of such Obligor or any of its Subsidiaries in writing to any holder for the purposes of or in
connection with this Agreement or any Transactions will be true and accurate in all material respects on the date as of which such information is dated or certified and such information shall not be
incomplete by omitting to state any material fact known to the relevant Obligor or Subsidiary necessary to make such information not misleading in any material respect. 


 


        15.11    Insurance.    


        (a)   The
Company shall, and shall cause its Subsidiaries to, at all times maintain or cause to be maintained in effect, with responsible and reputable insurance companies in
such amounts and covering such risks as is consistent with prudent practice and which are acceptable to the holders in their reasonable discretion. 



        (b)   The
Company will provide the holders with not less than ten (10) Business Days' prior written notice of any proposed change of any insurance company providing
insurance coverage of the nature referred to in clause (a) above, and any such change shall be consistent with the provisions of this Agreement. 


        (c)   Each
Obligor shall ensure that all premiums required to be paid in order to ensure that the policies referred to in this Section 15.11 are in full force and
effect shall be paid as and when the same shall become due and payable and shall otherwise comply with each other term and condition of such policies so as to ensure that such policies are, and shall
continue, in full force and effect; provided, that if any Obligor does not so ensure that all such premiums are paid, the holders may (but shall have no obligation to) pay
such premiums and the applicable Obligor shall indemnify the holders pursuant to Section 11.2; provided further that any such payment by the holders shall not cure
the applicable Obligor's failure to observe the obligations set forth in this Section 15.11. 


        (d)   Following
the Springing Lien Trigger Date, subject to the Intercreditor Agreement, all of the insurance policies relating to the Holbrook Project will, in each case, in
accordance with best 



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practice
in the mining industry and to prevailing market practice in connection with comparable facilities for projects similar to the Holbrook Project: 



          (i)  specify
the Collateral Agent (on behalf of the holders) as an additional insured under all policies of liability insurance (excluding motor or automobile insurance and
policies of insurance relating to workers' compensation and/or employers' liability) and the Collateral Agent (on behalf of the holders) as loss payee under all policies of insurance except
third-party liability insurance and contain such endorsements in favor of the Collateral Agent as the Collateral Agent shall reasonably require (including that the policy shall not be invalidated as
against the holders by reason of any action or failure to act of the Company or any other Person); 


         (ii)  not
be cancellable (or non-renewable or subject to a decrease in the scope or amount of coverage (including by way of increase in any deductible)) as
against the holders (including for failure to pay premiums) or subject to material alteration of any kind without (A) in the case of any such action, thirty (30) days' written notice of
such action having been given by the Company or the issuer of the relevant policy to the holders, and (B) in the case of any such material alteration, the prior written consent of the holders; 



        (iii)  provide
for waiver of any right of set-off, recoupment, subrogation, counterclaim or any other deduction, by attachment or otherwise, with respect to any
liability of the beneficiary of such policy (including the incorporation of a "non-vitiation" provision) and provide that all
amounts payable by reason of loss or damage to any of the Project Assets shall be payable in a manner which is consistent with this Agreement; 


        (iv)  provide
for payments of claims thereunder in Dollars; and 


         (v)  otherwise
(including with respect to the identity of the brokers, insurers, re-insurers and/or indemnities involved in connection with the solicitation,
placement and issue of such insurance policies) be in form and substance reasonably satisfactory to the holders. 





        In
connection with the foregoing, following the Springing Lien Trigger Date, and subject to the Intercreditor Agreement, the Company shall (x) execute and deliver notices to the
brokers, underwriters and insurance companies through or with whom any policy of insurance maintained in connection with the Holbrook Project have been effected in such form as the holders may from
time to time reasonably request, and (y) procure that any insurer effecting any policy of insurance maintained in connection with the Holbrook Project execute and deliver such notices to the
issuer of any such policy as the holders may from time to time reasonably request. 


        (e)   The
Company shall not at any time do or omit to do anything whereby any insurance required pursuant to this Section 15.11 would, or would be likely to, be
rendered void or voidable or suspended, impaired or defeated in whole or in part. 


        (f)    The
Company will make (or will cause to be made) full disclosure of all relevant issues and facts to the issuer of each insurance policy maintained in connection with
the Holbrook Project such that no such issuer will be entitled to vitiate, cancel or otherwise refuse or decline to honor the terms of, or pay claims in respect of, any such insurance policy. 


        (g)   In
the event that the Company makes any claim under any insurance policy, it shall be solely responsible for and shall pay any deductible in connection with such claim. 


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        (h)   For
the avoidance of doubt, no holder shall be under any obligation to the underwriters, insurance companies, or brokers by or through whom any policy of insurance
referred to in this Section 15.11 shall be effected. 



 
 
        15.12    Business Activities; No Amendment of Organizational Documents.
    


        (a)   AWP
will not, and Company will not permit AWP to: 



        (i)    engage
in any business activity other than the development and operation of the Holbrook Project and the Mine and any activity incidental thereto; 



        (ii)   following
the Springing Lien Trigger Date, maintain any place of business other than the location of the Mine or Denver, Colorado without first taking (to the
satisfaction of the holders) all actions necessary to protect the Liens granted or purported to be granted pursuant to the relevant Collateral Agreements. 




        (b)   No
Obligor will, or will permit any of its Subsidiaries to: 



        (i)    amend
its Organizational Documents (including to reduce its share capital) in any material respect or change its corporate name; or 


        (ii)   change
its fiscal year, 





in
each case without the consent of the Majority Purchasers. 



        (c)   The
Company will not and will not permit PGRI Delaware to engage in any business activity other than as a holding company for the ownership, directly or indirectly, of
all or a portion of the issued and outstanding share capital of AWP and other subsidiaries engaged in exploration, development, mining and related activities in connection with the mining of Potash,
other metals and commodities and activities incidental thereto. 


 


        15.13    Indebtedness.    Each Obligor will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness other than: 



        (a)   Indebtedness
in respect of the Notes and other Obligations; 


        (b)   Indebtedness
in respect of any Hedging Obligations incurred and reasonably calculated to mitigate any risk to which the Company or its Subsidiaries are exposed in
connection with their development or operations, and not incurred for speculative purposes; 


        (c)   Indebtedness
in respect of amounts payable to contractors, sub-contractors, carriers, warehousemen, mechanics, materialmen, repairers, suppliers and
landlords, incurred in the ordinary course of business and not for money borrowed; 


        (d)   Indebtedness
incurred in the ordinary course of business in connection with the purchases of goods and services or the exploration, development, operation and
reclamation of mineral properties (and excluding, for the avoidance of doubt, Indebtedness); 


        (e)   Indebtedness
incurred in respect of surety, bid, performance or appeal bonds or similar obligations and trade-related letters of credit, in each case provided in the
ordinary course of business; 


        (f)    Indebtedness
in respect of tenders, statutory obligations, utilities, leases and contracts (other than for Indebtedness) entered into in the ordinary course of business, 



        (g)   Indebtedness
in respect of Taxes, assessments, fees and other governmental charges or levies (including with respect to workers' compensation, unemployment insurance,
social security benefits or other forms of governmental insurance or benefits) to the extent that 




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payment
thereof shall not at the time be required to be made in accordance with the provisions of Section 15.6; 



        (h)   Indebtedness
in respect of judgments or awards, the enforcement of which has not been stayed (by reason of a pending appeal or otherwise), for a period of more than ten
(10) days or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; 


        (i)    Approved
Subordinated Indebtedness; 


        (j)    Indebtedness
of AWP and PGRI Delaware not in excess of $125,000,000 in aggregate principal amount at any one time outstanding and incurred pursuant to the Karlsson Note; 



        (k)   on
or after the Project Financing Facility Closing Date, Indebtedness of the Obligors not in excess of $900,000,000 in aggregate principal amount at any one time
outstanding incurred pursuant to a Project Financing Facility; 


        (l)    Capitalized
Lease Liabilities not in excess of $300,000,000 in aggregate principal amount at any one time outstanding; 


        (m)  Indebtedness
pursuant to a Cost Overrun Facility not in excess of $250,000,000 in aggregate principal amount at any one time outstanding; 


        (n)   Permitted
Junior Debt; and 


        (o)   in
the case of the Company, Indebtedness in an amount not in excess of $50,000,000 in aggregate principal amount at any one time outstanding and not permitted by the
preceding paragraphs of this Section 15.13. 


 




        15.14    Liens.    Each Obligor will not, and will not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of its properties, revenues or assets, whether now owned or hereafter acquired, except: 



        (a)   Liens
in favor of the Collateral Agent pursuant to the Collateral Documents or otherwise for the benefit of the holders of the Obligations; 


        (b)   Liens
for Taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; 


        (c)   Liens
in favor of carriers, warehousemen, mechanics, materialmen, suppliers and landlords incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; 


        (d)   Liens
incurred in the ordinary course of business in connection with unemployment insurance or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts (other than for Indebtedness) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; 



        (e)   Liens
in respect of judgments in existence less than ten (10) Business Days after the entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; 


        (f)    Liens
on the assets and membership units of AWP and the assets of PGRI Delaware to secure the obligations in respect of the Karlsson Note; 




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        (g)   Liens
in connection with the Grandhaven Agreement or the Grandhaven Agreement Amendment; 


        (h)   Liens
on Collateral to secure the obligations in respect of the Project Financing Facility; provided that the holder of such Lien shall have
entered into an Intercreditor Agreement; 


        (i)    Liens
in respect of the Cost Overrun Facility; provided that the holder of such Lien shall have entered into a Second Lien Intercreditor
Agreement; 


        (j)    Liens
securing Capitalized Lease Liabilities, provided that such Liens extend only to the assets acquired with or financed by such
Indebtedness; and 


        (k)   Liens
granted by AWP in the ordinary course of business in respect of Project Assets with an individual fair market value at any one time which is not in excess of
$5,000,000 and an aggregate fair market value at any one time which is not in excess of $10,000,000. 


 




        15.15    Investments.    Each Obligor will not, and will not permit any of its
Subsidiaries to, acquire all or substantially all of the assets of any other Person and will not make, incur, assume or suffer to exist any Investment in any other Person, except (a) Cash
Equivalent Investments, (b) Investments outstanding on the date of the Original Agreement and set forth on Schedule 15.15 and (c) in the case of the Company and PGRI Delaware,
investments in their Subsidiaries. 


 
 
         15.16    Restricted Payments, etc.
    Each Obligor will not and will not permit any of its Subsidiaries to: 



        (a)   declare,
pay or make any distribution (in cash, property or obligations) on any shares of any class of capital stock (now or hereafter outstanding) of such Obligor or on
any ownership interest of such Obligor or on any Options or other rights with respect to any shares of any class of capital stock of, or other ownership interest (now or hereafter outstanding) in,
such Obligor or apply any of its funds, property or assets to the purchase, redemption or other retirement of any shares of any class of capital
stock of, or other ownership interest (now or hereafter outstanding) in, such Obligor, or Options or other rights with respect to any shares of any class of capital stock of, or other ownership
interest (now or hereafter outstanding) in, such Obligor; 


        (b)   repay,
redeem, purchase or otherwise defease or discharge any indebtedness that is subordinated in right of payment or lien priority to the Obligations prior to its
stated maturity; or 


        (c)   make
any deposit for any of the foregoing purposes. 




        (the
payments and distributions described in paragraph (a) to (c) above collectively referred to as "Restricted Payments"); 


        provided,
however, that (i) any Subsidiary of the Company may declare, pay or make distributions ratably with respect to
their Capital Stock; (ii) any Obligor may make Restricted Payments to any former employee or director of the Company or its Subsidiaries in connection with any employment arrangements; and
(iii) the Company and any Subsidiary may make Restricted Payments to any Obligor. 


 
 
         15.17    Mergers, etc.
    Each Obligor will not, and will not permit any of its Subsidiaries to, enter into any merger or consolidation or sell or otherwise transfer all or substantially all of its assets, except
as may be consented to by the Majority Purchasers. 



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         15.18    Asset Dispositions, etc.
    Each Obligor will not, and will not permit any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of, or grant options, warrants or other rights with respect to, any of
its assets (including accounts receivable) to any Person, unless: 



        (a)   in
the case of AWP, such disposal is made in the ordinary course of business pursuant to arrangements which are otherwise in compliance with this Agreement; 


        (b)   in
the case of any other Obligor or Subsidiary which is producing output from mining activities, such disposal is of such output made in the ordinary course of business; 



        (c)   such
disposal is of obsolete or redundant assets which are no longer used or required by the relevant Obligor or Subsidiary or of assets which are to be replaced; or 


        (d)   the
net book value of all assets disposed of by all Obligors and their Subsidiaries (excluding, however, assets disposed of pursuant to clauses (a), (b) or
(c) above) in the same fiscal year of the Company does not exceed $10,000,000 (or the equivalent thereof in any other currency) in the aggregate and fair value in cash or other assets is
received therefor. 




 
 
        15.19    Transactions with Affiliates.
    Each Obligor will not, and will not permit any of its Subsidiaries to, enter into, or cause, suffer or permit to exist: 



        (a)   any
arrangement or contract pursuant to which any indebtedness is extended by such Obligor or Subsidiary to any of its Affiliates as obligor; or 



        (b)   any
other arrangement or contract with any of its Affiliates (including management or similar contracts or arrangements relating to the allocation of revenues, Taxes and
expenses or otherwise) unless such arrangement is on market standard arm's-length terms; 




provided,
however, that nothing in this Section 15.19 shall prevent, or be deemed to prevent (i) the execution and performance
of any Note Document; or (ii) any transaction by and among the Obligors. 


 
 
         15.20    Restrictive Agreements, etc.
    Each Obligor will not, and will not permit any of its Subsidiaries to, enter into any agreement prohibiting (i) the creation or assumption of any Lien upon its properties,
revenues or assets to secure the Obligations, whether now owned or hereafter acquired, or the ability of such Obligor to amend or otherwise modify this Agreement or any other Note Document or Project
or (ii) the dividend, distribution or loan of funds by any Subsidiary to the Company. 


 
 
         15.21    Inconsistent Agreements.
    Each Obligor will not, and will not permit any of its Subsidiaries to, enter into any agreement containing any provision which would be violated or breached by the issuing of the Notes
hereunder or by the performance by any Obligor of its obligations hereunder or under any Note Document. 


 
 
         15.22    Bank Accounts.
    After the Springing Lien Trigger Date, the Obligors shall not open or maintain any bank account or similar deposit arrangement that is not subject to a Lien in favor of the holders of
the Notes except with the prior written consent of the Majority Purchasers. 



 


        15.23    Acquisitions.    Each Obligor will not, and will not permit any of its
Subsidiaries to: 



        (a)   purchase,
subscribe for or otherwise acquire any shares (or other securities or any interest therein), in, or incorporate or form, any other company or agree to do any
of the foregoing; or 


        (b)   purchase
or otherwise acquire any assets (other than in the ordinary course of business) or revenues or (without limitation to any of the foregoing) acquire any business
or interest therein or form or enter into, any partnership, consortium, joint venture or other like arrangement or agree to do so. 




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         15.24    Collateral and Guarantees.
    


        (a)   Upon
the Springing Lien Trigger Date, and, following the Springing Lien Trigger Date, upon the acquisition or production of any Project Assets (including the entering
into of any Project Document or Hedging Agreement) or other Collateral in respect of which no Lien has effectively been granted pursuant to any Collateral Document, each relevant Obligor shall
promptly (and in any event within twenty (20) days of the Springing Lien Trigger Date and/or the relevant acquisition or production), each Obligor will: 



        (i)    enter
into agreements or instruments, in form and substance reasonably satisfactory to the Collateral Agent, in order to grant to the Collateral Agent, for the ratable
benefit of the holders to secure all Obligations, valid and binding Liens over all Project Assets and all other Collateral, which Liens shall be first-priority prior to the Project Financing Facility
Closing Date and second-priority, subordinated to the Liens securing the Project Financing Facility pursuant to the Intercreditor Agreement, on and after the Project Financing Facility Closing Date
(subject, in each case, to (1) Liens resulting from mandatory provisions of applicable law and (2) Liens specifically and expressly permitted to be incurred by this Agreement on a senior
basis to the Obligations); 


        (ii)   simultaneously
therewith, effect all relevant filings, notarizations and registrations or obtain the acknowledgment and agreement of all relevant counterparties, as the
case may be, in order to perfect the Liens so granted; and 


        (iii)  deliver
customary opinions in form and substance reasonably satisfactory to the Purchasers from counsel reasonably satisfactory to the Purchasers with respect to
enforceability, creation, perfection and such other matters as may be reasonably requested by the Purchasers. 




Without
limiting the generality of the foregoing, following the Springing Lien Trigger Date, each Obligor will ensure that promptly upon (and in any event within twenty (20) days after) the
effectiveness of any Project Document or of any Hedging Agreement, (i) the Collateral Agent, for the ratable benefit of the holders of the Notes, shall be granted valid and perfected
first-priority or second-priority, as applicable, Liens (except as aforesaid) over the relevant Obligor's rights thereunder as security for the Obligations, and (ii) the Collateral Agent shall
receive such documentation as it shall reasonably require as evidence of the rights of the holders to assume the rights and obligations of the relevant Obligor (and/or any affiliate thereof party to
such Project Document) under each such Project Document upon the occurrence of an Event of Default. 


        (b)   Upon
and after the Springing Lien Trigger Date, the Company shall cause each Subsidiary of the Company not party hereto on the date of the Original Agreement, whether
now existing or hereafter formed, to execute a joinder hereto assuming the obligations of a Guarantor hereunder pursuant to Article XXIII and otherwise in form and substance satisfactory to the
Purchasers. 


 
 
         15.25    Further Assurances.
    Following the Springing Lien Trigger Date, each Obligor shall promptly do all such acts and execute all such documents as the Collateral Agent or any holders may reasonably request (and
in such form as the Collateral Agent or such holders may reasonably require): 



        (a)   to
perfect the Liens created or intended to be created under or evidenced by the Collateral Documents or for the exercise of any rights, powers and remedies of the
Collateral Agent or the holders granted by or pursuant to the Note Documents or by law; and/or 




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        (b)   to
grant to the Collateral Agent or the holders Liens over any property or assets of that Obligor located in any jurisdiction equivalent or similar to the Liens intended
to be granted by or pursuant to the Collateral Documents. 




 
 
         15.26    Future Covenants.
    Upon the occurrence of the Project Financing Facility Closing Date, the Company and the Purchasers shall negotiate in good faith the implementation of additional covenants and
modification or deletion of existing covenants for the benefit of the holders, consistent with, and in any event no more restrictive than, those contained in the Project Financing Facility in respect
of matters as to the development and operation of the Holbrook Project, including budgets and development plans with respect thereto, which are not fully known as of the date of the Original
Agreement. 


 
 
         15.27    Repurchase at the Option of Purchasers Upon Change of Control.
    


        (a)   If
a Change of Control occurs, each holder of Notes shall have the right to require the Company to offer to repurchase all or any part of that holder's Notes pursuant to
a Change of Control Offer on the terms set forth herein. In the Change of Control Offer, the Company shall offer a change of control payment in cash equal to 101.00% of the aggregate principal amount
of Notes repurchased plus accrued and unpaid interest, if any (a "Change of Control Payment"), on the Notes repurchased to the Change of Control Payment Date, subject to
the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. 


        (b)   Within
thirty (30) days following the date on which the Company becomes aware that a Change of Control has occurred, the Company shall mail a notice to each
holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in the notice, which date shall
be no earlier than ten (10) days and no later than thirty (30) days from the date such notice is mailed, pursuant to the procedures described in such notice. 


        (c)   The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with this Section 15.27, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this
Section 15.27 by virtue of such compliance. 


        (d)   On
the Change of Control Payment Date, the Company shall, to the extent lawful, accept for payment all Notes or portions of Notes properly tendered pursuant to the
Change of Control Offer. 


        (e)   The
Company shall promptly mail to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the Company shall promptly mail (or cause to
be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note
shall be in a principal amount of $2,000 or an integral multiple of $1,000. 


        (f)    The
Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. 


        (g)   Notwithstanding
anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence
of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer. Notes repurchased by the Company or any of its Affiliates 



A-75







 

pursuant
to a Change of Control Offer shall have the status of Notes issued but not outstanding or shall be retired and canceled, at the option of the Company. 



 
 

  ARTICLE XVI
  
    EVENTS OF DEFAULT    
    


        Each
of the following is an "Event of Default": 



        (a)   default
for five (5) Business Days in the payment when due of interest, if any, on the Notes; 


        (b)   default
in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes; 


        (c)   failure
by any Obligor to comply with the covenants contained in Sections 15.4, 15.7(b), 15.12, 15.13, 15.14(i), 15.15, 15.16 (in the case of Liens to which the
Company has not consented, after thirty (30) days), 15.17, 15.18, 15.19, 15.20, 15.21, 15.22, 15.23, 15.24, 15.25 or 15.27 of this Agreement or failure by the Company to convert any Note as
required pursuant to Article XIII hereof; 


        (d)   failure
by any Obligor to comply with the covenants contained in Section 15.4(ii) and such failure shall not be cured within ten (10) days; 


        (e)   failure
by any Obligor to comply with any of the other agreements in this Agreement or any other Note Document and such failure shall not be cured within thirty
(30) days; 


        (f)    default
under any mortgage, agreement, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness by any
Obligor (or the payment of which is guaranteed by any Obligor), whether such Indebtedness or Guarantee now exists, or is created after the date of the Original Agreement, if that default: 



        (i)    is
caused by a failure to pay principal at final maturity on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default"); or 


        (ii)   results
in, or gives rise to a right of the holders of such Indebtedness to cause, the acceleration of such Indebtedness prior to its express maturity, 




and,
in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; 


        (g)   failure
by any Obligor to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $5.0 million to the extent such
judgment is not covered by insurance or is in excess of insurance coverage, which judgments are not paid, discharged or stayed for a period of sixty (60) days; 


        (h)   any
Guarantee of any Obligor of the Obligations is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason other than directly as a
result of any Purchaser's action or inaction to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Guarantee
hereunder; 


        (i)    after
the date that is twenty (20) days after the Springing Lien Trigger Date, any of the Collateral Documents shall cease, for any reason other than directly as
a result of any Purchaser's action or inaction, to be in full force and effect, or any Lien created by any of the Collateral Documents shall cease to be enforceable and of the same effect and priority
purported to be created thereby; 



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        (j)    the
Company, any Guarantor or any of their respective Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: 



        (i)    commences
a voluntary insolvency proceeding; 


        (ii)   consents
to the entry of an order for relief against it in an involuntary insolvency proceeding or consents to its dissolution or winding-up; 


        (iii)  consents
to the appointment of a Custodian of it or for any substantial part of its Property; 


        (iv)  makes
a general assignment for the benefit of its creditors; or 


        (v)   takes
any comparable action under any foreign laws relating to insolvency; 




provided,
however, that the liquidation of any entity into its parent, other than as part of a credit reorganization, will not constitute an
Event of Default under this clause (j); or 


        (k)   a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 



        (i)    is
for relief against the Company or any Subsidiary in an involuntary insolvency proceeding; 


        (ii)   appoints
a Custodian of the Company or any Subsidiary or for any substantial part of its Property; or 


        (iii)  orders
the winding-up, liquidation or dissolution of the Company or any Subsidiary; 




or
grants any similar relief under any foreign laws; and in each such case the order or decree remains unstayed and in effect for sixty (60) days. 



