Document:

Exhibit 10.1

 

THIRTEENTH AMENDMENT TO
 SENIOR FIRST PRIORITY SECURED PROMISSORY NOTE

 

This THIRTEENTH AMENDMENT TO SENIOR FIRST PRIORITY SECURED PROMISSORY NOTE (this “Thirteenth Amendment”) is made as of April 25, 2014 by and between Prospect Global Resources, Inc., a Delaware corporation (“Maker”), and the Karlsson Group, Inc., an Arizona corporation (“Holder”), with respect to the following facts:

 

RECITALS

 

WHEREAS, Maker issued to Holder that certain Senior First Priority Secured Promissory Note dated August 1, 2012 (the “Original Note”), whereby the Maker promised to pay to Holder the principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000);

 

WHEREAS, American West Potash, LLC, a Delaware limited liability company (“AWP”), Prospect Global Resources, Inc., a Nevada corporation (“Prospect Nevada”), Apache County Land & Ranch, LLC, a Nevada limited liability company (“Apache”), Maker and Holder entered into that certain Extension Agreement (the “Extension Agreement”) dated as of April 15, 2013;

 

WHEREAS, Maker and Holder entered into an Amendment to Senior First Priority Secured Promissory Note dated April 15, 2013 (“First Amendment” and the Original Note as amended thereby and as otherwise amended, restated or modified from time to time, the “Note”);

 

WHEREAS, AWP, Prospect Nevada, Apache, Maker and Holder entered into that certain Second Extension Agreement dated as of June 26, 2013;

 

WHEREAS, Maker and Holder entered into a Second Amendment to Senior First Priority Secured Promissory Note dated as of June 26, 2013;

 

WHEREAS, Maker and Holder entered into a Third Amendment to Senior First Priority Secured Promissory Note dated as of September 9, 2013;

 

WHEREAS, Maker and Holder entered into a Fourth Amendment to Senior First Priority Secured Promissory Note dated as of September 13, 2013;

 

WHEREAS, Maker and Holder entered into a Fifth Amendment to Senior First Priority Secured Promissory Note dated as of November 13, 2013;

 

WHEREAS, Maker and Holder entered into a Sixth Amendment to Senior First Priority Secured Promissory Note dated as of December 3, 2013;

 

WHEREAS, Maker and Holder entered into a Seventh Amendment to Senior First Priority Secured Promissory Note dated as of December 10, 2013;

 

 

WHEREAS, Maker and Holder entered into an Eighth Amendment to Senior First Priority Secured Promissory Note dated as of January 31, 2014;

 

WHEREAS, Maker and Holder entered into an Ninth Amendment to Senior First Priority Secured Promissory Note dated as of March 7, 2014;

 

WHEREAS, Maker and Holder entered into an Tenth Amendment to Senior First Priority Secured Promissory Note dated as of March 12, 2014;

 

WHEREAS, Maker and Holder entered into an Eleventh Amendment to Senior First Priority Secured Promissory Note dated as of April 3, 2014;

 

WHEREAS, Maker and Holder entered into a Twelfth Amendment to Senior First Priority Secured Promissory Note dated as of April 23, 2014; and

 

WHEREAS, Maker has requested that Holder agree to modify the Note to extend the deadline for discounted payoff of the Note in full by four days, until April 29, 2014, and to make certain conforming changes to the Note.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maker and Holder hereby agree as follows:

 

AGREEMENT

 

1.                                      Defined Terms.  All capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Note.

 

2.                                      Amendments.

 

(a)                                 Amendment to Section 2.2.  Section 2.2 of the Note is amended and restated to read in its entirety as follows:

 

“Payments Other Than Interest or Principal.  Maker shall pay to Holder, designating in writing such payments as payments under this section of this Note, the following amounts, as additional consideration for the Holder’s sale of its membership interest in American West Potash, LLC under the Purchase Agreement and not as prepayments of principal under this Note, (i) a payment equal to the 2012 453A Amount on or before the Initial 453A Payment Date, (ii) a payment equal to the 2013 453A Amount on or before the Initial 453A Payment Date, (iii) a payment equal to the 2014 453A Amount on or before February 10, 2015, and, (iv) along with each payment of principal pursuant to Section 3.2 of this Note, and at the Maturity Date, the Principal Payment Tax Gross-Up Amount or amount due under Section 3.5 with respect to such payment; provided, however, that no Principal Payment Tax Gross-Up Amount or amount under Section 3.5 shall be due with respect to the first $200,000 of pre-payments under Section 3.2(a).  For purposes hereof, the “Initial 453A Payment Date” shall mean the earlier of (i) April 29, 2014; and (ii) the date of occurrence of the first Event of Default to occur under this Note on or after November 14, 2013.  For the

 

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avoidance of doubt, no payment made pursuant to any other provision of this Note, including but not limited to Section 3.2(c) hereof, shall satisfy in whole or any part Maker’s obligation to make the payments set forth in this Section 2.2.”

