Document:

exv4w2

Exhibit 4.2

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATE SECURITIES LAWS.

WARRANT TO PURCHASE

COMMON STOCK OF PROSPECT GLOBAL RESOURCES INC.

PROSPECT GLOBAL RESOURCES INC., a Nevada corporation (the “Company”), HEREBY CERTIFIES THAT,
for value received, Hexagon Investments, LLC, or registered assigns, is entitled to purchase up to
a number of shares of Common Stock (adjusted as below provided) calculated by dividing $3,750,000
by the Warrant Price. As used herein, the term “Common Stock” means the Company’s Common Stock,
par value $0.001 per share, as constituted on the date of original issue of this Warrant, and any
shares of capital stock or other property into which such shares of Common Stock may thereafter be
changed or that may be issued in respect of, in exchange for, or in substitution of such Common
Stock by reason of any transaction described in Section 8.1(a) or 8.3. As used herein, the term
“Warrant Price” means $1,500,000 divided by the total number of shares of Common Stock issued upon
conversion of the Convertible Note (including pursuant to Section 5.1 thereof). As used herein,
the term “Convertible Note” means the Convertible Secured Promissory Note dated the date hereof in
the amount of $1,500,000 issued by the Company to Hexagon Investments, LLC on September 19, 2011.
As used herein, the term “Warrants” means this Warrant and all warrants delivered in substitution
or exchange for such warrants. The term “Warrant” means one of the Warrants.

Section 1. Term of Warrants; Exercise of Warrants. Subject to the terms hereof, the holder
of this Warrant shall have the right, at any time hereafter until 5:00 p.m., Denver, Colorado time,
on September 19, 2013 (the “Termination Date”), to purchase from the Company up to the number of
shares of Common Stock which such holder may at the time be entitled to purchase pursuant to this
Warrant, upon surrender to the Company, at its address for receipt of notices pursuant to Section
11 hereof, of this Warrant, together with the election to purchase form at the end hereof duly
completed and signed, accompanied by payment to the Company of the Warrant Price (as defined in and
determined in accordance with the provisions of Sections 7 and 8) for the number of shares with
respect to which this Warrant is then exercisable. Payment of the aggregate Warrant Price shall be
made either by (i) certified or cashier’s check or wire transfer or (ii) tendering Warrant Shares
(as defined below) having a Fair Market Value (as defined below) equal to the Warrant Price. As
used herein, the term “Business Day” means any day other than a Saturday or Sunday or a day on
which commercial banks are required or authorized by law to be closed in either New York, New York
or Denver, Colorado.

 

 

 

Notwithstanding any provisions herein to the contrary, if the fair market value of one share
of Common Stock is greater than the Warrant Price for one share of Common Stock (at the
date of calculation, as set forth below), in lieu of exercising this Warrant for cash, the holder
may elect to receive shares of Common Stock equal to the value (as determined below) of this
Warrant (or the portion thereof being canceled), computed using the following formula:

	 	 	 	 	 	 	 
	 
	 	WS =
	 	WCS (FMV-WP)

 

FMV
	 	 

WHERE:

	 	 	 	 	 
	 

	 	WS
	 	equals the number of Warrant Shares to be issued to the Holder;
	 
	 	 	 	 
	 

	 	WCS
	 	equals the number of shares of Common Stock purchasable under
the Warrant or, if only a portion of the Warrant is being exercised, the
portion of the Warrant being canceled (at the date of such calculation);

	 
	 	 	 	 
	 

	 	FMV
	 	equals the Fair Market Value (as defined below) of one share of
Common Stock (at the date of such calculation); and

	 
	 	 	 	 
	 

	 	WP
	 	equals the per share Warrant Price (as adjusted to the date of
such calculation) of the Warrant.

