Exhibit 10.2





Exhibit 10.2




[*Some
dollar amounts, percentages and personal contact information 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.]



HORTENSTINE GROUP

MINERAL LEASE




LESSEE:

American West Potash, LLC




LESSOR:

PAP & POP Family Ltd, a Texas limited partnership;

3MKJ, LP, a Texas limited partnership

(collectively, the “Hortenstine Group”)



 


 









 





MINERAL LEASE




This mineral lease (the “Lease”) is entered into by and between PAP & POP Family Ltd., a Texas
limited partnership, and 3MKJ, a Texas limited partnership (collectively the “Hortenstine Group” or
“Lessor”), and American West Potash, LLC, a Delaware limited liability company (“Lessee”), each a
“Party” and sometimes collectively referred to as the “Parties.”



RECITALS





	A.	 	Lessee is managed and 50% owned by Prospect Global Resources, Inc., a Nevada corporation
(“PGRI”).

	 
	B.	 	Lessor and Lessee have entered into a Potash Sharing Agreement (the “Agreement”) of even date
herewith, through which Lessee will pay a royalty to Lessor on a percentage of gross sales on
potash production from the Royalty Pool Area located within lands as more specifically
described therein (the “Royalty”);

	 
	C.	 	Lessor and Lessee have previously entered into an Exclusivity
Agreement dated April 20, 2011 (the “Term Sheet”) and the Agreement
and this Lease supersede and replace the Term Sheet; and

	 
	D.	 	Lessor is the record title owner of the mineral estate (the “Mineral
Estate” or the “Property” as further described at Appendix A), which
is a split estate and is located in Apache County, Arizona. Lessee
intends to develop the Mineral Estate for mining related purposes.






In consideration of the payment of rents, bonuses and royalties set forth herein and of performance
by the parties of each of the provisions set forth herein, the parties agree as follows:



Article 1

LEASED MINERAL ESTATE





	1.1	 	Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, for the Term, at the
Annual Rental rate and in accordance with the provisions of this Lease, the Mineral Estate
described in Appendix A, and as generally depicted in Appendix B (the “Location Map”) attached
hereto.

	 
	1.2	 	LESSEE TAKES THE MINERAL ESTATE “AS IS” AND “WITH ALL FAULTS.” LESSOR MAKES NO EXPRESSED OR
IMPLIED WARRANTIES OF ANY KIND OR NATURE AS TO THE FEASIBILITY, VALUE, AMOUNT, GEOLOGICAL
NATURE OF ANY MINERALS LOCATED WITHIN THE MINERAL ESTATE OR THE AVAILABILITY OF ANY
NECESSARY RESOURCES TO DEVELOP THE MINERAL ESTATE, SUCH AS WATER OR ACCESS TO THE SURFACE OF
THE MINERAL ESTATE.




 


 









 





	1.3	 	The Mineral Estate is limited to “Authorized Minerals” as such term is defined in the
Agreement.






Article 2

TERM





	2.1	 	The term of this Lease shall commence the 27th day of July, 2011 (“Effective Date”), and
expire on the date (the “Expiration Date”) of termination of the Agreement or as otherwise
provided herein (the “Term”).

	 
	2.2	 	Upon the sale, exchange, redemption, reconveyance, relinquishment or taking, whether by
eminent domain or institutional use, the lease of all or any portion of the Mineral Estate
shall terminate on the date of such taking as to the property so taken.






Article 3

BONUS AND RENT





	3.1	 	Pursuant to the Term Sheet, consideration for a license to conduct prior seismic surveys by
Lessee on the Mineral Estate, Lessee paid Lessor the sum of                                          Dollars
($                                        )* upon commencement of the seismic surveys on the Mineral Estate (the “License
Payment”) and agreed to hold harmless and indemnify Lessee from any claims or third party
claims related to Lessee’s conduct of the survey work.

	 
	3.2	 	Lessor shall pay rent to Lessee as follows for the use and occupancy of the Mineral Estate
during the term of this Lease without offset or deduction and without notice or demand, as
established, on an annual basis on the first day of each calendar year the amount of
                  
                 
      Dollars ($          
                 
             )* (the “Annual Rent”).

	 
	3.3	 	Lessor shall make an initial bonus payment in the amount of                                          Dollars
($                                        )* to Lessee upon completion of a mineral resource estimate report containing
information required by Canadian NI 43-101 and covering the Royalty Pool Area and other areas
controlled by Lessee (“NI-43-101 Report”) and upon Lessee’s decision to proceed with a
bankable feasibility study and related development of a mine plan which shall occur no later
than twelve (12) months following the Effective Date (the “Initial
Bonus Payment”). Lessee shall deliver a copy of the NI 43-101 Report to Lessor upon its
completion.