 

(b)                                 Amendment to Section 3.4.  Section 3.4 of the Note is amended to read in its entirety as follows:

 

“Prepayment Discount.  In the event that Maker makes payments under the Note totaling Fifteen Million Dollars ($15,000,000) on or after December 10, 2013 and on or before April 29, 2014, whether through one or multiple payments, and whether pursuant to Section 2.2, Section 3.2 or Section 3.3, then all of Maker’s obligations under this Note shall be deemed to have been satisfied in full by Maker as of the date of such payment, or, in the case of multiple payments, the date on which the last such payment is made.”

 

(c)                                  Amendment to Section 5.4(ii).  Section 5.4(ii) of the Note is amended to read in its entirety as follows:

 

“No later than April 29, 2014, deliver a completed and updated 43-101 final resource report for purposes of the Definitive Feasibility Study.”

 

(d)                                 Amendment to Section 5.13.  Section 5.13 of the Note is amended to read in its entirety as follows:

 

5.13                        “Section 3.4 Prepayment.  Maker shall not have prepaid the Note in the full amount of Fifteen Million Dollars ($15,000,000) on or after December 10, 2013 and on or before April 29, 2014 in accordance with Section 3.4 of the Note.”

 

3.                                      Miscellaneous.

 

(a)                                 No Other Amendment.  Except as expressly amended in this Thirteenth Amendment, all provisions of the Note shall remain in full force and effect, and the parties thereto and hereto shall continue to have all their rights and remedies under the Note.  In the event of a conflict between the terms and provisions of this Thirteenth Amendment and the terms and conditions of the Note, the provisions of this Thirteenth Amendment shall govern.

 

(b)                                 Relation to Note.  This Thirteenth Amendment constitutes an integral part of the Note.  Upon the effectiveness of this Thirteenth Amendment, each reference in the Note to “this Promissory Note,” “hereunder,” “hereof,” or words of like import referring to the Note, shall mean and be a reference to the Note as amended hereby.

 

(c)                                  Successors and Assigns.  This Thirteenth Amendment shall be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns except as otherwise provided herein.

 

(d)                                 Counterparts.  This Thirteenth Amendment may be executed by the parties hereto on any number of separate counterparts, any of which may be executed and transmitted by

 

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facsimile, and each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Thirteenth Amendment to be executed and delivered as of the date first above written.

 

	
 
    	
MAKER:
    
	
 
    	
 
    
	
 
    	
PROSPECT   GLOBAL RESOURCES, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Damon Barber
    
	
 
    	
Name:   Damon Barber
    
	
 
    	
Title:   President, CEO and Secretary
    
	
 
    	
 
    
	
ACKNOWLEDGED   AND AGREED TO
    	
 
    
	
EFFECTIVE   AS OF APRIL 25 , 2014:
    	
 
    
	
 
    	
 
    
	
THE   KARLSSON GROUP, INC.,
    	
 
    
	
an   Arizona corporation
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/   Michael Stone
    	
 
    
	
Name:   Michael Stone
    	
 
    
	
Title:   CFO/Treasurer
    	
 
    

 

5Exhibit 10.2

 

REAFFIRMATION OF LOAN DOCUMENTS

 

THIS REAFFIRMATION OF LOAN DOCUMENTS (“Reaffirmation”), dated as of April 25, 2014, is executed in favor of The Karlsson Group, Inc., an Arizona corporation (“Karlsson”), by each of Prospect Global Resources, Inc., a Delaware corporation (“Prospect DE”), Prospect Global Resources, Inc., a Nevada corporation (“Parent”), Apache County Land & Ranch, LLC, a Nevada limited liability company (“Apache”), and American West Potash, LLC, a Delaware limited liability company (“AWP” and collectively with Prospect DE, Parent and Apache, the “Prospect Parties” and each a “Prospect Party”) with reference to the following facts:

 

A.            Prospect DE has entered into and delivered to the order of Karlsson that certain Senior First Priority Secured Promissory Note, dated as of August 1, 2012 (such Note, as so amended and as the same may hereafter be amended, modified, extended and/or restated, being hereinafter referred to as the “Note”).  Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Note.