As used in this Section, the term “Fair Market Value” of each Warrant Share as of any date
shall be (i) if the Common Stock is not then listed on a national securities exchange the volume
weighted average price per share of Common Stock (as reported on the exchange, market or quotation
system on which shares of Common Stock are admitted to trading or listed) for the five consecutive
trading days ending on the Business Day prior to such exercise, (ii) if the Common Stock is then
listed on a national securities exchange, the last sale price in respect of the Common Stock on the
Nasdaq Global Market or any national securities exchange on which the Common Stock is then listed
at the close of trading on the Business Day prior to such exercise or (iii) if not so available,
Fair Market Value shall be determined as follows: (A) if the parties hereto can agree on the Fair
Market Value, such agreed upon value shall constitute the Fair Market Value; (B) if the parties
cannot reach an agreement as to the Fair Market Value within five (5) Business Days from the onset
of negotiations, then the Appraised Value (as defined below) shall constitute the Fair Market
Value. “Appraised Value” per Warrant Share as of a date specified herein shall mean the value of
such a share as of such date as determined by a nationally recognized valuation or appraisal firm
(an “Appraiser”) selected jointly by the holder of this Warrant and the Company. If the Company
and the holder of this Warrant cannot agree on a mutually acceptable Appraiser, then the Company
and the holder of this Warrant shall each choose one such Appraiser and the respective chosen firms
shall jointly select a third Appraiser, which shall make the determination. The Company and the
Warrant Holders shall each pay half of the costs and fees of each such Appraiser, and the decision
of the Appraiser making such determination of Appraised Value shall be final and binding on the
Company and all affected holders of Warrants. No discount shall be applied on account of any lack
of liquidity of the Common Stock, the Warrant or the Warrant Shares, including the fact that the
Warrants or Warrant Shares may constitute “restricted securities” for securities law purposes.

 

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Upon such surrender of this Warrant and payment of such Warrant Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or upon the written
order of the holder of this Warrant and in such name or names as such holder may designate, a
certificate or certificates for the number of full shares of Common Stock so purchased, together
with cash, as provided in Section 8, with respect to any fractional shares of Common Stock
otherwise issuable upon such surrender. Such certificate or certificates shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to have become a
holder of such shares of Common Stock as of the close of business on the date of the surrender of
this Warrant and, if applicable, payment of the Warrant Price as aforesaid, notwithstanding that
the certificates representing such shares shall not actually have been delivered or that the stock
transfer books of the Company shall then be closed.

This Warrant shall be exercisable, at the election of the holder of this Warrant, either in
full or from time to time in part. In the event that this Warrant is exercised with respect to
less than the aggregate number of shares of Common Stock this Warrant then entitles such holder to
purchase, the Company shall deliver to or upon the order of such holder hereof a new Warrant
evidencing the rights of such holder to purchase the unpurchased shares of Common Stock then called
for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
In the alternative, at the request of the holder upon any partial exercise of this Warrant,
appropriate notation may be made on this Warrant and the same shall be returned to such holder.

Section 2. Payment of Taxes. The Company shall pay all documentary stamp taxes, if any,
attributable to the initial issuance of the shares of Common Stock upon exercise of this Warrant,
provided that the Company shall not be required to pay any tax or taxes which may be payable with
respect to any secondary transfer of a Warrant or the shares of Common Stock issued upon exercise
of any Warrant, and in such case the Company shall not be required to issue or deliver any
certificates for shares of Common Stock, until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company’s reasonable satisfaction that
such tax has been paid or that no such tax is due.

Section 3. Transferability.

Section 3.1 Registration. The Warrants shall be numbered and shall be registered on the
books of the Company maintained for such purpose (the “Warrant Register”).

Section 3.2 Transfer. Subject to compliance with Section 3.3, this Warrant and all rights
hereunder are transferable upon delivery hereof together with the assignment form at the end hereof
duly completed and signed by the holder hereof or such holder’s duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment or authority to
transfer, provided that any transferee of this Warrant shall expressly agree to be bound by the
terms and conditions hereof. Upon any registration of transfer of this Warrant, the Company shall
execute and deliver a new Warrant or Warrants as may be requested by such holder for the same
aggregate number of shares of Common Stock as this Warrant. As used herein, the term “Warrant
Shares” shall mean, collectively, the shares of Common Stock that may be acquired pursuant to the
exercise of this Warrant and any securities issued as a dividend on or other distribution with
respect to or in exchange or replacement for or upon any subdivision of any of said shares of
Common Stock.

 

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Section 3.3 Limitations on Transfer of the Warrants and the Warrant Shares. If, at the time
of any transfer of this Warrant or any Warrant Shares, this Warrant or such Warrant Shares, as the
case may be, are not registered under the United States Securities Act of 1933, as amended (the
“Securities Act”), the Company may require as a condition precedent to allowing such transfer that
the holder or transferee of this Warrant or such Warrant Shares furnish to the Company such
information as, in the reasonable opinion of counsel to the Company, is necessary in order to
establish that such transfer or exchange may be made without registration under the Securities Act,
including a written statement that such holder or transferee will not sell or otherwise dispose of
this Warrant or such Warrant Shares purchased or acquired by him in any transaction which would
violate the Securities Act or any other securities laws.