 
 

  ARTICLE XVII
  
    REMEDIES ON DEFAULT, ETC.    
    


 
 
        17.1    Acceleration of Maturity; Rescission.
    In the case of an Event of Default arising from clauses (j) or (k) of Article XVI, all outstanding Notes will become due and payable immediately without further
action or notice. If any other Event of Default occurs and is continuing, the Majority Purchasers may declare all the Notes to be due and payable immediately by notice in writing to the Company. 


 
 
        17.2    Other Remedies.
    If an Event of Default occurs and is continuing, subject to Section 17.4 and 17.5, any holder of any Notes then outstanding may pursue any available remedy, under the Note
Documents or otherwise, by proceeding at law or in equity to collect the payment of principal of, or premium, if any, and interest on the Notes or to enforce the performance of any provision of the
Notes, this Agreement or the other Note Documents and may take any necessary action to settle, compromise, adjust or otherwise conclude any proceedings to which it is a party. 


        Any
recovery of judgment shall, after provisions for the payment of the reasonable compensation, expenses, disbursements of any holder of Notes then outstanding and their respective
counsel, be for the ratable benefit of the holders of the Notes in respect of which such judgment has been recovered. A delay or omission by any holder of Notes in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event
of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative, to the extent permitted by law. Any costs associated with actions taken by any holder under this
Section 17.2 shall be reimbursed to such holder by the Company. 


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        17.3    Waiver of Past Defaults and Events of Default.
    The holders of a majority in principal amount of Notes at the time outstanding by notice to the Company may, on behalf of the holders of all the Notes, rescind an acceleration or waive
any existing Default and its consequences under this Agreement, except a continuing Default in the payment of interest or premium, if any, on, or the principal of, the Notes. In the case of any such
waiver, the Company and any holders of Notes shall be restored to their former positions and rights under this Agreement, respectively, provided that no such waiver shall
extend to any subsequent or other Default or impair any right consequent thereto. 


 
 
        17.4    Control by Majority.
    The Majority Purchasers shall have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Purchasers, subject to certain
exceptions. 


 
 
        17.5    Limitation on Suits.
    Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no holder of Notes may pursue any remedy with respect to this Agreement or the Notes
unless the Majority Purchasers have agreed to pursue the remedy. 



 
 
        17.6    Rights of Holders to Receive Payment.
    Notwithstanding any other provision of this Agreement, the right of any holder of a Note to receive payment of the principal of or premium, if any, or interest, if any, on its Note or to
bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes shall not be impaired or affected without the consent of the holder. 


 
 
        17.7    Collection Suit by the Purchasers.
    If an Event of Default in payment of principal, premium or interest specified in clauses (a) or (b) of Article XVI occurs and is continuing, any holder of any Notes
then outstanding may recover judgment in its own name and on behalf of each of other holders of Notes against the Company or any Guarantor (or any other obligor on the Notes) for the whole amount of
unpaid principal and accrued interest remaining unpaid. 


 


        17.8    Priorities.    If any holder of any Notes then outstanding collects any money
pursuant to this Article XVII, it shall pay out the money in the following order: 



        FIRST,
to reimburse such holder of Notes then outstanding for any expenses related to bringing and maintaining a proceeding pursuant to this Article XVII; 


        SECOND,
to the holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest as to each, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes; and 


        THIRD,
to the Company or, to the extent the holder of Notes then outstanding collects any amount from any Guarantor, to such Guarantor. 



        The
holders of at least a majority in aggregate principal amount of the Notes then outstanding may collectively fix a record date and payment date for any payment to holders pursuant to
this Section 17.8. 



 
 

  ARTICLE XVIII
  
    REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES; TRANSFER OF APOLLO PREFERRED SHARES    
    


 
 
        18.1    Registration of Notes.
    The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose
name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or 


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knowledge
to the contrary. The Company shall give to any holder of a Note promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. 


 
 
        18.2    Transfer and Exchange of Notes.
    Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Article XXII), for registration of transfer or
exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such
holder's attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten
(10) Business Days thereafter, the Company shall execute and deliver, at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange
therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of Exhibit A. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp Tax or governmental charge imposed in respect of any such transfer
of Notes. Notes shall not be transferred in denominations of less than $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to
have made the representation set forth in Section 8.5. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of the Notes in accordance with the terms
hereof, the Purchasers shall not be required to physically surrender the Notes to the Company unless (a) the full principal amount represented by the Notes is being converted or (b) the
Purchasers have provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of the Notes upon physical surrender of the Notes. The
Purchasers and the Company shall maintain records showing the principal and interest, if any, converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the
Purchasers and the Company, so as not to require physical surrender of the Notes upon conversion. 


 
 
        18.3    Replacement of Notes.
    Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Article XXII) of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Note, and 



        (l)    in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a
nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least 200% of the value of the lost, stolen or destroyed Note, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or 


        (m)  in
the case of mutilation, upon surrender and cancellation thereof, within ten (10) Business Days thereafter, the Company, at its own expense, shall execute and
deliver, in lieu thereof, a new Note,
dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if
no interest shall have been paid thereon. 




 
 
        18.4    Transfer of Apollo Preferred Shares.
    The Apollo Preferred Shares may only be transferred (a) to an Affiliate of the Preferred Share Purchaser, or (b) with the consent of the Company. 


 
 

  ARTICLE XIX
  
    PAYMENTS ON NOTES    
    


        So
long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything in such Note to the contrary, the Company will pay all sums becoming due on such
Note for 


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principal
and interest by the method and at the address specified for such purpose below such Purchaser's name in Schedule A, or by such other method or at such other address as such Purchaser
shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company. Prior to any sale or other disposition of any Note held by
a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section 18.2. The Company will afford the benefits of this Article XIX to any direct or indirect transferee of
any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Article XIX. 


 
 

  ARTICLE XX
  
    EXPENSES, ETC.    
    



 
 
        20.1    Transaction Expenses.
    The Company will pay all reasonable out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by the Purchasers in connection with the
negotiation and execution of this Agreement and the Notes and any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent
becomes effective) and in connection with the enforcement of the terms and conditions hereof and of the Notes, including, without limitation: (a) the costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or any other Note Document, in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note and (b) the costs and expenses, including financial advisors' fees,
incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by
the Notes. The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other
than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Notes). 



 


        20.2    Survival.    The obligations of the Company under this Article XX will
survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement. 


 
 

  ARTICLE XXI
  
    MODIFICATION AND WAIVER    
    



 
 
        21.1    Requisite Consent of Holders.
    


        (a)   Except
as provided in Section 21.1(b) of this Agreement, this Agreement, the Notes or any other Note Document may be amended or supplemented with the consent of
the Majority Purchasers (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or compliance with
any provision of this Agreement or the Notes may be waived with the consent of the Majority Purchasers (including, without limitation, consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Notes). 


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        (b)   Without
the consent of each holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder): 



        (i)    reduce
the principal amount of Notes whose holders must consent to an amendment, supplement or waiver; 


        (ii)   reduce
the principal of or change the fixed maturity of any Note; 


        (iii)  provide
for any right of voluntary redemption of the Notes by the Company or its affiliates; 


        (iv)  reduce
the rate of or change the time for payment of interest on any Note; 



        (v)   waive
a Default or Event of Default in the payment of principal of or premium, if any, or interest, if any, on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the Payment Default that resulted from such acceleration in each case in
accordance with and subject to the terms of this Agreement; 


        (vi)  make
any Note payable in money other than that stated in the Notes; 



       (vii)  impair
the right of any holder to receive payment of principal of, or interest on such holder's notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such holder's notes; 


      (viii)  release
any Guarantor (or permit any entity to fail to become a Guarantor) from any of its Obligations under its Note Guarantee or this Agreement, except in
accordance with the terms of this Agreement; 


        (ix)  release
all or substantially all of the Collateral from (or permit all or substantially all of the Collateral to fail to become subject to) the Lien of the Collateral
Agent securing the Obligations; 


         (x)  alter
in any manner adverse to the holders, the provisions of Article XII or Article XIII; or 


        (xi)  make
any change to Section 21.1(a) or this Section 21.1(b). 




        (c)   The
consent of the holders of the Notes shall not be necessary to approve the particular form of any proposed amendment. It shall be sufficient if such consent approves
the substance of the proposed amendment. 


        (d)   After
an amendment under this Agreement becomes effective, the Company shall mail to each registered holder of the Notes at such holder's address appearing in the
register a notice briefly describing such amendment. However, the failure to give such notice to all holders of the Notes, or any defect therein, shall not impair or affect the validity of the
amendment. 




 
 
        21.2    Revocation and Effects of Consents.
    


        (a)   After
an amendment, supplement, waiver or other action becomes effective, a consent to it by a holder of a Note is a continuing consent conclusive and binding upon such
holder and every subsequent holder of the same Note or portion thereof, and of any Note issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is
not made on any such Note. 


        (b)   The
Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders entitled to consent to any amendment, supplement, or waiver.
If a record date is fixed, then, notwithstanding Section 21.2(a), those Persons who were holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled
to consent to such amendment, 


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supplement,
or waiver or to revoke any consent previously given, whether or not such Persons continue to be holders after such record date. No such consent shall be valid or effective for more than
ninety (90) days after such record date unless the consent of the requisite number of holders has been obtained. 



 
 
        21.3    Notation on Exchange of Notes.
    If an amendment, supplement or waiver changes the terms of a Note, the Company shall request the holder of the Note (in accordance with the specific written direction of the Company) to
deliver such Note to the Company. In such case, the Company shall place an appropriate notation on the Note about the changed terms and return it to the holder. Alternatively, if the Company so
determines, the Company in exchange for the Note shall issue, the Guarantors shall endorse and the Company shall authenticate a new Note that reflects the changed terms. Failure to make the
appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. 


 
 

  ARTICLE XXII    
    
    NOTICES    
    


        All notices and communications provided for hereunder, unless otherwise specified, shall be in writing and shall be deemed delivered
(a) on a Business Day if sent by telecopy during the Business Day or on the next Business Day if sent after a Business Day has ended or (b) the next Business Day after delivery to a
recognized overnight delivery service (with charges prepaid). Any such notice must be sent: 



          (i)  if
to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such
Purchaser or nominee shall have specified to the Company in writing, 


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



Wachtell,
Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention: Andrew Nussbaum

                   Ante Vucic

Telecopy: 212-403-2000 




         (ii)  if
to the Company, to the Company at the address set forth below or at such other address as the Company shall have specified to the holder of each Note in writing: 



Prospect
Global Resources Inc.

1401 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer

Telecopy: 303-990-8440 




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



Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch

Telecopy: 303-223-1111





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  ARTICLE XXIII    
    
    GUARANTEE OF NOTES    
    


 
 
        23.1    Note Guarantee.
    The Guarantors, fully and unconditionally, jointly and severally, guarantee, on an unsubordinated basis, to each holder (a) the due and punctual payment of the principal of,
premium (if any) and interest on each Note, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the
overdue principal of and interest on the Notes, to the extent lawful, and the due and punctual payment of all other obligations and due and punctual performance of all Obligations of the Company to
the holders all in accordance with the terms of such Note and this Agreement, and (b) in the case of any extension of time of payment or renewal of any Notes or any of such other obligations,
that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise. Each Guarantor agrees
that its obligations hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any such Note or this Agreement,
any failure to enforce the provisions of any such Note and this Agreement, any waiver, modification or indulgence granted to the Company with respect thereto by the holder of such Note, or any other
circumstances which may otherwise constitute a legal or equitable discharge of a surety or such Guarantor. 


        Each
Guarantor hereby waives diligence, presentment, demand for payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest or notice with respect to any such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee shall not
be discharged as to any such Note except by payment in full of the principal thereof, premium (if any) and interest thereon. Each Guarantor hereby agrees that, as between such Guarantor, on the one
hand, and the holders, on the other hand, (i) to the extent lawful in an applicable jurisdiction, the maturity of the Obligations guaranteed hereby may be accelerated as provided in
Article XVII for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such obligations as provided in Article XVII, such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Note Guarantee. 


        The
Note Guarantee of any Guarantor may be released pursuant to Section 23.3, in connection with the cessation of corporate existence of such Guarantor permitted under the terms
of this Agreement. 


        The
Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of any holder under
the Note Guarantees. 


 
 
        23.2    Execution and Delivery of Note Guarantee.
    To further evidence the Note Guarantee set forth in Section 23.1, each Guarantor hereby agrees, on the date such Guarantor becomes a party hereto, that a notation of such Note
Guarantee, reasonably satisfactory in form and substance to the Purchasers shall be endorsed on each Note authenticated and delivered by the Company on the Closing Date and such Note Guarantee shall
be executed by either manual or facsimile signature of an Officer of each Guarantor. The validity and enforceability of any Note Guarantee shall not be affected by the fact that it is not affixed to
any particular Note. 


        Each
of the Guarantors hereby agrees that its Note Guarantee set forth in Section 23.1 shall be in full force and effect notwithstanding any failure to endorse on each
Note a notation of such Note Guarantee. 


        If
an Officer of a Guarantor whose signature is on this Agreement or a Note Guarantee no longer holds that office at the time the Company authenticates the Note on which such Note
Guarantee is 


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endorsed
or at any time thereafter, such Guarantor's Note Guarantee of such Note shall be valid nevertheless. 


        The
delivery of any Note by the Company, after the authentication thereof hereunder, shall constitute due delivery of any Note Guarantee set forth in this Agreement on behalf of the
Guarantor. 


 
 
        23.3    Release of Guarantors.
    The Note Guarantee of a Guarantor shall be released: 



        (n)   in
connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person
that is not (either before or after giving effect to such transaction) the Company or a Subsidiary of the Company, if the sale or other disposition is permitted by the terms of this Agreement; or 



        (o)   in
connection with any sale or other disposition of Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction)
the Company or a Subsidiary of the Company, if the sale or other disposition is permitted by the terms of this Agreement; 




and
in either such case, the Company has delivered to the holders of Notes then outstanding an Officer's Certificate stating that all conditions precedent herein provided for relating to such
transactions have been complied with and that such release is authorized and permitted hereunder. 


        Each
holder of Notes then outstanding shall execute any documents reasonably requested by either the Company or a Guarantor in order to evidence the release of such Guarantor from its
obligations under its Note Guarantee endorsed on the Notes and under this Article XXIII. 


 
 
        23.4    Waiver of Subrogation.
    Until all the obligations under the Notes and the Note Guarantees are satisfied in full, each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Company that arise from the existence, payment, performance or enforcement of such Guarantor's obligations under its Note Guarantee and this Agreement, including, without
limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any holder of Notes against the Company, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or
other Property or by set-off or in any other manner, payment or Note on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding
sentence and the Notes shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the holders of
the Notes, and shall forthwith be paid to the Company for the benefit of such holders to be credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this
Agreement. Each Guarantor acknowledges that it shall receive direct and indirect benefits from the financing arrangements contemplated by this Agreement and that the waiver set forth in this
Section 23.4 is knowingly made in contemplation of such benefits. 


 
 

  ARTICLE XXIV    
    
    CONFIDENTIAL INFORMATION    
    


        For the purposes of this Article XXIV, "Confidential Information" means information delivered to
any Purchaser by or on behalf of the Company, any Subsidiary or any Guarantor in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature,
provided that such term does not include information that
(a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure (without breach of any confidentiality or fiduciary obligation), (b) subsequently becomes
publicly known through no act or omission by such Purchaser or any person acting on such Purchaser's behalf, (c) otherwise becomes known to such 


A-84







 

Purchaser
other than through disclosure by the Company or any Subsidiary (provided that such Purchaser did not know or have reason to believe that the party disclosing
such information was subject to any confidentiality or fiduciary obligation to the Company, any Subsidiary or any Guarantor) or (d) constitutes financial statements delivered to such Purchaser
under Section 14.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such Purchaser may deliver or disclose Confidential
Information to (i) its directors, officers, employees, partners, managers, shareholders, members, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the
administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially
in accordance with the terms of this Article XXIV, or (iii) any other Person (w) to effect compliance with any Law, rule, regulation or order applicable to such Purchaser,
(x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is
continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under
such Purchaser's Notes and this Agreement (provided that for clauses (w), (x) and (y), such Purchaser shall (1) promptly notify the Company of the
existence, terms and circumstances surrounding such request or requirement for disclosure, (2) consult with the Company on the advisability of taking legally available steps to resist or narrow
such request or requirement, (3) assist the Company in seeking a protective order or other appropriate remedy and (4) if disclosure is ultimately necessary, disclose only the portion of
the information legally required to be disclosed and use commercially reasonable efforts to obtain confidential treatment for such information). Each holder of a Note, by its acceptance of a Note,
will be deemed to have agreed to be bound by and to be entitled to the benefits of this Article XXIV as though it were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to
this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Article XXIV. 



        Notwithstanding
anything to the contrary in this Article XXIV, each Purchaser and any Affiliate thereof may disclose: (a) the type of business in which the Company and its
Subsidiaries are engaged; (b) the percentage and fair value of any Notes held by such Purchaser or any Affiliate under this Agreement and the amount of such Notes; and (c) the
relationship of such Purchaser or its Affiliates to the Company and its Subsidiaries in respect of this Agreement; provided that no such disclosure shall include, or in
any way describe, the sales or earnings results or projections of the Company or any of its Subsidiaries (except in connection with general statistical summaries or analyses of the portfolio
investments that do not specify or identify the Company or any of its Subsidiaries), or any terms of any
contracts to which the Company or any of its Subsidiaries is a party or any counterparty thereto and the terms of such contracts. 


 
 

  ARTICLE XXV    
    
    SUBSTITUTION OF PURCHASER    
    


        Each Purchaser (including any substitute Purchaser or any transferee of any portion of the purchase commitments pursuant to this
Article XXV) shall have the right to substitute any Person as the purchaser of the Notes, other Securities and/or Royalties that it has agreed to purchase hereunder, or transfer or assign a
portion of such Purchaser's commitment for the purchase of Notes, other Securities and/or Royalties to such Person, by written notice to the Company, which notice shall be signed by both such
Purchaser and such Person, shall contain such Person's agreement to be bound by this Agreement, contain a confirmation by such Person of the accuracy with respect to it of the 


A-85







 

representations
set forth in Article VIII, and be accompanied by a properly completed and duly executed Internal Revenue Service Form W-9 (or, if such Person is a Foreign
Assignee, a properly completed and duly executed Internal Revenue Service Form W-8, completed in such a manner as to benefit, to the fullest extent permitted by applicable U.S.
federal income tax law, from any available reduction of such Foreign Assignee's liability for U.S. federal income Taxes with respect to amounts to which such Foreign Assignee is entitled pursuant to
the Securities or pursuant to the Royalty Agreement). Upon receipt of such notice, if the original Purchaser has elected to substitute such Person or has allocated 100% of its commitments to one or
more Persons, any reference to such Purchaser in this Agreement (other than in this Article XXV), shall be deemed to refer to such Person(s) in lieu of such original Purchaser (including any
corresponding references to such Person as "Notes Purchaser" or "Royalties Purchaser," as the case may be). In the event that such Person is so substituted as a Purchaser hereunder and such Person
thereafter transfers to such original Purchaser all of the Notes, other Securities and Royalties then held by such Person, upon receipt by the Company of notice of such transfer, any reference to such
Person as a "Purchaser" in this Agreement (other than in this Article XXV), shall no longer be deemed to refer to such Person, but shall refer to such original Purchaser, and such original
Purchaser shall again have all the rights of an original holder of the Notes, other Securities and Royalties under this Agreement. In the event that a Purchaser transfers or assigns a portion (but not
all) of such Purchaser's commitment for the purchase of Notes, other Securities and/or Royalties, such transferee or assignee shall be deemed an additional "Purchaser" for all purposes under this
Agreement (including any corresponding references to such Person as "Notes Purchaser" or "Royalties Purchaser," as the case may be). Schedule A shall be updated upon the occurrence of any
substitution, transfer or assignment contemplated herein. 


 
 

  ARTICLE XXVI    
    
    MISCELLANEOUS    
    


 
 
        26.1    Successors and Assigns.
    Except as set forth in Article XXV, this Agreement shall be binding upon, and inure solely to the benefit of, the Purchasers, the Company, the Guarantors, and their respective
successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. 


 
 
        26.2    Legal Holidays.
    A "Legal Holiday" is a Saturday, a Sunday or other day on which (a) commercial banks in the City of New York are authorized or required by law to
close or (b) the Principal Market is not open for trading. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue for the intervening period. 


 
 
        26.3    Accounting Terms.
    All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically
provided herein, (a) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (b) all financial statements shall be prepared in accordance with GAAP. 


 


        26.4    Severability.    Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. 



 
 
        26.5    Construction, Etc.
    Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by 


A-86








 

any
Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. 


        Certain
capitalized and other terms used in this Agreement are defined in Schedule B; and references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement. For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof. 



 


        26.6    Counterparts.    This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute one (1) instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto. 


 
 
        26.7    Table of Contents, Headings, Etc.
    The table of contents, cross-reference sheet and headings of the Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof,
and shall in no way modify or restrict any of the terms or provisions hereof. 


