Document:

exv10w1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of the
25th day of April, 2011 by and between HEXAGON INVESTMENTS, LLC and any assignees or
transferees thereof (the “Purchaser”) and PROSPECT GLOBAL RESOURCES INC., a Delaware
corporation (the “Company”). Purchaser and the Company are sometimes each referred to
herein as a “Party” and collectively as the “Parties.”

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for
all purposes of this Agreement, the following terms have the meanings set forth in this Section
1.1:

“Business Day” means any day except any Saturday, any Sunday, any day which is
a federal legal holiday in the United States or any day on which banking institutions in the
State of Colorado are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

“Closing Date” means the Business Day on which this Agreement has been executed
and delivered by the applicable parties thereto, and all conditions precedent to (i) the
Purchaser’s obligations to pay the Purchase Price and (ii) the Company’s obligations to
deliver the Securities, in each case, have been satisfied or waived.

“Common Stock” means 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.

“Loan Documents” means this Agreement, the Note, the Warrants, the Registration
Rights Agreement and the Security Agreement.

“Note” means the Convertible Secured Promissory Note dated the date hereof in
the amount of $2,500,000 issued by the Company to the Purchaser.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political subdivision
thereof.

“Purchase Price” means $2,500,000 in cash.

“Registration Rights Agreement” means the Registration Rights Agreement dated
the date hereof between the Company and the Purchaser.

“Securities” means the Note and the Warrants.

“Securities Act” means the Securities Act of 1933, as amended, and the rules
and
regulations promulgated thereunder.

 

 

 

“Security Agreement” means the Amended and Restated Security Agreement dated
the date hereof among the Company, the Purchaser and Richard Merkin (“Merkin”).

“Shares” means the shares of Common Stock issued or issuable to the Purchaser
upon conversion of the Note and exercise of the Warrants.

“Warrants” means the $9,500,000 Warrants dated the date hereof issued to
Purchaser to purchase Shares.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing.

(a) On the Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by the parties hereto,
the Company agrees to sell, and the Purchaser agrees to purchase, the Securities. The Purchaser
shall deliver to the Company, via wire transfer or a certified check of immediately available
funds, the Purchase Price and the Company shall deliver to the Purchaser the Securities. Upon
satisfaction of the covenants and conditions set forth herein, the Closing shall occur at the
offices of the Company or such other location as the parties shall mutually agree.

2.2 Deliveries.

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered
to the Purchaser the following:

(i) this Agreement duly executed by the Company;

(ii) the Note duly executed by the Company;

(iii) the Warrants duly executed by the Company;

(iv) the Security Agreement duly executed by the Company; and

(v) the Registration Rights Agreement duly executed by the Company.

(b) On or prior to the Closing Date, the Purchaser shall deliver or cause to be
delivered to the Company the following:

(i) this Agreement duly executed by the Purchaser;

(ii) the Security Agreement duly executed by the Purchaser;

(iii) the Registration Rights Agreement duly executed by the Purchaser; and

(iv) the Purchase Price by wire transfer to the account as specified in writing
by the Company.

 

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2.3 Closing Conditions. 

(a) The obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Purchaser contained herein (unless as of a
specific date therein);

(ii) all obligations, covenants and agreements of the Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and

(iii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

(b) The respective obligations of the Purchaser hereunder in connection with the
Closing are subject to the following conditions being met:

(i) the accuracy in all material respects when made and on the Closing Date of
the representations and warranties of the Company contained herein (unless as of a
specific date therein);

(ii) all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed; and

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Purchaser as follows on the date hereof and
on the Closing Date:

3.1 Organization of the Company. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The Company 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.

3.2 Power and Authority. The Company has full power and authority to enter into the
Loan Documents and to consummate the transactions contemplated hereby and thereby. The Company has
duly and validly executed and delivered the Loan Documents. Each of the Loan Documents constitute
legal, valid and binding obligations of the Company, 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.

 

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3.3 No Conflict. The execution and delivery by the Company of the Loan Documents 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 Certificate of Incorporation of the Company, as amended, or
Bylaws of the Company, (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise or license to which the Company or any of its properties
or assets is subject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or its properties or assets.

3.4 Government 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 the Company of this Agreement or the business of the Company.

3.5 Liabilities. Other than the Note, the Company has no liabilities and, to the best
of its knowledge, no material contingent liabilities not disclosed in the financial statements
provided to the Purchaser.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants to the Company as follows on the date hereof and
on the Closing Date:

4.1 Power and Authority. The Purchaser has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby and thereby. The Purchaser
has duly and validly executed and delivered this Agreement. Each Loan Document to which the
Purchaser is a party constitutes legal, valid and binding obligations of the Purchaser, 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.

4.2 Risk. The Purchaser recognizes that the purchase of the Securities involves a
high degree of risk in that: (i) the Company is a development stage business with only limited
operating history and may require additional operating funds from time to time; (ii) an investment
in the Company is highly speculative and only investors who can afford the loss of their entire
investment should consider investing in the Company and the Securities; (iii) the Purchaser may not
be able to liquidate his, her or its investment; (iv) transferability of the Securities is
extremely limited; and (v) in the event of a disposition of the Securities or the Shares, the
Purchaser could sustain the loss of his, her or its entire investment.

