Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

  Exhibit 10.1    
    

[*The terms of the Permitted Preferred Stock and Permitted Junior Debt, set forth on Schedules C-1 and C-2 of this agreement, have
been omitted from this agreement in connection with a request for confidential treatment. The omitted information has been filed separately with the Securities and Exchange Commission as part of the
request for confidential treatment. The omitted information is indicated by a blank and marked with an asterisk.]

 

SECURITIES PURCHASE AGREEMENT

by and among

PROSPECT GLOBAL RESOURCES INC.,

CERTAIN GUARANTORS NAMED HEREIN,

and

THE PURCHASERS NAMED HEREIN

for

$100,000,000

in

10% CONVERTIBLE SPRINGING SECOND-LIEN NOTES DUE 2020

Dated November 29, 2012  

 

  

 
  
 

  TABLE OF CONTENTS    
    

 

							
	 
	 	 
	 	 
	 	Page 
	

   ARTICLE I AUTHORIZATION OF NOTES
	
 	
9
	

   ARTICLE II SALE AND PURCHASE OF SECURITIES
	
 	
9
	 
	 	 2.1
	 	 Sale and Purchase
	 	

9
	 
	 	2.2	 	 Fees and Expenses
	 	9
	 
	 	2.3	 	 Purchase Price Allocation
	 	10
	

   ARTICLE III CLOSING
	
 	
10
	 
	 	 3.1
	 	 Closing
	 	

10
	 
	 	3.2	 	 Deliveries
	 	10
	 
	 	3.3	 	 Apollo Warrants
	 	10
	

   ARTICLE IV JOINT CONDITIONS TO CLOSING
	
 	
11
	 
	 	 4.1
	 	 Shareholder Approval
	 	

11
	 
	 	4.2	 	 No Order
	 	11
	

   ARTICLE V COMPANY CONDITIONS TO CLOSING
	
 	
11
	 
	 	 5.1
	 	 Representations and Warranties
	 	

11
	 
	 	5.2	 	 Performance; No Default
	 	11
	 
	 	5.3	 	 Officer's Certificate
	 	11
	 
	 	5.4	 	 IRS Forms W-8/W-9
	 	11
	

   ARTICLE VI PURCHASERS CONDITIONS TO CLOSING
	
 	
12
	 
	 	 6.1
	 	 Representations and Warranties
	 	

12
	 
	 	6.2	 	 Performance; No Default
	 	12
	 
	 	6.3	 	 Compliance Certificates
	 	12
	 
	 	6.4	 	 Investors Rights Agreement
	 	12
	 
	 	6.5	 	 Royalty Agreement
	 	12
	 
	 	6.6	 	 Opinions of Counsel
	 	12
	 
	 	6.7	 	 Definitive Feasibility Study
	 	12
	 
	 	6.8	 	 EPC/EPCM Retention
	 	13
	 
	 	6.9	 	 Permits
	 	13
	 
	 	6.10	 	 Key Hire
	 	13
	 
	 	6.11	 	 Confirmatory Reports
	 	13
	 
	 	6.12	 	 Off-Take Agreement
	 	13
	 
	 	6.13	 	 No Material Adverse Changes
	 	13
	 
	 	6.14	 	 Purchase Permitted By Applicable Law, Etc. 
	 	13
	 
	 	6.15	 	 Private Placement Number
	 	14
	 
	 	6.16	 	 Funding Instructions
	 	14
	 
	 	6.17	 	 Proceedings and Documents
	 	14
	 
	 	6.18	 	 Guarantee and Collateral Documents
	 	14
	 
	 	6.19	 	 Certificate of Designation
	 	14
	 
	 	6.20	 	 Karlsson Agreements
	 	14
	 
	 	6.21	 	 Purchaser Expenses
	 	14
	 
	 	6.22	 	 Amendment Confirmation
	 	14
	 
	 	6.23	 	 Bylaws Amendment
	 	14

 

 2

 
 

							
	 
	 	 
	 	 
	 	Page 
	

   ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	
 	
15
	 
	 	 7.1
	 	 Organization; Power and Authority
	 	

15
	 
	 	7.2	 	 Authorization, Etc. 
	 	15
	 
	 	7.3	 	 Execution; Due Authority
	 	16
	 
	 	7.4	 	 No Conflicts
	 	16
	 
	 	7.5	 	 Consents, Approvals or Waivers
	 	16
	 
	 	7.6	 	 Legal and Governmental Proceedings
	 	17
	 
	 	7.7	 	 Compliance With Laws
	 	17
	 
	 	7.8	 	 Licenses and Permits
	 	17
	 
	 	7.9	 	 Company SEC Documents
	 	18
	 
	 	7.10	 	 No Material Adverse Effect
	 	18
	 
	 	7.11	 	 Exchange Act
	 	18
	 
	 	7.12	 	 Price Manipulation
	 	19
	 
	 	7.13	 	 Class of Notes
	 	19
	 
	 	7.14	 	 Status Under Investment Company Act
	 	19
	 
	 	7.15	 	 Restrictions on Sale of Notes, Etc. 
	 	19
	 
	 	7.16	 	 Company Controls and Procedures
	 	19
	 
	 	7.17	 	 Public Accounting Firm
	 	20
	 
	 	7.18	 	 Financial Statements; Material Liabilities
	 	20
	 
	 	7.19	 	 Title to Property; Leases
	 	20
	 
	 	7.20	 	 Environmental Matters
	 	21
	 
	 	7.21	 	 Intellectual Property
	 	23
	 
	 	7.22	 	 Taxes
	 	23
	 
	 	7.23	 	 Compliance with ERISA
	 	23
	 
	 	7.24	 	 Material Labor Disputes; Labor Laws
	 	24
	 
	 	7.25	 	 Mineral Rights
	 	25
	 
	 	7.26	 	 Insurance Coverage
	 	26
	 
	 	7.27	 	 Restrictions on Subsidiaries
	 	26
	 
	 	7.28	 	 No Registration Rights
	 	26
	 
	 	7.29	 	 Antitakeover Provisions
	 	26
	 
	 	7.30	 	 No General Solicitation
	 	26
	 
	 	7.31	 	 Material Contracts
	 	27
	 
	 	7.32	 	 Voting Agreements
	 	27
	 
	 	7.33	 	 Compliance with Money Laundering Laws
	 	27
	 
	 	7.34	 	 Compliance with OFAC
	 	27
	 
	 	7.35	 	 Compliance with Other Laws, Regulations and Instruments
	 	27
	 
	 	7.36	 	 Solvency
	 	27
	 
	 	7.37	 	 Use of Proceeds
	 	27
	 
	 	7.38	 	 Brokers' Fees
	 	27
	 
	 	7.39	 	 Collateral Documents
	 	28
	

   ARTICLE VIII REPRESENTATIONS OF THE PURCHASERS
	
 	
28
	 
	 	 8.1
	 	 Organization; Power and Authority
	 	

28
	 
	 	8.2	 	 Execution; Due Authority
	 	28
	 
	 	8.3	 	 No Conflicts
	 	28
	 
	 	8.4	 	 Purchase for Investment
	 	29
	 
	 	8.5	 	 Accredited Investor
	 	29
	 
	 	8.6	 	 Brokers' Fees
	 	29

 

 3

 
 

							
	 
	 	 
	 	 
	 	Page 
	

   ARTICLE IX CERTAIN INTERIM COVENANTS
	
 	
29
	 
	 	 9.1
	 	 Operation of Business
	 	

29
	 
	 	9.2	 	 Access to Information; Consultation
	 	33
	 
	 	9.3	 	 Reasonable Best Efforts
	 	34
	 
	 	9.4	 	 Reservation of Shares
	 	35
	 
	 	9.5	 	 Shareholders Meeting
	 	35
	 
	 	9.6	 	 Proxy
	 	36
	 
	 	9.7	 	 Non-Solicitation
	 	37
	 
	 	9.8	 	 Additional Common Stock Issuances
	 	39
	 
	 	9.9	 	 Affiliate Agreement Modifications
	 	40
	 
	 	9.10	 	 Off-take Agreement
	 	40
	 
	 	9.11	 	 Board and Observer Rights
	 	40
	 
	 	9.12	 	 KG Default Cure
	 	41
	 
	 	9.13	 	 Preemptive Rights
	 	42
	 
	 	9.14	 	 Standstill
	 	43
	 
	 	9.15	 	 Certain Tax Matters
	 	43
	 
	 	9.16	 	 Benefit Plans
	 	44
	 
	 	9.17	 	 FCPA
	 	44
	 
	 	9.18	 	 Supplemental Payment
	 	44
	 
	 	9.19	 	 Further Assurances
	 	44
	

   ARTICLE X TERMINATION
	
 	
45
	 
	 	 10.1
	 	 Right to Terminate
	 	

45
	 
	 	10.2	 	 Effect of Termination
	 	45
	 
	 	10.3	 	 Fees and Expenses
	 	46
	 
	 	10.4	 	 Amendment
	 	46
	 
	 	10.5	 	 Waiver
	 	46
	

   ARTICLE XI INDEMNIFICATION
	
 	
46
	 
	 	 11.1
	 	 Purchaser Indemnification
	 	

46
	 
	 	11.2	 	 Company Indemnification
	 	47
	 
	 	11.3	 	 Indemnification Actions
	 	47
	 
	 	11.4	 	 Limitations
	 	49
	

   ARTICLE XII VOTING
	
 	
51
	 
	 	 12.1
	 	 Voting
	 	

51
	 
	 	12.2	 	 No Adverse Actions
	 	51
	

   ARTICLE XIII CONVERSION
	
 	
51
	 
	 	 13.1
	 	 Conversion Right
	 	

51
	 
	 	13.2	 	 Conversion
	 	52
	 
	 	13.3	 	 Mechanics of Conversion
	 	52
	 
	 	13.4	 	 Adjustment Upon Issuance of Shares of Common Stock
	 	54
	 
	 	13.5	 	 Adjustment for Change in Capital Stock
	 	56
	 
	 	13.6	 	 Adjustment for Rights Issue
	 	57
	 
	 	13.7	 	 Adjustment for Other Distributions
	 	58
	 
	 	13.8	 	 Adjustment for Cash Dividends
	 	59
	 
	 	13.9	 	 Adjustment for Company Tender Offer
	 	59
	 
	 	13.10	 	 When Adjustment May Be Deferred
	 	60

 

 4

 
 

							
	 
	 	 
	 	 
	 	Page 
	 
	 	13.11	 	 When No Adjustment Required
	 	60
	 
	 	13.12	 	 Notice of Adjustment
	 	61
	 
	 	13.13	 	 Voluntary Decrease
	 	62
	 
	 	13.14	 	 Notice of Certain Transactions
	 	62
	 
	 	13.15	 	 Effect of Reclassification, Consolidation, Merger or Sale
	 	62
	 
	 	13.16	 	 Simultaneous Adjustments
	 	63
	 
	 	13.17	 	 Successive Adjustments
	 	63
	 
	 	13.18	 	 Limitation on Adjustments
	 	63
	

   ARTICLE XIV INFORMATION COVENANTS
	
 	
64
	 
	 	 14.1
	 	 Financial Statements
	 	

64
	 
	 	14.2	 	 Requirements as to Financial Statements
	 	64
	 
	 	14.3	 	 Information; Miscellaneous
	 	65
	 
	 	14.4	 	 Notification of Default
	 	66
	

   ARTICLE XV GENERAL COVENANTS
	
 	
67
	 
	 	 15.1
	 	 Use of Proceeds
	 	

67
	 
	 	15.2	 	 Compliance with Laws
	 	67
	 
	 	15.3	 	 Approvals
	 	67
	 
	 	15.4	 	 Maintenance of Corporate Existence, etc
	 	67
	 
	 	15.5	 	 Payment of Notes
	 	67
	 
	 	15.6	 	 Payment of Taxes, etc
	 	67
	 
	 	15.7	 	 Books and Records
	 	67
	 
	 	15.8	 	 Environmental Covenants
	 	68
	 
	 	15.9	 	 Maintenance of Project Assets
	 	69
	 
	 	15.10	 	 Accuracy of Information
	 	69
	 
	 	15.11	 	 Insurance
	 	69
	 
	 	15.12	 	 Business Activities; No Amendment of Organizational Documents
	 	70
	 
	 	15.13	 	 Indebtedness
	 	71
	 
	 	15.14	 	 Liens
	 	72
	 
	 	15.15	 	 Investments
	 	73
	 
	 	15.16	 	 Restricted Payments, etc
	 	73
	 
	 	15.17	 	 Mergers, etc
	 	73
	 
	 	15.18	 	 Asset Dispositions, etc
	 	73
	 
	 	15.19	 	 Transactions with Affiliates
	 	74
	 
	 	15.20	 	 Restrictive Agreements, etc
	 	74
	 
	 	15.21	 	 Inconsistent Agreements
	 	74
	 
	 	15.22	 	 Bank Accounts
	 	74
	 
	 	15.23	 	 Acquisitions
	 	74
	 
	 	15.24	 	 Collateral and Guarantees
	 	74
	 
	 	15.25	 	 Further Assurances
	 	75
	 
	 	15.26	 	 Future Covenants
	 	75
	 
	 	15.27	 	 Repurchase at the Option of Purchasers Upon Change of Control
	 	75
	

   ARTICLE XVI EVENTS OF DEFAULT
	
 	
76
	

   ARTICLE XVII REMEDIES ON DEFAULT, ETC. 
	
 	
78
	 
	 	 17.1
	 	 Acceleration of Maturity; Rescission
	 	

78
	 
	 	17.2	 	 Other Remedies
	 	78
	 
	 	17.3	 	 Waiver of Past Defaults and Events of Default
	 	78

 

 5

 
 

							
	 
	 	 
	 	 
	 	Page 
	 
	 	17.4	 	 Control by Majority
	 	78
	 
	 	17.5	 	 Limitation on Suits
	 	78
	 
	 	17.6	 	 Rights of Holders to Receive Payment
	 	79
	 
	 	17.7	 	 Collection Suit by the Purchasers
	 	79
	 
	 	17.8	 	 Priorities
	 	79
	

   ARTICLE XVIII REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES; TRANSFER OF APOLLO PREFERRED SHARES
	
 	
79
	 
	 	 18.1
	 	 Registration of Notes
	 	

79
	 
	 	18.2	 	 Transfer and Exchange of Notes
	 	79
	 
	 	18.3	 	 Replacement of Notes
	 	80
	 
	 	18.4	 	 Transfer of Apollo Preferred Shares
	 	80
	

   ARTICLE XIX PAYMENTS ON NOTES
	
 	
80
	

   ARTICLE XX EXPENSES, ETC. 
	
 	
81
	 
	 	 20.1
	 	 Transaction Expenses
	 	

81
	 
	 	20.2	 	 Survival
	 	81
	

   ARTICLE XXI MODIFICATION AND WAIVER
	
 	
81
	 
	 	 21.1
	 	 Requisite Consent of Holders
	 	

81
	 
	 	21.2	 	 Revocation and Effects of Consents
	 	82
	 
	 	21.3	 	 Notation on Exchange of Notes
	 	82
	

   ARTICLE XXII NOTICES
	
 	
83
	

   ARTICLE XXIII GUARANTEE OF NOTES
	
 	
83
	 
	 	 23.1
	 	 Note Guarantee
	 	

83
	 
	 	23.2	 	 Execution and Delivery of Note Guarantee
	 	84
	 
	 	23.3	 	 Release of Guarantors
	 	84
	 
	 	23.4	 	 Waiver of Subrogation
	 	85
	

   ARTICLE XXIV CONFIDENTIAL INFORMATION
	
 	
85
	

   ARTICLE XXV SUBSTITUTION OF PURCHASER
	
 	
86
	

   ARTICLE XXVI MISCELLANEOUS
	
 	
87
	 
	 	 26.1
	 	 Successors and Assigns
	 	

87
	 
	 	26.2	 	 Legal Holidays
	 	87
	 
	 	26.3	 	 Accounting Terms
	 	87
	 
	 	26.4	 	 Severability
	 	87
	 
	 	26.5	 	 Construction, Etc. 
	 	87
	 
	 	26.6	 	 Counterparts
	 	87
	 
	 	26.7	 	 Table of Contents, Headings, Etc. 
	 	88
	 
	 	26.8	 	 Construction
	 	88
	 
	 	26.9	 	 Governing Law
	 	88
	 
	 	26.10	 	 Jurisdiction and Process; Waiver of Jury Trial
	 	88
	 
	 	26.11	 	 Disclosure of Tax Information
	 	88
	 
	 	26.12	 	 Statements Required in Certificate
	 	89
	 
	 	26.13	 	 Force Majeure
	 	89
	 
	 	26.14	 	 Specific Performance
	 	89
	 
	 	26.15	 	 Time of the Essence
	 	89

 

 6

 

 

					
	SCHEDULE A	 	—	 	Information Relating to Purchasers
	SCHEDULE B	 	—	 	Defined Terms
	SCHEDULE C-1	 	—	 	Terms of Permitted Preferred Stock
	SCHEDULE C-2	 	—	 	Terms of Permitted Junior Debt
	SCHEDULE C-3	 	—	 	Terms of Notes in Karlsson Default
	EXHIBIT A	 	—	 	Form of 10% Convertible Springing Second-Lien Notes due 2020
	EXHIBIT B-1	 	—	 	Form of Purchaser Conversion Notice
	EXHIBIT B-2	 	—	 	Form of Company Conversion Notice
	EXHIBIT C	 	—	 	Form of Certificate of Designation
	EXHIBIT D	 	—	 	Minimum Offtake Arrangements
	EXHIBIT E-1	 	—	 	Form of Series A Warrant
	EXHIBIT E-2	 	—	 	Form of Series B Warrant

 

 7

 

 

 
 

  SECURITIES PURCHASE AGREEMENT    
    

        SECURITIES PURCHASE AGREEMENT (this "Agreement") dated as of November 29, 2012, by and among
PROSPECT GLOBAL RESOURCES INC., a Nevada corporation (the "Company"), the Subsidiaries of the Company party hereto from time to time as GUARANTORS (as defined
below) and the PURCHASERS named in Schedule A hereto (the "Purchasers"). 

        WHEREAS,
the Company is engaged, through its Subsidiaries, in the exploration and planning for construction and operation of a potash mine and related facilities to mine and develop the
potash deposit located on lands owned or leased by the Company or its Subsidiaries or on which the Company or its Subsidiaries otherwise have a right to mine, in the Holbrook Basin of eastern Arizona
(the "Holbrook Project"); 

        WHEREAS,
subject to the terms and conditions of this Agreement, the Purchasers are paying the Company $100,000,000, and the Company is issuing: (a) to the Notes Purchasers named
in Schedule A hereto (the "Notes Purchasers"), $100,000,000 aggregate principal amount of 10.0% Convertible Springing Second Lien Notes due 2020 (the
"Notes"), (b) to the Royalty Purchasers, Series A warrants for the purchase of up to 25,925,926 shares of Common Stock of the Company, in substantially the
form set out in Exhibit E-1 (the "Series A Warrants"), and Series B warrants for the purchase of up to 21,538,461 shares of Common Stock
of the Company, in substantially the form set out in Exhibit E-2 (the "Series B Warrants" and together with the Series A Warrants, the
"Apollo Warrants"), (c) to the Preferred Share Purchaser named in Schedule A hereto (the "Preferred Share Purchaser"), the
Apollo Preferred Shares, (d) to the Notes Purchasers, upon certain circumstances contemplated by this Agreement, newly issued shares of Common Stock of the Company (together with the Notes, the
Apollo Warrants and the Apollo Preferred Shares, the "Securities") and (e) to the Royalty Purchasers named in Schedule A hereto (the "Royalty
Purchasers"), certain royalty interests in the Company; 

        WHEREAS,
the Board of Directors of the Company has determined that this Agreement and the transactions contemplated hereby are in the best interests of the Company, and its shareholders,
and has previously approved this Agreement and the transactions contemplated hereby (the "Transactions"); 

        WHEREAS,
prior to or contemporaneously with the execution and delivery of this Agreement by the parties hereto, as a condition and inducement to the willingness of the Purchasers to
enter into this Agreement, certain shareholders of the Company and certain of the Purchasers have entered into Support Agreements (the "Support Agreements"), in respect of
the shares of Common Stock held by such shareholders; 

        WHEREAS,
concurrently with the execution and delivery of this Agreement by the parties hereto, as a condition and inducement to the willingness of the Purchasers to enter into this
Agreement, and in partial consideration for the payment by the Purchasers of the Purchase Price, Buffalo Management LLC ("Buffalo"), the Royalty Purchasers and the
Company have entered into a Royalty Agreement, of even date herewith (the "Royalty Agreement"), which provides for, among other things, Buffalo and the Royalty Purchasers
sharing evenly an annual royalty payment that was previously payable from the Company solely to Buffalo; 

        WHEREAS,
concurrently with the execution and delivery of this Agreement by the parties hereto, as a condition and inducement to the willingness of the Purchasers to enter into this
Agreement, the Purchasers and the Company have entered into an Investors Rights Agreement, of even date herewith (the "Investors Rights Agreement"), which provides for
certain governance and other rights for the Purchasers; 

8

 

        NOW,
THEREFORE, in consideration of the premises above and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: 

 
 

  ARTICLE I    
    
    AUTHORIZATION OF NOTES    
    

        Subject to the terms and conditions of this Agreement, the Company will, at the Closing, authorize the issuance and sale of
$100,000,000 aggregate principal amount of Notes. The Notes shall be substantially in the form set out in Exhibit A and shall otherwise be governed by this Agreement. 

 
 

  ARTICLE II    
    
    SALE AND PURCHASE OF SECURITIES    
    

        2.1    Sale and Purchase.    Subject to the terms and conditions of this Agreement, the
Company will issue, sell and grant to each Purchaser, respectively, in the proportions set forth below, at the Closing (except for the Apollo Warrants, which shall be issued one Business Day after the
receipt of Requisite Shareholder Approval) (and the Purchasers will purchase and accept from the Company at the Closing (except for the Apollo Warrants, which shall be accepted one Business Day after
the receipt of Requisite Shareholder Approval)), for the aggregate purchase price of $100,000,000 (the "Purchase Price"), payable by each Purchaser in cash on the Closing
Date in the amount to be specified to the Company prior to the Closing by the Purchasers: 

        (a)   Notes
in the principal amount specified opposite such Notes Purchaser's name in Schedule A; 

        (b)   Subject
to the terms of Section 9.8, a number of shares of Common Stock as provided in Section 9.8, allocated pro rata among the Notes Purchasers in
proportion to the principal amount of Notes purchased by them; 

        (c)   Subject
to the terms of the Royalty Agreement, the royalty payments contemplated by the Royalty Agreement (the "Royalty"), allocated to the
Royalty Purchasers in proportion to the percentage specified opposite such Royalty Purchaser's name in Schedule A; 

        (d)   Series A
Warrants, allocated to the Royalty Purchasers in proportion to the percentage specified opposite such Royalty Purchaser's name in Schedule A, to
be delivered to Royalty Purchasers on the Business Day after the date on which the Requisite Shareholder Approval is obtained (or such later date as specified by the Majority Purchasers by notice to
the Company); 

        (e)   Series B
Warrants, allocated to the Royalty Purchasers in proportion to the percentage specified opposite such Royalty Purchaser's name in Schedule A, to
be delivered to Royalty Purchasers on the Business Day after the date on which the Requisite Shareholder Approval is obtained (or such later date as specified by the Majority Purchasers by notice to
the Company); and 

        (f)    Apollo
Preferred Shares, allocated to the Preferred Share Purchaser. 

        2.2    Fees and Expenses.    Within thirty (30) days of the date hereof, the
Company shall pay, upon invoice, to the Purchasers or any Affiliates of the Purchasers designated by the Majority Purchasers (by wire transfer of immediately available funds to an account or accounts
as directed by the Majority Purchasers) reimbursement for all Purchaser Expenses incurred prior to the date hereof and not previously reimbursed. At the Closing, the Company shall cause (a) the
Purchasers or any Affiliates of the Purchasers designated by the Majority Purchasers to receive from the Company (by wire transfer of immediately available funds to an account or accounts as directed
by the Majority Purchasers) reimbursement of Purchaser Expenses incurred through the Closing Date and not previously 

9

 

reimbursed
and (b) Apollo Global Securities, LLC (or another Affiliate of the Purchasers (designated by the Majority Purchasers at least two (2) Business Days prior to the Closing
Date)) to receive from the Company a transaction fee (the "Transaction Fee") in the amount of $2,000,000 (by wire transfer of immediately available funds to an account or
accounts as directed by such designated Affiliate) (it being understood and agreed that, if requested by the Majority Purchasers, the Parties will memoralize in a separate letter agreement the
Company's obligation to pay the Transaction Fee). 

        2.3    Purchase Price Allocation.    The Purchase Price shall be allocated among the
Notes, the Common Stock, the Royalty, the Apollo Preferred Shares and the Apollo Warrants contemplated by subsections (a) through (e) of Section 2.1 in the reasonable discretion
of the Purchasers, after
consultation with the Company, and no parties shall take any actions, including filing any Tax returns or taking any Tax positions, inconsistent with such allocation. 

 
 

  ARTICLE III    
    
    CLOSING    
    

        3.1    Closing.    The sale and purchase of the Securities (other than the Apollo
Warrants) to be issued to the Purchasers and of the Royalties to be granted to each Royalty Purchaser (the "Closing") shall occur at the offices of Wachtell, Lipton,
Rosen & Katz, 51 W. 52nd Street, New York, New York 10019, at 4:30 p.m., Eastern time, at a closing on the date that is twenty (20) Business Days following
the first date on which all conditions set forth in Articles IV, V and VI have been satisfied or waived (other than those conditions that by their nature are to be satisfied by actions taken at
the Closing, but subject to the satisfaction or waiver of such conditions) or on such other Business Day as may be agreed upon by the Company and the Majority Purchasers (the "Closing
Date"), provided, that if the Company has provided the Purchasers with a draft of the Definitive Feasibility Study no later than twenty (20) Business
Days prior to the date that all such conditions are satisfied or waived and the final Definitive Feasibility Study that is delivered to the Purchasers and publicly filed with the SEC in accordance
with Section 6.7 is consistent in all material respects with such draft of the Definitive Feasibility Study, then the Closing shall occur on a date that is ten (10) Business Days
following the satisfaction or waiver of all such conditions or on such other Business Day as may be agreed upon by the Company and the Majority Purchasers. 

        3.2    Deliveries.    At the Closing, the Company will deliver to (a) each Notes
Purchaser (i) the Notes to be purchased by such Notes Purchaser in the form of a single Note (or such greater number of Notes in denominations of at least $500,000 as such Purchaser may
request) dated the Closing Date and registered in such Notes Purchaser's name (or in the name of its nominee) and (ii) certificates evidencing the Common Stock to be purchased by such Notes
Purchaser pursuant to Section 9.8, if any, and (b) to the Preferred Share Purchaser certificates evidencing the Apollo Preferred Shares to be purchased by such Preferred Share Purchaser,
in each case against delivery by each Purchaser to the Company of payment of immediately available funds in the amount of the purchase price therefor by wire transfer to an account number specified by
the Company no later than two (2) Business Days prior to the anticipated Closing Date. If at the Closing the Company shall fail to tender such Notes, Common Stock or Apollo Preferred Shares to
any Purchaser as provided above in this Article III, such Purchaser shall, at its election, be relieved of all obligations under this Agreement, including the payment of the Purchase Price
described in this Section 3.2. If any of the conditions specified in Articles IV and VI shall not have been fulfilled to the reasonable satisfaction of the Majority Purchasers, each
Purchaser shall, at its election, be relieved of all obligations under this Agreement. 

        3.3    Apollo Warrants.    At 9:30 a.m., Eastern time, on the first Business Day
following the receipt of the Requisite Shareholder Approval (or on such later date as specified by the Majority Purchasers by notice to the Company), at the Wachtell Lipton offices referred to in
Section 3.1, the Company shall issue and deliver to the Royalty Purchasers the Apollo Warrants. For the avoidance of doubt, if any of 

10

 

the
events referred to in Section 6 of the Apollo Warrants occur from and after the date hereof through the date of issuance of the Apollo Warrants, the number of shares of Common Stock for
which such Apollo Warrants shall be exercisable and the exercise price therefor shall each be adjusted in the Apollo Warrants that are issued to the Royalty Purchasers in such manner as they would
have been adjusted if such Apollo Warrants were issued on the date hereof. 

 
 

  ARTICLE IV    
    
    JOINT CONDITIONS TO CLOSING    
    

        The respective obligation of each of the parties hereto to effect the Closing shall be subject to the satisfaction (or waiver by the
Majority Purchasers and the Company) of the following conditions precedent: 

        4.1    Shareholder Approval.    The Requisite Shareholder Approval shall have been
obtained. 

        4.2    No Order.    No Governmental Authority or court of competent jurisdiction shall
have promulgated, enacted or issued any statute, rule, regulation, order, decree, injunction or ruling (whether temporary, preliminary or permanent) which remains in effect and prohibits, prevents or
otherwise enjoins the consummation of the Transactions. 

 
 

  ARTICLE V    
    
    COMPANY CONDITIONS TO CLOSING    
    

        The obligation of the Company to effect the Closing shall be subject to the satisfaction or waiver of the following conditions
precedent: 

        5.1    Representations and Warranties.    The representations and warranties of the
Purchasers in this Agreement shall be correct in all material respects (unless already qualified by materiality or material adverse effect, in which case such representation or warranty shall be true
and correct in all respects) at the time of the Closing (as if made on and as of the Closing), except for any representation and warranty which speaks as of a particular date, in which case such
representation and warranty shall be correct in all material respects (unless already qualified by materiality or material adverse effect, in which case such representation or warranty shall be true
and correct in all respects) as of such date. 

        5.2    Performance; No Default.    The Purchasers shall have performed and complied in
all material respects with all agreements and covenants contained in this Agreement required to be performed or complied with by them prior to or at the Closing. 

        5.3    Officer's Certificate.    Each Purchaser shall have furnished or caused to be
furnished to the Company at the Closing a certificate of an officer of such Purchaser reasonably satisfactory to the Company as to the satisfaction of the conditions set forth in Sections 5.1
and 5.2 at and as of the Closing. 

        5.4    IRS Forms W-8/W-9.    Each Purchaser shall have
delivered to the Company a properly completed and duly executed applicable Internal Revenue Service Form W-9 (or, if such Purchaser is a Foreign Purchaser, a completed applicable
Internal Revenue Service W-8). 

11

 
 
 

  ARTICLE VI    
    
    PURCHASERS CONDITIONS TO CLOSING    
    

        The obligation of the Purchasers to effect the Closing shall be subject to the satisfaction or waiver of the following conditions
precedent: 

        6.1    Representations and Warranties.    The representations and warranties of the
Company in this Agreement shall be correct in all material respects (unless already qualified by materiality or Material Adverse Effect, in which case such representation or warranty shall be true and
correct in all respects) at the time of the Closing (as if made on and as of the Closing), except for any representation and warranty which speaks as of a particular date, in which case such
representation and warranty shall be correct in all material respects (unless already qualified by materiality or Material Adverse Effect, in which case such representation or warranty shall be true
and correct in all respects) as of such date. 

        6.2    Performance; No Default.    The Company shall have performed and complied in all
material respects with all agreements and covenants contained in this Agreement required to be performed or complied with by it prior to or at the Closing and, after giving effect to the issue and
sale of the Securities (and the application of the proceeds thereof as contemplated by Section 7.37) and the other Transactions, no Default or Event of Default shall have occurred and be
continuing. 

        6.3    Compliance Certificates.    

        (a)    Officer's Certificate.    The Company shall have furnished or caused to be
furnished to the Purchasers at the Closing a Compliance Certificate as to the satisfaction of the conditions set forth in Sections 6.1 and 6.2 at and as of the Closing. 

        (b)    Secretary's Certificate.    The Company shall have delivered or caused to be
delivered to the Purchasers a certificate of its and each Guarantor's Secretary or Assistant Secretary, dated the Closing Date, certifying as to the articles or certificate of incorporation, bylaws
and/or other organizational documents of the Company or such Guarantor, as applicable, and the resolutions attached thereto and other corporate or other proceedings relating to the authorization,
execution and delivery of the Notes, the Note Guarantees and/or this Agreement, as applicable. 

        6.4    Investors Rights Agreement.    The Investors Rights Agreement shall be in full
force and effect, and neither the Company nor any of its Subsidiaries shall have entered into any agreement or taken any other action in a manner that is adverse to, or conflicts with, any of the
Investors Group's (as defined in the Investors Rights Agreement) rights under the Investors Rights Agreement (including its director designation rights and registration rights thereunder). 

        6.5    Royalty Agreement.    The Royalty Agreement shall be in full force and effect. 

        6.6    Opinions of Counsel.    Brownstein Hyatt Farber Schreck, LLP, counsel for
the Company, shall have furnished to the Purchasers its written opinion, dated the date of the Closing, in form and substance reasonably acceptable to the Purchasers, including opinions regarding the
validity and enforceability of (a) the voting rights of the Notes and (b) the Certificate of Designation and the Apollo Preferred Shares. 

        6.7    Definitive Feasibility Study.    The Company shall have received, and delivered to
the Purchasers and publicly filed with the SEC on Form 8-K, the final Definitive Feasibility Study, which final Definitive Feasibility Study shows (a) that the Holbrook
Project's Capital Costs are not in excess of 10% of the Current Capital Estimate, (b) that over the life of the mine (measured on a reserves-only basis) the Holbrook Project's
Operating Costs are not higher than $115/tonne (provided that Operating Costs in excess of $115/tonne will be permissible to the extent the Company demonstrates, to the
Majority Purchasers' reasonable satisfaction, that (x) such excess 

12

 

Operating
Costs are being incurred based on a tradeoff optimization study and (y) such tradeoffs that result in such excess Operating Costs are economically beneficial to the Company and add
value to the Holbrook Project), (c) that ore grades and mineable reserve and resources estimates are consistent with what was provided for in the PEA and (d) forecasted production
levels, ramp up rates, royalty rates and all other key commercial factors are consistent with what was provided for in the PEA (and in respect of royalty rates, including the royalties granted to the
Karlsson Group Inc., Grandhaven Energy LLC and Buffalo Management LLC in the amounts as publicly disclosed prior to the date hereof). 

        6.8    EPC/EPCM Retention.    The Company shall have retained an Engineering, Procurement
and Construction ("EPC") firm or Engineering, Procurement and Construction Management ("EPCM") firm, reasonably satisfactory to the Majority
Purchasers, for the provision of EPC or EPCM services in connection with the Holbrook Project. 

        6.9    Permits.    There shall have been no indication that the Company will be unable to
obtain any Necessary Permits no later than (a) December 31, 2013 for the Aquifer Protection Permit from the Arizona Department of Environmental Quality, the permit to construct and
operate a source of air pollutants from the Arizona Department of Environmental Quality, and approval of leases by the Arizona State Land Department, (b) the applicable dates set forth on
Schedule 6.9 for the applicable Necessary Permits listed on Schedule 6.9 and (c) December 31, 2013 for all of the other Necessary Permits. 

        6.10    Key Hire.    (a) The Project Manager (or person serving in an equivalent
capacity) employed by the Company as of the Closing shall be reasonably acceptable to the Majority Purchasers (and shall have been hired after consultation with the Purchasers), (b) the Chief
Executive Officer, Chief Operating Officer and Chief Financial Officer of the Company as of the Closing shall be reasonably acceptable to the Majority Purchasers (it being understood that the current
persons serving such roles are reasonably acceptable to the Purchasers for purposes of this condition) and (c) if the Company shall have hired or fired after the date hereof and prior to the
Closing the Chief Commercial Officer or the Mine Manager (or other executives or managers performing substantially similar roles), such hiring or firing shall have been reasonably acceptable to the
Majority Purchasers (after consultation with the Purchasers). 

        6.11    Confirmatory Reports.    The Purchasers shall have received, from their
commercial and technical advisors, reports which verify in all material respects the conclusions of the final Definitive Feasibility Study and generally support the continued commercial and technical
viability of, and the market opportunity for, the Holbrook Project; provided, that if such reports are not received by the Purchasers within twenty (20) Business
Days of the public filing of the final Definitive Feasibility Study with the SEC in accordance with Section 6.7, this condition shall be deemed waived; provided,
further, that, for the avoidance of doubt, if such reports are received within such twenty (20) Business Days but do not provide such verification and support, then
this condition shall not be deemed to be satisfied. 

        6.12    Off-Take Agreement.    The Company shall have used best efforts to
enter into definitive agreements with respect to the Minimum Off-Take Arrangements. 

        6.13    No Material Adverse Changes.    Neither the Company nor any of its Subsidiaries
shall have sustained since the date hereof any Material Adverse Effect. 

        6.14    Purchase Permitted By Applicable Law, Etc.    If requested by a Purchaser, such
Purchaser shall have received an Officer's Certificate from the Company certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether its
purchase of Notes shall (a) be permitted by the laws and regulations of each applicable jurisdiction, (b) not violate any applicable law or regulation (including, without limitation, 

13

 

Regulation T,
U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any Tax, penalty or liability under or pursuant to any applicable law
or regulation, which law or regulation was not in effect on the date hereof. 

        6.15    Private Placement Number.    A Private Placement Number issued by
Standard & Poor's CUSIP Service Bureau shall have been obtained for the Notes. 

        6.16    Funding Instructions.    The Purchasers shall have received written instructions
signed by a Responsible Officer on letterhead of the Company confirming the wiring information provided by the Company including (a) the name and address of the transferee bank, (b) such
transferee bank's ABA number and (c) the account name and number into which the Purchase Price is to be deposited. 

        6.17    Proceedings and Documents.    All corporate and other proceedings in connection
with the Transactions and all documents and instruments incident to such Transactions shall be satisfactory to the Majority Purchasers and the Purchasers' counsel, and the Purchasers and the
Purchasers' counsel shall have received all such counterpart originals or certified or other copies of such documents as the Majority Purchasers or such counsel may reasonably request. 

        6.18    Guarantee and Collateral Documents.    If the Springing Lien Trigger Date shall
have occurred prior to the Closing Date, the Company and the Guarantors, as applicable, shall have duly executed and delivered to the Purchasers such Collateral Documents and other agreements,
instruments or filings, all in form and substance satisfactory to the Majority Purchasers, as the Majority Purchasers may reasonably request to create and perfect Liens on the Collateral to secure the
Obligations in favor of the Collateral Agent, together with such customary officer's certificates, opinions of counsel and other documents as the Majority Purchasers may reasonably request in
connection therewith. 

        6.19    Certificate of Designation.    The Certificate of Designation shall have become
effective (and shall remain in full force and effect as of the Closing) and the Company shall have delivered to the Purchasers at the Closing the then-effective amended and restated
Articles of Incorporation of the Company reflecting the Certificate of Designation. 

        6.20    Karlsson Agreements.    (a) There shall have been, since such contracts were
entered into, no amendments, waivers or modifications to any terms of any contracts entered into in connection with, or
otherwise relating to, the Karlsson Purchase, or any new contracts entered into with Karlsson or its Affiliates (unless previously consented to in writing by the Majority Purchasers in accordance with
Section 9.1(o)), (b) the Company and its Subsidiaries shall have performed all obligations under all such agreements associated with the Karlsson Purchase and (c) after giving
effect to the issue and sale of the Securities (and the application of the proceeds thereof as contemplated by Section 7.37) and the other Transactions, no default or event of default shall
have occurred and be continuing under the Karlsson Note. 

        6.21    Purchaser Expenses.    The Company shall have paid at the Closing in accordance
with Section 2.2 the Transaction Fee and all Purchaser Expenses incurred by the Purchasers to the extent not previously paid. 

        6.22    Amendment Confirmation.    The Company shall have received an amendment of or
waiver (which shall be in full force and effect as of the Closing) under the agreements specified in Schedule 6.22 in the manner described on such Schedule 6.22. 

        6.23    Bylaws Amendment.    The Company shall have effected such amendments to its
Bylaws (which shall be in full force and effect as of the Closing) as are necessary or desirable, in the reasonable opinion of the Majority Purchasers, to effect the voting and
director-designation rights of the Notes and the Apollo Preferred Stock. 

14

 

 
 

  ARTICLE VII
  
    REPRESENTATIONS AND WARRANTIES OF THE COMPANY    
    

        The Company represents and warrants to each Purchaser that, except as set forth in the applicable section of the Company Disclosure
Schedules: 

        7.1    Organization; Power and Authority.    Each of the Company and its Subsidiaries is
duly organized or incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation, with all requisite power and authority (corporate or
other) to own its properties and carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, or is
subject to no material liability or disability by reason of the failure to be so qualified or in good standing in any such jurisdiction. 

        7.2    Authorization, Etc.    

        (a)   The
Company has, as of the date hereof, an authorized capitalization and issued and outstanding equity securities (including Convertible Securities or Options) set forth
on Schedule 7.2(a). 

        (b)   All
of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are
not subject to any preemptive or similar rights. Except as described in Schedule 7.2(b) or as permitted by Section 9.1 or consented to by the Majority Purchasers, there are no
outstanding rights (including preemptive rights), Options to
acquire, or instruments convertible into or exchangeable or exercisable for, any shares of capital stock or other equity interest in the Company or any of its Subsidiaries, or any contract,
commitment, agreement, understanding or arrangement of any kind relating to the issuance of any capital stock or other equity interest of the Company or any such Subsidiary, any such convertible or
exchangeable or exercisable securities or any such rights or Options. All of the outstanding shares of capital stock or other equity interests of AWP and PGRI Delaware have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned directly or indirectly by the Company, free and clear of any Liens, restrictions on voting or transfer or any other
claim of any third party. None of the Company, PGRI Delaware of AWP own or hold, directly or indirectly, any interests in, capital stock of or other securities (whether equity or debt) of any Person
(other than securities of PGRI Delaware and AWP). No bonds, debentures, notes or other Indebtedness of the Company or any of its Subsidiaries having the right to vote on any matters on which the
Company's shareholders may vote are issued or outstanding unless consented to in writing by the Majority Purchasers. The issuance of the Securities, the conversion of the Notes and the exercise of the
Apollo Warrants will not entitle any holder of any equity interests in the Company or any of its Subsidiaries (including any holder of Options or Convertible Securities) to any
anti-dilution or similar adjustments or to any preemptive or similar rights. At Closing, there will be outstanding no other shares of Series A Preferred Stock of the Company other
than the Apollo Preferred Shares being issued hereunder. 

        (c)   The
Notes and the guarantees thereof by the Guarantors have been, or, when executed, will have been, duly authorized by all necessary action (corporate or other) and,
when issued and delivered pursuant to this Agreement, will have been duly executed, authenticated, issued and delivered and will constitute valid and legally binding obligations of the Company and of
each of the Guarantors, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting creditors' rights generally and subject to general principles of equity and implied covenants of good faith and fair dealing, regardless of whether considered in a proceeding in equity or at
law (the "Enforceability Exceptions"). When issued and sold against receipt of the Purchase Price as 

15

 

provided
in this Agreement, the Notes will not be subject to preemptive or similar rights of any shareholder of the Company and will be free of restrictions on transfer other than restrictions on
transfer under applicable Laws or as set forth herein. When issued, shares of Common Stock issuable upon conversion of the Notes, exercise of the Apollo Warrants and pursuant to Section 9.8 and
the Apollo Preferred Shares will have been duly authorized by all necessary corporate action and when so issued will be validly issued, fully paid and nonassessable, will not be subject to preemptive
or similar rights of any shareholder of the Company, will be free and clear of all Liens, and will be free of restrictions on transfer other than restrictions on transfer under applicable Laws or as
set forth herein. 

        7.3    Execution; Due Authority.    

        (a)   The
execution, delivery and performance of this Agreement, the Investors Rights Agreement, the Apollo Warrants and the Royalty Agreement (and all other documents
required to be executed and delivered by the Company or any of the Guarantors) and the consummation of the transactions contemplated hereby and thereby, have been duly and validly authorized by all
necessary corporate action on the part of the Company and each of the Guarantors, except for obtaining the Requisite Shareholder Approval. 

        (b)   This
Agreement, the Investors Rights Agreement and the Royalty Agreement have been duly executed and delivered by the Company (and, in the case of the Royalty Agreement,
AWP and PGRI Delaware) (and all documents required to be executed and delivered by the Company or any of the Guarantors at or prior to the Closing will be duly executed and delivered by the Company
and/or such Guarantors) and this Agreement, the Investors Rights Agreement and the Royalty Agreement constitute, and at the Closing (assuming the due and valid execution and delivery of such documents
by the other parties thereto) such documents will constitute, the valid and binding obligations of the Company and each of the Guarantors, enforceable in accordance with their terms, except for the
Enforceability Exceptions. The Apollo Warrants will, when issued, have been duly executed and delivered by the Company and will constitute the valid and binding obligations of the Company, enforceable
in accordance with their terms, except for the Enforceability Exceptions. 

        7.4    No Conflicts.    The issue and sale of the Securities and the compliance by the
Company and its Subsidiaries with all of the provisions of the Securities, this Agreement, the Investors Rights Agreement, the Apollo Warrants and the Royalty Agreement, and the consummation of the
Transactions will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or give rise to any right of termination, cancellation,
payment or acceleration under, any contract, indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its Subsidiaries are a party or by which
the Company or any of its Subsidiaries are bound or to which any of the property or assets of the Company or any of its Subsidiaries are subject, nor will such action result in any violation of the
provisions of the Second Amended and Restated Articles of Incorporation or the Second Amended and Restated Bylaws of the Company (collectively, the "Company Organizational
Documents") or any statute or any order, rule or regulation of any court or Governmental Authority having jurisdiction over the Company or any of its Subsidiaries or any of their
properties, except, with respect to any of the foregoing (other than the violation of the provisions of the Company Organizational Documents), as would not reasonably be material to the Company and
its Subsidiaries, taken as a whole, or as would not have a material adverse effect on the ability of each of the Company and the Guarantors to perform its obligations under this Agreement, in each
case except as previously disclosed to the Purchasers in writing by the Company. 

        7.5    Consents, Approvals or Waivers.    The execution, delivery and performance of this
Agreement, the Investors Rights Agreement and the Royalty Agreement, including the issue and 

16

 

sale
of the Notes and the Apollo Warrants and the consummation of the Transactions, by the Company and the Guarantors will not be subject to any consent, approval or waiver from any Governmental
Authority or other third Person, except (a) the filing of the Certificate of Designation with the Secretary of State of the State of Nevada, (b) the Requisite Shareholder Approval,
(c) as set forth on Schedule 7.5 or as previously disclosed to the Purchasers in writing by the Company and (d) such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or "blue sky" laws in connection with the purchase and distribution of the Notes by the Purchasers. 

        7.6    Legal and Governmental Proceedings.    There are no legal or governmental
proceedings ("Proceedings") pending to which the Company or any of its Subsidiaries is a party or of which any property of the Company or any of its Subsidiaries is
subject which, individually or in the aggregate, is reasonably expected to be material to the Company and its Subsidiaries, taken as a whole, or would have a material adverse effect on the ability of
each of the Company and the Guarantors to perform its obligations under this Agreement, and, to the Knowledge of the Company and each of the Guarantors, no such Proceedings are threatened or
contemplated by Governmental Authorities or threatened by others. 

        7.7    Compliance With Laws.    

        (a)   The
Company and its Subsidiaries are, and have been since February 11, 2011, in compliance in all material respects with all applicable Laws. No material change
is required in the Company or its Subsidiaries' processes, properties or procedures in connection with any applicable Laws, and none of the Company or its Subsidiaries has, prior to the date of this
Agreement, received any notice or communication of any material noncompliance with any such Laws that has not been cured as of the date of this Agreement. 

        (b)   None
of the Company, any of its Subsidiaries or Affiliates, or any director, officer or employee of the Company or any of its Subsidiaries or Affiliates, or any
consultant, agent, broker, representative or other person associated with or acting for or on behalf of the Company or any of its Subsidiaries or Affiliates, has taken or failed to take any action or
otherwise engaged in any conduct, directly or indirectly, that would constitute or otherwise result in a violation by any such Person of the Foreign Corrupt Practices Act (15 U.S.C.
§§78m(b), 78dd-1, 78dd-2, 78ff) (the "FCPA"), The Bribery Act of 2010 of the United Kingdom (the "UK Bribery
Act"), or any other applicable anti-corruption or other law, rule or regulation regarding bribery, political contributions, gifts, entertainment, hospitality or the
provision of other things of value or advantage, including, without limitation: directly or indirectly (i) making, offering or promising to make, or authorizing the making of, any unlawful
payment of money or other thing of
value or advantage to any person; (ii) giving, offering or promising to give, or authorizing the giving of, any unlawful gift, political or charitable contribution or other thing of value or
advantage to any person; or (iii) requesting or receiving any unlawful payment, gift, political or charitable contribution or other thing of value or advantage. 

        7.8    Licenses and Permits.    The Company and its Subsidiaries possess all material
licenses, certificates, permits and other authorizations ("Permits") issued by, and have made all declarations and filings with, the appropriate Governmental Authorities
that are necessary for the present conduct of their respective businesses, including ownership and lease of their respective properties, as described in the Company SEC Documents, including the
Holbrook Project, and neither the Company nor any of its Subsidiaries have received notice of any revocation or modification of any material Permits (including any Necessary Permits) or has any reason
to believe that any material Permit (including any Necessary Permits) will not be renewed in the ordinary course. 

17

 

        7.9    Company SEC Documents.    

        (a)   (i)  Each
form, report, document, statement, schedule, prospectus, registration statement and definitive proxy statement filed by the Company with the SEC
(the "Company SEC Documents") since February 11, 2011, and all Company SEC Documents filed after the date hereof and prior to the Closing Date, (i) were and,
in the case of Company SEC Documents filed after the date hereof, will be, as of their respective dates, prepared in all material respects in accordance with the applicable requirements of the
Securities Act, the Exchange Act and the Sarbanes-Oxley Act, as the case may be, and the rules and regulations thereunder and (ii) did not at the time they were filed (or, if
amended or superseded by a subsequent filing, then on the date of such filing), and in the case of such Company SEC Documents filed after the date of this Agreement, will not as of the time they are
filed, contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company SEC Document necessary in order to make the statements therein, in the
light of the circumstances under which they were and will be made, not misleading. To the Knowledge of the Company, as of the date of this Agreement, none of the Company SEC Documents is the subject
of ongoing SEC review or outstanding SEC comment. 

        (b)   The
chief executive officer and chief financial officer of the Company have made all certifications required by Sections 302 and 906 of the
Sarbanes-Oxley Act, and statements contained in such certificates are complete and correct, and the Company is otherwise in material compliance with all applicable provisions of the
Sarbanes-Oxley Act. 

        (c)   As
of the date of this Agreement, the Company has disclosed, based on its most recent evaluation, to the Company's auditors and the audit committee of the Board of
Directors (i) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting, which are reasonably likely to adversely affect in
any material respect the Company's ability to record, process, summarize and report its consolidated financial information; and (ii) any fraud known to management, whether or not material that
involved management or other employees who have a significant role in the Company's internal controls over financial reporting. As of the date hereof, the Company has not received any complaint or
allegation in writing since February 11, 2011, regarding accounting, internal accounting controls or auditing matters, including any such complaint regarding improper accounting or auditing
matters. The Company and its consolidated Subsidiaries have established and maintain disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act; such
disclosures controls and procedures are reasonably designed to ensure that material information relating to the Company and its consolidated Subsidiaries is made known on a timely basis to the
individuals responsible for the preparation of the Company SEC Documents; and, as of the date hereof, to the Knowledge of the Company, the Company has not identified any material weaknesses in the
design or operation of internal control over financial reporting. As of the date of this Agreement, to the Knowledge of the Company, there is no reason to believe that its chief executive officer and
chief financial officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 302 of the
Sarbanes-Oxley Act when next due. 

        7.10    No Material Adverse Effect.    Neither the Company nor any of its Subsidiaries
has sustained since the Reference Balance Sheet Date any Material Adverse Effect. 

        7.11    Exchange Act.    None of the Transactions (including, without limitation, the use
of the proceeds from the sale of the Securities as described in Section 7.37) will violate or result in a violation of Section 7 of the Exchange Act, or any rule or regulation
promulgated thereunder, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System. 

18

 

        7.12    Price Manipulation.    Prior to the date hereof, neither the Company nor any of
its Affiliates have taken any action which is designed to or which has constituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of
the Company in connection with the sale of any securities of the Company. 

        7.13    Class of Notes.    When the Notes are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the meaning of Rule 144A under the Securities Act) as securities which are listed on a national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system. 

        7.14    Status Under Investment Company Act.    The Company is not, and after giving
effect to the offering and sale of the Notes and the application of the proceeds thereof, will not be an "investment company," as such term is defined in the United States Investment Company Act of
1940, as amended (the "Investment Company Act"). 

        7.15    Restrictions on Sale of Notes, Etc.    

        (a)   Neither
the Company nor any of its Subsidiaries, nor any person acting on behalf of the Company or any of its Subsidiaries, has offered or sold the Notes by means of any
general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act or, with respect to Notes sold outside the United States to
non-U.S. persons (as defined in Rule 902 under the Securities Act), by means of any directed selling efforts within the meaning of Rule 902 under the Securities Act,
and the Company and any Affiliate of the Company, and any person acting on its or their behalf, have complied with and will implement the "offering restriction" within the meaning of such
Rule 902. 

