Exhibit 10.2





Exhibit 10.2




AMENDED AND RESTATED SECURITY AGREEMENT

Dated as of August 3, 2011




WHEREAS, the undersigned, Prospect Global Resources Inc., a Delaware corporation (the
“Debtor”), has previously assigned and granted to Richard Merkin (“Merkin”) a
security interest in the Collateral (as defined below) pursuant to a Security Agreement dated as of
January 24, 2011, to COR Capital LLC, as investment advisor on behalf of the COR US Equity Income
Fund (“COR”) pursuant to an Amended and Restated Security Agreement dated as of March 11,
2011 and to Hexagon Investments, LLC (“Hexagon”) pursuant to an Amended and Restated
Security Agreement dated as of April 25, 2011 (the “Previous Agreement”);



WHEREAS, the Debtor now wishes to assign and grant to Avalon Portfolio, LLC, and any assignees or
transferees thereof (“Avalon”) a security interest in the Collateral and Merkin, COR and
Hexagon wish to consent to such assignment and grant, all on the terms set forth herein; and



NOW, THEREFORE, the Previous Agreement is hereby amended and restated as follows:



1. THE SECURITY. The Debtor hereby assigns and grants to the holders of the Notes (as defined in
Section 2) (together, the “Secured Parties”) a pari passu security interest in the
following described property, now owned or hereafter acquired by the Debtor and wherever located
(“Collateral”):



(a) All accounts, contract rights, chattel paper, instruments, deposit accounts, letter of
credit rights, payment intangibles and general intangibles and all returned or repossessed goods
which, on sale or lease, resulted in an account or chattel paper.



(c) All securities of any type or any other ownership interest in any business or venture of
any nature, securities entitlements, securities accounts, investment property, instruments, chattel
paper, and electronic chattel paper and Debtor’s books relating to the foregoing.




(d) All inventory, including all materials, work in process and finished goods.




(e) All machinery, furniture, fixtures and other equipment of every type.



(f) All general intangibles, including, but not limited to, (i) all patents, and all
unpatented or unpatentable inventions; (ii) all trademarks, service marks, and trade names; (iii)
all copyrights and literary rights; (iv) all computer software programs; (v) all mask works of
semiconductor chip products; (vi) all trade secrets, proprietary information, customer lists,
manufacturing, engineering and production plans, drawings, specifications, processes and systems.
The Collateral shall include all good will connected with or symbolized by any of such general
intangibles; all contract rights, documents, applications, licenses, materials and other matters
related to such general intangibles; all tangible property embodying or incorporating any such
general intangibles; and all chattel paper and instruments relating to such general intangibles.




(g) All negotiable and non-negotiable documents of title covering any Collateral.



(h) All accessions, attachments and other additions to the Collateral, and all tools, parts
and equipment used in connection with the Collateral.


 


 









 





(i) All substitutes or replacements for any Collateral, all cash or non-cash proceeds,
products, rents and profits of any Collateral, all income, benefits and property receivable on
account of the Collateral, all rights under warranties and insurance contracts, letters of credit,
guaranties or other supporting obligations covering the Collateral, and any causes of action
relating to the Collateral.



(j) All books and records pertaining to any Collateral, including but not limited to any
computer-readable memory and any computer hardware or software necessary to process such memory
(“Books and Records”).



2. THE INDEBTEDNESS. The Collateral secures and will secure pari passu all obligations of the
Debtor under the following Convertible Secured Notes (the “Notes”): (i) to Merkin under the
Convertible Secured Promissory Note, dated January 24, 2011, in an aggregate principal amount of
$2,000,000, by the Debtor to Merkin, (ii) to COR, under the convertible Secured Promissory Note,
dated March 11, 2011, in an aggregate principal amount of $500,000, by the Debtor to COR, (iii) to
Hexagon under the Convertible Secured Promissory Note, dated April 25, 2011, in an aggregate
principal amount of $2,500,000, by the Debtor to Hexagon, (iv) to Avalon under the Convertible
Secured Promissory Note, dated August 1, 2011, in an aggregate principal amount of $1,500,000, by
the Debtor to Avalon and (v) to the holders of any other Convertible Secured Promissory Notes
issued by the Company after the date hereof that becomes party to this Agreement. “Secured
Indebtedness” means all debts, obligations or liabilities now or hereafter existing, absolute
or contingent of the Debtor to the Secured Parties, whether voluntary or involuntary, whether due
or not due, or whether incurred directly or indirectly or acquired by the Secured Parties by
assignment or otherwise.