 


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	3.4	 	Lessor shall make a subsequent bonus payment to Lessee in the amount of                                         
Dollars ($                                        )* on or prior to one hundred
twenty (120) days following Lessor’s
application for any mining permit on private, state or federal land in either Navajo or Apache
County, Arizona that includes plans to utilize any portion of the Royalty Pool Area, which
payment shall occur no later than thirty-six (36) months from the Effective Date of this Lease
(the “Subsequent Bonus Payment”).

	 
	3.5	 	The License Payment, the Annual Rent, and the Initial and Subsequent Bonus Payments shall not
be refundable to Lessee and are not recoverable from Lessor’s obligation to pay Royalties.






Article 4

[INTENTIONALLY OMITTED]




Article 5

ROYALTY





	5.1	 	Royalties on Authorized Minerals. Royalty on Authorized Minerals extracted from the Royalty
Pool Area shall be paid by Lessee to Lessor in accordance with the Agreement.






Article 6

USE OF MINERAL ESTATE





	6.1	 	Purpose. The Mineral Estate is leased to Lessee for the purposes of mineral
extraction of Authorized Minerals and for no other purpose or use whatsoever. This Lease
confers on Lessee the right to extract and ship Authorized Minerals from the Mineral Estate.







	6.2	 	Exclusive Extraction. Lessee shall be solely responsible for all costs and expenses
associated with the development of any facilities necessary for extraction, processing and
sale of Authorized Minerals in the Royalty Pool Area (the “Facilities”). Lessor shall have no
ownership interest or management rights associated with the Facilities.






Article 7

[INTENTIONALLY OMITTED]




Article 8

TAXES; ADDITIONAL AMOUNTS





	8.1	 	Lessee shall pay all assessments and charges for utilities and communication services, and
assessments imposed pursuant to any construction on the Mineral Estate, all permit and
authorization fees, all taxes, duties, charges and assessments of every kind or nature imposed
by any public, governmental or political subdivision authority pursuant to any currently or
subsequently enacted law, ordinance, regulation or order, which during the term of this Lease,
becomes due or are imposed upon, charged against, measured by or become a lien on (a) the
Mineral Estate, (b) any improvements or personal property of Lessee located on the Mineral
Estate, and (c) the interest of Lessee to this Lease or in the proceeds received by Lessee
from any assignment or sublease of the Mineral Estate.




 


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	8.2	 	Lessee shall pay or cause to be paid all amounts required to be paid under Section 8.1 before
any interest, penalty, fine or cost accrues for nonpayment.






Article 9

WAIVER





	9.1	 	Acceptance of any payments by Lessor shall not constitute a waiver by Lessor of any violation
by Lessee of the provisions of this Lease.

	 
	9.2	 	No waiver of a breach of any provision of this Lease shall be construed as a waiver of any
succeeding breach of the same or any other provision.






Article 10

[INTENTIONALLY OMITTED]




Article 11

LESSEE’S COOPERATION; INGRESS AND EGRESS





	11.1	 	Representatives of Lessor may enter, and Lessee shall maintain access to the Mineral Estate
held under Lease, at reasonable times to inspect the workings, improvements and other
facilities used to extract or sever minerals from the Mineral Estate. Representatives of
Lessor may enter the Facilities and the Mineral Estate at reasonable times to obtain factual
data or access to records pertinent to mineral production required to be kept under the terms
of the Lease and otherwise ascertain compliance with law and the terms of this Lease. Lessee
will make this data and records available at the Facilities and/or such other location as
Lessee notifies Lessor.







	11.2	 	Inspections, investigations and audits conducted under Section 11.1 shall be on reasonable
notice to Lessee unless reasonable grounds exist to believe that notice would frustrate the
enforcement of law or the terms of the Lease.






Article 12

LOSS OR WASTE





	12.1	 	Lessee shall not cause nor grant permission to another to cause any waste in or upon the
Mineral Estate.






Article 13

[INTENTIONALLY OMITTED]




 


4









 







Article 14

PROTECT MINERAL PRODUCTS 





	14.1	 	Lessee is hereby authorized to use means which are reasonable and which do not result in a
breach of the peace or in creating a concealed hazard, to protect the Mineral Estate against
waste, damage and trespass. In the event of known trespass on the Mineral Estate resulting in
damage thereto, Lessee shall make reasonable efforts to notify Lessor and appropriate law
enforcement authorities.







	14.2	 	Lessee shall, at its expense, fence all shafts, prospect holes, adits, tunnels and other
dangerous mine workings for the protection of public health and safety and livestock.