        (b)   Within
the preceding six (6) months, neither the Company nor any of its Subsidiaries, nor any other person acting on behalf of either the Company or any of its
Subsidiaries, has since February 11, 2011 offered or sold to any person any Notes, or any securities of the same or a similar class as the Notes, other than Notes offered or sold to the
Purchasers hereunder. The Company and each of its Subsidiaries will take reasonable precautions designed to insure that any offer or sale, direct or indirect, in the United States or to any
U.S. person (as defined in Rule 902 under the Securities Act) of any Notes or any substantially similar security issued by the Company or any Guarantor, within six (6) months
subsequent to the date on which the distribution of the Notes has been completed (as notified to the Company by the Purchasers) is made under restrictions and other circumstances reasonably designed
not to affect the status of the offer and sale of the Notes in the United States and to U.S. persons contemplated by this Agreement as transactions exempt from the registration provisions of
the Securities Act. 

        7.16    Company Controls and Procedures.    

        (a)   The
Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in material conformity with GAAP; and
(iii) access to assets is permitted only in accordance with management's general or specific authorization. 

        (b)   Since
the date of the latest audited financial statements included in the Company's Annual Report on Form 10-K
("Form 10-K") for the fiscal year ended March 31, 2012, there has been no change in the Company's internal control over financial reporting that
has materially
adversely affected, or is reasonably likely to materially adversely affect, the Company's internal control over financial reporting. 

        (c)   The
Company maintains disclosure controls and procedures that have been designed to ensure that material information relating to the Company and its Subsidiaries is made
known to 

19

 

the
Company's principal executive officer and principal financial officer by others within those entities, and such disclosure controls and procedures are effective. 

        7.17    Public Accounting Firm.    Ehrhardt Keefe Steiner & Hottman PC, which has
audited certain financial statements of the Company, is an independent registered public accounting firm as required by the Securities Act and the rules and regulations of the SEC promulgated
thereunder. 

        7.18    Financial Statements; Material Liabilities.    

        (a)   Each
of the consolidated financial statements contained in the Company SEC Documents (including in each case all notes and schedules thereto), including any Company SEC
Documents filed after the date of this Agreement, complied or will comply, as of its respective date, in all material respects with all applicable accounting requirements and the rules and regulations
of the SEC with respect thereto, was or will be prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X of the SEC), and fairly presented or will fairly present in all material respects
the financial position of the Company and its consolidated Subsidiaries as of their respective dates and the results of operations and the cash flows of the Company and its consolidated Subsidiaries
for the periods presented therein, except that any unaudited interim financial statements do not include all of the information and notes required by GAAP for complete financial statements and are
subject to normal year-end adjustments. 

        (b)   The
Company and its Subsidiaries are not subject to any Liabilities or obligations of any nature, whether or not accrued, absolute, contingent or otherwise and whether
due or to become due, other than Liabilities (i) as reflected or reserved against on the balance sheet for the quarter ended
September 30, 2012, as contained in the Company SEC Documents (the "Reference Balance Sheet"), or (ii) incurred in the ordinary course of business consistent
with past practice since the date of the Reference Balance Sheet that have not had, individually or in the aggregate, a Material Adverse Effect. 

        7.19    Title to Property; Leases.    Except as would not adversely affect the Company's
ability to economically construct and operate a potash mine and related facilities on such properties or otherwise conduct its operations with respect to such properties or as previously disclosed to
the Purchasers in writing by the Company: each of the Company and each of the Subsidiaries owns or leases all such properties as are necessary to the conduct of its operations as presently conducted;
the Company and the Subsidiaries have good and marketable title to all surface real property owned by them in fee simple, and good and marketable title to all personal property owned by them, in each
case free and clear of all liens, encumbrances and defects of any kind (including mining, zoning, use or building code restrictions that would prohibit or prevent the continued effective ownership,
leasing, licensing or use of such property in the business of the Company and the Subsidiaries) that would prevent the Company from conducting its business as it is now being conducted; any real
property and buildings held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company and the Subsidiaries; the Company and the Subsidiaries hold either mining leases, mining concessions,
mining claims or participating interests or other conventional property or proprietary interests or rights, recognized in the jurisdiction in which a particular property is located, in respect of the
ore bodies and minerals located in properties in which the Company and its Subsidiaries have an interest under valid, subsisting and enforceable title documents or other recognized and enforceable
agreements or instruments, sufficient to permit the Company or applicable Subsidiary to explore the minerals relating thereto except where the failure 

20

 

to
have obtained such rights would individually or in the aggregate be, or reasonably expected to be, not material to the Company and its Subsidiaries, taken as a whole; all property, leases or claims
in which the Company or any Subsidiary has an interest or right have been validly located and recorded in accordance with all applicable laws and are valid and subsisting except where the failure to
be so would not be, or not reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole; the Company and its Subsidiaries have all necessary surface rights, access rights
and other necessary rights and interests relating to the properties in which the Company and its Subsidiaries have an interest, granting the Company or applicable Subsidiary the right and ability to
explore for minerals for development purposes as are appropriate in view of the rights and interest therein of the Company or applicable Subsidiary, with only such exceptions as do not interfere with
the currently conducted business of the Company or applicable Subsidiary or of the rights or interest so held, and each of the proprietary interests or rights and each of the documents, agreements and
instruments and obligations relating thereto referred to above is currently in good standing in the name of the Company or a Subsidiary except where the failure to be so would not be, or not
reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole; the Company is not aware of any reason that it
is not or would not be entitled to extract minerals from its properties and to do all of the exploration and development contemplated in the Company's current business plan except for such failures
that would not individually or in the aggregate be, or reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole; there are no pending or contemplated condemnation
proceedings affecting the real properties owned by the Company or its Subsidiaries with a fair market value in excess of $1,000,000 or any sale or disposition thereof in lieu of condemnation, and no
real property owned by the Company or its Subsidiaries with a fair market value in excess of $1,000,000, or any interest therein, is subject to any right of first refusal, option or other contractual
right to purchase such property or interest therein. 

        7.20    Environmental Matters.    

        (a)   Except
as would not, individually or in the aggregate, be, or reasonably expected to be, material to the Company and its Subsidiaries, taken as a whole: 

        (i)    To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries is, or has been, in violation of any U.S. federal, state, local or foreign law
(including common law), regulation, rule, requirement, decision or order relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), natural resources, or wildlife, including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Substances (collectively, "Materials of Environmental Concern"), or otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of, or exposure to, Materials of Environmental Concern (collectively, "Environmental Laws"). As used herein, "Environmental Laws"
means and includes, without limitation, those laws set forth in Title 49 of the Arizona Revised Statutes; the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. §§ 9601 et seq. ("CERCLA"); the Clean Air Act, 42 U.S.C. §§ 7401
et seq.; the National Environmental Policy Act, §§ 4321 et seq.; and the Clean Water Act, 33 U.S.C. §§ 1251
et seq. 

        (ii)   To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries is in violation or non-compliance with any Permits or other governmental
authorizations required for the operation of the business of the Company or its Subsidiaries under applicable Environmental Laws. 

21

 

        (iii)  Neither
the Company nor any of its Subsidiaries has received any written communication, whether from a Governmental Authority, citizens group, employee or otherwise,
that alleges that the Company or any of its Subsidiaries is in violation of any Environmental Law. 

        (iv)  There
is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which the Company or any of its Subsidiaries
has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, attorneys' fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at
any location owned, leased or operated by the Company or any of its Subsidiaries, now or in the past (collectively, "Environmental Claims") pending or, to the Knowledge of
the Company or any of its Subsidiaries, threatened in writing against the Company or any of its Subsidiaries or any person or entity whose liability for any Environmental Claim the Company or any of
its Subsidiaries has retained or assumed either contractually or by operation of law; and 

        (v)   To
the Knowledge of the Company, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the
release, emission, discharge, presence or disposal of any Material of Environmental Concern (including CERCLA hazardous substances), that would be reasonably expected to result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against the Company or any of its Subsidiaries or any person or entity whose liability for any Environmental Claim the Company or
any of its Subsidiaries has retained or assumed either contractually or by operation of law. 

        (b)   To
the Knowledge of the Company, the Company has not used or permitted to be used, except in compliance with all Environmental Laws, any freehold, leasehold and other
real property interests or rights, or other rights relating to the Mineral Rights (including licenses from landholders permitting the use of land, leases, rights of way, occupancy rights, surface
rights and easements) to release, dispose, recycle, generate, manufacture, process, distribute, use, treat, store, transport or handle any Hazardous Substance. To the Knowledge of the Company, there
are not Hazardous Substance on, in or under any freehold, leasehold and other real property interests or rights, or other rights relating to the Mineral Rights (including licenses from landholders
permitting the use of land, leases, rights of way, occupancy rights, surface rights and easements) held, occupied or used, or formerly held, occupied or used, by the Company or its Subsidiaries. 

        (c)   None
of the Company, its Subsidiaries, the Mineral Rights or any real property of the Company or its Subsidiaries is subject to any current, nor, to the Knowledge of the
Company, any pending or threatened: 

        (i)    claim,
action, notice, demand, allegation, investigation, proceeding, application, order, judgment, requirement or directive which relates to environmental, natural
resources, Hazardous Substances, human health or safety matters, and which may require or result in any work, repairs, rehabilitation, reclamation, remediation, construction, obligations, liabilities
or expenditures (and, to the Knowledge of
the Company, there is no basis for such a claim, action, notice, demand, allegation, investigation, proceeding, application, order, judgment, requirement or directive); or 

        (ii)   allegation,
demand, direction, order, notice or prosecution with respect to any Environmental Law applicable thereto including any Laws respecting the use, storage,
treatment, transportation, rehabilitation, reclamation, remediation or disposition of any 

22

 

Hazardous
Substance and the Company has not settled any allegation of non-compliance with Environmental Laws prior to prosecution. 

        (d)   The
Company has provided to the Purchasers a true and complete copy of each environmental audit, assessment, study or test of which it is aware as of the date of this
Agreement relating to the Holbrook Project and the Mineral Rights, including any environmental and social impact assessment study reports. 

        (e)   To
the Knowledge of the Company, there are no pending or proposed changes to Environmental Laws that would render illegal or materially restrict the operations of the
Company, its Subsidiaries or the Holbrook Project. 

        7.21    Intellectual Property.    Except as would not reasonably be expected to be
material to the Company and its Subsidiaries, taken as a whole, the Company and each of its Subsidiaries, own or possess sufficient intellectual property and proprietary rights, including, without
limitation, trademarks, service marks, trade names, patent rights, copyrights, licenses, approvals, trade secrets and all other similar rights (collectively, the "Intellectual Property
Rights") reasonably necessary to conduct their business as now conducted and the expected expiration of any of such Intellectual Property Rights would not be material, individually or
in the aggregate, to the Company and its Subsidiaries, taken as a whole, and neither the Company nor any of its Subsidiaries, has received any notice of infringements or conflict with asserted
Intellectual Property Rights which would reasonably be material, individually or in the aggregate, to the Company and its Subsidiaries, taken as a whole. 

        7.22    Taxes.    

        (a)   Except
as would not, individually or in the aggregate, be material to the Company and its Subsidiaries, taken as a whole: (i) the Company, since
February 11, 2011, and each of its Subsidiaries have timely filed or caused to be filed all U.S. federal, state and foreign income, franchise and other Tax returns and reports required
to be filed by any of them or have properly requested extensions thereof, and have paid or caused to be paid all Taxes required to be paid by any of them and, if due and payable, any related or
similar assessment, fine or penalty levied against any of them, except, in each case, any Taxes that are being contested in good faith by appropriate proceedings and for which the Company and each of
its Subsidiaries, as applicable, has set aside on its books adequate accruals or reserves in accordance with GAAP; and (ii) the Company has made adequate charges, accruals and reserves, in
accordance with GAAP, in its consolidated financial statements contained in the Form 10-K for the fiscal year ended March 31, 2012 in respect of all U.S. federal,
state and foreign income, franchise and other Taxes for all periods as to which the tax liabilities of the Company since February 11, 2011 or any of its Subsidiaries, has not been finally
determined. Neither the Company since February 11, 2011 nor any of its Subsidiaries has received written notice from any Taxing authority that it has failed to timely file any Tax return or
failed to timely pay any Taxes owed by it. 

        (b)   The
Common Stock is (i) traded on a national securities exchange which is registered under Section 6 of the Exchange Act, and (ii) regularly quoted
by brokers or dealers holding themselves out to buy or sell the Common Stock at such quoted price, all within the meaning of Code Section 897 and the Treasury Regulations thereunder. 

        7.23    Compliance with ERISA.    Except as would not reasonably be expected, either
individually or in the aggregate, to be material to the Company and its Subsidiaries, taken as a whole: the Company and its Subsidiaries and all "employee benefit plans" (as defined under
Section 3(3) of ERISA) established or maintained by the Company, its Subsidiaries or their ERISA Affiliates have been and are in compliance with their respective terms and all applicable Laws,
including ERISA and the Code; to the Knowledge of the Company, each Multiemployer 

23

 

Plan
to which the Company, its Subsidiaries or an ERISA Affiliate contributes is in compliance with its terms and all applicable Laws, including ERISA and the Code; no "reportable event" (as defined
under Section 4043 of ERISA) has occurred or is reasonably expected to occur with respect to any Benefit Plan; no "single employer plan" (as defined in Section 4001 of ERISA) established
or maintained by the Company, its Subsidiaries or any ERISA Affiliate, if such plan were terminated, would have any "amount of unfunded benefit liabilities" (within the meaning of
Section 4022(c) of ERISA), and each such plan satisfies the minimum funding standards set forth in Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA, whether or
not waived; neither the Company, its Subsidiaries nor any
of their ERISA Affiliates has incurred or reasonably expects to incur any unsatisfied liability under (a) Title IV of ERISA with respect to termination of any Benefit Plan, or withdrawal
from any Multiemployer Plan, or (b) Sections 412, 4971, 4975 or 4980B of the Code; the PBGC has not instituted proceedings to terminate any Benefit Plan, and no condition exists that
would reasonably be expected to result in such proceedings being instituted or which would constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Benefit Plan; with respect to each Benefit Plan, all premiums to the PBGC have been timely paid in full; there does not now exist, nor do any circumstances exist that would
reasonably be expected to result in any liability (x) under Title IV or Section 302 of ERISA, (y) under Sections 412 and 4971 of the Code or (z) as a result
of a failure to comply with the continuation coverage requirements of Section 601 et seq. of ERISA and Section 4980B of the Code, and without limiting the generality of the
foregoing, neither the Company nor any of its Subsidiaries, nor any of their respective ERISA Affiliates, has engaged in any transaction described in Section 4069 or Section 4204 or 4212
of ERISA; the Company and its Subsidiaries have no liability for life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof, except for health
continuation coverage as required by Section 4980B of the Code or Part 6 of Title I of ERISA and at no expense to the Company and its Subsidiaries; and with respect to each
"employee benefit plan" for which the Company, its Subsidiaries or any of their ERISA Affiliates would have any liability that is intended to be qualified under Section 401 of the Code (and the
related trust), the Internal Revenue Service has issued a favorable determination letter that has not been revoked, there are no circumstances and no events have occurred that could adversely affect
the qualified status of any such plan (or related trust), and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification. 

        7.24    Material Labor Disputes; Labor Laws.    Employees of the Company and its
Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees. No labor organization or group of employees of the
Company or any of its Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation
proceeding presently pending or threatened to be brought or filed, with the National Labor Relations Board or any other labor relations tribunal or authority. There are no pending or, to the Knowledge
of the Company, threatened strikes, lockouts, slowdowns or other material labor disputes against the Company or any of its Subsidiaries. To the best of the Knowledge of the Company, the hours worked
by and payments made to employees of the Company and each of its Subsidiaries have not been in material violation of the Fair Labor Standards Act or any other applicable federal, state, local or
foreign law dealing with such matters. Except for payroll yet to be paid for the Company's current payroll cycle (estimated to be in the rough amount of approximately $150,000) and, as would otherwise
not reasonably be expected, individually or in the aggregate, to be material to the Company and its Subsidiaries, taken as a whole, all payments known to be due from the Company and each Guarantor, or
for which any known claim has been made against the Company and each Guarantor, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a
liability on the books of the 

24

 

Company
and each of its Subsidiaries. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective
bargaining agreement to which the Company or any of its Subsidiaries is bound. It is understood that the Company may need to create new positions and in doing so restructure the Company's personnel
and contractor relations in connection with its continuing operations, which will be funded in part by the proceeds from the Transaction. 

        7.25    Mineral Rights.    Except as would not adversely affect the Company's ability to
economically construct and operate a potash mine and related facilities with respect to such Mineral Rights or otherwise conduct its operations with respect to such Mineral Rights or as previously
disclosed to the Purchasers in writing by the Company: 

        (a)   Schedule 7.25(a)
describes all Mineral Rights as of the date hereof. The Company and its Subsidiaries holds all licenses and has all interests in any mineral
interests, mining concessions, mining tenements or other mineral rights necessary or appropriate to authorize and enable the Company and its Subsidiaries to explore, develop, construct or operate the
Holbrook Project as contemplated as of the date hereof. As of the date of the final Definitive Feasibility Study, the Company and its Subsidiaries will hold all licenses and have all interests in any
mineral interests, mining concessions, mining tenements or other mineral rights necessary or appropriate to authorize and enable the Company and its Subsidiaries to explore, develop, construct or
operate the Holbrook Project as contemplated in the Definitive Feasibility Study. 

        (b)   The
Mineral Rights have been properly located and recorded in compliance with applicable Laws and, in respect of the Mineral Rights, are comprised of valid and
subsisting mineral claims. 

        (c)   The
Company or its Subsidiaries is the sole registered and beneficial owner of the Mineral Rights, with good and marketable title thereto, free and clear of any title
defect or Liens. 

        (d)   The
Mineral Rights constitute all of the right, title and interest necessary or appropriate to authorize and enable the Company to explore, develop, construct or operate
the Holbrook Project as contemplated as of the date hereof. 

        (e)   The
Company has the right, free and clear of any Liens, to access and use the surface area where all of the Mineral Rights are located necessary to explore, develop,
construct or operate the Holbrook Project as contemplated as of the date hereof, and the Company has paid to all surface area owners all rent, royalties, indemnification or other amounts to which they
are entitled, whether pursuant to any contract or by Law. 

        (f)    The
Company has the exclusive right to deal with the Mineral Rights, and there are no restrictions on the ability of the Company to use, transfer or exploit the Mineral
Rights except pursuant to applicable Laws. 

        (g)   No
Person other than the Company has any interest in the production or profits to be obtained in the future from the Mineral Rights or any royalty in respect thereof or
any right to acquire such interest. 

        (h)   There
are no farm-in or earn-in rights, rights of first refusal or similar rights or provisions which could materially affect the Mineral Rights
other than as disclosed in Item 3 of Schedule 7.18. 

        (i)    The
Company has not received any notice, whether written or oral, from any Governmental Authority or any Person, of any revocation or intention to revoke the interest of
the Company in any Mineral Rights. 

25

 

        (j)    The
Mineral Rights are in good standing under applicable Laws; all work required to be performed has been performed and all Taxes, rentals, fees, expenditures and other
payments in respect thereof have been paid or incurred and all filings in respect thereof have been made. 

        (k)   All
mining operations and all exploration activities in respect of the Mineral Rights have been conducted in accordance with good mining and engineering practices and
all material workers' compensation and health and safety regulations have been complied with. 

        (l)    There
are no Claims that have been commenced, are pending or, to the Knowledge of the Company, are threatened against the Company, nor is there a state of facts or
events that may give rise thereto, which could affect the title to or right to explore or develop the Mineral Rights. 

        7.26    Insurance Coverage.    The Company and its Subsidiaries carry, or are covered by,
insurance with insurers of recognized financial responsibility in such amounts, with such deductibles and covering such risks as the Company and its Subsidiaries deem adequate and prudent for the
conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses. The Company and its Subsidiaries have no reason to
believe that such insurance coverage cannot be renewed as and when such coverage expires or that similar coverage could not be obtained from similar insurers at a cost that would not reasonably be
expected to be material to the Company and its Subsidiaries, taken as a whole (other than as a result of general market conditions). As of the date hereof, neither the Company nor any of its
Subsidiaries has (a) received notice from any insurer or agent of such insurer that a material amount of capital improvements or other expenditures are required or necessary to be made in order
to continue such insurance or (b) any notice from its insurers that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage
at reasonable cost from similar insurers as may be necessary to continue its business. 

        7.27    Restrictions on Subsidiaries.    Except as provided in the Karlsson Agreements,
no Subsidiary of the Company is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Company,
from making any other distribution on such Subsidiary's capital stock, from repaying to the Company any loans or advances to such Subsidiary from the Company or from transferring any of such
Subsidiary's properties or assets to the Company or any other Subsidiary of the Company. 

        7.28    No Registration Rights.    Schedule 7.28 sets forth all agreements as of
the date hereof pursuant to which any Person has the right to require the Company or any of its Subsidiaries to register any securities for sale under the Securities Act. After the date hereof, other
than pursuant to the Investors Rights Agreement or as consented to by the Majority Purchasers, no Person has received the right to require the Company or any of its Subsidiaries to register any
securities for sale under the Securities Act. 

        7.29    Antitakeover Provisions.    The Company's Board of Directors has taken all
necessary actions so that no "business combination," "control share acquisition," or similar anti-takeover law or regulation is applicable to the Transactions, including with respect to
the issuance of the Securities or to the execution, delivery or performance of this Agreement and the consummation of the Transactions. 

        7.30    No General Solicitation.    None of the Company or any of its Affiliates (as
defined in Rule 501(b) of Regulation D under the Securities Act), has, directly or through an agent, engaged in any form of general solicitation or general advertising in connection with
the offering of the Securities (as those terms are used in Regulation D) under the Securities Act or in any manner involving a public offering within the meaning of Section 4(2) of the
Securities Act, and the Company has not entered 

26

 

into
any contractual arrangement with respect to the distribution of the Securities except for this Agreement. 

        7.31    Material Contracts.    All Material Contracts of the Company or its Subsidiaries
existing on the date hereof are contained in the Company's electronic data room maintained through Merrill Corporation, and (a) the Company is not, and, to the Knowledge of the Company, no
other person is as of the date hereof, in default under any Material Contract and (b) no notice of default or breach has been received or delivered by the Company under any Material Contract,
the resolution of which is currently outstanding, and to the Knowledge of the Company no event or circumstances are occurring, have occurred or exist which would, but for the passage of time,
constitute an event of default under any Material Contract, including any contracts entered into in connection with, or otherwise relating to, the Karlsson Purchase. 

        7.32    Voting Agreements.    To the Knowledge of the Company, except for the Support
Agreements entered into in connection with the Transactions, as of the date hereof, there are no existing voting or similar agreements between the Company's shareholders which could reasonably be
expected to adversely affect the ability of the Company to perform its obligations under this Agreement. 

        7.33    Compliance with Money Laundering Laws.    The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970,
as amended, the applicable money laundering statutes of jurisdictions where the Company and its Subsidiaries conduct business, the rules and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and no action, suit or proceeding by or
before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the Knowledge
of the Company, threatened. 

        7.34    Compliance with OFAC.    Neither the Company nor any of its Subsidiaries nor, to
the Knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any of its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"). The Company will not, directly or indirectly, use the proceeds of the offering contemplated hereby, or
lend, contribute or otherwise make available such proceeds to any person currently subject to any U.S. sanctions administered by OFAC. 

        7.35    Compliance with Other Laws, Regulations and Instruments.    The Company and each
of its Subsidiaries is in compliance with all Laws, regulations and orders (including any Environmental Laws, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, Pub. L. 107-56, as it may be amended or otherwise modified from time to time (the "Patriot Act"), margin
regulations and ERISA) of any governmental agency or body applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except where the
failure to do so, individually or in the aggregate, would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. 

        7.36    Solvency.    Immediately after giving effect to the Transactions, the Company and
its Subsidiaries on a consolidated basis, will be Solvent. 

        7.37    Use of Proceeds.    The Company will apply the proceeds of the sale of the
Securities as set forth in Section 15.1. 

        7.38    Brokers' Fees.    No Person is entitled to any brokerage, financial advisory,
finder's or similar fee or commission payable by any party hereto in connection with the Transactions based upon arrangements made by or on behalf of the Company. 

27

 

        7.39    Collateral Documents.    The Collateral Documents, when executed and delivered to
the extent required herein, will create legal and valid Liens on all the Collateral in favor of the Collateral Agent, for the benefit of the Purchasers and the other holders of Obligations, and such
Liens will constitute perfected and continuing Liens on the Collateral, securing the Obligations, enforceable against the applicable Obligor, and having priority over all other Liens on the
Collateral, except (a) Liens resulting from mandatory provisions of applicable law and (b) Liens specifically and expressly permitted to be incurred by this Agreement on a senior basis
to the Obligations. 

 
 

  ARTICLE VIII
  
    REPRESENTATIONS OF THE PURCHASERS    
    

        Each
of the Purchasers represents and warrants, solely as to itself, and on a several, not joint basis, to the Company that: 

        8.1    Organization; Power and Authority.    Such Purchaser is duly organized or
incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization or incorporation, with all requisite power and authority (corporate or other) to own its
properties and carry on its business as now conducted and as proposed to be conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is
required, or is subject to no material liability or disability by reason of the failure to be so qualified or in good standing in any such jurisdiction. 

        8.2    Execution; Due Authority.    

        (a)   The
execution, delivery and performance of this Agreement, the Investors Rights Agreement and the Royalty Agreement (and all other documents required to be executed and
delivered by each Purchaser and the consummation of the Transactions), to the extent such Purchaser is a party to such agreements, have been duly and validly authorized by all necessary corporate
action on the part of such Purchaser. 

        (b)   This
Agreement, the Investors Rights Agreement and the Royalty Agreement, to the extent such Purchaser is a party to such agreements, have been duly executed and
delivered by such Purchaser (and all documents required to be executed and delivered by such Purchaser at Closing will be duly executed and delivered by such Purchaser), and this Agreement
constitutes, and at the Closing (assuming the due and valid execution and delivery of such documents by the other parties thereto) such documents will constitute, the valid and binding obligations of
such Purchaser, enforceable in accordance with their terms, except for the Enforceability Exceptions. 

        8.3    No Conflicts.    The purchase of the Securities and the compliance by such
Purchaser with all of the provisions of the Notes and this Agreement and the consummation of the Transactions will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give rise to any right of termination, cancellation, payment or acceleration under, any contract, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Purchaser is a party or by which such Purchaser is bound or to which any of the property or assets of such Purchaser is subject, nor will such action result
in any violation of the provisions of the organizational documents of such Purchaser or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction
over such Purchaser or any of its properties, except, with respect to any of the foregoing (other than the violation of the provisions of such Purchaser's organizational documents), as would not
reasonably be expected to have a material adverse effect on the ability of such Purchaser to perform its obligations under this Agreement or otherwise materially threaten or materially impede the
consummation of the Transactions. 

28

 

        8.4    Purchase for Investment.    Each Security Purchaser severally represents that it
(a) is purchasing the Notes for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to
the distribution thereof; provided, however, that the disposition of such Purchaser's property shall at all times be within such Purchaser's
control and (b) understands that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not and will not be required to
register the Notes. 

        8.5    Accredited Investor.    Each Purchaser hereby represents and warrants to and
agrees with the Company that it (a) is an "accredited investor" within the meaning of Rule 501 under the Securities Act and, with respect to each Person who is a Purchaser as of the date
hereof, a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act , (b) has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Notes and it is able to bear the economic risk of such investment and (c) has had the opportunity to perform due diligence
with respect to the Company and the Transactions and to ask questions of and receive answers from the Company in respect thereof. 

        8.6    Brokers' Fees.    No Person is entitled to any brokerage, financial advisory,
finder's or similar fee or commission payable by any Party hereto in connection with the Transactions based upon arrangements made by or on behalf of the Purchasers. 

 
 

  ARTICLE IX
  
    CERTAIN INTERIM COVENANTS    
    

        9.1    Operation of Business.    The Company covenants and agrees that, between the date
of this Agreement and the Closing, unless the Majority Purchasers shall otherwise agree in writing, the Company shall, and shall cause its Subsidiaries to, (i) operate and maintain its assets
in the ordinary course of business consistent with past practice, (ii) use commercially reasonable efforts, consistent with existing practices, to keep available the services of its employees
and preserve relationships with all of its customers, suppliers, licensors, licensees, distributors, regulators and creditors and (iii) use its commercially reasonable efforts to preserve
substantially intact its business organization. Without limitation to the foregoing, except as contemplated or permitted by this Agreement or as set forth in Schedule 9.1, the Company shall not
(and shall cause its Subsidiaries not to), between the date of this Agreement and the Closing Date, directly or indirectly, do, or propose to do, any of the following without the prior written consent
of the Majority Purchasers (which consent will not be unreasonably withheld for approvals contemplated by Sections 9.1(a), (b) (except for the size of the Board of Directors), (d), (g),
(h), (n), (p), (q)(ii), (r), (s), and (v) (solely to the extent with respect to the foregoing clauses), so long as such actions do not have an adverse effect on the economic or governance
interests of the Purchasers): 

        (a)   except
for filing the Certificate of Designation, amend or otherwise change, or waive any provision of, its articles of incorporation or bylaws (or similar
organizational documents), except for non-material changes undertaken for routine or administrative reasons which do not adversely affect the Purchasers; 

        (b)   alter
the size or powers of the Board of Directors (or creating or altering the size or powers of any committee thereof), except (i) that the Company shall be
permitted to increase the size of its Board of Directors by one member solely in connection with the grant of a director designation right to new investors in connection with capital-raising
transactions occurring after the 

29

 

date
hereof and (ii) for non-material changes to the powers of the Board of Directors or any committee undertaken for routine or administrative reasons; 

        (c)   issue,
sell, register for sale, pledge, dispose of, grant, encumber or authorize the issuance, sale, registration, pledge, disposition, grant or encumbrance of any
shares of capital stock of any class of the Company or of its Subsidiaries (including Common Stock), or any Options, Convertible Securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including any phantom interest), of the Company or of its Subsidiaries, except for the: 

        (i)    issuance
of Common Stock (x) prior to the receipt of the Requisite Shareholder Approval, to the Persons listed on Schedule 9.1, unless such issuance would
result in any such Person (collectively with its Affiliates and Associates) Beneficially Owning seven and one-half percent (7.5%) or more of the then-outstanding Common Stock
or other equity of the Company (or voting power of the Company for the election of directors) or, (y) from and after the receipt of the Requisite Shareholder Approval, (A) in an
underwritten public offering involving a broad-based distribution or (B) to any Person, unless such issuance would result in any such Person (collectively with its Affiliates and Associates)
Beneficially Owning seven and one-half percent (7.5%) or more of the then-outstanding Common Stock or other equity of the Company (or voting power of the Company for the
election of directors)); 

        (ii)   from
and after the receipt of the Requisite Shareholder Approval, issuance to any Person or Persons of an amount of Permitted Preferred Stock that, when aggregated with
the amount of all prior and simultaneous permitted issuances of Permitted Preferred Stock and Permitted Junior Debt, does not exceed $75 million in the aggregate; 

        (iii)  the
issuance of the Notes to the Purchasers at the Closing; or 

        (iv)  the
issuance of shares of Common Stock, Options or other securities to employees, directors or consultants (who are natural persons) of the Company pursuant to Benefit
Plans existing on the date hereof, as amended from time to time in accordance with Section 9.1(q)(i); 

        (d)   sell,
transfer, assign, mortgage, pledge, dispose of, encumber or authorize the sale, transfer, assignment, mortgage, pledge, disposition, or encumbrance of any material
assets or properties of the
Company or any of its Subsidiaries, except (A) in the ordinary course of business and in a manner consistent with past practice, (B) pursuant to the Karlsson Agreements, as in effect on
the date hereof, or (C) acquisitions or dispositions for cash consideration of assets with a value of less than $200,000 individually or in excess of $500,000 when aggregated with all other
dispositions in a twelve (12)-month period; 

        (e)   declare,
set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for
such declarations, set-asides, dividends and other distributions made to or from any Subsidiary to or from the Company); 

        (f)    reclassify,
combine, split or subdivide, or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock, except in connection with
transactions between the Company and its wholly owned Subsidiaries and transactions among the Company's wholly owned Subsidiaries; 

        (g)   except
with respect to the acquisition of real property or interests in real property (which is covered by clause (h) below), acquire, in any individual or
related series of acquisitions, assets, securities or businesses, whether by purchase, transfer, assignment or otherwise, whether direct or indirect, and including investments in or formation of
partnerships or joint ventures with third 

30

 

parties,
with a value in excess of $500,000 individually or $2,000,000 in any twelve (12)-month period when aggregated with all other acquisitions; 

        (h)   acquire,
in any individual or related series of acquisitions, any real property or interests in real property (including Mineral Rights) with a value in excess of
$750,000 or in excess of $1,500,000 in any twelve (12)-month period when aggregated with all other acquisitions; 

        (i)    incur
any Indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the
obligations of any Person (other than obligations of the Company or the Company's wholly owned Subsidiaries), or make any loans or advances, except, from and after the receipt of the Requisite
Shareholder Approval, an amount of Permitted Junior Debt that, when aggregated with the amount of all prior and simultaneous
permitted issuances of Permitted Preferred Stock and Permitted Junior Debt, does not exceed $75 million in the aggregate; 

        (j)    repay
or redeem any Indebtedness for borrowed money or debt securities outstanding as of the date of this Agreement, except for (i) the Karlsson Note,
(ii) scheduled repayments of principal and interest in accordance with the terms of any such Indebtedness or debt securities and (iii) repayments and redemptions in the ordinary course
of business consistent with past practice; 

        (k)   other
than pursuant to the Royalty Agreement and the Grandhaven Agreement, selling or granting of any royalty (or similar) interests in, or other rights to payment based
on the revenue of, the Company or its Subsidiaries or any assets or rights of the Company or its Subsidiaries; provided, that the Company shall be permitted to grant
royalties in connection with the acquisition of property in the ordinary course of business, if (a) such royalty interests are granted to the seller of the acquired property and relate solely
to the acquired property; and (b) either (i) such royalty interests are granted in connection with acquisitions of state-owned property, where the size of all state-owned properties as
to which royalties are sold or granted under this proviso in any twelve (12)-month period does not exceed 1,500 acres in the aggregate and the royalties granted are substantially consistent with the
published guidelines of the Arizona State Land Department, or (ii) the size of all non-state-owned properties as to which royalties are sold or granted under this proviso in any
twelve (12)-month period does not exceed 500 acres in the aggregate and such royalty grants to the recipient only a percentage interest in gross Potash production from the acquired property, not to
exceed the following percentages: 

        (i)    two
percent (2%) if Potash produced from the acquired property is sold at $200/tonne or less; 

        (ii)   three
percent (3%) if Potash produced from the acquired property is sold at a price less than or equal to $300/tonne but greater than $200/tonne; 

        (iii)  four
percent (4%) if Potash produced from the acquired property is sold at a price less than or equal to $400/tonne but greater than $300/tonne; 

        (iv)  five
percent (5%) if Potash produced from the acquired property is sold at a price less than or equal to $500/tonne but greater than $400/tonne; and 

        (v)   six
percent (6%) if Potash produced from the acquired property is sold at a price greater than $500/tonne; 

        (l)    making
any material changes to the nature of the business of the Company or its Subsidiaries or entry into any new business lines, including (i) entering into the
ownership, management, development or operation of any line of business not conducted as of the date of this Agreement by the Company and its Subsidiaries or (ii) materially changing or exiting
any line of business conducted as of the date of this Agreement by the Company and its Subsidiaries; 

31

 

 

        (m)  discontinuing
the Company's status as a public company or SEC-reporting company, changing the Company's jurisdiction of organization, or applying to list (or
materially altering or terminating its listing) on any stock exchange; 

        (n)   pay,
discharge, settle or satisfy any material litigation, arbitration, proceeding, claim, liability or obligation (absolute or accrued, asserted or unasserted,
contingent or otherwise), except with respect to any such proceedings or claims disclosed in the Company SEC Documents on or prior to the date hereof; 

        (o)   amending,
waiving or otherwise modifying any terms of any contracts entered into in connection with, or otherwise relating to, the Karlsson Purchase, or entering into
any new contracts with Karlsson or its Affiliates that adversely affect the Purchasers in any respect, as determined in good faith by the Majority Purchasers; 

        (p)   enter
into, renew, extend, materially amend or terminate any contract with any EPCM or EPC firm, or any contract relating to shaft sinking; 

        (q)   (i)
accelerate any vesting of compensation or benefits or pay any compensation or benefits not otherwise due to employees of the Company or any of its Subsidiaries or
enter into, adopt or amend any Benefit Plan (including any employment agreements), other than (A) adopting a 401(k) plan (on terms customary for the industry in which the Company operates) or
(B) as required by applicable Law, a Benefit Plan in existence as of the date hereof or a contract in existence as of the date hereof or (ii) increase or enhance the compensation or
benefits of any employees of the Company or any of its Subsidiaries, other than as required by applicable Law or as required pursuant to the terms of any contract as in effect on the date of this
Agreement, by more than 3% annually, or in the case of any employee (other than the chief executive officer, chief operating officer or chief financial officer) whose responsibilities have been
increased, by more than 10%; 

        (r)   change
its methods of accounting (other than Tax accounting, which shall be governed by clause 9.1(s) below), except in accordance with changes in GAAP as
concurred in by the Company's independent auditors; 

        (s)   except
(i) to the extent required or appropriate to conform to changes in applicable Tax Law, regulatory accounting requirements or GAAP or (ii) in the
ordinary course of business consistent with past practice, enter into any closing agreement with respect to material Taxes, settle or compromise any material liability for Taxes, make, revoke or
change any material Tax election, agree to any adjustment of any material Tax attribute, surrender any claim for a material refund of Taxes, execute or consent to any waiver extending the statutory
period of limitations with respect to the collection or assessment of material Taxes, file any material amended Tax return or obtain any material Tax ruling, change any annual Tax accounting period,
adopt or change any method of Tax accounting, or enter into any Tax allocation agreement, Tax sharing agreement, Tax indemnity agreement or closing agreement relating to any material Tax; 

        (t)    enter
into any new, or amend or otherwise alter, any transaction with any Affiliate or Associates of the Company or its Subsidiaries, other than (i) transactions
solely among the Company and its Subsidiaries and (ii) the Royalty Agreement; 

        (u)   (i)
commencing a voluntary case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to the Company or any of its Subsidiaries, or seeking to adjudicate the Company or any of its
Subsidiaries bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to the Company or any
of its Subsidiaries or any indebtedness of the Company or any of its Subsidiaries, or (B) seeking 

32

 

appointment
of a receiver, trustee, custodian or other similar official for the Company or any of its Subsidiaries or for all or any substantial part of the Company or any of its Subsidiaries' assets,
(ii) the making of a general assignment for the benefit of the Company or any of its Subsidiaries's creditors or (iii) liquidation, dissolution, reorganization or merger of or involving
the Company or any of its Subsidiaries; or 

        (v)   enter
into any contract or otherwise obligate the Company or its Subsidiaries to do any of the foregoing. 

        9.2    Access to Information; Consultation.    

        (a)   From
the date of this Agreement until the Closing Date, upon reasonable prior notice, the Company shall, and shall cause its Subsidiaries to, (i) afford the
Representatives of the Purchasers reasonable access, during normal business hours, upon reasonable notice, to the offices, properties, books and records of the Company and its Subsidiaries,
(ii) furnish or cause to be furnished to the Representatives of the Purchasers such additional financial and operating data and other information regarding the Company and its Subsidiaries as
the Purchasers may from time to time reasonably request (including furnishing to the Purchasers the Company's financial results in advance of any filing of any Company SEC Document containing such
financial results), and (iii) instructing the employees, counsel, financial advisors, auditors and other Representatives of the Company and its Subsidiaries to cooperate reasonably with the
Purchasers in its investigation of the Company and its Subsidiaries. No information or knowledge obtained by the Purchasers in any investigation pursuant to this Section 9.2 shall affect or be
deemed to modify any representation and warranty made by the Company in Article VII. 

        (b)   Without
limitation of Section 9.2(a), until the Closing Date, the Company shall provide the Purchasers: 

        (i)    the
information contemplated by Sections 14.1(a) and (b), provided, at any time during which the Company or any of its Subsidiaries
is subject to the periodic reporting requirements of the Exchange Act or voluntarily reports thereunder, the Company may satisfy its obligations pursuant to this Sections 9.2(b)(i) by filing or
causing any of its subsidiaries to file with the SEC (via the EDGAR system) on a timely basis annual and quarterly reports including financial statements of the Company and its Subsidiaries and
satisfying the requirements of the Exchange Act; 

        (ii)   as
soon as available, (A) a copy of the operating and capital expenditure budgets for the Company and its Subsidiaries for such fiscal year, (B) monthly
construction progress reports (containing detail on budget, schedule and key metrics), (C) monthly management accounts and periodic information packages relating to the operations and financial
performance of the Company and its Subsidiaries, in each case in such form as the Company and its Subsidiaries prepare in the ordinary course of business, (D) a copy of all information packages
(and any other materials, documents or information) provided to the board of directors (or similar governing body) of any of the Company and its Subsidiaries or any director thereof (including
notices, minutes, consents and regularly or specially compiled financial and operating data distributed to the members of such board or body at the same time as such materials are distributed to such
board or body) and (E) a copy of any information or reporting packages (and any other materials, certificates, documents or other information) provided directly or indirectly (including through
trustees or other agents) to any or all lenders to or debt financing sources of the Company and its Subsidiaries; 

        (iii)  (A)
copies of draft applications for any Necessary Permits with respect to the Holbrook Project no later than five (5) Business Days prior to the anticipated
filing of such application, (B) copies of any Permits received by the Company or its Subsidiaries with respect to the 

33

 

Holbrook
Project within five (5) Business Days of receipt, (C) copies of any material correspondence with any Governmental Authority with respect to any Permits within two
(2) Business Days of receipt and (D) regular updates on any material conversations with any Governmental Authority with respect to any Permits or status of Necessary Permits; 

        (iv)  regular
updates regarding any discussions regarding financing arrangements for the Holbrook Project with any source or potential source of the Project Financing
Facility, including notification of any material developments or changes in terms, and a copy of any term sheets or draft documentation relating thereto. The Company shall consult with the Purchasers
on a regular basis with regard to the Project Financing Facility and give due consideration to all reasonable advice and input suggested by the Purchasers in connection with the Project Financing
Facility; 

        (v)   prompt
written notice upon it becoming aware of (x) the breach of any of its representations or warranties hereunder or of any of its or its Subsidiaries'
covenants hereunder or (y) any fact, occurrence or development that may reasonably result in the non-satisfaction of any of the conditions in Article VI; and 

        (vi)  upon
the request of any Purchaser, an update meeting or telephone conference with the Purchasers on the status of the progress of the Definitive Feasibility Study, and
a copy of any materially updated draft of the Definitive Feasibility Study within two (2) Business Days of receipt. 

        (c)   Without
prejudice to the consent rights of the Purchasers contained in Section 9.1, the Company shall consult with the Purchasers, and in good faith consider any
comments or advice from the Purchasers, prior to and in the course of taking any of the following actions (and shall provide the Purchasers with regular updates to the status of discussions and
negotiations with respect to any such actions): (i) retention of any third-party consultant, advisor or finder/broker, (ii) retention or replacement of any senior manager or officer,
(iii) any debt or equity financing transactions, (iv) acquisition or disposition of a material amount of assets (including real property or Mineral Rights), (v) any actions with
respect to the Karlsson Agreements, (vi) entry into or modification of any off-take or other long-term purchase agreements for Potash or any other Material Contract of
the Company or its Subsidiaries, (vi) compensation decisions with respect to officers or employees and (vii) litigation involving the Company, its Subsidiaries or their assets. 

        9.3    Reasonable Best Efforts.    

        (a)   Subject
to the terms and conditions of this Agreement, the Company shall use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary, proper or advisable under applicable Law to consummate the Transactions, including (i) preparing and filing as promptly as practicable with any Governmental
Authority or other third party all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents,
(ii) obtaining and maintaining all approvals, consents, registrations, permits, authorizations and other confirmations required to be obtained from any Governmental Authority or other third
party that are necessary, proper or advisable to consummate the Transactions, (iii) executing and delivering all documents required to be executed and delivered at each of the Closings and
(iv) vigorously defending or contesting any litigation or administrative proceeding, and seeking to have vacated, lifted, reversed or overturned any order, decree, injunction or ruling (whether
temporary, preliminary or permanent) that is in effect, and that seeks to or would prohibit, prevent, enjoin or materially restrain or delay the consummation of the Transactions. 

        (b)   The
Purchasers and the Company shall (i) promptly notify each other of any communication concerning this Agreement or the Transactions received by each of them
from any Governmental Authority and permit the other to review in advance any proposed communication concerning this Agreement, or the Transactions to any Governmental Authority; (ii) not
participate or agree to 

34

 

participate
in any meeting or discussion with any Governmental Authority in respect of any filing, investigation or other inquiry concerning this Agreement, or the Transactions unless it consults with
the other in advance and, to the extent permitted by such Governmental Authority, gives the other the opportunity to attend and participate in such meeting or discussion; and (iii) furnish each
other with copies of all correspondence, filings and communications (and memoranda setting forth the substance thereof) between such party and its Affiliates and Representatives on the one hand, and
any
Governmental Authority or members of any such authority's staff on the other hand, with respect to this Agreement and the Transactions. 

        (c)   The
Purchasers and the Company each agrees that, from and after the date hereof and prior to the Closing Date, and except as may be agreed in writing by the other
parties hereto or as may be permitted pursuant to this Agreement, it shall not, and shall not permit any of its Subsidiaries to, take any action (or agree to take any action) which could reasonably be
expected to delay the consummation of the Transactions or result in the failure to satisfy any condition to the consummation of the Transactions (it being understood and agreed that this
Section 9.3(c) shall in no event limit any party's right to terminate this Agreement in accordance with Article X). 

        (d)   Prior
to any conversion of the Notes or any exercise of the Apollo Warrants, the Company and the Majority Purchasers will determine if such conversion or exercise, as
applicable, will be subject to any filing or notification requirement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or any similar requirement of any
Governmental Authority. If such conversion or exercise, as applicable, is subject to any such requirement, the Company and the applicable Purchaser(s) will use commercially reasonable efforts to make
any required filings or notifications as soon as practicable, will observe any applicable waiting periods and will make all commercially reasonable efforts to cause the termination of any such waiting
periods or the removal of any other impediments to conversion or exercise, as applicable. The Parties will furnish to each other such information and assistance as may be necessary to ensure the
expiration of any applicable waiting period or the removal of any other impediment to the consummation of such conversion or exercise, as applicable. The Parties will keep each other informed of any
communications with any Governmental Authority with respect to the foregoing. The Majority Purchasers shall direct any proceedings, negotiations or communications with any Governmental Authority with
respect to the foregoing. 

        9.4    Reservation of Shares.    The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock solely for the purpose of issuing and selling shares of Common Stock upon exercise of the Apollo Warrants at the then current
Warrant Price (as defined in each of the Apollo Warrants), conversion of the Notes at the then current Conversion Price and pursuant to Section 9.8; and if at any time the number of shares
required to be reserved exceeds seventy-five percent (75%) of the Company's authorized but unissued shares of Common Stock, the Company shall take such corporate action as may be necessary
to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. All shares of Common Stock issued and sold upon exercise of the Apollo
Warrants, conversion of the Notes or pursuant to Section 9.8 shall be validly issued, fully paid, nonassessable and free and clear of any Liens. The Company shall use its reasonable best
efforts to cause all such shares of Common Stock to be approved for listing on the Principal Market, subject to official notice of issuance. 

        9.5    Shareholders Meeting.    The Company will take, in accordance with applicable Law
and the Company Organization Documents, all action necessary to convene a meeting of its shareholders (the "Shareholders Meeting") as promptly as practicable after the
date hereof (and in no event later than thirty (30) days after the date that the SEC has informed the Company that it has no further comments on, or does not intend to review, the Proxy
Statement), to consider and vote upon the Transactions, regardless of whether the Board of Directors of the Company determines at any time that the
Transactions are no longer advisable or recommends that the shareholders of the Company reject them or any other Adverse Recommendation Change has occurred at any time. The Board of Directors of 

35

 

the
Company shall recommend the approval of the Transactions (the "Board Recommendation"), unless permitted to make an Adverse Recommendation Change pursuant to
Section 9.7(c), and shall take all lawful action to solicit and obtain such approval by holders of a majority of the outstanding shares of Common Stock (the "Requisite Shareholder
Approval"). The Company may, and the Majority Purchasers may require the Company to, adjourn or postpone the Shareholders Meeting one or more times, unless prior to such adjournment or
postponement the Company shall have received an aggregate number of proxies sufficient for the Requisite Shareholder Approval, provided that the Company, on the one hand, and the Majority Purchasers,
on the other hand, may each only adjourn or postpone the Shareholders Meeting for no more than twenty (20) days in the aggregate. The Company shall, upon the reasonable request of the Majority
Purchasers, advise the Purchasers at least on a daily basis on each of the last ten (10) Business Days prior to the date of the Shareholders Meeting as to the aggregate tally of proxies
received by the Company with respect to the Requisite Shareholder Approval. Without the prior written consent of the Majority Purchasers, the approval of the Transactions shall be the only matter
which the Company shall propose to be acted on by the shareholders of the Company at the Shareholders Meeting. Without limiting the generality of the foregoing, the Company agrees that its obligations
pursuant to this Section 9.5 shall not be affected by the commencement, proposal, disclosure or communication to the Company or any other Person of any Competing Proposal. 

        9.6    Proxy.    

        (a)   The
Company shall prepare and file with the SEC, as promptly as practicable after the date of this Agreement but in no event later than five (5) Business Days
after the date of this Agreement, a proxy statement in preliminary form relating to the Transactions (such proxy statement, including any amendment or supplement thereto, the "Proxy
Statement"). The Company shall file with the SEC the definitive Proxy Statement and shall cause the mailing of the definitive Proxy Statement to the shareholders of the Company to occur
on the twelfth (12th) day (or, if such day is not a Business Day, the first Business Day subsequent to such calendar day) immediately following the filing of the preliminary Proxy
Statement with the SEC, or if not practicable, including as a result of outstanding comments from the SEC, then as promptly as practicable thereafter. The Company agrees, as to it and its
Subsidiaries, that the Proxy Statement will comply in all material respects with the applicable provisions of the Exchange Act and the rules and regulations thereunder. Each of the Company and the
Purchasers covenants and agrees, as to it and its Affiliates, that none of the information supplied by it or any of its Affiliates for inclusion or incorporation by reference in the Proxy Statement
will, at the date of mailing to shareholders of the Company and at the time of the Shareholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Board of Directors of the Company shall make the
Board Recommendation with respect to the approval of the Transactions, unless permitted to make an Adverse Recommendation Change pursuant to Section 9.7(c), and shall include such
recommendation in the Proxy Statement. 

        (b)   The
Company shall afford the Purchasers a reasonable opportunity to review and comment on the Proxy Statement prior to its filing with the SEC, including any amendments
or supplements thereto, and shall give due consideration to all the reasonable additions, deletions or changes suggested thereto by the Purchasers. The Company will promptly advise the Purchasers if
at any time prior to the effective time of such Proxy Statement, the Company shall obtain knowledge of any facts that might make it necessary to amend or supplement the Proxy Statement in order to
make the statements contained therein not misleading or to comply with applicable Law. The Company shall promptly notify the Purchasers of the receipt of all comments from the SEC with respect to the
Proxy Statement and of any request by the SEC for any amendment or supplement thereto or for additional information and shall promptly provide to the Purchasers copies of all correspondence between
the Company and/or any of its Representatives and the SEC with respect to the Proxy Statement and shall provide the 

36

 

Purchasers
an opportunity to review and comment on any such amendment, supplement or response to the SEC and shall give due consideration to all the reasonable additions, deletions or changes
suggested thereto by the Purchasers. Each Purchaser and the Company shall use its reasonable best efforts promptly to provide responses to the SEC with respect to all comments received on the Proxy
Statement from the SEC. To the extent required by applicable Law in the good faith judgment of the Company, the Company shall, as promptly as reasonably practicable, prepare, file and distribute to
its shareholders any supplement or amendment to the Proxy Statement if any event shall occur that requires such action. 