Section 3.4 Legend on Warrant Shares. Each certificate for shares of Common Stock initially
issued upon exercise of this Warrant, unless at the time of exercise such shares are registered
under the Securities Act, shall bear the following legend:

“The securities represented by this Certificate have not been registered or
qualified under the Securities Act of 1933 or the securities laws of any other
jurisdiction and may not be sold, exchanged, hypothecated or transferred in any
manner except in compliance with said Act and other applicable laws.”

Any certificate issued at any time in exchange or substitution for any certificate bearing such
legend (except a new certificate issued upon completion of a sale or transfer pursuant to a
registration statement under the Securities Act of the securities represented thereby or pursuant
to rule 144 under the Securities Act) shall also bear the above legend unless counsel for the
Company renders a written legal opinion to the Company that the securities represented thereby need
no longer be subject to such restriction.

Section 4. Exchange of Warrant Certificate. Any Warrant certificate may be exchanged for
another certificate or certificates entitling the holder thereof to purchase a like aggregate
number of shares of Common Stock as this certificate then entitles such holder to purchase. Any
holder of a Warrant desiring to exchange such Warrant certificate shall make such request in
writing delivered to the Company, and shall surrender, properly endorsed, the certificate
evidencing the Warrant to be so exchanged. Thereupon, the Company shall execute and deliver one or
more new Warrant certificates as so requested.

Section 5. Mutilated or Missing Warrant. In case any Warrant certificate shall be mutilated,
lost, stolen or destroyed, the Company shall, at the request of the holder thereof, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated certificate or
certificates, or in lieu of and substitution for the certificate or certificates lost, stolen or
destroyed, a new Warrant certificate or certificates of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence satisfactory to the Company of such loss,
theft or destruction of such Warrant and indemnity, if requested, satisfactory to the Company. In
the case of the initial Purchaser, the initial Purchaser’s unsecured agreement of indemnity shall
be deemed satisfactory to the Company.

 

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Section 6. Requirement of Availability of Shares of Common Stock. There are authorized and
available for issuance, and so long as any Warrant remains outstanding the
Company shall at all times keep authorized and available for issuance, such number of shares of the
Company’s authorized but unissued Common Stock as will be sufficient to permit the exercise in full
of all outstanding Warrants so as to ensure that the authorized capital of the Company comprises
sufficient unissued shares of Common Stock for issuance upon the exercise in full of all
outstanding Warrants and that such Common Stock may be issued by the Board of Directors of the
Company without any further authorization by the shareholders of the Company. Every transfer agent
for the Common Stock and other securities of the Company issuable upon the exercise of the Warrants
shall be irrevocably authorized and directed at all times to keep available such number of
authorized shares and other securities as will be sufficient for such purpose. The Company shall
supply any such transfer agent with duly executed stock and other certificates for such purpose and
shall provide or otherwise make available any cash which may be payable as provided in Section 9.

Section 7. Adjustment of Warrant Price and Number of Shares. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment from time to time upon the happening of certain events, as follows:

Section 7.1 Adjustments. The number of shares purchasable upon the exercise of this Warrant
and the Warrant Price shall be subject to adjustment as follows:

(a) In case the Company shall (i) pay a dividend in Common Stock or make a distribution in
Common Stock, (ii) pay a liquidating cash dividend as so denominated in accordance with generally
accepted accounting principles, (iii) subdivide its outstanding Common Stock, (iv) combine its
outstanding Common Stock into a smaller number of shares of Common Stock, or (v) issue by
reclassification of its Common Stock, spin-off, split-up, recapitalization, merger, consolidation
or any similar corporate event or arrangement other securities of the Company, the number of shares
of Common Stock purchasable upon exercise of this Warrant immediately prior thereto shall be
adjusted so that the holder of this Warrant shall be entitled to receive the kind and number of
shares or other securities of the Company which it would have owned or would have been entitled to
receive after the happening of any of the events described above had this Warrant been exercised
immediately prior to the happening of such event and any record date with respect thereto. Any
adjustment made pursuant to this subsection (a) shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such event.

(b) No adjustment in the number of shares of Common Stock purchasable hereunder shall be
required unless such adjustment would require an increase or decrease of at least one percent in
the number of shares of Common Stock then purchasable upon the exercise of this Warrant, provided
that any adjustments which by reason of this subsection (d) are not required to be made immediately
shall be carried forward and taken into account in any subsequent adjustment.

(c) Whenever the number of shares of Common Stock purchasable upon the exercise of this
Warrant is increased or decreased as provided in this Section 8, the Warrant Price payable upon
exercise of this Warrant shall be adjusted by multiplying the Warrant Price in effect immediately
prior to such adjustment by a fraction, the numerator of which shall be the number of shares of
Common Stock purchasable upon exercise of this Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of shares so purchasable immediately
after such adjustment.