Article 15

ASSIGNMENT





	15.1	 	This Lease is intended only to benefit the Parties hereto and their respective successors and
assigns. Any transfer, assignment, sale or other disposal of all or any portion of Lessee’s
interest under this Lease shall only be permissible if the prospective transferee has first
deliver to Lessor a written and enforceable undertaking agreeing to be bound by all the terms
and conditions of this Lease.

	 
	15.2	 	Copies of all assignments pertaining to the Mineral Estate shall be filed with Lessor.






Article 16

[INTENTIONALLY OMITTED]




Article 17

CONDEMNATION





	17.1	 	Termination. If the whole or materially all of the Mineral Estate shall be taken or
condemned, this Lease shall cease and terminate and all Royalty and other charges hereunder
shall be apportioned as of the date of vesting of title in such taking or condemnation
proceedings. For the purposes of this Article, a taking or condemnation of materially all of
the Mineral Estate, as distinguished from a taking or condemnation of the whole of the Mineral
Estate, means a taking of such scope that (a) the untaken portion of the Mineral Estate is not
reasonably usable for Lessee’s purposes or is insufficient to permit the reclamation of the
then existing improvements thereon or is insufficient to permit the recovery of the cost of
reclamation of the then existing improvements thereon, or (b) the remaining untaken portion of
the Mineral Estate and the improvements thereon are incapable of producing a proportionately
fair and reasonable net annual income, taking into consideration the payment of all operating
expenses thereof




 


5









 





	 	 	including but not limited to the Royalty and other charges, if any, herein
reserved and after the performance of all covenants, agreements and provisions herein provided
to be performed by Lessee. The determination of what constitutes a fair and reasonable net
annual income shall be governed by reference to the average net annual income produced by the
Mineral Estate during the five-year period immediately preceding the taking (or, if the taking
occurs during the first five years of the Lease term, during the Lease term to date). As used
above, the term “operating expenses” does not include depreciation or income taxes. If there
is any controversy as to whether materially all of the Mineral Estate has been taken, the
controversy shall be resolved by arbitration.







If materially all of the Mineral Estate is taken or condemned, then Lessee, at its option,
upon thirty (30) days prior notice to Lessor, given at any time within ninety (90) days
after the vesting of title in the condemnor, may cancel and terminate this Lease as to the
entire Mineral Estate. The charges hereunder shall be prorated as of this date of
termination.




	17.2	 	No Termination. In the event of a partial taking or condemnation, i.e., a
taking or condemnation of less than materially all of the Mineral Estate, this Lease (except
as hereinafter provided) shall nevertheless continue.







	17.3	 	Temporary Taking. If the whole or any part of the Mineral Estate or of Lessee’s
interest under this Lease be taken or condemned by any competent authority for its or their
temporary use or occupancy for a period which is fewer than four (4) months, this Lease shall
not terminate by reason thereof and Lessee shall continue to pay, in the manner and at the
times herein specified, the full amounts of Royalty and other charges, if any, payable by
Lessee hereunder, and, except only to the extent that Lessee may be prevented from so doing
pursuant to the terms of the order of the condemning authority, to perform and observe all of
the other terms, covenants, conditions and obligations hereof upon the part of Lessee to be
performed and observed, as though such taking or condemnation had not occurred. If the whole
or any part of the Mineral Estate or Lessee’s interest in this Lease be taken or condemned by a competent authority for its or their
temporary use or occupancy for a period which is in excess of four (4) months, this Lease
may be terminated at the option of Lessee upon notice given within thirty (30) days of the
taking or condemnation. Notwithstanding anything to the contrary herein, in the event of
any temporary taking or condemnation Lessee shall, if this Lease has not been terminated as
provided in this Section, be entitled to receive the entire amount of any award made for
such taking or condemnation, whether paid by way of damages or otherwise, unless such period
of temporary use or occupancy shall extend to or beyond the expiration or termination of
this Lease, in which case such award shall be apportioned between Lessor and Lessee as of
such date of expiration or termination.




 


6









 










Article 18

WATER RIGHTS





	18.1	 	This Lease creates no interest in or title to any surface or groundwater rights Lessor may
have.







	18.2	 	If Lessee uses, on the Mineral Estate, surface or groundwater from a source not on the
Mineral Estate, that use alone shall not (1) cause such water or any rights with respect to
that water to be appurtenant to the Mineral Estate, or (2) affect in any way Lessee’s rights
with respect to the water.

	 
	18.3	 	[Intentionally Omitted]







	18.4	 	Nothing in the provisions of this Lease shall affect the validity of any rights established
by or for Lessor or Lessee with respect to surface water, as defined in A.R.S. §45-101 or
other groundwater prior to the Effective Date of this Lease.