3. DEBTOR’S REPRESENTATIONS AND COVENANTS. The Debtor represents, covenants and warrants that
unless compliance is waived by all Secured Parties in writing:



(a) The Debtor will properly preserve the Collateral; defend the Collateral against any
adverse claims and demands; and keep accurate Books and Records.



(b) On the date hereof, the Debtor’s chief executive office is located at the address
specified on the signature page hereof. In addition, on the date hereof, the Debtor’s jurisdiction
of organization and exact legal name are as set forth in the first paragraph of this Agreement.
The Debtor shall give the Secured Parties at least 10 Business Days’ notice before changing its
chief executive office or jurisdiction of incorporation or organization or its registration as an
organization (or effecting any new such registration). The Debtor will notify the Secured Parties
in writing prior to any change in the location of any Collateral, including the Books and Records.



(c) The Debtor will notify the Secured Parties in writing at least 10 days prior to any
change in the Debtor’s name, identity or business structure.



(d) The Debtor has not granted and will not grant any security interest in any of the
Collateral, and will keep the Collateral free of all liens, claims, security interests and
encumbrances of any kind or nature, in each case except for the security interest of the Secured
Parties.



(e) The Debtor will promptly notify the Secured Parties in writing of any event which
materially and adversely affects the value of the Collateral, taken as a whole, the ability of the
Debtor or the Secured Parties to dispose of the Collateral, or the rights and remedies of the
Secured Parties in relation thereto.


 


 









 





(f) The Debtor shall pay all costs necessary to preserve, defend, enforce and collect the
Collateral, including but not limited to taxes, assessments, insurance premiums, repairs, rent,
storage costs and expenses of sales, and any costs to perfect the Secured Parties’ security
interest (collectively, the “Collateral Costs”). Without waiving the Debtor’s default for
failure to make any such payment, the Secured Parties at their option may pay any such Collateral
Costs, and discharge encumbrances on the Collateral, and such Collateral Costs payments shall be a
part of the Secured Indebtedness and bear interest at the rate set out in the Credit Agreement. The
Debtor agrees to reimburse the Secured Parties on demand for any Collateral Costs so incurred.



(g) Until a Secured Party exercises its rights to make collection, the Debtor will diligently
pursue rights to payment constituting Collateral.



(h) If any Collateral is or becomes the subject of any registration certificate, certificate
of deposit or negotiable document of title, including any warehouse receipt or bill of lading, the
Debtor shall immediately deliver such document to the Secured Parties, together with any necessary
endorsements.



(i) So long as no default has occurred and is continuing under this Agreement, the Debtor may
sell Collateral consisting of inventory in the ordinary course and withdraw funds from any deposit
account which is part of the Collateral without the Secured Parties’ prior written consent.



(j) The Debtor will at its expense protect and defend all rights in the Collateral against
any material claims and demands of all persons other than the Secured Parties and will, at its
expense, enforce all rights in the Collateral against any and all infringers of the Collateral
where such infringement would materially impair the value or use of the Collateral to the Debtor or
the Secured Parties. The Debtor will not license or transfer any of the Collateral, except for
such licenses as are customary in the ordinary course of the Debtor’s business, or except with the
prior written consent of all Secured Parties.



4. ADDITIONAL REQUIREMENTS. The Debtor agrees that any Secured Party may at its option at any
time, whether or not the Debtor is in default hereunder:



(a) Require the Debtor to deliver to such Secured Party (i) copies of or extracts from the
Books and Records, and (ii) information on any contracts or other matters affecting the Collateral.



(b) Examine the Collateral, including the Books and Records, and make copies of or extracts
from the Books and Records, and for such purposes enter at any reasonable time after reasonable
notice to the Debtor upon the property where any Collateral or any Books and Records are located.