        9.7    Non-Solicitation.    

        (a)   Subject
to Section 9.7(b), the Company hereby agrees that, from the date of this Agreement until the receipt of the Requisite Shareholder Approval, the Company
will not (and will cause its Representatives and Subsidiaries not to): (x) solicit, negotiate, encourage or otherwise discuss (including continuing any current discussions or negotiations) with
any Person other than Purchasers and their affiliates and advisors, (i) the sale, directly or indirectly, of any interest in the Company or its Subsidiaries (including any debt or equity
securities, other than ordinary course issuances of equity to employees, directors, and consultants and pursuant to contractual commitments existing as of the date hereof and disclosed to the
Purchasers) or a significant portion of its assets, (ii) any other debt or equity financing of the Company or its Subsidiaries, (iii) any merger or consolidation involving the Company or
its Subsidiaries, or (iv) any recapitalization or restructuring involving the Company or its Subsidiaries (any such transaction described in clauses (i) through (iv), for purposes of
this Section, a "substitute transaction"); (y) furnish any non-public information concerning the Company or its Subsidiaries to any Person, other than
Purchasers and their affiliates and advisors, for the purpose of a substitute transaction; or (z) enter into any agreement with respect to a substitute transaction with any Person other than
Purchasers or their affiliates. In addition, the Company will (and will cause its Representatives and Subsidiaries to) (a) immediately terminate all discussions and/or negotiations with any
Person other than Purchasers which may reasonably be expected to lead to a substitute transaction and (b) immediately cease any and all work (and not engage in any such work during the period
set forth in this Section) with respect to any substitute transaction. Notwithstanding anything to the contrary in the foregoing, the Company and its Representatives shall be permitted to solicit,
negotiate with, discuss with and provide non-public information to, or in connection with, but may not sign definitive documents with respect to (or publicly disclose or take any other
action or fail to take any action that would either cause the Company to have any public disclosure obligations with respect to or that would result, or be reasonably likely to result, in any other
Person publicly disclosing) a substitute transaction with or in connection with, (a) any bank or other potential lender in connection with project finance debt funding in connection with the
Project Finance Facility, (b) one or more lease counterparties in connection with capital leases in respect of equipment for the Company's operations in connection with the Project Finance
Facility, (c) Grandhaven Energy, LLC ("Grandhaven") in connection with the Grandhaven Agreement Amendment, (d) the acquisition of additional mineral
and land interests in the Holbrooke Basin, and (e) any transaction permitted without Majority Purchaser consent under Sections 9.1(c) and 9.1(i). For the avoidance of doubt, this
Section 9.7(a) is not intended to prohibit customary public company investor relations communications or discussions by the Company or its Representatives (it being understood and agreed that
such permissible customary communications or discussions shall not be deemed to include the provision of or communication of any of the reports (or portions thereof) that have been (or will be)
prepared by or on behalf of the Purchasers or their advisors, whether before, on or after the date hereof, or any similar reports or information packages or any other information that is not otherwise
publicly disclosed). 

        (b)   At
any time after the date hereof and prior to obtaining the Requisite Shareholder Approval, the Company or its Board of Directors may (i) furnish nonpublic
information to any third party making an unsolicited Competing Proposal (provided, however, that prior to so furnishing such information, the 

37

 

Company
receives from the third party an executed Acceptable Confidentiality Agreement and all such information has previously been provided to the Purchasers or is provided to the Purchasers prior to
or substantially concurrently with the time it is provided to such third party), and (ii) engage in discussions or negotiations with such third party with respect to such Competing Proposal if
and only if: (x) such Competing Proposal did not otherwise result from a breach of this the Section 9.7, (y) such third party has submitted a Competing Proposal which the Board of
Directors of the Company determines in good faith, after consultation with its financial and legal advisors, constitutes, or could reasonably be expected to lead to, a Superior Proposal, and
(z) the Board of Directors of the Company determines in good faith, after consultation with legal counsel, that failure to take such action would be inconsistent with the directors' fiduciary
duties under applicable Law. Prior to taking any of the actions referred to in this Section 9.7(b), the Company shall notify the Purchasers orally and in writing that it proposes to furnish
non-public information and/or enter into discussions or negotiations as provided in this Section 9.7(b). 

        (c)   Except
as expressly permitted by this Section 9.7(c), the Board of Directors of the Company shall not (i) withdraw, qualify, or modify, or publicly propose
to withdraw, qualify, or modify, in a manner adverse to the Purchasers, the Board Recommendation; (ii) adopt, approve or recommend, or publicly propose to adopt, approve or recommend, any
Competing Proposal made or received after the date hereof; (iii) subject to Section 9.7(f), (A) fail to publicly recommend against any Competing Proposal within five
(5) Business Days (or the Outside Date if earlier) after Majority Purchasers so request in writing, (B) fail to publicly reaffirm the Board Recommendation within five (5) Business
Days (or the Outside Date if earlier) if requested by the Majority Purchasers in writing, or (C) fail to include the Board Recommendation in the Proxy Statement, (any of the actions described
in clauses (i), (ii), and (iii) of this Section 9.7(c), an "Adverse Recommendation Change"); or (iv) cause or permit the Company or any of its
Subsidiaries to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, investment agreement or similar definitive agreement (other than an
Acceptable Confidentiality Agreement) with respect to any Competing Proposal. Notwithstanding anything to the contrary set forth in this Agreement, at any time prior to obtaining the Requisite
Shareholder Approval, the Board of Directors of the Company shall be permitted to make an Adverse Recommendation Change with respect to a Superior Proposal, subject to compliance with
Section 9.7(d), if the Board of Directors of the Company (A) has received an unsolicited Competing Proposal (which Competing Proposal did not arise out of any breach of this
Section 9.7) that, in the good faith determination of the Board of Directors of the Company, constitutes a Superior Proposal, after having complied with, and giving effect to all of the
adjustments which may be offered by the Purchasers pursuant to, Section 9.7(d), and (B) determines in good faith, after consultation with its legal advisors, that failure to take such
action would be inconsistent with the directors' fiduciary duties under applicable Law. 

        (d)   The
Company shall not be entitled to effect an Adverse Recommendation Change as permitted under Section 9.7(c) with respect to a Superior Proposal unless
(i) the Company has provided a written notice (a "Notice of Superior Proposal") to the Purchasers that the Company intends to take such action and describing the
material terms and conditions of the Superior Proposal that is the basis of such action (including the identity of the third party making such Superior Proposal) and attaching the most current
version, in an unredacted form, of any proposed agreement pursuant to which such Superior Proposal is proposed to be consummated, (ii) during the four (4) Business Day period following
the Purchasers' receipt of the Notice of Superior Proposal, the Company shall, and shall cause its Representatives to, negotiate with the Purchasers in good faith (to the extent the Purchasers desire
to negotiate) to make such adjustments to the terms and conditions of this Agreement and the other agreements contemplated hereby so that such Superior Proposal ceases to constitute a Superior
Proposal; and (iii) following the end of the four (4) Business Day period, the Board of Directors of the Company shall have determined in good faith, taking into account any changes to
this Agreement and the other agreements contemplated hereby proposed in writing by the 

38

 

Purchasers
in response to the Notice of Superior Proposal or otherwise, that the Superior Proposal giving rise to the Notice of Superior Proposal continues to constitute a Superior Proposal. Any
material amendment to the financial terms or any other material amendment of such Superior Proposal shall require a new Notice of Superior Proposal and the Company shall be required to comply again
with the requirements of this Section 9.7(d). 

        (e)   From
and after the date hereof, the Company shall, as promptly as reasonably practicable (and in any event within two (2) Business Days of receipt), advise the
Purchasers of receipt by the Company of any Competing Proposal or any request for non-public information in connection with any Competing Proposal, the status and material terms and
conditions of any such Competing Proposal or request (including the identity of the third party making such Competing Proposal) and a unredacted copy of any documentation, proposal or written
communication relating to such Competing Proposal or request, and shall as promptly as reasonably practicable (and in any event within two (2) Business Days of receipt) advise the Purchasers of
any material amendments to any such Competing Proposal or request. 

        (f)    Nothing
in this Section 9.7 shall prohibit the Board of Directors of the Company from taking and disclosing to the Company's stockholders a position contemplated
by Rule 14e-2(a), Rule 14d-9 or Item 1012(a) of Regulation M-A promulgated under the Exchange Act, or other Law, if the Board of
Directors of the Company, after consultation with outside legal counsel, determines in good faith that the failure to so disclose such position would reasonably be expected to be inconsistent with the
directors' exercise of their fiduciary obligations under Law. 

        (g)   For
purposes of this Agreement: 

        (i)    "Competing
Proposal" means any bona fide written proposal or offer relating to (i) the sale, directly or indirectly, of any equity or
debt securities of the Company or its Subsidiaries or a significant portion of its assets or (ii) any other debt or equity financing of the Company or its Subsidiaries, (other than, in either
such case, those described in the last sentence of Section 9.7(a) or from the Purchasers or their Affiliates), that, in either such case, would result in gross proceeds to the Company or its
Subsidiaries of not less than the gross proceeds receivable in connection with this Agreement, the agreements contemplated hereby, and in the transactions hereby and thereby. 

        (ii)   "Superior
Proposal" means any Competing Proposal that (A) (x) if involving Common Stock or Equity-based Securities, has a per share
price or implied per share price per share of Common Stock greater than the per share price implied by the Notes and the Warrants, taken together, and (y) if involving any debt securities, has
an interest rate less than the interest rate of the Notes (including a cash portion thereof less than the cash portion of the Notes), a maturity date no shorter than the Notes, a ranking no higher
than the Notes, and a set of covenants no more restrictive than those of the Notes, and (B) is on terms that the Board of Directors of the Company determines in good faith, after consultation
with the Company's financial and legal advisors, and considering such factors as the Board of Directors of the Company considers in good faith to be appropriate (including the conditionality,
certainty of financing and the timing and likelihood of consummation of such proposal on the terms proposed), are more favorable to the Company and its shareholders from a financial point of view than
the Transactions (after giving effect to all adjustments to the terms thereof which may be offered by the Purchasers in writing (including pursuant to Section 9.7(d)). 

        9.8    Additional Common Stock Issuances.    If the final Definitive Feasibility Study
indicates that the estimated total Capital Costs (the "DFS Estimate") for the Holbrook Project exceeds the Current 

39

 

Capital
Estimate by 2.5% or more, then the Company shall issue to the Notes Purchasers at Closing, and for no additional consideration other than the Purchase Price: 

        (a)   if
the DFS Estimate is between 2.5% and 5.0% higher than the Current Capital Estimate, 3,993,095 shares of Common Stock; or 

        (b)   if
the DFS Estimate is between 5.0% and 10.0% higher than the Current Capital Estimate, 7,189,275 shares of Common Stock. 

        (c)   In
the event that the Company shall, after the date of this Agreement (i) issue, or declare a dividend or make a distribution on its shares of its Common Stock
in, shares of its Common Stock or Options or Convertible Securities (including without limitation the issuance of Common Stock, Options or other equity securities under a Benefits Plan (whether or not
in effect as of the date hereof)), (ii) subdivide or reclassify the outstanding shares of its Common Stock into a greater number of shares, or (iii) combine or reclassify the outstanding
shares of its Common Stock into a smaller number of shares, then the number of shares of Common Stock receivable by the Purchasers pursuant to subsections (a) and (b) shall be
appropriately adjusted such that the Purchasers receive such number of shares of Common Stock in the aggregate that would entitle the Purchasers to 3.6% and 6.3%, respectively, of the outstanding
voting power of the Company for the election of directors (accounting for such issuance and the issuance of the Notes to the Purchasers but not any exercise of any Options (including the Apollo
Warrants) or other Convertible Securities outstanding as of the date hereof), provided that such adjustments are not required as a result of the exercise of any Option or
Convertible Security outstanding as of the date hereof. 

        9.9    Affiliate Agreement Modifications.    The Company shall use reasonable best
efforts to engage in discussions with Grandhaven for the termination of the Grandhaven Agreement in consideration for the potential issuance from the Company to Grandhaven of Options to purchase
Common Stock or Equity-based Securities, in each case on terms reasonably acceptable to the Majority Purchasers (the "Grandhaven Agreement Amendment"),
provided, for the avoidance of doubt, that the failure to enter into such a transaction with Grandhaven shall not itself be deemed to be a failure of any of the closing
conditions set forth in Article VI. 

        9.10    Off-take Agreement.    The Company shall use best efforts to enter
into additional definitive agreements with respect to off-take arrangements with customers for Potash production on the terms similar in all material respects as set forth in
Exhibit D (the "Minimum Off-Take Arrangements"), as soon as practicable. 

        9.11    Board and Observer Rights.    

        (a)   Promptly
after the date hereof, unless prohibited by applicable Law or the rules of the Principal Market (and provided that the Company shall use reasonable best efforts
to remove any such prohibitions), the Company shall appoint one representative of the Purchasers designated in writing by the Purchasers (the "Purchaser Designee") to the
Board of Directors of the Company. Until the earlier of the Closing Date and the termination of this Agreement, at each annual or special meeting (or action by written consent) of shareholders of the
Company at which directors are to be elected to its Board of Directors, the Company will nominate and use its best efforts to cause the election to its Board of Directors of the Purchaser Designee. In
the event of the death, disability, resignation or removal of the Purchaser Designee, or in the event of the failure of the Purchaser Designee to be elected, the Company's Board of Directors will
promptly appoint to the Company's Board of Directors a replacement Purchaser Designee designated by the Purchasers to fill the resulting vacancy, and such individual shall then be deemed the Purchaser
Designee for all purposes hereunder; provided that if the Purchaser Designee is removed for cause, the replacement Purchaser Designee will not be the same person who was
removed. Until the earlier of the Closing Date and the termination of this Agreement, 

40

 

the
Company's Board of Directors will not remove, or recommend to the shareholders of the Company removal of, the Purchaser Designee without the prior written consent of the Purchasers. 

        (b)   Until
the earlier of the Closing Date and the termination of this Agreement, the Purchasers shall have the right to appoint one observer on the Company's Board of
Directors (the "Board Observer") (it being understood that a Board Observer shall have all the rights (other than voting rights) of a director on the Company's Board of
Directors, including (A) the right to attend all meetings of the Company's Board of Directors as an observer, (B) the right to receive advance notice of each meeting, including such
meeting's time and place, at the same time and in the same manner as such notice is provided to the members of the Company's Board of Directors, (C) the right to receive copies of all
materials, including notices, minutes, consents and regularly compiled financial and operating data distributed to the members of the Company's Board of Directors at the same time as such materials
are distributed to the Company's Board of Directors, and shall have the same access to information concerning the business and operations of the Company, and (D) the right to discuss the
affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto to, the Company's Board of Directors, without voting). 

        (c)   At
or prior to Closing, in satisfaction of its obligations under the Investors Rights Agreement and the Company's Second Amended and Restated Articles of Incorporation
(as amended by the Certificate of Designation), the Company shall appoint four designees of the Purchasers to the Board of Directors of the Company and take all actions necessary to set the size of
its Board of Directors to nine members, provided, that if the Company has, pursuant to Section 9.1(b), added an additional director in connection with a capital-raising transaction, then the
Company shall appoint five designees of the Purchasers to the Board of Directors of the Company and take all actions necessary to set the size of its Board of Directors to eleven members. For
avoidance of doubt, from and after the Closing, the parties' obligations with respect to such director-designees shall be governed by the Investors Rights Agreement and the Company's Second Amended
and Restated Articles of Incorporation (as amended by the Certificate of Designation), and provided, further, that if, after the date hereof, there is a change in applicable Law or the rules of the
Principal Market that prohibits the rights in this subsection (c), then the Company shall use reasonable best efforts to remove such prohibitions and, if it is unsuccessful in doing so, the
Company and the Majority Purchasers will discuss in good faith amendments to this subsection (c) to remove such prohibition (it being acknowledged that in no event will the Majority Purchasers
be obligated to accept a lesser number of directors than a number equal to the Purchaser Percentage Interest multiplied by the outstanding number of directors on the board of directors of the
Company). 

        9.12    KG Default Cure.    

        (a)   If
at any time prior to the full repayment of the Karlsson Note, the Company or any of its Subsidiaries is in payment default or any other default that would entitle the
holder of the Karlsson Note to accelerate the payment of obligations thereunder or is reasonably likely to be in such default within thirty (30) days, (i) the Company shall immediately
provide the Purchasers notice thereof, (ii) the Royalty Purchasers shall have the right (but not the obligation), assuming the default is not cured within the subsequent fifteen
(15) days, to purchase either (A) Common Stock or (B) notes issued by the Company or its Subsidiaries, in each case on the terms set forth in this Section 9.12 and for an
aggregate amount sufficient to (in the Majority Purchasers' sole discretion) either (x) pay off the Karlsson Note in full (including any principal, interest, expenses, penalties or any other
amounts outstanding) or (y) pay off such lesser amount as would be necessary to avoid or cure the default or anticipated default (as determined in the Majority Purchasers' reasonable
discretion) and (iii) the Company shall use such proceeds for such purpose. For the avoidance of doubt, this Section 9.12 (and the Royalty Purchasers' rights hereunder) shall apply (and
remain in effect) prior to, at or after the Closing until such time (if any) that this Agreement is terminated pursuant to Article X hereof. 

41

 

        (b)   If,
pursuant to Section 9.12(a), the Royalty Purchasers elect to purchase Common Stock, such Common Stock shall be issued to the Royalty Purchasers or their
respective designees at a per-share price equal to the lesser of (i) the then-applicable Conversion Price for the Notes (whether or not the Notes have actually been
issued) or (ii) the arithmetic average of the volume-weighted average price ("VWAP") of the Common Stock for the ten (10) Trading Day period immediately
preceding the date of such purchase. Such Common Stock, when issued, shall be duly and validly authorized and issued, fully paid and non-assessable and free and clear of any Liens,
restriction on voting or transfer or any other claim of any third party. In the event of any purchase of Common Stock pursuant to this Section 9.12(b), the Company shall enter into a
registration rights agreement with respect to such shares of Common Stock with the Royalty Purchasers, on the same terms as those set forth in Articles IV and V of the Investors Rights
Agreement, which registration rights agreement shall terminate upon the Closing. 

        (c)   If,
pursuant to Section 9.12(a), the Royalty Purchasers elect to purchase notes issued by the Company or its Subsidiaries, such notes will be nonconvertible and
issued on terms set forth in Schedule C-3 and such other terms customary for financings of such type and otherwise reasonably requested by the Majority Purchasers. 

        9.13    Preemptive Rights.    

        (a)   The
Royalty Purchasers will have the preemptive rights set forth in this Section 9.13 with respect to any issuance of any Common Stock or Equity-based Securities
by the Company or any of its Subsidiaries that are issued prior to the Closing (any such issuance other than those described in clauses (i), (ii) and (iii) below, a
"Preemptive Rights Issuance"), except for (i) issuances to employees, directors and consultants pursuant to and in accordance with stock incentive plans of the
Company that were publicly filed with the SEC prior to the date hereof (provided that any such issuances are made in accordance with the terms, conditions and limitations
of such plans as they existed as of the date of hereof and without effect to any amendments or other modifications thereof after the date hereof unless approved by the Majority Purchasers) or in
accordance with written agreements set forth in Schedule 9.13 (provided that any such issuances are made in accordance with the terms, conditions and limitations of
such agreements as they existed as of the date hereof and without effect to any amendments or other modifications thereof after the date hereof unless approved by the Majority Purchasers),
(ii) issuances of shares of Common Stock as consideration in any merger approved pursuant to Section 9.1, or (iii) issuances of shares of Common Stock pursuant to and in
accordance with warrant agreements entered into (and publicly filed with the SEC) prior to the date hereof and previously disclosed to the Purchasers (provided that any
such issuances are made in accordance with the terms, conditions and limitations of such warrant agreements as they existed as of the date hereof and without effect to any amendments or other
modifications thereof after the date hereof unless approved by the Majority Purchasers). 

        (b)   If
the Company or any of its Subsidiaries at any time or from time to time, prior to the Closing, effects one or more Preemptive Rights Issuance, the Company shall give
written notice to each Royalty Purchaser a reasonable period in advance of each such issuance (but in no event later than ten (10) days prior to such issuance), which notice shall set forth the
number and type of the securities to be issued, the issuance date, the offerees or transferees, the price per security, and all of the other terms and conditions of such issuance, which shall be
deemed updated by delivery of the final documentation for such issuance to each Royalty Purchaser. With respect to each such Preemptive Rights Issuance, the Royalty Purchasers shall have the right,
exercisable (by written notice to the Company (the "Preemptive Rights Notice")) at any time at or within thirty (30) days following the Closing, to elect to
purchase (or designate an Affiliate thereof (including, without limitation, another Royalty Purchaser) to purchase) a number of securities specified in such Preemptive Rights Notice (which number may
be any number up to but not exceeding such Royalty Purchaser's pro rata portion of the Preemptive Rights Cap Amount applicable to such Preemptive Rights
Issuance), on the same 

42

 

terms
and conditions as such Preemptive Rights Issuance (it being understood and agreed that (i) the price per security that the Royalty Purchasers shall pay shall be the same as the price per
security set forth in the Preemptive Rights Notice, and (ii) the Royalty Purchasers shall not be required to comply with any terms, conditions, obligations or restrictions (including, without
limitation, any non-compete, standstill or other limitations but excluding any remaining period of a transfer or lock-up restriction applicable at such time to other purchasers
in such Preemptive Rights Issuance) not directly necessary for the effectuation of the sale or issuance of such securities). The Royalty Purchasers shall, by notice to the Company, within thirty
(30) days after the Closing, indicate which pre-Closing Preemptive Rights Issuances the Royalty Purchasers are electing to exercise their preemptive rights with respect to and the
number of securities the Royalty
Purchasers are electing to purchase with respect to such pre-Closing Preemptive Rights Issuances. If the Royalty Purchasers exercise their preemptive rights hereunder with respect to one
or more Preemptive Rights Issuances, the Company shall (or shall cause such Subsidiary to) issue to the Royalty Purchasers (or their designated Affiliates) the number of securities specified in the
applicable Preemptive Rights Notices as soon as reasonably practicable thereafter. For the avoidance of doubt, in the event that the issuance of Common Stock or Equity-based Securities in a Preemptive
Rights Issuance involves the purchase of a package of securities that includes Common Stock or Equity-based Securities and other securities in the same Preemptive Rights Issuance, each Royalty
Purchaser shall have the right to acquire its applicable pro rata portion of such other securities, together with its applicable  pro rata portion of such
Common Stock or Equity-based Securities, in the same manner described above (as to amount, price and other terms). 

        (c)   The
election by the Royalty Purchasers not to exercise its preemptive rights hereunder with respect to any Preemptive Rights Issuance shall not affect its right (other
than in respect of a reduction in the Purchaser Percentage Interest) as to any other Preemptive Rights Issuances. Each Royalty Purchaser shall be entitled to deliver its own notices and make its own
elections for purposes of this Section 9.13, and the non-exercise by any Royalty Purchaser shall not affect the rights of any other Royalty Purchaser under this Section 9.13. 

        9.14    Standstill.    Without the prior consent of the Company, the Purchasers shall not
at any time until the one-year anniversary of the Closing, purchase or acquire any outstanding equity securities of the Company (including any Options or Convertible Securities of the
Company) (it being understood and agreed that, for the avoidance of doubt, such restriction shall not apply to any purchase or acquisition by the Purchasers pursuant to and in accordance with
Sections 9.8, 9.12 and 9.13, pursuant to the exercise or conversion of the Apollo Warrants or the Notes, pursuant to the Investors Rights Agreement (including Section 2.1 thereof) or as
otherwise contemplated by the Transactions). 

        9.15    Certain Tax Matters.    

        (a)   The
Company shall not take any Tax position on any Tax return, in any Tax Proceeding, or otherwise in respect of the Notes, the other Securities or the Royalty without
the prior written consent of the Majority Purchasers, which consent will not be unreasonably withheld, conditioned or delayed. 

        (b)   The
Company shall provide to the Purchasers such cooperation, documentation and information relating to the Company, the other Securities, the Royalties and the
Transactions as the Purchasers may reasonably request in connection with (i) filing any Tax return, amended Tax return or claim for refund, (ii) determining a liability for Taxes or a
right to refund of Taxes, or (iii) conducting any Tax Proceeding. The Company shall make its employees reasonably available at the Company's cost to provide an explanation of any documents or
information provided pursuant to this Section 9.15(b). 

        (c)   Except
as required by applicable Law, all payments made by the Company hereunder, pursuant to the Securities or pursuant to the Royalty Agreement shall be made free and
clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other Taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (together with any interest, 

43

 

additions
to Tax and penalties applicable thereto, "Indemnified Taxes"). If any Indemnified Taxes are required to be withheld from any amounts payable by the Company to
the Purchasers hereunder, pursuant to the Securities or pursuant to the Royalty Agreement, the amounts so payable to the Purchasers shall be increased to the extent necessary to yield to the
Purchasers (after payment of all Indemnified Taxes) interest or any such other amounts payable hereunder or pursuant to the Securities at the rates or in the amounts specified in this Agreement or by
the terms of the Securities, as applicable. Whenever any Indemnified Taxes are payable by the Company, the Company shall timely pay such Indemnified Taxes and shall send to the Purchasers a certified
copy of an original official receipt received by the Company showing payment thereof. If the Company fails to pay any Indemnified Taxes when due to the appropriate Taxing Authority or fails to remit
to the Purchasers the required receipts or other required documentary evidence, the Company shall indemnify the Purchasers for any incremental Taxes, interest or penalties that may become payable by
the Purchasers as a result of any such failure. 

        9.16    Benefit Plans.    The Company agrees that (x) from the date hereof through
the Closing Date (and thereafter), it shall not take any action to accelerate the vesting of, or otherwise provide a benefit to a holder of, an outstanding equity or equity-based compensation award as
a result of any of the transactions contemplated hereby, including due to any such transaction constituting a Change in Control or term of similar import (within the meaning of the governing documents
applicable to such award) and (y) between the date hereof and the Closing Date, it shall obtain waivers (in a form satisfactory to the Majority Purchasers) from the Company employees party to
the agreements listed on Schedule 9.16 to the effect that none of the transactions contemplated hereby shall constitute a Change in Control for purposes of the applicable agreement. 

        9.17    FCPA.    As soon as practicable after the date hereof, the Company shall adopt a
compliance program for the FCPA, which compliance program shall be consistent with the prevailing standards of other companies operating in the Company's industry and reasonably acceptable to the
Majority Purchasers. 

        9.18    Supplemental Payment.    In the event that the Company or its Subsidiaries become
liable for a Supplemental Payment, the Company shall pay to the Notes Purchasers and the Royalty Purchasers an amount of cash (the "Supplemental Payment Gross Up"),
allocated among the Notes Purchasers and the Royalty Purchasers in the manner specified by the Majority Purchasers (which manner shall be intended to reflect the relative percentage interests of
ownership of Company securities of the Purchasers and their ultimate investors), equal to an amount that if such amount of the Supplemental
Payment Gross Up is divided by the sum of (i) such amount of the Supplemental Payment Gross Up and (ii) the amount of the Supplemental Payment, would represent a percentage that is equal
to the Investor Percentage Interest (as defined in the Investors Rights Agreement) at such time. Any such payment of the Supplemental Payment Gross Up shall be made at the same time as the payment of
the Supplemental Payment. 

        9.19    Further Assurances.    After the Closing, each of the Company, the Guarantors and
each Purchaser agrees to take such further actions and to execute, acknowledge and deliver all such further documents as are reasonably requested by the other Parties for carrying out the purposes of
this Agreement or of any document delivered pursuant to this Agreement or the Transactions. Without limitation of the foregoing, upon the request of a Purchaser, the Company will enter into a
management rights agreement, in customary form and reasonably acceptable to the Company. 

44

 

 

 
 

  ARTICLE X    
    
    TERMINATION    
    

        10.1    Right to Terminate.    Notwithstanding anything to the contrary set forth in this
Agreement, this Agreement may be terminated and the Transactions abandoned at any time prior to the Closing: 

        (a)   by
mutual written consent of the Company and the Majority Purchasers; or 

        (b)   by
the Company or the Majority Purchasers, if: 

        (i)    the
Closing shall not have been consummated on or before December 31, 2013 (the "Outside Date");
provided, however, that neither the Company, on the one hand, nor the Majority Purchasers, on the other hand, shall be entitled to terminate
this Agreement under this Section 10.1(b)(i) if such Party's breach of any provision of this Agreement shall have been the cause of, or otherwise resulted in, the failure of the Closing to
occur on or before the Outside Date; or 

        (ii)   a
court of competent jurisdiction or other Governmental Authority shall have issued a final, non-appealable order, decree or ruling permanently restraining,
enjoining or otherwise prohibiting the sale and purchase of the Notes or the other Transactions; provided, that the Party seeking to terminate this Agreement pursuant to
this Section 10.1(b)(ii)) shall have complied in all material respects with its obligations in Section 9.3; or 

        (iii)  the
Shareholders Meeting (including any permitted adjournments or postponements thereof) shall have been held and completed and the Requisite Shareholder Approval
shall not have been obtained at such Shareholders Meeting (or at any adjournment or postponement thereof, if applicable); or 

        (c)   by
the Majority Purchasers, if the Company shall have breached any of its representations or warranties in this Agreement or failed to perform any of its covenants in
this Agreement such that the conditions set forth in Sections 6.1 or 6.2 would not be capable of being satisfied on such date if such date was the Closing Date, and such breach or failure to
perform shall not have been cured or waived in writing prior to the earlier of (i) fifteen (15) days following notice of such breach or failure to the Company and (ii) the Outside
Date; provided, that Majority Purchasers shall not have the right to terminate this Agreement pursuant to this Section 10.1(c) if any Purchaser is then in material
breach of any of its representations or warranties in this Agreement or has failed to perform in any material respect any of its covenants in this Agreement; or 

        (d)   by
the Company, if any Purchaser shall have breached any of its representations or warranties in this Agreement or failed to perform any of its covenants in this
Agreement such that the conditions set forth in Sections 5.1 or 5.2 would not be capable of being satisfied on such date if such date was the Closing Date, and such breach or failure to perform
has not been cured or waived in writing prior to the earlier of (i) fifteen (15) days following notice of such breach or failure to the Purchasers and (ii) the Outside Date;
provided, that the Company shall have no right to terminate this Agreement pursuant to this Section 10.1(d) if the Company is then in material breach of any of its
representations or warranties in this Agreement or has failed to perform in any material respect any of its covenants in this Agreement; or 

        (e)   by
the Majority Purchasers, if prior to obtaining the Requisite Shareholder Approval, the Board of Directors of the Company shall have made an Adverse Recommendation
Change or the Company has materially breached its obligations under Section 9.7. 

        10.2    Effect of Termination.    In the event that the Closing Date does not occur as a
result of any Party hereto exercising its rights to terminate this Agreement pursuant to this Article X, then this Agreement shall be null and void and, except as otherwise expressly provided
herein (including as 

45

 

provided
for in Section 10.3), no Party shall have any rights or obligations under this Agreement, except that nothing herein shall relieve any Party from liability for any wrongful failure or
refusal to perform or observe in any material respect any agreement or covenant contained herein. In the event the termination of this Agreement results from the wrongful failure or refusal of any
Party to perform in any material respect any agreement or covenant herein, then the other Party shall be entitled to all remedies available at law or in equity and shall be entitled to recover court
costs and reasonable attorneys' fees in addition to any other relief to which such Party may be entitled. In the event that a Party wrongfully terminates or repudiates this Agreement or wrongfully
fails to consummate the Transactions, the remedies available to the other Party in equity shall include specific performance as set forth in Section 26.14 of this Agreement and such other
remedies as may be available to the other Party at Law. 

        10.3    Fees and Expenses.    Except as otherwise specifically provided herein, each
Party hereto is responsible for all costs and expenses incurred by it in connection with this Agreement, whether or not the Transactions are consummated. In the event that this Agreement is terminated
(a) by any Party pursuant to Section 10.1(b)(i) and, at the time of such termination, the Requisite Shareholder Approval has not been obtained; (b) by any Party pursuant to
Section 10.1(b)(iii); or (c) by the Majority Purchasers, pursuant to Section 10.1(c) or Section 10.1(e), then the Company shall promptly (and in no event later than two
(2) Business Days following such termination) (x) reimburse to the Purchasers or any Affiliates of the Purchasers designated by the Majority Purchasers all Purchaser Expenses, to the
extent not previously reimbursed, and (y) pay to the Royalty Purchasers (in proportion to the percentage specified opposite each such Royalty Purchaser's name in Schedule A) a fee of
$7.5 million (the "Company Termination Fee"), in the case of each of (x) and (y) by wire transfer of immediately available funds to an account or
accounts as directed by the Purchasers. 

        10.4    Amendment.    This Agreement may be amended by the parties hereto whether before
or after the Requisite Shareholder Approval is obtained; provided, however, that after the Requisite Shareholder Approval is obtained, no
amendment may be made that by Law, requires further approval by shareholders unless such further approval is first obtained. This Agreement may not be amended except by an instrument in writing signed
by the parties hereto. 

        10.5    Waiver.    At any time, any Party hereto may, to the extent permitted by
applicable Law, (a) extend the time for the performance of any obligation or other act of any other Party hereto, (b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the Party or Parties to be bound thereby. 

 
 

  ARTICLE XI    
    
    INDEMNIFICATION    
    

        11.1    Purchaser Indemnification.    From and after the Closing, the Purchasers shall,
on a several but not joint basis, indemnify, defend and hold harmless the Company and its Subsidiaries (and the officers, directors, employees, partners, members and Affiliates of each of the
foregoing) from and against all Damages incurred or suffered by such Persons: 

        (a)   caused
by or arising out of or resulting from any Purchaser's breach of any of its covenants or agreements contained in Article IX; or 

        (b)   caused
by or arising out of or resulting from any breach of any representation or warranty made by a Purchaser contained in Article VIII of this Agreement, as of
the Closing Date, as if made on such date, except for any representation and warranty which speaks as of a particular date, in which case, as of such particular date, or in the certificate delivered
by such Purchaser at Closing pursuant to Section 5.3; 

46

 

even
if such Damages are caused in whole or in part by the negligence (whether sole, joint, or concurrent), strict liability, or other legal fault of any Indemnified Person, but excepting in each case
Damages against which the Company would be required to indemnify a Purchaser (or related Indemnified Person) under Section 11.2(b) at the time the claim notice is presented by the Company.
"Damages" for purposes of this Article XI, means the amount of any liability, loss (including diminution of value), cost, expense, claim, award, or judgment
incurred or suffered by any Indemnified Person arising out of or resulting from the indemnified matter, whether attributable to personal injury or death, property damage, contract claims, torts or
otherwise including reasonable fees and expenses of attorneys, consultants, accountants, or other agents and experts reasonably incident to matters
indemnified against, and the costs of investigation and/or monitoring of such matters, and the costs of enforcement of the indemnity. 

        11.2    Company Indemnification.    From and after the Closing, the Company shall
indemnify, defend and hold harmless each Purchaser and its Affiliates (and the officers, directors, employees, partners and members of each of the foregoing) against and from all Damages incurred or
suffered by such Persons: 

        (a)   caused
by or arising out of or resulting from the Company or its Subsidiary's breach of any of the Company's covenants or agreements contained in Article IX; 

        (b)   caused
by or arising out of or resulting from any breach of any representation or warranty made by the Company contained in Article VII of this Agreement, as of
the Closing Date, as if made on such date, except for any representation and warranty which speaks as of a particular date, in which case, as of such particular date, or in the certificate delivered
by the Company at Closing pursuant to Section 6.3(a); 

        (c)   caused
by or arising out of or resulting from any Proceeding brought by any shareholders of the Company (including any derivative actions), any Governmental Authorities
or any other third party relating to the Company's authorization and execution of this Agreement or any agreement or instrument contemplated by this Agreement or the performance of the Transactions;
or 

        (d)   solely
until such time as the Notes have been fully converted into Common Stock, caused by or arising out of in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations thereunder or the consummation of the
Transactions, (ii) the use of the proceeds of the Notes purchased hereunder, including the development and operation of the Holbrook Project, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the Company or any of its Subsidiaries, or any Environmental Liability related in any way to the Company or any of its
Subsidiaries, or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, 

even
if such Damages are caused in whole or in part by the negligence (whether sole, joint, or concurrent), strict liability, or other legal fault of any Indemnified Person, but excepting in each case
Damages against which the Purchasers would be required to indemnify the Company under Section 11.1(a) at the time the claim notice is presented by the Purchasers. 

        11.3    Indemnification Actions.    All claims for indemnification under
Sections 11.1 and 11.2 shall be asserted and resolved as follows: 

        (a)   For
purposes of this Article XI, the term "Indemnifying Person" when used in connection with particular Damages shall mean the Person
having an obligation to indemnify another Person 

47

 

or
Persons with respect to such Damages pursuant to this Article XI, and the term "Indemnified Person" when used in connection with particular Damages shall mean a
Person having the right to be indemnified with respect to such Damages pursuant to this Article XI. 

        (b)   To
make a claim for indemnification under Sections 11.1 or 11.2, an Indemnified Person shall notify the Indemnifying Person of its claim, including the specific
details of and specific basis under this Agreement for its claim (the "Claim Notice"). In the event that the claim for indemnification is based upon a claim by a third
Person against the Indemnified Person (a "Claim"), the Indemnified Person shall provide its Claim Notice promptly after the Indemnified Person has actual knowledge of the
Claim and shall enclose a copy of all papers (if any) served with respect to the Claim; provided, that the failure of any Indemnified Person to give notice of a Claim as
provided in this Section 11.3 shall not relieve the Indemnifying Person of its obligations under Section 11.1 or 11.2 except to the extent such failure materially prejudices the
Indemnifying Person's ability to defend against the Claim. In the event that the claim for indemnification is based upon an inaccuracy or breach of a representation, warranty, covenant or agreement,
the Claim Notice shall specify the representation, warranty, covenant or agreement that was inaccurate or breached. 

        (c)   In
the case of a claim for indemnification based upon a Claim, the Indemnifying Person shall have thirty (30) days from its receipt of the Claim Notice to notify
the Indemnified Person whether it admits or denies its liability to defend the Indemnified Person against such Claim under this Article XI. If the Indemnifying Person does not notify the
Indemnified Person within such thirty (30) day period regarding whether the Indemnifying Person admits or denies its liability to defend the Indemnified Person, the Damages for which the
Indemnified Person is seeking indemnity shall be conclusively deemed a liability of the Indemnifying Person hereunder. The Indemnified Person is authorized, prior to and during such thirty
(30) day period, to file any motion, answer or other pleading that it shall deem necessary or appropriate to protect its interests or those of the Indemnifying Person and that is not
prejudicial to the Indemnifying Person. 

        (d)   If
the Indemnifying Person admits its liability to indemnify the Indemnified Person, it shall have the right and obligation to diligently defend, at its sole cost and
expense, the Claim. The Indemnifying Person shall have full control of such defense and proceedings, including any compromise or settlement thereof. If requested by the Indemnifying Person, the
Indemnified Person agrees to cooperate in
contesting any Claim, which the Indemnifying Person elects to contest (provided, however, that the Indemnified Person shall not be required to
bring any counterclaim or cross-complaint against any Person). The Indemnified Person may participate in, but not control, any defense or settlement of any Claim controlled by the Indemnifying Person
pursuant to this Section 11.3(d). An Indemnifying Person shall not, without the written consent of the Indemnified Person, settle any Claim or consent to the entry of any judgment with respect
thereto that (i) does not include, in the case of a settlement, an unconditional written release of the Indemnified Person from all liability in respect of such Claim or (ii) may
materially and adversely affect the Indemnified Person (other than as a result of money damages covered by the indemnity). 

        (e)   If
the Indemnifying Person does not admit its liability to indemnify the Indemnified Person or admits its liability, but fails to diligently defend or settle the Claim,
then the Indemnified Person shall have the right to defend against the Claim (at the sole cost and expense of the Indemnifying Person, if the Indemnified Person is entitled to indemnification
hereunder), with counsel of the Indemnified Person's choosing, subject to the right of the Indemnifying Person to admit its liability to indemnify the Indemnified Person and assume the defense of the
Claim at any time prior to settlement or final determination thereof. If the Indemnifying Person has not yet admitted its liability to indemnify the Indemnified Person, the Indemnified Person shall
send 

48

 

written
notice to the Indemnifying Person of any proposed settlement and the Indemnifying Person shall have the option for ten days following receipt of such notice to (i) admit in writing its
liability for indemnification with respect to such Claim and (ii) if liability is so admitted, reject the proposed settlement. 

        11.4    Limitations.    

        (a)   The
representations and warranties of the parties in Articles VII and VIII, and the corresponding representations and warranties given in the certificates
delivered at the Closing pursuant to Sections 5.3 and 6.3(a), as applicable, shall survive the Closing for a period of eighteen (18) months, except that (i) the representations
and warranties of the Company contained in Section 7.1 (Organization; Power and Authority), 7.2 (Authorization, Etc), 7.3 (Execution; Due Authority); 7.4 (No Conflicts); 7.5 (Consents,
Approvals or Waivers); 7.7(b) (Compliance with Law) and 7.22 (Taxes) (collectively, the "Fundamental Representations") shall survive the Closing indefinitely, and the
representations and warranties of the Company contained in Section 7.8 (License and Permits) and 7.20 (Environmental Matters) shall survive the Closing for three (3) years. The covenants
in this Agreement shall survive the Closing without time limit except as may otherwise be expressly provided herein. Representations, warranties, covenants and agreements shall be of no further force
and effect after the date of their expiration; provided, that there shall be no termination of any bona fide claim asserted pursuant to this
Agreement with respect to such a representation, warranty, covenant, or agreement prior to its expiration date. Subject to the foregoing, all representations and warranties contained herein shall
survive the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless
of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. 

        (b)   The
indemnities in Sections 11.1(b) and 11.2(b) shall terminate as of the termination date of each respective representation or warranty that is subject to
indemnification, except in each case as to matters for which a Claim Notice for indemnity has been delivered to the Indemnifying Person on or before such termination date. 

        (c)   Notwithstanding
anything to the contrary in this Agreement, for purposes of determining whether a representation or warranty has been breached for purposes of this
Article XI, each representation and warranty set forth in Article VII and Article VIII, shall be read without regard to and without giving effect to any "material," "materiality,"
"Material Adverse Effect", or similar qualifications, that may be contained in any such representation or warranty. 

        (d)   The
Company shall not have any liability for any Damages under Section 11.2(b), except for the Fundamental Representations, until the aggregate of all such claims
result in total Damages which are incurred or suffered by the Purchasers (or their related Indemnified Persons) that exceed $1,000,000 (the "Threshold"), in which case the
Purchasers shall be entitled to indemnification for all Damages incurred; provided, however, that the aggregate liability of the Company
pursuant to Section 11.2(b), except for the Fundamental Representations, shall not be in excess of an aggregate amount of $20,000,000 (the "Cap"). 

        (e)   The
Purchasers shall not have any liability for any Damages arising under Section 11.1(b) until the aggregate of all such claims result in total Damages which are
incurred or suffered by the Company that exceeds the Threshold, in which case the Company shall be entitled to indemnification for all Damages incurred; provided,
however, that the aggregate liability of the Purchasers pursuant to Section 11.1(b) shall not be in excess of an aggregate amount of the Cap. 

        (f)    If
any Damages sustained by an Indemnified Person are covered by an insurance policy or an indemnification, contribution or similar obligation of another Person (other
than an Affiliate of such 

49

 

Indemnified
Person), both the Indemnified Person and the Indemnifying Person shall use commercially reasonable efforts to collect such insurance proceeds or indemnity, contribution or similar
payments. The amount of any Damages subject to indemnification shall be reduced by the amounts recoverable under applicable insurance policies or an indemnification, contribution or similar obligation
of another Person (other than an Affiliate of such Indemnified Person) with respect to claims related to such Damages (net of (i) any increase in premiums, (ii) retroactive premiums,
(iii) premium adjustments or (iv) any deductible incurred in obtaining such proceeds) and if any Indemnified Person receives such insurance proceeds or indemnity, contribution or similar
payments after the settlement of any indemnification claim, such Indemnified Person shall refund to the Indemnifying Party or parties the amount of such insurance proceeds or indemnity, contribution
or similar payments, up to the amount received in connection with such indemnification claim. It is the intention of the parties hereto that no insurer or third party shall be entitled to any benefit
or right it would not be entitled to receive in the absence of this Section 11.4(f). 

        (g)   Notwithstanding
anything to the contrary contained in this Agreement (other than the final proviso in this subsection (g)) or provided for under any applicable
Law, no Indemnifying Person shall be liable under this Article XI (other than under Section 11.2(c)) to any Indemnified Person, either in contract or in tort, for any loss of profits or
any consequential, incidental, exemplary, indirect, special or punitive damages of such Indemnified Person, including loss of future revenue, income or profits, whether or not the possibility of such
damages has been disclosed to the Indemnifying Person in advance or could have been reasonably foreseen by the Indemnifying Person; provided,
however, that nothing in this Section 11.4(g) shall limit the liability of an Indemnified Person under this Article XI for any loss of profits or any
consequential, incidental, exemplary, indirect, special or punitive damages, including loss of future revenue, income or profits relating to the breach or alleged breach hereof actually paid by an
Indemnified Person to a third party; and provided further that nothing in this Section 11.4(g) shall limit any claims based on diminution of value. 

        (h)   Each
Indemnified Person shall use commercially reasonable efforts to mitigate any Damages for which such Indemnified Person seeks indemnification (it is understood that
an Indemnified Person's failure to satisfy its obligations under this Section 11.4(h) shall constitute a breach of this Agreement by such Indemnified Person but that such failure shall not
limit such Indemnified Person's rights under this Article XI and shall not limit an Indemnifying Person's rights to reduce the amount payable by such Indemnifying Person for Damages to reflect
such breach). Each Indemnified Person shall use commercially reasonable efforts to pursue against Persons who are not parties to this Agreement any and all rights or benefits (including rights to be
indemnified and held harmless or rights to be reimbursed for, or to share, certain costs, expenses or Taxes) with respect to any matter that is indemnifiable under this Article XI. 

        (i)    Notwithstanding
anything to the contrary contained in this Agreement, from and after Closing this Article XI contains the Parties' exclusive remedy against each
other with respect to breaches of the representations, warranties, covenants and agreements of the Parties contained in Articles VII, VIII and IX (other than any such covenants and agreements
that are to be performed, in part or in full, after the Closing) and the affirmations of such representations, warranties, covenants and agreements contained in the certificate delivered by each Party
at Closing pursuant to Sections 5.3 and 6.3(a), as applicable. 

        (j)    For
Tax purposes, the parties agree that all indemnification payments made hereunder constitute adjustments to the Purchase Price and shall report any payments as such
on their Tax returns, unless otherwise required by applicable law. 

50

 
 
 

  ARTICLE XII    
    
    VOTING    
    

        12.1    Voting.    On any matter presented to the shareholders of the Company for their
action or consideration at any meeting of the shareholders of the Company or for action by written consent, each Purchaser shall be entitled to the number of votes equal to the number of shares of
Common Stock into which the Notes held by such Purchaser (as of the record date for determining shareholders entitled to vote on such matter) are convertible based on the then-effective
Conversion Price (including any adjustments pursuant to Article XIII) and shall have voting rights and powers equal to the voting rights and powers of the Common Stock (except as otherwise
expressly provided herein or as required by Law, voting together with the Common Stock as a single class) and shall be entitled to notice of any such shareholders' meeting or action by written consent
in accordance with the Bylaws of the Company. Fractional votes shall not, however, be permitted and any fractional voting rights resulting from the above formula shall be rounded down to the nearest
whole number. Notwithstanding the foregoing, the holders of Notes shall vote as a separate class on any matters as to which a separate class vote is required by applicable Law or as provided in
Section 12.2. 

        12.2    No Adverse Actions.    As long as any Notes are outstanding, the Company shall
not, without the affirmative vote or written consent of the holders of 67% of the then outstanding principal amount of Notes, amend its articles of incorporation or bylaws in any manner that adversely
affects the voting rights of the Notes, or enter into any agreement committing the Company to do any of the foregoing. 

 
 

  ARTICLE XIII    
    
    CONVERSION    
    

        At any time or times after the Closing, the Note shall be convertible into shares of Common Stock, on the terms and conditions set
forth in this Article XIII. 

        13.1    Conversion Right.    

        (a)   At
any time and from time to time on or after the Closing Date, each Purchaser shall be entitled to convert all or any portion of the outstanding and unpaid principal
and all or any portion of the accrued and unpaid interest on the Notes owned by such Purchaser (such amount to be the "Conversion Amount" for purposes of this
Article XIII) into fully paid and nonassessable shares of Common Stock in accordance with Section 13.3, at the Conversion Price (as defined below). 

        (b)   Upon
or at any time after the Conversion Milestone, the Company shall be entitled to cause the conversion of all or any portion of the outstanding and unpaid principal
and all or any portion of the accrued and unpaid interest on the Notes (such amount to be the "Conversion Amount" for purposes of this Article XIII) into fully paid
and nonassessable shares of Common Stock in accordance with Section 13.3, at the Conversion Price, provided that if the Company causes conversion of less than all
of the outstanding principal amount of the Notes, such conversions shall be made from each of the Purchasers on a pro rata basis in proportion to the principal amount of Notes held by them. 

        (c)   The
Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common
Stock, the Company shall round such fraction of a share of Common Stock up to the next whole share. The Company shall pay any and all transfer, stamp and similar Taxes that may be payable with respect
to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. 

51

 

        13.2    Conversion.    The number of shares of Common Stock issuable upon conversion of
any Conversion Amount pursuant to Section 13.1(a) or (b) shall be determined by dividing (x) the applicable Conversion Amount by (y) the Conversion Price. 

        (a)   "Initial
Conversion Price" means $2.70. 

        (b)   "Conversion
Price" as of any date herein, means the Initial Conversion Price as adjusted from time to time pursuant to this
Article XIII hereof. It is expressly acknowledged and agreed by the Company that the Conversion Price on the Closing Date may be lower than the Initial Conversion Price as a result of
adjustments to the Initial Conversion Price set forth in this Article XIII that are based on events occurring prior to the Closing Date. 

        13.3    Mechanics of Conversion.    

        (a)   To
convert any Conversion Amount into shares of Common Stock on any date (a "Purchaser Conversion Date"), a Purchaser shall
(A) transmit for delivery, for receipt on or prior to 7:00 p.m., New York time, on such date, which must be a Business Day, a copy of an executed notice of conversion in the form
attached hereto as Exhibit B-1 (the "Purchaser Conversion Notice") to the Company and the Transfer Agent and (B) surrender the Notes to a common
carrier for delivery to the Company within three (3) Business Days following a conversion of the Notes. On or before the first (1st) Business Day following the date of receipt of a Purchaser
Conversion Notice, the Company shall transmit by facsimile a confirmation of receipt of such Purchaser Conversion Notice to such Purchaser and the Transfer Agent. On or before the third (3rd) Trading
Day following the date of receipt of a Purchaser Conversion Notice (a "Purchaser Share Delivery Date"), the Company shall (x) provided,
that the Transfer Agent is participating in the DTC Fast Automated Securities Transfer Program and the shares are eligible to be sold without restrictions (other than volume restrictions) under
Rule 144 under the Securities Act, credit such aggregate number of shares of Common Stock to which such Purchaser shall be entitled to such Purchaser's or its designee's balance account with
DTC through its Deposit/Withdrawal At Custodian system or (y) otherwise, issue and deliver to the address as specified in the Purchaser Conversion Notice, a certificate, registered in the name
of such Purchaser or its designees, for the number of shares of Common Stock to which such Purchaser shall be entitled. If the outstanding principal of the Notes is greater than the principal portion
of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of the Notes and at its own expense,
issue and deliver to such Purchaser a new Note representing the outstanding principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of
the Notes shall be treated for all purposes as the record purchaser of such shares of Common Stock on the Purchaser Conversion Date, irrespective of the date such shares are credited to such
purchaser's account with DTC or the date of delivery of the certificates evidencing such Conversion Shares, as the case may be. 

        (b)   To
convert any Conversion Amount into shares of Common Stock on any date (a "Company Conversion Date"), the Company shall transmit for
delivery, for receipt on or prior to 7:00 p.m., New York time, on such date, which must be a Business Day, a copy of an executed notice of conversion in the form attached hereto as
Exhibit B-2 (the "Company Conversion Notice") to the Purchasers and the Transfer Agent and the Purchasers shall surrender the Notes to a common carrier
for delivery to the Company within three (3) Business Days following a conversion of the Notes. On or before the first (1st) Business Day following the date of receipt of a Company Conversion
Notice, each Purchaser shall transmit by facsimile a confirmation of receipt of such Company Conversion Notice to the Company and the Transfer Agent. On or before the third (3rd) Trading Day following
the date of receipt by the Purchasers of a Company Conversion Notice (a "Company Share Delivery Date" and together with a Purchase Share Delivery Date, a
"Share Delivery Date"), the Company shall (x) provided, that the Transfer Agent is participating in the DTC Fast Automated Securities
Transfer Program and the shares are eligible to be sold without restrictions (other than volume restrictions) under Rule 144 under the 

52

 

Securities
Act, credit such aggregate number of shares of Common Stock to which each Purchaser shall be entitled to such Purchaser's balance account with DTC through its Deposit/Withdrawal At
Custodian system or (y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer
Program, issue and deliver to each Purchaser a certificate, registered in the name of such Purchaser, for the number of shares of Common Stock to which such Purchaser shall be entitled. If the
outstanding principal of the Notes is greater than the principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three
(3) Business Days after receipt of the Notes and at its own expense, issue and deliver to each Purchaser a new Note representing the outstanding principal not converted. The Person or Persons
entitled to receive the shares of Common Stock issuable upon a conversion of the Notes shall be treated for all purposes as the record purchaser of such shares of Common Stock on the Company
Conversion Date, irrespective of the date such shares are credited to the purchasers' account with DTC or the date of delivery of the certificates evidencing such Conversion Shares, as the case may
be. 