Article 19

DEFAULT AND CANCELLATION





	19.1	 	Violation by Lessee of any provision of this Lease shall be a default hereunder entitling
Lessor to any and all remedies it may have under Arizona law.

	 
	19.2	 	[Intentionally Omitted]

	 
	19.3	 	[Intentionally Omitted]






Article 20

HOLDOVER LESSEE





	20.1	 	Within one hundred twenty (120) days after expiration or termination of this Lease, Lessee
agrees to surrender to Lessor peaceful and uninterrupted possession of the Mineral Estate.
Holdover tenancy by Lessee is prohibited and shall be deemed a trespass for which Lessor may
seek all appropriate legal remedies; except that a Lessee in good standing who has filed a
timely application for renewal may continue to occupy and use the Mineral Estate, pursuant to
the terms of this Lease, pending action on the renewal application by Lessor.






 


7









 






Article 21

INDEMNIFICATION AND INSURANCE





	21.1	 	Lessee hereby expressly agrees to the following indemnity and insurance provisions:







	 	21.1.1	 	Irrespective of any insurance carried by Lessee for the benefit of Lessor, Lessee
hereby expressly agrees to indemnify and hold Lessor harmless, or cause Lessor to be
indemnified and held harmless, from and against all liabilities, obligations, damages,
penalties, claims, causes of action, costs, charges and expenses, including attorney’s
fees and costs, which may be imposed upon or incurred by or asserted against Lessor by
reason of the following: (i) any accident, injury or damage to any person or property
occurring on or about the Mineral Estate or any portion thereof as a result of Lessee’s
operations on the Mineral Estate commencing on April 20, 2011; (ii) any use, nonuse or
condition of the Mineral Estate or any portion thereof; or (iii) any failure on the
part of Lessee to perform or comply with any of the provisions of this Lease; except
that none of the foregoing shall apply to Lessor’s gross negligence or willful
misconduct. In case any action or proceeding is brought against Lessor by reason of
any such occurrence, Lessee, upon Lessor’s request and at Lessee’s expense, will resist
and defend such action or proceeding, or cause the same to be resisted and defended
either by counsel designated by Lessee or, where such occurrence is covered by
liability insurance, by counsel designated by the insurer. This section shall survive
the expiration or any termination of this Lease.







	 	21.1.2	 	Lessee, at its expense, shall at all times during the term of this Lease, and any
extension thereof, maintain in full force a policy or policies of comprehensive
liability insurance, written by one or more responsible insurance companies licensed
to do business in the State of Arizona, and each policy shall be written on an
occurrence basis, which insure
Lessee and Lessor against liability for injury to persons and property and death
of any person or persons occurring in, on or about the Mineral Estate, or arising
out of Lessee’s maintenance, use and occupancy thereof. All public liability and
personal property damage policies shall contain a provision that Lessor, named as
an additional insured, shall be entitled to recovery under the policies for any
loss occasioned to it, its servants, agents and employees by reason of the
negligence or wrongdoing of Lessee, its servants, agents, and employees or
sublessees. Further, the policies shall provide that their coverage is primary
over any other insurance coverage available to Lessor, its servants, agents and
employees. All policies of insurance delivered to Lessor must contain a provision
that the company writing the policy shall give to Lessor thirty (30) days notice
in writing in advance of any cancellation or lapse, or the effective date of any
reduction in the amounts of insurance. Insurance policies must be in the amounts
set forth in paragraph 3 below.







	21.2	 	In case an action or proceeding is brought against Lessor by reason of any such occurrence,
Lessee, upon Lessor’s request and at Lessee’s expense, will resist and defend such action or
proceedings, or cause the same to be resisted and
defended either by counsel designated by
Lessee or, where such occurrence is covered by liability insurance, by counsel designated by
the insurer.




 


8









 











	21.3	 	[Intentionally Omitted]

	 
	21.4	 	Minimum Scope and Limits of Insurance: Lessee shall provide coverage with limits of
liability not less than those stated below and in no event shall the limits of coverage be
less than the coverage provided by Lessee to the Arizona State Lands Department.







	 	21.4.1	 	Commercial General Liability — Occurrence Form: Policy shall include bodily injury,
property damage, personal injury and broad form contractual liability coverage.