 

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(d) Whenever the number of shares of Common Stock purchasable upon the exercise of this
Warrant or the Warrant Price is adjusted as herein provided, the Company shall cause to be promptly
mailed to the holder by first-class mail, postage prepaid, notice of such adjustment or adjustments
and a certificate of an executive officer of the Company setting forth the number of shares of
Common Stock purchasable upon the exercise of this Warrant and the Warrant Price after such
adjustment, a brief statement of the facts requiring such adjustment and the computation by which
such adjustment was made.

(e) If, as a result of an adjustment made pursuant to this Section 8, the holder of this
Warrant shall become entitled to purchase any shares of the Company other than Common Stock,
thereafter the number of such other shares so purchasable upon exercise of this Warrant and the
Warrant Price of such shares shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions of this Section 8 with respect to the
shares of Common Stock.

Section 7.2 No Adjustment in Certain Cases. No adjustments to the number of shares of Common
Stock issuable upon the exercise of this Warrant or the Warrant Price shall be made in connection
with the issuance of (a) Common Stock upon exercise of any of the Warrants or (b) stock options
granted to employees and directors of the Company for the purchase of a number of shares of Common
Stock as may from time to time be duly authorized by the Board of Directors.

Section 7.3 Statement on Warrants. This Warrant shall entitle the holder hereof to purchase
such number of shares of Common Stock at such Warrant Price as may be determined in accordance with
the terms hereof after giving effect to any adjustments in the number or kind of shares purchasable
upon the exercise hereof or the Warrant Price, as the case may be, notwithstanding that this
Warrant certificate may continue to express the same price and number and kind of shares as are
initially stated herein.

Section 7.4 No Dilution or Impairment. The Company will not, through any reorganization,
transfer of assets, consolidation, merger, dissolution or otherwise, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed hereunder by the Company,
but will at all times in good faith assist in carrying out all of the provisions of this Section 8.

Section 8. Fractional Interests. The Company shall not be required to issue fractional
shares of Common Stock on the exercise of any Warrant. If any fraction of a Share would, except
for the provisions of this Section 9, be issuable on the exercise of this Warrant (or specified
portions thereof), the Company at its election (i) shall pay an amount in cash equal to the then
current market price of a share of Common Stock (as determined in good faith by the Board of
Directors of the Company) multiplied by such fraction, or (ii) shall issue a full share of Common
Stock in lieu of such fractional share.

 

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Section 9. No Rights as Shareholder; Notices. Nothing contained in this Warrant shall be
construed as conferring upon the holder or its transferees any rights as a shareholder of the
Company, including the right to vote, receive dividends, consent or receive notices as a
shareholder with respect to any meeting of shareholders for the election of directors of the
Company or any other matter.

Section 10. Notices. Any notice by the Company or the holder of this Warrant shall be in
writing and shall be deemed to have been duly given if hand delivered on the date of such delivery,
or on the Business Day after timely delivery to a recognized overnight courier that guarantees
overnight delivery, (a) if to the Company, at 600 17th Street, Suite 2800-South, Denver,
CO 80202, Attention: President, or at such other address as the Company may designate by notice to
each holder of Warrants at the time outstanding, with a copy to Jeff Knetsch, Brownstein Hyatt
Farber Schreck, LLP, Suite 2100, 410 17th Street, Denver, Colorado 80202, and (b) if to
any holder of Warrants, at the address of such holder as it appears on the Warrant Register.

Section 11. Successors. This Warrant shall bind and inure to the benefit of the Company and
its permitted successors and assigns hereunder and, in addition, shall inure to the benefit of and
be enforceable by all holders from time to time of the Warrants.

Section 12. Applicable Law. This Warrant shall be enforced in accordance with, and the
rights of the Company and the holder of this Warrant shall be governed by, the laws of the State of
Colorado (without regard to conflicts of laws principles thereof).

Section 13. Benefits of this Agreement. Nothing in this Warrant shall be construed to give
to any person or corporation other than the Company and the holder of this Warrant any legal or
equitable right, remedy or claim under this Warrant and this Warrant shall be for the sole and
exclusive benefit of the Company and the holder hereof.

Section 14. Availability of Information. As long as the Company is required to comply with
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company will use it
reasonable best efforts to comply with all public information reporting requirements of the SEC
(including Rule 144 promulgated under the Securities Act) from time to time in effect and relating
to the availability of an exemption from the Securities Act for the sale of any such securities.
The Company will also cooperate with each holder of any Warrants in supplying such information as
may be necessary for such holder to complete and file any information reporting forms presently or
hereafter required by the SEC as a condition to the availability of an exemption from the
Securities Act for the sale of restricted securities.