        (c)   If
the Company shall fail to issue a certificate to a Purchaser or credit such Purchaser's balance account with DTC, as applicable, for the number of shares of Common
Stock to which such Purchaser is entitled upon conversion of any Conversion Amount on or prior to the Share Delivery Date (a "Conversion Failure"), then (A) the
Company shall pay damages to the Purchasers for each trading day of such Conversion Failure in an amount equal to 1.5% of the product of (1) the sum of the number of shares of Common Stock not
issued to the Purchasers on or prior to the Share Delivery Date and to which the Purchasers is entitled, and (2) the Closing Sale Price of the Common Stock on the Share Delivery Date;
provided, that the payment of such damages shall not relieve the Company from its obligation to deliver the shares to which the Purchasers are entitled upon conversion of
such Conversion Amount except to the extent of a voided Conversion Notice pursuant to clause (B) of this sentence and (B) the Purchasers, upon written notice to the Company, may void its
Conversion Notice with respect to any portion of the Conversion Amount in respect of which there has been a Conversion Failure, and retain or have returned, as the case may be, any portion of the
Notes in respect of which there has been a Conversion Failure; provided, that the voiding of a Conversion Notice shall not affect the Company's obligations to pay any
amounts which have accrued under the Notes prior to the date of such notice pursuant to this Section 13.3(c) or otherwise. In addition to the foregoing, if the Company shall fail on or prior to
the Share Delivery Date to issue and deliver a certificate to such Purchaser or credit such Purchaser's balance accounts with DTC for the number of shares of Common Stock to which such Purchaser is
entitled upon such Purchaser's conversion of any Conversion Amount or on any date of the Company's obligation to deliver shares of Common Stock as contemplated pursuant to clause (ii) below,
and if on or after such Share Delivery Date such Purchaser purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by such Purchaser of Common Stock
issuable upon such conversion that such Purchaser anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Trading
Days after such Purchaser's request and in such Purchaser's discretion, either (i) pay cash to such Purchaser in an amount equal to such Purchaser's total purchase price (including brokerage
commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point
the Company's obligation to issue and deliver such certificate or credit such Purchaser's balance account with DTC for the shares of Common Stock to which such Purchaser is entitled upon such
Purchaser's conversion of the applicable Conversion Amount shall terminate, or (ii) promptly honor its obligation to deliver to such Purchaser a certificate or certificates representing such
Common Stock or credit such Purchaser's balance account with DTC for the number of shares of Common Stock to which such Purchaser is entitled upon such Purchaser's conversion hereunder (as the case
may be) and pay cash to such Purchaser in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times
(B) the Closing Sale Price on the Conversion Date. 

53

 

 

        (d)   In
the event that the Company receives a Conversion Notice from more than one Purchaser for the same Conversion Date and the Company can convert some, but not all, of
such portions of the Notes submitted for conversion, the Company shall convert from each Purchaser electing to have Notes converted on such date a pro rata amount of such Purchaser's portion of its
Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such Purchasers relative to the aggregate principal amount of all Notes submitted for
conversion on such date; provided, however, that nothing in this Section 13.3(d) shall be deemed to release the Company from any such
failure to convert. In the event of a dispute as to the number of shares of Common Stock issuable to a Purchaser in connection with a conversion of the Notes, the Company shall issue to such Purchaser
the number of shares of Common Stock not in dispute and resolve such dispute in accordance with the terms of this Agreement. 

        13.4    Adjustment Upon Issuance of Shares of Common Stock.    If and whenever on or
after the date hereof the Company issues or sells, or in accordance with this Section 13.4 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares
of Common Stock owned or held by or for the account of the Company) for a consideration per share (the "New Issuance Price") less than a price equal to the Conversion
Price in effect immediately prior to such issue or sale or deemed issuance or sale (such Conversion Price then in effect is referred to as the "Applicable Price") (the
foregoing a "Dilutive Issuance"), other than distributions covered by Section 13.6, then the Conversion Price then in effect shall be reduced to a price determined
in accordance with the following formula: 

 

							
	 	 	R1 = R ×	 	OS + A

  OS + B	 	 

 

 Where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after such Dilutive Issuance;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to such Dilutive Issuance;
	

 	
 	
 OS =	
 	
 the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue or upon conversion or exchange of Convertible Securities (excluding the Notes) outstanding immediately prior to such issue (to the extent such Options or Convertible Securities have an exercise or conversion price
below R);
	

 	
 	
 A =	
 	
 the number of shares of Common Stock that would have been issued (or be deemed to have been issued) if such Dilutive Issuance had been issued at a price per share equal to R (determined by dividing the aggregate
consideration received by the Company in respect of such issue by R); and
	

 	
 	
 B =	
 	
 the number of shares of Common Stock issued (or deemed to have been issued) in such Dilutive Issuance.

 

         For
purposes of determining the adjusted Conversion Price under this Section 13.4, the following shall be applicable: 

        (A)    Issuance of Options.    If the Company in any manner grants or sells any Options and the lowest price per share
for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is
less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for
such price per share. For purposes of this 

54

 

Section 13.4(A),
the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option. Except as
contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such share of Common Stock upon conversion, exercise or exchange of such Convertible Securities. The Conversion Price will be readjusted to the extent that such
Options are not exercised prior to their expiration. 

        (B)    Issuance of Convertible Securities.    If the Company in any manner issues or sells any Convertible Securities
and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock
shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this
Section 13.4(B), the "lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof" shall be equal to the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and upon conversion, exercise or
exchange of such Convertible Security. Except as contemplated below, no further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price has
been or is to be made pursuant to other provisions of this Section 13.4, except as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issue or
sale. The Conversion Price will be readjusted to the extent that such Convertible Securities are not converted prior to the last day on which they are convertible. 

        (C)    Change in Option Price or Rate of Conversion.    If the purchase or exercise price provided for in any Options,
the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or
exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Conversion Price in effect at the time of such increase or decrease shall be adjusted to the Conversion
Price which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or
decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section 13.4(C), if the terms of any Option or Convertible Security that was
outstanding as of the Closing Date are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock
deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 13.4(C)
shall be made if such adjustment would result in an increase of the Conversion Price then in effect. 

        (D)    Calculation of Consideration Received.    In case any Option is issued in connection with the issue or sale of
other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to
have been issued for a consideration of $0.01. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been 

55

 

issued
or sold for cash, the consideration received therefor will be deemed to be the amount of consideration received by the Company therefor. If any shares of Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities will be the arithmetic average of the VWAP of such security
for the five (5) Trading Day period immediately preceding the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the
non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of
the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities (as the case may be). The fair value of any
consideration other than cash or publicly traded securities will be determined jointly by the Company and the Purchasers. If such parties are unable to reach agreement within ten (10) days
after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Trading Days
after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser (an "Appraiser") jointly selected by the Company and the Majority
Purchasers; provided, that if the Company and the Majority Purchasers cannot agree on an Appraiser within such ten (10) Trading Days, each will choose an Appraiser
and the two Appraisers will choose a third Appraiser who will determine the fair value of such consideration. The determination of such appraiser shall be final and binding upon all parties absent
manifest error (provided such determination is approved by the Majority Purchasers) and the fees and expenses of such appraiser shall be borne by the Company. 

        13.5    Adjustment for Change in Capital Stock.    If, after the date hereof, the
Company: 

        (a)   pays
a dividend or makes another distribution to all or substantially all holders of Common Stock payable exclusively in shares of Common Stock; 

        (b)   subdivides
the outstanding shares of Common Stock into a greater number of shares; or 

        (c)   combines
the outstanding shares of Common Stock into a smaller number of shares; 

then
the Conversion Price will be adjusted based on the following formula: 

 

							
	 	 	R1 = R ×	 	OS1

  OS	 	 

 

 where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the effective date of such subdivision or
combination, as the case may be;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to the open of business on the effective date of such
subdivision or combination, as the case may be;
	

 	
 	
 OS1 =	
 	
 the number of shares of Common Stock outstanding immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately prior to the open of business on the effective date
of such subdivision or combination, as the case may be; and
	

 	
 	
 OS =	
 	
 the number of shares of Common Stock outstanding immediately after such dividend or distribution, or immediately after the effective date of such subdivision or combination, as the case may be.

 

 56

 

        Such
adjustment shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or distribution, or the effective date for such
subdivision or combination. If any dividend or distribution of the type described in this Section 13.5 is declared but not so paid or made, or the outstanding shares of Common Stock are not
split or combined, as the case may be, the Conversion Price shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, or
split or combine the outstanding shares of Common Stock, as the case may be, to the Conversion Price that would then be in effect if such dividend, distribution, share split or share combination had
not been declared or announced. 

        If,
after an adjustment, a Purchaser upon conversion of its Note may receive shares of two or more classes of Capital Stock of the Company, the Conversion Price shall thereafter be
subject to adjustment upon the occurrence of an action taken with respect to any such class of Capital Stock as is
contemplated by this Article XIII with respect to the Common Stock, on terms comparable to those applicable to Common Stock in this Article XIII. 

        13.6    Adjustment for Rights Issue.    If, after the date hereof, the Company
distributes any rights or Options to all or substantially all holders of Common Stock entitling such holders to purchase (for a period expiring within sixty (60) days) shares of Common Stock at
a price per share less than the average of the Closing Sale Prices of the Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately
preceding the date of announcement of such distribution, the Conversion Price shall be adjusted in accordance with the following formula; provided,
however, that the Conversion Price will be readjusted to the extent that such rights or Options are not exercised prior to their expiration or are not distributed: 

 

							
	 	 	R1 = R ×	 	O+((N×P)/M)

  (O+N)	 	 

 

 where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 O =	
 	
 the number of shares of Common Stock outstanding at the close of business on the Trading Day immediately preceding the Ex-Dividend Date for such distribution;
	

 	
 	
 N =	
 	
 the number of additional shares of Common Stock issuable pursuant to such rights or Options;
	

 	
 	
 P =	
 	
 the per-share offering price payable to exercise such rights or Options for the additional shares plus the per-share consideration (if any) the Company receives for such
rights or Options; and
	

 	
 	
 M =	
 	
 the average of the Closing Sale Prices of the Common Stock for the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the date of announcement of such
distribution.

 

         Such
adjustment shall be successively made whenever any such rights or Options are distributed and shall become effective immediately after the open of business on the
Ex-Dividend Date for such distribution. To the extent that shares of the Common Stock are not delivered after the expiration of such rights or Options, the Conversion Price shall be
readjusted to the Conversion Price that would then be in effect had the adjustments made upon the issuance of such rights or Options been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. If such rights or 

57

 

Options
are not so issued, the Conversion Price shall be adjusted promptly to be the Conversion Price that would then be in effect if such Ex-Dividend Date for such distribution had not
been fixed. 

        For
purposes of this Section 13.6, in determining whether any rights or Options entitle the holders to subscribe for or purchase Common Stock at less than the average of the
Closing Sale Prices of Common Stock for each Trading Day in the applicable ten (10) consecutive Trading Day period, there shall be taken into account any consideration received by the Company
for such rights or Options and any amount payable on exercise thereof, with the value of such consideration, if other than cash, to be determined by the Board of Directors. 

        No
adjustment shall be made under this Section 13.6 if the application of the formula stated above in this Section 13.6 would result in a value of R1 that is
equal to or greater than the value of R. 

        13.7    Adjustment for Other Distributions.    If, after the date hereof, the Company
distributes to all or substantially all holders of its Common Stock any of its debt, securities or assets or any rights or Options to purchase securities of the Company (including securities or cash,
but excluding (a) distributions of capital stock as to which an adjustment is required pursuant to Section 13.5, (b) distributions of rights or Options as to which an adjustment
is required pursuant to Section 13.6, (c) dividends or other distributions paid exclusively in cash (as to which Section 13.8 applies) and (d) any Spin-off to
which the provisions set forth below in this Section 13.7 shall apply), the Conversion Price shall be decreased in accordance with the formula: 

 

							
	 	 	R1 = R ×	 	M - F

  M	 	 

 

 where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 M =	
 	
 the average of the Closing Sale Prices of the Common Stock for the ten (10) consecutive Trading Day-period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such
distribution; and
	

 	
 	
 F =	
 	
 the fair market value, as determined by the Board of Directors, of the portion of those assets, securities, rights, or Options to be distributed in respect of each share of Common Stock immediately prior to the open
of business on the Ex-Dividend Date for such distribution.

 

         With
respect to an adjustment pursuant to this Section 13.7 where there has been a payment of a dividend or other distribution on the Common Stock in shares of Capital Stock of
any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit, where such Capital Stock or similar equity interest is listed or quoted (or will be listed or
quoted upon consummation of the Spin-off) on a national securities exchange or reasonably comparable non-U.S. equivalent, which is referred to herein as a
"Spin-off," the Conversion Price will be decreased based on the following formula: 

 

							
	 	 	R1 = R ×	 	MP

  F + MP	 	 

 

 58

 

where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for the Spin-off;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for the Spin-off;
	

 	
 	
 F =	
 	
 the average of the Closing Sale Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of the Common Stock over the first ten (10) consecutive
Trading Day period immediately following, and including, the Ex-Dividend Date for the Spin-off (such period, the "Valuation Period"); and
	

 	
 	
 MP =	
 	
 the average of the Closing Sale Prices of the Common Stock over the Valuation Period.

 

         The
adjustment to the Conversion Price under the preceding paragraph of this Section 13.7 will be made immediately after the open of business on the day after the last day of the
Valuation Period, but will be given effect as of the open of business on the Ex-Dividend Date for the Spin-off. For purposes of determining the Conversion Price, in respect of
any conversion during the ten (10) consecutive Trading Days commencing on the Ex-Dividend Date for any Spin-off, references within the portion of this
Section 13.7 related to Spin-offs to ten (10) consecutive Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including,
the Ex-Dividend Date for such Spin-off to, but excluding, the relevant Conversion Date. 

        13.8    Adjustment for Cash Dividends.    If, after the date hereof, the Company
distributes to all or substantially all holders of its Common Stock any dividends payable exclusively in cash, the Conversion Price shall be adjusted in accordance with the formula: 

 

							
	 	 	R1 = R ×	 	SP-C

  SP	 	 

 

 where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
	

 	
 	
 SP =	
 	
 the average of the Closing Sale Prices of Common Stock over the ten (10) consecutive Trading Day period ending on, and including, the Trading Day immediately preceding the Ex-Dividend Date for such distribution;
and
	

 	
 	
 C =	
 	
 the amount in cash per share the Company distributes to holders of Common Stock.

 

         The
adjustment shall become effective immediately after the open of business on the Ex-Dividend Date with respect to the distribution. 

        13.9    Adjustment for Company Tender Offer.    If, after the date hereof, the Company or
any Subsidiary of the Company makes a payment to holders of Common Stock in respect of a tender or exchange offer, other than an odd-lot offer, by the Company or any of its Subsidiaries
for shares of Common Stock, to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the average of the Closing Sale Prices over the
ten (10) consecutive Trading Day period commencing on, and including, the Trading Day following the last 

59

 

date
on which tenders or exchanges may be made pursuant to such tender or exchange offer ("Expiration Date"), the Conversion Price shall be decreased based on the
following formula: 

 

							
	 	 	R1 = R ×	 	OS×SP

  F+(SP×OS')	 	 

 

 where:

 

					
	 	 	 R1 =	 	 the Conversion Price in effect immediately after the open of business on the Trading Day following the Expiration Date;
	

 	
 	
 R =	
 	
 the Conversion Price in effect immediately prior to the open of business on the Trading Day following the Expiration Date;
	

 	
 	
 F =	
 	
 the fair market value, as determined by the Board of Directors, of the aggregate consideration payable in such tender or exchange offer (up to any maximum amount specified in the terms of the tender or exchange
offer) for all shares of Common Stock that the Company or any Subsidiary of the Company purchases in such tender or exchange offer, such fair market value to be measured as of the expiration time of the tender or exchange offer ("Expiration
Time");
	

 	
 	
 OS =	
 	
 the number of shares of Common Stock outstanding immediately prior to the Expiration Time (prior to giving effect to such tender offer or exchange offer);
	

 	
 	
 OS' =	
 	
 the number of shares of Common Stock outstanding immediately after the Expiration Time (after giving effect to such tender offer or exchange offer); and
	

 	
 	
 SP =	
 	
 the average of the Closing Sale Prices of Common Stock over the ten (10) consecutive Trading Day period commencing on, and including, the Trading Day following the Expiration Date.

 

         The
adjustment to the Conversion Price under the preceding paragraph of this Section 13.9 will be made immediately after the open of business on the eleventh (11th) Trading Day
following the Expiration Date but will be given effect at the open of business on the Trading Day following the Expiration Date. For purposes of determining the Conversion Price, in respect of any
conversion during the ten (10) consecutive Trading Days commencing on the Trading Day following the Expiration Date, references within this Section 13.9 to ten (10) consecutive
Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the Trading Day following the Expiration Time to, but excluding, the relevant
Conversion Date. 

        13.10    When Adjustment May Be Deferred.    No adjustment in the Conversion Price need
be made unless the adjustment would require an increase or decrease of more than 1% of the Conversion Price. If the adjustment is not made because the adjustment does not change the Conversion Price
by more than one percent (1%), then the adjustment that is not made shall be carried forward and taken into account in any future adjustment. Notwithstanding the foregoing, all such carried-forward
adjustments shall be made with respect to the affected Notes on the Trading Day that is thirty (30) Trading Days prior to the scheduled Maturity Date and thereafter any adjustment to the
Conversion Price shall be made on each subsequent Scheduled Trading Day immediately preceding the scheduled Maturity Date. 

        All
calculations under this Article XIII shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be. 

        13.11    When No Adjustment Required.    No adjustment need be made as a result of: 

        (a)   the
issuance of any shares of Common Stock by the Company upon conversion of the Notes; 

60

 

        (b)   the
issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in shares of Common Stock under any plan; 

        (c)   the
issuance of any shares of Common Stock or Options pursuant to any present or future employee, director or consultant Benefit Plan of the Company or any of its
Subsidiaries; provided that any such issuances are made in accordance with the terms, conditions and limitations of such plans as they existed as of the date hereof and
without effect to any amendments or other modifications thereof after the date hereof, unless previously approved by the Majority Purchasers; 

        (d)   any
accrued and unpaid interest; 

        (e)   the
issuance of any shares of Common Stock pursuant to any Option outstanding as of the date hereof or issuable pursuant to any agreement set forth in
Schedule 13.11(e), provided that such issuance of shares of Common Stock upon exercise of such Options or Convertible Securities (or under such agreements) is made
pursuant to the terms of such Options or Convertible Securities (or of such agreements) in effect on the date immediately preceding the date hereof and the exercise, conversion or similar price and
the number of shares underlying such Option or Convertible Security (or the terms and conditions of such agreements) are not amended or changed after the date hereof and the other material terms of
such Options or Convertible Securities are not otherwise amended or changed after the date hereof, unless previously approved by the Majority Purchasers; 

        (f)    the
issuance of the rights pursuant to any Company stockholders rights plan ("Stockholder Rights Plan"); 

        (g)   the
distribution of separate certificates representing the rights under a Stockholder Rights Plan; 

        (h)   the
exercise or redemption of the rights in accordance with any rights agreement under a Stockholder Rights Plan; or 

        (i)    the
termination or invalidation of the rights under a Stockholder Rights Plan. 

        If
any event described in Section 13.11(f) through (i) occurs, the Purchasers will receive the rights under such Stockholders Rights Plan upon conversion, unless, prior to any
conversion, the rights have separated from the Common Stock. If the rights have separated, the Conversion Price will be adjusted at the time of separation as provided by Section 13.6 (subject
to readjustment in the event of the expiration termination or redemption of such rights.) 

        No
adjustment need be made for a transaction referred to in Sections 13.5 through 13.9 if the Purchasers may participate in the transaction (as a result of holding the Notes, and
at the same time and upon the same terms as holders of Common Stock participate) on a basis that the Majority Purchasers determine to be fair and appropriate (excluding any participation through
exercise of any preemptive rights), and with notice of such participation to the Purchasers, in any of the events described in Sections 13.4 through 13.9 as if each Purchaser held a number of
shares of Common Stock equal to the Conversion Price, divided into by the principal amount (expressed in thousands) of Notes held by such Purchaser, without having to convert its Notes. 

        13.12    Notice of Adjustment.    Whenever the Conversion Price is adjusted, the Company
shall promptly or within three (3) Business Days mail to the Purchasers a notice of the adjustment. The Company shall file with the trustee (if any) and the conversion agent (if any) such
notice briefly stating the facts requiring the adjustment and the manner of computing it. The notice of adjustment shall be conclusive evidence that the adjustment is correct, unless the Majority
Purchasers, by notice to the Company within three (3) Business Days of receiving such notice of adjustment, disputes such adjustment. If, after discussing in good faith for ten
(10) Business Days, the parties are unable to reach 

61

 

agreement
over the appropriate adjustment, such adjustment will be determined within five (5) Business Days after such ten (10) Business Day period by an independent, reputable national
accounting firm (an "Accounting Firm") jointly selected by the Company and the Majority Purchasers; provided that if the Company and the Majority Purchasers cannot agree
on an Accounting Firm within such ten (10) Business Day period, each will choose an Accounting Firm and the two Accounting Firms will choose a third Accounting Firm who will determine the
appropriate adjustment. The determination of
the Accounting Firm shall be final and binding upon all parties absent manifest error, and the fees and expenses of such Accounting Firm shall be borne by the party with whom the Accounting Firm most
closely agrees. 

        13.13    Voluntary Decrease.    The Company from time to time may (but is not required
to) decrease the Conversion Price, as permitted by law, by any amount at any time for at least twenty (20) Business Days, so long as the decrease is irrevocable during such period. In addition,
the Company may also (but is not required to) decrease the Conversion Price to avoid or diminish any income Tax to holders of Common Stock or rights to purchase Common Stock in connection with any
dividend or distribution of shares (or rights to acquire shares) or similar event. Whenever the Conversion Price is decreased, the Company shall mail to the Purchasers a notice of the decrease. The
Company shall mail the notice at least fifteen (15) days before the date the decreased Conversion Price takes effect. The notice shall state the decreased Conversion Price and the period it
will be in effect. A voluntary decrease of the Conversion Price does not change or adjust the Conversion Price otherwise in effect for purposes of Sections 13.4 through 13.9. 

        13.14    Notice of Certain Transactions.    If: 

        (a)   the
Company takes any action that would require an adjustment in the Conversion Price pursuant to Section 13.4 through 13.9 (unless no adjustment is to occur,
pursuant to Section 13.11); or 

        (b)   there
is a liquidation or dissolution of the Company, 

then
the Company shall mail to the Purchasers a notice stating the proposed record date for a dividend, distribution or subdivision or the proposed effective date of a combination, reclassification,
consolidation, merger, binding share exchange, transfer, liquidation or dissolution. The Company shall file and mail the notice at least fifteen (15) Trading Days before such date. Failure to
file or mail the notice or any defect in it shall not affect the validity of the transaction. 

        13.15    Effect of Reclassification, Consolidation, Merger or Sale.    

        (a)   In
the event of: 

        (i)    any
reclassification of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value,
or as a result of a split, subdivision or combination covered by Section 13.5); 

        (ii)   a
consolidation, merger, combination or binding share exchange involving the Company; or 

        (iii)  any
sale or conveyance of all or substantially all of the property and assets of the Company to any other Person, 

in
each case as a result of which holders of Common Stock shall be entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock (any such
event, "Merger Event"), then the Company or the successor or purchasing Person, as the case may be, provide that the Purchasers shall be entitled at and after the
effective time of the Merger Event to convert their Notes into the type and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that the
Purchasers would have been entitled to 

62

 

receive
upon such Merger Event had they converted their Notes immediately prior to such Merger Event ("Reference Property"). 

        (b)   With
respect to Notes surrendered for conversion after the effective date of any such Merger Event in lieu of cash, shares of Common Stock or a combination of cash and
shares of Common Stock otherwise provided for hereunder, the Company shall deliver to the converting Purchaser a number of units of Reference Property (each such unit comprised of the kind and amount
of shares of stock, securities or other property or assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have
owned or been entitled to receive based on the Weighted Average Consideration) equal to (A) the aggregate principal amount of Notes to be converted, divided by
(B) the Conversion Price immediately prior to the Merger Event. 

        (i)    The
Company will deliver cash in lieu of fractional units of Reference Property (provided that the amount of such cash shall be determined
as if references in such Section to "the Closing Sale Price" were instead a reference to "the Closing Sale Price of a unit of Reference Property" composed of the type and amount of shares of stock,
securities or other property or assets (including cash or any combination thereof) that a holder of one share of Common Stock immediately prior to such Merger Event would have owned or been entitled
to receive based on the Weighted Average Consideration). 

        (ii)   For
purposes of this Section 13.15, the "Weighted Average Consideration" means the weighted average of the types and amounts of
consideration received by the holders of Common Stock entitled to receive cash, securities or other property or assets with respect to or in exchange for such Common Stock in any Merger Event who
affirmatively make such an election; provided that, if the types and
amounts of consideration that holders of Common Stock would be entitled to receive with respect to or in exchange for such Common Stock is based in part upon any form of shareholders election, the
"Weighted Average Consideration" will be deemed to be (A) if holders of the majority of the shares of Common Stock affirmatively make such an election, the weighted average of the types and
amounts of consideration received by the holders of Common Stock that affirmatively make such an election or (B) if the holders of a majority of the shares of Common Stock do not affirmatively
make such an election, the types and amount of consideration actually received by such holders. 

        (iii)  The
Company shall notify the Purchasers of the Weighted Average Consideration as soon as practicable after the Weighted Average Consideration is determined. 

        (c)   The
above provisions of this Section 13.15 shall similarly apply to successive Merger Events. 

        13.16    Simultaneous Adjustments.    In the event that this Article XIII requires
adjustments to the Conversion Price under more than one of Sections 13.5, 13.6, 13.7 and 13.8, and the record dates for the distributions giving rise to such adjustments shall occur on the same
date, then such adjustments shall be made by applying, first, the provisions of Section 13.5, second, the provisions of Section 13.7, third, the provisions of Section 13.8 and,
fourth, the provisions of Section 13.6. 

        13.17    Successive Adjustments.    After an adjustment to the Conversion Price under
this Article XIII, any subsequent event requiring an adjustment under this Article XIII shall cause an adjustment to the Conversion Price as so adjusted. 

        13.18    Limitation on Adjustments.    The Company shall not take any action that would
result in an adjustment pursuant to the foregoing provisions in this Article XIII if that adjustment would reduce the Conversion Price below the then par value of the shares of Common Stock
issuable upon conversion of the Notes. 

63

 
 
 

  ARTICLE XIV    
    
    INFORMATION COVENANTS    
    

        Each of the Obligors covenants that, from and after the Closing Date, so long as any of the Notes are outstanding: 

        14.1    Financial Statements.    The Company shall deliver to each Purchaser: 

        (a)   as
soon as available and in any event within ninety (90) days after the end of its fiscal year, audited consolidated statements of income, owners' equity and cash
flows of the Company and its Subsidiaries for such fiscal year and the related consolidated audited balance sheet as at the end of such fiscal year, setting out in each case in comparative form the
corresponding figures for the preceding fiscal year, and an opinion of an independent public or chartered accountant of recognized international standing as is reasonably acceptable to the Purchasers,
which opinion shall (i) state that said financial statements fairly present in all material respects the financial condition and results of operations of the Company and its Subsidiaries as at
the end of, and for, such fiscal year in accordance with GAAP and (ii) following the end of the fiscal year in which the Project Financing Facility Closing Date occurs contain no "going
concern" or like qualification; and 

        (b)   as
soon as available and in any event within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Company,
unaudited consolidated statements of income and cash flows of the Company and its Subsidiaries, for such fiscal quarter and for the period from the beginning of the respective fiscal year to the end
of such period, and the related unaudited balance sheet, as at the end of such fiscal quarter, setting out in each case in comparative form the corresponding figures for the preceding fiscal quarter
or period, as applicable, accompanied by a certificate of a senior financial officer of the Company, which certificate shall state that said financial statements fairly present in all material
respects the financial condition and results of operations of the Company and its Subsidiaries, in accordance with GAAP as at the end of, and for, such period (subject only to normal
year-end audit adjustments). 

Delivery
within the time period specified above of copies of the Company's Form 10-K or Quarterly Report on Form 10-Q
("Form 10-Q"), as the case may be, prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the
requirements of this Section 14.1. 

        14.2    Requirements as to Financial Statements.    

        (a)   Each
set of financial statements delivered by the Company pursuant to Section 14.1 shall be accompanied by a Compliance Certificate certifying that no Default or
Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and is continuing, describing the same, as well as any actions the Company intends to take in respect
thereof. 

        (b)   Each
set of financial statements delivered pursuant to Section 14.1 will be prepared using GAAP, accounting practices and financial reference periods consistent
with those applied in the preparation of the Original Financial Statements unless, in relation to any set of financial statements, the Company notifies the holders that there has been a change in
GAAP, the accounting practices or reference periods and it delivers to the holders: 

        (i)    a
description of any change necessary for those financial statements to reflect the GAAP, accounting practices and reference periods upon which the Original Financial
Statements were prepared; and 

64

 

        (ii)   sufficient
information, in form and substance as may be reasonably required by the holders, to enable the holders to determine whether the covenants contained herein
have been complied with and make an accurate comparison between the financial position indicated in those financial statements and the Original Financial Statements. 

        14.3    Information; Miscellaneous.    The Company shall deliver to each Purchaser: 

        (a)   copies
of all documents delivered by the Company to its (i) shareholders (or any class of them) or (ii) its creditors generally, in each case, within ten
(10) days of such documents being delivered; 

        (b)   copies
of all documents delivered by the Company to the agent or lenders under the Project Financing Facility within ten (10) days of such documents being
delivered, in each case excluding documents in respect of administrative matters but including any operating, engineering, financial, insurance, accounting or other reports; 

        (c)   promptly
upon becoming aware thereof, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against the
Company or any of its Subsidiaries, and which might, if adversely determined, have a Material Adverse Effect; 

        (d)   annually,
within twenty (20) Business Days of the annual renewal date of the insurance policies maintained in connection with the Holbrook Project, a memorandum
prepared by the Company summarizing the then-outstanding insurance coverage with respect to the Holbrook Project together with a certificate or certificates of insurance prepared by a
Responsible Officer and/or the relevant insurance carriers, as the case may be, and in form and substance satisfactory to the holders confirming that: 

        (i)    all
such insurance coverage is in full force and effect and all premiums payable in connection therewith have been paid; 

        (ii)   in
the opinion of the Responsible Officer, such insurance is sufficient for the purposes of the Holbrook Project and complies with the provisions of
Section 15.11; 

        (iii)  following
the Springing Lien Trigger Date, the Collateral Agent is named as an additional insured under all policies of insurance and loss payee under all policies of
insurance except third-party liability insurance; and 

        (iv)  the
insurers under such insurance policies have agreed in writing not to amend or terminate such policies without at least twenty (20) Business Days prior
written notice thereof to the Collateral Agent and have entered into such agreements as are required pursuant to Section 15.11. 

        (e)   as
promptly as practicable after the occurrence of the relevant event, details as to any: 

        (i)    material
disputes with such of its insurance carriers as are providing insurance coverage with respect to the Holbrook Project; 

        (ii)   failure
to pay any insurance premium as and when required that might result in the cancellation of any insurance policy implemented in connection with, or relating to,
the Holbrook Project; 

        (iii)  material
reduction in the amount of, or any other material change in, insurance coverage maintained in connection with the Holbrook Project; 

65

 

        (iv)  occurrence
of any actual or reasonably expected liability or loss in an aggregate amount in excess of $500,000 which is covered by the terms of any policy of insurance
maintained in connection with the Holbrook Project; and 

        (v)   notices
received from any insurance carriers with respect to the cancellation of or proposed cancellation of any policy of insurance maintained in connection with the
Holbrook Project (and, in the case of the notification of any such details, stating the reasons therefor, together with any other information concerning the insurance coverage required to be
maintained pursuant to this Agreement as the Collateral Agent shall have reasonably requested); 

        (f)    promptly
upon the effectiveness or occurrence thereof, as the case may be, copies of any instrument, correspondence or other item of documentation implementing,
amending, supplementing or otherwise modifying the material provisions of the definitive documentation for the Project Finance Facility or other material Indebtedness; 

        (g)   without
limiting any other provision of this Section 14.3, as soon as possible (and in any event within three (3) Business Days) after any Obligor knows or
has reason to know of any event or circumstance which has a reasonable likelihood of having a Material Adverse Effect with respect to such Obligor, notice of such event or circumstance and describing
the same in reasonable detail; 

        (h)   promptly
following execution thereof, copies of all Project Documents; 

        (i)    (i) not
later than March 1st in each fiscal year, an annual operating and cash flow budget for the Holbrook Project for the next succeeding fiscal year
(showing expense and revenue, cash flows and capital expenditures on a monthly basis), in form and substance satisfactory to the holders and (ii) not later than the 20th day of each
month, a variance report against the corresponding (1) month and (2) the elapsed portion of the fiscal year, in each case, as set forth in the applicable annual report delivered pursuant
to clause (i) hereof; 

        (j)    promptly
following any Obligor becoming aware of the occurrence thereof, notice of any event or circumstance which entitles, or might reasonably be expected to entitle,
any Person to cancel, suspend or terminate any Approval of the nature referred to in Section 15.3; 

        (k)   promptly
following the occurrence thereof and without limiting the provisions of Section 15.8, notice of any event or circumstance which constitutes, or might
reasonably be expected to constitute, a material environmental spill or accident at the Holbrook Project; 

        (l)    promptly
upon the implementation thereof, copies of all documentation relating to each Hedging Agreement entered into by any Obligor; and 

        (m)  promptly
as becomes available, such further information regarding the financial condition, business, assets and operations of any Obligor as any holder may reasonably
request. 

        14.4    Notification of Default.    The Company shall notify the holders of any Default
or Event of Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of the occurrence thereof. 

66

 
 
 

  ARTICLE XV    
    
    GENERAL COVENANTS    
    

        Each of the Obligors covenants that, from and after the Closing Date, so long as any of the Notes are outstanding: 

        15.1    Use of Proceeds.    The Company shall apply the proceeds of the sale of the Notes
for (a) the purpose of financing the Holbrook Project (including, but not limited to, the costs associated with the Definitive Feasibility Study and the initial drilling, engineering and
permitting related thereto), (b) repayment of amounts due under the Karlsson Note and (c) general corporate purposes. 

        15.2    Compliance with Laws.    Each Obligor will, and will cause each of its
Subsidiaries to, comply in all material respects with all laws to which it may be subject (including Environmental Laws). 

        15.3    Approvals.    Each Obligor will, and will cause each of its Subsidiaries to,
obtain, maintain in full force and effect, and comply in all material respects with, all Approvals as may be required or advisable from time to time for each Obligor to (i) execute, deliver,
perform and preserve its rights under any of the Note Documents or any Project Document executed or to be executed by it, (ii) following the Springing Lien Trigger Date, grant and perfect the
Liens granted or purported to be granted and perfected by it pursuant to any Collateral Document to which it is a party, (iii) maintain and operate its business in accordance with standard
industry practice, and (iv) own, lease, use or license the Project Assets in which it holds any interest and operate the Holbrook Project and the Mine in accordance with sound mining and
business practice. 

        15.4    Maintenance of Corporate Existence, etc.    Each Obligor will, and will cause
each of its Subsidiaries to, (i) do and cause to be done at all times all things necessary to maintain and preserve its corporate existence and (ii) do and cause to be done at all times
all things necessary to be duly qualified to do business and be in good standing (where such concept is relevant) as a foreign corporation, in each jurisdiction where the nature of its business makes
such qualification necessary. 

        15.5    Payment of Notes.    The Company shall pay the principal and interest on the
Notes in accordance with the terms of the Notes. The Company shall pay interest on overdue principal (including post-petition interest in a proceeding under any Bankruptcy Law), and
overdue interest, to the extent lawful, at the rate specified in the Notes. 

        15.6    Payment of Taxes, etc.    Each Obligor shall, and shall cause each of its
Subsidiaries to, file all Tax returns (including all property Tax returns and other similar Tax returns applicable to the Holbrook Project) required by applicable law to have been filed by it. Each
Obligor shall, and shall cause each of its Subsidiaries to, pay and discharge, as the same may become due and payable, all Taxes, assessments, fees and other governmental charges or levies against it
or on any of its property as well as claims of any kind or character; provided, however, that the foregoing shall not require any Person to
pay or discharge any such Tax, assessment, fee, charge, levy or claim so long as it shall be diligently contesting the validity or amount thereof in good faith by appropriate proceedings and shall
have set aside on its books adequate reserves in accordance with GAAP with respect thereto. 

        15.7    Books and Records.    

        (a)   Each
Obligor will, and will cause each of its Subsidiaries to, keep financial records and accounting and management information systems reflecting all of its business
affairs and transactions in accordance with applicable laws and produce financial statements in accordance with GAAP. 

67

 

        (b)   On
not less than three (3) days prior written notice where no Default or Event of Default has occurred or is continuing and on not less than
twenty-four (24) hours prior notice where a Default or Event of Default has occurred and is continuing, each Obligor will, and will cause each of its Subsidiaries to, permit any
advisers of the Purchasers, the holders or any of their respective representatives during reasonable business hours to inspect any and all of its properties and operations (including the Mine), to
visit all of its offices or any other location where relevant personnel or records are located, to discuss its financial matters with its officers, its banks and its independent chartered accountants
and certified public accountants, as the case may be (and hereby authorizes such independent chartered accountants or certified public accountants, as the case may be, to discuss its financial matters
with any of the foregoing Persons or its representatives whether or not any representative of the relevant Obligor is present), and to examine (and photocopy extracts from) any of its books or other
corporate records or any instrument, document or correspondence relating to any of the Project Documents. Without limiting the generality of the foregoing, each Obligor shall, and shall cause each of
its Subsidiaries to, provide all relevant and necessary assistance to: 

        (i)    any
advisors to the Purchasers in connection with the performance of their respective duties to the Purchasers (including the review of all matters relating to the
development and operation of the Holbrook Project (including environmental issues) and the preparation of any reports in connection therewith); and 

        (ii)   the
holders in connection with the exercise of their rights hereunder and under each other Note Document. 

        (c)   The
Company shall pay any fees of such chartered accountants or certified public accountants incurred in connection with this Section 15.7. 

        (d)   It
is expressly understood that none of the advisors to the Purchasers nor any holder assumes any obligation to any Obligor or any other party in respect of the
operation, development, exploration and production of the Holbrook Project. 

        15.8    Environmental Covenants.    Each Obligor will, and will cause each of its
Subsidiaries to and will use commercially reasonable efforts to cause each other Project Party to: 

        (a)   use
and operate the Mine, the Project Assets and all of the facilities and properties related thereto in material compliance with all applicable Environmental Laws and
applicable permits and Approvals; 

        (b)   keep
all material Approvals and Permits relating to environmental matters related to the Holbrook Project in effect; 

        (c)   remain
in material compliance with, and handle all Hazardous Substances in material compliance with, all applicable Environmental Laws; 

        (d)   (i) promptly
notify the holders and provide copies upon receipt of all material written claims, complaints, notices or inquiries relating to the condition of the
facilities and properties related to the Holbrook Project and the Project Assets or compliance with the Environmental Laws relating to the Holbrook Project, and (ii) promptly cure any
non-compliance which is the subject matter of any actions and proceedings relating to such Environmental Laws in accordance with the requirements of any applicable Governmental Authority;
and 

        (e)   provide
such information and certifications which the holders may reasonably request from time to time to evidence compliance with this Section (including in connection
with any environmental audit to determine compliance therewith). 

68

 

        15.9    Maintenance of Project Assets.    Each Obligor will, and will cause each of its
Subsidiaries to, maintain, preserve, protect and keep: 

        (a)   all
of its ownership, lease, use, license and other interests in the Project Assets (including all Mining Rights) as are necessary for it to be able to operate the Mine
substantially in accordance with sound mining and business practice; and 

        (b)   all
of the Project Assets owned by it in good repair, working order, and condition, and make necessary and proper repairs, renewals, and replacements so that the
business carried on in connection therewith may be properly conducted at all times, unless the continued maintenance of any of such Project Assets is no longer necessary or economically desirable for
the operation of the Mine, such operation to be substantially in accordance with sound mining and business practice. 

        15.10    Accuracy of Information.    Each Obligor will ensure that all factual
information hereafter furnished by or on behalf of such Obligor or any of its Subsidiaries in writing to any holder for the purposes of or in connection with this Agreement or any Transactions will be
true and accurate in all material respects on the date as of which such information is dated or certified and such information shall not be incomplete by omitting to state any material fact known to
the relevant Obligor or Subsidiary necessary to make such information not misleading in any material respect. 

        15.11    Insurance.    

        (a)   The
Company shall, and shall cause its Subsidiaries to, at all times maintain or cause to be maintained in effect, with responsible and reputable insurance companies in
such amounts and covering such risks as is consistent with prudent practice and which are acceptable to the holders in their reasonable discretion. 

        (b)   The
Company will provide the holders with not less than ten (10) Business Days' prior written notice of any proposed change of any insurance company providing
insurance coverage of the nature referred to in clause (a) above, and any such change shall be consistent with the provisions of this Agreement. 

        (c)   Each
Obligor shall ensure that all premiums required to be paid in order to ensure that the policies referred to in this Section 15.11 are in full force and
effect shall be paid as and when the same shall become due and payable and shall otherwise comply with each other term and condition of such policies so as to ensure that such policies are, and shall
continue, in full force and effect; provided, that if any Obligor does not so ensure that all such premiums are paid, the holders may (but shall have no obligation to) pay
such premiums and the applicable Obligor shall indemnify the holders pursuant to Section 11.2; provided further that any such payment
by the holders shall not cure the applicable Obligor's failure to observe the obligations set forth in this Section 15.11. 

        (d)   Following
the Springing Lien Trigger Date, subject to the Intercreditor Agreement, all of the insurance policies relating to the Holbrook Project will, in each case, in
accordance with best practice in the mining industry and to prevailing market practice in connection with comparable facilities for projects similar to the Holbrook Project: 

        (i)    specify
the Collateral Agent (on behalf of the holders) as an additional insured under all policies of liability insurance (excluding motor or automobile insurance and
policies of insurance relating to workers' compensation and/or employers' liability) and the Collateral Agent (on behalf of the holders) as loss payee under all policies of insurance except
third-party liability insurance and contain such endorsements in favor of the Collateral Agent as the Collateral Agent shall reasonably require (including that the policy shall not be invalidated as 

69

 

against
the holders by reason of any action or failure to act of the Company or any other Person); 

        (ii)   not
be cancellable (or non-renewable or subject to a decrease in the scope or amount of coverage (including by way of increase in any deductible)) as
against the holders (including for failure to pay premiums) or subject to material alteration of any kind without (A) in the case of any such action, thirty (30) days' written notice of
such action having been given by the Company or the issuer of the relevant policy to the holders, and (B) in the case of any such material alteration, the prior written consent of the holders; 

        (iii)  provide
for waiver of any right of set-off, recoupment, subrogation, counterclaim or any other deduction, by attachment or otherwise, with respect to any
liability of the beneficiary of such policy (including the incorporation of a "non-vitiation" provision) and provide that all amounts payable by reason of loss or damage to any of the
Project Assets shall be payable in a manner which is consistent with this Agreement; 

        (iv)  provide
for payments of claims thereunder in Dollars; and 

        (v)   otherwise
(including with respect to the identity of the brokers, insurers, re-insurers and/or indemnities involved in connection with the solicitation,
placement and issue of such insurance policies) be in form and substance reasonably satisfactory to the holders. 

        In
connection with the foregoing, following the Springing Lien Trigger Date, and subject to the Intercreditor Agreement, the Company shall (x) execute and deliver notices to the
brokers, underwriters and insurance companies through or with whom any policy of insurance maintained in connection with the Holbrook Project have been effected in such form as the holders may from
time to time reasonably request, and (y) procure that any insurer effecting any policy of insurance maintained in connection with the Holbrook Project execute and deliver such notices to the
issuer of any such policy as the holders may from time to time reasonably request. 

        (e)   The
Company shall not at any time do or omit to do anything whereby any insurance required pursuant to this Section 15.11 would, or would be likely to, be
rendered void or voidable or suspended, impaired or defeated in whole or in part. 

        (f)    The
Company will make (or will cause to be made) full disclosure of all relevant issues and facts to the issuer of each insurance policy maintained in connection with
the Holbrook Project such that no such issuer will be entitled to vitiate, cancel or otherwise refuse or decline to honor the terms of, or pay claims in respect of, any such insurance policy. 

        (g)   In
the event that the Company makes any claim under any insurance policy, it shall be solely responsible for and shall pay any deductible in connection with such claim. 

        (h)   For
the avoidance of doubt, no holder shall be under any obligation to the underwriters, insurance companies, or brokers by or through whom any policy of insurance
referred to in this Section 15.11 shall be effected. 

        15.12    Business Activities; No Amendment of Organizational Documents.    

        (a)   AWP
will not, and Company will not permit AWP to: 

        (i)    engage
in any business activity other than the development and operation of the Holbrook Project and the Mine and any activity incidental thereto; 

        (ii)   following
the Springing Lien Trigger Date, maintain any place of business other than the location of the Mine or Denver, Colorado without first taking (to the
satisfaction of the holders) all actions necessary to protect the Liens granted or purported to be granted pursuant to the relevant Collateral Agreements. 

70

 

 

        (b)   No
Obligor will, or will permit any of its Subsidiaries to: 

        (i)    amend
its Organizational Documents (including to reduce its share capital) in any material respect or change its corporate name; or 

        (ii)   change
its fiscal year, 

in
each case without the consent of the Majority Purchasers. 

        (c)   The
Company will not and will not permit PGRI Delaware to engage in any business activity other than as a holding company for the ownership, directly or indirectly, of
all or a portion of the issued and outstanding share capital of AWP and other subsidiaries engaged in exploration, development, mining and related activities in connection with the mining of Potash,
other metals and commodities and activities incidental thereto. 

        15.13    Indebtedness.    Each Obligor will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness other than: 

        (a)   Indebtedness
in respect of the Notes and other Obligations; 

        (b)   Indebtedness
in respect of any Hedging Obligations incurred and reasonably calculated to mitigate any risk to which the Company or its Subsidiaries are exposed in
connection with their development or operations, and not incurred for speculative purposes; 

        (c)   Indebtedness
in respect of amounts payable to contractors, sub-contractors, carriers, warehousemen, mechanics, materialmen, repairers, suppliers and
landlords, incurred in the ordinary course of business and not for money borrowed; 

        (d)   Indebtedness
incurred in the ordinary course of business in connection with the purchases of goods and services or the exploration, development, operation and
reclamation of mineral properties (and excluding, for the avoidance of doubt, Indebtedness); 

        (e)   Indebtedness
incurred in respect of surety, bid, performance or appeal bonds or similar obligations and trade-related letters of credit, in each case provided in the
ordinary course of business; 

        (f)    Indebtedness
in respect of tenders, statutory obligations, utilities, leases and contracts (other than for Indebtedness) entered into in the ordinary course of business, 

        (g)   Indebtedness
in respect of Taxes, assessments, fees and other governmental charges or levies (including with respect to workers' compensation, unemployment insurance,
social security benefits or other forms of governmental insurance or benefits) to the extent that payment thereof shall not at the time be required to be made in accordance with the provisions of
Section 15.6; 

        (h)   Indebtedness
in respect of judgments or awards, the enforcement of which has not been stayed (by reason of a pending appeal or otherwise), for a period of more than ten
(10) days or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; 

        (i)    Approved
Subordinated Indebtedness; 

        (j)    Indebtedness
of AWP and PGRI Delaware not in excess of $125,000,000 in aggregate principal amount at any one time outstanding and incurred pursuant to the Karlsson Note; 

        (k)   on
or after the Project Financing Facility Closing Date, Indebtedness of the Obligors not in excess of $900,000,000 in aggregate principal amount at any one time
outstanding incurred pursuant to a Project Financing Facility; 

71

 

        (l)    Capitalized
Lease Liabilities not in excess of $300,000,000 in aggregate principal amount at any one time outstanding; 

        (m)  Indebtedness
pursuant to a Cost Overrun Facility not in excess of $250,000,000 in aggregate principal amount at any one time outstanding; 

        (n)   Permitted
Junior Debt; and 

        (o)   in
the case of the Company, Indebtedness in an amount not in excess of $50,000,000 in aggregate principal amount at any one time outstanding and not permitted by the
preceding paragraphs of this Section 15.13. 

        15.14    Liens.    Each Obligor will not, and will not permit any of its Subsidiaries to,
create, incur, assume or suffer to exist any Liens upon any of its properties, revenues or assets, whether now owned or hereafter acquired, except: 

        (a)   Liens
in favor of the Collateral Agent pursuant to the Collateral Documents or otherwise for the benefit of the holders of the Obligations; 

        (b)   Liens
for Taxes, assessments or other governmental charges or levies not at the time delinquent or thereafter payable without penalty or being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; 

        (c)   Liens
in favor of carriers, warehousemen, mechanics, materialmen, suppliers and landlords incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books; 

        (d)   Liens
incurred in the ordinary course of business in connection with unemployment insurance or other forms of governmental insurance or benefits, or to secure
performance of tenders, statutory obligations, leases and contracts (other than for Indebtedness) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; 

        (e)   Liens
in respect of judgments in existence less than ten (10) Business Days after the entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible) by insurance maintained with responsible insurance companies; 

        (f)    Liens
on the assets and membership units of AWP and the assets of PGRI Delaware to secure the obligations in respect of the Karlsson Note; 

        (g)   Liens
in connection with the Grandhaven Agreement or the Grandhaven Agreement Amendment; 

        (h)   Liens
on Collateral to secure the obligations in respect of the Project Financing Facility; provided that the holder of such Lien shall have
entered into an Intercreditor Agreement; 

        (i)    Liens
in respect of the Cost Overrun Facility; provided that the holder of such Lien shall have entered into a Second Lien Intercreditor
Agreement; 

        (j)    Liens
securing Capitalized Lease Liabilities, provided that such Liens extend only to the assets acquired with or financed by such
Indebtedness; and 

        (k)   Liens
granted by AWP in the ordinary course of business in respect of Project Assets with an individual fair market value at any one time which is not in excess of
$5,000,000 and an aggregate fair market value at any one time which is not in excess of $10,000,000. 

72

 

        15.15    Investments.    Each Obligor will not, and will not permit any of its
Subsidiaries to, acquire all or substantially all of the assets of any other Person and will not make, incur, assume or suffer to exist any Investment in any other Person, except (a) Cash
Equivalent Investments, (b) Investments outstanding on
the date of this Agreement and set forth on Schedule 15.15 and (c) in the case of the Company and PGRI Delaware, investments in their Subsidiaries. 

        15.16    Restricted Payments, etc.    Each Obligor will not and will not permit any of
its Subsidiaries to: 

        (a)   declare,
pay or make any distribution (in cash, property or obligations) on any shares of any class of capital stock (now or hereafter outstanding) of such Obligor or on
any ownership interest of such Obligor or on any Options or other rights with respect to any shares of any class of capital stock of, or other ownership interest (now or hereafter outstanding) in,
such Obligor or apply any of its funds, property or assets to the purchase, redemption or other retirement of any shares of any class of capital stock of, or other ownership interest (now or hereafter
outstanding) in, such Obligor, or Options or other rights with respect to any shares of any class of capital stock of, or other ownership interest (now or hereafter outstanding) in, such Obligor; 

        (b)   repay,
redeem, purchase or otherwise defease or discharge any indebtedness that is subordinated in right of payment or lien priority to the Obligations prior to its
stated maturity; or 

        (c)   make
any deposit for any of the foregoing purposes. 

        (the
payments and distributions described in paragraph (a) to (c) above collectively referred to as "Restricted Payments"); 

        provided,
however, that (i) any Subsidiary of the Company may declare, pay or make distributions ratably with respect to
their Capital Stock; (ii) any Obligor may make Restricted Payments to any former employee or director of the Company or its Subsidiaries in connection with any employment arrangements; and
(iii) the Company and any Subsidiary may make Restricted Payments to any Obligor. 

        15.17    Mergers, etc.    Each Obligor will not, and will not permit any of its
Subsidiaries to, enter into any merger or consolidation or sell or otherwise transfer all or substantially all of its assets, except as may be consented to by the Majority Purchasers. 

        15.18    Asset Dispositions, etc.    Each Obligor will not, and will not permit any of
its Subsidiaries to, sell, transfer, lease or otherwise dispose of, or grant options, warrants or other rights with respect to, any of its assets (including accounts receivable) to any Person, unless: 

        (a)   in
the case of AWP, such disposal is made in the ordinary course of business pursuant to arrangements which are otherwise in compliance with this Agreement; 

        (b)   in
the case of any other Obligor or Subsidiary which is producing output from mining activities, such disposal is of such output made in the ordinary course of business; 

        (c)   such
disposal is of obsolete or redundant assets which are no longer used or required by the relevant Obligor or Subsidiary or of assets which are to be replaced; or 

        (d)   the
net book value of all assets disposed of by all Obligors and their Subsidiaries (excluding, however, assets disposed of pursuant to clauses (a), (b) or
(c) above) in the same fiscal year of the Company does not exceed $10,000,000 (or the equivalent thereof in any other currency) in the aggregate and fair value in cash or other assets is
received therefor. 

