Document:

Exhibit 10.1

 

This instrument and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement (the “Subordination Agreement”) dated as of May 2, 2013, among Very Hungry LLC, a Colorado limited liability company, Scott Reiman 1991 Trust,  Prospect Global Resources, Inc., a Nevada corporation (the “Borrower”) and The Karlsson Group, Inc., an Arizona corporation (“Senior Lender”), to the indebtedness (including interest) owed by the Borrower to Senior Lender pursuant to the Borrower’s Guaranty, and to indebtedness refinancing such indebtedness as contemplated by the Subordination Agreement; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.

 

For the purposes of Sections 1272, 1273 and 1275 of the Internal Revenue Code of 1986, as amended, this Note is being issued with original issue discount.  You may contact the Borrower at 1407 17th Street, Suite 1550, Denver, CO 80202, attention Chief Financial Officer, and the Borrower  will provide you with the issue price, the amount of original issue discount, the issue date and the yield to maturity of this Note.

 

THIS CONVERTIBLE PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED   (THE “Securities Act”).  NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH RULE 144 UNDER SUCH ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL FOR LENDER, SATISFACTORY TO BORROWER, THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT OR RECEIPT OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.

 

PROSPECT GLOBAL RESOURCES INC.

 

SUBORDINATED PROMISSORY NOTE

 

	
$4,436,017.30
    	
 
    	
May 2, 2013
    

 

For Value Received, The Borrower hereby unconditionally promises to pay to the order of Very Hungry LLC, a Colorado limited liability company (“Lender”), in lawful money of the United States of America and in immediately available funds, the principal sum of FOUR MILLION, FOUR HUNDRED THIRTY-SIX THOUSAND SEVENTEEN DOLLARS AND THIRTY CENTS ($4,436,017.30), due and payable on the dates and in the manner set forth below (the “Note”).  The Note shall not bear interest.  The Borrower acknowledges receipt of $4,032,743.00 of cash proceeds from the issuance of the Note.

 

1.                                      Repayment and Conversion.

 

(a)                                 Repayment Upon Maturity; Prepayment.  Unless the Note has been (i) converted in accordance with the terms of this Section 1(a) or (ii) repaid, the outstanding

 

 

principal balance of the Note and all accrued and unpaid interest thereon shall become due and payable on September 9, 2013 (the “Maturity Date”), and at any time on or after the Maturity Date, Lender, at its sole discretion, may demand payment of the entire outstanding principal balance of the Note (the “Payment Demand”).  Borrower may prepay the Note or any portion thereof at anytime without penalty.

 

(b)                             Conversion upon a Rights Offering.  If  Borrower consummates a rights offering (the “Rights Offering”) of its Common Stock, $0.001 par value (“Common Stock”), to its stockholders while this Note is outstanding for aggregate consideration of not less than $12,000,000 and this Note has not been paid in full, then the outstanding principal balance of the Note thereon shall, upon closing of the Rights Offering, convert into a number of shares of Common Stock equal to (i) the outstanding principal balance of the Note, divided by (ii) the price per share paid by the investors to purchase the shares issued pursuant to the Rights Offering and otherwise upon the terms and conditions of such Rights Offering; provided, however that such conversion is conditioned on the Company having received shareholder approval of such conversion. If such conversion occurs and the Rights Offering also includes warrants or other rights to acquire securities of Borrower in the future, Borrower shall issue to Lender upon the closing of the Rights Offering, a warrant or warrants and rights exercisable for or carrying the right to purchase securities of Borrower (together, “Warrants”) on the same terms and conditions as given to the other investors in the Rights Offering; provided, however, that Borrower shall not be obligated to issue such Warrants unless the Note is either delivered to Borrower or its transfer agent as provided below, or Lender notifies Borrower or its transfer agent in writing that the Note has been lost, stolen or destroyed and executes an agreement satisfactory to Borrower to indemnify Borrower from any loss incurred by it in connection with such Note.

 

(c) Cash Payment Upon a Liquidity Event.  In the event of a Liquidity Event (as defined below) prior to the Maturity Date and prior to the Note having been paid in full or converted as provided above, then Borrower shall, in full satisfaction of all obligations under this Note, make a cash payment to Lender equal to 120% of the outstanding principal balance of the Note as of immediately prior to the closing of the Liquidity Event.  “Liquidity Event” means (x) a consolidation or merger of Borrower with or into any other corporation or other entity or person, or any other corporate reorganization or transaction, in which the stockholders of Borrower immediately prior to such consolidation, merger or reorganization, own less than 50% of the voting power of the surviving entity immediately after such consolidation, merger or reorganization (except for transactions principally for bona fide equity financing purposes in which cash is received by Borrower or indebtedness of Borrower is cancelled or converted or a combination thereof), or (y) a sale, lease, sublease or license by Borrower of all or substantially all of its assets.

 

2.                                      Mechanics of Conversion.  In the event of conversion pursuant to Section 2(b), the Note shall be converted automatically without any further action by Lender and whether or not the Note is surrendered to Borrower or its transfer agent; provided, however, that Borrower shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless the Note is either delivered to Borrower or its transfer agent as provided below, or Lender notifies Borrower or its transfer agent in writing that the Note has been lost, stolen or destroyed and executes an agreement satisfactory to Borrower to indemnify Borrower from any loss incurred by it in connection with such Note.  Upon the occurrence of such

 

2

 

conversion, Lender shall surrender the Note at the office of Borrower or any transfer agent for the shares of Common Stock issuable upon conversion.  Thereupon, there shall be issued and delivered to Lender, at such office and in its name as shown on such surrendered Note, a certificate for the number of shares of Common Stock into which the Note was convertible on the date on which such conversion occurred

 

3.                                      Fractional Shares.  No fractional share shall be issued upon the conversion of the Note. Borrower shall, in lieu of issuing any fractional share, pay Lender a sum in cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the board of directors of Borrower).