 


        26.8    Construction.    Each of the Company and the Guarantors acknowledges and agrees
that the purchase and sale of the Securities pursuant to this Agreement is an arm's-length commercial transaction between the Company, on the one hand, and the several Purchasers, on the other, and
that each of the Company and the Guarantors has consulted its own legal and financial advisors to the extent it deemed appropriate. 


 
 
        26.9    Governing Law.
    This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York (excluding
choice-of-law principles of the laws of such State that would permit the application of the laws of a jurisdiction other than such State), other than to the extent the laws of
the State of Nevada (including chapters 78 and 92A of the Nevada Revised Statutes) mandatorily apply. 



 
 
        26.10    Jurisdiction and Process; Waiver of Jury Trial.
    


        (a)   Each
of the Company and the Guarantors and the Purchasers agrees that any suit or proceeding arising in respect of this Agreement will be tried in the U.S. District
Court for the Southern District of New York or in any state court located in the City and County of New York and the Company and the Guarantors and the Purchasers agree to submit to the jurisdiction
of, and to venue in, such courts. 


        (b)   The
Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in
Section 26.10(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified
in Article XXII or at such other address of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt (i) shall be
deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be
valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or
any reputable commercial delivery service. 


        (c)   Nothing
in this Section 26.10 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders
of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction. 


        (d)   Each
of the Company, the Guarantors and the Purchasers hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the Transactions. 


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        26.11    Disclosure of Tax Information.
    Notwithstanding anything herein to the contrary, the Company (and the Company's employees, representatives, and other agents) and each of the Guarantors (and each of the Guarantors'
employees, representatives, and other agents) are authorized to disclose to any and all persons, the Tax Treatment and Tax Structure of the potential transaction and all materials of any kind
(including Tax opinions and other Tax analyses) provided to the Company and to any of the Guarantors relating to that treatment and structure, without the Purchasers imposing any limitation of any
kind. For this purpose, "Tax Treatment" means U.S. federal and state income Tax treatment, and "Tax Structure" is limited to any facts that
may be relevant to that treatment. 


 
 
        26.12    Statements Required in Certificate.
    Each certificate (other than certificates provided pursuant to Section 14.1(a)) with respect to compliance by or on behalf of the Company or any Guarantor with a condition or
covenant provided for in this Agreement shall include: 



        (p)   a
statement that the Person making such certificate or opinion has read such covenant or condition; 



        (q)   a
statement that, in the opinion of such Person, it or he has made such examination or investigation as is necessary to enable it or him to express an informed opinion
as to whether or not such covenant or condition has been complied with; and 


        (r)   a
statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with. 




 
 
        26.13    [Intentionally Deleted]
    


 
 
        26.14    Specific Performance.
    The parties agree that irreparable damage would occur in the event that any party fails to consummate the transactions contemplated by this Agreement in accordance with the terms of this
Agreement and that each of the Company and the Purchasers shall be entitled to specific performance in such event, in addition to any other remedy at Law or in equity. The parties agree that the
Company and the Purchasers shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the terms and provisions of this Agreement in addition to
any other remedy to which either Party may be entitled. 


 
 
        26.15    Time of the Essence.
    Time shall be of the essence of this Agreement. 


[Signature page follows]


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        IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. 

 






							
	 	 	PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
  By:	
 	
/s/ PATRICK L. AVERY







 
	 	 	 	 	Name:	 	Patrick Avery
	 	 	 	 	Title:	 	 Chief Executive Officer and President




 

 




 






							
	 	 	AIF VII PG O&R HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo Advisors VII (APO FC), L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo Advisors VII (APO FC-GP), LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY







 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President




 

 




 






							
	 	 	AIF VII PG HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo Advisors VII, L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo Capital Management VII, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY







 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President




 

 




 






							
	 	 	ANRP PG HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo ANRP Advisors, L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo ANRP Capital Management, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY







 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President




 

 




 






							
	 	 	ANRP PG O&R HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo ANRP Advisors (APO FC), L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo ANRP Advisors (APO FC-GP), LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY







 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President




 

 




 






							
	 	 	AP PG GOLDEN SHARE, LLC
	

 	
 	
  By:	
 	
Apollo Management VII, L.P.,

its manager
	

 	
 	
 By:	
 	
AIF VII Management, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY







 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President




 

 






 








































 
 

  SCHEDULE A    
    
    INFORMATION RELATING TO PURCHASERS    
    

 






					
	Name of Notes Purchasers



 
	 	Principal Amount of

Notes to be Purchased 	 
	 AIF VII PG Holdings, L.P. 
	 	$	76,200,000	 
	 ANRP PG Holdings, L.P. 
	 	$	23,800,000	 
	 Total
	 	$	100,000,000	 




 

  


 






														
	Name of Royalty Purchasers



 
	 	Percentage of

Royalty to be

Purchased 	 	Percentage of

Series A

Warrants to be Received 	 	Percentage of

Series B

Warrants to be Received 	 	Percentage of

Termination Fee

to be Received 	 
	 AIF VII PG O&R Holdings, L.P. 
	 	 	76.20	%	 	76.20	%	 	76.20	%	 	76.20	%
	 ANRP PG O&R Holdings, L.P. 
	 	 	23.80	%	 	23.80	%	 	23.80	%	 	23.80	%
	 Total
	 	 	100	%(1)	 	100	%	 	100	%	 	100	%









 


 	(1)
	The
percentages in this Schedule A refer to the percentage of the Royalty that is allocable to the Royalty Purchasers in the Royalty Agreement. For
the avoidance of doubt, the Royalty Purchasers are not entitled to the Royalty that is allocable to Buffalo Management LLC in the Royalty Agreement. 


 

  Name of Preferred Share Purchaser  


AP
PG Golden Share, LLC 


        1)    All
payments by wire transfer of immediately available funds to accounts to be specified by the applicable Purchaser no later than two (2) Business Days prior to
the date of the applicable payment. 


        2)    All
notices of payments, written confirmations of such wire transfers and all other communications: 



c/o
Apollo Global Management, LLC

9 West 57th Street

New York, NY 10019

Attention: Laurie Medley

Facsimile: (646) 607-0528 



A-Sch. A-1









 







































 SCHEDULE B  


 DEFINED TERMS  


        As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such
term: 


        "Acceptable
Confidentiality Agreement" shall mean a customary confidentiality agreement containing terms no less favorable to the Company in the aggregate
than the terms set forth in the Confidentiality Agreement, dated March 5, 2012, between the Company and Apollo Management VII, L.P. 


        "Accounting
Firm" is defined in Section 13.12. 


        "Affiliate"
or "affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For
purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have
correlative meanings. For purposes of this Agreement, Apollo Global Management, LLC and its Affiliates shall not be deemed to be Affiliates of the Company or any of its Subsidiaries. 


        "Associate"
means, when used to indicate a relationship with any Person, (i) any officer or director of such Person, (ii) any spouse, former
spouse, child, parent, parent of a spouse, sibling, grandchild or grandparent of any of the Persons listed in clause (i) above, (iii) any Affiliate of any of the Persons listed in
clause (i) or (ii) above, (iv) any corporation or organization of which such Person listed in clause (i) or (ii) above is an officer or partner or is directly or
indirectly the beneficial owner of 10% or more of any class of equity securities, and (v) any trust or other estate in which any of the Persons listed in clause (i) or (ii) above
has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity. 


        "Agreement"
is defined in the first paragraph of this Agreement. 


        "Applicable
Price" is defined in Section 13.4. 


        "Apollo
Preferred Shares" means 100 shares of the Company's Series A Preferred Stock as described in the Certificate of Designation. 


        "Apollo
Warrants" are defined in the fifth paragraph of this Agreement. 


        "Appraiser"
is defined in Section 13.4(D). 


        "Approval"
means any authorization, consent, approval, license, lease, ruling, permit, tariff, rate, certification, exemption, filing, variance, claim,
order, judgment, decree, sanction or publication of, by or with, any notice to, any declaration of or with, or any registration by or with, or any other action or deemed action by or on behalf of, any
Governmental Authority. 


        "Approved
Subordinated Indebtedness" means any indebtedness outstanding from any Obligor to any other Obligor which is subject to the terms and conditions of
a subordination agreement in form and substance satisfactory to the Purchasers providing for, among other things, the subordination of the Indebtedness subject to the subordination agreement to the
Indebtedness evidenced by the Notes, and which is incurred on terms and conditions, and pursuant to documentation, acceptable to the holders, acting in their reasonable discretion. 



        "AWP"
means American West Potash LLC, a Delaware limited liability company and, as of the date hereof, a wholly owned indirect Subsidiary of the
Company. 


A-Sch. B-1







 

        "Bankruptcy
Law" means Title 11, United States Code, or any other U.S. Federal or state law for the relief of debtors. 



        "Beneficial
Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act as in
effect on the date hereof. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. 


        "Benefit
Plan" shall mean any employee benefit plan, program, policy, practice, undertaking or other arrangement maintained, sponsored or administered by the
Company or any of its Subsidiaries, to which the Company or any of its Subsidiaries contributes or is bound, or in respect of which the Company or any of its Subsidiaries has, or will have, any
liability or contingent liability, in each case providing benefits to any employees of the Company or any of its Subsidiaries (or any beneficiary or dependent thereof), whether or not written (whether
funded or unfunded, insured or uninsured, formal or informal, registered or unregistered), including without limitation any bonus, incentive, deferred compensation, incentive compensation, vacation,
stock purchase, stock option, phantom stock, pension, retirement savings, profit sharing, life or accident insurance, hospitalization, health, medical or dental, disability, severance, employment,
change of control or fringe benefit plan, program or agreement and any related trusts or other funding vehicles. 


        "Board
Observer" is defined in Section 9.11(b). 


        "Board
of Directors" means: 



        (a)   with
respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; 


        (b)   with
respect to a partnership, the board of directors of the general partner of the partnership; 


        (c)   with
respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and 


        (d)   with
respect to any other Person, the board or committee of such Person serving a similar function. 




        "Buffalo"
is defined in the eighth paragraph of this Agreement. 


        "Business
Day" means a day other than a Saturday, Sunday or other day on which commercial banking institutions in New York City are authorized or required by
law to close. 


        "Buy-In"
is defined in Section 13.3(c). 


        "Buy-In
Price" is defined in Section 13.3(c). 


        "Cap"
is defined in Section 11.4(d). 


        "Capital
Costs" shall mean all costs to develop, build, equip, commission and ramp up to nameplate capacity the mine, processing facilities, required
infrastructure (including any necessary infrastructure to export product whether at the mine site or off the mine site) and administrative facilities at the mine site. Capital Costs shall include
direct, indirect costs and contingency, direct and indirect owner's costs and contingency plus spare parts and first fills. 


        "Capitalized
Lease Liabilities" means all monetary obligations of any Person under any leasing or similar arrangement which could be classified as
capitalized leases, and, for purposes of this Agreement and each other Note Document, the amount of such obligations shall be the capitalized amount thereof, and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 


A-Sch. B-2







 

        "Capital
Stock" means: 



        (a)   in
the case of a corporation, corporate stock; 


        (b)   in
the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; 


        (c)   in
the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and 



        (d)   any
other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing
Person, but excluding from all of the foregoing clauses (a) through (d) any debt securities convertible into Capital Stock, whether or not such debt securities include any right of
participation with Capital Stock. 




        "Cash
Equivalent Investment" means, at any time: 



        (e)   securities
denominated in Dollars maturing not more than twelve (12) months from the date of issue, which are issued, guaranteed or insured by the government of
the United States of America; or 


        (f)    any
negotiable certificate of deposit or bankers' acceptance, guaranteed investment contracts, repurchase agreement or discount debt obligation (in each case,
denominated in Dollars), maturing not more than one (1) year after such time, which is issued (or, in the case of a bankers' acceptance, accepted) by any domestic commercial banking institution
that has a credit rating of either A-1 or higher by Standard & Poor's Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody's Investor
Services Limited. 




        "CERCLA"
is defined in Section 7.20(a)(i). 


        "Certificate
of Designation" means the certificate of designation of the Apollo Preferred Shares in the form set forth in Exhibit C. 


        "Change
of Control" means the occurrence of any of the following: 



        (g)   (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act)), other than Permitted Holders, is or becomes the Beneficial
Owner, directly or indirectly, of
35.0% or more of the voting power of the Voting Stock of the Company (or upon any merger or consolidation, the surviving or successor entity); or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election to such Board of Directors or whose nomination
for election was approved by a vote of at least 50.0% of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of the Company; 


        (h)   the
sale, transfer, conveyance, or other disposition in one or a series of related transactions, of all or substantially all of the properties or assets of the Company
and the Subsidiaries, taken as a whole (which, for the avoidance of doubt, shall not include merger or consolidation transactions), to any "person" (as that term is used in Section 13(d)(3) of
the Exchange Act) other than to Permitted Holders; or 


        (i)    the
adoption of a plan relating to the liquidation or dissolution of the Company. 




        "Change
of Control Offer" means an offer to a holder of Notes to repurchase all or any part of that holder's Notes in the event a Change of Control occurs. 


        "Change
of Control Payment" is defined in Section 15.27(a). 


A-Sch. B-3







 

        "Change
of Control Payment Date" means the date of repurchase of Notes by the Company pursuant to a Change of Control Offer. 


        "Claim"
is defined in Section 11.3(b). 


        "Claim
Notice" is defined in Section 11.3(b). 


        "Closing"
is defined in Section 3.1. 


        "Closing
Date" is defined in Section 3.1. 


        "Closing
Sale Price" means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market
makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly the Pink OTC Markets Inc.). If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the
Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved by an Appraiser selected as provided in
Section 13.4(d). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable
calculation period. 


        "Code"
means the Internal Revenue Code of 1986, as amended, and the rules, regulations and published interpretations promulgated thereunder from time to
time. 


        "Collateral"
means substantially all of the property, real or personal, tangible or intangible, of each Obligor, including, without limitation, any property
subject to a Lien in favor of the lenders in respect of the Project Financing Facility. 


        "Collateral
Agent" means the agent named as "Collateral Agent" in the Collateral Documents. 


        "Collateral
Documents" means any security agreements, mortgages, collateral access agreements, deposit account control agreements, securities account control
agreements and any other documents pursuant to which any Obligor grants or perfects a Lien upon any real or personal property as security for payment of the Obligations. 


        "Company
Disclosure Schedules" means the disclosure schedules attached hereto that correspond to the numbered sections in Article VII; the information
disclosed in any particular section of the Company Disclosure Schedules shall be deemed to relate to and to qualify only the particular representation or warranty set forth in the corresponding
numbered section in Article VII; provided, however, that to the extent that an item in a section of the Company Disclosure Schedules is
relevant and reasonably apparent on its face to apply to the disclosure required by any other section of Article VII, such item shall be deemed to be disclosed in the section of the Company
Disclosure
Schedules corresponding to such other section of Article VII whether or not an explicit cross-reference appears. 



        "Common
Stock" means the common stock of the Company, par value $0.001 per share. 


        "Company"
is defined in the first paragraph of this Agreement. 


A-Sch. B-4







 

        "Company
Converstion Date" is defined in Section 13.3(b). 



        "Company
Conversion Notice" is defined in Section 13.3(b). 


        "Company
Organizational Documents" is defined in Section 7.4. 


        "Company
SEC Documents" is defined in Section 7.9(a). 


        "Company
Share Delivery Date" is defined in Section 13.3(b). 


        "Company
Termination Fee" is defined in Section 10.3. 



        "Compliance
Certificate" means a certificate an officer of the Company reasonably satisfactory in form and substance to the Purchasers certifying of
compliance with the provisions of this Agreement. 


        "Confidential
Information" is defined in Article XXV. 


        "Conversion
Amount" is defined in Section 13.1(a) and 13.1(b). 


        "Conversion
Date" is defined in Section 13.3(a). 


        "Conversion
Failure" is defined in Section 13.3(c). 


        "Conversion
Milestone" means the date on which both of the following has occurred: (i) Project Completion, and (ii) at any time after Project
Completion, the arithmetic average of the daily VWAP of the Common Stock for any twenty (20) consecutive Trading Days being 200% or more of the then-applicable Conversion Price
(provided that this condition shall only be deemed to be satisfied if the Common Stock is listed on Nasdaq, TSX or NYSE/AMEX (or another national securities exchange in
the US or Canada reasonably acceptable to the Majority Purchasers) during such twenty (20) consecutive Trading Day measuring period). 


        "Conversion
Price" is defined in Section 13.2(b). 


        "Convertible
Securities" means, with respect to any Person, any shares or securities (other than Options) directly or indirectly convertible into or
exchangeable or exercisable for shares of capital stock of such Person (including, in the case of the Company, shares of Common Stock). 


        "Cost
Overrun Facility" means any committed credit facility made available to the Company for the purposes of funding capital cost overruns and which has
been made available on terms and conditions, and pursuant to documentation, acceptable to the Collateral Agent (acting on the instructions of the Majority Purchasers). 


        "Current
Capital Estimate" means $1,530,000,000. 


        "Custodian"
means any receiver, interim receiver, receiver and manager, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy
Law. 


        "Damages"
is defined in Section 11.1. 


        "Default"
means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. 


        "Definitive
Feasibility Study" shall mean a definitive feasibility study with respect to the Holbrook Project from Tetra Tech or another firm reasonably
acceptable to the Majority Purchasers which (a) indicates that applicable metallurgical test work has been completed such that the entire flow sheet has been finalized and fixed and is fully
specified to support basic and detailed engineering and obtaining firm vendor quotes; (b) indicates that at least 50% of basic engineering has been completed; (c) indicates that
procurement is well-advanced; (d) indicates that capital and operating cost estimate with an accuracy of +/- 15%, has been completed and in the case of the capital cost estimate,
has minimal reliance on factored estimates and primarily relies on takeoffs and unit rates; (e) indicates that 


A-Sch. B-5







 

significant
trade-off and optimization studies have been completed; (f) indicates that all environmental assessments have been performed and all key permit applications have been
submitted; (g) indicates that the Holbrook Project has a schedule that starts no later than the first quarter of 2014 and has a duration from Notice to Proceed (as defined in the EPCM or EPC
contract) to Project Completion (as would be defined in a customary project finance facility) that does not exceed fifty-two (52) months; (h) indicates that the Holbrook
Project is supported by reserves and resources of all potash members which the Company has the right to mine which are estimated using assumptions, methodologies and a mine plan acceptable to the
Purchasers' independent engineering firm and meet NI 43-101 standards that have a tonnage and grade consistent with that presented in the Reserves and Resources Statement presented
in the Preliminary Economic Assessment ("PEA") by Tetra Tech (which was filed with the SEC on December 22, 2011), and that in any event will (x) have sufficient demonstrable resources of
ultimately recoverable standard product of all potash members that support a mine life of twenty-five (25) years and (y) have sufficient reserves to support a mine life of at
least twenty (20) years; and (i) meets the definitive feasibility study requirements of commercial project finance lending banks, policy banks and major export credit agencies to which
the Company will be applying for financial support, including compliance with the Equator Principles. 


        "DFS
Estimate" is defined in Section 9.8. 


        "Dilutive
Issuance" is defined in Section 13.4. 


        "Enforceability
Exceptions" is defined in Section 7.2(c). 


        "Environmental
Claims" is defined in Section 7.20(a)(iv). 


        "Environmental
Laws" is defined in Section 7.20(a)(i). 


        "EPC"
is defined in Section 6.8. 


        "EPCM"
is defined in Section 6.8. 


        "Equity
Interests" means Capital Stock and all Options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock). 


        "Equity-based
Security" means any capital stock, any preferred stock or any other equity-like or hybrid securities (including debt securities
with equity components), including, without limitation, Options, convertible, exchangeable or exercisable securities, stock appreciation rights or any other security or arrangement whose economic
value is derived from the value of the equity of the Company or its Subsidiaries. 


        "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from
time to time in effect. 


        "ERISA
Affiliate" means, with respect to the Company or a Subsidiary of the Company, any trade or business (whether or not incorporated) that, together with
the Company or such Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of the Code. 


        "Event
of Default" is defined in Article XVI. 


        "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to
time in effect. 


        "Ex-Dividend
Date" means, with respect to any issuance, dividend or distribution, the first date on which the shares of Common Stock trade on the
applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question. 


A-Sch. B-6







 

        "Expiration
Date" is defined in Section 13.9. 


        "Expiration
Time" is defined in Section 13.9. 


        "FCPA"
is defined in Section 7.7(b). 


        "Foreign
Assignee" means an assignee of an interest in the Securities or the Royalty Agreement (including pursuant to Article XXV) that is a Foreign
Purchaser. 


        "Foreign
Purchaser" means a Purchaser other than a Purchaser that is, or is treated as, a "United States person" for U.S. federal income tax purposes, within
the meaning of Section 7701(a)(30) of the Code. 


        "Form 10-K"
is defined in Section 7.16(b). 


        "Form 10-Q"
is defined in Section 14.1. 


        "GAAP"
means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting profession, as in effect from time to time, provided that if any change in GAAP would alter the
computation or determination of any financial ratio or other test provided for under this Agreement such ratio or other test shall continue to be computed in accordance with GAAP as in effect prior to
such change until the Majority Purchasers and the Company shall have agreed whether (and if so, how) to amend this Agreement to eliminate the effect of such change on such computation or
determination. 


        "Governmental
Authority" means: 



        (j)    the
government of 



        (i)    the
United States of America or any state or other political subdivision thereof, or 


        (ii)   any
other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company
or any Subsidiary, or 




        (k)   any
entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. 




        "Grandhaven"
is defined in Section 9.7. 


        "Grandhaven
Agreement" means the Potash Royalty Purchase and Sale Agreement and Option, dated November 22, 2011, between the Company and Grandhaven. 


        "Grandhaven
Agreement Amendment" is defined in Section 9.9. 


        "Guarantee"
means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. 


        "Guarantors"
means each entity that signs this Agreement as a Guarantor on the date hereof and each entity that becomes a party hereto after the date hereof,
including pursuant to Section 15.24, and each of their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the
provisions of this Agreement. 