73

 

        15.19    Transactions with Affiliates.    Each Obligor will not, and will not permit any
of its Subsidiaries to, enter into, or cause, suffer or permit to exist: 

        (a)   any
arrangement or contract pursuant to which any indebtedness is extended by such Obligor or Subsidiary to any of its Affiliates as obligor; or 

        (b)   any
other arrangement or contract with any of its Affiliates (including management or similar contracts or arrangements relating to the allocation of revenues, Taxes and
expenses or otherwise) unless such arrangement is on market standard arm's-length terms; 

provided,
however, that nothing in this Section 15.19 shall prevent, or be deemed to prevent (i) the execution and performance
of any Note Document; or (ii) any transaction by and among the Obligors. 

        15.20    Restrictive Agreements, etc.    Each Obligor will not, and will not permit any
of its Subsidiaries to, enter into any agreement prohibiting (i) the creation or assumption of any Lien upon its properties, revenues or assets to secure the Obligations, whether now owned or
hereafter acquired, or the ability
of such Obligor to amend or otherwise modify this Agreement or any other Note Document or Project or (ii) the dividend, distribution or loan of funds by any Subsidiary to the Company. 

        15.21    Inconsistent Agreements.    Each Obligor will not, and will not permit any of
its Subsidiaries to, enter into any agreement containing any provision which would be violated or breached by the issuing of the Notes hereunder or by the performance by any Obligor of its obligations
hereunder or under any Note Document. 

        15.22    Bank Accounts.    After the Springing Lien Trigger Date, the Obligors shall not
open or maintain any bank account or similar deposit arrangement that is not subject to a Lien in favor of the holders of the Notes except with the prior written consent of the Majority Purchasers. 

        15.23    Acquisitions.    Each Obligor will not, and will not permit any of its
Subsidiaries to: 

        (a)   purchase,
subscribe for or otherwise acquire any shares (or other securities or any interest therein), in, or incorporate or form, any other company or agree to do any
of the foregoing; or 

        (b)   purchase
or otherwise acquire any assets (other than in the ordinary course of business) or revenues or (without limitation to any of the foregoing) acquire any business
or interest therein or form or enter into, any partnership, consortium, joint venture or other like arrangement or agree to do so. 

        15.24    Collateral and Guarantees.    

        (a)   Upon
the Springing Lien Trigger Date, and, following the Springing Lien Trigger Date, upon the acquisition or production of any Project Assets (including the entering
into of any Project Document or Hedging Agreement) or other Collateral in respect of which no Lien has effectively been granted pursuant to any Collateral Document, each relevant Obligor shall
promptly (and in any event within twenty (20) days of the Springing Lien Trigger Date and/or the relevant acquisition or production), each Obligor will: 

        (i)    enter
into agreements or instruments, in form and substance reasonably satisfactory to the Collateral Agent, in order to grant to the Collateral Agent, for the ratable
benefit of the holders to secure all Obligations, valid and binding Liens over all Project Assets and all other Collateral, which Liens shall be first-priority prior to the Project Financing Facility
Closing Date and second-priority, subordinated to the Liens securing the Project Financing Facility pursuant to the Intercreditor Agreement, on and after the Project Financing Facility Closing Date
(subject, in each case, to (1) Liens resulting from mandatory provisions of 

74

 

applicable
law and (2) Liens specifically and expressly permitted to be incurred by this Agreement on a senior basis to the Obligations); 

        (ii)   simultaneously
therewith, effect all relevant filings, notarizations and registrations or obtain the acknowledgment and agreement of all relevant counterparties, as the
case may be, in order to perfect the Liens so granted; and 

        (iii)  deliver
customary opinions in form and substance reasonably satisfactory to the Purchasers from counsel reasonably satisfactory to the Purchasers with respect to
enforceability, creation, perfection and such other matters as may be reasonably requested by the Purchasers. 

Without
limiting the generality of the foregoing, following the Springing Lien Trigger Date, each Obligor will ensure that promptly upon (and in any event within twenty (20) days after) the
effectiveness of any Project Document or of any Hedging Agreement, (i) the Collateral Agent, for the ratable benefit of the holders of the Notes, shall be granted valid and perfected
first-priority or second-priority, as applicable, Liens (except as aforesaid) over the relevant Obligor's rights thereunder as security for the Obligations, and (ii) the Collateral Agent shall
receive such documentation as it shall reasonably require as evidence of the rights of the holders to assume the rights and obligations of the relevant Obligor (and/or any affiliate thereof party to
such Project Document) under each such Project Document upon the occurrence of an Event of Default. 

        (b)   Upon
and after the Springing Lien Trigger Date, the Company shall cause each Subsidiary of the Company not party hereto on the date hereof, whether now existing or
hereafter formed, to execute a joinder hereto assuming the obligations of a Guarantor hereunder pursuant to Article XXIII and otherwise in form and substance satisfactory to the Purchasers. 

        15.25    Further Assurances.    Following the Springing Lien Trigger Date, each Obligor
shall promptly do all such acts and execute all such documents as the Collateral Agent or any holders may reasonably request (and in such form as the Collateral Agent or such holders may reasonably
require): 

        (a)   to
perfect the Liens created or intended to be created under or evidenced by the Collateral Documents or for the exercise of any rights, powers and remedies of the
Collateral Agent or the holders granted by or pursuant to the Note Documents or by law; and/or 

        (b)   to
grant to the Collateral Agent or the holders Liens over any property or assets of that Obligor located in any jurisdiction equivalent or similar to the Liens intended
to be granted by or pursuant to the Collateral Documents. 

        15.26    Future Covenants.    Upon the occurrence of the Project Financing Facility
Closing Date, the Company and the Purchasers shall negotiate in good faith the implementation of additional covenants and modification or deletion of existing covenants for the benefit of the holders,
consistent with, and in any event no more restrictive than, those contained in the Project Financing Facility in respect of matters as to the development and operation of the Holbrook Project,
including budgets and development plans with respect thereto, which are not fully known as of the date hereof. 

        15.27    Repurchase at the Option of Purchasers Upon Change of Control.    

        (a)   If
a Change of Control occurs, each holder of Notes shall have the right to require the Company to offer to repurchase all or any part of that holder's Notes pursuant to
a Change of Control Offer on the terms set forth herein. In the Change of Control Offer, the Company shall offer a change of control payment in cash equal to 101.00% of the aggregate principal amount
of Notes repurchased plus accrued and unpaid interest, if any (a "Change of Control Payment"), on 

75

 

the
Notes repurchased to the Change of Control Payment Date, subject to the rights of holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. 

        (b)   Within
thirty (30) days following the date on which the Company becomes aware that a Change of Control has occurred, the Company shall mail a notice to each
holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date specified in the notice, which date shall
be no earlier than ten (10) days and no later than thirty (30) days from the date such notice is mailed, pursuant to the procedures described in such notice. 

        (c)   The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the
extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with this Section 15.27, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under this
Section 15.27 by virtue of such compliance. 

        (d)   On
the Change of Control Payment Date, the Company shall, to the extent lawful, accept for payment all Notes or portions of Notes properly tendered pursuant to the
Change of Control Offer. 

        (e)   The
Company shall promptly mail to each holder of Notes properly tendered the Change of Control Payment for such Notes, and the Company shall promptly mail (or cause to
be transferred by book entry) to each holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any; provided that each new Note
shall be in a principal amount of $2,000 or an integral multiple of $1,000. 

        (f)    The
Company shall publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. 

        (g)   Notwithstanding
anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence
of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer. Notes repurchased by the Company or any of its Affiliates
pursuant to a Change of Control Offer shall have the status of Notes issued but not outstanding or shall be retired and canceled, at the option of the Company. 

 
 

  ARTICLE XVI
  
    EVENTS OF DEFAULT    
    

        Each
of the following is an "Event of Default": 

        (d)   default
for five (5) Business Days in the payment when due of interest, if any, on the Notes; 

        (e)   default
in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on, the Notes; 

        (f)    failure
by any Obligor to comply with the covenants contained in Sections 15.4, 15.7(b), 15.12, 15.13, 15.14(i), 15.15, 15.16 (in the case of Liens to which the
Company has not consented, after thirty (30) days), 15.17, 15.18, 15.19, 15.20, 15.21, 15.22, 15.23, 15.24, 15.25 or 15.27 of this Agreement or failure by the Company to convert any Note as
required pursuant to Article XIII hereof; 

76

 

        (g)   failure
by any Obligor to comply with the covenants contained in Section 15.4(ii) and such failure shall not be cured within ten (10) days; 

        (h)   failure
by any Obligor to comply with any of the other agreements in this Agreement or any other Note Document and such failure shall not be cured within thirty
(30) days; 

        (i)    default
under any mortgage, agreement, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness by any
Obligor (or the payment of which is guaranteed by any Obligor), whether such Indebtedness or Guarantee now exists, or is created after the date hereof, if that default: 

        (i)    is
caused by a failure to pay principal at final maturity on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of
such default (a "Payment Default"); or 

        (ii)   results
in, or gives rise to a right of the holders of such Indebtedness to cause, the acceleration of such Indebtedness prior to its express maturity, 

and,
in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $5.0 million or more; 

        (j)    failure
by any Obligor to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $5.0 million to the extent such
judgment is not covered by insurance or is in excess of insurance coverage, which judgments are not paid, discharged or stayed for a period of sixty (60) days; 

        (k)   any
Guarantee of any Obligor of the Obligations is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason other than directly as a
result of any Purchaser's action or inaction to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Guarantee
hereunder; 

        (l)    after
the date that is twenty (20) days after the Springing Lien Trigger Date, any of the Collateral Documents shall cease, for any reason other than directly as
a result of any Purchaser's action or inaction, to be in full force and effect, or any Lien created by any of the Collateral Documents shall cease to be enforceable and of the same effect and priority
purported to be created thereby; 

        (m)  the
Company, any Guarantor or any of their respective Subsidiaries pursuant to or within the meaning of any Bankruptcy Law: 

        (i)    commences
a voluntary insolvency proceeding; 

        (ii)   consents
to the entry of an order for relief against it in an involuntary insolvency proceeding or consents to its dissolution or winding-up; 

        (iii)  consents
to the appointment of a Custodian of it or for any substantial part of its Property; 

        (iv)  makes
a general assignment for the benefit of its creditors; or 

        (v)   takes
any comparable action under any foreign laws relating to insolvency; 

provided,
however, that the liquidation of any entity into its parent, other than as part of a credit reorganization, will not constitute an
Event of Default under this clause (i); or 

77

 

        (n)   a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: 

        (i)    is
for relief against the Company or any Subsidiary in an involuntary insolvency proceeding; 

        (ii)   appoints
a Custodian of the Company or any Subsidiary or for any substantial part of its Property; or 

        (iii)  orders
the winding-up, liquidation or dissolution of the Company or any Subsidiary; 

or
grants any similar relief under any foreign laws; and in each such case the order or decree remains unstayed and in effect for sixty (60) days. 

 
 

  ARTICLE XVII
  
    REMEDIES ON DEFAULT, ETC.    
    

        17.1    Acceleration of Maturity; Rescission.    In the case of an Event of Default
arising from clauses (i) or (j) of Article XVI, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default
occurs and is continuing, the Majority Purchasers may declare all the Notes to be due and payable immediately by notice in writing to the Company. 

        17.2    Other Remedies.    If an Event of Default occurs and is continuing, subject to
Section 17.4 and 17.5, any holder of any Notes then outstanding may pursue any available remedy, under the Note Documents or otherwise, by proceeding at law or in equity to collect the payment
of principal of, or premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes, this Agreement or the other Note Documents and may take any necessary action
to settle, compromise, adjust or otherwise conclude any proceedings to which it is a party. 

        Any
recovery of judgment shall, after provisions for the payment of the reasonable compensation, expenses, disbursements of any holder of Notes then outstanding and their respective
counsel, be for the ratable benefit of the holders of the Notes in respect of which such judgment has been recovered. A delay or omission by any holder of Notes in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative, to the extent permitted by law. Any costs associated with actions taken by any holder under this Section 17.2 shall be reimbursed to such holder by the Company. 

        17.3    Waiver of Past Defaults and Events of Default.    The holders of a majority in
principal amount of Notes at the time outstanding by notice to the Company may, on behalf of the holders of all the Notes, rescind an acceleration or waive any existing Default and its consequences
under this Agreement, except a continuing Default in the payment of interest or premium, if any, on, or the principal of, the Notes. In the case of any such waiver, the Company and any holders of
Notes shall be restored to their former positions and rights under this Agreement, respectively, provided that no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereto. 

        17.4    Control by Majority.    The Majority Purchasers shall have the right to direct
the time, method and place of conducting any proceeding for exercising any remedy available to the Purchasers, subject to certain exceptions. 

        17.5    Limitation on Suits.    Except to enforce the right to receive payment of
principal, premium, if any, or interest when due, no holder of Notes may pursue any remedy with respect to this Agreement or the Notes unless the Majority Purchasers have agreed to pursue the remedy. 

78

 

        17.6    Rights of Holders to Receive Payment.    Notwithstanding any other provision of
this Agreement, the right of any holder of a Note to receive payment of the principal of or premium, if any, or interest, if any, on its Note or to bring suit for the enforcement of any such payment,
on or after the due date expressed in the Notes shall not be impaired or affected without the consent of the holder. 

        17.7    Collection Suit by the Purchasers.    If an Event of Default in payment of
principal, premium or interest specified in clauses (a) or (b) of Article XVI occurs and is continuing, any holder of any Notes then outstanding may recover judgment in its own
name and on behalf of each of other holders of Notes against the Company or any Guarantor (or any other obligor on the Notes) for the whole amount of unpaid principal and accrued interest remaining
unpaid. 

        17.8    Priorities.    If any holder of any Notes then outstanding collects any money
pursuant to this Article XVII, it shall pay out the money in the following order: 

        FIRST,
to reimburse such holder of Notes then outstanding for any expenses related to bringing and maintaining a proceeding pursuant to this Article XVII; 

        SECOND,
to the holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest as to each, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes; and 

        THIRD,
to the Company or, to the extent the holder of Notes then outstanding collects any amount from any Guarantor, to such Guarantor. 

        The
holders of at least a majority in aggregate principal amount of the Notes then outstanding may collectively fix a record date and payment date for any payment to holders pursuant to
this Section 17.8. 

 
 

  ARTICLE XVIII    
    
    REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES; TRANSFER OF APOLLO PREFERRED SHARES    
    

        18.1    Registration of Notes.    The Company shall keep at its principal executive
office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each
transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and
treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note
promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes. 

        18.2    Transfer and Exchange of Notes.    Upon surrender of any Note to the Company at
the address and to the attention of the designated officer (all as specified in Article XXII), for registration of transfer or exchange (and in the case of a surrender for registration of
transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder's attorney duly authorized in writing and accompanied by
the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten (10) Business Days thereafter, the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid principal
amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of Exhibit A. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no 

79

 

interest
shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp Tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall
not be transferred in denominations of less than $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the
representation set forth in Section 8.5. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of the Notes in accordance with the terms hereof, the
Purchasers shall not be required to physically surrender the Notes to the Company unless (a) the full principal amount represented by the Notes is being converted or (b) the Purchasers
have provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of the Notes upon physical surrender of the Notes. The Purchasers and
the Company shall maintain records showing the principal and interest, if any, converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Purchasers and
the Company, so as not to require physical surrender of the Notes upon conversion. 

        18.3    Replacement of Notes.    Upon receipt by the Company at the address and to the
attention of the designated officer (all as specified in Article XXII) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note,
and 

        (o)   in
the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided that if the holder of such Note is, or is a
nominee for, an original Purchaser or another holder of a Note with a minimum net worth of at least 200% of the value of the lost, stolen or destroyed Note, such Person's own unsecured agreement of
indemnity shall be deemed to be satisfactory), or 

        (p)   in
the case of mutilation, upon surrender and cancellation thereof, within ten (10) Business Days thereafter, the Company, at its own expense, shall execute and
deliver, in lieu thereof, a new Note, dated and bearing interest from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon. 

        18.4    Transfer of Apollo Preferred Shares.    The Apollo Preferred Shares may only be
transferred (a) to an Affiliate of the Preferred Share Purchaser, or (b) with the consent of the Company. 

 
 

  ARTICLE XIX
  
    PAYMENTS ON NOTES    
    

        So
long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything in such Note to the contrary, the Company will pay all sums becoming due on such
Note for principal and interest by the method and at the address specified for such purpose below such Purchaser's name in Schedule A, or by such other method or at such other address as such
Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon
written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably
promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company. Prior to any sale or other disposition of any Note
held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or
surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section 18.2. The Company will afford the benefits of this Article XIX to any direct or indirect
transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made in this Article XIX. 

80

 
 
 

  ARTICLE XX
  
    EXPENSES, ETC.    
    

        20.1    Transaction Expenses.    The Company will pay all reasonable
out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by the Purchasers in connection with the negotiation and execution of this Agreement and the
Notes and any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective) and in connection with the
enforcement of the terms and conditions hereof and of the Notes, including, without limitation: (a) the costs and expenses incurred in enforcing or defending (or determining whether or how to
enforce or defend) any rights under this Agreement or the Notes or any other Note Document, in responding to any subpoena or other legal process or informal investigative demand issued in connection
with this Agreement or the Notes, or by reason of being a holder of any Note and (b) the costs and expenses, including financial advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will
save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a
Purchaser or other holder in connection with its purchase of the Notes). 

        20.2    Survival.    The obligations of the Company under this Article XX will
survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement. 

 
 

  ARTICLE XXI
  
    MODIFICATION AND WAIVER    
    

        21.1    Requisite Consent of Holders.    

        (a)   Except
as provided in Section 21.1(b) of this Agreement, this Agreement, the Notes or any other Note Document may be amended or supplemented with the consent of
the Majority Purchasers (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or compliance with
any provision of this Agreement or the Notes may be waived with the consent of the Majority Purchasers (including, without limitation, consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Notes). 

        (b)   Without
the consent of each holder affected, an amendment, supplement or waiver may not (with respect to any Notes held by a non-consenting holder): 

        (i)    reduce
the principal amount of Notes whose holders must consent to an amendment, supplement or waiver; 

        (ii)   reduce
the principal of or change the fixed maturity of any Note; 

        (iii)  provide
for any right of voluntary redemption of the Notes by the Company or its affiliates; 

        (iv)  reduce
the rate of or change the time for payment of interest on any Note; 

        (v)   waive
a Default or Event of Default in the payment of principal of or premium, if any, or interest, if any, on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the Payment Default that resulted from such acceleration in each case in
accordance with and subject to the terms of this Agreement; 

        (vi)  make
any Note payable in money other than that stated in the Notes; 

81

 

 

       (vii)  impair
the right of any holder to receive payment of principal of, or interest on such holder's notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such holder's notes; 

      (viii)  release
any Guarantor (or permit any entity to fail to become a Guarantor) from any of its Obligations under its Note Guarantee or this Agreement, except in
accordance with the terms of this Agreement; 

        (ix)  release
all or substantially all of the Collateral from (or permit all or substantially all of the Collateral to fail to become subject to) the Lien of the Collateral
Agent securing the Obligations; 

         (x)  alter
in any manner adverse to the holders, the provisions of Article XII or Article XIII; or 

        (xi)  make
any change to Section 21.1(a) or this Section 21.1(b). 

        (c)   The
consent of the holders of the Notes shall not be necessary to approve the particular form of any proposed amendment. It shall be sufficient if such consent approves
the substance of the proposed amendment. 

        (d)   After
an amendment under this Agreement becomes effective, the Company shall mail to each registered holder of the Notes at such holder's address appearing in the
register a notice briefly describing such amendment. However, the failure to give such notice to all holders of the Notes, or any defect therein, shall not impair or affect the validity of the
amendment. 

        21.2    Revocation and Effects of Consents.    

        (a)   After
an amendment, supplement, waiver or other action becomes effective, a consent to it by a holder of a Note is a continuing consent conclusive and binding upon such
holder and every subsequent holder of the same Note or portion thereof, and of any Note issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is
not made on any such Note. 

        (b)   The
Company may, but shall not be obligated to, fix a record date for the purpose of determining the holders entitled to consent to any amendment, supplement, or waiver.
If a record date is fixed, then, notwithstanding Section 21.2(a), those Persons who were holders at such record date (or their duly designated proxies), and only such Persons, shall be entitled
to consent to such amendment, supplement, or waiver or to revoke any consent previously given, whether or not such Persons continue to be holders after such record date. No such consent shall be valid
or effective for more than ninety (90) days after such record date unless the consent of the requisite number of holders has been obtained. 

        21.3    Notation on Exchange of Notes.    If an amendment, supplement or waiver changes
the terms of a Note, the Company shall request the holder of the Note (in accordance with the specific written direction of the Company) to deliver such Note to the Company. In such case, the Company
shall place an appropriate notation on the Note about the changed terms and return it to the holder. Alternatively, if the Company so determines, the Company in exchange for the Note shall issue, the
Guarantors shall endorse and the Company shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and
effect of such amendment, supplement or waiver. 

82

 
 
 

  ARTICLE XXII    
    
    NOTICES    
    

        All notices and communications provided for hereunder, unless otherwise specified, shall be in writing and shall be deemed delivered
(a) on a Business Day if sent by telecopy during the Business Day or on the next Business Day if sent after a Business Day has ended or (b) the next Business Day after delivery to a
recognized overnight delivery service (with charges prepaid). Any such notice must be sent: 

          (i)  if
to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such
Purchaser or nominee shall have specified to the Company in writing, 

with
a copy (which shall not constitute notice) to: 

Wachtell,
Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention: Andrew Nussbaum

                   Ante Vucic

Telecopy: 212-403-2000 

         (ii)  if
to the Company, to the Company at the address set forth below or at such other address as the Company shall have specified to the holder of each Note in writing: 

Prospect
Global Resources Inc.

1401 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer

Telecopy: 303-990-8440 

with
a copy (which shall not constitute notice) to: 

Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch

Telecopy: 303-223-1111

 
 

  ARTICLE XXIII    
    
    GUARANTEE OF NOTES    
    

        23.1    Note Guarantee.    The Guarantors, fully and unconditionally, jointly and
severally, guarantee, on an unsubordinated basis, to each holder (a) the due and punctual payment of the principal of, premium (if any) and interest on each Note, when and as the same shall
become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of and interest on the Notes, to the extent lawful, and the
due and punctual payment of all other obligations and due and punctual performance of all Obligations of the Company to the holders all in accordance with the terms of such Note and this Agreement,
and (b) in the case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise. Each Guarantor agrees that its 

83

 

obligations
hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any such Note or this Agreement, any failure
to enforce the provisions of any such Note and this Agreement, any waiver, modification or indulgence granted to the Company with respect thereto by the holder of such Note, or any other circumstances
which may otherwise constitute a legal or equitable discharge of a surety or such Guarantor. 

        Each
Guarantor hereby waives diligence, presentment, demand for payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest or notice with respect to any such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Note Guarantee shall not
be discharged as to any such Note except by payment in full of the principal thereof, premium (if any) and interest thereon. Each Guarantor hereby agrees that, as between such Guarantor, on the one
hand, and the holders, on the other hand, (i) to the extent lawful in an applicable jurisdiction, the maturity of the Obligations guaranteed hereby may be accelerated as provided in
Article XVII for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and
(ii) in the event of any declaration of acceleration of such obligations as provided in Article XVII, such obligations (whether or not due and payable) shall forthwith become due and
payable by each Guarantor for the purpose of this Note Guarantee. 

        The
Note Guarantee of any Guarantor may be released pursuant to Section 23.3, in connection with the cessation of corporate existence of such Guarantor permitted under the terms
of this Agreement. 

        The
Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of any holder under
the Note Guarantees. 

        23.2    Execution and Delivery of Note Guarantee.    To further evidence the Note
Guarantee set forth in Section 23.1, each Guarantor hereby agrees, on the date such Guarantor becomes a party hereto, that a notation of such Note Guarantee, reasonably satisfactory in form and
substance to the Purchasers shall be endorsed on each Note authenticated and delivered by the Company on the Closing Date and such Note Guarantee shall be executed by either manual or facsimile
signature of an Officer of each Guarantor. The validity and enforceability of any Note Guarantee shall not be affected by the fact that it is not affixed to any particular Note. 

        Each
of the Guarantors hereby agrees that its Note Guarantee set forth in Section 23.1 shall be in full force and effect notwithstanding any failure to endorse on each
Note a notation of such Note Guarantee. 

        If
an Officer of a Guarantor whose signature is on this Agreement or a Note Guarantee no longer holds that office at the time the Company authenticates the Note on which such Note
Guarantee is endorsed or at any time thereafter, such Guarantor's Note Guarantee of such Note shall be valid nevertheless. 

        The
delivery of any Note by the Company, after the authentication thereof hereunder, shall constitute due delivery of any Note Guarantee set forth in this Agreement on behalf of the
Guarantor. 

        23.3    Release of Guarantors.    The Note Guarantee of a Guarantor shall be released: 

        (q)   in
connection with any sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of merger or consolidation) to a Person
that is not (either before or after giving effect to such transaction) the Company or a Subsidiary of the Company, if the sale or other disposition is permitted by the terms of this Agreement; or 

        (r)   in
connection with any sale or other disposition of Capital Stock of that Guarantor to a Person that is not (either before or after giving effect to such transaction)
the Company or a 

84

 

Subsidiary
of the Company, if the sale or other disposition is permitted by the terms of this Agreement; 

and
in either such case, the Company has delivered to the holders of Notes then outstanding an Officer's Certificate stating that all conditions precedent herein provided for relating to such
transactions have been complied with and that such release is authorized and permitted hereunder. 

        Each
holder of Notes then outstanding shall execute any documents reasonably requested by either the Company or a Guarantor in order to evidence the release of such Guarantor from its
obligations under its Note Guarantee endorsed on the Notes and under this Article XXIII. 

        23.4    Waiver of Subrogation.    Until all the obligations under the Notes and the Note
Guarantees are satisfied in full, each Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment,
performance or enforcement of such Guarantor's obligations under its Note Guarantee and this Agreement, including, without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, and any right to participate in any claim or remedy of any holder of Notes against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other Property or by set-off or in any other manner, payment
or Note on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and the Notes shall not have been paid in full, such amount shall
have been deemed to have
been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the holders of the Notes, and shall forthwith be paid to the Company for the benefit of such holders to be
credited and applied upon the Notes, whether matured or unmatured, in accordance with the terms of this Agreement. Each Guarantor acknowledges that it shall receive direct and indirect benefits from
the financing arrangements contemplated by this Agreement and that the waiver set forth in this Section 23.4 is knowingly made in contemplation of such benefits. 

 
 

  ARTICLE XXIV    
    
    CONFIDENTIAL INFORMATION    
    

        For the purposes of this Article XXIV, "Confidential Information" means information delivered to
any Purchaser by or on behalf of the Company, any Subsidiary or any Guarantor in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature,
provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure (without
breach of any confidentiality or fiduciary obligation), (b) subsequently becomes publicly known through no act or omission by such Purchaser or any person acting on such Purchaser's behalf,
(c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary (provided that such Purchaser did not know or have
reason to believe that the party disclosing such information was subject to any confidentiality or fiduciary obligation to the Company, any Subsidiary or any Guarantor) or (d) constitutes
financial statements delivered to such Purchaser under Section 14.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in
accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser, provided that such
Purchaser may deliver or disclose Confidential Information to (i) its directors, officers, employees, partners, managers, shareholders, members, agents, attorneys and affiliates (to the extent
such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential
the Confidential Information substantially in accordance with the terms of this Article XXIV, or (iii) any other Person (w) to effect compliance with any Law, rule, regulation or
order applicable to such Purchaser, (x) in response to any subpoena or 

85

 

other
legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser
may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser's Notes and this Agreement
(provided that for clauses (w), (x) and (y), such Purchaser shall (1) promptly notify the Company of the existence, terms
and circumstances surrounding such request or requirement for disclosure, (2) consult with the Company on the advisability of taking legally available steps to resist or narrow such request or
requirement, (3) assist the Company in seeking a protective order or other appropriate remedy and (4) if disclosure is ultimately necessary, disclose only the portion of the information
legally required to be disclosed and use commercially reasonable efforts to obtain confidential treatment for such information). Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this Article XXIV as though it were a party to this Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company embodying the provisions of this Article XXIV. 

        Notwithstanding
anything to the contrary in this Article XXIV, each Purchaser and any Affiliate thereof may disclose: (a) the type of business in which the Company and its
Subsidiaries are engaged; (b) the percentage and fair value of any Notes held by such Purchaser or any Affiliate under this Agreement and the amount of such Notes; and (c) the
relationship of such Purchaser or its Affiliates to the Company and its Subsidiaries in respect of this Agreement; provided that no such disclosure shall include, or in
any way describe, the sales or earnings results or projections of the Company or any of its Subsidiaries (except in connection with general statistical summaries or analyses of the portfolio
investments that do not specify or identify the Company or any of its Subsidiaries), or any terms of any contracts to which the Company or any of its Subsidiaries is a party or any counterparty
thereto and the terms of such contracts. 

 
 

  ARTICLE XXV    
    
    SUBSTITUTION OF PURCHASER    
    

        Each Purchaser (including any substitute Purchaser or any transferee of any portion of the purchase commitments pursuant to this
Article XXV) shall have the right to substitute any Person as the purchaser of the Notes, other Securities and/or Royalties that it has agreed to purchase hereunder, or transfer or assign a
portion of such Purchaser's commitment for the purchase of Notes, other Securities and/or Royalties to such Person, by written notice to the Company, which notice shall be signed by both such
Purchaser and such Person, shall contain such Person's agreement to be bound by this Agreement, contain a confirmation by such Person of the accuracy with respect to it of the representations set
forth in Article VI, and be accompanied by a properly completed and duly executed Internal Revenue Service Form W-9 (or, if such Person is a Foreign Assignee, a properly
completed and duly executed Internal Revenue Service Form W-8, completed in such a manner as to benefit, to the fullest extent permitted by applicable U.S. federal income tax law,
from any available reduction of such Foreign Assignee's liability for U.S. federal income Taxes with respect to amounts to which such Foreign Assignee is entitled pursuant to the Securities or
pursuant to the Royalty Agreement). Upon receipt of such notice, if the original Purchaser has elected to substitute such Person or has allocated 100% of its commitments to one or more Persons, any
reference to such Purchaser in this Agreement (other than in this Article XXV), shall be deemed to refer to such Person(s) in lieu of such original Purchaser (including any
corresponding references to such Person as "Notes Purchaser" or "Royalties Purchaser," as the case may be). In the event that such Person is so substituted as a Purchaser hereunder and such Person
thereafter transfers to such original Purchaser all of the Notes, other Securities and Royalties then held by such Person, upon receipt by the Company of notice of such 

86

 

transfer,
any reference to such Person as a "Purchaser" in this Agreement (other than in this Article XXV), shall no longer be deemed to refer to such Person, but shall refer to such original
Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes, other Securities and Royalties under this Agreement. In the event that a Purchaser transfers
or assigns a portion (but not all) of such Purchaser's commitment for the purchase of Notes, other Securities and/or Royalties, such transferee or assignee shall be deemed an additional "Purchaser"
for all purposes under this Agreement (including any corresponding references to such Person as "Notes Purchaser" or "Royalties Purchaser," as the case may be). Schedule A shall be updated upon
the occurrence of any substitution, transfer or assignment contemplated herein. 

 
 

  ARTICLE XXVI    
    
    MISCELLANEOUS    
    

        26.1    Successors and Assigns.    Except as set forth in Article XXV, this
Agreement shall be binding upon, and inure solely to the benefit of, the Purchasers, the Company, the Guarantors, and their respective successors and assigns, and no other person shall acquire or have
any right under or by virtue of this Agreement. 

        26.2    Legal Holidays.    A "Legal Holiday" is a Saturday,
a Sunday or other day on which (a) commercial banks in the City of New York are authorized or required by law to close or (b) the Principal Market is not open for trading. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. 

        26.3    Accounting Terms.    All accounting terms used herein which are not expressly
defined in this Agreement have the meanings respectively given to them in accordance with GAAP. Except as otherwise specifically provided herein, (a) all computations made pursuant to this
Agreement shall be made in accordance with GAAP, and (b) all financial statements shall be prepared in accordance with GAAP. 

        26.4    Severability.    Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction. 

        26.5    Construction, Etc.    Each covenant contained herein shall be construed (absent
express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be
deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person. 

        Certain
capitalized and other terms used in this Agreement are defined in Schedule B; and references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule
or an Exhibit attached to this Agreement. For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof. 

        26.6    Counterparts.    This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute one (1) instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but
together signed by all, of the parties hereto. 

87

 

        26.7    Table of Contents, Headings, Etc.    The table of contents, cross-reference sheet
and headings of the Sections of this Agreement have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or
provisions hereof. 

        26.8    Construction.    Each of the Company and the Guarantors acknowledges and agrees
that the purchase and sale of the Securities pursuant to this Agreement is an arm's-length commercial transaction
between the Company, on the one hand, and the several Purchasers, on the other, and that each of the Company and the Guarantors has consulted its own legal and financial advisors to the extent it
deemed appropriate. 

        26.9    Governing Law.    This Agreement shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State of New York (excluding choice-of-law principles of the laws of such State that would permit the
application of the laws of a jurisdiction other than such State), other than to the extent the laws of the State of Nevada (including chapters 78 and 92A of the Nevada Revised Statutes)
mandatorily apply. 

        26.10    Jurisdiction and Process; Waiver of Jury Trial.    

        (a)   Each
of the Company and the Guarantors and the Purchasers agrees that any suit or proceeding arising in respect of this Agreement will be tried in the U.S. District
Court for the Southern District of New York or in any state court located in the City and County of New York and the Company and the Guarantors and the Purchasers agree to submit to the jurisdiction
of, and to venue in, such courts. 

        (b)   The
Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in
Section 26.10(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified
in Article XXII or at such other address of which such holder shall then have been notified pursuant to said Section. The Company agrees that such service upon receipt (i) shall be
deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be
valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or
any reputable commercial delivery service. 

        (c)   Nothing
in this Section 26.10 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders
of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any
other jurisdiction. 

        (d)   Each
of the Company, the Guarantors and the Purchasers hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Agreement or the Transactions. 

        26.11    Disclosure of Tax Information.    Notwithstanding anything herein to the
contrary, the Company (and the Company's employees, representatives, and other agents) and each of the Guarantors (and each of the Guarantors' employees, representatives, and other agents) are
authorized to disclose to any and all
persons, the Tax Treatment and Tax Structure of the potential transaction and all materials of any kind (including Tax opinions and other Tax analyses) provided to the Company and to any of the
Guarantors relating to that treatment and structure, without the Purchasers imposing any limitation of any kind. For this purpose, "Tax Treatment" means U.S. federal and
state income Tax treatment, and "Tax Structure" is limited to any facts that may be relevant to that treatment. 

88

 

        26.12    Statements Required in Certificate.    Each certificate (other than certificates
provided pursuant to Section 14.1(a)) with respect to compliance by or on behalf of the Company or any Guarantor with a condition or covenant provided for in this Agreement shall include: 

        (s)   a
statement that the Person making such certificate or opinion has read such covenant or condition; 

        (t)    a
statement that, in the opinion of such Person, it or he has made such examination or investigation as is necessary to enable it or him to express an informed opinion
as to whether or not such covenant or condition has been complied with; and 

        (u)   a
statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with. 

        26.13    Force Majeure.    In no event shall the Company be responsible or liable for any
failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages,
accidents, fires, floods, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications
or computer (software and hardware) services; it being understood that the Company shall use reasonable efforts which are consistent with accepted practices in the mining industry to resume
performance as soon as practicable under the circumstances. 

        26.14    Specific Performance.    The parties agree that irreparable damage would occur
in the event that any party fails to consummate the transactions contemplated by this Agreement in accordance with the terms of this Agreement and that each of the Company and the Purchasers shall be
entitled to specific performance in such event, in addition to any other remedy at Law or in equity. The parties agree that the Company and the Purchasers shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement or to enforce specifically the terms and provisions of this Agreement in addition to any other remedy to which either Party may be entitled. 

        26.15    Time of the Essence.    Time shall be of the essence of this Agreement. 

[Signature page follows]

89

 

        IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. 

 

							
	 	 	PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
  By:	
 	
/s/ PATRICK L. AVERY

 
	 	 	 	 	Name:	 	Patrick Avery
	 	 	 	 	Title:	 	 Chief Executive Officer and President

 

 90

 
 

							
	 	 	AIF VII PG O&R HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo Advisors VII (APO FC), L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo Advisors VII (APO FC-GP), LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY

 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President

 

 91

 
 

							
	 	 	AIF VII PG HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo Advisors VII, L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo Capital Management VII, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY

 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President

 

 92

 
 

							
	 	 	ANRP PG HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo ANRP Advisors, L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo ANRP Capital Management, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY

 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President

 

 93

 
 

							
	 	 	ANRP PG O&R HOLDINGS, L.P.
	

 	
 	
  By:	
 	
Apollo ANRP Advisors (APO FC), L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo ANRP Advisors (APO FC-GP), LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY

 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President

 

 94

 
 

							
	 	 	AP PG GOLDEN SHARE, LLC
	

 	
 	
  By:	
 	
Apollo Management VII, L.P.,

its manager
	

 	
 	
 By:	
 	
AIF VII Management, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY

 
	 	 	 	 	Name:	 	Laurie D. Medley
	 	 	 	 	Title:	 	 Vice President

 

 95

 

 
 

  SCHEDULE A    
    
    INFORMATION RELATING TO PURCHASERS    
    

 

					
	Name of Notes Purchasers

 
	 	Principal Amount of

Notes to be Purchased 	 
	 AIF VII PG Holdings, L.P. 
	 	$	76,200,000	 
	 ANRP PG Holdings, L.P. 
	 	$	23,800,000	 
	 Total
	 	$	100,000,000	 

 

  

 

														
	Name of Royalty Purchasers

 
	 	Percentage of

Royalty to be

Purchased 	 	Percentage of

Series A

Warrants to

be Received 	 	Percentage of

Series B

Warrants to

be Received 	 	Percentage of

Termination Fee

to be Received 	 
	 AIF VII PG O&R Holdings, L.P. 
	 	 	76.20	%	 	76.20	%	 	76.20	%	 	76.20	%
	 ANRP PG O&R Holdings, L.P. 
	 	 	23.80	%	 	23.80	%	 	23.80	%	 	23.80	%
	 Total
	 	 	100	%(1)	 	100	%	 	100	%	 	100	%

 

 	(1)
	The
percentages in this Schedule A refer to the percentage of the Royalty that is allocable to the Royalty Purchasers in the Royalty Agreement. For
the avoidance of doubt, the Royalty Purchasers are not entitled to the Royalty that is allocable to Buffalo Management LLC in the Royalty Agreement. 

 

  Name of Preferred Share Purchaser  

AP
PG Golden Share, LLC 

        1)    All
payments by wire transfer of immediately available funds to accounts to be specified by the applicable Purchaser no later than two (2) Business Days prior to
the date of the applicable payment. 

        2)    All
notices of payments, written confirmations of such wire transfers and all other communications: 

c/o
Apollo Global Management, LLC

9 West 57th Street

New York, NY 10019

Attention: Laurie Medley

Facsimile: (646) 607-0528 

Sch. A-1

 

 
 

  SCHEDULE B    
    
    DEFINED TERMS    
    

        As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such
term: 

        "Acceptable
Confidentiality Agreement" shall mean a customary confidentiality agreement containing terms no less favorable to the Company in the aggregate
than the terms set forth in the Confidentiality Agreement, dated March 5, 2012, between the Company and Apollo Management VII, L.P. 

        "Accounting
Firm" is defined in Section 13.12. 

        "Affiliate"
of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control
with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" have correlative meanings. For purposes of this
Agreement, Apollo Global Management, LLC and its Affiliates shall not be deemed to be Affiliates of the Company or any of its Subsidiaries. 

        "Associate"
means, when used to indicate a relationship with any Person, (i) any officer or director of such Person, (ii) any spouse, former
spouse, child, parent, parent of a spouse, sibling, grandchild or grandparent of any of the Persons listed in clause (i) above, (iii) any Affiliate of any of the Persons listed in
clause (i) or (ii) above, (iv) any corporation or organization of which such Person listed in clause (i) or (ii) above is an officer or partner or is directly or
indirectly the beneficial owner of 10% or more of any class of equity securities, and (v) any trust or other estate in which any of the Persons listed in clause (i) or (ii) above
has a substantial beneficial interest or as to which such Person serves as trustee or in a similar fiduciary capacity. 

        "Agreement"
is defined in the first paragraph of this Agreement. 

        "Applicable
Price" is defined in Section 13.4. 

        "Apollo
Preferred Shares" means 100 shares of the Company's Series A Preferred Stock as described in the Certificate of Designation. 

        "Apollo
Warrants" are defined in the third paragraph of this Agreement. 

        "Appraiser"
is defined in Section 13.4(D). 

        "Approval"
means any authorization, consent, approval, license, lease, ruling, permit, tariff, rate, certification, exemption, filing, variance, claim,
order, judgment, decree, sanction or publication of, by or with, any notice to, any declaration of or with, or any registration by or with, or any other action or deemed action by or on behalf of, any
Governmental Authority. 

        "Approved
Subordinated Indebtedness" means any indebtedness outstanding from any Obligor to any other Obligor which is subject to the terms and conditions of
a subordination agreement in form and substance satisfactory to the Purchasers providing for, among other things, the subordination of the Indebtedness subject to the subordination agreement to the
Indebtedness evidenced by the Notes, and which is incurred on terms and conditions, and pursuant to documentation, acceptable to the holders, acting in their reasonable discretion. 

        "AWP"
means American West Potash LLC, a Delaware limited liability company and, as of the date hereof, a wholly owned indirect Subsidiary of the
Company. 

Sch. B-1

 

        "Bankruptcy
Law" means Title 11, United States Code, or any other U.S. Federal or state law for the relief of debtors. 

        "Beneficial
Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act as in
effect on the date hereof. The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding meaning. 

        "Benefit
Plan" shall mean any employee benefit plan, program, policy, practice, undertaking or other arrangement maintained, sponsored or administered by the
Company or any of its Subsidiaries, to which the Company or any of its Subsidiaries contributes or is bound, or in respect of which the Company or any of its Subsidiaries has, or will have, any
liability or contingent liability, in each case providing benefits to any employees of the Company or any of its Subsidiaries (or any beneficiary or dependent thereof), whether or not written (whether
funded or unfunded, insured or uninsured, formal or informal, registered or unregistered), including without limitation any bonus, incentive, deferred compensation, incentive compensation, vacation,
stock purchase, stock option, phantom stock, pension, retirement savings, profit sharing, life or accident insurance, hospitalization, health, medical or dental, disability, severance, employment,
change of control or fringe benefit plan, program or agreement and any related trusts or other funding vehicles. 

        "Board
Observer" is defined in Section 9.11(b). 

        "Board
of Directors" means: 

        (a)   with
respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board; 

        (b)   with
respect to a partnership, the board of directors of the general partner of the partnership; 

        (c)   with
respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and 

        (d)   with
respect to any other Person, the board or committee of such Person serving a similar function. 

        "Buffalo"
is defined in the sixth paragraph of this Agreement. 

        "Business
Day" means a day other than a Saturday, Sunday or other day on which commercial banking institutions in New York City are authorized or required by
law to close. 

        "Buy-In"
is defined in Section 13.3(c). 

        "Buy-In
Price" is defined in Section 13.3(c). 

        "Cap"
is defined in Section 11.4(d). 

        "Capital
Costs" shall mean all costs to develop, build, equip, commission and ramp up to nameplate capacity the mine, processing facilities, required
infrastructure (including any necessary infrastructure to export product whether at the mine site or off the mine site) and administrative facilities at the mine site. Capital Costs shall include
direct, indirect costs and contingency, direct and indirect owner's costs and contingency plus spare parts and first fills. 

        "Capitalized
Lease Liabilities" means all monetary obligations of any Person under any leasing or similar arrangement which could be classified as
capitalized leases, and, for purposes of this Agreement and each other Note Document, the amount of such obligations shall be the capitalized amount thereof, and the stated maturity thereof shall be
the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. 

Sch. B-2

 

        "Capital
Stock" means: 

        (a)   in
the case of a corporation, corporate stock; 

        (b)   in
the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; 

        (c)   in
the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and 

        (d)   any
other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing
Person, but excluding from all of the foregoing clauses (a) through (d) any debt securities convertible into Capital Stock, whether or not such debt securities include any right of
participation with Capital Stock. 

        "Cash
Equivalent Investment" means, at any time: 

        (e)   securities
denominated in Dollars maturing not more than twelve (12) months from the date of issue, which are issued, guaranteed or insured by the government of
the United States of America; or 

        (f)    any
negotiable certificate of deposit or bankers' acceptance, guaranteed investment contracts, repurchase agreement or discount debt obligation (in each case,
denominated in Dollars), maturing not more than one (1) year after such time, which is issued (or, in the case of a bankers' acceptance, accepted) by any domestic commercial banking institution
that has a credit rating of either A-1 or higher by Standard & Poor's Rating Services or F1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody's Investor
Services Limited. 

        "CERCLA"
is defined in Section 7.20(a)(i). 

        "Certificate
of Designation" means the certificate of designation of the Apollo Preferred Shares in the form set forth in Exhibit C. 

        "Change
of Control" means the occurrence of any of the following: 

        (g)   (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act)), other than Permitted Holders, is or becomes the Beneficial
Owner, directly or indirectly, of
35.0% or more of the voting power of the Voting Stock of the Company (or upon any merger or consolidation, the surviving or successor entity); or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election to such Board of Directors or whose nomination
for election was approved by a vote of at least 50.0% of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of the Company; 

        (h)   the
sale, transfer, conveyance, or other disposition in one or a series of related transactions, of all or substantially all of the properties or assets of the Company
and the Subsidiaries, taken as a whole (which, for the avoidance of doubt, shall not include merger or consolidation transactions), to any "person" (as that term is used in Section 13(d)(3) of
the Exchange Act) other than to Permitted Holders; or 

        (i)    the
adoption of a plan relating to the liquidation or dissolution of the Company. 

        "Change
of Control Offer" means an offer to a holder of Notes to repurchase all or any part of that holder's Notes in the event a Change of Control occurs. 

        "Change
of Control Payment" is defined in Section 15.27(a). 

Sch. B-3

 

        "Change
of Control Payment Date" means the date of repurchase of Notes by the Company pursuant to a Change of Control Offer. 

        "Claim"
is defined in Section 11.3(b). 

        "Claim
Notice" is defined in Section 11.3(b). 

        "Closing"
is defined in Section 3.1. 

        "Closing
Date" is defined in Section 3.1. 

        "Closing
Sale Price" means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the
Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the
case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market
makers for such security as reported in the OTC Link or "pink sheets" by OTC Markets Group Inc. (formerly the Pink OTC Markets Inc.). If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the
Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved by an Appraiser selected as provided in
Section 13.4(d). All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable
calculation period. 

        "Code"
means the Internal Revenue Code of 1986, as amended, and the rules, regulations and published interpretations promulgated thereunder from time to
time. 

        "Collateral"
means substantially all of the property, real or personal, tangible or intangible, of each Obligor, including, without limitation, any property
subject to a Lien in favor of the lenders in respect of the Project Financing Facility. 

        "Collateral
Agent" means the agent named as "Collateral Agent" in the Collateral Documents. 

        "Collateral
Documents" means any security agreements, mortgages, collateral access agreements, deposit account control agreements, securities account control
agreements and any other documents pursuant to which any Obligor grants or perfects a Lien upon any real or personal property as security for payment of the Obligations. 

        "Company
Disclosure Schedules" means the disclosure schedules attached hereto that correspond to the numbered sections in Article VII; the information
disclosed in any particular section of the Company Disclosure Schedules shall be deemed to relate to and to qualify only the particular representation or warranty set forth in the corresponding
numbered section in Article VII; provided, however, that to the extent that an item in a section of the Company Disclosure Schedules is
relevant and reasonably apparent on its face to apply to the disclosure required by any other section of Article VII, such item shall be deemed to be disclosed in the section of the Company
Disclosure
Schedules corresponding to such other section of Article VII whether or not an explicit cross-reference appears. 

        "Common
Stock" means the common stock of the Company, par value $0.001 per share. 

        "Company"
is defined in the first paragraph of this Agreement. 

Sch. B-4

 

        "Company
Converstion Date" is defined in Section 13.3(b). 

        "Company
Conversion Notice" is defined in Section 13.3(b). 

        "Company
Organizational Documents" is defined in Section 7.4. 

        "Company
SEC Documents" is defined in Section 7.9(a). 

        "Company
Share Delivery Date" is defined in Section 13.3(b). 

        "Company
Termination Fee" is defined in Section 10.3. 

        "Compliance
Certificate" means a certificate an officer of the Company reasonably satisfactory in form and substance to the Purchasers certifying of
compliance with the provisions of this Agreement. 

        "Confidential
Information" is defined in Article XXV. 

        "Conversion
Amount" is defined in Section 13.1(a) and 13.1(b). 

        "Conversion
Date" is defined in Section 13.3(a). 

        "Conversion
Failure" is defined in Section 13.3(c). 

        "Conversion
Milestone" means the date on which both of the following has occurred: (i) Project Completion, and (ii) at any time after Project
Completion, the arithmetic average of the daily VWAP of the Common Stock for any twenty (20) consecutive Trading Days being 200% or more of the then-applicable Conversion Price
(provided that this condition shall only be deemed to be satisfied if the Common Stock is listed on Nasdaq, TSX or NYSE/AMEX (or another national securities exchange in
the US or Canada reasonably acceptable to the Majority Purchasers) during such twenty (20) consecutive Trading Day measuring period). 

        "Conversion
Price" is defined in Section 13.2(b). 

        "Convertible
Securities" means, with respect to any Person, any shares or securities (other than Options) directly or indirectly convertible into or
exchangeable or exercisable for shares of capital stock of such Person (including, in the case of the Company, shares of Common Stock). 

        "Cost
Overrun Facility" means any committed credit facility made available to the Company for the purposes of funding capital cost overruns and which has
been made available on terms and conditions, and pursuant to documentation, acceptable to the Collateral Agent (acting on the instructions of the Majority Purchasers). 

        "Current
Capital Estimate" means $1,530,000,000. 

        "Custodian"
means any receiver, interim receiver, receiver and manager, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy
Law. 

        "Damages"
is defined in Section 11.1. 

        "Default"
means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. 

        "Definitive
Feasibility Study" shall mean a definitive feasibility study with respect to the Holbrook Project from Tetra Tech or another firm reasonably
acceptable to the Majority Purchasers which (a) indicates that applicable metallurgical test work has been completed such that the entire flow sheet has been finalized and fixed and is fully
specified to support basic and detailed engineering and obtaining firm vendor quotes; (b) indicates that at least 50% of basic engineering has been completed; (c) indicates that
procurement is well-advanced; (d) indicates that capital and operating cost estimate with an accuracy of +/- 15%, has been completed and in the case of the capital cost estimate,
has minimal reliance on factored estimates and primarily relies on takeoffs and unit rates; (e) indicates that 

Sch. B-5

 

significant
trade-off and optimization studies have been completed; (f) indicates that all environmental assessments have been performed and all key permit applications have been
submitted; (g) indicates that the Holbrook Project has a schedule that starts no later than the first quarter of 2014 and has a duration from Notice to Proceed (as defined in the EPCM or EPC
contract) to Project Completion (as would be defined in a customary project finance facility) that does not exceed fifty-two (52) months; (h) indicates that the Holbrook
Project is supported by reserves and resources of all potash members which the Company has the right to mine which are estimated using assumptions, methodologies and a mine plan acceptable to the
Purchasers' independent engineering firm and meet NI 43-101 standards that have a tonnage and grade consistent with that presented in the Reserves and Resources Statement presented
in the Preliminary Economic Assessment ("PEA") by Tetra Tech (which was filed with the SEC on December 22, 2011), and that in any event will (x) have sufficient demonstrable resources of
ultimately recoverable standard product of all potash members that support a mine life of twenty-five (25) years and (y) have sufficient reserves to support a mine life of at
least twenty (20) years; and (i) meets the definitive feasibility study requirements of commercial project finance lending banks, policy banks and major export credit agencies to which
the Company will be applying for financial support, including compliance with the Equator Principles. 

        "DFS
Estimate" is defined in Section 9.8. 

        "Dilutive
Issuance" is defined in Section 13.4. 

        "Enforceability
Exceptions" is defined in Section 7.2(c). 

        "Environmental
Claims" is defined in Section 7.20(a)(iv). 

        "Environmental
Laws" is defined in Section 7.20(a)(i). 

        "EPC"
is defined in Section 6.8. 

        "EPCM"
is defined in Section 6.8. 

        "Equity
Interests" means Capital Stock and all Options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or
exchangeable for, Capital Stock). 

        "Equity-based
Security" means any capital stock, any preferred stock or any other equity-like or hybrid securities (including debt securities
with equity components), including, without limitation, Options, convertible, exchangeable or exercisable securities, stock appreciation rights or any other security or arrangement whose economic
value is derived from the value of the equity of the Company or its Subsidiaries. 

        "ERISA"
means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder from
time to time in effect. 

        "ERISA
Affiliate" means, with respect to the Company or a Subsidiary of the Company, any trade or business (whether or not incorporated) that, together with
the Company or such Subsidiary, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section 412 of
the Code, is treated as a single employer under Section 414 of the Code. 