 

4.                                      Payments.  All payments of principal shall be in lawful money of the United States of America and shall be payable at the primary address of Lender unless another place of payment shall be specified in writing by Lender.  Payment on the Note shall be applied to the outstanding principal balance hereof.  If any payments on the Note become due on a Saturday, Sunday, or a public holiday under the laws of the state of Colorado, such payment shall be made on the next succeeding business day.

 

5.                                      Default.  Each of the following events shall be an “Event of Default” hereunder:

 

Borrower fails to pay timely any of the principal amount or other amounts due under this Note when due, whether by acceleration or otherwise;

 

any breach of any representation, warranty or covenant made by the Borrower in the Note;

 

Borrower engages in any liquidation, dissolution, winding up of Borrower;

 

Borrower files any petition or action for relief under any bankruptcy, reorganization, insolvency or moratorium law or any other law for the relief of, or relating to, debtors, now or hereafter in effect, or makes any assignment for the benefit of creditors or takes any corporate action in furtherance of any of the foregoing;

 

An involuntary petition is filed against Borrower under any bankruptcy statute now or hereafter in effect, and such petition is not  dismissed or discharged within 60 days, or a custodian, receiver, trustee, assignee for the benefit of creditors (or other similar official) is appointed to take possession, custody or control of any property of Borrower; and

 

the Note shall cease to be in full force and effect and enforceable against the Borrower in accordance with its terms (other than by reason of any action taken (or the failure to take any action) by the Lender).

 

6.                                      Remedies.  Upon the occurrence and during the continuance of any Event of Default, the outstanding principal balance of the Note shall, all at the option of Lender, upon notice to Borrower (except that no such election by Lender and notice to Borrower shall be required in the case of an Event of Default of the type specified in Sections 5(d) or 5(e)), automatically be immediately due, payable and collectible by Lender pursuant to applicable law.

 

3

 

7.                                      Cumulative Remedies.  Lenders’ rights and remedies under the Note shall be cumulative.  Lender shall have all other rights and remedies not inconsistent herewith as provided under the Uniform Commercial Code, by law or in equity.  No exercise by Lender of one right or remedy shall be deemed an election, and no waiver by Lender of any Event of Default shall be deemed a continuing waiver.

 

8.                                      Creditor’s Rights.  Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of protest of the Note.  Borrower hereby acknowledges that Lender shall be entitled to recover, and the undersigned agrees to pay when incurred, all reasonable costs and expenses of collection of the Note, including without limitation, reasonable attorneys’ fees.  The right to plead any and all statutes of limitations as a defense to any demands hereunder is hereby waived to the full extent permitted by law. Borrower and Lender consent irrevocably to personal jurisdiction in the state and federal courts located in Denver, Colorado for the resolution of any disputes arising hereunder or relating hereto.

 

9.                                      Representations and Warranties of Lender.  Lender hereby represents and warrants to Borrower as follows:

 

Acquisition for Own Account.  Lender is acquiring the Note and all securities referred to herein (the “Investor Securities”) for its own account and for investment purposes only, and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act.  Lender understands that the Investor Securities have not been registered under the Securities Act or any applicable state securities laws by reason of a specific exemption therefrom that depends upon, among other things, the bona fide nature of the investment intent as expressed herein.

 

Speculative Investment; Accredited Investor Status.  Lender realizes that the purchase of the Investor Securities will be a highly speculative investment.  Lender is able, without impairing Lender’s financial condition, to hold the Investor Securities for an indefinite period of time and to suffer a complete loss of Lender’s investment.  By virtue of Lender’s experience in evaluating and investing in private placement transactions of securities in companies similar to Borrower, Lender is capable of evaluating the merits and risks of Lender’s investment in Borrower and has the capacity to protect Lender’s own interests.  Lender is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act or, if Lender is not an accredited investor, Lender possesses such expertise, knowledge and sophistication in financial and business matters generally, and familiarity with this investment, that together with its or their investment advisors is capable of evaluating the merits and economic risks of acquiring the Investor Securities.

 

Limitation on Transfer.  Lender understands that no public market now exists, and that a public market may never exist, for any of the securities of Borrower.  Lender understands that the Investor Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available.  Moreover, Lender understands that Borrower is under no obligation to register the Investor Securities.  Lender is aware of Rule 144 promulgated under the Act that permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, but that Borrower has made no commitment to satisfy such conditions.  Lender understands that the

 

4

 

Investor Securities will be imprinted with a legend which prohibits the transfer of the Investor Securities unless they are registered or such registration is not required in the opinion of counsel reasonably satisfactory to Borrower.

 

10.                               Representations and Warranties of Borrower.  The Borrower hereby represents and warrants to Lender as follows:

 

(a)                                 Organization of the Borrower.  The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.  The Borrower has full corporate power and authority to own, use, lease and license its assets and its properties and to carry on its business as it is now being conducted.

 

(b)                                 Capitalization. Borrower’s authorized capital stock consists of 300,000,000 shares of Common Stock and 100,000,000 shares of Preferred stock,  of which 72,670,718 shares of Common Stock are issued and outstanding.  Borrower has no other authorized or outstanding shares of capital stock.  Each outstanding share of Borrower’s Common Stock has been, and any shares of Common Stock into which this Note is convertible, will be, duly authorized and validly issued, fully paid and nonassessable, and not have been  issued in violation of the preemptive rights of any shareholder.

 

(c)                                  Power and Authority.  Borrower has full power and authority to enter into this Note and  to consummate the transactions contemplated hereby. Borrower has duly and validly executed and delivered the Note.  The Note constitutes the  legal, valid and binding obligation of the Borrower, enforceable in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in effect which affect the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies.