(c) Require the Debtor to deliver to such Secured Party, in trust for the benefit, pari
passu, of all of the Secured Parties, any instruments, chattel paper or letters of credit which are
part of the Collateral, and to assign to the Secured Parties the proceeds of any such letters of
credit.



(d) Only at such time that an Event of Default has occurred and is continuing, notify any
account debtors, any buyers of the Collateral, or any other persons of the Secured Parties’
interest in the Collateral.


 


 









 





5. DEFAULTS. Any Event of Default (as defined in any of the Notes) shall be an Event of Default
hereunder.



6. SECURED PARTY’S REMEDIES AFTER DEFAULT. Upon the occurrence of, and during the continuance of,
any Event of Default, any Secured Party may do any one or more of the following for the benefit,
pari passu, of all of the Secured Parties:




(a) Declare any Secured Indebtedness immediately due and payable, without notice or demand.



(b) Enforce the security interest given hereunder pursuant to the Uniform Commercial Code and
any other applicable law.




(c) Exert control over any deposit or securities accounts of the Debtor.



(d) Require the Debtor to obtain the prior written consent of all Secured Parties to any
sale, lease, agreement to sell or lease, or other disposition of any Collateral consisting of
inventory.



(f) Require the Debtor to segregate all collections and proceeds of the Collateral so that
they are capable of identification and deliver daily such collections and proceeds to the Secured
Parties in kind.



(g) Require the Debtor to direct all account debtors to forward all payments and proceeds of
the Collateral to a post office box under the Secured Parties’ exclusive control.



(h) Require the Debtor to assemble the Collateral, including the Books and Records, and make
them available to the Secured Parties at a place designated by such Secured Party.



(i) Enter upon the property where any Collateral, including any Books and Records, are
located and take possession of such Collateral and such Books and Records, and use such property
(including any buildings and facilities) and any of the Debtor’s equipment, if such Secured Party
deems such use necessary or advisable in order to take possession of, hold, preserve, process,
assemble, prepare for sale or lease, market for sale or lease, sell or lease, or otherwise dispose
of, any Collateral.



(j) Demand and collect any payments on and proceeds of the Collateral. In connection
therewith the Debtor irrevocably authorizes the Secured Parties to endorse or sign the Debtor’s
name on all checks, drafts, collections, receipts and other documents, and to take possession of
and open the mail addressed to the Debtor and remove therefrom any payments and proceeds of the
Collateral.



(k) With the consent of the other Secured Parties, grant extensions and compromise or settle
claims with respect to the Collateral for less than face value, all without prior notice to the
Debtor.



(l) Use or transfer any of the Debtor’s rights and interests in any Intellectual Property now
owned or hereafter acquired by the Debtor, if such Secured Party deems such use or transfer
necessary or advisable in order to take possession of, hold, preserve, process, assemble, prepare
for sale or lease, market for sale or lease, sell or lease, or otherwise dispose of, any
Collateral. The Debtor agrees that any such use or transfer shall be without any additional
consideration to the Debtor. As used in this paragraph, “Intellectual Property” includes,
but is not limited to, all
trade secrets, computer software, service marks, trademarks, trade names, trade styles, copyrights,
patents, applications for any of the foregoing, customer lists, working drawings, instructional
manuals, and rights in processes for technical manufacturing, packaging and labeling, in which the
Debtor has any right or interest, whether by ownership, license, contract or otherwise.


 


 









 





(m) With the consent of the other Secured Parties have a receiver appointed by any court of
competent jurisdiction to take possession of the Collateral. The Debtor hereby consents to the
appointment of such a receiver and agrees not to oppose any such appointment.



(n) Take such measures as such Secured Party may deem necessary or advisable to take
possession of, hold, preserve, process, assemble, insure, prepare for sale or lease, market for
sale or lease, sell or lease, or otherwise dispose of, any Collateral, and the Debtor hereby
irrevocably constitutes and appoints each Secured Party as the Debtor’s attorney-in-fact to perform
all acts and execute all documents in connection therewith.



(o) Without notice or demand to the Debtor, set off and apply against any and all of the
Secured Indebtedness any and all deposits (general or special, time or demand, provisional or
final) at any time held or owing by such Secured Party or any of such Secured Party’s agents or
affiliates to or for the credit of the account of the Debtor.