        "Hazardous
Substances" means (i) any pollutant, contaminant, chemical or toxic or hazardous material or substance or waste or any other material or
substance, to the extent exposure to such 


A-Sch. B-7







 

material
or substance is now or hereafter prohibited, limited or regulated under any Environmental Law, (ii) any petrochemical or petroleum distillates or by-products, acidizing,
well improvement, hydraulic fracturing ("fracking") or drilling fluids, produced waters, radioactive materials (including naturally occurring radioactive materials),
asbestos in any form, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, explosives, and radon gas, and
(iii) any chemicals, materials, wastes, or substances defined, listed, or classified as or included in the definition or designations of "hazardous substances," "solid waste," "regulated
substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants" or "pollutants" or words of similar
meaning and regulatory effect or with respect to which liability or standards of conduct are imposed. 


        "Hedging
Agreement" means any agreement evidencing or creating any Hedging Obligations. 


        "Hedging
Obligations" means, with respect to any specified Person, the obligations of such Person under: 



        (l)    interest
rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed to protect such Person against
fluctuations in interest rates; 


        (m)  currency
exchange swap agreements, currency exchange cap agreements, currency exchange collar agreements and other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange values; 


        (n)   commodity
swap agreements, commodity cap agreements, commodity collar agreements and other agreements or arrangements designed to protect such Person against
fluctuations in commodity prices; and 


        (o)   other
agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. 




        "Holbrook
Project" is defined in the fourth paragraph of this Agreement. 


        "holder"
means, with respect to any Note the Person in whose name such Note is registered in the register maintained by the Company pursuant to
Section 18.1. 


        "Indebtedness"
means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent: 



        (p)   in
respect of borrowed money; 



        (q)   raised
pursuant to any note purchase facility or evidenced by bonds, notes, debentures, loan stock or similar instruments or letters of credit (or reimbursement
agreements in respect thereof); 


        (r)   in
respect of banker's acceptances; 


        (s)   representing
Capitalized Lease Liabilities; 


        (t)    representing
the balance deferred and unpaid of the purchase price of any Property due more than six (6) months after such Property is acquired, except any such
balance that constitutes an accrued expense or trade payable (other than any contingent payment obligations of a Person based on the performance of a business or asset or Capital Stock purchased by
such Person); 


        (u)   representing
the net loss value of any Hedging Obligations; 


        (v)   representing
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); 



A-Sch. B-8







 

        (w)  representing
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; 


        (x)   representing
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a
bank or financial institution; or 


        (y)   representing
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above; 




if
and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified
Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. 


        "Indemnified
Person" is defined in Section 11.3(a). 



        "Indemnifying
Person" is defined in Section 11.3(a). 


        "Indemnified
Taxes" is defined in Section 9.15(c). 


        "Indemnity
Tax Benefit" is defined in Section 11.4(g). 


        "Initial
Conversion Price" is defined in Section 13.2(a). 


        "Insolvency
Default" means any condition or event which, after notice, lapse of time or both, would constitute an Event of Default of the nature referred to
in clauses (j) or (k) of Article XVI. 


        "Investors
Rights Agreement" is defined in the tenth paragraph of this Agreement. 


        "Intellectual
Property Rights" is defined in Section 7.21. 


        "Intercreditor
Agreement" means an agreement between the Collateral Agent, on behalf of the holders, and the agent or other representative for the lenders
under the Project Finance Facility which will provide (a) for the subordination of the Liens securing the Obligations to the Liens securing the Indebtedness under the Project Finance Facility,
(b) that the Liens on the Collateral securing the Notes shall not, other than pursuant to a proceeding under Bankruptcy Law, be released absent the consent of the Collateral Agent unless there
has been final and full payment of the Obligations, (c) that the holders of the Notes will have enforcement rights over the Collateral subject to an agreed upon standstill period if the holders
of the obligations in respect of the Project Finance Facility are not exercising such enforcement rights, (d) that the holders of the Notes will have the right to purchase the Indebtedness and
other liquidated obligations under the Project Finance Facility at par during such standstill period and (e) such other terms as are reasonably satisfactory to the Purchasers. 


        "Investment
Company Act" is defined in Section 7.14. 


        "Investments"
means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of
loans (including Guarantees or similar obligations relative to the liabilities of such other Persons), advances or capital contributions (excluding commission, travel and similar advances to officers,
agents and employees made in the ordinary course of business and excluding advances made to customers and suppliers with respect to current or anticipated purchases of inventory in the ordinary course
of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP, excluding, for the avoidance of doubt, accounts receivable arising in the ordinary course of business. 


A-Sch. B-9









 







































        "Karlsson"
means The Karlsson Group, Inc., an Arizona corporation. 


        "Karlsson
Agreements" means the agreements entered into in connection with the Karlsson Purchase, as in effect on the date hereof or as amended with the
consent of the Majority Purchasers or as permitted by Section 9.1(o). 


        "Karlsson
Note" means that certain Senior First Priority Secured Promissory Note, dated August 1, 2012, made by PGRI Delaware in favor of Karlsson in
the principal amount of $125,000,000, together with the related financing agreements. 


        "Karlsson
Purchase" means the transactions contemplated by that certain Membership Interest Purchase Agreement, dated as of May 30, 2012, between PGRI
Delaware and Karlsson, including all ancillary agreements and documentation entered in connection therewith. 


        "Knowledge"
means, with respect to the Company, the knowledge, after reasonably inquiry, of Patrick Avery, Brian Wallace, Wayne Rich, Jonathan Bloomfield and
Gregory Dangler. 


        "Law"
means all laws, statutes, rules, regulations, ordinances, orders, decrees, requirements, judgments and codes of Governmental Authorities. 


        "Legal
Holiday" is defined in Section 26.2. 


        "Liabilities"
shall mean any and all Indebtedness, liabilities, costs, expenses and obligations, whether accrued or fixed, known or unknown, absolute or
contingent, matured or unmatured or determined or determinable, whether or not required to be recorded or reflected in a balance sheet in accordance with GAAP. 


        "Lien"
means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title-retention agreement, any lease (other than an operating lease) in the nature thereof,
any option or other agreement to sell or give a security interest in and, any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction. For purposes of the Note Documents, any Person shall be deemed to own, subject to a Lien, any property that it has acquired or holds subject to the interest of a vendor or lessor under
any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such property. 


        "Majority
Purchasers" means, (i) prior to Closing, Purchasers with at least a majority of purchase commitment for the Notes as set forth in
Schedule A and (ii) from and after the Closing, Purchasers (including any transferee holders who subsequently become Purchasers) holding at least a majority of the principal amount of
the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). 


        "Material
Adverse Effect" means any development, event, state of facts, change or effect that, individually or in the aggregate, has had or would reasonably
be expected to have a material adverse effect on (a) the ability of AWP to develop and operate the Holbrook Project and the Mine in a manner which is consistent with the financial projections;
(b) the business, assets, liabilities, operations, performance, properties, condition (financial or otherwise) or prospects of the Company, AWP or the Holbrook Project, or the Company and its
Subsidiaries taken as a whole, (c) the ability of any Obligor to perform or comply with its obligations under this Agreement, the Note Documents or any Project Document or with respect to the
Transactions; (d) the legality, validity or enforceability of the Note Documents or any Project Documents; or (e) following the Springing Lien Trigger Date, the rights and remedies of
any holder under the Collateral Documents. 


A-Sch. B-10







 

        "Material
Contracts" means any contract to which the Company or any of its Subsidiaries is a party to or is expressly bound by that: 



        (z)   is
a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC); 


        (aa) relates
to any joint venture, partnership, limited liability or other similar agreements or arrangements relating to the formation, creation, operation, management or
control of any joint venture or partnership that is material to the business of the Company and any of its Subsidiaries, taken as a whole, or in which the Company owns more than a 15% voting or
economic interest; 


        (bb) that
is an indenture, credit agreement, loan agreement, security agreement, guarantee, note, mortgage or other contract providing for or securing indebtedness for
borrowed money or deferred payment (in each case, whether incurred, assumed, guaranteed or secured by any asset) in excess of $1,000,000; 


        (cc) prohibits
the payment of dividends or distributions in respect of any Equity Interest of the Company or any of any of its Subsidiaries, prohibits the pledging of any
Equity Interest of any of the Company's Subsidiaries or prohibits the issuance of guarantees by any of the Company's Subsidiaries; 



        (dd) is
a settlement, conciliation or similar agreement (x) with any Governmental Authority or (y) which would require the Company or any of the Company's
Subsidiaries to pay consideration of more than $1,000,000 after the date of this Agreement; 


        (ee) (A)
contains a standstill or similar agreement pursuant to which the Company or any of the Company's Subsidiaries has agreed not to acquire assets or securities of a
third party, or (B) which contains any "non-solicitation", "no hire" or similar provision which restricts the Company or any of the Company's Subsidiaries in soliciting, hiring,
engaging, retaining or employing such third party's current or former employees in a manner, or to an extent, that would interfere in any material respect with the ordinary course of operations of the
business of the Company or any of its Subsidiaries; 


        (ff)  relates
to any acquisition by the Company or any of its Subsidiaries of equity interests or any material assets (other than acquisitions of inventory or equipment in
the ordinary course of business) pursuant to which the Company or any of its Subsidiaries has continuing indemnification (other than indemnification obligations with respect to directors and
officers), "earn-out" or other contingent payment or guarantee obligations, in each case, that could result in payments in excess of $1,000,000; 



        (gg) contains
any covenant that (A) materially limits the ability of the Company or any of the Company's Subsidiaries to engage in any line of business, or to compete
with any Person or operate at any geographic location, except for radius restrictions that may be contained in contracts entered into in the ordinary course of business consistent with past practice,
or expressly requiring the Company and/or
any of the Company's Subsidiaries to purchase an amount of goods or services from a particular Person in an amount in excess of $1,000,000 annually, or $2,000,000 in the aggregate, or (B) could
require the disposition of any material assets or material line of business of the Company or any of the Company's Subsidiaries; 



        (hh) involves
any directors, executive officers (as such term is defined in the Exchange Act) or 5% shareholders of the Company or any of their affiliates (other than the
Company or any of the Company's Subsidiaries) or immediate family members; 


        (ii)   relates
to the employment of any individual on a full-time or part-time consulting or other basis providing annual compensation in excess of
$200,000; 



A-Sch. B-11







 

        (jj)   contains
a license in respect of Intellectual Property (except for (A) licenses of commercially available software granted to the Company or any of the Company's
Subsidiaries and (B) licenses granted by the Company or any of the Company's Subsidiaries to franchisees in the ordinary course of business consistent with past practice) and that is material
to the conduct of the business of the Company and any of its Subsidiaries, taken as a whole; 


        (kk) by
its terms calls for aggregate payments by the Company or any of the Company's Subsidiaries of more than $1,000,000 over the remaining term of such Contract, except
for any such Contract entered into in the ordinary course of business consistent with past practice or that may be canceled, without any material penalty or other material liability to the Company or
any Company Subsidiaries, upon notice of ninety (90) days or less; 


        (ll)   entered
into in connection with, or otherwise relating to, the Karlsson Purchase; or 


        (mm)  grants
to any Person any right of first offer or right of first refusal to purchase, lease, sublease, use, possess or occupy all or a substantial part of the material
assets of the Company or any of its Subsidiaries. 




        "Materials
of Environmental Concern" is defined in Section 7.20(a)(i). 


        "Maturity
Date" when used with respect to any Note, means the later of (i) the seventh (7th) anniversary of the Closing Date and (ii) the date
that is six (6) months after the maturity date of the Senior Project Finance Bank Debt (as such maturity date shall be in effect on the date of initial incurrence of the Senior Project Finance
Bank Debt). 


        "Merger
Event" is defined in Section 13.15(a). 


        "Mine"
means, collectively, all properties, assets or other rights, whether real or personal, tangible or intangible, now owned or leased or hereafter
acquired by or for the benefit of the Company or any of its Subsidiaries which assets are used or intended for use in or forming part of the Holbrook Project (and, for the avoidance of doubt, shall
include (i) the potash deposits located at the Holbrook Project and (ii) all associated beneficiation facilities, together with all plant sites, waste dumps, ore dumps, crushing
circuits, abandoned heaps, power-supply systems and ancillary and infrastructure facilities which are used in connection with the operation of the Holbrook Project). 



        "Mineral
Rights" means all mineral interests, mining concessions, mining tenements or other mineral rights owned by or subject to any lease, license or
similar agreement in favor of the Company and its Subsidiaries. 


        "Minimum
Off-Take Arrangements" is defined in Section 9.10. 


        "Mining
Rights" means all interests in the surface of any lands, the minerals in (or that may be extracted from) any lands, all royalty agreements, water
rights, patented and unpatented mining claims, fee interests, mineral leases, mining licenses, profits-a-prendre, joint ventures and other leases,
rights-of-way, inurements, licenses, permits and other mining rights and interests used by or necessary to the Company or any of its Subsidiaries to construct, develop and
operate the Mine. 


        "Money
Laundering Laws" is defined in Section 7.33. 


        "Moody's"
means Moody's Investors Service, Inc., or any successor rating agency. 


        "Multiemployer
Plan" means any "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). 


        "Necessary
Permits" mean any Permits materially necessary for the construction, production and operation of the Holbrook Project (including any related to
the logistics chain), including any Permits scheduled in Schedule 6.9, but excluding any Permits that may be needed for activities within the boundary of the Petrified Forest National Park. 


A-Sch. B-12







 

        "New
Issuance Price" is defined in Section 13.4. 


        "Note
Documents" means this Agreement, the Notes, the Investors Rights Agreement, the Royalty Agreement and the Collateral Documents. 



        "Note
Guarantee" means the Guarantee by each Guarantor of the Company's obligations under this Agreement and the Notes, executed pursuant to the provisions
of this Agreement, with such variations as may be required under local law in the event of a Note Guarantee delivered by a non-U.S. Guarantor. 


        "Notes"
is defined in the fifth paragraph of this Agreement. 


        "Notes
Purchaser" is defined in the fifth paragraph of this Agreement, provided that if any such Notes Purchaser transfers all or a portion of such Notes
Purchaser's commitment pursuant to Article XXV or all or a portion of the Notes held by such Notes Purchaser, such transferee shall be deemed a "Notes Purchaser" for all purposes under this
Agreement. 


        "Obligations"
means all advances to, and debts, liabilities, obligations, covenants and duties of, any Obligor arising under any Note Document or otherwise
with respect to any Note, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including principal,
interest and fees, including interest and fees that accrue after the commencement by or against any Obligor or any Affiliate thereof of any proceeding under any debtor-relief laws naming such Person
as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. 


        "Obligor"
means the Company or any Guarantor. 


        "OFAC"
is defined in Section 7.34. 


        "Officer"
means the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer or any Executive Vice President, Senior Vice
President, Vice President, Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary of the specified Person, or equivalent officer in the case of non-corporate or
non-U.S. entities. 


        "Officer's
Certificate" means a certificate signed by an Officer (or two Officers to the extent specifically required by this Agreement) of the specified
Person and delivered to each holder of Notes then outstanding. 


        "Operating
Costs" shall mean all inside the fence cash costs necessary to produce Potash with 60% grade delivered to the mine gate to customers, including:
mining, processing, compaction, product storage and handling, load-out, tailings disposal, environmental and safety and mine site G&A, but excluding any royalty-type payments
and Taxes on mine-generated income. 


        "Options"
means, with respect to any Person, any rights, warrants or options to subscribe for or purchase shares of capital stock or Convertible Securities
of such Person (including, in the case of the Company, shares of Common Stock). 


        "Organizational
Documents" means, with respect to each Obligor, (a) its certificate or articles of incorporation, bylaws, operating agreement,
partnership agreement or similar documents in any applicable jurisdiction; and (b) all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized Capital
Stock or other equity interests. 


        "Original
Agreement" is defined in the second paragraph of this Agreement. 


        "Original
Financial Statements" means the audited consolidated financial statements of the Company and its Subsidiaries for the fiscal year ended
March 31, 2012. 


        "Outside
Date" is defined in Section 10.1(b)(i). 


A-Sch. B-13







 

        "Party"
means each of the Company, the Guarantors and the Purchasers, and "Parties" means all such Persons. 


        "Patriot
Act" is defined in Section 7.35. 


        "Payment
Default" is defined in Article XVI. 


        "PBGC"
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. 


        "Permitted
Junior Debt" means any Indebtedness of the Company issued or incurred after the receipt of the Requisite Shareholder Approval and prior to the
Closing which does not include terms that are inconsistent with or contrary to the terms set forth in Schedule C-2. 


        "Permitted
Preferred Stock" means any preferred stock of the Company issued after the receipt of the Requisite Shareholder Approval and prior to the Closing,
which does not include terms that are inconsistent with or contrary to the terms set forth in Schedule C-1. 


        "Permits"
is defined in Section 7.8. 


        "Permitted
Holders" means the Purchasers and holders and their respective Affiliates. 


        "Person"
means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity. 


        "PGRI
Delaware" means Prospect Global Resources Inc., a Delaware corporation and, as of the date hereof, a wholly owned Subsidiary of the Company. 


        "Plan"
means an "employee benefit plan" (as defined in section 3(3) of ERISA, but excluding any Multiemployer Plan) subject to Title I of ERISA that
is, or within the preceding six (6) years has been, established or maintained, or to which contributions are, or within the preceding six (6) years have been, made or required to be
made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. 


        "Potash"
means potassium salts, including potassium chloride, potassium nitrate, potassium sulfate and sulfate of potash magnesia, or langbeinite. 


        "Preemptive
Rights Cap Amount" means, with respect to a Preemptive Rights Issuance, a number of securities which, if divided by the sum of (i) such
number of securities plus (ii) the number of securities issued in such Preemptive Rights Issuance, would represent a percentage that is equal to the Purchaser
Percentage Interest (as of immediately prior to the Preemptive Rights Issuance). A Royalty Purchaser's "pro rata portion" of the Preemptive Rights Cap Amount applicable to a Preemptive Rights Issuance
shall be determined by the Majority Purchasers, from time to time, with notice to the Company, in a manner intended to maintain the relative percentage interests of ownership of Company securities of
the Purchasers and their ultimate investors. 


        "Preemptive
Rights Issuance" is defined in Section 9.13(a). 


        "Preemptive
Rights Notice" is defined in Section 9.13(b). 


        "Preferred
Share Purchaser" is defined in the fifth paragraph of this Agreement. 


        "Preferred
Stock" means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person. 


        "Principal
Market" means the Nasdaq Stock Exchange, or, if the Nasdaq Stock Exchange is not the principal trading market for the shares of Common Stock, then
on the principal securities exchange or securities market on which the shares of Common Stock are then traded. 


A-Sch. B-14







 

        "Proceedings"
is defined in Section 7.6. 


        "Project
Assets" means all properties, assets or other rights, whether real or personal, tangible or intangible, now owned or hereafter acquired by or for
the benefit of the Company or any of its Subsidiaries, which are used or intended for use in or forming part of the Holbrook Project. 



        "Project
Completion" means (a) until the definition in clause (b) hereto becomes effective, the earliest date on which all of the following
have occurred with respect to the Holbrook Project: (i) all mining equipment has been tested successfully; (ii) the mine is operating at 90% of nameplate capacity; (iii) both
underground and surface ore storage spaces are full; and (iii) the mine has produced more than 200,000 tonnes of Potash or (b) after the entry into the Project Finance Facility, the
definition of "Project Completion" (or analogous term) contained in the Project Finance Facility, provided that such definition is reasonably satisfactory to the Majority Purchasers. 



        "Project
Documents" means instruments relating to the construction, development or operations of the Holbrook Project pursuant to which either (i) the
aggregate amount payable thereunder by the Obligors exceeds (or may reasonably be expected to exceed) U.S. $2,000,000 or (ii) the remaining term thereunder is of more than twelve
(12) months. 


        "Project
Financing Facility" means one or more debt facility with banks or other institutional lenders or governmental lenders providing for loans for the
purpose of financing the Holbrook Project, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced in whole or in part from time to
time, whether by the same or any other lender or group of lenders, in each case on terms and conditions, and pursuant to documentation, acceptable to the holders. 


        "Project
Financing Facility Closing Date" means the first date on which a credit agreement (or similar agreement) governing the Project Financing Facility is
executed and delivered in accordance therewith. 


        "Project
Party" means the Company and each of its Subsidiaries and any affiliate, agent, advisor (excluding legal advisers and other similar professional
advisors not actually engaged in the construction, development, operation or maintenance of the Mine), contractor, consultant, officer, director or other associate of the Company or any of its
Subsidiaries retained, employed or consulted by the Company or any of its Subsidiaries in connection with the consummation or the Holbrook Project or the development or operation of the Mine. 


        "Property"
means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, including Capital Stock in, and other securities of, any other Person. 


        "Proxy
Statement" is defined in Section 9.6(a)(ii). 



        "Purchaser
Conversion Date" is defined in Section 13.3(a). 


        "Purchaser
Conversion Notice" is defined in Section 13.3(a). 


        "Purchaser
Designee" is defined in Section 9.11(a). 


        "Purchaser
Expenses" means all reasonable out-of-pocket expenses reasonably incurred by the Purchasers or on their behalf in
connection with their due diligence of the Company, the negotiation, preparation, execution, delivery and performance of this Agreement and the other documents to be delivered in connection with this
Agreement, and the undertaking, structuring, financing, evaluation and consummation of the Transactions (including, without limitation, in connection with obtaining the consents, approvals,
authorizations of or delivering any notices or filings in connection therewith to, Governmental Authorities necessary in connection with the execution, delivery and performance of this Agreement, the
other documents to be delivered in connection with this Agreement, or the 


A-Sch. B-15







 

Transactions),
including, without limitation, reasonable fees and expenses of legal, accounting, industry, consulting and financial advisors; provided that the Company
shall be an addressee of any report generated by SRK Consulting and McKinsey and shall share ownership of such reports with Purchasers whether or not the Closing occurs. For avoidance of doubt,
in lieu of reimbursement, Purchasers shall be entitled to direct any third-party invoices directly to the Company for payment directly by the Company. 