 

(d)                                 No Conflict.  The execution and delivery by  Borrower of the Note and the consummation of the transactions contemplated hereby will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (i) any provision of the Articles of Incorporation of the Borrower, as amended, or Bylaws of the Borrower, (ii) any mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise or license to which the Borrower or any of its properties or assets is subject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Borrower or its properties or assets.

 

(e)                                  Approvals.  Except as may be required by any state “blue sky” laws, no authorization, consent, approval, license, qualification or formal exemption from, nor any filing, declaration or registration with, any court, governmental agency, regulatory authority or political subdivision thereof, any securities exchange or any other person is required in connection with the execution, delivery or performance by Borrower of the Note.

 

(f)                                   Related Party Transactions.  The issuance of this Note has been, and the issuance of any Common Stock on conversion of this Note will be, duly approved by Borrower’s board of directors in compliance with Borrower’s relevant corporate documents, Nasdaq

 

5

 

regulations and applicable law, and has been or will be timely disclosed in compliance with applicable law, regulations and stock exchange rules.

 

(g)                                 Affirmative Covenants of Borrower.  Borrower covenants and agrees that, between the date hereof and the date of repayment the outstanding principal balance of the Note Borrower shall:

 

(a)                                 Corporate Existence.  At all times cause to be done all things reasonably necessary to maintain, preserve and renew its corporate existence and all material licenses, authorizations and permits necessary to the conduct of its businesses.

 

(b)                                 Compliance with Laws.  Comply with all applicable laws, rules and regulations of all governmental authorities, the violation of which could reasonably be expected to have a material adverse effect on its business or properties.

 

(c)                                  Books and Records.  Maintain proper books of record and account which present fairly in all material respects its financial condition and results of operations and make provisions on its financial statements for all such proper reserves as in each case are required in accordance with generally accepted accounting principles, consistently applied.

 

11.                               Negative Covenants of Borrower.  Borrower covenants and agrees that, between the date hereof and the repayment of the outstanding principal balance of the Note,  Borrower shall not:

 

(a)                                 Debt Incurrence.  Create, incur, assume or suffer to exist any indebtedness that is senior in right of payment to the Note.

 

(b)                                 Material Transaction.  Enter into any material joint venture or strategic partnership, or make any acquisition of or investment in any Person, other than such a transaction in which the Obligations will be paid in full at the closing of such transaction.

 

(c)                                  Change in Business.  Make any change or modification to Borrower’s current business.

 

12.                               Governing Law.  The Note shall be governed by, and construed and enforced in accordance with, the laws of the state of Colorado, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

13.                               Amendment and Waiver.  Any provision of this Note may be amended or waived in a writing signed by both Borrower and Lender. No failure or delay on the part of the Lender to exercise any right, remedy, power or privilege under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

 

14.                               Successors and Assigns.  The provisions of this Note shall inure to the benefit of and be binding on any successor to Borrower.

 

6

 

15.                               Transfers. The Note is not transferable without the written consent of the Company (which consent shall not be unreasonably withheld) except to an Affiliate (as defined in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act, as amended) of the Holder.  This Note may be transferred only upon its surrender to Borrower for registration of transfer, duly endorsed, or accompanied by a duly executed written instrument of transfer in form satisfactory to Borrower.  Thereupon, this Note shall be reissued to, and registered in the name of, the transferee, or a new Note for like principal amount shall be issued to, and registered in the name of, the transferee.  Principal shall be paid solely to the registered holder of this Note.  Such payment shall constitute full discharge of Borrower’s obligation to pay such principal.

 

16.                               Notice.  Notice permitted or required to be given hereunder shall be deemed sufficient if given in writing by reputable overnight delivery service or by registered or certified mail, postage prepaid, return receipt requested, addressed to the respective addresses of the parties set forth below or at such other address as the respective parties may designate by like notice from time to time.  Notices so given shall be deemed effective upon the earlier of (i) receipt by the party to which notice is given; (ii) on the fifth business day following the date such notice was deposited in the mail; or (iii) on the second business day following the date such notice was delivered to a reputable overnight delivery service.

 

[Signature page follows.]

 

7

 

In Witness Whereof, the parties have executed the Note as of the date first above written.

 

 

	
 
    	
BORROWER:
    
	
 
    	
 
    
	
 
    	
PROSPECT GLOBAL RESOURCES INC.
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Damon G. Barber
    
	
 
    	
Name:
    	
Damon   G, Barber
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
LENDER:
    
	
 
    	
 
    
	
 
    	
VERY HUNGRY LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brian Fleishmann
    
	
 
    	
Name:
    	
Brian   Fleishmann
    
	
 
    	
Title:
    	
Manager   
    
	
 
    	
AddressExhibit 10.2

 

SUBORDINATION AND INTERCREDITOR AGREEMENT

 

THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”), dated as of May 2, 2013 (as the same may be amended, restated, supplemented or otherwise modified from time to time, this “Agreement”), is made by and among Very Hungry LLC, a Colorado limited liability company (“Very Hungry”), Scott Reiman 1991 Trust (together with Very Hungry, “Subordinated Creditor”), Prospect Global Resources Inc., a Nevada corporation (the “Company”), and The Karlsson Group, Inc., an Arizona corporation (“Senior Lender”).

 

R E C I T A L S

 

A.    On or about April 15, 2013, the Company and Senior Lender entered into an Unconditional Guaranty (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Guaranty”) whereby the Company unconditionally guaranteed and promised to pay any and all obligations of Company’s wholly-owned subsidiary Prospect Global Resources, Inc., a Delaware corporation (“Maker”), to Senior Creditor pursuant to a Secured First Priority Promissory Note in the original principal sum of $125 million (as the same may be amended, supplemented or otherwise modified, from time to time, including without limitation by that certain First Amendment to Secured First Priority Promissory Note (the “First Note Amendment”) (as amended thereby, the “Note”)).  Pursuant to the documents and agreements executed in connection with the Guaranty, Senior Lender has agreed to make certain financial accommodations to the Company and to Maker.  All of the Company’s obligations to Senior Lender under the Guaranty and the other Senior Debt Documents (as hereinafter defined) are secured by, among other things, liens on and security interests in all of the shares of Maker owned by the Company (the “Collateral”).