Section 15. Amendment. This Warrant may be amended by the Company in any respect at any time
or from time to time upon the written consent of the holder of this Warrant.

 

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IN WITNESS WHEREOF, the Company has executed this Warrant.

	 	 	 	 	 
	 	PROSPECT GLOBAL RESOURCES INC.

 	 
	 	By:  	/s/ Patrick L. Avery
 	 
	 	 	Patrick L. Avery 	 
	 	 	Chief Executive Officer 	 

 

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PROSPECT GLOBAL RESOURCES INC.

ELECTION TO PURCHASE

PROSPECT GLOBAL RESOURCES INC.

600 17th Street, Suite 2800-South

Denver, CO 80202

Attn: Chief Executive Officer

The undersigned hereby irrevocably elects to exercise the right of purchase represented by the
Warrant to which this Election to Purchase is attached for, and to purchase thereunder,
                     shares of Common Stock (or other securities) of the Company provided for therein, and
herewith makes payment for the Warrant Price by (check one of the following):

o certified or cashiers check or wire transfer; or

o tendering Warrant Shares having a Fair Market Value equal to the Warrant Price;

all at the price and on the terms specified in this Warrant and requests that certificates for said
shares (or other securities) be issued in the name of:

 

 

(Please Print Name and Address)

and, if said number of shares shall not be all the shares of Common Stock purchasable hereunder,
that a new Warrant certificate for the balance of said shares purchasable under the said Warrant be
registered in the name of the undersigned holder or its nominee as below indicated and delivered to
the address stated below:

Dated:                     ,           

	 	 	 	 	 	 	 	 	 
	 	 	Name of holder or

Nominee (Please Print):	 	 	 	 
	 

	 	 	 	 	 	 

	 	 
	 

	 	Address:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Signature Guaranteed:	 	 	 	 

 

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(To be signed only upon assignment of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

 

(Name and Address of Assignee must be Printed or Typewritten)

the within Warrant, hereby irrevocably constituting and appointing                     
Attorney to transfer said Warrant on the books of Prospect Global Resources Inc. with full power of
substitution in the premises.

Dated:                     ,          

Signature of Registered Holder

Signature Guaranteed:

 

10exv4w3

Exhibit 4.3

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of this 19th day of
September, 2011 by and between Prospect Global Resources Inc., a Delaware corporation (the
“Company”), and Hexagon Investments, LLC and any assignees or transferees thereof (the
“Investor”).

1. Certain Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:

(a) An “Affiliate” of any Person (as defined herein) means a Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with the first mentioned Person. A Person shall be deemed to control another Person if
such first Person possesses, directly or indirectly, the power to direct, or cause the direction
of, the management and policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.

(b) “Board of Directors” means the Board of Directors of the Company.

(c) “Commission” shall mean the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act and the Exchange Act.

(d) “Common Stock” shall mean the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be reclassified
or changed.

(e) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any
similar successor federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

(f) “Holders” shall mean the holders of Registrable Securities.

(g) “Majority Interest” means Holders holding not less than a majority in interest of
the Registrable Securities held by all Holders.

(h) “Note” means the Convertible Secured Promissory Note dated as of the date hereof
in the principal amount of $1,500,000 issued by the Company to the Investor.

(i) “Person” shall mean an individual, a corporation, an association, a joint venture,
a partnership, a limited liability company, an estate, a trust, an unincorporated organization, and
any other entity or organization, governmental or otherwise.

 

 

 

(j) “Registrable Securities” shall mean (i) any shares of Common Stock held by the
Investor or its transferees that were issued pursuant to the conversion of the Note or exercise of
the Warrants and any other securities issued or issuable with respect to any such shares by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided, however, that
notwithstanding anything to the contrary contained herein, “Registrable Securities” shall
not at any time include any securities (i) registered and sold pursuant to the Securities Act, (ii)
sold to the public pursuant to Rule 144 promulgated under the Securities Act or (iii) which could
then be sold in their entirety pursuant to Rule 144(k) promulgated under the Securities Act without
limitation or restriction.

(k) “Registration Expenses” shall mean the expenses so described in Section 5 hereof.

(l) “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar
successor federal statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.

(m) “Warrants” shall mean the $3,750,000 Warrants dated the date hereof issued to
Purchaser to purchase shares of Common Stock.