	 
	 	21.4.2	 	General Aggregate — $2,000,000

	 
	 	21.4.3	 	Products — Completed Operations Aggregate — $2,000,000

	 
	 	21.4.4	 	Personal and Advertising Injury — $2,000,000

	 
	 	21.4.5	 	Each Occurrence — $2,000,000

	 
	 	21.4.6	 	Blanket Contractual Liability — Written and Oral — $2,000,000

	 
	 	21.4.7	 	XCU — Coverage for Mining Operations — $2,000,000

	 
	 	21.4.8	 	Fire Damage (any one fire) — $500,000

	 
	 	21.4.9	 	Medical — $50,000

	 
	 	21.4.10	 	The policy shall be endorsed to add Lessor as an additional insured with respect to
liability arising out of the use and/or occupancy of the Mineral Estate subject to this
Lease.







	21.5	 	Excess Liability/Umbrella — Occurrence Form. Excess Liability is to follow form of
the Commercial General Liability policy in Section 21.4.1 with the minimum amount of
$5,000,000.







	21.6	 	Automobile Liability — To cover all owned, non-owned, hired, leased vehicles of
Lessee in the minimum amount of $1,000,000.







	21.7	 	Additional Insurance Requirements: The policies shall include, or be endorsed to
include, the following provisions:







	 	21.7.1	 	Lessor, its officers, officials, agents, and employees wherever additional insured
status is required. Such additional insured shall be covered to the full limits of
liability purchased by Lessee, even if those limits of liability are in excess of those
required by this Lease.




 


9









 











	 	21.7.2	 	Lessee’s insurance coverage shall be primary insurance with respect to all other
available sources.







	 	21.7.3	 	Coverage provided by Lessee shall not be limited to the liability assumed under the
indemnification provisions of this Lease.







	21.8	 	Notice of Cancellation: Each insurance policy required by the insurance provisions
of this Lease shall not be suspended, voided, cancelled, reduced in coverage or in limits
except after thirty (30) days’ prior written notice has been given to Lessor. Such notice
shall be sent directly to Lessor as provided at Section 25.7 herein.







	21.9	 	Acceptability of Insurers: Insurance is to be placed with duly licensed or approved
non-admitted insurers in the State of Arizona with an “A.M. Best” rating not less than A-VII.
The State of Arizona in no way warrants that the above-required minimum insurer rating is
sufficient to protect Lessee from potential insurer insolvency.







	21.10	 	Verification of Coverage: Lessee shall furnish Lessor with certificates of
insurance (ACORD form or equivalent approved by Lessor) as required by this
Lease. The certificates for each insurance policy are to be signed by a person authorized
by that insurer to bind coverage on its behalf. All certificates and endorsements are to be
received and approved by Lessor before the lease term commences. Each insurance policy
required by this Lease must be in effect at or prior to the commencement of the Lease and
must remain in effect for the duration of the Lease. Failure to maintain the insurance
policies as required by this Lease or to provide timely evidence of renewal will be
considered a material breach of the Lease. All certificates required by this Lease shall be
sent directly to Lessor. Lessor reserves the right to require complete, certified copies of
all insurance policies and endorsements required by this Lease at any time.







	21.11	 	Approval: Any modification or variation from the insurance requirements in this
Lease must have prior approval from Lessor, whose decision shall be final. Such action will
not require a formal Lease amendment, but may be made by administrative action.




 


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Article 22

ENVIRONMENTAL MATTERS





	22.1	 	Definition of Regulated Substances and Environmental Laws. For purposes of this
Lease, the term “Environmental Laws” shall include but not be limited to any relevant
federal, state, or local environmental laws, and the regulations, rules and ordinances,
relating to environmental matters, and publications promulgated pursuant to the local, state,
and federal laws and any rules or regulations relating to environmental matters applicable to
Lessee’s operations on the Mineral Estate. For the purpose of this Lease, the term
“Regulated Substances” shall include but not be limited to substances defined as
“regulated substance,” “solid waste,” “hazardous waste,” “hazardous materials,” “hazardous
substances,” “toxic materials,” “toxic substances,” “inert materials,” “pollutants,” “toxic
pollutants,” “herbicides,” “fungicides,” “rodenticides,” “insecticides,” “contaminates,”
“pesticides,” “asbestos,” “environmental nuisance,” “criminal littering,” or “petroleum
products” as defined in Environmental Laws.