        "Purchaser
Percentage Interest" means, with respect to any Preemptive Rights Issuance, the percentage of the total number of votes that may be cast in the
election of directors generally of the Company immediately prior to such Preemptive Rights Issuance that is represented by (a) the Notes (calculated as if all of the Notes were issued and
outstanding immediately prior to such Preemptive Rights Issuance), (b) all of the shares of Common Stock previously issued or then issuable under the Apollo Warrants (calculated as if all such
Common Stock were issued and outstanding immediately prior to such Preemptive Rights Issuance), (c) any shares of Common Stock issued to the Notes Purchasers pursuant to Sections 9.8 and
9.12 and (d) any securities with respect to which the Notes Purchasers have elected to purchase pursuant to Section 9.13 in connection with any Preemptive Rights Issuances that occurred
prior to such Preemptive Rights Issuance (calculated as if all such elected securities (and all securities that were issued in such prior Preemptive Rights Issuances) were issued and outstanding
immediately prior to such Preemptive Rights Issuance). 


        "Purchase
Price" is defined in Section 2.1. 


        "Purchaser
Share Delivery Date" is defined in Section 13.3(a). 


        "Purchasers"
is defined in the first paragraph of this Agreement; provided, that following the Closing Date, each holder of a
Note, by its acceptance of a Note, will be deemed a Purchaser and will be entitled to the benefits and subject to the obligations of this Agreement as though it were a party to this Agreement. 


        "Reference
Balance Sheet" is defined in Section 7.18(b). 


        "Reference
Property" is defined in Section 13.15(a). 


        "refinance"
means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue
other Indebtedness, in exchange or replacement for, such Indebtedness. "refinanced" and "refinancing" shall have correlative meanings. 


        "Representatives"
of any Person means the directors, officers, employees, shareholders, partners, agents, advisors, representatives of such Person or any
other persons acting under the direction of any of them or any of their affiliates. 


        "Requisite
Shareholder Approval" is defined in Section 9.5. 


        "Responsible
Officer" means any Senior Financial Officer and any other Officer of the Company with responsibility for the administration of the relevant
portion of this Agreement. 


        "Restricted
Payments" is defined in Section 15.16. 


        "Royalty"
is defined in Section 2.1(c). 


        "Royalty
Agreement" is defined in the eighth paragraph of this Agreement. 


        "Royalty
Purchasers" is defined in the fifth paragraph of this Agreement, provided that any assignee or transferee of any such
Royalty Purchaser pursuant to the terms of the Royalty Agreement shall be deemed a "Royalty Purchaser" for all purposes under this Agreement. 


        "Rule 144A"
means Rule 144A promulgated under the Securities Act. 


        "S&P"
means Standard & Poor's Ratings Group, or any successor rating agency. 


A-Sch. B-16







 

        "SEC"
shall mean the Securities and Exchange Commission of the United States, or any successor thereto. 


        "Second
Lien Intercreditor Agreement" means an agreement between the Collateral Agent, on behalf of the holders, and the agent or other representative for
the lenders under the Cost Overrun Facility, which will provide (1) that the Liens securing the Indebtedness under the Cost Overrun Facility are equally and ratably secured with, but may rank
senior in payment priority to, the Obligations and (2) such other terms as are reasonably satisfactory to the Collateral Agent. 


        "Securities"
is defined in the fifth paragraph of this Agreement. 


        "Securities
Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in
effect. 


        "Senior
Financial Officer" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. 


        "Series A
Warrants" is defined in the fifth paragraph of this Agreement. 



        "Series B
Warrants" is defined in the fifth paragraph of this Agreement. 


        "Share
Delivery Date" is defined in Section 13.3(b). 


        "Shareholders
Meeting" is defined in Section 9.5. 


        "Solvent"
means, when used with respect to any Person, as of any date of determination, that on such date (a) the present fair saleable value of the
present assets of such Person and its Subsidiaries taken as a whole, exceeds the sum of their debts (including contingent liabilities); (b) the present fair salable value of the property of the
such Person and its Subsidiaries, taken as a whole, will be greater than the amount that will be required to pay the probable liability of their debts and other liabilities (including contingent
liabilities), as such debts and other liabilities become absolute and matured; (c) such Person and its Subsidiaries, taken as a whole, will be able to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) such Person and its Subsidiaries, taken as a whole, will not have unreasonably small
capital with which to conduct their business as contemplated on such date. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. 


        "Spin-off"
is defined in Section 13.7. 


        "Springing
Lien Trigger Date" means the earlier of (i) the date on which the principal of and interest on indebtedness outstanding under the Karlsson
Note is paid in full and (ii) the Project Financing Facility Closing Date. 


        "Stockholder
Rights Plan" is defined in Section 13.11(f). 


        "Subsidiary"
means, with respect to any specified Person: 



        (nn) any
corporation, association or other business entity of which more than 50.0% of the total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency and after giving effect to any voting agreement or shareholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or
trustees of the corporation, association or
other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and 



A-Sch. B-17







 

        (oo) any
partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only
general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof); and 


        (pp) any
other Person that is consolidated in the consolidated financial statements of the specified Person in accordance with GAAP. 




        "substitute
transaction" is defined in Section 9.7(x). 


        "Support
Agreements" is defined in the seventh paragraph of this Agreement. 


        "Supplemental
Payment" is defined in that certain Supplemental Payment Agreement, dated August 1, 2012, by and among the Company, AWP and Karlsson. 


        "Supplemental
Payment Gross Up" is defined in Section 9.18. 


        "Tax"
or "Taxes" means all taxes, including income tax, surtax, remittance tax, presumptive tax, net worth tax, special
contribution, production tax, pipeline transportation tax, value added tax, withholding tax, gross receipts tax, windfall profits tax, profits tax, severance tax, personal property tax, real property
tax, sales tax, service tax, transfer tax, use tax, excise tax, premium tax, customs duties, stamp tax, motor vehicle tax, entertainment tax, insurance tax, capital stock tax, franchise tax,
occupation tax, payroll tax, employment tax, social security, unemployment tax, disability tax, alternative or add-on minimum tax, estimated tax, and any other tax, together with any
interest, fine or penalty thereon, or addition thereto. 


        "Tax
Proceeding" means any Tax audit, contest, suit, litigation, defense, investigation, claim or other proceeding with or against any Governmental
Authority. 


        "Tax
Structure" is defined in Section 26.11. 


        "Tax
Treatment" is defined in Section 26.11. 


        "tonne"
means a metric tonne. 


        "Trading
Day" means any day on which the shares of Common Stock are traded on the Principal Market, provided that "Trading Day"
shall not include any day on which the shares of Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the shares of Common Stock are suspended
from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then
during the hour ending at 4:00 p.m., New York City Time). 


        "Threshold"
is defined in Section 11.4(d). 


        "Transaction
Fee" is defined in Section 2.2. 



        "Transactions"
is defined in the sixth paragraph of this Agreement. 


        "Transfer
Agent" means the Company's transfer agent for its Common Stock from time to time. 


        "UK
Bribery Act" is defined in Section 7.7(b). 


        "Valuation
Period" is defined in Section 13.7. 


        "Valuation
Event" is defined in Section 13.4(D). 


        "Voting
Stock" of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person. 


        "VWAP"
is defined in Section 9.12(b). 


        "Weighted
Average Consideration" is defined in Section 13.15(b)(ii). 


A-Sch. B-18









 








































 
 

  SCHEDULE C-1    
    
    TERMS OF PERMITTED PREFERRED STOCK *    
    


Sch. C-1-1









 








































 
 

  SCHEDULE C-2    
    
    TERMS OF PERMITTED JUNIOR DEBT*    
    


Sch. C-2-1









 








































 
 

  SCHEDULE C-3    
    
    TERMS OF NOTES IN KARLSSON DEFAULT    
    

 






			
	 Interest Rate
	 	Then-applicable interest rate on the Karlsson Note + 500 bps.
	 Interest Type
	 	 Non-cash; payment-in-kind only.

	 Maturity
	 	 One year.

	 Ranking
	 	 Junior to Project Finance Facility.

	 Mandatory prepayments
	 	 Mandatorily prepayable for any subsequent borrowings from the Project Finance Facility.

	 Optional repayment/prepayment penalty
	 	 Repayable at any time with no penalty.

	 Covenants
	 	 None.

	 Default interest
	 	 2% above otherwise applicable rate.

	 Events of Default
	 	 Non-payment of amounts due, and cross-default to the Securities Purchase Agreement.





 

 Sch. C-3-1









 



































 



 
 

  EXHIBIT A    
    


 
    [Form of Note]    
    


 
    Prospect Global Resources, Inc.    
    


10%
Convertible Springing Second-Lien Notes due 2020 

 






			
	No. [            ]	 	 [Date]
	$[            ]	 	 PPN[            ]




 

         FOR
VALUE RECEIVED, the undersigned, Prospect Global Resources Inc. (herein called the "Company"), a corporation organized and existing under the laws
of the State of Nevada, hereby promises to pay to [                        ], or its registered assigns ("Holder"), the
initial principal sum of
[                        ] DOLLARS (or so much thereof as shall not have been prepaid) on
the Maturity Date (as defined in the Securities
Purchase Agreement referred to below) , with interest (computed on the basis of a three hundred and sixty (360)-day year of twelve, thirty (30)-day months and actual days
elapsed) on the unpaid balance hereof at the rate of 10.0% per annum from the date hereof, payable in the form set forth below semiannually, on the
[    •    ]th day of [    •    ] and
[    •    ] in each year (each an "Interest Payment Date"), commencing with the
[    •    ] or [    •    ] next succeeding the date hereof, until the principal hereof
shall have become due and payable. The Company shall pay interest on overdue principal and on overdue interest (to the full extent permitted by law) at the rate borne by the Notes. 


        Payments
of principal on this Note are to be made in lawful money of the United States of America by wire transfer to the Holder. 


        A
portion of the interest payable on this note corresponding to 4.0% per annum shall be made in lawful money of the United States of America by wire transfer to the Holder on each
Interest Payment Date. A portion of the interest payable on this note corresponding to 6.0% per annum (the "PIK Portion") shall be made by increasing the principal amount
of this Note, or if the Holder shall so elect not fewer than five (5) Business Days prior to any applicable Interest Payment Date, by issuing additional Notes, in each case on each Interest
Payment Date in an amount equal to the PIK Portion. Unless the election described in the immediately preceding sentence shall have been made, the principal amount of this Note shall be automatically
increased on the applicable Interest Payment Date,
and this Note shall thereafter evidence such increased principal amount which shall, from and after the applicable Interest Payment Date, accrue interest as set forth herein. To the extent the Holder
shall have made such election, Company shall execute and deliver to the Holder on the applicable Interest Payment Date a new Note or Notes with a face amount equal to the PIK Portion then payable. 


        This
Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Securities Purchase Agreement, dated as of
November [    •    ], 2012 (as from time to time amended, the "Securities Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have made the representations set
forth in Section 8.5 of the Securities Purchase Agreement and agreed to the confidentiality provisions set forth in Article XXIV of the Securities Purchase Agreement. Unless otherwise
indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Securities Purchase Agreement. To the extent that any provision of any Note conflicts
with the express provisions of the Securities Purchase Agreement, the provisions of the Securities Purchase Agreement shall govern and be controlling. 


        This
Note is a registered Note and, as provided in the Securities Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly 


A-A-1







 

authorized
in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may
treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company will not be affected by any notice to the
contrary. 


        The
Holder shall have the voting rights set forth in Article XII of the Securities Purchase Agreement. 



        The
Holder shall have the right to convert this Note into Common Stock of the Company in accordance with Article XIII of the Securities Purchase Agreement. 


        This
Note is not subject to optional prepayment or redemption by the Company; provided that this Note may be converted into Common Stock of the Company at
the election of the Company to the extent set forth in Section 13.1(b) of the Securities Purchase Agreement. 


        If
an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price and with the effect provided
in the Securities Purchase Agreement. 


        Upon
the occurrence of a Change of Control and subject to further limitations contained in the Securities Purchase Agreement, the holder of this Note may require the Company to redeem
this Note in the manner, at the price and with the effect provided in the Securities Purchase Agreement. 


        This
Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding
choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state. 

 






							
	 	 	Prospect Global Resources Inc.
	

 	
 	
By	
 	

 
	 	 	 	 	





  [Title]




 

 A-A-2









 



































 



 
 

  EXHIBIT B-1    
    
    PROSPECT GLOBAL RESOURCES INC.
  CONVERSION NOTICE    
    


Reference
is made to the 10% Convertible Springing Second-Lien Note (the "Note") issued to the undersigned by Prospect Global Resources Inc., a Nevada
corporation (the "Company"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the
Note indicated below into shares of Common Stock par value $0.001 per share (the "Common Stock") of the Company, as of the date specified below. 

 






			
	Date of Conversion:	 	 







 




 


 






			
	Aggregate Conversion Amount to be converted:	 	 







 




 

 Please
confirm the following information: 

 






			
	Conversion Price:	 	 







 




 


 






			
	Number of shares of Common Stock to be issued:	 	 







 




 

 Please
issue the Common Stock into which the Note is being converted in the following name and to the following address: 

 






			
	Issue to:	 	 







 
	 	 	  







 
	 	 	  







 




 


 






			
	Facsimile Number:	 	 







 




 


 






			
	Authorization:	 	 







 




 


 






			
	By:	 	 







 




 


 






			
	Title:	 	 







 




 


 






			
	Dated:	 	 







 




 


 






			
	Account Number:	 	 







 




 


 






			
	(if electronic book entry transfer)






 


 






			
	Transaction Code Number:	 	 







 




 


 






			
	(if electronic book-entry transfer)






 

 A-B-1-1







 
 
 

  ACKNOWLEDGMENT    
    



        The Company hereby acknowledges this Conversion Notice and hereby directs [transfer
agent] to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated
[            ] from the Company and acknowledged and agreed to by [transfer agent]. 

 






					
	 	 	 Prospect Global Resources Inc.
	

 	
 	
  By:	
 	
  






  Name:

Title:






 

 A-B-1-2









 



































 



 
 

  EXHIBIT B-2    
    
    PROSPECT GLOBAL RESOURCES INC.
  CONVERSION NOTICE    
    


Reference
is made to the 10% Convertible Springing Second-Lien Note (the "Note") issued to the holder named below by Prospect Global Resources Inc., a
Nevada corporation (the "Company"). In accordance with and pursuant to the Note, the Company hereby elects to require the conversion of the Conversion Amount (as defined
in the Note) of the Note indicated below into shares of Common Stock par value $0.001 per share (the "Common Stock") of the Company, as of the date specified below. 

 






			
	Holder:	 	 







 




 


 






			
	Date of Conversion:	 	 







 




 


 






			
	Aggregate Conversion Amount to be converted:	 	 







 




 

 Please
confirm the following information: 

 






			
	Conversion Price:	 	 







 




 


 






			
	Number of shares of Common Stock to be issued:	 	 







 




 

 Please
indicate and return to the Company within one (1) Business Day of the receipt of this notice the information below: 

 






			
	Issue to:	 	 







 
	 	 	  







 
	 	 	  







 




 


 






			
	Facsimile Number:	 	 







 




 


 






			
	Authorization:	 	 







 




 


 






			
	By:	 	 







 




 


 






			
	Title:	 	 







 




 


 






			
	Dated:	 	 







 




 


 






			
	Account Number:	 	 







 
	(if electronic book entry transfer)






 


 






			
	Transaction Code Number:	 	 







 
	(if electronic book-entry transfer)






 

 A-B-2-1







 
 
 

  ACKNOWLEDGMENT    
    


        The undersigned hereby acknowledges this Conversion Notice and hereby agrees that the [transfer
agent] shall issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated
[                        ] from the Company and acknowledged and agreed to by [transfer agent]
. 

 






					
	

 	
 	
[Holder]
	

 	
 	
 By:	
 	
    
	 	 	 	 	





  Name:

Title:    




 

 A-B-2-2









 



































 



 
 

  EXHIBIT C-1    
    
    FORM OF CERTIFICATE OF DESIGNATION    
    


See attached.  


A-C-1







 
  
 

      PROSPECT GLOBAL RESOURCES INC.
  Attachment "A" to Certificate of Designation    
    
    CERTIFICATE OF DESIGNATION
  of
  SERIES A PREFERRED STOCK
  of
  PROSPECT GLOBAL
RESOURCES INC.
  (Pursuant to the Nevada Revised Statutes 78.1955)    
    



        Prospect Global Resources Inc., a Nevada corporation (the "Corporation"), does by this certificate
certify that, pursuant to the authority contained in its articles of incorporation (as amended from time to time, the "Articles of Incorporation") and the provisions of
Nevada Revised Statutes ("NRS") 78.1955, the Corporation's Board of Directors (the "Board") has duly adopted the following resolution creating
a series of Preferred Stock designated as "Series A Preferred Stock": 



        RESOLVED,
that the Corporation hereby designate and create a series of authorized Preferred Stock of the Corporation, designated as "Series A Preferred Stock", as follows: 



        Of
the 100,000,000 shares of Preferred Stock, $0.001 par value per share, authorized to be issued by the Corporation pursuant to its Articles of Incorporation, 100 shares of such
Preferred Stock are hereby designated as "Series A Preferred Stock." The voting powers, designations, preferences, limitations, restrictions and relative rights of the Series A Preferred
Stock are as set forth below: 




 
 

ARTICLE I
  Number of Shares    





        The
designation of this series shall be Series A Preferred Stock (the "Series A Stock"). The number of authorized shares of the Series A
Preferred Stock shall be 100. 




 
 

ARTICLE II
  Rank    





        The
Series A Preferred Stock shall rank pari passu to the Corporation's common stock, $0.001 par value per share (the "Common Stock") as to
distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 




 
 

ARTICLE III
  Dividends    





        Holders
of the Series A Preferred Stock shall not be entitled to receive any dividends with respect to the Series A Preferred Stock. 




 
 

ARTICLE IV
  Liquidation Preference    





        Holders
of the Series A Preferred Stock shall not be entitled to any liquidation preference with respect to the Series A Preferred Stock. 




 
 

ARTICLE V
  Voting and Related Rights    





        A.    The
holders of a majority of the Series A Preferred Stock (the "Majority Holders") shall have the right to elect the following number
of directors at any meeting of stockholders 




A-C-2







 


of
the Corporation (or by written consent) at which directors are to be elected, designated or appointed: (i) if the Investor Percentage Interest (as defined in the Investors Rights Agreement,
dated November 29, 2012 by and among the Corporation and the investors named therein (the "Investor Rights Agreement")) at such time equals or exceeds
twenty-two and four tenths percent (22.4%) (the "Initial Threshold"), four directors (subject to upwards adjustment pursuant to Paragraph B below); and
(ii) if the Investor Percentage Interest at such time is less than the Initial Threshold, a number of directors equal to the Investor Percentage Interest multiplied
by the total number of directors on the Board (inclusive of the directors elected by the Majority Holders pursuant to this Article V),
provided that (x) if the application of clause (ii) results in a fractional number of Board members of greater than one, the number of directors that the
Majority Holders shall be entitled to elect shall be (A) if the Investor Percentage Interest at such time equals or exceeds twenty percent (20%), rounded up to the nearest whole number and
(B) if the Investor Percentage Interest at such time is below twenty percent (20%), rounded up or down to the nearest whole number and (y) if the application of clause (ii)
results in a fractional number of Board members of less than one, the Majority Holders shall not have the right to elect any member of the Board. 


        B.    From
and after the Closing (as defined below), without the written consent of the Majority Holders, the Corporation shall not change the number of directors on the Board
from nine; provided that without the written consent of the Majority Holders, the Corporation may increase the size of the Board by one member solely in connection with
the grant of a director designation or nomination right to new investors in connection with capital- raising transactions occurring after the Closing (as defined in the Securities Purchase Agreement
dated November 29, 2012 by and among the Corporation, certain guarantors named therein and the purchasers named therein (as amended and restated on December 21, 2012, and from time to
time thereafter, the "Purchase Agreement")); provided, further, that, (i) the Corporation shall be able to
exercise such right only once and (ii) in the event of such increase in the number of directors, the Majority Holders shall thereafter be entitled to elect an
additional director to the Board (in addition to the number of directors they are entitled to elect pursuant to Paragraph A above). If, pursuant to the terms of the Purchase Agreement, the
Corporation prior to the Closing increased the size of its Board by one member in connection with the grant of a director designation or nomination right to new investors in connection with
capital-raising transactions occurring prior to the Closing, then (i) the Corporation shall not be entitled to exercise the right set forth in the prior sentence and (ii) references to
"nine" and "four" in Paragraph A above and the first sentence of this Paragraph B shall instead be "eleven" and "five", respectively. 


        C.    In
the event of the death, disability, resignation or removal of a director elected, designated or appointed by the Majority Holders (other than pursuant to
Section 1.5 of the Investors Rights Agreement), the Majority Holders may elect or appoint a replacement director to fill the resulting vacancy; provided that if a
director elected by the Majority Holders is removed for cause, the replacement director will not be the same person who was removed. Other than pursuant to Section 1.5 of the Investors Rights
Agreement or for cause, a director elected, designated or appointed by the Majority Holders may not be removed without the prior written consent of the Majority Holders. 


        D.    The
Corporation will at all times provide the directors elected by the Majority Holders with the same rights to indemnification that it provides to the other members of
the Board. The directors elected by the Majority Holders shall each receive director fees and rights to expense reimbursement that are no less favorable to them than the fees and reimbursement
provided to any other non-management director (in their capacity as directors). 




A-C-3







 


        E.    Except
as otherwise provided in this Certificate of Designation for Series A Preferred Stock (the "Certificate of Designation"), the
holders of shares of Series A Preferred Stock and the holders of shares of Common Stock (together with the holders of Notes (as defined in the Purchase Agreement)) shall vote together as one
class on all other matters submitted to a vote of the stockholders of the Corporation. 


        F.     Except
as otherwise provided herein or to the extent they may vote as a separate class under the NRS, the holders of shares of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required for taking any corporate action, except to the extent they are entitled to vote with holders of shares of Common Stock as set forth
herein. 




 
 

ARTICLE VI
  Restrictions on Transfer    





        The
outstanding shares of Series A Preferred Stock may only be transferred (a) to an Affiliate (as defined in the Purchase Agreement) of the initial holder of the
Series A Preferred Stock, or (b) with the consent of the Board. 