 

B.    The Company has issued two Subordinated Promissory Notes of even date herewith pursuant to which Subordinated Creditor is extending credit to the Company as evidenced by two Subordinated Promissory Notes of even date herewith in the aggregate principal amount of $5,500,000 (as the same may be amended, supplemented or otherwise modified from time to time as permitted hereunder, the “Subordinated Note”);

 

C.    As an inducement to and as one of the conditions precedent to the agreement of Senior Lender to enter into the First Note Amendment, Senior Lender has required the Company to covenant to procure the execution and delivery of this Agreement by Subordinated Creditor and the Company in order to set forth the relative rights and priorities of Senior Lender and Subordinated Creditor under the Senior Debt Documents and the Subordinated Debt Documents (as hereinafter defined).

 

NOW, THEREFORE, in accordance with the Company’s agreement (entered into in order to induce Senior Lender to enter into the First Note Amendment) to procure the execution

 

 

and delivery of this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

The following terms shall have the following meanings in this Agreement:

 

1.1          “Bankruptcy Code” means Chapter 11 of Title 11 of the United States Code, as amended from time to time and any successor statute and all rules and regulations promulgated thereunder.

 

1.2          “Business Day” means any day that is not a Saturday, a Sunday or a day on which banks are required or permitted to be closed in the State of New York.

 

1.3          “Debt Default Notice” means a written notice from Subordinated Creditor to Senior Lender or from Senior Lender to Subordinated Creditor pursuant to which Senior Lender or Subordinated Creditor, as applicable, is notified of the occurrence of a Subordinated Debt Default or Senior Default, as applicable, which notice incorporates a reasonably detailed description of such default.

 

1.4          “Distribution” means, with respect to any indebtedness, obligation or security,  (a) any payment or distribution by any Person of cash, securities or other property other than Plan Securities (as defined below), by set-off or otherwise, on account of such indebtedness, obligation or security, (b) any redemption, purchase or other acquisition of such indebtedness, obligation or security by any Person or (c) the granting of any lien or security interest to or for the benefit of the holders of such indebtedness, obligation or security in or upon any property of any Person; provided, however, that notwithstanding any other provisions in this Agreement, the Company shall have the right to issue any equity securities in connection with the satisfaction of indebtedness.

 

1.5          “Enforcement Action” means (a) to take from or for the account of the Company or any guarantor of the Subordinated Debt, by set-off or in any other manner, the whole or any part of any moneys which may now or hereafter be owing by the Company or any such guarantor with respect to the Subordinated Debt, (b) to sue for payment of, or to initiate or participate with others in any suit, action or proceeding against the Company or any such guarantor to (i) enforce payment of or to collect the whole or any part of the Subordinated Debt or (ii) commence judicial enforcement of any of the rights and remedies under the Subordinated Debt Documents or applicable law with respect to the Subordinated Debt, (c) to accelerate the Subordinated Debt, (d) to exercise any put option or to cause the Company or any such guarantor to honor any redemption or mandatory prepayment obligation under any Subordinated Debt Document or (e) to take any action under the provisions of any state or federal law, including, without limitation, the Uniform Commercial Code, or under any contract or agreement, to enforce, foreclose upon, take possession of or sell any property or assets of the Company or any such guarantor.

 

1.6          “Person” means any natural person, corporation, general or limited partnership, limited liability company, firm, trust, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

 

2

 

1.7          “Proceeding” means any voluntary or involuntary insolvency, bankruptcy, receivership, custodianship, liquidation, dissolution, reorganization, assignment for the benefit of creditors, appointment of a custodian, receiver, trustee or other officer with similar powers or any other proceeding for the liquidation, dissolution or other winding up of a Person.

 

1.8          “Senior Covenant Default” means any “Event of Default” under any Senior Debt Document (other than a Senior Payment Default).

 

1.9          “Senior Debt” means all obligations, liabilities and indebtedness of every nature of the Maker that are guaranteed by the Company (and all obligations of the Company with respect thereto) from time to time and owed to Senior Lender under the Senior Debt Documents, including, without limitation, the principal amount of all debts, claims and indebtedness, accrued and unpaid interest and all fees, costs and expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and from time to time hereafter owing, due or payable, whether before or after the filing of a Proceeding under the Bankruptcy Code together with (a) any amendments, modifications, renewals or extensions thereof and (b) any interest accruing thereon after the commencement of a Proceeding, without regard to whether or not such interest is an allowed claim.  Senior Debt shall be considered to be outstanding whenever any amount under any Senior Debt Document is outstanding.

 

1.10        “Senior Debt Documents” means the Senior Loan Documents and shall include but not be limited to all documents by which any Senior Debt is refinanced or replaced or by which any Senior Debt Document is superseded, amended, or replaced as part of any Senior Refinancing.

 

1.11        “Senior Default” means any Senior Payment Default or Senior Covenant Default.

 

1.12        “Senior Loan Documents” means the Note, the Guaranty, and all other agreements, documents and instruments executed from time to time in connection therewith or pursuant thereto, as the same may be amended, supplemented or otherwise modified from time to time.

 

1.13        “Senior Payment Default” means any “Event of Default” under any Senior Debt Document resulting from the failure of the obligor to pay, on a timely basis, any principal, interest, fees or other obligations under such Senior Debt Document (whether to Senior Lender or into any escrow account pursuant to the terms of any Senior Debt Document) including, without limitation, any default in payment of Senior Debt after acceleration thereof.

 

1.14        “Senior Refinancing” means any refinancing of all or any portion of the Senior Debt under the Senior Loan Documents.