	22.2	 	Compliance with Environmental Laws and Operating Permits. Lessee shall strictly
comply with all Environmental Laws, including, without limitation, water quality, air quality,
and handling, transportation, storage, treatment, or disposal of any Regulated Substance on,
under, or from the Mineral Estate. Without limiting the foregoing, compliance includes that
Lessee shall: (i) comply with all reporting obligations imposed under Environmental Laws; (ii)
obtain and maintain all permits required by Environmental Laws, and permits required to
operate the Facilities, mine and produce the Authorized Minerals and conduct operations
authorized by this Lease and provide a copy to Lessor within ten business days of receipt of
the permit; (iii) provide copies of all material documentation relating to the Mineral Estate
as required by Environmental Laws to Lessor within ten business days of Lessee’s submittal and/or receipt of the
documentation; (iv) during the Term of this Lease, provide copies of all material
information it receives or obtains regarding any and all environmental matters relating to
the Mineral Estate, including but not limited to environmental audits relating to the
Mineral Estate regardless of the reason for which the information was obtained or whether or
not the information was required by Environmental Laws; and (v) prevent treatment, storage,
disposal, handling or use of any Regulated Substances within the Mineral Estate without
prior written authorization from Lessor.







	22.3	 	Designated Compliance Officer. Lessee at all times shall employ or designate an
existing employee, consultant or representative (the “Designated Compliant Officer”)
who is responsible for knowing all Environmental Laws affecting Lessee and Lessee’s business
and monitoring Lessee’s continued compliance with applicable Environmental Laws. Upon request
by Lessor, Lessee shall make the Designated Compliance Officer available to discuss Lessee’s
compliance, answer any questions, and provide such reports and confirming information as
Lessor may reasonably request.







	22.4	 	Audit. No more than once in any five year period, Lessor may request Lessee to
provide an environmental audit of the Mineral Estate performed by an Arizona registered
professional engineer or an Arizona registered geologist. Lessee shall pay the entire cost of
the audit.

	 
	22.5	 	[Intentionally omitted]




 


11









 











	22.6	 	Indemnity for Environmental Damage. Lessee shall defend, indemnify and hold Lessor
harmless from and against any and all liability, obligations, losses, damages, penalties,
claims, environmental response and cleanup costs and fines, and actions, suits, costs, taxes,
charges, expenses and disbursements, including legal fees and expenses of whatever kind or
nature (collectively, “claims” or “damages”) imposed on, incurred by, or reserved against
Lessor in any way relating to or arising out of any non-compliance by Lessee, Lessee’s
successors or sublessees, with any Environmental Laws, the existence or presence from and
after the Effective Date of any Regulated Substance, on, under, or from the Mineral Estate,
and any claims or damages in any way relating to or arising out of the removal, treatment,
storage, disposition, mitigation, cleanup or remedying of any Regulated Substance on, under,
or from the Mineral Estate by Lessee, its agents, contractors, or subcontractors.







	22.7	 	Scope of Indemnity. This indemnity shall include, without limitation, claims or
damages arising out of any and all violations of Environmental laws by Lessee on the Mineral
Estate. This indemnity shall survive the expiration or termination of this Lease and/or
transfer of all or any portion of the Mineral Estate and shall be governed by the laws of the
State of Arizona.







	22.8	 	Lessee’s Participation in the Defense. In the event any action or claim is brought
or asserted against Lessor which is or may be covered by this indemnity, Lessee shall fully
participate, at Lessee’s expense, in the defense of the action or claim including but not
limited to the following: (i) the conduct of any required cleanup, removal or remedial actions
and/or negotiations, (ii) the conduct of any proceedings, hearings, and/or litigation, and
(iii) the negotiation and finalization of any agreement or settlement. Lessor shall retain
the right to make all final decisions concerning the defense.







	22.9	 	Remediation. Prior to the termination of this Lease and in addition to those
obligations set forth in this Lease, Lessee shall restore the Mineral Estate by removing any
and all Regulated Substances placed on the Mineral Estate by or on behalf of Lessee. If the
Mineral Estate or any portions thereof are damaged or destroyed from the existence or presence
of any such Regulated Substance or if the Mineral Estate or any portions thereof are damaged
or destroyed in any way relating to or arising out of the removal, treatment, storage,
disposition, mitigation, cleanup or remedying of any such Regulated Substance, Lessee shall
arrange, at its expense, for the repair, removal, and remediation of the Mineral Estate, to
the satisfaction of Lessor. In any event, any damage, destruction, or restoration by Lessee
shall not relieve Lessee from its obligations and liabilities under this Lease.






Article 23

[INTENTIONALLY OMITTED]



 


12









 







Article 24

[INTENTIONALLY OMITTED]




Article 25

MISCELLANEOUS





	25.1	 	This Lease grants Lessee only those rights expressly granted herein.







	25.2	 	This Lease is subject to and Lessee will comply with all current and subsequently enacted
rules, regulations and laws applicable hereto as though fully set forth herein.







	25.3	 	Lessor shall be forever wholly absolved from any liability for damages which might result to
Lessee in the event this Lease is found to be void, canceled, forfeited or terminated prior to
the Expiration Date.