4.3 Accredited Investor. The Purchaser is an “accredited investor” as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act, and the Purchaser is
able to bear the economic risk of a loss of its entire investment in the Securities and the
Shares.

 

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4.4 Investment Experience. The Purchaser has prior investment experience, including
investment in non-listed and unregistered securities.

4.5 Residency. The Purchaser’s principal residence address is in the jurisdiction set
forth on the signature page of this Agreement.

4.6 Information. The Purchaser acknowledges and agrees that the Purchaser has been
provided access to and has had the opportunity to discuss with the Company and review any
information the Purchaser desires in order to analyze the Company’s business, management, financial
affairs, prospects and the terms and conditions of this transaction with the Company. The
Purchaser has such knowledge and experience in financial and business matters that the Purchaser is
capable of evaluating the merits of this transaction. The Purchaser has had the opportunity to
seek independent advice in connection with such evaluation and analysis.

4.7 Protection of Interests; Exempt Offering. The Purchaser by reason of the
Purchaser’s business or financial experience has the capacity to protect the Purchaser’s own
interests in connection with the transaction contemplated hereby. The Purchaser agrees that the
Purchaser will not sell or otherwise transfer the Securities or the Shares unless they are
registered under the Securities Act or unless an exemption from such registration is available.

4.8 Investment Intent. The Purchaser understands that the Securities and the Shares
have not been registered under the Securities Act by reason of a claimed exemption under the
provisions of the Securities Act which depends, in part, upon the Purchaser’s investment intention.
In this connection, the Purchaser is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling the Securities or the Shares or any part
thereof in violation of the Securities Act or any applicable state securities law, has no present
intention of distributing any of the Securities or the Shares in violation of the Securities Act or
any applicable state securities law and has no direct or indirect arrangement or understandings
with any other persons to distribute or regarding the distribution of the Securities or the Shares
in violation of the Securities Act or any applicable state securities law (this representation and
warranty not limiting the Purchaser’s right to sell the Securities or the Shares in compliance with
applicable federal and state securities laws).

4.9 Restricted Securities. The Purchaser understands that there currently is no
public market for the Securities or the Shares and that even if there were, Rule 144 promulgated
under the Securities Act requires, among other conditions, a one-year holding period prior to the
resale (in limited amounts) of securities acquired in a non-public offering without having to
satisfy the registration requirements under the Securities Act. The Purchaser understands and
hereby acknowledges that the Company is under no obligation to register the Securities under the
Securities Act or any state securities or “blue sky” laws (collectively, the “Securities
Laws”). The Purchaser consents that the Company may, if it desires, permit the transfer of the
Securities or the Shares out of the Purchaser’s name only when the Purchaser’s request for transfer
is accompanied by an opinion of counsel reasonably satisfactory to the Company that neither the
sale nor the proposed transfer results in a violation of Securities Laws. The Purchaser agrees to
hold the Company and its members, managers, officers, employees, controlling persons and agents and
their respective heirs, representatives, successors and assigns harmless and to indemnify them
against all liabilities, costs and expenses incurred by them as a result of any misrepresentation
made by the Purchaser
contained in this Agreement or any sale or distribution by the Purchaser in violation of the
Securities Laws. The Purchaser understands and agrees that in addition to restrictions on transfer
imposed by applicable Securities Laws, the transfer of the Securities and the Shares will be
restricted by the terms of this Agreement.

 

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4.10 Legends. The Purchaser consents to the placement of a legend on any certificate
or other document evidencing the Securities or the Shares that the Securities and the Shares have
not been registered under Securities Laws and setting forth or referring to the restrictions on
transferability and sale thereof contained in this Agreement. The Purchaser is aware that the
Company will make a notation in its appropriate records with respect to the restrictions on the
transferability of the Securities and the Shares and may place additional legends to such effect on
the Purchaser’s certificate(s) for the Shares.

ARTICLE V.

COVENANTS

5.1 Information Rights. If and for so long as the Purchaser holds the Note or owns at
least 50,000 Shares, the Company shall deliver to the Purchaser:

(i) as soon as reasonably practicable, but in any event within 90 days after the end of each
fiscal year of the Company, an audited balance sheet for such fiscal year, an audited income
statement of the Company as of the end of such year, a statement of cash flows for such year, such
audited year-end financial reports to be prepared in accordance with generally accepted accounting
principles (“GAAP”);

(ii) as soon as reasonably practicable, but in any event within 45 days after the end of each
of the first three quarters of each fiscal year of the Company, an unaudited balance sheet as of
the end of such fiscal quarter and an unaudited income statement and statement of cash flows for
such fiscal quarter;

(iii) as soon as reasonably practicable, but in any event within 30 days prior to the end of
each fiscal year, a budget and business plan for the next fiscal year.