 
 

ARTICLE VII
  Conversion    





        Each
outstanding share of Series A Preferred Stock shall automatically convert to one share of Common Stock upon the earlier to occur of (a) a transfer of such share of
Series A Preferred Stock in violation of Article VI above and (b) the first business day following the first day after the Closing on which the Investor Percentage Interest is
equal to 0.0%. 




 
 

ARTICLE VIII
  Redemption    





        The
shares of Series A Preferred Stock shall not be redeemable. 




 
 

ARTICLE IX
  Reacquired Shares    





        Any
shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation be restored to the status of authorized and unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to
be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein and in the Articles of Incorporation. 




 
 

ARTICLE X
  Amendment of Certificate of Designation    





        This
Certificate of Designation may only be amended with the written consent of the Majority Holders. Except as otherwise provided in the Articles of Incorporation, no consent by the
holders of shares of any other class or series of the Corporation's capital stock shall be required to amend this Certificate of Designation. 




A-C-4







 

        IN
WITNESS WHEREOF, this Certificate of Designation of Series A Preferred Stock is executed on behalf of the Corporation as of
                                       ,
2013. 

 






					
	 
	 	PROSPECT GLOBAL RESOURCES INC.
	 
	 	 By:
	 	  








 
	 
	 	Name:
	 
	 	Title:




 

 A-C-5









 








































 
 

  EXHIBIT D
  
    MINIMUM OFFTAKE ARRANGEMENTS    
    


 
    Guidelines for the Minimum Off-Take Arrangements    
    

 









  



							
	 Best Efforts Obligation
	 	As described in the Securities Purchase Agreement to which this Exhibit is attached, Prospect will use best efforts to enter into definitive agreements ("Customer Agreements") with respect to the Minimum Off-Take
Arrangements no later than the Closing, on the terms in all material respects as set forth below and subject to modifications required by the providers of the Project Finance Facility.
	 Customers
	 	  Prospect will enter into Customer Agreements with 2 to 4 customers; provided, however, that no such customer shall be
committed to purchase more than 50% of the annual volume (as set forth below under "Minimum Volumes") for any year unless such customer's commitment for such year does not exceed 250,000 tonnes.

	 Initial Delivery Date
	 	  The Customer Agreements shall provide that the anticipated initial delivery date of potash to the customers shall be first
calendar month following commencement of commercial levels of production and/or Project Completion, whatever comes first; provided, however, that if Prospect cannot meet the anticipated initial delivery date due to a delay in construction, mining
operations, permitting or force majeure, the parties will agree to negotiate in good faith to adjust delivery dates and obligations; provided further, that if Prospect is unable to commence deliveries by June 30, 2017 (structured, for example,
with a base 18 month grace period and one 6 month extension), the customer has the right to terminate the contract.

	 Term
	 	  The Customer Agreements shall have a minimum term (the "Term") of three (3) years; provided that if the initial
delivery date is not on a January 1st then the Term shall be for three years and a fraction of a year so that the term ends on a December 31st.

	 Pricing Terms
	 	  The price at the signing of each sales agreement shall be calculated as follows:

	 
	 	
   (a)    for
granular potash, the average of weekly Green Markets indices of Saskatchewan, Carlsbad, Midwest and Vancouver, less a discount of $5 a tonne; and

	 
	 	
   (b)    for
standard potash, the average of weekly Green Markets indices of Saskatchewan and Vancouver, less a discount of $5 a tonne.

	 
	 	  Prospect will allow pricing terms for more than one quarter and up to four quarters; provided that the Customer Agreements in the
aggregate shall have a mix of terms and durations intended to provide a portfolio of risk across the portfolio.





 

 D-1







 
 









  



							
	 
	 	  As a component of the off-take arrangements, Prospect will use best efforts to provide "collar" pricing designed to provide greater certainty to
both parties with respect to budgeting and planning over a range of years. Under collar pricing, Prospect and the buyer will agree on the "floor" or minimum price to be paid by the buyer even if the indices price (above) falls below the floor price
and a "ceiling" or maximum price to be paid by the buyer even if the indices price rises above the ceiling price. The floor and ceiling prices will be symmetrical (i.e., equidistant from the initial price) and Prospect shall be within a
reasonable range (for illustrative purposes, the parties believe that a reasonable floor/ceiling range around the current spot as of the date hereof would be in the range of ±10 to 20%).

	 Payment Terms
	 	  The payment terms in the Customer Agreements will be consistent with customary payments terms for potash off-take agreements,
provided that in no event shall the payment terms allow for a payment period of longer than 30 days from delivery.

	 Minimum Volumes
	 	  The customers under the Customer Agreements will be required to purchase in the aggregate, in each calendar year during the Term,
at least the following quantities on a take or pay basis:

	 
	 	  Years 1-3:
	 	  1,000,000 tonnes

	 
	 	Year 4:	 	 750,000 tonnes
	 
	 	Year 5:	 	 750,000 tonnes
	 
	 	Year 6:	 	 500,000 tonnes
	 
	 	Year 7:	 	 250,000 tonnes
	 
	 	  For the avoidance of doubt, the volumes set forth above are the minimum volumes that will be required. After Prospect has
commenced production, its Board of Directors may determine whether to seek additional off-take volumes.

	 Minimum Specifications
	 	  The Customer Agreements will include customary minimum specifications for shipments. The Customer Agreements will also include
terms describing the consequences for the failure to meet the minimum specifications, which consequences shall be no less favorable to Prospect than the following consequences:

	 
	 	
   •    If
during the Ramp Up Period (defined below), shipments fail to meet minimum specifications, the parties will agree to customary and appropriate price adjustments to reflect the lower quality. The "Ramp Up Period" shall have the same definition
as that used in the Senior Project Finance Bank Debt.

	 
	 	
   •    After
the Ramp Up Period, if two of three consecutive deliveries fail to meet the minimum specifications, the customer can suspend ordered but not yet delivered deliveries. The customer will not be required to take a new delivery until Prospect
demonstrates (to the customer's reasonable satisfaction) that it can meet the minimum specifications. If Prospect cannot demonstrate that it can meet the minimum specifications within 180 days, the customer will have the right to terminate the
contract.





 

 D-2







 
 









  



							
	 Termination
	 	  In addition to a termination pursuant to "Minimum Specifications" above, the only other termination provisions in the Customer Agreements will be
(a) termination by either party following a continuous, 12-month period of force majeure, (b) for a material breach by the other party (which is uncured within 60 days after notification) or (c) upon a bankruptcy or
insolvency-related event of the other party.

	 Financial Guarantees
	 	  Customers will be required to provide a guarantee or standby L/C for the benefit of Prospect that is reasonably satisfactory to
Prospect's lenders. The L/C will be for one year's forecasted purchases. Once this is in place, orders and shipments can begin. Customers will be required to pay for each shipment using irrevocable letters of credit payable at sight against bills of
lading. Customers will have a minimum credit rating of AA as defined by S&P or Moody's and/or LCs of a similar credit quality.

	 Assignments
	 	  No assignment by the customer without prior written consent of Prospect other than to a bank, financial institution, security
trustee or security agent for a bond or other financing.

	 Exclusivity
	 	  The Customer Agreements will be on a non-exclusive basis, and Prospect shall be permitted to sell to any other party.

	 Governing Law
	 	  Delaware.





 

 D-3









 








































 EXHIBIT E-1  


 FORM OF SERIES A WARRANT  


See attached.  


A-E-1-1







 

        THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.


SERIES
A WARRANT TO PURCHASE

COMMON STOCK OF PROSPECT GLOBAL RESOURCES INC.



                        , 2012 


PROSPECT
GLOBAL RESOURCES INC., a Nevada corporation (the "Company"), HEREBY CERTIFIES THAT, for value received,
                        , or registered
assigns, is entitled to purchase, in whole or part and from time to time, up to [25,925,926](1) fully paid and non-assessable shares of Common Stock at a purchase
price of $[2.70](2) per share (the "Warrant Price"), in each case subject to adjustment pursuant to Section 6. As used
herein, the term "Common Stock" means the Company's Common Stock, par value $0.001 per share, as constituted on the date of original issue of this
Warrant, and any shares of capital stock or other property into which such shares of Common Stock may thereafter be changed or that may be issued in respect of, in exchange for, or in substitution of
such Common Stock. As used herein, the term "Warrants" means this Warrant and all warrants delivered in substitution or exchange for such warrants. The
term "Warrant" means one of the Warrants. This Warrant is being issued in connection with the Securities Purchase Agreement dated as of
November             , 2012 by and among the Company, certain guarantors named therein and the purchasers named therein for the purchase of $100,000,000 in 10% Convertible Springing
Second-Lien Notes Due 2020 and other securities and interests of the Company (as amended from time to time, the "Securities Purchase
Agreement"). Capitalized terms not otherwise defined herein have the meanings set forth in the Securities Purchase Agreement.  



	1.
	Term
of Warrants; Exercise of Warrants. 



        (a)   Subject
to the terms hereof, the holder of this Warrant shall have the right, at any time and from time to time, from and after the date hereof until 11:59 PM New York
City Time on the date that is one hundred and eighty (180) days after the Closing Date (as defined in the Securities Purchase Agreement), to purchase from the Company up to the number of shares
of Common Stock which such holder may at the time be entitled to purchase pursuant to this Warrant, upon surrender to the Company, at its address for receipt of notices pursuant to Section 9
hereof, of this Warrant, together with the Notice of Exercise form at the end 




   

   


 

         (1)    Note to Draft:    Number of shares exercisable represents the aggregate number exercisable under all
Series A Warrants; multiple warrants may be issued to multiple Purchasers. If any of the events described in Section 6 of this Warrant occur between the date of the Original Securities
Purchase Agreement and the date this Warrant is issued, the number of shares of Common Stock that this Warrant is exercisable for shall be adjusted as if Section 6 were in effect as of the date
of the Original Securities Purchase Agreement—and such adjusted number shall replace the number listed above in brackets in the definitive Warrant that is issued. 


        (2)    Note to Draft:    If any of the events described in Section 6 of this Warrant occur between the date of
the Original Securities Purchase Agreement and the date this Warrant is issued, the Warrant Price shall be adjusted as if Section 6 were in effect as of the date of the Original Securities
Purchase Agreement—and such adjusted price shall replace the price listed above in brackets in the definitive Warrant that is issued. 


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hereof
duly completed and signed, accompanied by payment to the Company of the Warrant Price for the number of shares with respect to which this Warrant is being exercised. 


        (b)   Payment
of the aggregate Warrant Price shall be made by wire transfer to an account specified in writing (including by email) by the Company. 



        (c)   Upon
such surrender of this Warrant and payment of such Warrant Price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the holder of this Warrant and in such name or names as such holder may designate, a certificate or certificates for the number of full shares of Common Stock so purchased.
Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of such shares of Common Stock as of the
close of business on the date of the surrender of this Warrant and, if applicable, payment of the Warrant Price as aforesaid, notwithstanding that the certificates representing such shares shall not
actually have been delivered or that the stock transfer books of the Company shall then be closed. The Company hereby represents and warrants that any Common Stock issued upon the exercise of this
Warrant will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the holder of the Warrant or
taxes in respect of any transfer occurring contemporaneously therewith). The Company will at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock, as the case may be, then issuable upon exercise of this Warrant. The Company will
(i) procure, at its sole expense, the listing of the Common Stock and other securities issuable upon exercise of this Warrant, subject to issuance or notice of issuance on all stock exchanges
on which the Common Stock are then listed or traded and (ii) maintain the listing of such Common Stock after issuance. The Company will ensure that the Common Stock may be issued without
violation of any applicable law or regulation or of any requirement of any securities exchange on which the Common Stock are listed or traded. 


        (d)   This
Warrant shall be exercisable, at the election of the holder of this Warrant, either in full or from time to time in part. In the event that this Warrant is
exercised with respect to less than the aggregate number of shares of Common Stock this Warrant then entitles such holder to purchase, the Company shall deliver to or upon the order of such holder
hereof a new Warrant evidencing the rights of such holder to purchase the unpurchased shares of Common Stock then called for by this Warrant, which new Warrant shall in all other respects be identical
with this Warrant. In the alternative, at the request of the holder upon any partial exercise of this Warrant, appropriate notation may be made on this Warrant and the same shall be returned to such
holder. 





        2.     Payment
of Taxes. The Company shall pay all documentary stamp taxes, transfer tax or other incidental expenses if any, attributable to the initial issuance of the shares
of Common Stock upon exercise of this Warrant, provided that the Company shall not be required to pay any tax or taxes which may be payable with respect to any secondary transfer of a Warrant or the
shares of Common Stock issued upon exercise of any Warrant. 



        3.     Transferability.
The Warrants are not transferable without the Company's written consent; provided, that the Warrants may be transferred in whole or in part without the
Company's written consent to any Affiliate (as defined in the Securities Purchase Agreement) of the holder of this Warrant. 


        4.     Exchange
of Warrant Certificate. Any Warrant certificate may be exchanged for another certificate or certificates entitling the holder thereof to purchase a like
aggregate number of shares of Common Stock as this certificate then entitles such holder to purchase. Any holder of a Warrant 


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desiring
to exchange such Warrant certificate shall make such request in writing delivered to the Company, and shall surrender, properly endorsed, the certificate evidencing the Warrant to be so
exchanged. Thereupon, the Company shall execute and deliver one or more new Warrant certificates as so requested. 


        5.     Mutilated
or Missing Warrant. In case any Warrant certificate shall be mutilated, lost, stolen or destroyed, the Company shall, at the request of the holder thereof,
issue and deliver in exchange and substitution for and upon cancellation of the mutilated certificate or certificates, or in lieu of and substitution for the certificate or certificates lost, stolen
or destroyed, a new Warrant certificate or certificates of like tenor and representing an equivalent right or interest, but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant and indemnity, if requested, satisfactory to the Company. 


        6.     Adjustment
of Warrant Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time upon the happening of certain events, as follows: 




        (a)   (i)
If and whenever on or after the date hereof the Company issues or sells, or in accordance with Section 13.4 of the Securities Purchase Agreement is deemed to
have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the
"New Issuance Price") less than a price equal to the Warrant Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Warrant Price then in effect is referred to as the "Applicable Price") (the foregoing a "Dilutive
Issuance"), other than an issuance or sale or deemed issuance or sale covered by Section 13.5 of the Securities Purchase Agreement, then the Warrant Price then in effect
shall be reduced to a price determined in accordance with the following formula: 




 






							
	 	 	R1 = R ×	 	OS + A






  OS + B	 	 




 

         Where:


 






					
	 	 	R1 =	 	the Warrant Price in effect immediately after such Dilutive Issuance;
	

 	
 	
R =	
 	
the Warrant Price in effect immediately prior to such Dilutive Issuance;
	

 	
 	
OS =	
 	
the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue (excluding the Apollo Warrants) or upon conversion or exchange of Convertible Securities (excluding the Notes) outstanding immediately prior to such issue (to the extent such Options or Convertible Securities have an
exercise or conversion price below R);
	

 	
 	
A =	
 	
the number of shares of Common Stock that would have been issued (or be deemed to have been issued) if such Dilutive Issuance had been issued at a price per share equal to R (determined by dividing the aggregate
consideration received by the Company in respect of such issue by R); and
	

 	
 	
B =	
 	
the number of shares of Common Stock issued (or deemed to have been issued) in such Dilutive Issuance.




 

 For
purposes of this Section 6(a)(i), clauses (A) through (D) of Section 13.4 of the Securities Purchase Agreement shall apply to the adjustments contemplated in this
Section 6(a)(i), mutandis mutatis. 


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(ii)        In
the event of any such Dilutive Issuance, the number of shares of Common Stock issuable upon the exercise of this Warrant shall be increased to the number obtained by dividing
(x) the product of (1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to such Dilutive Issuance, and (2) the Warrant Price in
effect immediately prior to such Dilutive Issuance, by (y) the new Warrant Price determined in accordance with Section 6(a)(i). 




        (b)   With
respect to any event contemplated in Sections 13.5, 13.6, 13.7, or 13.8 of the Securities Purchase Agreement, the adjustments contemplated by such sections
shall be applied to the Warrant Price as if all references to Conversion Price in such sections were references to Warrant Price and all reference to conversion of Notes in such sections were
references to exercise of the Warrant. The number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the number obtained by dividing (x) the product of
(1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to the event giving rise to such adjustment, and (2) the
Warrant Price in effect immediately prior to the event giving rise to such adjustment, by (y) the new Warrant Price determined in accordance with this Section 6(b). 


        (c)   With
respect to any event contemplated in Section 13.14 of the Securities Purchase Agreement, the Warrant shall be exercisable for the same type and amount of
shares of stock, other securities or other property or assets (including cash or any combination thereof) that the holder of this Warrant would have owned or been entitled to receive upon such Merger
Event had such holder exercised this Warrant immediately prior to such Merger Event. In determining the kind and amount of shares of stock, other securities or other property or assets (including cash
or any combination thereof) receivable upon consummation of such Merger Event, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation
of such Merger Event, the holder of the Warrant shall have the right to make a similar election upon exercise of this Warrant with respect to the number of shares of stock, other securities or other
property or assets (including cash or any combination thereof) which the holder of this Warrant will receive upon exercise of this Warrant. 



        (d)   Sections 13.10,
13.11, 13.12, 13.13, 13.15, 13.16 and 13.17 of the Securities Purchase Agreement shall apply to the adjustments contemplated in this
Section 6, mutandis mutatis. 





        7.     Fractional
Interests. The Company shall not be required to issue fractional shares of Common Stock on the exercise of any Warrant. If any fraction of a share would,
except for the provisions of this Section 7, be issuable on the exercise of this Warrant (or specified portions thereof), the Company shall issue a full share of Common Stock in lieu of such
fractional share. 


        8.     No
Rights as Stockholder; Notices. Nothing contained in this Warrant shall be construed as conferring upon the holder or its transferees any rights as a stockholder of
the Company, including the right to vote, receive dividends, consent or receive notices as a stockholder with respect to any meeting of stockholders for the election of directors of the Company or any
other matter. The Company will at no time close its transfer books against transfer of this Warrant in any manner which interferes with the timely exercise of this Warrant. 


        9.     Notices.
All notices and communications provided for hereunder, unless otherwise specified, shall be in writing and shall be deemed delivered (a) on a Business Day
if sent by telecopy during the Business Day or on the next Business Day if sent after a Business Day has ended or (b) the next 


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Business
Day after delivery to a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: 





          (i)  if
to any holder of Warrants, at the address specified for such communications in the Securities Purchase Agreement, or at such other address as holder of Warrants (or
its transferee) shall have specified to the Company in writing, and 


         (ii)  if
to the Company, to the Company at the address set forth below or at such other address as the Company shall have specified to the holder of the Warrant in writing: 


Prospect
Global Resources Inc.

1450 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer 






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





Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch 





        10.   Successors.
This Warrant shall bind and inure to the benefit of the Company and its permitted successors and assigns hereunder and, in addition, shall inure to the
benefit of and be enforceable by all holders from time to time of the Warrants. 



        11.   Applicable
Law. This Warrant shall be enforced in accordance with, and the rights of the Company and the holder of this Warrant shall be governed by, the laws of the
State of New York (without regard to conflicts of laws principles thereof). 


        12.   Benefits
of this Agreement. Nothing in this Warrant shall be construed to give to any person or corporation other than the Company and the holder of this Warrant any
legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Company and the holder hereof. 



        13.   Amendment.
This Warrant may be amended by the Company in any respect at any time or from time to time upon the written consent of the holder of this Warrant. 




        IN
WITNESS WHEREOF, the Company has executed this Warrant. 

 






					
	 	 	PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
By:	
 	







  Patrick L. Avery,

Chief Executive Officer




 

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  NOTICE OF EXERCISE    
    


        (1)   The
undersigned hereby elects to purchase                        shares of Common Stock of PROSPECT GLOBAL RESOURCES INC.,
pursuant to the provisions of Section 1
of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full. 


        (2)   Please
issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

 






			
	

 	
 	

 
	 	 	





  (Name)
	

 	
 	

 
	 	 	





  (Name)




 

         (3)   Please
issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: 

 






			
	

 	
 	

 
	 	 	





  (Name)
	

 	
 	

 
	





  (Date)	 	





  (Signature)




 

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 EXHIBIT E-2  


 FORM OF SERIES B WARRANT  


See attached.  


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        THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.


 
 

SERIES B WARRANT TO PURCHASE
  COMMON STOCK OF PROSPECT GLOBAL RESOURCES INC.

                        , 2012    



        PROSPECT
GLOBAL RESOURCES INC., a Nevada corporation (the "Company"), HEREBY CERTIFIES THAT, for value
received,                                    , or registered assigns,
is entitled to purchase, in whole or part and from time to time, up to [21,538,461](1) fully paid and
non-assessable shares of Common Stock at a purchase price of $[3.25](2) per share (the "Warrant Price"), in each
case subject to adjustment pursuant to Section 6. As used herein, the term "Common Stock" means the Company's Common Stock, par value $0.001 per
share, as constituted on the date of original issue of this Warrant, and any shares of capital stock or other property into which such shares of Common Stock may thereafter be changed or that may be
issued in respect of, in exchange for, or in substitution of such Common Stock. As used herein, the term "Warrants" means this Warrant and all warrants
delivered in substitution or exchange for such warrants. The term "Warrant" means one of the Warrants. This Warrant is being issued in connection with
the Securities Purchase Agreement dated as of November     , 2012 by and among the Company, certain guarantors named therein and the purchasers named therein for the purchase of
$100,000,000 in 10% Convertible Springing Second-Lien Notes Due 2020 and other securities and interests of the Company (as amended from time to time, the
"Securities Purchase Agreement"). Capitalized terms not otherwise defined herein have the meanings set forth in the Securities Purchase Agreement. 



 Section 1. Term of Warrants; Exercise of Warrants.  




        (a)   Subject
to the terms hereof, the holder of this Warrant shall have the right, at any time and from time to time, from and after the date hereof until 11:59 PM New York
City Time on the date that is one hundred and eighty (180) days after the Closing Date (as defined in the Securities Purchase Agreement), to purchase from the Company up to the number of shares
of Common Stock which such holder may at the time be entitled to purchase pursuant to this Warrant, upon surrender to the Company, at its address for receipt of notices pursuant to Section 9
hereof, of this Warrant, together with the Notice of Exercise form at the end hereof duly completed and signed, accompanied by payment to the Company of the Warrant Price for the number of shares with
respect to which this Warrant is being exercised. 