	25.4	 	[Intentionally omitted]







	25.5	 	In any action arising out of this Lease, the prevailing party shall recover reasonable
attorneys’ fees incurred therein in addition to the amount of any judgment, costs and other
expenses as determined by the court.







	25.6	 	No provisions of this Lease shall create any right or interest in Lessee to an ownership
interest in the Mineral Estate.







	25.7	 	All notices and communications required or permitted under this Lease shall be in writing and
addressed as set forth below. Any communication or delivery hereunder shall be deemed to have
been duly made and the receiving Party charged with notice (i) if personally delivered, when
received, (ii) if sent by facsimile transmission, when received, or (iii) if sent by overnight
courier, one day after sending. All notices shall be addressed as follows:







If to Lessee:




American West Potash LLC

600 17th Street, Suite 2800-South

Denver, Colorado 80202

Attn: Patrick L. Avery, President

Facsimile: (720) 294-0402




If to Lessor:




PAP & POP FAMILY, LTD


                
    *


Attn: Tom Hortenstine, General Partner




and




3MKJ, LP


                
    *


Attn: Katherine Hortenstine, General Partner


 


13









 






	 	 	Any Party may, by written notice so delivered to Lessor, change the address or individual to
which delivery shall thereafter be made.

	 
	25.8	 	[Intentionally omitted]







	25.9	 	This Lease and the Agreement, together with all attached Appendices, embodies the whole
agreement of the parties. There are no other agreements or terms, oral or written. This
document supersedes all previous communications, representations and agreements, oral or
written, between the parties.







	25.10	 	This Lease may only be amended in writing signed by all the Parties, and any rights
hereunder may not be waived except by an instrument in writing signed by the Party to be
charged with such waiver and delivered by such Party to all Parties. The waiver or failure of
any Party to enforce any provision of this Lease shall not be construed or operate as a waiver
of any further breach of such provision or of any other provision of this Agreement.







	25.11	 	The Parties may record a written short form or memorandum of this Lease which is sufficient
to be entitled to be recorded in the real property records under the laws of the State of
Arizona.







	25.12	 	Lessor acknowledge that Lessee is managed and partially owned by PGRI, which is a public
company, and that consequently this Lease agreement and a description of this Lease may be
required to be filed by PGRI with and/or reported to the Securities and Exchange Commission
and may be required to be filed with, reported to or otherwise disclose to other applicable
regulatory organizations. Subject to PGRI’s legal reporting obligations, each Party agrees to
treat any information as confidential, including information set forth in reports delivered.







	25.13	 	The headings of the Articles and Sections of this Agreement are for guidance and convenience
of reference only and shall not limit or otherwise affect any of the terms or provisions of
this Lease.







	25.14	 	This Lease may be executed by the Parties in any number of counterparts, each of which shall
be deemed an original instrument, but all of which together shall constitute but one and the
same instrument. Signatures of the Parties transmitted by facsimile or electronic scan
transmission in .pdf format shall be considered binding.




 


14









 











	25.15	 	References made in this Lease, including use of a pronoun, shall be deemed to include where
applicable, masculine, feminine, singular or plural, individuals or entities. As used in this
Lease, “person” shall mean any natural person, corporation, partnership, trust, limited
liability company, court, agency, government, board, commission, estate or other entity or
authority.







	25.16	 	This Lease and the transactions contemplated hereby and any arbitration or dispute
resolution conducted pursuant hereto shall be construed and enforced in accordance with, and
governed by, the laws of the State of Arizona, without regard to its conflicts of laws rules.
The Parties shall attempt to resolve any dispute that may arise in connection with this Lease
through a process of mediation administered by a mediation service provider mutually agreed
upon by the Parties (the “Mediation Service Provider”). The complaining Party must notify the
other Party or Parties that a dispute exists and, for a period of ten (10) days, the Parties
shall attempt to agree on the Mediation Service Provider. If, during such ten-day-period the
Parties cannot agree upon a Mediation Service
Provider, the Mediation Service Provider shall be
appointed by the American Arbitration
Association. A designated individual mediator
will then be selected in accordance with the
rules of the Mediation Service Provider to
conduct the mediation; provided that such
mediator must have experience in the mining
industry and must not have any conflict of
interest. The mediation will be a nonbinding
conference between the Parties conducted in
accordance with the applicable rules and
procedures of the Mediation Service Provider.
The Parties shall attempt to settle the dispute
by participating in at least ten (10) hours of
mediation at the offices of the Mediation Service
Provider. No Party may initiate litigation or
arbitration proceedings with respect to any
dispute until the mediation of such dispute is
complete with the sole exception of seeking
emergency relief from a court of competent
jurisdiction, as described below. Any mediation
will be considered complete: (i) if the Parties
enter into an agreement to resolve the dispute;
(ii) with respect to the Party submitting the
dispute to mediation, if the other Party or
Parties fail to appear at or participate in a
reasonably scheduled mediation conference; or
(iii) if the dispute is not resolved within five
days after the mediation is commenced, provided
the Parties have participated in at least ten
hours of mediation, as provided above. EACH OF
THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED
HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS LEASE AND ANY AGREEMENT CONTEMPLATED TO
BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE PARTIES ENTERING INTO THIS LEASE.