2. Piggyback Registration. If the Company at any time proposes to register any of its
Common Stock under the Securities Act for sale to the public either for its own account or for the
account of another Person other than Holders, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, each such time it will
promptly give written notice to the Holders of its intention to effect such registration. Upon the
written request of any such Holder given within 30 days after receipt by such Holder of such
notice, the Company will, subject to the limits contained in this Section 2, use its reasonable
best efforts to cause all Registrable Securities of such Holder that such Holder so requests to be
registered under the Securities Act and qualified for sale under any state blue sky law, all to the
extent required to permit such sale or other disposition of said Registrable Securities; provided,
however, that if the Company is advised in writing in good faith by the managing underwriter of the
Company’s securities being offered in an underwritten public offering pursuant to such registration
statement that the amount to be sold by persons other than the Company (collectively, “Selling
Stockholders”) is greater than the amount which can be offered without adversely affecting the
marketability of the offering, the Company may reduce the amount offered for the accounts of
Selling Stockholders (including any Holders) to a number reasonably deemed satisfactory by such
managing underwriter; and provided, further, that the securities to be excluded shall be determined
in the following sequence: (i) first, securities held by any Persons not having any contractual
incidental or “piggy back” registration rights, and (ii) second, Registrable Securities and
securities held by any Persons having contractual incidental or “piggy back” registration rights
pursuant to an agreement which is not this Agreement. If there is a reduction in the number of
shares of Common Stock or Registrable Securities to be registered pursuant to clauses (i) and (ii)
above, such reduction shall be made within each tranche on a pro rata basis (based upon the
aggregate number of shares of Common Stock or Registrable Securities held by the holders in each
such tranche).

 

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3. Registration Procedures. If and whenever the Company is required by the provisions
of this Agreement to effect the registration of any of its securities under the Securities Act, the
Company will, as expeditiously as possible:

(a) use its reasonable best efforts diligently to prepare and file with the Commission a
registration statement on the appropriate form under the Securities Act with respect to such
securities, which form shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the Commission to be filed
therewith, and use its reasonable best efforts to cause such registration statement to become and
remain effective until completion of the proposed offering (but not for more than 180 days);

(b) use its reasonable best efforts to prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective until the completion of the offering
(but not for more than 180 days) and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such registration statement
whenever the seller or sellers of such securities shall desire to sell or otherwise dispose of the
same, but only to the extent provided in this Agreement;

(c) furnish to each selling Holder and the underwriters, if any, such number of copies of such
registration statement, any amendments thereto, any documents incorporated by reference therein,
the prospectus, including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such selling holder may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by such selling holder;

(d) use its reasonable best efforts to register or qualify the securities covered by such
registration statement under and to the extent required by such other securities or state blue sky
laws of such jurisdictions as each selling holder shall reasonably request, and do any and all
other acts and things which may be necessary under such securities or blue sky laws to enable such
selling holder to consummate the public sale or other disposition in such jurisdictions of the
securities owned by such selling holder, except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in any jurisdiction wherein it is not
so qualified;

(e) within a reasonable time before each filing of the registration statement or prospectus or
amendments or supplements thereto with the Commission, furnish to counsel selected by a Majority
Interest (“Holders’ Counsel”) copies of such documents proposed to be filed, which
documents shall be subject to the reasonable approval of such counsel;

 

3

 

(f) promptly notify each selling holder of Registrable Securities, Holders’ Counsel and any
underwriter and (if requested by any such Person) confirm such notice in writing, of the happening
of any event which makes any statement made in the registration statement or related prospectus
untrue or which requires the making of any changes in such registration statement or prospectus so
that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein in the light of the circumstances under which they were made not
misleading; and, as promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;

(g) use its best efforts to prevent the issuance of any order suspending the effectiveness of
a registration statement, and if one is issued use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of a registration statement at the earliest
possible moment;

(h) if requested by the managing underwriter or underwriters (if any), any selling holder, or
Holders’ Counsel, promptly incorporate in a prospectus supplement or post-effective amendment such
information as such Person requests to be included therein with respect to the selling holder or
the securities being sold, including, without limitation, with respect to the securities being sold
by such selling holder to such underwriter or underwriters, the purchase price being paid therefor
by such underwriter or underwriters and with respect to any other terms of an underwritten offering
of the securities to be sold in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;

(i) make available to each selling Holder, any underwriter participating in any disposition
pursuant to a registration statement, Holders’ Counsel and any accountant or other agent or
representative retained by a Majority Interest (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any such Inspector in connection with such registration
statement subject, in each case, to such confidentiality agreements as the Company shall reasonably
request;

(j) enter into any reasonable underwriting agreement required by the proposed underwriter(s)
for the selling holders, if any, and use its reasonable best efforts to facilitate the public
offering of the securities;

(k) use its reasonable best efforts to cause the securities covered by such registration
statement to be listed on the securities exchange or quoted on the quotation system on which the
Common Stock is then listed or quoted (including the Over-the-Counter Bulletin Board);

(l) otherwise use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission and make generally available to its security holders, in each case as
soon as practicable, but not later than 90 days after the close of the period covered thereby, an
earnings statement of the Company which will satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any comparable successor provisions); and

 

4

 

(m) otherwise cooperate with the underwriter(s), the Commission and other regulatory agencies
and take all reasonable actions and execute and deliver or cause to be executed and delivered all
documents reasonably necessary to effect the registration of any securities under this Agreement.