        "Event
of Default" is defined in Article XVI. 

        "Exchange
Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder from time to
time in effect. 

        "Ex-Dividend
Date" means, with respect to any issuance, dividend or distribution, the first date on which the shares of Common Stock trade on the
applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question. 

Sch. B-6

 

        "Expiration
Date" is defined in Section 13.9. 

        "Expiration
Time" is defined in Section 13.9. 

        "FCPA"
is defined in Section 7.7(b). 

        "Foreign
Assignee" means an assignee of an interest in the Securities or the Royalty Agreement (including pursuant to Article XXV) that is a Foreign
Purchaser. 

        "Foreign
Purchaser" means a Purchaser other than a Purchaser that is, or is treated as, a "United States person" for U.S. federal income tax purposes, within
the meaning of Section 7701(a)(30) of the Code. 

        "Form 10-K"
is defined in Section 7.16(b). 

        "Form 10-Q"
is defined in Section 14.1. 

        "GAAP"
means generally accepted accounting principles in the United States of America set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting profession, as in effect from time to time, provided that if any change in GAAP would alter the
computation or determination of any financial ratio or other test provided for under this Agreement such ratio or other test shall continue to be computed in accordance with GAAP as in effect prior to
such change until the Majority Purchasers and the Company shall have agreed whether (and if so, how) to amend this Agreement to eliminate the effect of such change on such computation or
determination. 

        "Governmental
Authority" means: 

        (j)    the
government of 

        (i)    the
United States of America or any state or other political subdivision thereof, or 

        (ii)   any
other jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company
or any Subsidiary, or 

        (k)   any
entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. 

        "Grandhaven"
is defined in Section 9.7. 

        "Grandhaven
Agreement" means the Potash Royalty Purchase and Sale Agreement and Option, dated November 22, 2011, between the Company and Grandhaven. 

        "Grandhaven
Agreement Amendment" is defined in Section 9.9. 

        "Guarantee"
means a guarantee other than by endorsement of negotiable instruments for collection or deposit in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. 

        "Guarantors"
means each entity that signs this Agreement as a Guarantor on the date hereof and each entity that becomes a party hereto after the date hereof,
including pursuant to Section 15.24, and each of their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the
provisions of this Agreement. 

        "Hazardous
Substances" means (i) any pollutant, contaminant, chemical or toxic or hazardous material or substance or waste or any other material or
substance, to the extent exposure to such 

Sch. B-7

 

material
or substance is now or hereafter prohibited, limited or regulated under any Environmental Law, (ii) any petrochemical or petroleum distillates or by-products, acidizing,
well improvement, hydraulic fracturing ("fracking") or drilling fluids, produced waters, radioactive materials (including naturally occurring radioactive materials),
asbestos in any form, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls, explosives, and radon gas, and
(iii) any chemicals, materials, wastes, or substances defined, listed, or classified as or included in the definition or designations of "hazardous substances," "solid waste," "regulated
substances," "hazardous wastes," "hazardous materials," "restricted hazardous materials," "extremely hazardous substances," "toxic substances," "contaminants" or "pollutants" or words of similar
meaning and regulatory effect or with respect to which liability or standards of conduct are imposed. 

        "Hedging
Agreement" means any agreement evidencing or creating any Hedging Obligations. 

        "Hedging
Obligations" means, with respect to any specified Person, the obligations of such Person under: 

        (l)    interest
rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed to protect such Person against
fluctuations in interest rates; 

        (m)  currency
exchange swap agreements, currency exchange cap agreements, currency exchange collar agreements and other agreements or arrangements designed to protect such
Person against fluctuations in currency exchange values; 

        (n)   commodity
swap agreements, commodity cap agreements, commodity collar agreements and other agreements or arrangements designed to protect such Person against
fluctuations in commodity prices; and 

        (o)   other
agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. 

        "Holbrook
Project" is defined in the second paragraph of this Agreement. 

        "holder"
means, with respect to any Note the Person in whose name such Note is registered in the register maintained by the Company pursuant to
Section 18.1. 

        "Indebtedness"
means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent: 

        (p)   in
respect of borrowed money; 

        (q)   raised
pursuant to any note purchase facility or evidenced by bonds, notes, debentures, loan stock or similar instruments or letters of credit (or reimbursement
agreements in respect thereof); 

        (r)   in
respect of banker's acceptances; 

        (s)   representing
Capitalized Lease Liabilities; 

        (t)    representing
the balance deferred and unpaid of the purchase price of any Property due more than six (6) months after such Property is acquired, except any such
balance that constitutes an accrued expense or trade payable (other than any contingent payment obligations of a Person based on the performance of a business or asset or Capital Stock purchased by
such Person); 

        (u)   representing
the net loss value of any Hedging Obligations; 

        (v)   representing
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); 

Sch. B-8

 

 

        (w)  representing
any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; 

        (x)   representing
any counter-indemnity obligation in respect of a guarantee, indemnity, bond, standby or documentary letter of credit or any other instrument issued by a
bank or financial institution; or 

        (y)   representing
the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above; 

if
and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified
Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. 

        "Indemnified
Person" is defined in Section 11.3(a). 

        "Indemnifying
Person" is defined in Section 11.3(a). 

        "Indemnified
Taxes" is defined in Section 9.15(c). 

        "Indemnity
Tax Benefit" is defined in Section 11.4(g). 

        "Initial
Conversion Price" is defined in Section 13.2(a). 

        "Insolvency
Default" means any condition or event which, after notice, lapse of time or both, would constitute an Event of Default of the nature referred to
in clauses (i) or (j) of Article XVI. 

        "Investors
Rights Agreement" is defined in the eighth paragraph of this Agreement. 

        "Intellectual
Property Rights" is defined in Section 7.21. 

        "Intercreditor
Agreement" means an agreement between the Collateral Agent, on behalf of the holders, and the agent or other representative for the lenders
under the Project Finance Facility which will provide (a) for the subordination of the Liens securing the Obligations to the Liens securing the Indebtedness under the Project Finance Facility,
(b) that the Liens on the Collateral securing the Notes shall not, other than pursuant to a proceeding under Bankruptcy Law, be released absent the consent of the Collateral Agent unless there
has been final and full payment of the Obligations, (c) that the holders of the Notes will have enforcement rights over the Collateral subject to an agreed upon standstill period if the holders
of the obligations in respect of the Project Finance Facility are not exercising such enforcement rights, (d) that the holders of the Notes will have the right to purchase the Indebtedness and
other liquidated obligations under the Project Finance Facility at par during such standstill period and (e) such other terms as are reasonably satisfactory to the Purchasers. 

        "Investment
Company Act" is defined in Section 7.14. 

        "Investments"
means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of
loans (including Guarantees or similar obligations relative to the liabilities of such other Persons), advances or capital contributions (excluding commission, travel and similar advances to officers,
agents and employees made in the ordinary course of business and excluding advances made to customers and suppliers with respect to current or anticipated purchases of inventory in the ordinary course
of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP, excluding, for the avoidance of doubt, accounts receivable arising in the ordinary course of business. 

Sch. B-9

 

        "Karlsson"
means The Karlsson Group, Inc., an Arizona corporation. 

        "Karlsson
Agreements" means the agreements entered into in connection with the Karlsson Purchase, as in effect on the date hereof or as amended with the
consent of the Majority Purchasers or as permitted by Section 9.1(o). 

        "Karlsson
Note" means that certain Senior First Priority Secured Promissory Note, dated August 1, 2012, made by PGRI Delaware in favor of Karlsson in
the principal amount of $125,000,000, together with the related financing agreements. 

        "Karlsson
Purchase" means the transactions contemplated by that certain Membership Interest Purchase Agreement, dated as of May 30, 2012, between PGRI
Delaware and Karlsson, including all ancillary agreements and documentation entered in connection therewith. 

        "Knowledge"
means, with respect to the Company, the knowledge, after reasonably inquiry, of Patrick Avery, Brian Wallace, Wayne Rich, Jonathan Bloomfield and
Gregory Dangler. 

        "Law"
means all laws, statutes, rules, regulations, ordinances, orders, decrees, requirements, judgments and codes of Governmental Authorities. 

        "Legal
Holiday" is defined in Section 26.2. 

        "Liabilities"
shall mean any and all Indebtedness, liabilities, costs, expenses and obligations, whether accrued or fixed, known or unknown, absolute or
contingent, matured or unmatured or determined or determinable, whether or not required to be recorded or reflected in a balance sheet in accordance with GAAP. 

        "Lien"
means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title-retention agreement, any lease (other
than an operating lease) in the nature thereof, any option or other agreement to sell or give a security interest in and, any filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction. For purposes of the Note Documents, any Person shall be deemed to own, subject to a Lien, any property that it has acquired or holds
subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement (other than an operating lease) relating to such property. 

        "Majority
Purchasers" means, (i) prior to Closing, Purchasers with at least a majority of purchase commitment for the Notes as set forth in
Schedule A and (ii) from and after the Closing, Purchasers (including any transferee holders who subsequently become Purchasers) holding at least a majority of the principal amount of
the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its Affiliates). 

        "Material
Adverse Effect" means any development, event, state of facts, change or effect that, individually or in the aggregate, has had or would reasonably
be expected to have a material adverse effect on (a) the ability of AWP to develop and operate the Holbrook Project and the Mine in a manner which is consistent with the financial projections;
(b) the business, assets, liabilities, operations, performance, properties, condition (financial or otherwise) or prospects of the Company, AWP or the Holbrook Project, or the Company and its
Subsidiaries taken as a whole, (c) the ability of any Obligor to perform or comply with its obligations under this Agreement, the Note Documents or any Project Document or with respect to the
Transactions; (d) the legality, validity or enforceability of the Note Documents or any Project Documents; or (e) following the Springing Lien Trigger Date, the rights and remedies of
any holder under the Collateral Documents. 

Sch. B-10

 

        "Material
Contracts" means any contract to which the Company or any of its Subsidiaries is a party to or is expressly bound by that: 

        (z)   is
a "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC); 

        (aa) relates
to any joint venture, partnership, limited liability or other similar agreements or arrangements relating to the formation, creation, operation, management or
control of any joint venture or partnership that is material to the business of the Company and any of its Subsidiaries, taken as a whole, or in which the Company owns more than a 15% voting or
economic interest; 

        (bb) that
is an indenture, credit agreement, loan agreement, security agreement, guarantee, note, mortgage or other contract providing for or securing indebtedness for
borrowed money or deferred payment (in each case, whether incurred, assumed, guaranteed or secured by any asset) in excess of $1,000,000; 

        (cc) prohibits
the payment of dividends or distributions in respect of any Equity Interest of the Company or any of any of its Subsidiaries, prohibits the pledging of any
Equity Interest of any of the Company's Subsidiaries or prohibits the issuance of guarantees by any of the Company's Subsidiaries; 

        (dd) is
a settlement, conciliation or similar agreement (x) with any Governmental Authority or (y) which would require the Company or any of the Company's
Subsidiaries to pay consideration of more than $1,000,000 after the date of this Agreement; 

        (ee) (A) contains
a standstill or similar agreement pursuant to which the Company or any of the Company's Subsidiaries has agreed not to acquire assets or securities
of a third party, or (B) which contains any "non-solicitation", "no hire" or similar provision which restricts the Company or any of the Company's Subsidiaries in soliciting,
hiring, engaging, retaining or employing such third party's current or former employees in a manner, or to an extent, that would interfere in any material respect with the ordinary course of
operations of the business of the Company or any of its Subsidiaries; 

        (ff)  relates
to any acquisition by the Company or any of its Subsidiaries of equity interests or any material assets (other than acquisitions of inventory or equipment in
the ordinary course of business) pursuant to which the Company or any of its Subsidiaries has continuing indemnification (other than indemnification obligations with respect to directors and
officers), "earn-out" or other contingent payment or guarantee obligations, in each case, that could result in payments in excess of $1,000,000; 

        (gg) contains
any covenant that (A) materially limits the ability of the Company or any of the Company's Subsidiaries to engage in any line of business, or to compete
with any Person or operate at any geographic location, except for radius restrictions that may be contained in contracts entered into in the ordinary course of business consistent with past practice,
or expressly requiring the Company and/or any of the Company's Subsidiaries to purchase an amount of goods or services from a particular Person in an amount in excess of $1,000,000 annually, or
$2,000,000 in the aggregate, or (B) could require the disposition of any material assets or material line of business of the Company or any of the Company's Subsidiaries; 

        (hh) involves
any directors, executive officers (as such term is defined in the Exchange Act) or 5% shareholders of the Company or any of their affiliates (other than the
Company or any of the Company's Subsidiaries) or immediate family members; 

        (ii)   relates
to the employment of any individual on a full-time or part-time consulting or other basis providing annual compensation in excess of
$200,000; 

Sch. B-11

 

        (jj)   contains
a license in respect of Intellectual Property (except for (A) licenses of commercially available software granted to the Company or any of the Company's
Subsidiaries and (B) licenses granted by the Company or any of the Company's Subsidiaries to franchisees in the ordinary course of business consistent with past practice) and that is material
to the conduct of the business of the Company and any of its Subsidiaries, taken as a whole; 

        (kk) by
its terms calls for aggregate payments by the Company or any of the Company's Subsidiaries of more than $1,000,000 over the remaining term of such Contract, except
for any such Contract entered into in the ordinary course of business consistent with past practice or that may be canceled, without any material penalty or other material liability to the Company or
any Company Subsidiaries, upon notice of ninety (90) days or less; 

        (ll)   entered
into in connection with, or otherwise relating to, the Karlsson Purchase; or 

        (mm)  grants
to any Person any right of first offer or right of first refusal to purchase, lease, sublease, use, possess or occupy all or a substantial part of the material
assets of the Company or any of its Subsidiaries. 

        "Materials
of Environmental Concern" is defined in Section 7.20(a)(i). 

        "Maturity
Date" when used with respect to any Note, means the later of (i) the seventh (7th) anniversary of the Closing Date and (ii) the date
that is six (6) months after the maturity date of the Senior Project Finance Bank Debt (as such maturity date shall be in effect on the date of initial incurrence of the Senior Project Finance
Bank Debt). 

        "Merger
Event" is defined in Section 13.15(a). 

        "Mine"
means, collectively, all properties, assets or other rights, whether real or personal, tangible or intangible, now owned or leased or hereafter
acquired by or for the benefit of the Company or any of its Subsidiaries which assets are used or intended for use in or forming part of the Holbrook Project (and, for the avoidance of doubt, shall
include (i) the potash deposits located at the Holbrook Project and (ii) all associated beneficiation facilities, together with all plant sites, waste dumps, ore dumps, crushing
circuits, abandoned heaps, power-supply systems and ancillary and infrastructure facilities which are used in connection with the operation of the Holbrook Project). 

        "Mineral
Rights" means all mineral interests, mining concessions, mining tenements or other mineral rights owned by or subject to any lease, license or
similar agreement in favor of the Company and its Subsidiaries. 

        "Minimum
Off-Take Arrangements" is defined in Section 9.10. 

        "Mining
Rights" means all interests in the surface of any lands, the minerals in (or that may be extracted from) any lands, all royalty agreements, water
rights, patented and unpatented mining claims, fee interests, mineral leases, mining licenses, profits-a-prendre, joint ventures and other leases,
rights-of-way, inurements, licenses, permits and other mining rights and interests used by or necessary to the Company or any of its Subsidiaries to construct, develop and
operate the Mine. 

        "Money
Laundering Laws" is defined in Section 7.33. 

        "Moody's"
means Moody's Investors Service, Inc., or any successor rating agency. 

        "Multiemployer
Plan" means any "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). 

        "Necessary
Permits" mean any Permits materially necessary for the construction, production and operation of the Holbrook Project (including any related to
the logistics chain), including any Permits scheduled in Schedule 6.9, but excluding any Permits that may be needed for activities within the boundary of the Petrified Forest National Park. 

Sch. B-12

 

        "New
Issuance Price" is defined in Section 13.4. 

        "Note
Documents" means this Agreement, the Notes, the Investors Rights Agreement, the Royalty Agreement and the Collateral Documents. 

        "Note
Guarantee" means the Guarantee by each Guarantor of the Company's obligations under this Agreement and the Notes, executed pursuant to the provisions
of this Agreement, with such variations as may be required under local law in the event of a Note Guarantee delivered by a non-U.S. Guarantor. 

        "Notes"
is defined in the third paragraph of this Agreement. 

        "Notes
Purchaser" is defined in the third paragraph of this Agreement, provided that if any such Notes Purchaser transfers all or a portion of such Notes
Purchaser's commitment pursuant to Article XXV or all or a portion of the Notes held by such Notes Purchaser, such transferee shall be deemed a "Notes Purchaser" for all purposes under this
Agreement. 

        "Obligations"
means all advances to, and debts, liabilities, obligations, covenants and duties of, any Obligor arising under any Note Document or otherwise
with respect to any Note, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including principal,
interest and fees, including interest and fees that accrue after the commencement by or against any Obligor or any Affiliate thereof of any proceeding under any debtor-relief laws naming such Person
as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. 

        "Obligor"
means the Company or any Guarantor. 

        "OFAC"
is defined in Section 7.34. 

        "Officer"
means the Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer or any Executive Vice President, Senior Vice
President, Vice President, Treasurer or any Assistant Treasurer or Secretary or any Assistant Secretary of the specified Person, or equivalent officer in the case of non-corporate or
non-U.S. entities. 

        "Officer's
Certificate" means a certificate signed by an Officer (or two Officers to the extent specifically required by this Agreement) of the specified
Person and delivered to each holder of Notes then outstanding. 

        "Operating
Costs" shall mean all inside the fence cash costs necessary to produce Potash with 60% grade delivered to the mine gate to customers, including:
mining, processing, compaction, product storage and handling, load-out, tailings disposal, environmental and safety and mine site G&A, but excluding any royalty-type payments
and Taxes on mine-generated income. 

        "Options"
means, with respect to any Person, any rights, warrants or options to subscribe for or purchase shares of capital stock or Convertible Securities
of such Person (including, in the case of the Company, shares of Common Stock). 

        "Organizational
Documents" means, with respect to each Obligor, (a) its certificate or articles of incorporation, bylaws, operating agreement,
partnership agreement or similar documents in any applicable jurisdiction; and (b) all shareholder agreements, voting trusts and similar arrangements applicable to any of its authorized Capital
Stock or other equity interests. 

        "Original
Financial Statements" means the audited consolidated financial statements of the Company and its Subsidiaries for the fiscal year ended
March 31, 2012. 

        "Outside
Date" is defined in Section 10.1(b)(i). 

Sch. B-13

 

        "Party"
means each of the Company, the Guarantors and the Purchasers, and "Parties" means all such Persons. 

        "Patriot
Act" is defined in Section 7.35. 

        "Payment
Default" is defined in Article XVI. 

        "PBGC"
means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto. 

        "Permitted
Junior Debt" means any Indebtedness of the Company issued or incurred after the receipt of the Requisite Shareholder Approval and prior to the
Closing which does not include terms that are inconsistent with or contrary to the terms set forth in Schedule C-2. 

        "Permitted
Preferred Stock" means any preferred stock of the Company issued after the receipt of the Requisite Shareholder Approval and prior to the Closing,
which does not include terms that are inconsistent with or contrary to the terms set forth in Schedule C-1. 

        "Permits"
is defined in Section 7.8. 

        "Permitted
Holders" means the Purchasers and holders and their respective Affiliates. 

        "Person"
means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity. 

        "PGRI
Delaware" means Prospect Global Resources Inc., a Delaware corporation and, as of the date hereof, a wholly owned Subsidiary of the Company. 

        "Plan"
means an "employee benefit plan" (as defined in section 3(3) of ERISA, but excluding any Multiemployer Plan) subject to Title I of ERISA that
is, or within the preceding six (6) years has been, established or maintained, or to which contributions are, or within the preceding six (6) years have been, made or required to be
made, by the Company or any ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability. 

        "Potash"
means potassium salts, including potassium chloride, potassium nitrate, potassium sulfate and sulfate of potash magnesia, or langbeinite. 

        "Preemptive
Rights Cap Amount" means, with respect to a Preemptive Rights Issuance, a number of securities which, if divided by the sum of (i) such
number of securities plus (ii) the number of securities issued in such Preemptive Rights Issuance, would represent a percentage that is equal to the Purchaser
Percentage Interest (as of immediately prior to the Preemptive Rights Issuance). A Royalty Purchaser's "pro rata portion" of the Preemptive Rights Cap Amount applicable to a Preemptive Rights Issuance
shall be determined by the Majority Purchasers, from time to time, with notice to the Company, in a manner intended to maintain the relative percentage interests of ownership of Company securities of
the Purchasers and their ultimate investors. 

        "Preemptive
Rights Issuance" is defined in Section 9.13(a). 

        "Preemptive
Rights Notice" is defined in Section 9.13(b). 

        "Preferred
Share Purchaser" is defined in the third paragraph of this Agreement. 

        "Preferred
Stock" means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such
Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person. 

        "Principal
Market" means the Nasdaq Stock Exchange, or, if the Nasdaq Stock Exchange is not the principal trading market for the shares of Common Stock, then
on the principal securities exchange or securities market on which the shares of Common Stock are then traded. 

Sch. B-14

 

        "Proceedings"
is defined in Section 7.6. 

        "Project
Assets" means all properties, assets or other rights, whether real or personal, tangible or intangible, now owned or hereafter acquired by or for
the benefit of the Company or any of its Subsidiaries, which are used or intended for use in or forming part of the Holbrook Project. 

        "Project
Completion" means (a) until the definition in clause (b) hereto becomes effective, the earliest date on which all of the
following have occurred with respect to the Holbrook Project: (i) all mining equipment has been tested successfully; (ii) the mine is operating at 90% of nameplate capacity;
(iii) both underground and surface ore storage spaces are full; and (iii) the mine has produced more than 200,000 tonnes of Potash or (b) after the entry into the Project Finance
Facility, the definition of "Project Completion" (or analogous term) contained in the Project Finance Facility, provided that such definition is reasonably satisfactory to the Majority Purchasers. 

        "Project
Documents" means instruments relating to the construction, development or operations of the Holbrook Project pursuant to which either (i) the
aggregate amount payable thereunder by the Obligors exceeds (or may reasonably be expected to exceed) U.S. $2,000,000 or (ii) the remaining term thereunder is of more than twelve
(12) months. 

        "Project
Financing Facility" means one or more debt facility with banks or other institutional lenders or governmental lenders providing for loans for the
purpose of financing the Holbrook Project, as amended, restated, modified, renewed, refunded, replaced (whether upon or after termination or otherwise) or refinanced in whole or in part from time to
time, whether by the same or any other lender or group of lenders, in each case on terms and conditions, and pursuant to documentation, acceptable to the holders. 

        "Project
Financing Facility Closing Date" means the first date on which a credit agreement (or similar agreement) governing the Project Financing Facility is
executed and delivered in accordance therewith. 

        "Project
Party" means the Company and each of its Subsidiaries and any affiliate, agent, advisor (excluding legal advisers and other similar professional
advisors not actually engaged in the construction, development, operation or maintenance of the Mine), contractor, consultant, officer, director or other associate of the Company or any of its
Subsidiaries retained, employed or consulted by the Company or any of its Subsidiaries in connection with the consummation or the Holbrook Project or the development or operation of the Mine. 

        "Property"
means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or mixed, or tangible or
intangible, including Capital Stock in, and other securities of, any other Person. 

        "Proxy
Statement" is defined in Section 9.6(a)(ii). 

        "Purchaser
Conversion Date" is defined in Section 13.3(a). 

        "Purchaser
Conversion Notice" is defined in Section 13.3(a). 

        "Purchaser
Designee" is defined in Section 9.11(a). 

        "Purchaser
Expenses" means all reasonable out-of-pocket expenses reasonably incurred by the Purchasers or on their behalf in
connection with their due diligence of the Company, the negotiation, preparation, execution, delivery and performance of this Agreement and the other documents to be delivered in connection with this
Agreement, and the undertaking, structuring, financing, evaluation and consummation of the Transactions (including, without limitation, in connection with obtaining the consents, approvals,
authorizations of or delivering any notices or filings in connection therewith to, Governmental Authorities necessary in connection with the execution, delivery and performance of this Agreement, the
other documents to be delivered in connection with this Agreement, or the 

Sch. B-15

 

Transactions),
including, without limitation, reasonable fees and expenses of legal, accounting, industry, consulting and financial advisors. For avoidance of doubt, in lieu of reimbursement,
Purchasers shall be entitled to direct any third-party invoices directly to the Company for payment directly by the Company. 

        "Purchaser
Percentage Interest" means, with respect to any Preemptive Rights Issuance, the percentage of the total number of votes that may be cast in the
election of directors generally of the Company immediately prior to such Preemptive Rights Issuance that is represented by (a) the Notes (calculated as if all of the Notes were issued and
outstanding immediately prior to such Preemptive Rights Issuance), (b) all of the shares of Common Stock previously issued or then issuable under the Apollo Warrants (calculated as if all such
Common Stock were issued and outstanding immediately prior to such Preemptive Rights Issuance), (c) any shares of Common Stock issued to the Notes Purchasers pursuant to Sections 9.8 and
9.12 and (d) any securities with respect to which the Notes Purchasers have elected to purchase pursuant to Section 9.13 in connection with any Preemptive Rights Issuances that occurred
prior to such Preemptive Rights Issuance (calculated as if all such elected securities (and all securities that were issued in such prior Preemptive Rights Issuances) were issued and outstanding
immediately prior to such Preemptive Rights Issuance). 

        "Purchase
Price" is defined in Section 2.1. 

        "Purchaser
Share Delivery Date" is defined in Section 13.3(a). 

        "Purchasers"
is defined in the first paragraph of this Agreement; provided, that following the Closing Date, each holder of a
Note, by its acceptance of a Note, will be deemed a Purchaser and will be entitled to the benefits and subject to the obligations of this Agreement as though it were a party to this Agreement. 

        "Reference
Balance Sheet" is defined in Section 7.18(b). 

        "Reference
Property" is defined in Section 13.15(a). 

        "refinance"
means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, repurchase, redeem, defease or retire, or to issue
other Indebtedness, in exchange or replacement for, such Indebtedness. "refinanced" and "refinancing" shall have correlative meanings. 

        "Representatives"
of any Person means the directors, officers, employees, shareholders, partners, agents, advisors, representatives of such Person or any
other persons acting under the direction of any of them or any of their affiliates. 

        "Requisite
Shareholder Approval" is defined in Section 9.5. 

        "Responsible
Officer" means any Senior Financial Officer and any other Officer of the Company with responsibility for the administration of the relevant
portion of this Agreement. 

        "Restricted
Payments" is defined in Section 15.16. 

        "Royalty"
is defined in Section 2.1(c). 

        "Royalty
Agreement" is defined in the sixth paragraph of this Agreement. 

        "Royalty
Purchasers" is defined in the third paragraph of this Agreement, provided that any assignee or transferee of any such
Royalty Purchaser pursuant to the terms of the Royalty Agreement shall be deemed a "Royalty Purchaser" for all purposes under this Agreement. 

        "Rule 144A"
means Rule 144A promulgated under the Securities Act. 

        "S&P"
means Standard & Poor's Ratings Group, or any successor rating agency. 

Sch. B-16

 

        "SEC"
shall mean the Securities and Exchange Commission of the United States, or any successor thereto. 

        "Second
Lien Intercreditor Agreement" means an agreement between the Collateral Agent, on behalf of the holders, and the agent or other representative for
the lenders under the Cost Overrun Facility, which will provide (1) that the Liens securing the Indebtedness under the Cost Overrun Facility are equally and ratably secured with, but may rank
senior in payment priority to, the Obligations and (2) such other terms as are reasonably satisfactory to the Collateral Agent. 

        "Securities"
is defined in the third paragraph of this Agreement. 

        "Securities
Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in
effect. 

        "Senior
Financial Officer" means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. 

        "Series A
Warrants" is defined in the third paragraph of this Agreement. 

        "Series B
Warrants" is defined in the third paragraph of this Agreement. 

        "Share
Delivery Date" is defined in Section 13.3(b). 

        "Shareholders
Meeting" is defined in Section 9.5. 

        "Solvent"
means, when used with respect to any Person, as of any date of determination, that on such date (a) the present fair saleable value of the
present assets of such Person and its Subsidiaries taken as a whole, exceeds the sum of their debts (including contingent liabilities); (b) the present fair salable
value of the property of the such Person and its Subsidiaries, taken as a whole, will be greater than the amount that will be required to pay the probable liability of their debts and other
liabilities (including contingent liabilities), as such debts and other liabilities become absolute and matured; (c) such Person and its Subsidiaries, taken as a whole, will be able to pay
their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) such Person and its Subsidiaries, taken as a whole, will
not have unreasonably small capital with which to conduct their business as contemplated on such date. The amount of contingent liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. 

        "Spin-off"
is defined in Section 13.7. 

        "Springing
Lien Trigger Date" means the earlier of (i) the date on which the principal of and interest on indebtedness outstanding under the Karlsson
Note is paid in full and (ii) the Project Financing Facility Closing Date. 

        "Stockholder
Rights Plan" is defined in Section 13.11(f). 

        "Subsidiary"
means, with respect to any specified Person: 

        (nn) any
corporation, association or other business entity of which more than 50.0% of the total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency and after giving effect to any voting agreement or shareholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or
trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or
a combination thereof); and 

Sch. B-17

 

        (oo) any
partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only
general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof); and 

        (pp) any
other Person that is consolidated in the consolidated financial statements of the specified Person in accordance with GAAP. 

        "substitute
transaction" is defined in Section 9.7(x). 

        "Support
Agreements" is defined in the fifth paragraph of this Agreement. 

        "Supplemental
Payment" is defined in that certain Supplemental Payment Agreement, dated August 1, 2012, by and among the Company, AWP and Karlsson. 

        "Supplemental
Payment Gross Up" is defined in Section 9.18. 

        "Tax"
or "Taxes" means all taxes, including income tax, surtax, remittance tax, presumptive tax, net worth tax, special
contribution, production tax, pipeline transportation tax, value added tax, withholding tax, gross receipts tax, windfall profits tax, profits tax, severance tax, personal property tax, real property
tax, sales tax, service tax, transfer tax, use tax, excise tax, premium tax, customs duties, stamp tax, motor vehicle tax, entertainment tax, insurance tax, capital stock tax, franchise tax,
occupation tax, payroll tax, employment tax, social security, unemployment tax, disability tax, alternative or add-on minimum tax, estimated tax, and any other tax, together with any
interest, fine or penalty thereon, or addition thereto. 

        "Tax
Proceeding" means any Tax audit, contest, suit, litigation, defense, investigation, claim or other proceeding with or against any Governmental
Authority. 

        "Tax
Structure" is defined in Section 26.11. 

        "Tax
Treatment" is defined in Section 26.11. 

        "tonne"
means a metric tonne. 

        "Trading
Day" means any day on which the shares of Common Stock are traded on the Principal Market, provided that "Trading Day"
shall not include any day on which the shares of Common Stock are scheduled to trade on such exchange or market for less than 4.5 hours or any day that the shares of Common Stock are suspended
from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then
during the hour ending at 4:00 p.m., New York City Time). 

        "Threshold"
is defined in Section 11.4(d). 

        "Transaction
Fee" is defined in Section 2.2. 

        "Transactions"
is defined in the fourth paragraph of this Agreement. 

        "Transfer
Agent" means the Company's transfer agent for its Common Stock from time to time. 

        "UK
Bribery Act" is defined in Section 7.7(b). 

        "Valuation
Period" is defined in Section 13.7. 

        "Valuation
Event" is defined in Section 13.4(D). 

        "Voting
Stock" of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person. 

        "VWAP"
is defined in Section 9.12(b). 

        "Weighted
Average Consideration" is defined in Section 13.15(b)(ii). 

Sch. B-18

 

 
 

  SCHEDULE C-1    
    
    TERMS OF PERMITTED PREFERRED STOCK *    
    

Sch. C-1-1

 

 
 

  SCHEDULE C-2    
    
    TERMS OF PERMITTED JUNIOR DEBT*    
    

Sch. C-2-1

 

 
 

  SCHEDULE C-3    
    
    TERMS OF NOTES IN KARLSSON DEFAULT    
    

 

			
	 Interest Rate
	 	Then-applicable interest rate on the Karlsson Note + 500 bps.
	 Interest Type
	 	 Non-cash; payment-in-kind only.

	 Maturity
	 	 One year.

	 Ranking
	 	 Junior to Project Finance Facility.

	 Mandatory prepayments
	 	 Mandatorily prepayable for any subsequent borrowings from the Project Finance Facility.

	 Optional repayment/prepayment penalty
	 	 Repayable at any time with no penalty.

	 Covenants
	 	 None.

	 Default interest
	 	 2% above otherwise applicable rate.

	 Events of Default
	 	 Non-payment of amounts due, and cross-default to the Securities Purchase Agreement.

 

 Sch. C-3-1

 

 

 
 

  EXHIBIT A    
    

 
    [Form of Note]    
    

 
    Prospect Global Resources, Inc.    
    

10%
Convertible Springing Second-Lien Notes due 2020 

 

			
	No. [            ]	 	 [Date]
	$[            ]	 	 PPN[            ]

 

         FOR
VALUE RECEIVED, the undersigned, Prospect Global Resources Inc. (herein called the "Company"), a corporation organized and existing under the laws
of the State of Nevada, hereby promises to pay to [            ], or its registered assigns ("Holder"), the initial principal sum of
[            ] DOLLARS (or so much thereof as shall not have been prepaid) on the Maturity Date (as defined in the Securities
Purchase Agreement referred to below) , with interest (computed on the basis of a three hundred and sixty (360)-day year of twelve, thirty (30)-day months and actual days
elapsed) on the unpaid balance hereof at the rate of 10.0% per annum from the date hereof, payable in the form set forth below semiannually, on the
[    •    ]th day of [    •    ] and
[    •    ] in each year (each an "Interest Payment Date"), commencing with the
[    •    ] or [    •    ] next succeeding the date hereof, until the principal hereof
shall have become due and payable. The Company shall pay interest on overdue principal and on overdue interest (to the full extent permitted by law) at the rate borne by the Notes. 

        Payments
of principal on this Note are to be made in lawful money of the United States of America by wire transfer to the Holder. 

        A
portion of the interest payable on this note corresponding to 4.0% per annum shall be made in lawful money of the United States of America by wire transfer to the Holder on each
Interest Payment Date. A portion of the interest payable on this note corresponding to 6.0% per annum (the "PIK Portion") shall be made by increasing the principal amount
of this Note, or if the Holder shall so elect not fewer than five (5) Business Days prior to any applicable Interest Payment Date, by issuing additional Notes, in each case on each Interest
Payment Date in an amount equal to the PIK Portion. Unless the election described in the immediately preceding sentence shall have been made, the principal amount of this Note shall be automatically
increased on the applicable Interest Payment Date,
and this Note shall thereafter evidence such increased principal amount which shall, from and after the applicable Interest Payment Date, accrue interest as set forth herein. To the extent the Holder
shall have made such election, Company shall execute and deliver to the Holder on the applicable Interest Payment Date a new Note or Notes with a face amount equal to the PIK Portion then payable. 

        This
Note is one of a series of Senior Notes (herein called the "Notes") issued pursuant to the Securities Purchase Agreement, dated as of
November [    •    ], 2012 (as from time to time amended, the "Securities Purchase Agreement"), between the
Company and the respective Purchasers named therein and is entitled to the benefits thereof. Each holder of this Note will be deemed, by its acceptance hereof, to have made the representations set
forth in Section 8.5 of the Securities Purchase Agreement and agreed to the confidentiality provisions set forth in Article XXIV of the Securities Purchase Agreement. Unless otherwise
indicated, capitalized terms used in this Note shall have the respective meanings ascribed to such terms in the Securities Purchase Agreement. To the extent that any provision of any Note conflicts
with the express provisions of the Securities Purchase Agreement, the provisions of the Securities Purchase Agreement shall govern and be controlling. 

        This
Note is a registered Note and, as provided in the Securities Purchase Agreement, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in
the 

A-1

 

name
of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company will not be affected by any notice to the contrary. 

        The
Holder shall have the voting rights set forth in Article XII of the Securities Purchase Agreement. 

        The
Holder shall have the right to convert this Note into Common Stock of the Company in accordance with Article XIII of the Securities Purchase Agreement. 

        This
Note is not subject to optional prepayment or redemption by the Company; provided that this Note may be converted into Common Stock of the Company at
the election of the Company to the extent set forth in Section 13.1(b) of the Securities Purchase Agreement. 

        If
an Event of Default occurs and is continuing, the principal of this Note may be declared or otherwise become due and payable in the manner, at the price and with the effect provided
in the Securities Purchase Agreement. 

        Upon
the occurrence of a Change of Control and subject to further limitations contained in the Securities Purchase Agreement, the holder of this Note may require the Company to redeem
this Note in the manner, at the price and with the effect provided in the Securities Purchase Agreement. 

        This
Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of New York, excluding
choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state. 

 

							
	 	 	Prospect Global Resources Inc.
	

 	
 	
By	
 	

 
	 	 	 	 	

  [Title]

 

 A-2

 

 

 
 

  EXHIBIT B-1    
    
    PROSPECT GLOBAL RESOURCES INC.
  CONVERSION NOTICE    
    

Reference
is made to the 10% Convertible Springing Second-Lien Note (the "Note") issued to the undersigned by Prospect Global Resources Inc., a Nevada
corporation (the "Company"). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion Amount (as defined in the Note) of the
Note indicated below into shares of Common Stock par value $0.001 per share (the "Common Stock") of the Company, as of the date specified below. 

 

			
	Date of Conversion:	 	 

 

 

 

			
	Aggregate Conversion Amount to be converted:	 	 

 

 

 Please
confirm the following information: 

 

			
	Conversion Price:	 	 

 

 

 

			
	Number of shares of Common Stock to be issued:	 	 

 

 

 Please
issue the Common Stock into which the Note is being converted in the following name and to the following address: 

 

			
	Issue to:	 	 

 
	 	 	  

 
	 	 	  

 

 

 

			
	Facsimile Number:	 	 

 

 

 

			
	Authorization:	 	 

 

 

 

			
	By:	 	 

 

 

 

			
	Title:	 	 

 

 

 

			
	Dated:	 	 

 

 

 

			
	Account Number:	 	 

 

 

 

			
	(if electronic book entry transfer)

 

 

			
	Transaction Code Number:	 	 

 

 

 

			
	(if electronic book-entry transfer)

 

 B-1-1

 
 
 

  ACKNOWLEDGMENT    
    

        The Company hereby acknowledges this Conversion Notice and hereby directs [transfer
agent] to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated
[            ] from the Company and acknowledged and agreed to by [transfer agent]. 

 

					
	 	 	 Prospect Global Resources Inc.
	

 	
 	
  By:	
 	
  

  Name:

Title:

 

 B-1-2

 

 

 
 

  EXHIBIT B-2    
    
    PROSPECT GLOBAL RESOURCES INC.
  CONVERSION NOTICE    
    

Reference
is made to the 10% Convertible Springing Second-Lien Note (the "Note") issued to the holder named below by Prospect Global Resources Inc., a
Nevada corporation (the "Company"). In accordance with and pursuant to the Note, the Company hereby elects to require the conversion of the Conversion Amount (as defined
in the Note) of the Note indicated below into shares of Common Stock par value $0.001 per share (the "Common Stock") of the Company, as of the date specified below. 

 

			
	Holder:	 	 

 

 

 

			
	Date of Conversion:	 	 

 

 

 

			
	Aggregate Conversion Amount to be converted:	 	 

 

 

 Please
confirm the following information: 

 

			
	Conversion Price:	 	 

 

 

 

			
	Number of shares of Common Stock to be issued:	 	 

 

 

 Please
indicate and return to the Company within one (1) Business Day of the receipt of this notice the information below: 

 

			
	Issue to:	 	 

 
	 	 	  

 
	 	 	  

 

 

 

			
	Facsimile Number:	 	 

 

 

 

			
	Authorization:	 	 

 

 

 

			
	By:	 	 

 

 

 

			
	Title:	 	 

 

 

 

			
	Dated:	 	 

 

 

 

			
	Account Number:	 	 

 
	(if electronic book entry transfer)

 

 

			
	Transaction Code Number:	 	 

 
	(if electronic book-entry transfer)

 

 B-2-1

 
 
 

  ACKNOWLEDGMENT    
    

        The undersigned hereby acknowledges this Conversion Notice and hereby agrees that the [transfer
agent] shall issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated
[                        ] from the Company and acknowledged and agreed to by [transfer agent]
. 

 

					
	

 	
 	
[Holder]
	

 	
 	
 By:	
 	
    
	 	 	 	 	

  Name:

Title:    

 

 B-2-2

 

 

 
 

  EXHIBIT C-1
  
    FORM OF CERTIFICATE OF DESIGNATION    
    

See attached.  

C-1

 
  
 

      PROSPECT GLOBAL RESOURCES INC.
  Attachment "A" to Certificate of Designation
  
    CERTIFICATE OF DESIGNATION
  of
  SERIES A PREFERRED STOCK
  of
  PROSPECT GLOBAL
RESOURCES INC.
  (Pursuant to the Nevada Revised Statutes 78.1955)    
    

        Prospect Global Resources Inc., a Nevada corporation (the "Corporation"), does by this certificate
certify that, pursuant to the authority contained in its articles of incorporation (as amended from time to time, the "Articles of Incorporation") and the provisions of
Nevada Revised Statutes ("NRS") 78.1955, the Corporation's Board of Directors (the "Board") has duly adopted the following resolution creating
a series of Preferred Stock designated as "Series A Preferred Stock": 

        RESOLVED,
that the Corporation hereby designate and create a series of authorized Preferred Stock of the Corporation, designated as "Series A Preferred Stock", as follows: 

        Of
the 100,000,000 shares of Preferred Stock, $0.001 par value per share, authorized to be issued by the Corporation pursuant to its Articles of Incorporation, 100 shares of such
Preferred Stock are hereby designated as "Series A Preferred Stock." The voting powers, designations, preferences, limitations, restrictions and relative rights of the Series A Preferred
Stock are as set forth below: 

 
 

ARTICLE I
  Number of Shares    

        The
designation of this series shall be Series A Preferred Stock (the "Series A Stock"). The number of authorized shares of the Series A
Preferred Stock shall be 100. 

 
 

ARTICLE II
  Rank    

        The
Series A Preferred Stock shall rank pari passu to the Corporation's common stock, $0.001 par value per share (the "Common Stock") as to
distribution of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary. 

 
 

ARTICLE III
  Dividends    

        Holders
of the Series A Preferred Stock shall not be entitled to receive any dividends with respect to the Series A Preferred Stock. 

 
 

ARTICLE IV
  Liquidation Preference    

        Holders
of the Series A Preferred Stock shall not be entitled to any liquidation preference with respect to the Series A Preferred Stock. 

 
 

ARTICLE V
  Voting and Related Rights    

        A.    The
holders of a majority of the Series A Preferred Stock (the "Majority Holders") shall have the right to elect the following number
of directors at any meeting of stockholders 

C-2

 

of
the Corporation (or by written consent) at which directors are to be elected, designated or appointed: (i) if the Investor Percentage Interest (as defined in the Investors Rights Agreement,
dated November 29, 2012 by and among the Corporation and the investors named therein (the "Investor Rights Agreement")) at such time equals or exceeds
twenty-two and four tenths percent (22.4%) (the "Initial Threshold"), four directors (subject to upwards adjustment pursuant to Paragraph B below); and
(ii) if the Investor Percentage Interest at such time is less than the Initial Threshold, a number of directors equal to the Investor Percentage Interest multiplied
by the total number of directors on the Board (inclusive of the directors elected by the Majority Holders pursuant to this Article V),
provided that (x) if the application of clause (ii) results in a fractional number of Board members of greater than one, the number of directors that the
Majority Holders shall be entitled to elect shall be (A) if the Investor Percentage Interest at such time equals or exceeds twenty percent (20%), rounded up to the nearest whole number and
(B) if the Investor Percentage Interest at such time is below twenty percent (20%), rounded up or down to the nearest whole number and (y) if the application of clause (ii)
results in a fractional number of Board members of less than one, the Majority Holders shall not have the right to elect any member of the Board. 

        B.    From
and after the Closing (as defined below), without the written consent of the Majority Holders, the Corporation shall not change the number of directors on the Board
from nine; provided that without the written consent of the Majority Holders, the Corporation may increase the size of the Board by one member solely in connection with
the grant of a director designation or nomination right to new investors in connection with capital-raising transactions occurring after the Closing (as defined in the Securities Purchase Agreement
dated November 29, 2012 by and among the Corporation, certain guarantors named therein and the purchasers named therein (the "Purchase Agreement"));
provided, further, that, (i) the Corporation shall be able to exercise such right only once and (ii) in the event of such
increase in the number of directors, the Majority Holders shall thereafter be entitled to elect an additional director to the Board (in addition to the number of directors they are entitled to elect
pursuant to Paragraph A above). If, pursuant to the terms of the Purchase Agreement, the Corporation prior to the Closing increased the size of its Board by one member in connection with the
grant of a director designation or nomination right to new investors in connection with capital-raising transactions occurring prior to the Closing, then (i) the Corporation shall not be
entitled to exercise the right set forth in the prior sentence and (ii) references to "nine" and "four" in Paragraph A above and the first sentence of this Paragraph B shall
instead be "eleven" and "five", respectively. 

        C.    In
the event of the death, disability, resignation or removal of a director elected, designated or appointed by the Majority Holders (other than pursuant to
Section 1.5 of the Investors Rights Agreement), the Majority Holders may elect or appoint a replacement director to fill the resulting vacancy; provided that if a
director elected by the Majority Holders is removed for cause, the replacement director will not be the same person who was removed. Other than pursuant to Section 1.5 of the Investors Rights
Agreement or for cause, a director elected, designated or appointed by the Majority Holders may not be removed without the prior written consent of the Majority Holders. 

        D.    The
Corporation will at all times provide the directors elected by the Majority Holders with the same rights to indemnification that it provides to the other members of
the Board. The directors elected by the Majority Holders shall each receive director fees and rights to expense reimbursement that are no less favorable to them than the fees and reimbursement
provided to any other non-management director (in their capacity as directors). 

C-3

 

        E.    Except
as otherwise provided in this Certificate of Designation for Series A Preferred Stock (the "Certificate of Designation"), the
holders of shares of Series A Preferred Stock and the holders of shares of Common Stock (together with the holders of Notes (as defined in the Purchase Agreement)) shall vote together as one
class on all other matters submitted to a vote of the stockholders of the Corporation. 

        F.     Except
as otherwise provided herein or to the extent they may vote as a separate class under the NRS, the holders of shares of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required for taking any corporate action, except to the extent they are entitled to vote with holders of shares of Common Stock as set forth
herein. 

 
 

ARTICLE VI
  Restrictions on Transfer    

        The
outstanding shares of Series A Preferred Stock may only be transferred (a) to an Affiliate (as defined in the Purchase Agreement) of the initial holder of the
Series A Preferred Stock, or (b) with the consent of the Board. 

 
 

ARTICLE VII
  Conversion    

        Each
outstanding share of Series A Preferred Stock shall automatically convert to one share of Common Stock upon the earlier to occur of (a) a transfer of such share of
Series A Preferred Stock in violation of Article VI above and (b) the first business day following the first day after the Closing on which the Investor Percentage Interest is
equal to 0.0%. 

 
 

ARTICLE VIII
  Redemption    

        The
shares of Series A Preferred Stock shall not be redeemable. 

 
 

ARTICLE IX
  Reacquired Shares    

        Any
shares of Series A Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation be restored to the status of authorized and unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to
be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein and in the Articles of Incorporation. 

 
 

ARTICLE X
  Amendment of Certificate of Designation    

        This
Certificate of Designation may only be amended with the written consent of the Majority Holders. Except as otherwise provided in the Articles of Incorporation, no consent by the
holders of shares of any other class or series of the Corporation's capital stock shall be required to amend this Certificate of Designation. 

C-4

 

        IN
WITNESS WHEREOF, this Certificate of Designation of Series A Preferred Stock is executed on behalf of the Corporation as of
                                       ,
2013. 

 

					
	 
	 	PROSPECT GLOBAL RESOURCES INC.
	 
	 	 By:
	 	  

 
	 
	 	Name:
	 
	 	Title:

 

 C-5

 

 
 

  EXHIBIT D
  
    MINIMUM OFFTAKE ARRANGEMENTS    
    

 
    Guidelines for the Minimum Off-Take Arrangements    
    

 

  

							
	 Best Efforts Obligation
	 	As described in the Securities Purchase Agreement to which this Exhibit is attached, Prospect will use best efforts to enter into definitive agreements ("Customer Agreements") with respect to the Minimum Off-Take
Arrangements no later than the Closing, on the terms in all material respects as set forth below and subject to modifications required by the providers of the Project Finance Facility.
	 Customers
	 	  Prospect will enter into Customer Agreements with 2 to 4 customers; provided, however, that no such customer shall be
committed to purchase more than 50% of the annual volume (as set forth below under "Minimum Volumes") for any year unless such customer's commitment for such year does not exceed 250,000 tonnes.

	 Initial Delivery Date
	 	  The Customer Agreements shall provide that the anticipated initial delivery date of potash to the customers shall be first
calendar month following commencement of commercial levels of production and/or Project Completion, whatever comes first; provided, however, that if Prospect cannot meet the anticipated initial delivery date due to a delay in construction, mining
operations, permitting or force majeure, the parties will agree to negotiate in good faith to adjust delivery dates and obligations; provided further, that if Prospect is unable to commence deliveries by June 30, 2017 (structured, for example,
with a base 18 month grace period and one 6 month extension), the customer has the right to terminate the contract.

	 Term
	 	  The Customer Agreements shall have a minimum term (the "Term") of three (3) years; provided that if the initial
delivery date is not on a January 1st then the Term shall be for three years and a fraction of a year so that the term ends on a December 31st.

	 Pricing Terms
	 	  The price at the signing of each sales agreement shall be calculated as follows:

	 
	 	
   (a)    for
granular potash, the average of weekly Green Markets indices of Saskatchewan, Carlsbad, Midwest and Vancouver, less a discount of $5 a tonne; and

	 
	 	
   (b)    for
standard potash, the average of weekly Green Markets indices of Saskatchewan and Vancouver, less a discount of $5 a tonne.

	 
	 	  Prospect will allow pricing terms for more than one quarter and up to four quarters; provided that the Customer Agreements in the
aggregate shall have a mix of terms and durations intended to provide a portfolio of risk across the portfolio.

 

 D-1

 
 

  

							
	 
	 	  As a component of the off-take arrangements, Prospect will use best efforts to provide "collar" pricing designed to provide greater certainty to
both parties with respect to budgeting and planning over a range of years. Under collar pricing, Prospect and the buyer will agree on the "floor" or minimum price to be paid by the buyer even if the indices price (above) falls below the floor price
and a "ceiling" or maximum price to be paid by the buyer even if the indices price rises above the ceiling price. The floor and ceiling prices will be symmetrical (i.e., equidistant from the initial price) and Prospect shall be within a
reasonable range (for illustrative purposes, the parties believe that a reasonable floor/ceiling range around the current spot as of the date hereof would be in the range of ±10 to 20%).

	 Payment Terms
	 	  The payment terms in the Customer Agreements will be consistent with customary payments terms for potash off-take agreements,
provided that in no event shall the payment terms allow for a payment period of longer than 30 days from delivery.

	 Minimum Volumes
	 	  The customers under the Customer Agreements will be required to purchase in the aggregate, in each calendar year during the Term,
at least the following quantities on a take or pay basis:

	 
	 	  Years 1-3:
	 	  1,000,000 tonnes

	 
	 	Year 4:	 	 750,000 tonnes
	 
	 	Year 5:	 	 750,000 tonnes
	 
	 	Year 6:	 	 500,000 tonnes
	 
	 	Year 7:	 	 250,000 tonnes
	 
	 	  For the avoidance of doubt, the volumes set forth above are the minimum volumes that will be required. After Prospect has
commenced production, its Board of Directors may determine whether to seek additional off-take volumes.

	 Minimum Specifications
	 	  The Customer Agreements will include customary minimum specifications for shipments. The Customer Agreements will also include
terms describing the consequences for the failure to meet the minimum specifications, which consequences shall be no less favorable to Prospect than the following consequences:

	 
	 	
   •    If
during the Ramp Up Period (defined below), shipments fail to meet minimum specifications, the parties will agree to customary and appropriate price adjustments to reflect the lower quality. The "Ramp Up Period" shall have the same definition
as that used in the Senior Project Finance Bank Debt.

	 
	 	
   •    After
the Ramp Up Period, if two of three consecutive deliveries fail to meet the minimum specifications, the customer can suspend ordered but not yet delivered deliveries. The customer will not be required to take a new delivery until Prospect
demonstrates (to the customer's reasonable satisfaction) that it can meet the minimum specifications. If Prospect cannot demonstrate that it can meet the minimum specifications within 180 days, the customer will have the right to terminate the
contract.

 

 D-2

 
 

  

							
	 Termination
	 	  In addition to a termination pursuant to "Minimum Specifications" above, the only other termination provisions in the Customer Agreements will be
(a) termination by either party following a continuous, 12-month period of force majeure, (b) for a material breach by the other party (which is uncured within 60 days after notification) or (c) upon a bankruptcy or
insolvency-related event of the other party.