 

1.15        “Subordinated Debt” means all of the obligations of the Company or any guarantor to Subordinated Creditor evidenced by or incurred pursuant to the Subordinated Debt Documents.

 

1.16        “Subordinated Debt Documents” means the Subordinated Note, any guaranty with respect to the Subordinated Debt, and all other documents, agreements and instruments now

 

3

 

existing or hereinafter entered into evidencing or pertaining to all or any portion of the Subordinated Debt.

 

1.17        “Subordinated Debt Default” means a default in the payment of the Subordinated Debt or in the performance of any term, covenant or condition contained in the Subordinated Debt Documents or any other occurrence permitting Subordinated Creditor to accelerate the payment of, put or cause the redemption of all or any portion of the Subordinated Debt or any Subordinated Debt Document.

 

1.18        “Uniform Commercial Code” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in any applicable jurisdiction.

 

ARTICLE II
 SUBORDINATION

 

2.1          Subordination of Subordinated Debt to Senior Debt.  The Company covenants and agrees, and Subordinated Creditor by its acceptance of the Subordinated Debt Documents (whether upon original issue or upon transfer or assignment) likewise covenants and agrees, notwithstanding anything to the contrary contained in any of the Subordinated Debt Documents, that the payment of any and all of the Subordinated Debt shall be subordinate and subject in right and time of payment, to the extent and in the manner hereinafter set forth, to the prior indefeasible payment in full in cash of all Senior Debt. Each holder of Senior Debt, whether such Senior Debt is now outstanding or hereafter created, incurred, assumed or guaranteed, shall be deemed to have acquired Senior Debt in reliance upon the provisions contained in this Agreement.

 

2.2          Liquidation, Dissolution, Bankruptcy.  In the event of any Proceeding involving the Company or any subsidiary of the Company:

 

(a)           All Senior Debt shall first be indefeasibly paid in full in cash and all commitments to lend under the Senior Debt Documents shall be terminated before any Distribution shall be made to Subordinated Creditor on account of any Subordinated Debt; provided that Subordinated Creditor may receive securities of the Company or any Person provided for by a bankruptcy court approved plan of reorganization or readjustment, the payment of which is subordinate on terms substantially similar hereto with respect to the Senior Debt Documents (“Plan Securities”).

 

(b)           Except as set forth in Section 2.2(a), any Distribution which would otherwise, but for the terms hereof, be payable or deliverable in respect of the Subordinated Debt, shall be paid or delivered directly to Senior Lender (to be held and/or applied by Senior Lender in accordance with the terms of the Senior Debt Documents) until all Senior Debt is indefeasibly paid in full in cash and any commitments to lend under the Senior Debt Documents shall have been terminated. Subordinated Creditor irrevocably authorizes, empowers and directs any debtor, debtor in possession, receiver, trustee, liquidator, custodian, conservator or other Person having authority, to pay or otherwise deliver all such Distributions to Senior Lender. Subordinated Creditor also irrevocably authorizes and empowers Senior Lender, in the name of Subordinated Creditor, to demand, sue for, collect and receive any and all such Distributions.

 

4

 

(c)           Subordinated Creditor agrees not to initiate, prosecute or participate in any claim, action or other proceeding challenging the enforceability, validity, perfection or priority of the Senior Debt or any liens and security interests securing the Senior Debt.

 

(d)           Subordinated Creditor agrees to execute, verify, deliver and file any proofs of claim in respect of the Subordinated Debt requested by Senior Lender in connection with any such Proceeding and hereby irrevocably authorizes, empowers and appoints Senior Lender its agent and attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim upon the failure of Subordinated Creditor promptly to do so prior to 30 days before the expiration of the time to file any such proof of claim and (ii) vote such claim in any such Proceeding; provided Senior Lender shall have no obligation to execute, verify, deliver, file and/or vote any such proof of claim. In the event that Senior Lender votes any claim in accordance with the authority granted hereby, Subordinated Creditor shall not be entitled to change or withdraw such vote.

 

(e)           The Senior Debt shall continue to be treated as Senior Debt and the provisions of this Agreement shall continue to govern the relative rights and priorities of Senior Lender and Subordinated Creditor even if all or part of the Senior Debt or the security interests securing the Senior Debt are subordinated, set aside, avoided, invalidated or disallowed in connection with any such Proceeding, and this Agreement shall be reinstated if at any time any payment of any of the Senior Debt is rescinded or must otherwise be returned by any holder of Senior Debt or any representative of such holder.

 

2.3          Subordinated Debt Payment Restrictions.

 

Notwithstanding the terms of the Subordinated Debt Documents, the Company hereby agrees that it may not make, directly or indirectly, and Subordinated Creditor hereby agrees that it will not accept, any Distribution with respect to the Subordinated Debt until the Senior Debt is indefeasibly paid in full in cash and any commitments to lend under the Senior Debt Documents have terminated.

 

2.4          Subordinated Debt Standstill Provisions.

 

(a)           Until the Senior Debt is indefeasibly paid in full in cash and all commitments to lend under the Senior Debt Documents shall be terminated, Subordinated Creditor shall not, without the prior written consent of Senior Lender, take any Enforcement Action with respect to the Subordinated Debt, until acceleration of the Senior Debt and in any event no earlier than ten (10) days after Senior Lender’s receipt of written notice of Subordinated Creditor’s intention to take any such Enforcement Action.

 

Notwithstanding the foregoing, Subordinated Creditor may file proofs of claim against the Company in any Proceeding involving the Company.  Any Distributions or other proceeds of any Enforcement Action obtained by Subordinated Creditor (including but not limited to Distributions of money or property with respect to any Plan Securities) shall in any event be held in trust by it for the benefit of Senior Lender and promptly be paid or delivered to Senior Lender in the form received until all Senior Debt is indefeasibly paid in full in cash and any commitment to lend under the Senior Debt Documents shall have been terminated.