 


15









 











	25.17	 	 [Intentionally omitted].







	25.18	 	It is the intent of the Parties that the provisions contained in this Lease shall be
severable. Should any provisions, in whole or in part, be held invalid as a matter of law,
such holding shall not affect the other portions of this Lease, and such portions that are not
invalid shall be given effect without the invalid portion.







	25.19	 	The Parties agree that legal remedies may be inadequate to enforce the provisions of this
Lease and that equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Lease.




 


16









 










IN WITNESS WHEREOF the Parties have executed this Lease effective as of the Effective Date.



LESSEE:

AMERICAN WEST POTASH LLC



	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 
	 

	 	 

Patrick L. Avery
	 	 	 	 	 	 
	 

	 	Its: Manager	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	LESSOR:

HORTENSTINE GROUP	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	PAP AND POP FAMILY LTD.	 	 	 	3MKJ LP
	By: HLCC, LLC, its General Partner	 	 	 	HMC Investment Management, LLC,

its General Partner
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Name: Tom Hortenstine
	 	 	 	 	 	Name: Katherine Hortenstine
	 

	 	Title: President
	 	 	 	 	 	Title: President






 


17









 







APPENDIX A

LEGAL DESCRIPTION OF MINERAL ESTATE




Lessor’s interest in and to the Mineral Estate in Authorized Minerals in the following described
lands located in Apache County, Arizona:



	 	 	 	 	 
	Township 18 North 25 East, Gila and Salt River Meridian
	Section 1:

	 	All;	 	 
	Section 3:

	 	All;	 	 
	Section 5:

	 	All;	 	 
	Section 9:

	 	All;	 	 
	Section 11:

	 	All;	 	 
	Section 13

	 	All;	 	 
	Section 15:

	 	All;	 	 
	Section 17:

	 	All;	 	 
	Section 21:

	 	All;	 	 
	Section 23:

	 	All;	 	 
	Section 25:

	 	All;	 	 
	Section 27:

	 	All;	 	 
	Section 29:

	 	All;	 	 
	Section 33:

	 	All;	 	 
	Section 35:

	 	All.	 	 
	 
	 	 	 	 
	Township 19 North 25 East, Gila and Salt River Meridian
	Section 12:	 	W1/2SW1/4, S1/2NW1/4,
	Section 13:

	 	All;	 	 
	Section 23:

	 	All;	 	 
	Section 25:

	 	All;	 	 
	Section 27:

	 	All;	 	 
	Section 33:

	 	All;	 	 
	Section 35:

	 	All;	 	 
	Sections 1, 11,	 	15 and 21 as to those portions lying south and east of the thread of the stream of
the Rio Puerco of the West and lying south of the southern limit of the right-of-way of the
Atlantic and Pacific Railroad.
	 
	 	 	 	 
	Township 18 North 26 East, Gila and Salt River Meridian
	Section 5:

	 	All;	 	 
	Section 7:

	 	All;	 	 
	Section 17:

	 	All;	 	 
	Section 19:

	 	All;	 	 
	Section 29:

	 	N1/2, SW 1/4.	 	 
	 
	 	 	 	 
	Township 19 North 26 East, Gila and Salt River Meridian
	Section 3:

	 	All;	 	 
	Section 5:

	 	All;	 	 
	Section 7

	 	All;	 	 
	Section 9:

	 	All;	 	 
	Section 11:

	 	All;	 	 
	Section 15:

	 	All;	 	 
	Section 17:

	 	All;	 	 
	Section 19:

	 	All;	 	 
	Section 29:

	 	All;	 	 
	Section 31:

	 	All.	 	 
	 
	 	 	 	 
	Township 20 North 26 East, Gila and Salt River Meridian
	Section 33:	 	As to that portion lying south and east of
the thread of the stream of the Rio Puerco of
the West and lying south of the southern
limit of the right-of-way of the Atlantic and
Pacific Railroad;
	Section 35:

	 	All.	 	 







 


 









 







APPENDIX B

GENERAL LOCATION MAP