4. Expenses. All reasonable expenses incurred by the Company, the Investor and any
other Holders in effecting the registrations provided for in Section 2, including, without
limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel
for the Company, reasonable fees and disbursements of Holders’ Counsel, underwriting expenses
(other than fees, commissions or discounts), expenses of any audits incident to or required by any
such registration and expenses of complying with the securities or blue sky laws of any
jurisdiction pursuant to Section 3(d) hereof (all of such expenses referred to as “Registration
Expenses”), shall be paid by the Company. The Registration Expenses of Demand Registrations on
Form S-3 after the first two shall be paid by the Holders effecting such Demand Registrations.

5. Indemnification.

(a) The Company shall indemnify and hold harmless each selling Holder of Registrable
Securities, each underwriter (as defined in the Securities Act), and each other Person who
participates in the offering of such securities and each other Person, if any, who controls (within
the meaning of the Securities Act) such seller, underwriter or participating Person (individually
and collectively, the “Indemnified Person”) against any losses, claims, damages or
liabilities (collectively, the “liability”), joint or several, to which such Indemnified
Person may become subject under the Securities Act or any other statute or at common law, insofar
as such liability (or action in respect thereof) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, or (iii)
any violation by the Company of the Securities Act, any state securities or “blue sky” laws or any
rule or regulation thereunder in connection with such registration. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 5(a) as it
pertains to any preliminary prospectus, shall not inure to the benefit of any Indemnified Person if
the untrue statement or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section 3(f), and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice, used such incorrect
prospectus. Except as otherwise provided in Section 5(d), the Company shall reimburse each such
Indemnified Person in connection with investigating or defending any such liability as expenses in
connection with the same are incurred; provided, however, that the Company shall
not be liable to any Indemnified Person in any such case to the extent that any such liability
arises out of or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary or final prospectus, or amendment
or supplement thereto in reliance upon and in conformity with information furnished in writing to the Company by such Indemnified
Person specifically for use therein.

 

5

 

(b) Each selling Holder of any securities included in such registration being effected shall
indemnify and hold harmless each other selling holder of any securities, the Company, its directors
and officers, each underwriter and each other Person, if any, who controls the Company or such
underwriter (individually and collectively also the “Indemnified Person”), against any
liability, joint or several, to which any such Indemnified Person may become subject under the
Securities Act or any other statute or at common law, insofar as such liability (or actions in
respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any registration
statement under which securities were registered under the Securities Act at the request of such
selling holder, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any omission or alleged omission by such selling holder to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, in the case of (i) and (ii) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by such selling holder specifically
for use therein. Such selling Holder’s obligations hereunder shall be limited to an amount equal
to the proceeds to such selling Holder of the securities sold in any such registration.

(c) Indemnification similar to that specified in Section 5(a) and Section 5(b) shall be given
by the Company and each selling Holder (with such modifications as may be appropriate) with respect
to any required registration or other qualification of their securities under any federal or state
law or regulation of governmental authority other than the Securities Act.

(d) If the indemnification provided for in this Section 5 for any reason is held by a court of
competent jurisdiction to be unavailable to an Indemnified Person in respect of any losses, claims,
damages, expenses or liabilities referred to therein, then each Indemnifying Party under this
Section 5, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses, claims, damages,
expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, the selling Holders and the underwriters from the offering of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company, the other selling
Holders and the underwriters in connection with the statements or omissions which resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the selling Holders and the
underwriters shall be deemed to be in the same respective proportions that the net proceeds from
the offering (before deducting expenses) received by the Company and the selling Holders and the
underwriting discount received by the underwriters, in each case as set forth in the table on the
cover page of the applicable prospectus, bear to the aggregate public offering price of the
Registrable Securities. The relative fault of the Company, the selling Holders and the
underwriters shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, the selling Holders or the underwriters and
the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

6

 

The Company, the selling Holders and the underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata or per capita
allocation or by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. In no event, however, shall a
selling Holder be required to contribute any amount under this Section 5(d) in excess of the lesser
of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified
against equal to the proportion of the total Registrable Securities sold under such registration
statement which are being sold by such selling Holder or (ii) the net proceeds received by such
selling holder from its sale of Registrable Securities under such registration statement. No
person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not found guilty of such
fraudulent misrepresentation.