 

5

 

(b)           Notwithstanding anything contained herein to the contrary, if following the acceleration of the Senior Debt by Senior Lender such acceleration is rescinded (whether or not any existing Senior Default has been cured or waived), then all Enforcement Actions taken by the Subordinated Creditor shall likewise be rescinded.

 

2.5          Incorrect Payments.  If any Distribution on account of the Subordinated Debt not permitted to be made by the Company or accepted by Subordinated Creditor under this Agreement is made and received by Subordinated Creditor, such Distribution shall not be commingled with any of the assets of Subordinated Creditor, shall be held in trust by Subordinated Creditor for the benefit of Senior Lender and shall be promptly paid over to Senior Lender for application (in accordance with the Senior Debt Documents ) to the payment of the Senior Debt then remaining unpaid, until all of the Senior Debt is paid in full.

 

2.6          Subordination of Liens and Security Interests; Agreement Not to Contest; Agreement to Release Liens.  Until the Senior Debt has been indefeasibly paid in full in cash and any lending commitments under the Senior Debt Documents have terminated, any liens and security interests of Subordinated Creditor in the Collateral which may exist in breach of Subordinated Creditor’s agreement pursuant to Section 3.2(b) or Section 4.1 of this Agreement shall be and hereby are subordinated for all purposes and in all respects to the liens and security interests of Senior Lender in the Collateral, regardless of the time, manner or order of perfection of any such liens and security interests. Subordinated Creditor agrees that it will not at any time contest the validity, perfection, priority or enforceability of the Senior Debt, the Senior Loan Documents, the Senior Debt Documents, or the liens and security interests of Senior Lender in the Collateral securing the Senior Debt. In the event that Subordinated Creditor obtains any liens or security interests in the Collateral, Subordinated Creditor shall (or shall cause its agent to) promptly execute and deliver to Senior Lender such termination statements and releases as Senior Lender shall request to effect the release of the liens and security interests of Subordinated Creditor in such Collateral. In furtherance of the foregoing, Subordinated Creditor hereby irrevocably appoints Senior Lender its attorney-in-fact, with full authority in the place and stead of Subordinated Creditor and in the name of Subordinated Creditor or otherwise, to execute and deliver any document or instrument which Subordinated Creditor may be required to deliver pursuant to this Section 2.6.

 

2.7          Sale, Transfer or other Disposition of Subordinated Debt.

 

(a)           Subordinated Creditor shall not sell, assign, pledge, dispose of or otherwise transfer all or any portion of the Subordinated Debt or any Subordinated Debt Document: (i) without giving prior written notice of such action to Senior Lender, (ii) unless, prior to the consummation of any such action, the transferee thereof shall execute and deliver to Senior Lender an agreement substantially identical to this Agreement, providing for the continued subordination of the Subordinated Debt to the Senior Debt as provided herein and for the continued effectiveness of all of the rights of Senior Lender arising under this Agreement.

 

(b)           Notwithstanding the failure of any transferee to execute or deliver an agreement substantially identical to this Agreement, the subordination effected hereby shall survive any sale, assignment, pledge, disposition or other transfer of all or any portion of the

 

6

 

Subordinated Debt, and the terms of this Agreement shall be binding upon the successors and assigns of Subordinated Creditor, as provided in Section 6.4 hereof.

 

2.8          Legends.  Until the termination of this Agreement in accordance with Section 6.10 hereof, Subordinated Creditor will cause to be clearly, conspicuously and prominently inserted on the face of the Subordinated Note, and any other Subordinated Debt Document, as well as any renewals or replacements thereof, the following legend:

 

“This instrument and the rights and obligations evidenced hereby are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement (the “Subordination Agreement”) dated as of May 2, 2013, among Very Hungry LLC, a Colorado limited liability company, Scott Reiman 1991 Trust, Prospect Global Resources Inc., a Nevada corporation (the “Company”) and The Karlsson Group, Inc., an Arizona corporation (“Senior Lender”), to the indebtedness (including interest) owed by the Company to Senior Lender pursuant to the Company’s Guaranty, and to indebtedness refinancing such indebtedness as contemplated by the Subordination Agreement; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.”

 

2.9          Default Notice.  Promptly following a Subordinated Debt Default or Senior Default, Subordinated Creditor or Senior Lender, as applicable, shall deliver to the other a Debt Default Notice.

 

ARTICLE III
 MODIFICATIONS

 

3.1          Modifications to Senior Debt Documents.  Senior Lender may at any time and from time to time without the consent of or notice to Subordinated Creditor, without incurring liability to Subordinated Creditor and without impairing or releasing the obligations of Subordinated Creditor under this Agreement, change the manner or place of payment or extend the time of payment of or increase the obligations of Maker or the Company or renew or alter any of the terms of the Senior Debt, or amend or modify in any manner the Senior Debt Documents.

 

3.2          Modifications to Subordinated Debt Documents.  Until the Senior Debt has been indefeasibly paid in full in cash and any lending commitments under the Senior Debt Documents have terminated, and notwithstanding anything to the contrary contained in the Subordinated Debt Documents, Subordinated Creditor shall not, without the prior written consent of Senior Lender, agree to any amendment, modification or supplement to the Subordinated Debt Documents the effect of which is to (a) alter the subordination provisions with respect to the Subordinated Debt, including, without limitation, subordinating the Subordinated Debt to any other indebtedness, (b) take any liens or security interests in any assets of Maker, the Company or any other guarantor of the Subordinated Debt or (c) change or amend any other term of the Subordinated Debt Documents if such change or amendment would result in a Senior Default, increase the obligations of the Company or any guarantor of the Subordinated Debt or confer additional material rights on Subordinated Creditor or any other holder of the Subordinated Debt in a manner adverse to Senior Lender.