   

   


 

         (1)    Note to Draft:    Number of shares exercisable represents the aggregate number exercisable under all
Series A Warrants; multiple warrants may be issued to multiple Purchasers. If any of the events described in Section 6 of this Warrant occur between the date of the Original Securities
Purchase Agreement and the date this Warrant is issued, the number of shares of Common Stock that this Warrant is exercisable for shall be adjusted as if Section 6 were in effect as of the date
of the Original Securities Purchase Agreement—and such adjusted number shall replace the number listed above in brackets in the definitive Warrant that is issued. 


        (2)    Note to Draft:    If any of the events described in Section 6 of this Warrant occur between the date of
the Original Securities Purchase Agreement and the date this Warrant is issued, the Warrant Price shall be adjusted as if Section 6 were in effect as of the date of the Original Securities
Purchase Agreement—and such adjusted price shall replace the price listed above in brackets in the definitive Warrant that is issued. 


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        (b)   Payment
of the aggregate Warrant Price shall be made by wire transfer to an account specified in writing (including by email) by the Company. 


        (c)   Upon
such surrender of this Warrant and payment of such Warrant Price as aforesaid, the Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the holder of this Warrant and in such name or names as such holder may designate, a certificate or certificates for the number of full shares of Common Stock so purchased.
Such certificate or certificates shall be deemed to have been issued and any person so designated to be named therein shall be deemed to have become a holder of such shares of Common Stock as of the
close of business on the date of the surrender of this Warrant and, if applicable, payment of the Warrant Price as aforesaid, notwithstanding that the certificates representing such shares shall not
actually have been delivered or that the stock transfer books of the Company shall then be closed. The Company hereby represents and warrants that any Common Stock issued upon the exercise of this
Warrant will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the holder of the Warrant or
taxes in respect of any transfer occurring contemporaneously therewith). The Company will at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock, as the case may be, then issuable upon exercise of this Warrant. The Company will
(i) procure, at its sole expense, the listing of the Common Stock and other securities issuable upon exercise of this Warrant, subject to issuance or notice of issuance on all stock exchanges
on which the Common Stock are then listed or traded and (ii) maintain the listing of such Common Stock after issuance. The Company will ensure that the Common Stock may be issued without
violation of any applicable law or regulation or of any requirement of any securities exchange on which the Common Stock are listed or traded. 



        (d)   This
Warrant shall be exercisable, at the election of the holder of this Warrant, either in full or from time to time in part. In the event that this Warrant is
exercised with respect to less than the aggregate number of shares of Common Stock this Warrant then entitles such holder to purchase, the Company shall deliver to or upon the order of such holder
hereof a new Warrant evidencing the rights of such holder to purchase the unpurchased shares of Common Stock then called for by this Warrant, which new Warrant shall in all other respects be identical
with this Warrant. In the alternative, at the request of the holder upon any partial exercise of this Warrant, appropriate notation may be made on this Warrant and the same shall be returned to such
holder. 


        Section 2. Payment of Taxes.    The Company shall pay all documentary stamp taxes, transfer tax or other incidental expenses if any,
attributable
to the initial issuance of the shares of Common Stock upon exercise of this Warrant, provided that the Company shall not be required to pay any tax or taxes which may be payable with respect to any
secondary transfer of a Warrant or the shares of Common Stock issued upon exercise of any Warrant. 


         Section 3. Transferability.    The Warrants are not transferable without the Company's written consent; provided, that the Warrants
may be
transferred in whole or in part without the Company's written consent to any Affiliate (as defined in the Securities Purchase Agreement) of the holder of this Warrant. 


         Section 4. Exchange of Warrant Certificate.    Any Warrant certificate may be exchanged for another certificate or certificates
entitling the
holder thereof to purchase a like aggregate number of shares of Common Stock as this certificate then entitles such holder to purchase. Any holder of a Warrant desiring to exchange such Warrant
certificate shall make such request in writing delivered to the Company, and shall surrender, properly endorsed, the certificate evidencing the Warrant to be so exchanged. Thereupon, the Company shall
execute and deliver one or more new Warrant certificates as so requested. 


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         Section 5. Mutilated or Missing Warrant.    In case any Warrant certificate shall be mutilated, lost, stolen or destroyed, the
Company shall, at
the request of the holder thereof, issue and deliver in exchange and substitution for and upon cancellation of the mutilated certificate or certificates, or in lieu of and substitution for the
certificate or certificates lost, stolen or destroyed, a new Warrant certificate or certificates of like tenor and representing an equivalent right or interest, but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such Warrant and indemnity, if requested, satisfactory to the Company. 


         Section 6. Adjustment of Warrant Price and Number of Shares.    The number and kind of securities purchasable upon the exercise of
this Warrant
and the Warrant Price shall be subject to adjustment from time to time upon the happening of certain events, as follows: 



        (a)   (i)
If and whenever on or after the date hereof the Company issues or sells, or in accordance with Section 13.4 of the Securities Purchase Agreement is deemed to
have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the
"New Issuance Price") less than a price equal to the Warrant Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Warrant Price then in effect is referred to as the "Applicable Price") (the foregoing a "Dilutive
Issuance"), other than an issuance or sale or deemed issuance or sale covered by Section 13.5 of the Securities Purchase Agreement, then the Warrant Price then in effect
shall be reduced to a price determined in accordance with the following formula: 

 






							
	 	 	R1 = R ×	 	OS + A






  OS + B	 	 




 

 Where:


 






					
	 	 	R1 =	 	the Warrant Price in effect immediately after such Dilutive Issuance;
	

 	
 	
R =	
 	
the Warrant Price in effect immediately prior to such Dilutive Issuance;
	

 	
 	
OS =	
 	
the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue (excluding the Apollo Warrants) or upon conversion or exchange of Convertible Securities (excluding the Notes) outstanding immediately prior to such issue (to the extent such Options or Convertible Securities have an
exercise or conversion price below R);
	

 	
 	
A =	
 	
the number of shares of Common Stock that would have been issued (or be deemed to have been issued) if such Dilutive Issuance had been issued at a price per share equal to R (determined by dividing the aggregate
consideration received by the Company in respect of such issue by R); and
	

 	
 	
B =	
 	
the number of shares of Common Stock issued (or deemed to have been issued) in such Dilutive Issuance.




 

         For
purposes of this Section 6(a)(i), clauses (A) through (D) of Section 13.4 of the Securities Purchase Agreement shall apply to the adjustments contemplated
in this Section 6(a)(i), mutandis mutatis. 


         (ii)  In
the event of any such Dilutive Issuance, the number of shares of Common Stock issuable upon the exercise of this Warrant shall be increased to the number obtained by
dividing (x) the product of (1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately 


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prior
to such Dilutive Issuance, and (2) the Warrant Price in effect immediately prior to such Dilutive Issuance, by (y) the new Warrant Price determined in accordance with
Section 6(a)(i). 


        (b)   With
respect to any event contemplated in Sections 13.5, 13.6, 13.7, 13.8, or 13.9 of the Securities Purchase Agreement, the adjustments contemplated by such
sections shall be applied to the Warrant Price as if all references to Conversion Price in such sections were references to Warrant Price and all reference to conversion of Notes in such sections were
references to exercise of the Warrant. The number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the number obtained by dividing (x) the product of
(1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to the event giving rise to such adjustment, and (2) the Warrant Price in effect
immediately prior to the event giving rise to such adjustment, by (y) the new Warrant Price determined in accordance with this Section 6(b). 


        (c)   With
respect to any event contemplated in Section 13.14 of the Securities Purchase Agreement, the Warrant shall be exercisable for the same type and amount of
shares of stock, other securities or other property or assets (including cash or any combination thereof) that the holder of this Warrant would have owned or been entitled to receive upon such Merger
Event had such holder exercised this Warrant immediately prior to such Merger Event. In determining the kind and amount of shares of stock, other securities or other property or assets (including cash
or any combination thereof) receivable upon consummation of such Merger Event, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation
of such Merger Event, the holder of the Warrant shall have the right to make a similar election upon exercise of this Warrant with respect to the number of shares of stock, other securities or other
property or assets (including cash or any combination thereof) which the holder of this Warrant will receive upon exercise of this Warrant. 


        (d)   Sections 13.10,
13.11, 13.12, 13.13, 13.15, 13.16 and 13.17 of the Securities Purchase Agreement shall apply to the adjustments contemplated in this
Section 6, mutandis mutatis. 



        Section 7. Fractional Interests.    The Company shall not be required to issue fractional shares of Common Stock on the exercise of
any Warrant.
If any fraction of a share would, except for the provisions of this Section 7, be issuable on the exercise of this Warrant (or specified portions thereof), the Company shall issue a full share
of Common Stock in lieu of such fractional share. 


         Section 8. No Rights as Stockholder; Notices.    Nothing contained in this Warrant shall be construed as conferring upon the holder
or its
transferees any rights as a stockholder of the Company, including the right to vote, receive dividends, consent or receive notices as a stockholder with respect to any meeting of stockholders for the
election of directors of the Company or any other matter. The Company will at no time close its transfer books against transfer of this Warrant in any manner which interferes with the timely exercise
of this Warrant. 


         Section 9. Notices.    All notices and communications provided for hereunder, unless otherwise specified,
shall be in writing and shall be deemed delivered (a) on a Business Day if sent by telecopy during the Business Day or on the next Business Day if sent after a Business Day has ended or
(b) the next Business Day after delivery to a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: 



        (1)   if
to any holder of Warrants, at the address specified for such communications in the Securities Purchase Agreement, or at such other address as holder of Warrants (or
its transferee) shall have specified to the Company in writing, and 



A-E-2-5







 

        (2)   if
to the Company, to the Company at the address set forth below or at such other address as the Company shall have specified to the holder of the Warrant in writing: 


Prospect
Global Resources Inc.

1450 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer





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



Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch 




        Section 10. Successors.    This Warrant shall bind and inure to the benefit of the Company and its permitted successors and assigns
hereunder
and, in addition, shall inure to the benefit of and be enforceable by all holders from time to time of the Warrants. 


         Section 11. Applicable Law.    This Warrant shall be enforced in accordance with, and the rights of the Company and the holder of
this Warrant
shall be governed by, the laws of the State of New York (without regard to conflicts of laws principles thereof). 



        Section 12. Benefits of this Agreement.    Nothing in this Warrant shall be construed to give to any person or corporation other than
the Company
and the holder of this Warrant any legal or equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and exclusive benefit of the Company and the holder hereof. 


         Section 13. Amendment.    This Warrant may be amended by the Company in any respect at any time or from time to time upon the written
consent of
the holder of this Warrant. 


        IN
WITNESS WHEREOF, the Company has executed this Warrant. 

 






					
	 	 	PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
By:	
 	
  






  Patrick L. Avery,

Chief Executive Officer




 

 A-E-2-6







 
 
 

  NOTICE OF EXERCISE    
    


        (1)   The
undersigned hereby elects to purchase                        shares of Common Stock of PROSPECT GLOBAL RESOURCES INC.,
pursuant to the provisions of Section 1
of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full. 


        (2)   Please
issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

 






			
	

 	
 	
  






  (Name)
	

 	
 	
  






  (Name)




 

 
        (3)   Please
issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: 



 






			
	

 	
 	
  






  (Name)
	
  






  (Date)	
 	
  






  (Signature)




 

 A-E-2-7









 



































 



 
 

  NOVEMBER 29, 2012
  
    DISCLOSURE SCHEDULES
  OF
  THE COMPANY    
    


        These Disclosure Schedules have been prepared in connection with the Securities Purchase Agreement (the
"Agreement"), dated as of November 29, 2012, by and among Prospect Global Resources, Inc. (the "Company"), the Subsidiaries of
the Company set forth on the signature pages thereto (each, individually, a "Guarantor," and collectively, the "Guarantors") and the Purchaser
set forth on the signature pages thereto ("Purchasers"). These Disclosure Schedules are qualified in their entirety by reference to specific provisions of the Agreement.
The inclusion of any information in these Disclosure Schedules will not be deemed an admission or acknowledgement that such information is required to be listed in the Disclosure Schedules or that any
such information is material to the Company. 


        The
schedule numbers referenced in these Disclosure Schedules refer to the corresponding sections of the Agreement to which these Disclosure Schedules relate; provided, however, to the
extent that an item in the Disclosure Schedules is relevant and reasonably apparent on its face to apply to the disclosure required by any other section of the Agreement that references a different
schedule contained in these Disclosure Schedules, such item shall be deemed to be disclosed in the section of the Disclosure Schedules corresponding to such other section of these Schedules, whether
or not an explicit cross-reference appears. 


        The
headings, if any, of the individual sections of these Disclosure Schedules are inserted for convenience only and will not be deemed to constitute a part thereof or a part of the
Agreement. The
annexes or exhibits to these Disclosure Schedules form an integral part of these Disclosure Schedules and are incorporated therein by reference as if set forth fully herein. 



        Defined
terms not defined herein shall have the meanings given to such terms in the Agreement. 


S-1








 
 
 

  SCHEDULES    
    

 






			
	6.9	 	Permits
	6.22	 	Amendment Confirmation
	7.2(a)	 	Capitalization
	7.2(b)	 	Pre-emptive Rights/Warrants/Options
	7.5	 	Required Consents
	7.18	 	Undisclosed Liabilities
	7.23	 	Compliance with ERISA
	7.28	 	No Registration Rights
	9.1	 	Operation of Business
	9.13	 	Preemptive Rights
	9.16	 	Benefit
	13.11	 	When No Adjustment Required
	15.15	 	Investments




 

 S-2







 
 
 

  Schedule 6.9
  Permits    
    

 






					
	 
	 	Necessary Permit



 
	 	Applicable Date 
	1.	 	Air Quality Control Permit (Arizona Department of Environmental Quality ("ADEQ"))	 	August 31, 2013
	
2.	
 	
Aquifer Protection Permit (ADEQ)	
 	
December 31, 2013
	
3.	
 	
Arizona Pollution Discharge Elimination System, 402 Permit for Stormwater Discharge from Industrial Activities (ADEQ)	
 	
December 31, 2013
	
4.	
 	
Mineral Lease (Arizona State Land Department)	
 	
December 31, 2013
	
5.	
 	
Mined Land Reclamation Plan (Arizona State Mine Inspector)	
 	
December 31, 2013
	
6.	
 	
Major Plan Amendment (Apache County)	
 	
December 31, 2013
	
7.	
 	
Water and/or Wastewater Facilities—Approval to Construct (ADEQ)	
 	
December 31, 2014
	
8.	
 	
Operation and production permits unrelated to initial construction and outside the PFNP boundaries, of the type customarily obtained by mine developers after construction, and not reasonably likely to pose a material
impediment to operation of the mine following construction.	
 	
December 31, 2015




 

 S-3









 



































 



 
 

  Schedule 6.22
  Amendment Confirmation    
    


        Potash Supply Agreement, dated October 18, 2012 (the "Sichuan Offtake Agreement"), among the Company, AWP and Sichuan Chemical
Industry Holding (Group) Co., Ltd.—To be amended or modified to specify that the Transaction and any Securities acquired in connection with the Transaction will be excluded
from any calculation of Change of Control for purposes of Section 7 of the Sichuan Offtake Agreement, and that any directors nominated or designated by the Purchasers shall be deemed to have
been directors of the Company as of the date of the Sichuan Offtake Agreement. 


        COR
Advisors Investor Relations Consulting Agreement, dated July 5, 2011, between the Company and COR Advisors LLC, as amended on May 9, 2012 and August 1,
2012—To be amended or modified to specify that the Transaction and any Securities acquired in connection with the Transaction will be excluded from any calculation of Change of Control
under the agreement. 


        Items
set forth in Schedule 9.16 shall be resolved as contemplated by Section 9.16 of the Agreement. 


S-4







 
 
 

  Schedule 7.2(a)
  Capitalization    
    


 Capitalization Summary Report  

 






														
	 
	 	Authorized 	 	Shares

Outstanding 	 	Shares

Outstanding

Fully Diluted 	 	% Owned on

Fully Diluted

Basis 	 
	 Stock
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Common
	 	 	300,000,000	 	 	70,864,468	 	 	70,864,468	 	 	70.50	%
	 Preferred
	 	 	100,000,000	 	 	—	 	 	—	 	 	0.00	%
	 	 	 	 	 	 	 	 	 	 
	 Total Stock
	 	 	400,000,000	 	 	70,864,468	 	 	70,864,468	 	 	70.50	%
	 Rights to Acquire Stock
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Options
	 	 	21,700,000	 	 	 	 	 	8,761,000	 	 	8.72	%
	 Warrants to Purchase
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Common
	 	 	 	 	 	 	 	 	20,889,534	 	 	20.78	%
	 	 	 	 	 	 	 	 	 	 	 	 
	 Total Diluted Shares
	 	 	 	 	 	 	 	 	100,515,002	 	 	100.00	%




 

 S-5







 
 
 

  Schedule 7.2(b)
  Pre-emptive Rights/Warrants/Options    
    


 Warrants  


        1.     As
of the date hereof, the Company has issued warrants that are exercisable into an aggregate of 20,889,534 shares of common stock. 



 Options  


        1.     As
of the date hereof, under the 2011 Employee Equity Incentive Plan, 13,500,000 shares are authorized and 3,786,000 options are issued and outstanding. 


        2.     As
of the date hereof, under the 2011 Director & Consultant Equity Plan, 8,200,000 shares are authorized and 5,025,000 options are issued and outstanding. 



 Other Equity Commitments  


        1.     On
August 1, 2012 the Company entered into a second amendment to its investor relations consulting agreement with COR Advisors, LLC pursuant to which COR
has agreed to provide additional services to the Company following its recent public offering and the Company agreed to pay a monthly retainer of $20,000 to COR through July 4, 2015. The
Company also agreed that the 75,000 shares payable quarterly to COR under the amended agreement would be paid quarterly in advance rather than in arrears (other than the shares earned during the
quarter ended October 5, 2012, which were paid in arrears). Upon any change of control transaction, the remaining shares to be issued for the term of the amended agreement shall become
immediately due to COR. 


        2.     Pursuant
to the Potash Royalty Purchase and Sale Agreement and Option dated effective as of November 22, 2011 by and between the Company and Grandhaven Energy
("Grandhaven"), the Company committed to maintain, and currently maintains at all times, 25 million shares in reserve until the earlier of (a) Grandhaven exercises its option or
(b) such royalty is assigned to American West Potash LLC ("AWP"). 


        3.     Pursuant
to a Consulting Agreement by and between the Company and the Thornton Group LLC ("Thornton") dated February 27, 2012 (the "Thornton Consulting
Agreement") upon the Company's entry into the potash supply agreement with Sichuan Chemical on October 18, 2012 (the "Sichuan Offtake Agreement"), the Company owed the Thornton Group a
one-time success fee, payable in 50% cash and 50% common stock, equal to 2.5% of the average annual potash committed by Sichuan multiplied by the world price of potash. Pursuant to the
side letter dated November 15, 2012 by and between the Company and Thornton, the success fee payable to Thornton in connection with the Sichuan Offtake Agreement is (a) cash payment of
$3,875,625 (to be paid in two equal installments) and (b) approximately 1,656,250 shares of the Company's common stock. As of the date hereof, the Company paid the first installment of the cash
payment on November 16, 2012 and instructed its transfer agent to issue the Thornton Group approximately 1,656,250 shares of common stock (for the avoidance of doubt such shares have been
included in the capitalization table on Schedule 7.2(a)). The Company will pay the second (and final) installment of the cash payment no later than February 28, 2013. Pursuant to the
Thornton Consulting Agreement, the Company pays Thornton a monthly retainer payment of $10,000 and such agreement automatically renews for 6 month periods unless the Company terminates the
Agreement (which it may do so at any time) upon 30 days prior written notice. If the Company terminates the Thornton Consulting Agreement, it will be subject to the compensation described in
Sections 3(c) and 3(e) therein. In addition to the success fee paid to Thornton by the Company described above, the Thornton Consulting Agreement provides for a success fee related to any other
(i) offtake arrangements entered into by the Company and third parties that have been introduced to the Company by Thornton payable 50% in cash and 50% in shares of the 


S-6







 

Company's
common stock and (ii) 3% of the aggregate amount of investment (debt or equity) in the Company made by an investor introduced to the Company by Thornton payable in cash on the closing
of such investment. 


        4.     In
connection with its underwritten offering of 15,000,000 shares that closed on November 14, 2012 and pursuant to the Underwriting Agreement dated
November 8, 2012 by and among the Company, Dahlman Rose & Company, LLC, Macquarie Capital (USA) Inc., Roth Capital Partners, LLC and Sterne, Agee &
Leach, Inc. (collectively, the "Underwriters"), the Company granted the Underwriters a 30-day option to purchase up to an additional 2,250,000 shares of the Company's common stock
to cover over-allotments, if any. 


        5.     The
Company entered into a consulting agreement with Silver Peaks, LLC dated November 12, 2012 under which Silver Peaks will receive warrants to purchase
50,000 shares of the Company's common stock along with payment of $1,000 per day on a monthly basis. 



        6.     As
disclosed in the Company's SEC Documents, such liens and/or restrictions placed on the shares of the Company's Subsidiaries in connection with the Karlsson Agreements. 


        7.     The
Company entered into a letter agreement dated November 14, 2012 (the "MCNC Agreement") with MC Namir Capital LLC ("MCNC") for services related to
offtake opportunities under which MCNC will receive warrants to purchase 60,000 shares of common stock (which such amount is reflected in the total number of warrants outstanding within these
Disclosure Schedules). MCNC will also receive on a monthly basis (in advance) warrants to purchase 10,000 shares of common stock for an initial term of 12 months. 



        8.     Pursuant
to the Letter of Agreement dated August 13, 2012 between Crystal Research Associates, LLC ("CRA") and the Company, the Company agreed to issue CRA
one hundred fifty thousand (150,000) four year warrants in the Company, at a purchase price equal to its current stock price as of August 13, 2012. The warrants will/have
vest[ed] as follows: 25,000 shares on each of September 13, 2012, October 13, 2012, November 13, 2012, December 13, 2012, January 13, 2013,
and February 13, 2013. 