6. Compliance with Rule 144. The Company will use its reasonable best efforts to file
with the Commission such information as is required under the Exchange Act for so long as there are
holders of Registrable Securities; and in such event, the Company shall use its reasonable best
efforts to take all action as may be required as a condition to the availability of Rule 144 under
the Securities Act (or any comparable successor rules). The Company shall furnish to any holder of
Registrable Securities upon request a written statement executed by the Company as to the steps it
has taken to comply with the current public information requirement of Rule 144 (or such comparable
successor rules). Subject to the limitations on transfers imposed by this Agreement, or any other
agreement to which the Holders and the Company are a party, the Company shall use its reasonable
best efforts to facilitate and expedite transfers of Registrable Securities pursuant to Rule 144
under the Securities Act, which efforts shall include timely notice to its transfer agent to
expedite such transfers of Registrable Securities.

7. Amendments. The provisions of this Agreement may be amended, and the Company may
take any action herein prohibited or omit to perform any act herein required to be performed by it,
only with the written consent of the Company and a Majority Interest.

8. Transferability of Registration Rights. The registration rights set forth in this
Agreement are transferable by the Investor to each transferee of Registrable Securities. Each
subsequent holder of Registrable Securities must consent in writing to be bound by the terms and
conditions of this Agreement in order to acquire the rights granted pursuant to this Agreement.

9. Rights Which May Be Granted to Subsequent Parties. Other than transferees of
Registrable Securities under Section 8 hereof, the Company shall not, without the prior written
consent of a Majority Interest, allow purchasers of the Company’s securities to become a party to
this Agreement.

10. Damages. The Company recognizes and agrees that each Holder of Registrable
Securities will not have an adequate remedy if the Company fails to comply with the terms and
provisions of this Agreement and that damages will not be readily ascertainable, and the Company
expressly agrees that, in the event of such failure, it shall not oppose an application by any
holder of Registrable Securities or any other Person entitled to the benefits of this Agreement
requiring specific performance of any and all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.

 

7

 

11. Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and
construed under the laws of the State of Colorado without regard to principles of conflict of laws.
The parties irrevocably consent to the jurisdiction and venue of the state courts located in
Denver, Colorado and federal courts located in Denver, Colorado in connection with any action
relating to this Agreement.

12. Miscellaneous.

(a) All notices, requests, demands and other communications provided for hereunder shall be in
writing and mailed (by first class registered or certified mail, postage prepaid), telegraphed,
sent by express overnight courier service or electronic facsimile transmission (with a copy by
mail), or delivered to the applicable party at the addresses indicated below:

	 	 	 
	If to the Company:

	 	Prospect Global Resources Inc.

600 17th Street, Suite 2800-South

Denver, CO 80202

Attention: Pat Avery

Facsimile: 720-294-0402
	 
	 	 
	If to the Investor:

	 	Hexagon Investments, LLC

730 17th Street, Suite 800

Denver, CO 80202

Attn: Brian Fleischmann

Fax: 303-571-1221

email: *****************

If to any other holder of Registrable Securities:

At such Person’s address for notice as set forth in the books and
records of the Company.

or, as to each of the foregoing, at such other address as shall be designated by such Person in a
written notice to other parties complying as to delivery with the terms of this subsection (a).
All such notices, requests, demands and other communications shall, when mailed, faxed or sent,
respectively, be effective (i) two days after being deposited in the mails or (ii) one day after
being delivered to the telegraph company, deposited with the express overnight courier service or
sent by electronic facsimile transmission, respectively, addressed as aforesaid.

(b) This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.

 

8

 

(c) If any provision of this Agreement shall be held to be illegal, invalid or unenforceable,
such illegality, invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable
provision were not contained herein.

The parties hereto have caused this Registration Rights Agreement to be duly executed as of
the date first set forth above.

	 	 	 	 	 
	 	PROSPECT GLOBAL RESOURCES INC.

 	 
	 	By:  	/s/ Patrick L. Avery
 	 
	 	 	Name:  	Patrick Avery 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	HEXAGON INVESTMENTS, LLC

 	 
	 	By:  	/s/ Brian Fleischmann
 	 
	 	 	By:  	Brian Fleischmann 	 
	 	 	Title:  	Executive Vice President 	 

 

9

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