 

7

 

ARTICLE IV
 REPRESENTATIONS AND WARRANTIES

 

4.1          Representations and Warranties of Subordinated Creditor.  Subordinated Creditor hereby represents and warrants to Senior Lender that as of the date hereof: (a) Very Hungry Very Hungry is a limited liability company duly formed and validly existing under the laws of the State of Colorado and Scott Reiman 1991 Trust is a trust duly formed and validly existing under the laws of the State of Colorado; (b)  Subordinated Creditor has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (c) the execution of this Agreement by Subordinated Creditor will not violate or conflict with the organizational documents of Subordinated Creditor, any material agreement binding upon Subordinated Creditor or any law, regulation or order or require any consent or approval which has not been obtained; (d) this Agreement is the legal, valid and binding obligation of Subordinated Creditor, enforceable against Subordinated Creditor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles; (e) Subordinated Creditor is the sole owner, beneficially and of record, of the Subordinated Debt Documents and the Subordinated Debt; and (f) the Subordinated Debt is, and at all times prior to the termination of this Agreement shall remain, an unsecured obligation of the Company.

 

4.2          Representations and Warranties of Senior Lender.  Senior Lender hereby represents and warrants to Subordinated Creditor that as of the date hereof: (a) Senior Lender is a corporation duly formed and validly existing under the laws of the State of Arizona; (b) Senior Lender has the power and authority to enter into, execute, deliver and carry out the terms of this Agreement, all of which have been duly authorized by all proper and necessary action; (c) the execution of this Agreement by Senior Lender will not violate or conflict with the organizational documents of Senior Lender, any material agreement binding upon Senior Lender or any law, regulation or order or require any consent or approval which has not been obtained; and (d) this Agreement is the legal, valid and binding obligation of Senior Lender, enforceable against Senior Lender in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles.

 

ARTICLE V
 SUBROGATION

 

Subject to the indefeasible payment in full in cash of all Senior Debt and the termination of any lending commitments under the Senior Debt Documents, Subordinated Creditor shall be subrogated to the right of Senior Lender to receive Distributions with respect to the Senior Debt. Subordinated Creditor agrees that in the event that all or any part of a payment made with respect to the Senior Debt is recovered from the holders of the Senior Debt in a Proceeding or otherwise, any Distribution received by Subordinated Creditor with respect to the Subordinated Debt at any time after the date of the payment that is so recovered, whether pursuant to the right of subrogation provided for in this Agreement or otherwise, shall be deemed to have been received by Subordinated Creditor in trust as property of the holders of the Senior Debt and Subordinated Creditor shall forthwith deliver the same to Senior Lender for application to the Senior Debt until

 

8

 

the Senior Debt is paid in full. A Distribution made pursuant to this Agreement to Senior Lender which otherwise would have been made to Subordinated Creditor is not, as between the Company and Subordinated Creditor, a payment by the Company to or on account of the Senior Debt.

 

ARTICLE VI
 MISCELLANEOUS

 

6.1          Complete Agreement; Modification of Agreement.  This Agreement constitutes the complete agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, commitments, understandings or inducements (oral or written, expressed or implied).  Any modification or waiver of any provision of this Agreement, or any consent to any departure by any party from the terms hereof, shall not be effective in any event unless the same is in writing and signed by Senior Lender and Subordinated Creditor, and then such modification, waiver or consent shall be effective only in the specific instance and for the specific purpose given. Any notice to or demand on any party hereto in any event not specifically required hereunder shall not entitle the party receiving such notice or demand to any other or further notice or demand in the same, similar or other circumstances unless specifically required hereunder.

 

6.2          Further Assurances.  Each party to this Agreement promptly will execute and deliver such further instruments and agreements and do such further acts and things as may be reasonably requested in writing by any other party hereto that may be necessary or desirable in order to effect fully the purposes of this Agreement.

 

6.3          Notices.  Except as otherwise provided herein, whenever any notice, demand, request or other communication shall or may be given to or served upon any party by any other party, or whenever any party desires to give or serve upon any other party any communication with respect to this Agreement, each such notice, demand, request or other communication shall be in writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of actual receipt and three (3) days after deposit in the United States mail, registered or certified mail, return receipt requested, with proper postage prepaid, (b) upon transmission, when sent by telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly confirmed by delivery of a copy by personal delivery or United States mail as otherwise provided in this Section 6.3), (c) one (1) Business Day after deposit with a reputable overnight courier with all charges prepaid or (d) when hand-delivered, all of which shall be addressed to the party to be notified and sent to the address or facsimile number indicated below or to such other address (or facsimile number) as may be substituted by notice given as herein provided.  The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Failure or delay in delivering copies of any notice, demand, request or other communication to any Person (other than Subordinated Creditor, the Company or Senior Lender) designated below to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request or other communication.

 

9

 

Notices shall be addressed as follows:

 

If to Subordinated Creditor:

 

Very Hungry LLC

Scott Reiman 1991 Trust

730 17th Street, Suite 800

Denver, CO 80202
 Attention:                                         Conway Schatz
 Telephone:                                   303-571-1010
 Facsimile:                                         303-571-1221

 

With a copy to:

Bryan Cave

1700 Lincoln Street, Suite 4100

Denver CO 80203
 Attention:                                         W. Dean Salter
 Telephone:                                   303-866-0245
 Facsimile:                                         303-335-3745

 

If to the Company:

 

Prospect Global Resources Inc.
 1401 17th Street, Suite 1550
 Denver, CO 80202
 Attention:                                         Chief Executive Officer
 Telephone:                                   303-990-8415
 Facsimile:                                         303-990-8440

 

With a copy to:

 

Eisner Kahan Gorry Chapman Ross & Jaffe PC
 9601 Wilshire Blvd., Suite 700
 Beverly Hills, CA 90210
 Attention:                                         Mr. Michael Eisner
 Telephone:                                   310-855-3200
 Facsimile:                                         310-855-3201

 

If to Senior Lender:

The Karlsson Group, Inc.