S-7









 



































 



 
 

  Schedule 7.5
  Required Consents    
    


        1.     The
office lease dated February 23, 2012 by and between the Company as "Tenant" and CSHV 9595 Wilshire, LLC as "Landlord" for the Company's Los
Angeles office located at 9595 Wilshire Blvd., Beverly Hills, CA 90212, provides that a transfer at any one time or from time to time of the lessor of a controlling interest or fifty
percent (50%) or more of an interest in Tenant (whether stock, assets or other form of ownership or control) by any person(s) or entity(ties) having an interest in ownership or control of Tenant at
the Lease Date shall be deemed to be a Transfer of the lease. Tenant shall not transfer the lease without the prior written consent of the Landlord and Tenant shall request such consent at least
30 days prior to the proposed commencement date of the Transfer. 


S-8







 
 
 

  Schedule 7.18
  Undisclosed Liabilities    
    


        1.     Pursuant
to the Thornton Consulting Agreement by and between the Company and Thornton, upon the Company's entry into Sichuan Offtake Agreement, the Company owed the
Thornton Group a one-time success fee, payable in 50% cash and 50% common stock, equal to 2.5% of the average annual potash committed by Sichuan multiplied by the world price of potash.
Pursuant to the side letter dated November 15, 2012 by and between the Company and Thornton, the success fee payable to Thornton in connection with the Sichuan Offtake Agreement is
(a) cash payment of $3,875,625 (to be paid in two equal installments) and (b) approximately 1,656,250 shares of the Company's common stock. As of the date hereof, the Company paid the
first installment of the cash payment on November 16, 2012 and instructed its Transfer Agent to issue the Thornton Group approximately 1,656,250 shares of common stock (for the avoidance of
doubt such shares have been included in the capitalization table on Schedule 7.2(a)). The Company will pay the second (and final) installment of the cash payment no later than
February 28, 2013. Pursuant to the Thornton Consulting Agreement, the Company pays Thornton a monthly retainer payment of $10,000 and such agreement automatically renews for 6 month
periods unless the Company terminates the Agreement (which it may do so at any time) upon 30 days prior written notice. If the Company terminates the Thornton Consulting Agreement, it will be
subject to the compensation described in Sections 3(c) and 3(e) therein. In addition to the success fee paid to Thornton by the Company described above, the Thornton Consulting Agreement
provides for a success fee related to any other (i) offtake arrangements entered into by the Company and third parties that have been introduced to the Company by Thornton payable 50% in cash
and 50% in shares of the Company's common stock and (ii) 3% of the aggregate amount of investment (debt or equity) in the Company made by an investor introduced to the Company by Thornton
payable in cash on the closing of such investment. 


        2.     The
below consulting or service agreements provide for success fees based upon the occurrence of certain trigger events provided therein. As of the date hereof, no
triggering events for any of the respective success fees listed below have occurred: 



        (a)   In
addition to the success fee paid to Thornton by the Company described in Item 1 above, the Thornton Consulting Agreement by and between the Company and the
Thornton, provides for a success fee related to any other (i) offtake arrangements entered into by the Company and third parties that have been introduced to the Company by Thornton and
(ii) 3% of the aggregate amount of investment (debt or equity) in the Company made by an investor introduced to the Company by Thornton. Such amount shall be payable in cash at the time of the
closing of such investment; 


        (b)   Section III
"Fees" of the MCNC Agreement provides for certain trigger events for the success fees described therein; 


        (c)   Section 3
"Compensation" of the Consulting Agreement with Pulsar Capital Investimentos Ltda ("Pulsar") dated August 31, 2012 (the "Pulsar
Agreement") as further amended by the Amendment to Consulting Agreement (undated) between the parties, provides for certain trigger events for the success fees described therein. The Company also pays
Pulsar a monthly retainer fee of 15,000 pursuant to the Pulsar Agreement and after an initial one year term the Pulsar Agreement extends for additional six month periods upon the mutual consent of the
parties; 


        (d)   The
sections entitled "Compensation" and "Warrants" of the Relationship Agreement dated October 10, 2011 by and between the Company and Oxford Metrica Limited,
provide for certain success fees due to Oxford Metrica by the Company upon the occurrence of certain trigger events described therein. This agreement expires October 10, 2016; 



S-9







 

        (e)   While
the Letter Agreement dated January 3, 2012 (the "NCCP Letter Agreement") by and between the Company and New Century Capital Partners, Inc. ("NCCP"),
expired pursuant to its terms on July 3, 2012, Section 5 provides a 12 month tail period, commencing on July 3, 2012, for certain success fees described therein; 


        (f)    Agreement
by and between the Company and Roscoe Martin in connection with executive search and placement services under which Roscoe Martin is paid 25% (the "placement
fee") of the base salary for any successful placement with the Company. Such placement fee is comprised of cash and options. 




        3.     As
disclosed in the Company's SEC Documents, the Company owes royalty payments to the following parties once certain levels of production or gross revenues are achieved: 



        (a)   Pursuant
to Section 4 of the Termination of Management Services Agreement dated August 1, 2012 by and between the Company and Buffalo Management LLC
("Buffalo"), Buffalo receives a fee equal to 2% of the Company's annual gross revenues provided in perpetuity. 


        (b)   On
November 22, 2011, the Company completed two transactions with entities related to Hexagon Investments, LLC. As part of the consideration given within
those transactions, the Company must either (a) assign a 1% overriding royalty interest or (b) settle the obligation through issuance of the Company's common shares to a Hexagon related
entity based on the estimated fair value of a 1% royalty interest at the time of exercise "Grandhaven Option." 



        (c)   AWP
granted The Karlsson Group the right to receive payments equal to of 1% of the gross sales received by AWP from potash production from the real property over which
AWP currently has leases, licenses and permits for mining purposes, capped at $75 million. 


        (d)   In
connection with AWP's exploration permits on state land in Arizona, upon the conversion of such exploration permits into mining permits, the State of Arizona will be
entitled to receive customary future production royalties for any potash production on state owned lands. 



        (e)   Item 5
below is hereby incorporated by reference. The royalties on the Company's gross sales are set forth in Article III of the Potash Sharing Agreement
(as defined below). 




        4.     As
disclosed in the Company's SEC Documents, in the event of a sale of at least 50% of AWP or a merger of AWP with or into an unaffiliated entity within four years of the
closing date, the Company has agreed to pay The Karlsson Group an additional payment equal to 15% of the net proceeds received from the transaction, capped at $75 million. 



        5.     In
July 2011, AWP entered into a Potash Sharing Agreement dated July 27, 2011 (the "Potash Sharing Agreement") with the mineral estate owners party thereto
covering 101 private mineral estate sections and related mineral leases on approximately 63,000 acres adjacent to or in close proximity to AWP's existing mineral rights. In May, 2012, AWP divested
itself of four Arizona state exploration permits covering the mineral estate of approximately 2,500 gross acres, which were non-contiguous with our remaining sections. The Potash Sharing
Agreement provides that AWP will pay such mineral estate owners specified dollar amounts during the development of AWP's mining and processing facility. The related agreements with each counterparty
to the Potash Sharing Agreement include an annual base rent and a royalty for potash extracted from these estates. Upon the Company's completion of specified targets set forth in the Potash Sharing
Agreement (which such targets have not yet been met as of the date hereof), the Company's next payment to such mineral estate owners under the Potash Sharing Agreement will be in the amount of
$1.5 million in accordance with Article III therein. The term of the Potash Sharing Agreement is perpetual or until the earliest of cessation of operations by AWP for 180 consecutive
days or abandonment of the potash mining operation by AWP. 



        6.     The
Investor Relations Consulting Agreement dated July 5, 2011 by and between the Company and COR Advisors LLC, as amended by Amendment #1 to
Investor Relations Consulting 


S-10







 

Agreement
dated May 9, 2012 and as further amended by Amendment #2 to Investor Relations Consulting Agreement dated August 1, 2012 provides that a 'Change of Control' transaction
shall be any transaction or series of transactions that results in the sale of the Company or the issuance of common stock or securities convertible into common stock that in the aggregate would
result in a majority of the Company's shares being owned or controlled by new investors or the change in a majority of the Company's Board of Directors as constituted on the date such agreement was
signed. In the event that the Transaction triggers a "Change of Control" as defined above, the remaining shares to be issued for the term (750,000 shares as of the date hereof) shall become
immediately due and payable. 


        7.     The
Company and its Subsidiaries are party to certain operating leases for their office space and other ordinary course items that are not reflected on the Reference
Balance Sheet and are not expected to exceed an aggregate amount of $750,000. 


        8.     Item 7
under "Other Equity Commitments" of Schedule 7.2(b) is hereby incorporated by reference. 


        9.     To
the extent not already disclosed in Item 2 above, the Company is also obligated to pay monthly fees for services to certain third parties as further described
below: 



        (a)   Independent
Contractor Consulting Agreement by and between the Company and Granite Peak Advisors LLC, the Company pays Granite Peak $20,000 a month on or before
the 15th business day of each month for advisory and consulting services and such agreement expires on October 10, 2013 unless the parties choose to extend such
arrangement; 


        (b)   Independent
Contractor Agreement by and between the Company and Mitsuru Kataoka, the Company pays Mr. Kataoka $5,000 per month paid by the
3rd of every month for consulting and advisory services. Such agreement is terminable at any time by either party, for any reason, upon 30 day prior written notice. In the
event that the Company terminates, the Company shall pay Mr. Kataoka two months worth of payment; 


        (c)   Item 1
under "Other Equity Commitments" of Schedule 7.2(b) is hereby incorporated by reference. 


        (d)   Item 5
under "Other Equity Commitments" of Schedule 7.2(b) is hereby incorporated by reference. 



S-11







 
 
 

  Schedule 7.23
  Compliance with ERISA    
    


        1.     COBRA
payments are included as severance benefits pursuant to individual employment agreements, including those with Chad Brownstein, Brian W. Wallace, Wayne Rich,
and Gregory Dangler. 


S-12









 



































 



 
 

  Schedule 7.28
  No Registration Rights    
    



        The following Persons have the right to require the Company to register securities for sale under the Securities Act pursuant to their
respective Registration Rights Agreements with the Company: 

 






					
	Person



 
	 	Shares 	 
	 The Karlsson Group
	 	 	5,605,834	 
	 Delta Institutional LP
	 	 	209,900	 
	 Delta Onshore LP
	 	 	98,800	 
	 Delta Offshore Master Ltd
	 	 	867,771	 
	 Very Hungry LLC
	 	 	4,841,608	 
	 Avalon Portfolio, LLC
	 	 	1,900,000	 
	 Buffalo Management LLC
	 	 	3,983,993	 
	 Certain other purchasers in private placements representing aggregate shares of:
	 	 	3,331,628	 




 

 S-13







 
 
 

  Schedule 9.1
  Operation of Business    
    


        The Persons listed below, including their affiliates: 

 






			
	40 North Industries

Austin Powder Company / Jack Davis

Blackrock

Koch Fertilizers

Lion Gate Capital	 	LSB Industries

Trafalet

Very Hungry LLC

Emerald

SunAmerica




 

 S-14







 
 
 

  Schedule 9.13
  Contracts Obligating the Company to Issue Shares    
    


        Consulting Agreement by and between Thornton Group LLC and the Company effective as of February 27, 2012. 


        Consulting
Agreement by and between Pulsar Capital Investimentos Ltda and the Company effective as of August 31, 2012. 


        Amendment
to Consulting Agreement by and between Pulsar Capital Investimentos Ltda and the Company. 


        Letter
of Agreement by and between Crystal Research Associates, LLC and the Company effective as of August 13, 2012. 


        Agreement
by and between New Century Capital Partners, Inc. and the Company effective as of January 3, 2012. 


        Relationship
Agreement by and between Oxford Metrica Limited and the Company dated as of October 10, 2011. 


        Proposal
and Fee Agreement for Representation by and between Brownstein Hyatt Farber Schreck, LLP and the Company dated as of July 5, 2011. 


        Agreement
by and between Dahlman Rose & Co., LLC and the Company dated as of June 30, 2011. 


        Independent
Contractor Agreement by and between Milton MacGregor and the Company dated as of September 1, 2012. 


        Agreement
by and between MC Namir Capital LLC and the Company dated as of November 14, 2012. 


        Termination
of the Management Services Agreement by and between Buffalo Management LLC and Prospect Global Resources Inc., a Delaware corporation, dated as of
August 1, 2012. 


        Independent
Contractor Agreement by and between Silver Peaks, LLC and the Company dated as of November 12, 2012. 


        Letter
dated as of November 15, 2012, confirming the success fee in the Consulting Agreement by and between Thornton Group LLC and the Company dated February 27,
2012, in connection with the Potash Supply Agreement entered into on October 18, 2012, between Prospect Global Resources Inc. and Sichuan Chemical Industry Holding (Group), Ltd. 


        Investor
Relations Consulting Agreement by and between COR Advisors LLC and the Company effective as of July 5, 2011. 



        Amendment
#1 to Investor Relations Consulting Agreement by and between COR Advisors LLC and the Company dated as of May 9, 2012. 


        Amendment
#2 to Investor Relations Consulting Agreement by and between COR Advisors LLC and the Company dated as of August 1, 2012. 


        Potash
Royalty Purchase and Sale Agreement and Option by and between Grandhaven Energy, LLC and the Company, effective as of November 22, 2011. 


        In
connection with its underwritten offering of 15,000,000 shares that closed on November 14, 2012 and pursuant to the Underwriting Agreement dated November 8, 2012 by and
among the Company, Dahlman Rose & Company, LLC, Macquarie Capital (USA) Inc., Roth Capital Partners, LLC and Sterne, Agee & Leach, Inc. (collectively, the
"Underwriters"), the Company granted the Underwriters a 


S-15







 

30-day
option to purchase up to an additional 2,250,000 shares of the Company's common stock to cover over-allotments, if any. 


        Item 1
to Schedule 13.11(e) is hereby incorporated by reference. 


        Agreement
by and between the Company and Roscoe Martin in connection with executive search and placement services under which Roscoe Martin is paid 25% (the "placement fee") of the base
salary for any successful placement with the Company. Such placement fee is comprised of cash and options. 


S-16









 



































 



 
 

  Schedule 9.16
  Employee Waivers to be Provided by Closing    
    


	1.
	Brian
W. Wallace 



	•
	Employment Agreement dated as of June 13, 2012 



	•
	2011 Employee Equity Incentive Plan Option Agreement effective as of July 2, 2012, and executed on July 10,
2012






	2.
	Chad
Brownstein 



	•
	Employment Agreement dated as of August 1, 2012






	3.
	Wayne
E. Rich 



	•
	Amended and Restated Employment Agreement dated as of June 13, 2012






	4.
	Patrick
L. Avery 



	•
	Second Amended and Restated Employment Agreement dated as of June 13, 2012






	5.
	Jonathan
Bloomfield 



	•
	Second Amended and Restated Employment Agreement dated as of September 6, 2011, with an effective date of
September 1, 2010






	6.
	Anita
Marks 



	•
	Offer Letter dated as of August 20, 2012






	7.
	Gregory
Dangler 



	•
	Employment Agreement dated as of October 19, 2012






	8.
	Hugh
Eisler 



	•
	Offer Letter dated as of August 20, 2012 





S-17







 
 
 

  Schedule 13.11(e)
  When No Adjustment Required    
    



        1.     Pursuant
to warrant agreements to purchase common stock with the holders below: 

 






					
	Name of Warrant holder



 
	 	Convertible into Number of

Shares Listed Below 	 
	 Very Hungry LLC(1)
	 	 	4,841,608	 
	 Scott Reiman Trust(1)
	 	 	1,893,687	 
	 Abas Holdings LLC
	 	 	11,765	 
	 Adriana Milana
	 	 	11,765	 
	 JPFP Family LLC
	 	 	25,000	 
	 Rising Sun Ventures (AZ), LLC
	 	 	47,059	 
	 Anthony Johnson
	 	 	11,765	 
	 Junction Energy Partners, LLC
	 	 	117,648	 
	 Mark Attanasio
	 	 	111,764	 
	 Melissa Weiler
	 	 	29,412	 
	 Jean-Marc Chapus
	 	 	23,529	 
	 Michael Parks
	 	 	23,529	 
	 Jonathan Insull
	 	 	11,765	 
	 Daniel Attanasio
	 	 	5,882	 
	 Michael Attanasio
	 	 	5,882	 
	 Matthew Miller
	 	 	5,882	 
	 Jason Breaux
	 	 	5,882	 
	 Richard Stevenson
	 	 	5,882	 
	 Christopher Wright
	 	 	5,882	 
	 Delta Offshore Master LTD
	 	 	867,771	 
	 Delta Institutional LP
	 	 	209,900	 
	 Delta Onshore LP
	 	 	98,800	 
	 Gary Jamell
	 	 	11,765	 
	 John Grier
	 	 	235,295	 
	 Dahlman Rose & Company, LLC
	 	 	70,588	 
	 Avalon Portfolio, LLC
	 	 	1,900,000	 
	 Crystal Research Associates, LLC
	 	 	150,000	 
	 Buffalo Management LLC (and its assignees)(2)
	 	 	4,433,993	 
	 The Karlsson Group, Inc. 
	 	 	5,605,834	 
	 MC Namir Capital LLC
	 	 	60,000	 
	 Silver Peaks LLC
	 	 	50,000	 
	 	 	 	 
	 
	 	 	 20,889,534	 









 


 	(1)
	Hexagon
Investments LLC assigned its warrants to purchase common stock of the Company to Very Hungry LLC.



	(2)
	Buffalo
Management LLC assigned an aggregate of 450,000 warrants to the following parties: The Schnel Family Trust, Granite Peak Advisors LLC,
Zasis LLC and Santa Fe National Insurance Company. 


 

 S-18








 

        2.     Options
granted to the parties set forth below: 

 






							
	Participant Name



 
	 	Plan 	 	Shares Granted 	 
	 Wayne Rich
	 	2011 Employee Equity Incentive Plan	 	 	1,000,000	 
	 Brian Wallace
	 	2011 Employee Equity Incentive Plan	 	 	1,000,000	 
	 Pat Avery
	 	2011 Employee Equity Incentive Plan	 	 	600,000	 
	 Barry Munitz
	 	2011 Director and Consultant Equity Incentive Plan	 	 	400,000	 
	 Barry Munitz
	 	2011 Director and Consultant Equity Incentive Plan	 	 	300,000	 
	 Devon Archer
	 	2011 Director and Consultant Equity Incentive Plan	 	 	2,000,000	 
	 Pat Avery
	 	2011 Employee Equity Incentive Plan	 	 	300,000	 
	 Marc Holtzman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	300,000	 
	 Zhi Zhong Qui
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Jon Bloomfield
	 	2011 Employee Equity Incentive Plan	 	 	200,000	 
	 Scott Reiman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Gray Davis
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Chad Brownstein
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Conway Schatz
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Zhi Zhong Qui
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Marc Holtzman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Ari Swiller
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Greg Dangler
	 	2011 Employee Equity Incentive Plan	 	 	140,000	 
	 Greg Dangler
	 	2011 Employee Equity Incentive Plan	 	 	300,000	 
	 Erich Kirsch
	 	2011 Employee Equity Incentive Plan	 	 	125,000	 
	 Milton MacGregor
	 	2011 Director and Consultant Equity Incentive Plan	 	 	50,000	 
	 Brownstein Hyatt Farber Schreck LLP
	 	2011 Director and Consultant Equity Incentive Plan	 	 	120,000	 
	 Chad Brownstein
	 	2011 Director and Consultant Equity Incentive Plan	 	 	100,000	 
	 Ari Swiller
	 	2011 Director and Consultant Equity Incentive Plan	 	 	100,000	 
	 Jon Bloomfield
	 	2011 Employee Equity Incentive Plan	 	 	75,000	 
	 Isaac Morgan
	 	2011 Employee Equity Incentive Plan	 	 	40,000	 
	 Hugh Eisler
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Anita Marks
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Rick Chastain
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Tom Neuman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Hugh Eisler
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Anita Marks
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Rick Chastain
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Tom Neuman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Ron Justman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	10,000	 
	 Rick Marlowe
	 	2011 Director and Consultant Equity Incentive Plan	 	 	10,000	 
	 Joe Hardin
	 	2011 Director and Consultant Equity Incentive Plan	 	 	10,000	 
	 Nesrin Arafa
	 	2011 Employee Equity Incentive Plan	 	 	6,000	 
	 Ron Justman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	5,000	 
	 Rick Marlowe
	 	2011 Director and Consultant Equity Incentive Plan	 	 	5,000	 
	 Joe Hardin
	 	2011 Director and Consultant Equity Incentive Plan	 	 	5,000	 
	 	 	 	 	 	 
	 
	 	 	 	 	 8,761,000	 




 

         3.     Pursuant
to the Potash Royalty Purchase and Sale Agreement and Option dated effective as of November 22, 2011 by and between the Company and Grandhaven Energy
("Grandhaven") as further amended by the First Amendment to Potash Royalty Purchase and Sale Agreement and Option, dated March 21, 2012, between the parties, the Company committed to maintain,
and currently maintains at all times, 25 million shares in reserve until the earlier of (a) Grandhaven exercises its option or (b) such royalty is assigned to American West
Potash LLC ("AWP"). 


S-19







 

        4.     The
Investor Relations Consulting Agreement dated July 5, 2011 by and between the Company and COR Advisors LLC, as amended by Amendment #1 to Investor
Relations Consulting Agreement dated May 9, 2012 and as further amended by Amendment #2 to Investor Relations Consulting Agreement dated August 1, 2012 provides that a 'Change of
Control' transaction shall be any transaction or series of transactions that results in the sale of the Company or the issuance of common stock or securities convertible into common stock that in the
aggregate would result in a majority of the Company's shares being owned or controlled by new investors or the change in a majority of the Company's Board of Directors as constituted on the date such
agreement was signed. In the event that the Transaction triggers a "Change of Control" as defined above, the remaining shares to be issued for the term (750,000 shares as of the date hereof) shall
become immediately due and payable. 


S-20







 
 
 

  Schedule 15.15
  Investments    
    


        Money market account in the Company's name at KeyBank. 


S-21