(p) Exercise any other remedies available to such Secured Party at law or in equity.



7. MISCELLANEOUS.



(a) Any waiver, express or implied, of any provision hereunder and any delay or failure by
any Secured Party to enforce any provision shall not preclude the Secured Parties from enforcing
any such provision thereafter.



(b) The Debtor shall, at the request of the Secured Parties, execute such other agreements,
documents, instruments or financing statements in connection with this Agreement as the Secured
Parties may reasonably deem necessary.



(c) All notes, security agreements, subordination agreements and other documents executed by
the Debtor or furnished to the Secured Parties in connection with this Agreement must be in form
and substance satisfactory to the Secured Parties.



(d) This Agreement shall be governed by and construed according to the law of the State of
Colorado.



(e) All rights and remedies herein provided are cumulative and not exclusive of any rights or
remedies otherwise provided by law. Any single or partial exercise of any right or remedy shall
not preclude the further exercise thereof or the exercise of any other right or remedy.




(f) All terms not defined herein are used as set forth in the Uniform Commercial Code.



(g) In the event of any action by a Secured Party to enforce this Agreement or to protect the
security interest of the Secured Parties in the Collateral, or to take possession of, hold,
preserve, process, assemble, insure, prepare for sale or lease, market for sale or lease, sell or
lease, or otherwise dispose of, any Collateral, the Debtor agrees to pay immediately the costs and
expenses thereof, together with attorney’s fees and allocated costs for in-house legal services to
the extent permitted by law.


 


 









 





(h) In the event the Secured Parties seek to take possession of any or all of the Collateral
by judicial process, the Debtor hereby irrevocably waives any bonds and any surety or security
relating thereto that may be required by applicable law as an incident to such possession, and
waives any demand for possession prior to the commencement of any such suit or action.



(i) This Agreement shall constitute a continuing agreement, applying to all future as well as
existing transactions, whether or not of the character contemplated at the date of this Agreement,
and if all transactions between the Secured Parties and the Debtor shall be closed at any time,
shall be equally applicable to any new transactions thereafter.



(j) No amendment or waiver of any provision of this Agreement and no consent by the Secured
Parties to any departure therefrom by the Debtor shall be effective unless such amendment, waiver
or consent shall be in writing and signed by each Secured Party, and any such amendment, waiver or
consent shall then be effective only for the period and on the conditions and for the specific
instance specified in such writing. No failure or delay by any Secured Party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the exercise of any
other rights, power or privilege.



(k) The Secured Parties’ rights hereunder shall inure to the benefit of their respective
successors and assigns. In the event of any assignment or transfer by a Secured Party of any of
the Secured Indebtedness or the Collateral, such Secured Party thereafter shall be fully discharged
from any responsibility with respect to the Collateral so assigned or transferred, but such Secured
Party shall retain all rights and powers hereby given with respect to any of the Secured
Indebtedness or the Collateral not so assigned or transferred. All terms, covenants and agreements
of the Debtor herein shall be binding upon the successors and assigns of the Debtor.




IN WITNESS WHEREOF, this Security Agreement has been executed as of the date set forth above.



	 	 	 	 	 
	 	PROSPECT GLOBAL RESOURCES INC.

 	 
	 	By:  	/s/ Patrick Avery
 	 
	 	 	Patrick Avery, Chief Executive Officer 	 
	 	 	 	 
	 	SECURED PARTIES:

 	 
	 	/s/ Richard Merkin
 	 
	 	Richard Merkin 	 


 


 









 





	 	 	 	 	 



	 	 	 	 	 	 	 
	 	 	COR US EQUITY INCOME FUND	 	 
	 
	 	 	 	 	 	 
	 	 	By: COR Capital LLC

Its: Investment Advisor	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Steven Sugarman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	By: Steven Sugarman	 	 
	 

	 	 	 	Title: Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	HEXAGON INVESTMENTS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Brian Fleishmann	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	By: Brian Fleischmann	 	 
	 

	 	 	 	Title: Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	AVALON PORTFOLIO, LLC	 	 
	 
	 	 	 	 	 	 
	 	 	By its Manager Avalon Capital Group, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jonathan Bloomfield	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	By: Shane Hartnett	 	 
	 

	 	 	 	Its Manager