	 Financial Guarantees
	 	  Customers will be required to provide a guarantee or standby L/C for the benefit of Prospect that is reasonably satisfactory to
Prospect's lenders. The L/C will be for one year's forecasted purchases. Once this is in place, orders and shipments can begin. Customers will be required to pay for each shipment using irrevocable letters of credit payable at sight against bills of
lading. Customers will have a minimum credit rating of AA as defined by S&P or Moody's and/or LCs of a similar credit quality.

	 Assignments
	 	  No assignment by the customer without prior written consent of Prospect other than to a bank, financial institution, security
trustee or security agent for a bond or other financing.

	 Exclusivity
	 	  The Customer Agreements will be on a non-exclusive basis, and Prospect shall be permitted to sell to any other party.

	 Governing Law
	 	  Delaware.

 

 D-3

 

 
 

  EXHIBIT E-1
  
    FORM OF SERIES A WARRANT    
    

See attached.  

E-1-1

 

        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 PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.

SERIES
A WARRANT TO PURCHASE

COMMON STOCK OF PROSPECT GLOBAL RESOURCES INC.

                        , 2012 

PROSPECT
GLOBAL RESOURCES INC., a Nevada corporation (the "Company"), HEREBY CERTIFIES THAT, for value received,
                        , or registered
assigns, is entitled to purchase, in whole or part and from time to time, up to [25,925,926](1) fully paid and non-assessable shares of Common Stock at a purchase
price of $[2.70](2) per share (the "Warrant Price"), in each case subject to adjustment pursuant to Section 6. 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. 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. This Warrant is being issued in connection with the Securities Purchase Agreement dated as of
November             , 2012 by and among the Company, certain guarantors named therein and the purchasers named therein for the purchase of $100,000,000 in 10% Convertible Springing
Second-Lien Notes Due 2020 and other securities and interests of the Company (the "Securities Purchase Agreement"). Capitalized terms not
otherwise defined herein have the meanings set forth in the Securities Purchase Agreement.  

	1.
	Term
of Warrants; Exercise of Warrants. 

        (a)   Subject
to the terms hereof, the holder of this Warrant shall have the right, at any time and from time to time, from and after the date hereof until 11:59 PM New York
City Time on the date that is one hundred and eighty (180) days after the Closing Date (as defined in the Securities Purchase Agreement), 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 

   

   

 

         (1)    Note to Draft:    Number of shares exercisable represents the aggregate number exercisable under all
Series A Warrants; multiple warrants may be issued to multiple Purchasers. If any of the events described in Section 6 of this Warrant occur between the date of the Securities Purchase
Agreement and the date this Warrant is issued, the number of shares of Common Stock that this Warrant is exercisable for shall be adjusted as if Section 6 were in effect as of the date of the
Securities Purchase Agreement—and such adjusted number shall replace the number listed above in brackets in the definitive Warrant that is issued. 

        (2)    Note to Draft:    If any of the events described in Section 6 of this Warrant occur between the date of
the Securities Purchase Agreement and the date this Warrant is issued, the Warrant Price shall be adjusted as if Section 6 were in effect as of the date of the Securities Purchase
Agreement—and such adjusted price shall replace the price listed above in brackets in the definitive Warrant that is issued. 

E-1-2

 

to
Section 9 hereof, of this Warrant, together with the Notice of Exercise form at the end hereof duly completed and signed, accompanied by payment to the Company of the Warrant Price for the
number of shares with respect to which this Warrant is being exercised. 

        (b)   Payment
of the aggregate Warrant Price shall be made by wire transfer to an account specified in writing (including by email) by the Company. 

        (c)   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.
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. The Company hereby represents and warrants that any Common Stock issued upon the exercise of this
Warrant will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the holder of the Warrant or
taxes in respect of any transfer occurring contemporaneously therewith). The Company will at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock, as the case may be, then issuable upon exercise of this Warrant. The Company will
(i) procure, at its sole expense, the listing of the Common Stock and other securities issuable upon exercise of this Warrant, subject to issuance or notice of issuance on all stock exchanges
on which the Common Stock are then listed or traded and (ii) maintain the listing of such Common Stock after issuance. The Company will ensure that the Common Stock may be issued without
violation of any applicable law or regulation or of any requirement of any securities exchange on which the Common Stock are listed or traded. 

        (d)   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. 

        2.     Payment
of Taxes. The Company shall pay all documentary stamp taxes, transfer tax or other incidental expenses 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. 

        3.     Transferability.
The Warrants are not transferable without the Company's written consent; provided, that the Warrants may be transferred in whole or in part without the
Company's written consent to any Affiliate (as defined in the Securities Purchase Agreement) of the holder of this Warrant. 

        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 

E-1-3

 

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. 

        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. 

        6.     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: 

        (a)   (i)
If and whenever on or after the date hereof the Company issues or sells, or in accordance with Section 13.4 of the Securities Purchase Agreement is deemed to
have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the
"New Issuance Price") less than a price equal to the Warrant Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Warrant Price then in effect is referred to as the "Applicable Price") (the foregoing a "Dilutive
Issuance"), other than distributions contemplated by Section 13.6 of the Securities Purchase Agreement, then the Warrant Price then in effect shall be reduced to a price
determined in accordance with the following formula: 

 

							
	 	 	R1 = R ×	 	OS + A

  OS + B	 	 

 

         Where:

 

					
	 	 	R1 =	 	the Warrant Price in effect immediately after such Dilutive Issuance;
	
 	
 	
R =	
 	
the Warrant Price in effect immediately prior to such Dilutive Issuance;
	

 	
 	
OS =	
 	
the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue (excluding the Apollo Warrants) or upon conversion or exchange of Convertible Securities (excluding the Notes) outstanding immediately prior to such issue (to the extent such Options or Convertible Securities have an
exercise or conversion price below R);
	

 	
 	
A =	
 	
the number of shares of Common Stock that would have been issued (or be deemed to have been issued) if such Dilutive Issuance had been issued at a price per share equal to R (determined by dividing the aggregate
consideration received by the Company in respect of such issue by R); and
	

 	
 	
B =	
 	
the number of shares of Common Stock issued (or deemed to have been issued) in such Dilutive Issuance.

 

 E-1-4

 

For
purposes of this Section 6(a)(i), clauses (A) through (D) of Section 13.4 of the Securities Purchase Agreement shall apply to the adjustments contemplated in this
Section 6(a)(i), mutandis mutatis. 

(ii)        In
the event of any such Dilutive Issuance, the number of shares of Common Stock issuable upon the exercise of this Warrant shall be increased to the number obtained by dividing
(x) the product of (1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to such Dilutive Issuance, and (2) the Warrant Price in
effect immediately prior to such Dilutive Issuance, by (y) the new Warrant Price determined in accordance with Section 6(a)(i). 

        (b)   With
respect to any event contemplated in Sections 13.5, 13.6, 13.7, 13.8, or 13.9 of the Securities Purchase Agreement, the adjustments contemplated by such
sections shall be applied to the Warrant Price as if all references to Conversion Price in such sections were references to Warrant Price and all reference to conversion of Notes in such sections were
references to exercise of the Warrant. The number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the number obtained by dividing (x) the product of
(1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to the event giving rise to such adjustment, and
(2) the Warrant Price in effect immediately prior to the event giving rise to such adjustment, by (y) the new Warrant Price determined in accordance with this Section 6(b). 

        (c)   With
respect to any event contemplated in Section 13.15 of the Securities Purchase Agreement, the Warrant shall be exercisable for the same type and amount of
shares of stock, other securities or other property or assets (including cash or any combination thereof) that the holder of this Warrant would have been entitled to receive upon such Merger Event had
such holder exercised this Warrant immediately prior to such Merger Event. In determining the kind and amount of shares of stock, other securities or other property or assets (including cash or any
combination thereof) receivable upon consummation of such Merger Event, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such
Merger Event, the holder of the Warrant shall have the right to make a similar election upon exercise of this Warrant with respect to the number of shares of stock, other securities or other property
or assets (including cash or any combination thereof) which the holder of this Warrant will receive upon exercise of this Warrant. 

        (d)   Sections 13.11,
13.12, 13.13, 13.14, 13.16, 13.17 and 13.18 of the Securities Purchase Agreement shall apply to the adjustments contemplated in this
Section 6, mutandis mutatis. 

        7.     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 7, be issuable on the exercise of this Warrant (or specified portions thereof), the Company shall issue a full share of Common Stock in lieu of such
fractional share. 

        8.     No
Rights as Stockholder; Notices. Nothing contained in this Warrant shall be construed as conferring upon the holder or its transferees any rights as a stockholder of
the Company, including the right to vote, receive dividends, consent or receive notices as a stockholder with respect to any meeting of stockholders for the election of directors of the Company or any
other matter. The Company will at no time close its transfer books against transfer of this Warrant in any manner which interferes with the timely exercise of this Warrant. 

        9.     Notices.
All notices and communications provided for hereunder, unless otherwise specified, shall be in writing and shall be deemed delivered (a) on a Business Day
if sent by telecopy during the Business Day or on the next Business Day if sent after a Business Day has ended or (b) the next 

E-1-5

 

Business
Day after delivery to a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: 

          (i)  if
to any holder of Warrants, at the address specified for such communications in the Securities Purchase Agreement, or at such other address as holder of Warrants (or
its transferee) shall have specified to the Company in writing, and 

         (ii)  if
to the Company, to the Company at the address set forth below or at such other address as the Company shall have specified to the holder of the Warrant in writing: 

Prospect
Global Resources Inc.

1450 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer 

        with
a copy (which shall not constitute notice) to: 

Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch 

        10.   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. 

        11.   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 New York (without regard to conflicts of laws principles thereof). 

        12.   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. 

        13.   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. 

        IN
WITNESS WHEREOF, the Company has executed this Warrant. 

 

					
	 	 	PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
By:	
 	

  Patrick L. Avery,

Chief Executive Officer

 

 E-1-6

 
 
 

  NOTICE OF EXERCISE    
    

        (1)   The
undersigned hereby elects to purchase                        shares of Common Stock of PROSPECT GLOBAL RESOURCES INC.,
pursuant to the provisions of Section 1
of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full. 

        (2)   Please
issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

 

			
	

 	
 	

 
	 	 	

  (Name)
	

 	
 	

 
	 	 	

  (Name)

 

         (3)   Please
issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: 

 

			
	

 	
 	

 
	 	 	

  (Name)
	

 	
 	

 
	

  (Date)	 	

  (Signature)

 

 E-1-7

 

 

 
 

  EXHIBIT E-2
  
    FORM OF SERIES B WARRANT    
    

See attached.  

E-2-1

 

        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 PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.

 
 

SERIES B WARRANT TO PURCHASE
  COMMON STOCK OF PROSPECT GLOBAL RESOURCES INC.

                        , 2012    

        PROSPECT
GLOBAL RESOURCES INC., a Nevada corporation (the "Company"), HEREBY CERTIFIES THAT, for value
received,                                    , or registered assigns,
is entitled to purchase, in whole or part and from time to time, up to [21,538,461](1) fully paid and
non-assessable shares of Common Stock at a purchase price of $[3.25](2) per share (the "Warrant Price"), in each
case subject to adjustment pursuant to Section 6. 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. 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. This Warrant is being issued in connection with
the Securities Purchase Agreement dated as of November     , 2012 by and among the Company, certain guarantors named therein and the purchasers named therein for the purchase of
$100,000,000 in 10% Convertible Springing Second-Lien Notes Due 2020 and other securities and interests of the Company (the "Securities Purchase
Agreement"). Capitalized terms not otherwise defined herein have the meanings set forth in the Securities Purchase Agreement. 

 Section 1. Term of Warrants; Exercise of Warrants.  

        (a)   Subject
to the terms hereof, the holder of this Warrant shall have the right, at any time and from time to time, from and after the date hereof until 11:59 PM New York
City Time on the date that is one hundred and eighty (180) days after the Closing Date (as defined in the Securities Purchase Agreement), 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 9
hereof, of this Warrant, together with the Notice of Exercise form at the end hereof duly completed and signed, accompanied by 

   

   

 

         (1)    Note to Draft:    Number of shares exercisable represents the aggregate number exercisable under all
Series A Warrants; multiple warrants may be issued to multiple Purchasers. If any of the events described in Section 6 of this Warrant occur between the date of the Securities Purchase
Agreement and the date this Warrant is issued, the number of shares of Common Stock that this Warrant is exercisable for shall be adjusted as if Section 6 were in effect as of the date of the
Securities Purchase Agreement—and such adjusted number shall replace the number listed above in brackets in the definitive Warrant that is issued. 

        (2)    Note to Draft:    If any of the events described in Section 6 of this Warrant occur between the date of
the Securities Purchase Agreement and the date this Warrant is issued, the Warrant Price shall be adjusted as if Section 6 were in effect as of the date of the Securities Purchase
Agreement—and such adjusted price shall replace the price listed above in brackets in the definitive Warrant that is issued. 

E-2-2

 

payment
to the Company of the Warrant Price for the number of shares with respect to which this Warrant is being exercised. 

        (b)   Payment
of the aggregate Warrant Price shall be made by wire transfer to an account specified in writing (including by email) by the Company. 

        (c)   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.
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. The Company hereby represents and warrants that any Common Stock issued upon the exercise of this
Warrant will be duly and validly authorized and issued, fully paid and nonassessable and free from all taxes, liens and charges (other than liens or charges created by the holder of the Warrant or
taxes in respect of any transfer occurring contemporaneously therewith). The Company will at all times reserve and keep available out of its authorized but unissued Common Stock, solely for the
purpose of providing for the exercise of this Warrant, the aggregate number of shares of Common Stock, as the case may be, then issuable upon exercise of this Warrant. The Company will
(i) procure, at its sole expense, the listing of the Common Stock and other securities issuable upon exercise of this Warrant, subject to issuance or notice of issuance on all stock exchanges
on which the Common Stock are then listed or traded and (ii) maintain the listing of such Common Stock after issuance. The Company will ensure that the Common Stock may be issued without
violation of any applicable law or regulation or of any requirement of any securities exchange on which the Common Stock are listed or traded. 

        (d)   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, transfer tax or other incidental expenses 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. 

        Section 3. Transferability.    The Warrants are not transferable without the Company's written consent; provided, that the Warrants
may be
transferred in whole or in part without the Company's written consent to any Affiliate (as defined in the Securities Purchase Agreement) of the holder of this Warrant. 

         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 

E-2-3

 

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. 

         Section 6. 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: 

        (a)   (i)
If and whenever on or after the date hereof the Company issues or sells, or in accordance with Section 13.4 of the Securities Purchase Agreement is deemed to
have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company) for a consideration per share (the
"New Issuance Price") less than a price equal to the Warrant Price in effect immediately prior to such issue or sale or deemed issuance or sale (such
Warrant Price then in effect is referred to as the "Applicable Price") (the foregoing a "Dilutive
Issuance"), other than distributions contemplated by Section 13.6 of the Securities Purchase Agreement, then the Warrant Price then in effect shall be reduced to a price
determined in accordance with the following formula: 

 

							
	 	 	R1 = R ×	 	OS + A

  OS + B	 	 

 

 Where:

 

					
	 	 	R1 =	 	the Warrant Price in effect immediately after such Dilutive Issuance;
	

 	
 	
R =	
 	
the Warrant Price in effect immediately prior to such Dilutive Issuance;
	

 	
 	
OS =	
 	
the number of shares of Common Stock outstanding immediately prior to such Dilutive Issuance (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstanding
immediately prior to such issue (excluding the Apollo Warrants) or upon conversion or exchange of Convertible Securities (excluding the Notes) outstanding immediately prior to such issue (to the extent such Options or Convertible Securities have an
exercise or conversion price below R);
	

 	
 	
A =	
 	
the number of shares of Common Stock that would have been issued (or be deemed to have been issued) if such Dilutive Issuance had been issued at a price per share equal to R (determined by dividing the aggregate
consideration received by the Company in respect of such issue by R); and
	

 	
 	
B =	
 	
the number of shares of Common Stock issued (or deemed to have been issued) in such Dilutive Issuance.

 

         For
purposes of this Section 6(a)(i), clauses (A) through (D) of Section 13.4 of the Securities Purchase Agreement shall apply to the adjustments contemplated
in this Section 6(a)(i), mutandis mutatis. 

         (ii)  In
the event of any such Dilutive Issuance, the number of shares of Common Stock issuable upon the exercise of this Warrant shall be increased to the number obtained by
dividing (x) the product 

E-2-4

 

of
(1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to such Dilutive Issuance, and (2) the Warrant Price in effect immediately prior
to such Dilutive Issuance, by (y) the new Warrant Price determined in accordance with Section 6(a)(i). 

        (b)   With
respect to any event contemplated in Sections 13.5, 13.6, 13.7, 13.8, or 13.9 of the Securities Purchase Agreement, the adjustments contemplated by such
sections shall be applied to the Warrant Price as if all references to Conversion Price in such sections were references to Warrant Price and all reference to conversion of Notes in such sections were
references to exercise of the Warrant. The number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the number obtained by dividing (x) the product of
(1) the number of shares of Common Stock issuable upon the exercise of this Warrant immediately prior to the event giving rise to such adjustment, and (2) the Warrant Price in effect
immediately prior to the event giving rise to such adjustment, by (y) the new Warrant Price determined in accordance with this Section 6(b). 

        (c)   With
respect to any event contemplated in Section 13.15 of the Securities Purchase Agreement, the Warrant shall be exercisable for the same type and amount of
shares of stock, other securities or other property or assets (including cash or any combination thereof) that the holder of this Warrant would have been entitled to receive upon such Merger Event had
such holder exercised this Warrant immediately prior to such Merger Event. In determining the kind and amount of shares of stock, other securities or other property or assets (including cash or any
combination thereof) receivable upon consummation of such Merger Event, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such
Merger Event, the holder of the Warrant shall have the right to make a similar election upon exercise of this Warrant with respect to the number of shares of stock, other securities or other property
or assets (including cash or any combination thereof) which the holder of this Warrant will receive upon exercise of this Warrant. 

        (d)   Sections 13.11,
13.12, 13.13, 13.14, 13.16, 13.17 and 13.18 of the Securities Purchase Agreement shall apply to the adjustments contemplated in this
Section 6, mutandis mutatis. 

         Section 7. 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 7, be issuable on the exercise of this Warrant (or specified portions thereof), the Company shall issue a full share
of Common Stock in lieu of such fractional share. 

        Section 8. No Rights as Stockholder; Notices.    Nothing contained in this Warrant shall be construed as conferring upon the holder or
its
transferees any rights as a stockholder of the Company, including the right to vote, receive dividends, consent or receive notices as a stockholder with respect to any meeting of stockholders for the
election of directors of the Company or any other matter. The Company will at no time close its transfer books against transfer of this Warrant in any manner which interferes with the timely exercise
of this Warrant. 

         Section 9. Notices.    All notices and communications provided for hereunder, unless otherwise specified,
shall be in writing and shall be deemed delivered (a) on a Business Day if sent by telecopy during the Business Day or on the next Business Day if sent after a Business Day has ended or
(b) the next Business Day after delivery to a recognized overnight delivery service (with charges prepaid). Any such notice must be sent: 

        (1)   if
to any holder of Warrants, at the address specified for such communications in the Securities Purchase Agreement, or at such other address as holder of Warrants (or
its transferee) shall have specified to the Company in writing, and 

E-2-5

 

        (2)   if
to the Company, to the Company at the address set forth below or at such other address as the Company shall have specified to the holder of the Warrant in writing: 

Prospect
Global Resources Inc.

1450 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer 

with
a copy (which shall not constitute notice) to: 

Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch 

         Section 10. 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 11. 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 New York (without regard to conflicts of laws principles thereof). 

         Section 12. 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 13. 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. 

        IN
WITNESS WHEREOF, the Company has executed this Warrant. 

 

					
	 	 	PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
By:	
 	
  

  Patrick L. Avery,

Chief Executive Officer

 

 E-2-6

 
 
 

  NOTICE OF EXERCISE    
    

        (1)   The
undersigned hereby elects to purchase                        shares of Common Stock of PROSPECT GLOBAL RESOURCES INC.,
pursuant to the provisions of Section 1
of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full. 

        (2)   Please
issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: 

 

			
	

 	
 	
  

  (Name)
	

 	
 	
  

  (Name)

 

 
        (3)   Please
issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: 

 

			
	

 	
 	
  

  (Name)
	
  

  (Date)	
 	
  

  (Signature)

 

 E-2-7

 

 

 
 

  NOVEMBER 29, 2012
  
    DISCLOSURE SCHEDULES
  OF
  THE COMPANY    
    

        These Disclosure Schedules have been prepared in connection with the Securities Purchase Agreement (the
"Agreement"), dated as of November 29, 2012, by and among Prospect Global Resources, Inc. (the "Company"), the Subsidiaries of
the Company set forth on the signature pages thereto (each, individually, a "Guarantor," and collectively, the "Guarantors") and the Purchaser
set forth on the signature pages thereto ("Purchasers"). These Disclosure Schedules are qualified in their entirety by reference to specific provisions of the Agreement.
The inclusion of any information in these Disclosure Schedules will not be deemed an admission or acknowledgement that such information is required to be listed in the Disclosure Schedules or that any
such information is material to the Company. 

        The
schedule numbers referenced in these Disclosure Schedules refer to the corresponding sections of the Agreement to which these Disclosure Schedules relate; provided, however, to the
extent that an item in the Disclosure Schedules is relevant and reasonably apparent on its face to apply to the disclosure required by any other section of the Agreement that references a different
schedule contained in these Disclosure Schedules, such item shall be deemed to be disclosed in the section of the Disclosure Schedules corresponding to such other section of these Schedules, whether
or not an explicit cross-reference appears. 

        The
headings, if any, of the individual sections of these Disclosure Schedules are inserted for convenience only and will not be deemed to constitute a part thereof or a part of the
Agreement. The
annexes or exhibits to these Disclosure Schedules form an integral part of these Disclosure Schedules and are incorporated therein by reference as if set forth fully herein. 

        Defined
terms not defined herein shall have the meanings given to such terms in the Agreement. 

S-1

 
 
 

  SCHEDULES    
    

 

			
	6.9	 	Permits
	6.22	 	Amendment Confirmation
	7.2(a)	 	Capitalization
	7.2(b)	 	Pre-emptive Rights/Warrants/Options
	7.5	 	Required Consents
	7.18	 	Undisclosed Liabilities
	7.23	 	Compliance with ERISA
	7.28	 	No Registration Rights
	9.1	 	Operation of Business
	9.13	 	Preemptive Rights
	9.16	 	Benefit
	13.11	 	When No Adjustment Required
	15.15	 	Investments

 

 S-2

 
 
 

  Schedule 6.9
  Permits    
    

 

					
	 
	 	Necessary Permit

 
	 	Applicable Date 
	1.	 	Air Quality Control Permit (Arizona Department of Environmental Quality ("ADEQ"))	 	August 31, 2013
	
2.	
 	
Aquifer Protection Permit (ADEQ)	
 	
December 31, 2013
	
3.	
 	
Arizona Pollution Discharge Elimination System, 402 Permit for Stormwater Discharge from Industrial Activities (ADEQ)	
 	
December 31, 2013
	
4.	
 	
Mineral Lease (Arizona State Land Department)	
 	
December 31, 2013
	
5.	
 	
Mined Land Reclamation Plan (Arizona State Mine Inspector)	
 	
December 31, 2013
	
6.	
 	
Major Plan Amendment (Apache County)	
 	
December 31, 2013
	
7.	
 	
Water and/or Wastewater Facilities—Approval to Construct (ADEQ)	
 	
December 31, 2014
	
8.	
 	
Operation and production permits unrelated to initial construction and outside the PFNP boundaries, of the type customarily obtained by mine developers after construction, and not reasonably likely to pose a material
impediment to operation of the mine following construction.	
 	
December 31, 2015

 

 S-3

 

 

 
 

  Schedule 6.22
  Amendment Confirmation    
    

        Potash Supply Agreement, dated October 18, 2012 (the "Sichuan Offtake Agreement"), among the Company, AWP and Sichuan Chemical
Industry Holding (Group) Co., Ltd.—To be amended or modified to specify that the Transaction and any Securities acquired in connection with the Transaction will be excluded
from any calculation of Change of Control for purposes of Section 7 of the Sichuan Offtake Agreement, and that any directors nominated or designated by the Purchasers shall be deemed to have
been directors of the Company as of the date of the Sichuan Offtake Agreement. 

        COR
Advisors Investor Relations Consulting Agreement, dated July 5, 2011, between the Company and COR Advisors LLC, as amended on May 9, 2012 and August 1,
2012—To be amended or modified to specify that the Transaction and any Securities acquired in connection with the Transaction will be excluded from any calculation of Change of Control
under the agreement. 

        Items
set forth in Schedule 9.16 shall be resolved as contemplated by Section 9.16 of the Agreement. 

S-4

 
 
 

  Schedule 7.2(a)
  Capitalization    
    

 Capitalization Summary Report  

 

														
	 
	 	Authorized 	 	Shares

Outstanding 	 	Shares

Outstanding

Fully Diluted 	 	% Owned on

Fully Diluted

Basis 	 
	 Stock
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Common
	 	 	300,000,000	 	 	70,864,468	 	 	70,864,468	 	 	70.50	%
	 Preferred
	 	 	100,000,000	 	 	—	 	 	—	 	 	0.00	%
	 	 	 	 	 	 	 	 	 	 
	 Total Stock
	 	 	400,000,000	 	 	70,864,468	 	 	70,864,468	 	 	70.50	%
	 Rights to Acquire Stock
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Options
	 	 	21,700,000	 	 	 	 	 	8,761,000	 	 	8.72	%
	 Warrants to Purchase
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 Common
	 	 	 	 	 	 	 	 	20,889,534	 	 	20.78	%
	 	 	 	 	 	 	 	 	 	 	 	 
	 Total Diluted Shares
	 	 	 	 	 	 	 	 	100,515,002	 	 	100.00	%

 

 S-5

 
 
 

  Schedule 7.2(b)
  Pre-emptive Rights/Warrants/Options    
    

 Warrants  

        1.     As
of the date hereof, the Company has issued warrants that are exercisable into an aggregate of 20,889,534 shares of common stock. 

 Options  

        1.     As
of the date hereof, under the 2011 Employee Equity Incentive Plan, 13,500,000 shares are authorized and 3,786,000 options are issued and outstanding. 

        2.     As
of the date hereof, under the 2011 Director & Consultant Equity Plan, 8,200,000 shares are authorized and 5,025,000 options are issued and outstanding. 

 Other Equity Commitments  

        1.     On
August 1, 2012 the Company entered into a second amendment to its investor relations consulting agreement with COR Advisors, LLC pursuant to which COR
has agreed to provide additional services to the Company following its recent public offering and the Company agreed to pay a monthly retainer of $20,000 to COR through July 4, 2015. The
Company also agreed that the 75,000 shares payable quarterly to COR under the amended agreement would be paid quarterly in advance rather than in arrears (other than the shares earned during the
quarter ended October 5, 2012, which were paid in arrears). Upon any change of control transaction, the remaining shares to be issued for the term of the amended agreement shall become
immediately due to COR. 

        2.     Pursuant
to the Potash Royalty Purchase and Sale Agreement and Option dated effective as of November 22, 2011 by and between the Company and Grandhaven Energy
("Grandhaven"), the Company committed to maintain, and currently maintains at all times, 25 million shares in reserve until the earlier of (a) Grandhaven exercises its option or
(b) such royalty is assigned to American West Potash LLC ("AWP"). 

        3.     Pursuant
to a Consulting Agreement by and between the Company and the Thornton Group LLC ("Thornton") dated February 27, 2012 (the "Thornton Consulting
Agreement") upon the Company's entry into the potash supply agreement with Sichuan Chemical on October 18, 2012 (the "Sichuan Offtake Agreement"), the Company owed the Thornton Group a
one-time success fee, payable in 50% cash and 50% common stock, equal to 2.5% of the average annual potash committed by Sichuan multiplied by the world price of potash. Pursuant to the
side letter dated November 15, 2012 by and between the Company and Thornton, the success fee payable to Thornton in connection with the Sichuan Offtake Agreement is (a) cash payment of
$3,875,625 (to be paid in two equal installments) and (b) approximately 1,656,250 shares of the Company's common stock. As of the date hereof, the Company paid the first installment of the cash
payment on November 16, 2012 and instructed its transfer agent to issue the Thornton Group approximately 1,656,250 shares of common stock (for the avoidance of doubt such shares have been
included in the capitalization table on Schedule 7.2(a)). The Company will pay the second (and final) installment of the cash payment no later than February 28, 2013. Pursuant to the
Thornton Consulting Agreement, the Company pays Thornton a monthly retainer payment of $10,000 and such agreement automatically renews for 6 month periods unless the Company terminates the
Agreement (which it may do so at any time) upon 30 days prior written notice. If the Company terminates the Thornton Consulting Agreement, it will be subject to the compensation described in
Sections 3(c) and 3(e) therein. In addition to the success fee paid to Thornton by the Company described above, the Thornton Consulting Agreement provides for a success fee related to any other
(i) offtake arrangements entered into by the Company and third parties that have been introduced to the Company by Thornton payable 50% in cash and 50% in shares of the 

S-6

 

Company's
common stock and (ii) 3% of the aggregate amount of investment (debt or equity) in the Company made by an investor introduced to the Company by Thornton payable in cash on the closing
of such investment. 

        4.     In
connection with its underwritten offering of 15,000,000 shares that closed on November 14, 2012 and pursuant to the Underwriting Agreement dated
November 8, 2012 by and among the Company, Dahlman Rose & Company, LLC, Macquarie Capital (USA) Inc., Roth Capital Partners, LLC and Sterne, Agee &
Leach, Inc. (collectively, the "Underwriters"), the Company granted the Underwriters a 30-day option to purchase up to an additional 2,250,000 shares of the Company's common stock
to cover over-allotments, if any. 

        5.     The
Company entered into a consulting agreement with Silver Peaks, LLC dated November 12, 2012 under which Silver Peaks will receive warrants to purchase
50,000 shares of the Company's common stock along with payment of $1,000 per day on a monthly basis. 

        6.     As
disclosed in the Company's SEC Documents, such liens and/or restrictions placed on the shares of the Company's Subsidiaries in connection with the Karlsson Agreements. 

        7.     The
Company entered into a letter agreement dated November 14, 2012 (the "MCNC Agreement") with MC Namir Capital LLC ("MCNC") for services related to
offtake opportunities under which MCNC will receive warrants to purchase 60,000 shares of common stock (which such amount is reflected in the total number of warrants outstanding within these
Disclosure Schedules). MCNC will also receive on a monthly basis (in advance) warrants to purchase 10,000 shares of common stock for an initial term of 12 months. 

        8.     Pursuant
to the Letter of Agreement dated August 13, 2012 between Crystal Research Associates, LLC ("CRA") and the Company, the Company agreed to issue CRA
one hundred fifty thousand (150,000) four year warrants in the Company, at a purchase price equal to its current stock price as of August 13, 2012. The warrants will/have
vest[ed] as follows: 25,000 shares on each of September 13, 2012, October 13, 2012, November 13, 2012, December 13, 2012, January 13, 2013,
and February 13, 2013. 

S-7

 

 

 
 

  Schedule 7.5
  Required Consents    
    

        1.     The
office lease dated February 23, 2012 by and between the Company as "Tenant" and CSHV 9595 Wilshire, LLC as "Landlord" for the Company's Los
Angeles office located at 9595 Wilshire Blvd., Beverly Hills, CA 90212, provides that a transfer at any one time or from time to time of the lessor of a controlling interest or fifty
percent (50%) or more of an interest in Tenant (whether stock, assets or other form of ownership or control) by any person(s) or entity(ties) having an interest in ownership or control of Tenant at
the Lease Date shall be deemed to be a Transfer of the lease. Tenant shall not transfer the lease without the prior written consent of the Landlord and Tenant shall request such consent at least
30 days prior to the proposed commencement date of the Transfer. 

S-8

 
 
 

  Schedule 7.18
  Undisclosed Liabilities    
    

        1.     Pursuant
to the Thornton Consulting Agreement by and between the Company and Thornton, upon the Company's entry into Sichuan Offtake Agreement, the Company owed the
Thornton Group a one-time success fee, payable in 50% cash and 50% common stock, equal to 2.5% of the average annual potash committed by Sichuan multiplied by the world price of potash.
Pursuant to the side letter dated November 15, 2012 by and between the Company and Thornton, the success fee payable to Thornton in connection with the Sichuan Offtake Agreement is
(a) cash payment of $3,875,625 (to be paid in two equal installments) and (b) approximately 1,656,250 shares of the Company's common stock. As of the date hereof, the Company paid the
first installment of the cash payment on November 16, 2012 and instructed its Transfer Agent to issue the Thornton Group approximately 1,656,250 shares of common stock (for the avoidance of
doubt such shares have been included in the capitalization table on Schedule 7.2(a)). The Company will pay the second (and final) installment of the cash payment no later than
February 28, 2013. Pursuant to the Thornton Consulting Agreement, the Company pays Thornton a monthly retainer payment of $10,000 and such agreement automatically renews for 6 month
periods unless the Company terminates the Agreement (which it may do so at any time) upon 30 days prior written notice. If the Company terminates the Thornton Consulting Agreement, it will be
subject to the compensation described in Sections 3(c) and 3(e) therein. In addition to the success fee paid to Thornton by the Company described above, the Thornton Consulting Agreement
provides for a success fee related to any other (i) offtake arrangements entered into by the Company and third parties that have been introduced to the Company by Thornton payable 50% in cash
and 50% in shares of the Company's common stock and (ii) 3% of the aggregate amount of investment (debt or equity) in the Company made by an investor introduced to the Company by Thornton
payable in cash on the closing of such investment. 

        2.     The
below consulting or service agreements provide for success fees based upon the occurrence of certain trigger events provided therein. As of the date hereof, no
triggering events for any of the respective success fees listed below have occurred: 

        (a)   In
addition to the success fee paid to Thornton by the Company described in Item 1 above, the Thornton Consulting Agreement by and between the Company and the
Thornton, provides for a success fee related to any other (i) offtake arrangements entered into by the Company and third parties that have been introduced to the Company by Thornton and
(ii) 3% of the aggregate amount of investment (debt or equity) in the Company made by an investor introduced to the Company by Thornton. Such amount shall be payable in cash at the time of the
closing of such investment; 

        (b)   Section III
"Fees" of the MCNC Agreement provides for certain trigger events for the success fees described therein; 

        (c)   Section 3
"Compensation" of the Consulting Agreement with Pulsar Capital Investimentos Ltda ("Pulsar") dated August 31, 2012 (the "Pulsar
Agreement") as further amended by the Amendment to Consulting Agreement (undated) between the parties, provides for certain trigger events for the success fees described therein. The Company also pays
Pulsar a monthly retainer fee of 15,000 pursuant to the Pulsar Agreement and after an initial one year term the Pulsar Agreement extends for additional six month periods upon the mutual consent of the
parties; 

        (d)   The
sections entitled "Compensation" and "Warrants" of the Relationship Agreement dated October 10, 2011 by and between the Company and Oxford Metrica Limited,
provide for certain success fees due to Oxford Metrica by the Company upon the occurrence of certain trigger events described therein. This agreement expires October 10, 2016; 

S-9

 

        (e)   While
the Letter Agreement dated January 3, 2012 (the "NCCP Letter Agreement") by and between the Company and New Century Capital Partners, Inc. ("NCCP"),
expired pursuant to its terms on July 3, 2012, Section 5 provides a 12 month tail period, commencing on July 3, 2012, for certain success fees described therein; 

        (f)    Agreement
by and between the Company and Roscoe Martin in connection with executive search and placement services under which Roscoe Martin is paid 25% (the "placement
fee") of the base salary for any successful placement with the Company. Such placement fee is comprised of cash and options. 

        3.     As
disclosed in the Company's SEC Documents, the Company owes royalty payments to the following parties once certain levels of production or gross revenues are achieved: 

        (a)   Pursuant
to Section 4 of the Termination of Management Services Agreement dated August 1, 2012 by and between the Company and Buffalo Management LLC
("Buffalo"), Buffalo receives a fee equal to 2% of the Company's annual gross revenues provided in perpetuity. 

        (b)   On
November 22, 2011, the Company completed two transactions with entities related to Hexagon Investments, LLC. As part of the consideration given within
those transactions, the Company must either (a) assign a 1% overriding royalty interest or (b) settle the obligation through issuance of the Company's common shares to a Hexagon related
entity based on the estimated fair value of a 1% royalty interest at the time of exercise "Grandhaven Option." 

        (c)   AWP
granted The Karlsson Group the right to receive payments equal to of 1% of the gross sales received by AWP from potash production from the real property over which
AWP currently has leases, licenses and permits for mining purposes, capped at $75 million. 

        (d)   In
connection with AWP's exploration permits on state land in Arizona, upon the conversion of such exploration permits into mining permits, the State of Arizona will be
entitled to receive customary future production royalties for any potash production on state owned lands. 

        (e)   Item 5
below is hereby incorporated by reference. The royalties on the Company's gross sales are set forth in Article III of the Potash Sharing Agreement
(as defined below). 

        4.     As
disclosed in the Company's SEC Documents, in the event of a sale of at least 50% of AWP or a merger of AWP with or into an unaffiliated entity within four years of the
closing date, the Company has agreed to pay The Karlsson Group an additional payment equal to 15% of the net proceeds received from the transaction, capped at $75 million. 

        5.     In
July 2011, AWP entered into a Potash Sharing Agreement dated July 27, 2011 (the "Potash Sharing Agreement") with the mineral estate owners party thereto
covering 101 private mineral estate sections and related mineral leases on approximately 63,000 acres adjacent to or in close proximity to AWP's existing mineral rights. In May, 2012, AWP divested
itself of four Arizona state exploration permits covering the mineral estate of approximately 2,500 gross acres, which were non-contiguous with our remaining sections. The Potash Sharing
Agreement provides that AWP will pay such mineral estate owners specified dollar amounts during the development of AWP's mining and processing facility. The related agreements with each counterparty
to the Potash Sharing Agreement include an annual base rent and a royalty for potash extracted from these estates. Upon the Company's completion of specified targets set forth in the Potash Sharing
Agreement (which such targets have not yet been met as of the date hereof), the Company's next payment to such mineral estate owners under the Potash Sharing Agreement will be in the amount of
$1.5 million in accordance with Article III therein. The term of the Potash Sharing Agreement is perpetual or until the earliest of cessation of operations by AWP for 180 consecutive
days or abandonment of the potash mining operation by AWP. 

        6.     The
Investor Relations Consulting Agreement dated July 5, 2011 by and between the Company and COR Advisors LLC, as amended by Amendment #1 to
Investor Relations Consulting 

S-10

 

Agreement
dated May 9, 2012 and as further amended by Amendment #2 to Investor Relations Consulting Agreement dated August 1, 2012 provides that a 'Change of Control' transaction
shall be any transaction or series of transactions that results in the sale of the Company or the issuance of common stock or securities convertible into common stock that in the aggregate would
result in a majority of the Company's shares being owned or controlled by new investors or the change in a majority of the Company's Board of Directors as constituted on the date such agreement was
signed. In the event that the Transaction triggers a "Change of Control" as defined above, the remaining shares to be issued for the term (750,000 shares as of the date hereof) shall become
immediately due and payable. 

        7.     The
Company and its Subsidiaries are party to certain operating leases for their office space and other ordinary course items that are not reflected on the Reference
Balance Sheet and are not expected to exceed an aggregate amount of $750,000. 

        8.     Item 7
under "Other Equity Commitments" of Schedule 7.2(b) is hereby incorporated by reference. 

        9.     To
the extent not already disclosed in Item 2 above, the Company is also obligated to pay monthly fees for services to certain third parties as further described
below: 

        (a)   Independent
Contractor Consulting Agreement by and between the Company and Granite Peak Advisors LLC, the Company pays Granite Peak $20,000 a month on or before
the 15th business day of each month for advisory and consulting services and such agreement expires on October 10, 2013 unless the parties choose to extend such
arrangement; 

        (b)   Independent
Contractor Agreement by and between the Company and Mitsuru Kataoka, the Company pays Mr. Kataoka $5,000 per month paid by the
3rd of every month for consulting and advisory services. Such agreement is terminable at any time by either party, for any reason, upon 30 day prior written notice. In the
event that the Company terminates, the Company shall pay Mr. Kataoka two months worth of payment; 

        (c)   Item 1
under "Other Equity Commitments" of Schedule 7.2(b) is hereby incorporated by reference. 

        (d)   Item 5
under "Other Equity Commitments" of Schedule 7.2(b) is hereby incorporated by reference. 

S-11

 
 
 

  Schedule 7.23
  Compliance with ERISA    
    

        1.     COBRA
payments are included as severance benefits pursuant to individual employment agreements, including those with Chad Brownstein, Brian W. Wallace, Wayne Rich,
and Gregory Dangler. 

S-12

 

 

 
 

  Schedule 7.28
  No Registration Rights    
    

        The following Persons have the right to require the Company to register securities for sale under the Securities Act pursuant to their
respective Registration Rights Agreements with the Company: 

 

					
	Person

 
	 	Shares 	 
	 The Karlsson Group
	 	 	5,605,834	 
	 Delta Institutional LP
	 	 	209,900	 
	 Delta Onshore LP
	 	 	98,800	 
	 Delta Offshore Master Ltd
	 	 	867,771	 
	 Very Hungry LLC
	 	 	4,841,608	 
	 Avalon Portfolio, LLC
	 	 	1,900,000	 
	 Buffalo Management LLC
	 	 	3,983,993	 
	 Certain other purchasers in private placements representing aggregate shares of:
	 	 	3,331,628	 

 

 S-13

 
 
 

  Schedule 9.1
  Operation of Business    
    

        The Persons listed below, including their affiliates: 

 

			
	40 North Industries

Austin Powder Company / Jack Davis

Blackrock

Koch Fertilizers

Lion Gate Capital	 	LSB Industries

Trafalet

Very Hungry LLC

Emerald

SunAmerica

 

 S-14

 
 
 

  Schedule 9.13
  Contracts Obligating the Company to Issue Shares    
    

        Consulting Agreement by and between Thornton Group LLC and the Company effective as of February 27, 2012. 

        Consulting
Agreement by and between Pulsar Capital Investimentos Ltda and the Company effective as of August 31, 2012. 

        Amendment
to Consulting Agreement by and between Pulsar Capital Investimentos Ltda and the Company. 

        Letter
of Agreement by and between Crystal Research Associates, LLC and the Company effective as of August 13, 2012. 

        Agreement
by and between New Century Capital Partners, Inc. and the Company effective as of January 3, 2012. 

        Relationship
Agreement by and between Oxford Metrica Limited and the Company dated as of October 10, 2011. 

        Proposal
and Fee Agreement for Representation by and between Brownstein Hyatt Farber Schreck, LLP and the Company dated as of July 5, 2011. 

        Agreement
by and between Dahlman Rose & Co., LLC and the Company dated as of June 30, 2011. 

        Independent
Contractor Agreement by and between Milton MacGregor and the Company dated as of September 1, 2012. 

        Agreement
by and between MC Namir Capital LLC and the Company dated as of November 14, 2012. 

        Termination
of the Management Services Agreement by and between Buffalo Management LLC and Prospect Global Resources Inc., a Delaware corporation, dated as of
August 1, 2012. 

        Independent
Contractor Agreement by and between Silver Peaks, LLC and the Company dated as of November 12, 2012. 

        Letter
dated as of November 15, 2012, confirming the success fee in the Consulting Agreement by and between Thornton Group LLC and the Company dated February 27,
2012, in connection with the Potash Supply Agreement entered into on October 18, 2012, between Prospect Global Resources Inc. and Sichuan Chemical Industry Holding (Group), Ltd. 

        Investor
Relations Consulting Agreement by and between COR Advisors LLC and the Company effective as of July 5, 2011. 

        Amendment
#1 to Investor Relations Consulting Agreement by and between COR Advisors LLC and the Company dated as of May 9, 2012. 

        Amendment
#2 to Investor Relations Consulting Agreement by and between COR Advisors LLC and the Company dated as of August 1, 2012. 

        Potash
Royalty Purchase and Sale Agreement and Option by and between Grandhaven Energy, LLC and the Company, effective as of November 22, 2011. 

        In
connection with its underwritten offering of 15,000,000 shares that closed on November 14, 2012 and pursuant to the Underwriting Agreement dated November 8, 2012 by and
among the Company, Dahlman Rose & Company, LLC, Macquarie Capital (USA) Inc., Roth Capital Partners, LLC and Sterne, Agee & Leach, Inc. (collectively, the
"Underwriters"), the Company granted the Underwriters a 

S-15

 

30-day
option to purchase up to an additional 2,250,000 shares of the Company's common stock to cover over-allotments, if any. 

        Item 1
to Schedule 13.11(e) is hereby incorporated by reference. 

        Agreement
by and between the Company and Roscoe Martin in connection with executive search and placement services under which Roscoe Martin is paid 25% (the "placement fee") of the base
salary for any successful placement with the Company. Such placement fee is comprised of cash and options. 

S-16

 

 

 
 

  Schedule 9.16
  Employee Waivers to be Provided by Closing    
    

	1.
	Brian
W. Wallace 

	•
	Employment Agreement dated as of June 13, 2012 

	•
	2011 Employee Equity Incentive Plan Option Agreement effective as of July 2, 2012, and executed on July 10,
2012

	2.
	Chad
Brownstein 

	•
	Employment Agreement dated as of August 1, 2012

	3.
	Wayne
E. Rich 

	•
	Amended and Restated Employment Agreement dated as of June 13, 2012

	4.
	Patrick
L. Avery 

	•
	Second Amended and Restated Employment Agreement dated as of June 13, 2012

	5.
	Jonathan
Bloomfield 

	•
	Second Amended and Restated Employment Agreement dated as of September 6, 2011, with an effective date of
September 1, 2010

	6.
	Anita
Marks 

	•
	Offer Letter dated as of August 20, 2012

	7.
	Gregory
Dangler 

	•
	Employment Agreement dated as of October 19, 2012

	8.
	Hugh
Eisler 

	•
	Offer Letter dated as of August 20, 2012 

S-17

 
 
 

  Schedule 13.11(e)
  When No Adjustment Required    
    

        1.     Pursuant
to warrant agreements to purchase common stock with the holders below: 

 

					
	Name of Warrant holder

 
	 	Convertible into Number of

Shares Listed Below 	 
	 Very Hungry LLC(1)
	 	 	4,841,608	 
	 Scott Reiman Trust(1)
	 	 	1,893,687	 
	 Abas Holdings LLC
	 	 	11,765	 
	 Adriana Milana
	 	 	11,765	 
	 JPFP Family LLC
	 	 	25,000	 
	 Rising Sun Ventures (AZ), LLC
	 	 	47,059	 
	 Anthony Johnson
	 	 	11,765	 
	 Junction Energy Partners, LLC
	 	 	117,648	 
	 Mark Attanasio
	 	 	111,764	 
	 Melissa Weiler
	 	 	29,412	 
	 Jean-Marc Chapus
	 	 	23,529	 
	 Michael Parks
	 	 	23,529	 
	 Jonathan Insull
	 	 	11,765	 
	 Daniel Attanasio
	 	 	5,882	 
	 Michael Attanasio
	 	 	5,882	 
	 Matthew Miller
	 	 	5,882	 
	 Jason Breaux
	 	 	5,882	 
	 Richard Stevenson
	 	 	5,882	 
	 Christopher Wright
	 	 	5,882	 
	 Delta Offshore Master LTD
	 	 	867,771	 
	 Delta Institutional LP
	 	 	209,900	 
	 Delta Onshore LP
	 	 	98,800	 
	 Gary Jamell
	 	 	11,765	 
	 John Grier
	 	 	235,295	 
	 Dahlman Rose & Company, LLC
	 	 	70,588	 
	 Avalon Portfolio, LLC
	 	 	1,900,000	 
	 Crystal Research Associates, LLC
	 	 	150,000	 
	 Buffalo Management LLC (and its assignees)(2)
	 	 	4,433,993	 
	 The Karlsson Group, Inc. 
	 	 	5,605,834	 
	 MC Namir Capital LLC
	 	 	60,000	 
	 Silver Peaks LLC
	 	 	50,000	 
	 	 	 	 
	 
	 	 	 20,889,534	 

 

 	(1)
	Hexagon
Investments LLC assigned its warrants to purchase common stock of the Company to Very Hungry LLC.

	(2)
	Buffalo
Management LLC assigned an aggregate of 450,000 warrants to the following parties: The Schnel Family Trust, Granite Peak Advisors LLC,
Zasis LLC and Santa Fe National Insurance Company. 

 

 S-18

 

        2.     Options
granted to the parties set forth below: 

 

							
	Participant Name

 
	 	Plan 	 	Shares Granted 	 
	 Wayne Rich
	 	2011 Employee Equity Incentive Plan	 	 	1,000,000	 
	 Brian Wallace
	 	2011 Employee Equity Incentive Plan	 	 	1,000,000	 
	 Pat Avery
	 	2011 Employee Equity Incentive Plan	 	 	600,000	 
	 Barry Munitz
	 	2011 Director and Consultant Equity Incentive Plan	 	 	400,000	 
	 Barry Munitz
	 	2011 Director and Consultant Equity Incentive Plan	 	 	300,000	 
	 Devon Archer
	 	2011 Director and Consultant Equity Incentive Plan	 	 	2,000,000	 
	 Pat Avery
	 	2011 Employee Equity Incentive Plan	 	 	300,000	 
	 Marc Holtzman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	300,000	 
	 Zhi Zhong Qui
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Jon Bloomfield
	 	2011 Employee Equity Incentive Plan	 	 	200,000	 
	 Scott Reiman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Gray Davis
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Chad Brownstein
	 	2011 Director and Consultant Equity Incentive Plan	 	 	200,000	 
	 Conway Schatz
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Zhi Zhong Qui
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Marc Holtzman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Ari Swiller
	 	2011 Director and Consultant Equity Incentive Plan	 	 	140,000	 
	 Greg Dangler
	 	2011 Employee Equity Incentive Plan	 	 	140,000	 
	 Greg Dangler
	 	2011 Employee Equity Incentive Plan	 	 	300,000	 
	 Erich Kirsch
	 	2011 Employee Equity Incentive Plan	 	 	125,000	 
	 Milton MacGregor
	 	2011 Director and Consultant Equity Incentive Plan	 	 	50,000	 
	 Brownstein Hyatt Farber Schreck LLP
	 	2011 Director and Consultant Equity Incentive Plan	 	 	120,000	 
	 Chad Brownstein
	 	2011 Director and Consultant Equity Incentive Plan	 	 	100,000	 
	 Ari Swiller
	 	2011 Director and Consultant Equity Incentive Plan	 	 	100,000	 
	 Jon Bloomfield
	 	2011 Employee Equity Incentive Plan	 	 	75,000	 
	 Isaac Morgan
	 	2011 Employee Equity Incentive Plan	 	 	40,000	 
	 Hugh Eisler
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Anita Marks
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Rick Chastain
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Tom Neuman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Hugh Eisler
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Anita Marks
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Rick Chastain
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Tom Neuman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	25,000	 
	 Ron Justman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	10,000	 
	 Rick Marlowe
	 	2011 Director and Consultant Equity Incentive Plan	 	 	10,000	 
	 Joe Hardin
	 	2011 Director and Consultant Equity Incentive Plan	 	 	10,000	 
	 Nesrin Arafa
	 	2011 Employee Equity Incentive Plan	 	 	6,000	 
	 Ron Justman
	 	2011 Director and Consultant Equity Incentive Plan	 	 	5,000	 
	 Rick Marlowe
	 	2011 Director and Consultant Equity Incentive Plan	 	 	5,000	 
	 Joe Hardin
	 	2011 Director and Consultant Equity Incentive Plan	 	 	5,000	 
	 	 	 	 	 	 
	 
	 	 	 	 	 8,761,000	 

 

         3.     Pursuant
to the Potash Royalty Purchase and Sale Agreement and Option dated effective as of November 22, 2011 by and between the Company and Grandhaven Energy
("Grandhaven") as further amended by the First Amendment to Potash Royalty Purchase and Sale Agreement and Option, dated March 21, 2012, between the parties, the Company committed to maintain,
and currently maintains at all times, 25 million shares in reserve until the earlier of (a) Grandhaven exercises its option or (b) such royalty is assigned to American West
Potash LLC ("AWP"). 

S-19

 

        4.     The
Investor Relations Consulting Agreement dated July 5, 2011 by and between the Company and COR Advisors LLC, as amended by Amendment #1 to Investor
Relations Consulting Agreement dated May 9, 2012 and as further amended by Amendment #2 to Investor Relations Consulting Agreement dated August 1, 2012 provides that a 'Change of
Control' transaction shall be any transaction or series of transactions that results in the sale of the Company or the issuance of common stock or securities convertible into common stock that in the
aggregate would result in a majority of the Company's shares being owned or controlled by new investors or the change in a majority of the Company's Board of Directors as constituted on the date such
agreement was signed. In the event that the Transaction triggers a "Change of Control" as defined above, the remaining shares to be issued for the term (750,000 shares as of the date hereof) shall
become immediately due and payable. 