ARTICLE VI.

MISCELLANEOUS

6.1 Fees and Expenses. Each Party shall pay all costs and expenses that it incurs
with respect to the preparation, negotiation, execution and delivery of this Agreement and the
other documents and agreements entered into in connection herewith. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery
of the Securities or the Shares to the Purchaser.

6.2 Entire Understanding. This Agreement, together with the schedules hereto, set
forth the entire agreement and understanding of the Parties and supersede any and all prior
agreements, arrangements and understandings among the Parties, and there are no other prior written
or oral agreements, undertakings, promises, warranties, or covenants respecting such subject matter
not expressly set forth herein and therein.

 

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6.3 Further Assurances. Each of the Parties agrees to execute and deliver (or cause
to be
executed and delivered) such additional documents and instruments and to perform such
additional acts as may be necessary and appropriate to effectuate, carry out, and perform all of
the terms, provisions, and conditions of this Agreement.

6.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of: (a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature page of this Agreement prior to 5:30
p.m. (mountain time) on a Business Day, (b) the next Business Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth on the
signature page of this Agreement on a day that is not a Business Day or later than 5:30 p.m.
(mountain time) on any Business Day, (c) the second Business Day following the date of mailing, if
sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices and communications
shall be as set forth on the signature page of this Agreement.

6.5 Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Colorado without giving effect to the principles
of conflicts of law thereof.

6.6 Replacement of the Securities or Shares. If any certificate or instrument
evidencing the Securities or the Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but
only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or
destruction. The applicant for a new certificate or instrument under such circumstances shall also
pay any reasonable third-party costs (including customary indemnity) associated with the issuance
of such replacement Security or Shares.

6.7 Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the same instrument and
shall become effective when one or more counterparts have been signed by each of the Parties and
delivered (including by facsimile) to the other Parties.

6.8 Recitals. The recitals set forth above are hereby incorporated into this
Agreement and made a binding part hereof.

6.9 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION
BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered as of the
date first above written.

	 	 	 	 	 	 	 
	PROSPECT GLOBAL RESOURCES INC.,

a Delaware corporation	 	 	 	Address for Notice:

600 17th St. Suite 2800 South

Denver, CO 80202

	By:

	 	/s/ Patrick L. Avery
 

Name: Patrick L. Avery

Title:  Chief Executive Officer
	 	 	 	Attn: Patrick Avery
Fax: 720-294-0402

email: *************
	 
	 	 	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 	 	 
	 
	 	 	 	 	 	 
	Brownstein Hyatt Farber Schreck, LLP

410 Seventeenth Street, Suite 2200

Denver, CO 80202-4437

Attn: Jeff Knetsch	 	 	 	 
	 
	 	 	 	 	 	 
	HEXAGON INVESTMENTS, LLC	 	 	 	Address for Notice:

730 17th Street, Suite 800

	By:

	 	/s/ Brian Fleischmann
 

By:  Brian Fleischmann 

Title: Executive Vice President
	 	 	 	Denver, CO 80202

Attn: Brian Fleischmann

Fax: 303-571-1221

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

 

8exv10w2

Exhibit 10.2

AMENDED AND RESTATED SECURITY AGREEMENT

Dated as of April 25, 2011

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

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

2. THE INDEBTEDNESS. The Collateral secures and will secure pari passu all obligations of the
Debtor to (i) Merkin under the Convertible Secured Promissory Note, dated January 24, 2011, in an
aggregate principal amount of $2,000,000, by the Debtor to Merkin, (ii) COR, under the convertible
Secured Promissory Note, dated March 11, 2011, in an aggregate principal amount of $500,000, by the
Debtor to COR and (iii) Hexagon under the Convertible Secured Promissory Note, dated April 7, 2011,
in an aggregate principal amount of $2,500,000, by the Debtor to Hexagon. “Secured
Indebtedness” means all debts, obligations or liabilities now or hereafter existing, absolute
or contingent of the Debtor to the Secured Parties, whether voluntary or involuntary, whether due
or not due, or whether incurred directly or indirectly or acquired by the Secured Parties by
assignment or otherwise.

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

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

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

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

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

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

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

 

 

 

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

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

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

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

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

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

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

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

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

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

 

 

 

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

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

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

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

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

7. MISCELLANEOUS.

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

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

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

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

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

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

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

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

 

 

 

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

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

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

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

	 	 	 	 	 
	 	PROSPECT GLOBAL RESOURCES INC.

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

 	 
	 	/s/ Richard Merkin
 	 
	 	Richard Merkin 	 
	 	 	 	 	 
	 	COR US EQUITY INCOME FUND

 	 
	 	By:  	COR Capital LLC
 	 
	 	Its:  Investment Advisor 	 
	 	 	 	 	 
	 	By:  	                                              /s/ Steven Sugarman
 	 
	 	 	By:  Steven Sugarman 	 
	 	 	Title:  	Managing Member 	 

	 	 	 	 	 
	 	HEXAGON INVESTMENTS, LLC

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

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