18 Ozone Avenue

Venice, California  90291

Attention:                                         Michael Stone
 Facsimile:                                         310-933-0262

 

10

 

With copies to:

 

Loeb & Loeb LLP

10100 Santa Monica Boulevard, Suite 2200

Los Angeles, California 90067

Attention:                                         Lance N. Jurich, Esq.
 Facsimile:                                         310-282-2211

 

and

 

Law Offices of Richard C. Weisberg

33 Derwen Road

Bala Cynwyd, Pennsylvania 19005

Attention:                                         Dick Weisberg

Facsimile:                                         215-689-1504

 

or in any case, to such other address as the party addressed shall have previously designated by written notice to the serving party, given in accordance with this Section 6.3.

 

6.4          Successors and Assigns.  This Agreement shall inure to the benefit of, and shall be binding upon, the respective successors and assigns of Senior Lender, Subordinated Creditor and the Company. To the extent permitted under the Senior Debt Documents, Senior Lender may, from time to time, without notice to Subordinated Creditor, assign or transfer any or all of the Senior Debt or any interest therein to any Person and, notwithstanding any such assignment or transfer, or any subsequent assignment or transfer, the Senior Debt shall, subject to the terms hereof, be and remain Senior Debt for purposes of this Agreement, and every permitted assignee or transferee of any of the Senior Debt or of any interest therein shall, to the extent of the interest of such permitted assignee or transferee in the Senior Debt, be entitled to rely upon and be the third party beneficiary of the subordination provided under this Agreement and shall be entitled to enforce the terms and provisions hereof to the same extent as if such assignee or transferee were initially a party hereto.

 

6.5          Relative Rights.  This Agreement shall define the relative rights of Senior Lender and Subordinated Creditor. Nothing in this Agreement shall (a) impair, as between the Company and Senior Lender and as between the Company and Subordinated Creditor, the obligation of the Company with respect to the payment of the Senior Debt and the Subordinated Debt in accordance with their respective terms or (b) affect the relative rights of Senior Lender or Subordinated Creditor with respect to any other creditors of the Company.

 

6.6          Conflict.  In the event of any conflict between any term, covenant or condition of this Agreement and any term, covenant or condition of any of the Subordinated Debt Documents, the provisions of this Agreement shall control and govern.

 

6.7          Counterparts.  This Agreement may be authenticated in any number of separate counterparts by any one or more of the parties hereto, and all of said counterparts taken together

 

11

 

shall constitute one and the same instrument.  This Agreement may be authenticated by manual signature, facsimile or, if approved in writing by Senior Lender, electronic means, all of which shall be equally valid.

 

6.8          Severability; Section Titles.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.  The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

 

6.9          Rules of Construction.  The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.  The terms “herein”, “hereof” and similar terms refer to this Agreement as a whole and not to any particular Article, Section or clause in this Agreement.  References herein to an Exhibit, Schedule, Article, Section or clause refer to the appropriate Exhibit or Schedule to, or Article, Section or clause in this Agreement.

 

6.10        Continuation of Subordination; Termination of Agreement.  This Agreement shall remain in full force and effect until the indefeasible payment in full in cash of the Senior Debt and the termination of all lending commitments under the Senior Debt Documents after which this Agreement shall terminate without further action on the part of the parties hereto.

 

6.11        GOVERNING LAW.  THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ARIZONA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING CONFLICTS OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

 

6.12        SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.

 

(a)           EACH PARTY HERETO HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ARIZONA SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN OR AMONG SENIOR LENDER, THE SUBORDINATED LENDER AND THE COMPANY PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT; PROVIDED, THAT EACH OF THE SUBORDINATED CREDITOR AND THE COMPANY HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF ARIZONA; AND FURTHER PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE SENIOR LENDER FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SENIOR LENDER.  EACH OF THE SUBORDINATED CREDITOR AND THE COMPANY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN

 

12

 

ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH OF THE SUBORDINATED CREDITOR AND THE COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.  EACH OF THE SUBORDINATED CREDITOR AND THE COMPANY HEREBY WAIVE PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PARTY AT THE ADDRESS SET FORTH IN SECTION 6.3 HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PARTY’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

 

(b)           THE PARTIES HERETO DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.  THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE BETWEEN OR AMONG ANY OF SENIOR LENDER, THE SUBORDINATED CREDITOR AND THE COMPANY ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO.

 

(Signature page follows)

 

13

 

IN WITNESS WHEREOF, Subordinated Creditor, the Company and Senior Lender have caused this Agreement to be executed as of the date first above written.

 

 

	
 
    	
“Senior   Lender”
    
	
 
    	
 
    
	
 
    	
THE   KARLSSON GROUP, INC., an Arizona corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
s/s Michael Stone
    
	
 
    	
 
    	
Name:   Michael Stone
    
	
 
    	
 
    	
Title:   CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
“Subordinated   Creditor”
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
VERY   HUNGRY LLC, a Colorado limited liability company
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
By:
    	
/s/ Brian Fleishmann
    
	
 
    	
 
    	
Name:   Brian Fleishmann
    
	
 
    	
 
    	
Title:   Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SCOTT   REIMAN 1991 TRUST
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Scott Reiman
    
	
 
    	
 
    	
Name:   Scott Reiman
    
	
 
    	
 
    	
Title:   Trustee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
“Company”
    
	
 
    	
 
    	
 
    
	
 
    	
PROSPECT   GLOBAL RESOURCES INC., a Nevada corporation
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Damon G. Barber
    
	
 
    	
 
    	
Name:   Damon G. Barber
    
	
 
    	
 
    	
Title:   President and Chief Executive Officer
    

 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00216-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00216-of-00352.parquet"}]]