 

B.            Pursuant to the Note, Karlsson has made certain extensions of credit (the “Loan”) to Prospect DE.

 

C.            The Loan is secured by, among other instruments, (i) that certain Deed of Trust, Security Agreement, Assignment of Production and Proceeds, Fixture Filing and Financing Statement dated as of August 1, 2012, executed by AWP, as trustor, in favor of and for the benefit of Karlsson, as beneficiary, and recorded August 1, 2012, as Instrument No. 2012-004076 in the Official Records of Apache County, Arizona (the “AWP Deed of Trust”) with respect to the property described therein (the “Premises”), (ii) that certain Security Agreement, dated as of August 1, 2012, executed by Prospect DE and AWP in favor of and for the benefit of Karlsson (the “Security Agreement”), (iii) that certain Membership Interest Pledge Agreement between Prospect DE and Karlsson, dated as of May 30, 2012 (the “AWP Pledge Agreement”); (iv) that certain Membership Interest Pledge Agreement between AWP and Karlsson, dated as of January 28, 2013 (the “Apache Pledge Agreement”); and (v) each of the Collateral Assignment of Mineral Leases, the Collateral Assignment of Mining Permits, and the Collateral Assignments of Royalty Agreements, each between AWP and Karlsson and each dated as of August 1, 2012 (collectively, the “Collateral Assignments”).  The Loan and all of Prospect DE’s other obligations under the Loan Documents (as defined below) are guaranteed by that certain Unconditional Guaranty dated as of August 1, 2012 executed by AWP in favor of and for the benefit of Karlsson (the “Guaranty”, and together with the AWP Deed of Trust, the Security Agreement, the Pledge Agreement and the Collateral Assignments and all financing statements, fixture filings, patent, trademark and copyright filings and other documents and agreements relating to the collateral for the Loan and made or delivered pursuant to the Note or any other Loan Document, the “Collateral Documents”).  The Note, the Collateral Documents and all other documents, agreements and instruments delivered to Karlsson under or in connection with the Note are collectively referred to herein as the “Loan Documents.”

 

D.            Concurrently herewith: (i) Karlsson and Prospect DE are entering into an Thirteenth Amendment to Senior First Priority Secured Promissory Note (the “Thirteenth

 

 

Amendment”) pursuant to which the deadline for discounted payoff of the Note in full is extended by four days, until April 29, 2014, and certain conforming changes to the Note are made to extend the applicable deadlines from April 25, 2014 to April 29, 2014; and (ii) Karlsson and the Prospect Parties are entering into an Amendment No. 2 to Sixth Extension Agreement (the “Extension Amendment” and collectively with the Thirteenth Amendment, the “Amendment Documents”) pursuant to which the deadline for payment of Karlsson legal fees and expenses is similarly being extended from April 25, 2014 to April 29, 2014.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and other agreements hereinafter contained, Karlsson and the Prospect Parties hereby agree as follows:

 

SECTION 1. Defined Terms.  All initially capitalized terms used without definition in this Reaffirmation shall have the respective meanings assigned to them in the Note.

 

SECTION 2.  Reaffirmation.  Each Prospect Party hereby (i) reaffirms and remakes on the date hereof each of the representations, warranties, covenants and agreements made by it in the Loan Documents, except to the extent such representations and warranties relate solely to an earlier date; (ii) acknowledges and admits its indebtedness and obligations under its respective Collateral Document(s) and under any other Loan Document to which such Prospect Party is a party, as the same have heretofore been, and may from time to time hereafter be, supplemented, amended, modified, restated or extended; and (iii) acknowledges and admits that it has no defenses, offsets or claims whatsoever in respect thereof, in each case notwithstanding the transactions effected by the Amendment Documents.

 

SECTION 3.  Full Force and Effect.  Except as expressly set forth herein, all of the Loan Documents to which each Prospect Party is party shall remain unmodified and in full force and effect.

 

SECTION 4.  Counterparts.  This Reaffirmation may be executed in multiple counterparts, each of which shall constitute an original and all of which, taken together, shall constitute but one and the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Reaffirmation of Loan Documents as of the date first above written.

 

	
 
    	
KARLSSON:
    
	
 
    	
 
    
	
 
    	
The   Karlsson Group, Inc.
    
	
 
    	
an   Arizona corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael Stone
    
	
 
    	
Name:   Michael Stone
    
	
 
    	
Its:   CFO/Treasurer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PROSPECT   DE:
    
	
 
    	
 
    
	
 
    	
Prospect   Global Resources, Inc.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Damon Barber
    
	
 
    	
Name:   Damon Barber
    
	
 
    	
Its:   President, CEO and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PARENT:
    
	
 
    	
 
    
	
 
    	
Prospect   Global Resources, Inc.,
    
	
 
    	
a   Nevada corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Damon Barber
    
	
 
    	
Name:   Damon Barber
    
	
 
    	
Its:   President, CEO and Secretary
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AWP:
    
	
 
    	
 
    
	
 
    	
American   West Potash, LLC
    
	
 
    	
a   Delaware limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Damon Barber
    
	
 
    	
Name:   Damon Barber
    
	
 
    	
Its:   President, CEO and Secretary
    

 

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APACHE:
    
	
 
    	
 
    
	
 
    	
Apache   County Land & Ranch, LLC
    
	
 
    	
a   Nevada limited liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Damon Barber
    
	
 
    	
Name:   Damon Barber
    
	
 
    	
Its:   President, CEO and Secretary
    

 

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