S-20

 
 
 

  Schedule 15.15
  Investments    
    

        Money market account in the Company's name at KeyBank. 

S-21

QuickLinks

Exhibit 10.1

TABLE OF CONTENTS

SECURITIES PURCHASE AGREEMENT

ARTICLE I AUTHORIZATION OF NOTES

ARTICLE II SALE AND PURCHASE OF SECURITIES

ARTICLE III CLOSING

ARTICLE IV JOINT CONDITIONS TO CLOSING

ARTICLE V COMPANY CONDITIONS TO CLOSING

ARTICLE VI PURCHASERS CONDITIONS TO CLOSING

ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE COMPANY

ARTICLE VIII REPRESENTATIONS OF THE PURCHASERS

ARTICLE IX CERTAIN INTERIM COVENANTS

ARTICLE X TERMINATION

ARTICLE XI INDEMNIFICATION

ARTICLE XII VOTING

ARTICLE XIII CONVERSION

ARTICLE XIV INFORMATION COVENANTS

ARTICLE XV GENERAL COVENANTS

ARTICLE XVI EVENTS OF DEFAULT

ARTICLE XVII REMEDIES ON DEFAULT, ETC.

ARTICLE XVIII REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES; TRANSFER OF APOLLO PREFERRED SHARES

ARTICLE XIX PAYMENTS ON NOTES

ARTICLE XX EXPENSES, ETC.

ARTICLE XXI MODIFICATION AND WAIVER

ARTICLE XXII NOTICES

ARTICLE XXIII GUARANTEE OF NOTES

ARTICLE XXIV CONFIDENTIAL INFORMATION

ARTICLE XXV SUBSTITUTION OF PURCHASER

ARTICLE XXVI MISCELLANEOUS

SCHEDULE A INFORMATION RELATING TO PURCHASERS

SCHEDULE B DEFINED TERMS

SCHEDULE C-1 TERMS OF PERMITTED PREFERRED STOCK

SCHEDULE C-2 TERMS OF PERMITTED JUNIOR DEBT

SCHEDULE C-3 TERMS OF NOTES IN KARLSSON DEFAULT

EXHIBIT A

[Form of Note]

Prospect Global Resources, Inc.

EXHIBIT B-1 PROSPECT GLOBAL RESOURCES INC. CONVERSION NOTICE

ACKNOWLEDGMENT

EXHIBIT B-2 PROSPECT GLOBAL RESOURCES INC. CONVERSION NOTICE

ACKNOWLEDGMENT

EXHIBIT C-1 FORM OF CERTIFICATE OF DESIGNATION

PROSPECT GLOBAL RESOURCES INC. Attachment "A" to Certificate of Designation CERTIFICATE OF DESIGNATION of SERIES A PREFERRED STOCK of PROSPECT GLOBAL RESOURCES INC. (Pursuant to the Nevada Revised Statutes
78.1955)

ARTICLE I Number of Shares

ARTICLE II Rank

ARTICLE III Dividends

ARTICLE IV Liquidation Preference

ARTICLE V Voting and Related Rights

ARTICLE VI Restrictions on Transfer

ARTICLE VII Conversion

ARTICLE VIII Redemption

ARTICLE IX Reacquired Shares

ARTICLE X Amendment of Certificate of Designation

EXHIBIT D MINIMUM OFFTAKE ARRANGEMENTS

Guidelines for the Minimum Off-Take Arrangements

EXHIBIT E-1 FORM OF SERIES A WARRANT

NOTICE OF EXERCISE

EXHIBIT E-2 FORM OF SERIES B WARRANT

SERIES B WARRANT TO PURCHASE COMMON STOCK OF PROSPECT GLOBAL RESOURCES INC. , 2012

NOTICE OF EXERCISE

NOVEMBER 29, 2012 DISCLOSURE SCHEDULES OF THE COMPANY

SCHEDULES

Schedule 6.9 Permits

Schedule 6.22 Amendment Confirmation

Schedule 7.2(a) Capitalization

Schedule 7.2(b) Pre-emptive Rights/Warrants/Options

Schedule 7.5 Required Consents

Schedule 7.18 Undisclosed Liabilities

Schedule 7.23 Compliance with ERISA

Schedule 7.28 No Registration Rights

Schedule 9.1 Operation of Business

Schedule 9.13 Contracts Obligating the Company to Issue Shares

Schedule 9.16 Employee Waivers to be Provided by Closing

Schedule 13.11(e) When No Adjustment Required

Schedule 15.15 InvestmentsQuickLinks
 -- Click here to rapidly navigate through this document

 
 

  Exhibit 10.2    
    

 

INVESTORS RIGHTS AGREEMENT  

 by and between  

 PROSPECT GLOBAL RESOURCES INC.  

 and  

 THE INVESTORS NAMED HEREIN  

 Dated as of November 29, 2012  

 

  

  
 

  TABLE OF CONTENTS    
    

 

					
	 
	 	 
	 	Page 
	 ARTICLE I
	 	 GOVERNANCE
	 	2
	 1.1
	 	 Composition of the Board of Directors
	 	

2
	 1.2
	 	 Committees. 
	 	3
	 1.3
	 	 Consent Rights
	 	4
	 1.4
	 	 Good Faith Dealing
	 	7
	 1.5
	 	 Termination of Investors Group Rights
	 	7
	 ARTICLE II
	 	 OTHER COVENANTS
	 	

7
	 2.1
	 	 Preemptive Rights
	 	

7
	 2.2
	 	 Information Rights
	 	8
	 ARTICLE III
	 	 REPRESENTATIONS AND WARRANTIES
	 	

9
	 3.1
	 	 Representations and Warranties of the Investors
	 	

9
	 3.2
	 	 Representations and Warranties of the Company
	 	10
	 ARTICLE IV
	 	 REGISTRATION
	 	

10
	 4.1
	 	 Demand Registrations
	 	

10
	 4.2
	 	 Piggyback Registrations
	 	11
	 4.3
	 	 Shelf Registration Statement
	 	13
	 4.4
	 	 Registration Procedures
	 	13
	 4.5
	 	 Registration Expenses
	 	16
	 4.6
	 	 Participation in Underwritten Registrations
	 	16
	 4.7
	 	 Rule 144 and 144A and Regulation S
	 	17
	 4.8
	 	 Holdback
	 	17
	 4.9
	 	 Furnishing Information
	 	17
	 ARTICLE V
	 	 INDEMNIFICATION
	 	

18
	 5.1
	 	 Indemnification
	 	

18
	 ARTICLE VI
	 	 DEFINITIONS
	 	

20
	 6.1
	 	 Defined Terms
	 	

20
	 6.2
	 	 Terms Generally
	 	24
	 ARTICLE VII
	 	 MISCELLANEOUS
	 	

25
	 7.1
	 	 Term
	 	

25
	 7.2
	 	 Investors Group Actions
	 	25
	 7.3
	 	 Amendments and Waivers
	 	25
	 7.4
	 	 Successors and Assigns
	 	25
	 7.5
	 	 Severability
	 	25
	 7.6
	 	 Counterparts
	 	25
	 7.7
	 	 Entire Agreement
	 	26
	 7.8
	 	 Governing Law; Jurisdiction
	 	26
	 7.9
	 	 WAIVER OF JURY TRIAL
	 	26
	 7.10
	 	 Specific Performance
	 	26
	 7.11
	 	 No Third-Party Beneficiaries
	 	26
	 7.12
	 	 Notices
	 	26
	 7.13
	 	 Stock Dividends, Etc. 
	 	27
	 7.14
	 	 Effectiveness
	 	27

 

 

 

 

        INVESTORS
RIGHTS AGREEMENT, dated as of November 29, 2012 (as may be amended from time to time, this "Agreement"), by and between
Prospect Global Resources Inc., a Nevada corporation (the "Company"), and the investors named in Schedule A hereto (each, an
"Investor" and collectively, the "Investors Group"). 

 
 

  W I T N E S S E T H:    

        WHEREAS,
simultaneously with the execution and delivery of this Agreement by the parties hereto, the Company and each of the Investors entered into a
Securities Purchase Agreement (as may be amended from time to time, the "Purchase Agreement") pursuant to which, among other things, the Company has
agreed to issue to the Investors and/or Affiliates thereof (a) the Notes (as defined in the Purchase Agreement), which Notes may be converted into shares of common stock, par value $0.001 per
share ("Common Stock"), of the Company, (b) the Apollo Warrants (as defined in the Purchase Agreement), (c) the Apollo Preferred Shares
(as defined in the Purchase Agreement), and (d) under certain circumstances, shares of Common Stock (the shares of Common Stock, the Notes, the shares of Common Stock into which such Notes are
convertible into and for which such Apollo Warrants are exercisable and the Apollo Preferred Shares, are collectively referred to herein as the
"Securities") and (d) certain royalty interests in the Company; and 

        WHEREAS,
each of the parties hereto wishes to set forth in this Agreement certain terms and conditions regarding the Investors' ownership of the Securities; and 

        WHEREAS,
this Agreement (a) shall become effective as of the Closing (as defined in the Purchase Agreement) or (b) shall automatically terminate (and be of no further force
and effect) if the Purchase Agreement is terminated prior to the Closing. 

        NOW,
THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained in this Agreement, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: 

 
 

  ARTICLE I
  
    GOVERNANCE    
    

        1.1    Composition of the Board of Directors.    

        (a)   Following
the Closing and until the Charter Designation Termination Date, the Company shall take all actions necessary to preserve, and ensure the continuation of, the
rights of the Preferred Share Purchaser (or, in the event the Preferred Share Purchaser has transferred any Apollo Preferred Shares to any of its Affiliates, the rights of the Majority Holders) to
elect directors to the Company's board of directors (the "Board") pursuant to and in accordance with the articles of incorporation of the Company (as
amended by the Certificate of Designation (as defined in the Purchase Agreement)) (the "Charter Designation Rights"), including, without limitation, by
nominating for election (with respect to the Charter Designations Rights) the Persons proposed by the Preferred Share Purchaser (or, in the event the Preferred Share Purchaser has transferred all of
the Apollo Preferred Shares to any of its Affiliates, the Majority Holders) pursuant to Section 1.1(c) below or otherwise. 

        (b)   From
and after the Charter Designation Termination Date and until an Investor Rights Termination Event, the Preferred Share Purchaser (or an Affiliate thereof designated
by the Preferred Share Purchaser) shall have the right to appoint one observer on the Board (the "Board Observer") so long as it and/or its Affiliates
hold any Securities (it being understood that a Board Observer shall have all the rights (other than voting rights) of a director on the Board, including (i) the right to attend all meetings of
the Board as an observer, (ii) the right to receive advance notice of each meeting, including such meeting's time and place, at the same time and in the same manner as such notice is 

2

 

provided
to the members of the Board, (iii) the right to receive copies of all materials, including notices, minutes, consents and regularly compiled financial and operating data distributed to
the members of the Board at the same time as such materials are distributed to the Board, and to access the same information concerning the business and operations of the Company, and (iv) the
right to discuss the affairs, finances and accounts of the Company with, and to make proposals and furnish advice with respect thereto, to the Board without voting). 

        (c)   The
Preferred Share Purchaser (or, in the event the Preferred Share Purchaser has transferred all of the Apollo Preferred Shares to any of its Affiliates, the Majority
Holders) shall notify the Company of the identity of the proposed Investor Directors, in writing, no later than reasonably promptly after such information is reasonably requested by the Board or any
committee thereof responsible for the nomination of directors for inclusion in (x) a proxy or information statement for a meeting of shareholders (or action by written consent) or
(y) any other documents or reports to be filed by the Company with the SEC, together with all information about the proposed Investors Directors as shall be reasonably requested by the Board or
any committee thereof responsible for the nomination of directors; provided, however, that in no event
shall the Company require more information from the Preferred Share Purchaser or the Majority Holders regarding the proposed Investor Directors than is required for any other person nominated for
election to the Board; provided, further, that in the event the Preferred Share Purchaser or the
Majority Holders, as applicable, fails to provide any such notice, the persons then serving as the Investor Directors shall be deemed to be the proposed Investor Directors nominated for election for
such meeting or written consent for purposes of this Section 1.2(c). 

        (d)   Upon
the request of the Preferred Share Purchaser, the Company shall cause one or more Investor Directors elected or serving in connection with the Charter Designation
Rights to be appointed or elected to the boards of directors (or similar governing bodies) of any or all of the other Group Companies, such that the Investor Directors' representation on such boards
will be proportionate to the Investor Directors' representation on the Board at such time. 

        (e)   The
provisions of the Certificate of Designation and this Article I are intended to provide the Preferred Share
Purchaser and its Affiliates with the minimum Board representation rights set forth herein. Nothing in the Certificate of Designation or this Agreement shall prevent the Company from having a greater
number of nominees or designees of the Preferred Share Purchaser and its Affiliates on the Board than otherwise provided herein. 

        (f)    If
the Company at any time after the Closing becomes eligible for the "controlled company" exception under the rules of the Principal Market as a result of the Investor
Percentage Interest exceeding fifty percent (50%), the Company shall, upon the request of the Preferred Share Purchaser, take any and all action necessary to qualify the Company for such exception. 

        (g)   If,
after the date hereof, there is a change in applicable Law or the rules of the Principal Market that prohibits the Charter Designation Rights, then the Company shall
use reasonable best efforts to remove such prohibitions and, if it is unsuccessful in doing so, the Company and the Preferred Share Purchaser will discuss in good faith amendments to the terms of the
Certificate of Designation to remove such prohibition (it being acknowledged that in no event will the Preferred Share Purchaser be obligated to accept a lesser number of directors than a number equal
to the Investor Percentage Interest multiplied by the outstanding number of directors on the Board). 

        1.2    Committees.    From and after the Closing and until such time as the Preferred Share Purchaser (or the Majority
Holders, as applicable) is no longer entitled to elect at least two members of the Board pursuant to the Charter Designation Rights, the Preferred Share Purchaser (or the Majority Holders, as
applicable) shall be entitled to designate and appoint (and the Company shall cause such appointment (and the other appointments referred to in this  Section 1.2) to occur and become effective)
Investor Directors to serve on all of the committees of the Board in proportion to 

3

 

the
Investor Directors' overall representation on the Board (rounded up or down to the nearest whole number); provided that the Preferred Share
Purchaser (or the Majority Holders, as applicable) shall be entitled to designate and appoint at least one member to each committee so long as it is entitled to elect at least one member to the Board.
In the event that an insufficient number of Investor Directors meet the eligibility requirements mandated by applicable Law or applicable national securities exchange rules (in either case from which
the Company is not then exempt, by reason of operating under an applicable controlled company exemption or otherwise), the Preferred Share Purchaser (or the Majority Holders, as applicable) shall be
entitled to designate and appoint a number of Investor Directors to such committee in a non-voting observer capacity as it would have been able to designate as full members in the absence
of such ineligibility. Each such observer shall have the same rights as a director (other than voting rights), including the right to participate in all deliberations of each committee. Observers
shall not be counted towards a quorum. The Company shall send to each such observer the notice of the time and place of such meeting in the same manner and at the same time as it shall send such
notice to the committee members. The Company shall also provide to each such observer copies of all notices, reports, minutes and consents at the time and in the manner as they are provided to the
committee members. 

        1.3    Consent Rights.    From and after the Closing, the Company shall not, and shall cause each of its subsidiaries
to not (the Company and its current and future subsidiaries together, the "Group Companies"), take, enter into or effectuate any of the following
actions or transactions without the prior written approval of the Preferred Share Purchaser (provided that (x) the consent rights set forth below
shall not be applicable for so long as the Investor Percentage Interest is less than the Initial Threshold, and (y) the consent rights set forth below (except for the consent rights set forth
in subsections (a), (c), (d),  (e), (f), (o),  (p), (q), (r)
(solely with respect to the Chief
Executive Officer), (s) and (t) (solely with reference to the foregoing subsections)) shall terminate
upon the Conversion Milestone): 

        (a)   (i)
any increase or decrease in the number of directors serving on the Board (or similar governing body) or any committee thereof, except as permitted by the terms of
the Certificate of Designation, or (ii) any alteration of the powers of the Board (or similar governing body) or any committee thereof (including creating any new committee), except for any
alterations of a non-material, routine or administrative nature which do not adversely affect the rights of the Investors Group; 

        (b)   (i)
approving or making material amendments to the annual budget of any Group Company (the "Annual Budget"), or
(ii) making any expenditures or undertaking any transactions which would cause the Group Companies to, together with all other contemplated expenditures in the same budget period, deviate from
a previously approved Annual Budget by more than five percent (5%) of the aggregate expenditures contemplated in such previously approved Annual Budget; 

        (c)   (i)
terminating the Company's status as a publicly listed company or terminating the registration of the Common Stock under the Securities Act of 1933 (the
"Securities Act") or amending the Company's reporting obligations under the Exchange Act of 1934 (the "Exchange
Act"), (ii) changing its (or any other Group Company's) jurisdiction of organization, or (iii) applying to list (or materially altering or terminating its
listing) on any stock exchange; 

        (d)   making
any material change in the nature of its business or in its lines of business; 

        (e)   changing
its articles of incorporation, bylaws or other similar governing documents except for any alterations of a non-material, routine or administrative
nature which do not adversely affect the rights of the Investors Group; 

4

 

        (f)    creating
or issuing any capital stock (including creating or issuing any new class of common stock of the Company other than the issuance for cash of the current class
of Common Stock), any preferred stock (including any Apollo Preferred Shares or other shares of the Series A Preferred Stock of the Company) or any other equity-like or hybrid
securities (including debt securities with equity components), including, without limitation, options, warrants, convertible, exchangeable or exercisable securities, stock appreciation rights or any
other security or arrangement whose economic value is derived from the value of the equity of the Group Companies (an "Equity-based Security") (it being
understood, for the avoidance of doubt, that the Company shall be permitted to (x) issue shares of its current class of Common Stock for cash without consent of the Preferred Share Purchaser,
subject to the Investors Group rights in Sections 1.3(s) and 2.1 of this Agreement and
(y) make issuances (other than of any Apollo Preferred Shares or other shares of the Series A Preferred Stock of the Company) to employees, directors and consultants (who are natural
persons) pursuant to and in
accordance with stock incentive plans of the Company that were publicly filed with the Commission prior to the date of the Purchase Agreement (provided
that any such issuances are made in accordance with the terms, conditions and limitations of such plans as they existed as of the date of the Purchase Agreement, as modified with (i) the
approval of the Company's stock holders and (ii) the separate written approval of the Preferred Share Purchaser); 

        (g)   repurchasing
or redeeming any equity securities or any Equity-based Security; 

        (h)   declaring,
setting aside, making or paying dividends or other distributions to any Person; 

        (i)    authorizing,
issuing, creating, or incurring any Indebtedness (or Liens relating to Indebtedness) or entry into any other binding commitments with any person with
respect to such Indebtedness, other than (i) the issuance of the Notes pursuant to the Purchase Agreement and (ii) up to $75 million in the aggregate of Permitted Junior Debt (as
defined in the Purchase Agreement); 

        (j)    repaying,
refinancing (by recapitalization or otherwise) or amending or otherwise modifying any Indebtedness prior to maturity thereof (including, without limitation,
amending, waiving or otherwise modifying any terms of any Contracts entered into in connection with, or otherwise relating to, the Karlsson Purchase, whether through the amendment of any such
Contracts, through the entry into new Contracts or arrangements, or otherwise), except as required by the terms of such Indebtedness; 

        (k)   any
individual or related series of dispositions of assets or businesses, whether by sale, transfer, assignment or otherwise, whether direct or indirect, with a value in
excess of $200,000 individually or in excess of $500,000 when aggregated with all other dispositions in any twelve (12)-month period, except for the sale of potash in the ordinary course of business; 

        (l)    selling
or granting of any royalty (or similar) interests in, or other rights to payment based on the revenue of, the Group Companies or any assets or rights of the
Group Companies; provided, that the Company shall be permitted to grant royalties in connection with the acquisition of property in the ordinary course
of business, if (x) such royalty interests are granted to the seller of the acquired property and relate solely to the acquired property; and (y) either (i) such royalty interests
are granted in connection with acquisitions of state-owned property, where the size of all state-owned properties as to which royalties are sold or granted under this proviso in any twelve (12)-month
period does not exceed 1,500 acres in the aggregate and the royalties granted are substantially consistent with the published guidelines of the Arizona Bureau of Land Management, or (ii) the
size of all non-state-owned properties as to which royalties are sold or granted under this proviso in any twelve (12)-month period does not exceed 500 acres in the aggregate and such 

5

 

royalty
grants to the recipient only a percentage interest in gross potash production from the acquired property, not to exceed the following percentages: 

        (i)    two
percent (2%) if potash produced from the acquired property is sold at $200/tonne or less, 

        (ii)   three
percent (3%) if potash produced from the acquired property is sold at a price less than or equal to $300/tonne but greater than $200/t, 

        (iii)  four
percent (4%) if potash produced from the acquired property is sold at a price less than or equal to $400/tonne but greater than $300/t, 

        (iv)  five
percent (5%) if potash produced from the acquired property is sold at a price less than or equal to $500/tonne but greater than $400/t and 

        (v)   six
percent (6%) if potash produced from the acquired property is sold at a price greater than $500/tonne; 

        (m)  except
with respect to the acquisition of real property or interests in real property (which is covered by clause (n) below), any individual or related series of
acquisitions of assets, securities or businesses, whether by purchase, transfer, assignment or otherwise, whether direct or indirect, and including investments in or formation of partnerships or joint
ventures with third parties, with a value (or for consideration) in excess of $500,000 individually or $2,000,000 in any twelve (12)-month period when aggregated with all other acquisitions; 

        (n)   any
individual or related series of acquisitions of any real property or interests in real property with a value (or for consideration) in excess of $750,000 or in
excess of $1,500,000 in any twelve (12)-month period when aggregated with all other acquisitions, other than pursuant to Contracts entered into after the date hereof that are permitted to be entered
into hereunder and by Section 9.1 of the Purchase Agreement; 

        (o)   any
mergers, consolidations, recapitalizations, restructurings, reorganizations, business combinations, or change-of-control transactions
involving any Group Company; 

        (p)   (i)
commencing a voluntary case, proceeding or other action under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to any Group Company, or seeking to adjudicate any Group Company bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to any Group Company or any Indebtedness of any Group
Company, (ii) seeking appointment of a receiver, trustee, custodian or other similar official for any Group Company or for all or any substantial part of any Group Company's assets, or
(iii) the making of a general assignment for the benefit of any Group Company's creditors; 

        (q)   entering
into (or amending, altering or cancelling) any transaction or Contract (including, but not limited to, the purchase, sale, lease, or exchange of any property or
the rendering of any service) with any Affiliate or Associate of the Group Companies; 

        (r)   hiring
or firing of the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Commercial Officer, Project Manager or Mine Manager (or other
executives or managers performing substantially similar roles), and entry into or amendments of (or any waivers under) any employment or similar agreements or other compensation arrangements with such
persons; 

        (s)   issuing
to any Person or Group shares of Common Stock or Equity-based Securities which would result in such Person or Group (including Affiliates and Associates of such
Person or Group) Beneficially Owning seven and one-half percent (7.5%) or more of the then-outstanding 

6

 

Common
Stock or other equity of the Company (or voting power of the Company for the election of directors); or 

        (t)    entering
into any Contract or otherwise obligating the Group Companies to take any of the foregoing actions. 

        1.4    Good Faith Dealing.    Until the occurrence of an Investor Rights Termination Event, without the prior consent
of the Investors Group, the Company shall not take any action (or fail to take any action) to cause or permit the amendment of, or amend, its articles of incorporation (as amended by the Certificate
of Designation (as defined in the Purchase Agreement)) or bylaws, or enter into any Contract (or amend an existing Contract), in each case in a manner that is adverse to, or conflicts with, any of the
Investors Group's rights under this Agreement (including its registration rights hereunder) or its Charter Designation Rights, and shall perform its obligations herein in good faith. 

        1.5    Termination of Investors Group Rights.    From and after the Closing, if the Investor Percentage Interest is
less than the Initial Threshold, then at any time that the Investor Percentage Interest falls below a level at which the Majority Holders would be entitled to elect a number of Investor Directors
pursuant to the Charter Designation Rights as are then serving, the Preferred Share Purchaser shall promptly notify the Company and, unless otherwise consented to by a majority of the
non-Investor Directors on the Board, use its reasonable best efforts to cause a number of Investor Directors to promptly resign from the Board (including by taking action by written
consent) such that immediately following such resignation there is only that number of Investor Directors that the Majority Holders are then entitled to elect based on the then-current
Investor Percentage Interest. 

 
 

  ARTICLE II
  
    OTHER COVENANTS    
    

        2.1    Preemptive Rights.    

        (a)   Each
Royalty Purchaser will have the preemptive rights set forth in this Section 2.1 with respect to any issuance
of any Common Stock or Equity-based Securities by any Group Company that are issued after the Closing (any such issuance other than those described in clauses (i) through (iii) below, a
"Preemptive Rights Issuance"), except for (i) issuances to employees, directors and consultants pursuant to and in accordance with stock
incentive plans of the Company that were publicly filed with the Commission prior to the date hereof (provided that any such issuances are made in
accordance with the terms, conditions and limitations of such plans as they existed as of the date of hereof and without effect to any amendments or other modifications thereof after the date hereof
unless approved by the Investors Group) or written agreements set forth on Schedule 9.13 of the Purchase Agreement (provided that any such
issuances are made in accordance with the terms, conditions and limitations of such agreements as they existed as of the date hereof and without effect to any amendments or other modifications thereof
after the date hereof unless approved by the Investors Group), (ii) issuances of shares of Common Stock as consideration in any merger approved by pursuant to  Section 1.3(o), or
(iii) issuances of shares of Common Stock pursuant to and in accordance with warrant agreements entered into (and
publicly filed with the Commission) prior to the date of the Purchase Agreement and previously disclosed to the Investors Group (provided that any such
issuances are made in accordance with the terms, conditions and limitations of such warrant agreements as they existed as of the date of the Purchase Agreement and without effect to any amendments or
other modifications thereof after the date of the Purchase Agreement unless approved by the Investors Group). The preemptive rights in this  Section 2.1 shall terminate at such time as the Investor
Percentage Interest falls below ten percent (10%). 

        (b)   If
any Group Company at any time or from time to time effects a Preemptive Rights Issuance, such Group Company shall give written notice to each Royalty Purchaser a
reasonable period in 

7

 

advance
of such issuance (but in no event later than ten (10) days prior to such issuance), which notice shall set forth the number and type of the securities to be issued, the issuance date,
the offerees or transferees, the price per security, and all of the other terms and conditions of such issuance, which shall be deemed updated by delivery of the final documentation for such issuance
to each Royalty Purchaser. Each Royalty Purchaser may, by written notice to such Group Company (a "Preemptive Rights Notice") delivered no later than
twenty-one (21) days after the consummation of such Preemptive Rights Issuance, elect to purchase (or designate an Affiliate thereof (including, without limitation, another
Investor) to purchase) a number of securities specified in such Preemptive Rights Notice (which number may be any number up to but not exceeding such Royalty Purchaser's pro rata portion of the
Preemptive Rights Cap Amount applicable to such Preemptive Rights Issuance), on the same terms and conditions as such Preemptive Rights Issuance (it being understood and agreed that (i) the
price per security that the Investors shall pay shall be the same as the price per security set forth in the Preemptive Rights Notice, and (ii) the Investors shall not be required to comply
with any terms, conditions, obligations or restrictions (including, without limitation, any non-compete, standstill or other limitations but excluding any remaining period of a transfer or
lock-up restriction applicable at such time to other purchasers in such Preemptive Rights Issuance) not directly necessary for the effectuation of the sale or issuance of such securities).
If the Royalty Purchasers exercise their preemptive rights hereunder with respect to such Preemptive Rights Issuance, the Company shall (or shall cause such subsidiary to) issue to the Royalty
Purchasers (or their designated Affiliates) the number of securities specified in such Preemptive Rights Notice as soon as reasonably practicable thereafter. For the avoidance of doubt, in the event
that the issuance of Common Stock or Equity-based Securities in a Preemptive Rights Issuance involves the purchase of a package of securities that includes Common Stock or Equity-based Securities and
other securities in the same Preemptive Rights Issuance, each Royalty Purchaser shall have the right to acquire its applicable pro rata portion of such other securities, together with its applicable
pro rata portion of such Common Stock or Equity-based Securities, in the same manner described above (as to amount, price and other terms). 

        (c)   The
election by any Royalty Purchaser not to exercise its preemptive rights hereunder in any one instance shall not affect its right (other than in respect of a
reduction in the Investors Rights Percentage) as to any future Preemptive Rights Issuances. Each Royalty Purchaser shall be entitled to deliver its own notices and make its own elections for purposes
of this Section 2.1, and the non-exercise by any Royalty Purchaser shall not affect the rights of any other Investor under this  Section 2.1.

        (d)   For
the avoidance of doubt, the Royalty Purchasers shall not have any preemptive rights under this Section 2.1
with respect to any issuance of any Common Stock or Equity-based Securities by any Group Company occurring at or prior to the Closing (a "Pre-Closing
Issuance"). Each Investor's preemptive rights (if any) with respect to Pre-Closing Issuances shall be limited to their rights under Section 9.13 of the
Purchase Agreement. 

        2.2    Information Rights.    

        (a)   From
the Closing until the Investor Percentage Interest is less than five percent (5%), the Company will prepare and furnish the following to each Investor (and in the
case of clause (iv), make available to each Investor): 

        (i)    As
soon as available, and in any event within ninety (90) days after the end of each fiscal year of the Group Companies, a copy of the audited consolidated
balance sheet of the Group Companies as at the end of each such fiscal year and the related audited consolidated statements of income, cash flows and changes in shareholders equity for such year of
the Group Companies setting forth, in each case in comparative form the figures for the previous fiscal year, or, in the case of such balance sheet, for the last day of such fiscal year, all in
reasonable detail. 

        (ii)   As
soon as available, and in any event within forty-five (45) days after the end of each fiscal quarter of the Group Companies for the first three
(3) fiscal quarters of a fiscal year, the 

8

 

unaudited
consolidated balance sheet of the Group Companies as at the end of such quarter and the related consolidated statements of income, cash flows and changes in shareholders' equity for such
quarter and the portion of the fiscal year of the Group Companies then ended, setting forth in each case in comparative form the figures for the corresponding periods of the previous fiscal year, or,
in the case of such balance sheet, for the last day of such period, all in reasonable detail. 

        (iii)  As
soon as available, (A) a copy of the operating and capital expenditure budgets for the Group Companies for such fiscal year, (B) monthly construction
progress reports (containing detail on budget, schedule and key metrics), (C) monthly management accounts and periodic information packages relating to the operations and financial performance
of the Group Companies, in each case in such form as the applicable Group Company prepares in the ordinary course of business, (D) unless already received by an Investor Director or a Board
Observer, a copy of all information packages (and any other materials, documents or information) provided to the board of directors (or similar governing body) of any Group Company or any director
thereof (including notices, minutes, consents and regularly or specially compiled financial and operating data distributed to the members of such board or body at the same time as such materials are
distributed to such board or body) and (E) a copy of any information or reporting packages (and any other materials, certificates, documents or other information) provided directly or
indirectly (including through trustees or other agents) to any or all lenders under the Project Finance Facility (as defined in the Purchase Agreement) or to any other lender to or debt financing
source of any Group Company. 

        (iv)  As
soon as reasonably practicable after a request by any Investor to inspect, review or consult with (as applicable), all books and records and facilities and
properties and management (including project managers and other key employees) of each Group Company at reasonable times and intervals. 

        (v)   As
soon as reasonably practicable, any other information reasonably requested by such Investor; provided that there is a
tax, accounting, investment monitoring or other valid purpose for requesting such information. 

 
 

  ARTICLE III
  
    REPRESENTATIONS AND WARRANTIES    
    

        3.1    Representations and Warranties of the Investors.    Each Investor hereby represents and warrants to the Company
as follows: 

        (a)   Such
Investor has been duly formed, is validly existing and is in good standing under the laws of its state of organization. Such Investor has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations under this Agreement. 

        (b)   The
execution and delivery by such Investor of this Agreement and the performance by such Investor of its obligations under this Agreement do not and will not conflict
with, violate any provision of, or require the consent or approval of any Person under, Applicable Law, the organizational documents of such Investor, or any Contract to which such Investor is a party
or to which any of its assets are subject. 

        (c)   The
execution, delivery and performance of this Agreement by such Investor has been duly authorized by all necessary corporate (or similar) action on the part of such
Investor. This Agreement has been duly executed and delivered by such Investor and, assuming the due authorization, execution and delivery by the Company, constitutes a legal, valid and binding
obligation of the Investor, enforceable against such Investor in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general principles of equity. 

9

 

 

        3.2    Representations and Warranties of the Company.    The Company hereby represents and warrants to the Investors
Group as follows: 

        (a)   The
Company is a duly incorporated and validly existing corporation in good standing under the laws of the State of Nevada. The Company has all requisite power and
authority to execute and deliver this Agreement and to perform its obligations under this Agreement and to consummate the transactions contemplated hereby. 

        (b)   The
execution and delivery by the Company of this Agreement and the performance of the obligations of the Company under this Agreement do not and will not conflict with,
violate any provision of, or require any consent or approval of any Person under, Applicable Law, the organizational documents of the Company, or any Contract to which the Company is a party or to
which any assets of any Group Company are subject. 

        (c)   The
execution, delivery and performance of this Agreement by the Company has been duly authorized by all necessary corporate action on the part of the Company. This
Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the Investors Group, constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to
general principles of equity. 

 
 

  ARTICLE IV
  
    REGISTRATION    
    

        4.1    Demand Registrations.    

        (a)    Requests for Registration.    Subject to Section 4.1(b),
at any time after the Closing, the Investors Group may request in writing and require that the Company effect the registration (which, for avoidance of doubt, may be a Shelf Registration) of all or
any part of the Registrable Securities held by any Investor (a "Registration Request") (which Registration Request shall specify the number of
Registrable Securities intended to be registered and the intended method of distribution). Promptly after its receipt of any Registration Request, the Company will use its best efforts to register, as
soon as practicable in accordance with the provisions of this Agreement, all Registrable Securities that have been requested to be registered in the Registration Request. Any registration requested by
the Investors Group pursuant to this Section 4.1(a) is referred to in this Agreement as a "Demand
Registration." 

        (b)    Limitation on Demand Registrations.    

        (i)    The
Company shall not be required to (A) effect more than six (6) Demand Registrations (or more than three (3) in any twelve (12)-month period) or
(B) effect more than three (3) Demand Registrations on Form S-1 (or more than one (1) in any twelve (12)-month period) (it being understood and agreed that the
Company shall not be required to effect a Demand Registration on Form S-1 if the Company is S-3 eligible at such time and can successfully effectuate a Shelf
Registration (including, if requested, an Underwritten Shelf Takedown thereunder) at such time with respect to the Registrable Securities requested to be registered by the Investors Group). No Demand
Registration will count for the purposes of the limitations in this Section 4.1(b) unless the registration has been declared or ordered effective
by the Commission and remains continuously effective until (I) in the case of a Shelf Registration, the date on which all Registrable Securities covered thereby have been sold pursuant to such
registration (or if earlier, the first date on which no Registrable Securities remain outstanding) and (II) in the case of a registration statement that does not relate to a Shelf Registration,
the earlier of (x) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration (or if earlier, the first date on which no Registrable Securities
remain 

10

 

outstanding)
and (y) the close of business on the one hundred and eightieth (180th) day after such registration has been declared or ordered effective by the Commission. 

        (ii)   The
Company also shall not be required to effect any Demand Registration if the Company has notified the Investors Group that, in the good faith judgment of the
Company, due to a pending material transaction or material event (other than the Demand Registration that is the subject of such Registration Request) it would be materially detrimental to the Company
for such registration to be effected at such time, in which event the Company shall have the right to defer such filing for a period of not more than thirty (30) days after receipt of the
request of the Investors Group; provided that such right to delay a request shall be exercised by the Company not more than three (3) times in
any twelve (12)-month period and not more than once in any four (4)-month period. If the Company postpones the filing of a prospectus or the effectiveness of a Registration Statement pursuant to this  Section 4.1(b)(ii)
, the Investors Group will be entitled to withdraw its Registration Request and, if such request is withdrawn, such
registration request will not count for the purposes of the limitation set forth in this Section 4.1(b). 

        (c)    Selection of Underwriters.    If any Demand Registration (or any Underwritten Shelf Takedown) is proposed to be
underwritten, the lead underwriter (and all of the other underwriters, other than the second bookrunner) to administer the offering in connection with any such Demand Registration or Underwritten
Shelf Takedown will be chosen by the Investors Group subject to prior consultation with the Company. The Company shall be entitled to designate a second bookrunner in any offering in connection with
any such Demand Registration or Underwritten Shelf Takedown. In connection with any registered offering of the Company in which none of the Investors Group is offering any securities, so long as the
Investor Percentage Interest is twenty percent (20%) or more at such time, the underwriters for such offering shall be selected by the mutual agreement of the Company and the Investors Group, each
acting reasonably. 

        (d)    Priority on Demand Registrations.    The Company will not include in any Demand Registration pursuant to this  Section 4.1 (or any Shelf Takedown, whether an Underwritten Shelf Takedown or otherwise) any shares of Common Stock (or other securities) that
are not Registrable Securities, without the prior written consent of the Investors Group. If the lead underwriter in a Demand Registration that is an underwritten offering advises the Company that in
its reasonable opinion the number of Registrable Securities (and, if permitted hereunder, other shares of Common Stock requested to be included in such offering) exceeds the number of securities that
can be sold in such offering without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), the Company will include in such offering only
such number of securities that, in the reasonable opinion of such underwriter, can be sold without adversely affecting the marketability of the offering (including an adverse effect on the per share
offering price), which securities will be so included in the following order of priority: (i) first, Registrable Securities of the Investors Group, (ii) second, if there is any
additional availability after full satisfaction of clause (i) above, any shares of Common Stock to be sold by the Company, and (iii) third, if there is any additional availability after
full satisfaction of clauses (i) and (ii) above, any shares of Common Stock requested to be included pursuant to the exercise of other contractual piggyback registration rights granted
by the Company pro rata among such persons
(if applicable) on the basis of the aggregate number of securities requested to be included by such persons. 

        4.2    Piggyback Registrations.    

        (a)    Right to Piggyback.    Whenever the Company proposes to register any shares of Common Stock (or securities
convertible into or exercisable for shares of Common Stock) in connection with a Public Offering solely for cash (whether for its own account (a "Company
Registration") or for the account of any other Person (other than the Investors Group) possessing contractual demand registration rights (a "Shareholder
Registration")), other than pursuant to a Demand Registration or a 

11

 

Special
Registration, and the registration form to be filed may be used for the registration or qualification for distribution of Registrable Securities, the Company will give prompt written notice to
the Investors Group of its intention to effect such a registration and, subject to Section 4.2(c), will include in such registration all
Registrable Securities with respect to which the Company has received written requests for inclusion therein within fifteen (15) Business Days after the date of the Company's notice (a
"Piggyback Registration") (it being understood and agreed that, for the avoidance of doubt, the Investors Group's election to include its Registrable
Securities in such registration and/or sell its Registrable Securities in such related offering may be conditioned on the pricing achieved in the contemplated registration or offering). Subject to the
foregoing, the Investors Group may withdraw its Registrable Securities from such Piggyback Registration by giving written notice to the Company and the managing underwriter, if any, on or before the
fifth (5th) Business Day prior to the planned effective date of such Piggyback Registration. The Company may terminate or withdraw any registration under this  Section 4.2 prior to the effectiveness
of such registration, whether or not the Investors Group has elected to include Registrable Securities in
such registration, and except for the obligation to pay Registration Expenses pursuant to Section 4.5, the Company will have no liability to the
Investors Group in connection with such termination or withdrawal. 

        (b)    Underwritten Registration.    If the registration referred to in Section 4.2(a)  is proposed to be underwritten, the
Company will so advise the Investors Group. In such event, the right of the Investors Group to registration pursuant to
this Section 4.2 will be conditioned upon the Investors Group's participation in such underwriting and the inclusion of the Investors Group's
Registrable Securities in the underwriting, and the Investors Group will (together with the Company and the other securityholders distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting in accordance with Section 4.1(c). 

        (c)    Priority on Registrations.    

        (i)    If
a Piggyback Registration relates to an underwritten primary offering for a Company Registration, and the lead underwriter advises the Company that in its reasonable
opinion the number of securities requested to be included in such registration exceeds the number that can be sold without adversely affecting the marketability of such offering (including an adverse
effect on the per share offering price), the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such underwriter can be sold
without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority:
(i) first, the shares of Common Stock the Company proposes to sell, and (ii) second, if there is any additional availability after full satisfaction of clause (i) above, shares of
Common Stock (including Registrable Securities) of any investors (including the Investors Group) who have requested registration of their securities pursuant to contractual piggyback registration
rights (including pursuant to Section 4.2(a)), pro rata on the basis of the aggregate number of such securities or shares owned by each such
investor. 

        (ii)   If
a Piggyback Registration relates to an underwritten offering for a Shareholder Registration, and the lead underwriter advises the Company that in its reasonable
opinion the number of securities requested to be included in such registration exceeds the number that can be sold without adversely affecting the marketability of such offering (including an adverse
effect on the per share offering price), the Company will include in such registration or prospectus only such number of securities that in the reasonable opinion of such underwriter can be sold
without adversely affecting the marketability of the offering (including an adverse effect on the per share offering price), which securities will be so included in the following order of priority:
(i) first, the shares of Common Stock to be included by the investor that exercised its demand rights with respect to the Shareholder Registration, and (ii) second, if there is any
additional availability after full satisfaction of clause (i) above, shares of Common Stock (including Registrable Securities) of any other investors (including the Investors Group) who have 

12

 

requested
registration of their securities pursuant to contractual piggyback registration rights (including pursuant to Section 4.2(a)), pro rata
on the basis of the aggregate number of such securities or shares owned by each such investor. 

        4.3    Shelf Registration Statement.    

        (a)   Not
later than the earlier of thirty (30) days after (or, if the Company is not then S-3 eligible, sixty (60) days after) (x) Project
Completion (as defined in the Purchase Agreement) or (y) a written request by the Investors Group, the Company shall file with the Commission either (i) a Shelf Registration Statement or
(ii) pursuant to Rule 424(b) under the Securities Act, a prospectus supplement that shall be deemed to be part of an existing Shelf Registration Statement in accordance with
Rule 430B under the Securities Act, in each case relating to the offer and sale of all of the Registrable Securities (the "Shelf Registration").
The Company shall, if such Shelf Registration Statement is not automatically effective, use its best efforts to cause such Shelf Registration Statement to be declared effective under the Securities
Act as soon as possible after filing. The Company shall amend or supplement such Shelf Registration Statement to include additional Registrable Securities. The Company shall use its best efforts to
cause the Shelf Registration Statement to remain effective, including by filing a replacement Shelf Registration Statement upon the expiration of the original Shelf Registration Statement until such
time as there are no remaining Registrable Securities, and amend the Shelf Registration Statement from time to time as requested by the Investors Group to permit disposition of Registrable Securities
pursuant thereto in accordance with the preferred method of distribution of Securities under the Shelf Registration Statement of the Investors Group. 

        (b)   The
Investors Group shall be entitled, at any time and from time to time when a Shelf Registration Statement is effective, to sell such Registrable Securities as are
then registered pursuant to such Shelf Registration Statement, in any manner as provided in its notice to the Company (including in any underwritten offering, if so requested) (each such sale, a
"Shelf Takedown"); provided, that, (i) if such
Shelf Takedown is to be underwritten (an "Underwritten Shelf Takedown"), the Investors Group shall provide the Company at least thirteen
(13) Business Days' written notice prior to the expected closing of such Underwritten Shelf Takedown (it being understood and agreed that, notwithstanding anything to the contrary herein, there
shall be no aggregate limit to the number of Underwritten Shelf Takedowns that may be required to be consummated hereunder (except that the parties hereto agree that no more than three
(3) Underwritten Shelf Takedowns may be required to be consummated hereunder in any twelve (12)-month period)) and (ii) if such takedown does not involve an Underwritten Shelf Takedown
(a "Non-Underwritten Shelf Takedown"), the Investors Group shall provide the Company at least five (5) Business Days' written notice
prior to the expected closing of such Non-Underwritten Shelf Takedown (it being understood and agreed that, notwithstanding anything to the contrary herein, there shall be no limit to the
number of Non-Underwritten Shelf Takedowns that may be required to be consummated hereunder). The Investors Group shall give the Company prompt written notice after the consummation of
each Shelf Takedown. 

        4.4    Registration Procedures.    Subject to Section 4.1(b),
whenever the Investors Group has requested that any Registrable Securities be registered pursuant to Section 4.1 or  4.2 of this Agreement (including
with respect to a Shelf Registration and any Underwritten Shelf Takedowns or Non-Underwritten Shelf
Takedowns), the Company will use its best efforts to effect the registration and sale of such Registrable Securities as soon as reasonably practicable in accordance with the intended method of
disposition thereof, and pursuant thereto the Company shall use its best efforts to as expeditiously as reasonably practicable: 

        (a)   With
respect to a Demand Registration or a Piggyback Registration, prepare and file with the Commission a registration statement with respect to such Registrable
Securities (which, for the avoidance of doubt, may be a Shelf Registration and any Underwritten Shelf Takedowns or
Non-Underwritten Shelf Takedowns) and use its best efforts to cause such registration statement to 

13

 

become
effective, or prepare and file with the Commission a prospectus supplement with respect to such Registrable Securities pursuant to an effective registration statement and, upon the request of
the Investors Group, keep such registration statement effective or such prospectus supplement current, until (i) in the case of a Shelf Registration, the date on which all Registrable
Securities covered thereby have been sold pursuant to such registration (or if earlier, the first date on which no Registrable Securities remain outstanding) and (ii) in the case of any
registration statement not related to a Shelf Registration, the earlier of (A) the date on which all Registrable Securities covered thereby have been sold pursuant to such registration (or if
earlier, the first date on which no Registrable Securities remain outstanding) and (B) the close of business on the one hundred and eightieth (180th) day after such registration has been
declared or ordered effective by the Commission; 

        (b)   Prepare
and file with the Commission such amendments and supplements to the applicable registration statement and the prospectus or prospectus supplement used in
connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration
statement for the period set forth in paragraph (a); 

        (c)   Furnish
to the Investors Group such number of copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all
exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Registrable Securities owned by it; 

        (d)   Use
its best efforts to register and qualify the securities covered by such registration statement under such other securities, blue sky or other laws of such
jurisdictions as shall be reasonably requested by the Investors Group, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take
any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by the Investors Group;  provided that the Company
shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions; 

        (e)   Enter
into customary agreements (including, if the method of distribution is by means of an underwriting, an underwriting agreement in customary form with the managing
underwriter(s) of such offering) and take such other actions (including participating in and making documents available for the due diligence review of underwriters if the method of distribution is by
means of an underwriting) as are reasonably required in order to facilitate the disposition of such Registrable Securities; 

        (f)    With
respect to a Demand Registration (including any Shelf Takedowns), at the request of the Investors Group, cause its senior executives to participate, at the
Company's expense, in customary investor presentations and "road shows" (to be scheduled in a collaborative manner so as not to unreasonably interfere with the conduct of the business of the Company); 

        (g)   Notify
the Investors Group at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result
of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing; 

        (h)   Make
such representations and warranties to the Investors Group of the Registrable Securities covered by the applicable registration statement and the underwriters, if
any, in form, substance and scope as are customarily made by issuers to underwriters in an underwritten Public 

14

 

Offering
and deliver such documents and certificates as may be reasonably requested by the Investors Group and the managing underwriter, if any, to evidence compliance with the foregoing and with any
customary conditions contained in the applicable underwriting agreement or other agreement entered into by the Company; 

        (i)    Use
its best efforts to furnish to the managing underwriter, if any, and the Investors Group (1) an opinion of outside legal counsel representing the Company for
the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten Public Offering, addressed to the underwriters and the Investors Group, and
(2) a "comfort letter" from the independent registered public accountants of the Company addressed to the Investors Group and the underwriters, if any, in form and substance as is customarily
given by independent registered public accountants to underwriters in an underwritten Public Offering; 

        (j)    Give
written notice to the Investors Group: 

        (i)    when
any Registration Statement relating to such registrations or any amendment thereto has been filed with the Commission and when such registration statement or any
post-effective amendment thereto has become effective; 

        (ii)   of
any request by the Commission for amendments or supplements to any registration statement filed in connection therewith or the prospectus included therein or for
additional information; 

        (iii)  of
the issuance by the Commission of any stop order suspending the effectiveness of any registration statement filed in connection therewith or the initiation of any
proceedings for that purpose; 

        (iv)  of
the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any
jurisdiction or the initiation or threatening of any proceeding for such purpose; and 

        (v)   of
the happening of any event that requires the Company to make changes in any effective registration statement filed in connection therewith or the prospectus related
to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite
changes have been made). 

        (k)   Use
its best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in  Section 4.4(j)(iii) at the earliest
practicable time; 

        (l)    Upon
the occurrence of any event contemplated by Section 4.4(j)(v) above, promptly (and in any event within five
(5) Business Days) prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as
thereafter delivered to the Investors Group, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the Company notifies the Investors Group in accordance with  Section 4.4(j)(v) above to suspend the use of the prospectus
until the requisite changes to the prospectus have been made, then the Investors
Group shall suspend use of such prospectus and use its commercially reasonable efforts to return to the Company all hard copies of such prospectus (at the Company's expense) other than permanent file
copies then in the Investors Group's possession, and the period of effectiveness of such registration statement provided for above shall be extended by the number of days from and including the date
of
the giving of such notice to the date Investors Group shall have received such amended or supplemented prospectus pursuant to this  Section 4.4(l); 

15

 

        (m)  Use
its best efforts to procure the cooperation of the Company's transfer agent in settling any offering or sale of Registrable Securities, including with respect to the
transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the Investors Group or the underwriters; 

        (n)   If
requested by the managing underwriter or the Investors Group, promptly incorporate in a supplement or post-effective amendment such information as the
managing underwriter and the Investors Group agree should be included therein relating to the sale of the Registrable Securities, including, without limitation, information with respect to the number
of shares of Registrable Securities being sold to underwriters, the purchase price being paid therefor by such underwriters and with respect to any other terms of the underwritten offering of the
Registrable Securities to be sold in such underwritten offering, and make all required filings of such supplement or post-effective amendment as soon as notified of the matters to be
incorporated in such supplement or post-effective amendment; 

        (o)   Cooperate
with the Investors Group and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive
legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be in such denominations and registered in such names as the managing underwriter may reasonably
request at least three (3) Business Days prior to any sale of Registrable Securities to the underwriters; 

        (p)   Cause
all Registrable Securities covered by the applicable registration statement to be listed on any national securities exchange on which the Common Stock is then
listed; 

        (q)   Following
reasonable advance notice, make available for inspection by representatives of the Investors Group, any underwriter participating in any disposition pursuant
to the applicable registration statement, and any attorney or accountant retained by the Investors Group or any such underwriter, all relevant financial and other records and pertinent corporate
documents and properties of the Company, as shall be reasonably deemed necessary to the Investors Group or any such underwriter, and cause the Company's officers, directors and employees to supply all
relevant information, reasonably requested by the Investors Group, underwriter, attorney or accountant in connection with the applicable registration as is customary for similar due diligence
examinations during normal business hours at the offices where such information is normally kept; and 

        (r)   Otherwise
use its best efforts to comply with all applicable rules and regulations of the Commission, and make generally available to the Company's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities Act, (A) covering the twelve (12)-month period commencing at the end of the fiscal quarter in which the
applicable registration statement becomes effective, within forty-five (45) days of the end of such twelve (12)-month period, and (B) beginning with the first month of the
Company's first fiscal quarter commencing after the effective date of the applicable registration statement, which statements shall cover such twelve (12)-month period. 

        4.5    Registration Expenses.    Except as specifically provided herein, all Registration Expenses incurred in
connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by
the investors of the securities so registered pro rata on the basis of the aggregate offering or sale price of the securities so registered. 

        4.6    Participation in Underwritten Registrations.    The Investors Group shall not participate in any registration
hereunder that is underwritten unless the Investors Group (i) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by the Investors Group
(including, pursuant to the terms of any over allotment or "green shoe" option requested by the managing underwriter(s); provided that the Investors
Group will not be required to sell more than the 

16

 

number
of Registrable Securities that the Investors Group has requested the Company to include in any registration), (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) cooperates with the Company's reasonable requests in
connection with such registration or qualification (it being understood that the Company's failure to perform its obligations hereunder, which failure is caused by the Investors Group's failure to so
cooperate, will not constitute a breach by the Company of this Agreement). 

        4.7    Rules 144 and 144A and Regulation S.    The Company covenants that it will file any and all
reports required to be filed by it under the Securities Act and the Exchange Act (or, if the Company is not required to file such reports, it will make publicly available such necessary information
for so long as necessary to permit sales pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act) and that it will take such further action as the Investors Group
may reasonably request, all to the extent required from time to time to enable the Investors Group to sell its Securities (including, without limitation, its Notes and its Registrable Securities)
without registration under the Securities Act within the limitation of the exemptions provided by Rule 144, Rule 144A or Regulation S under the Securities Act, as such Rules may
be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. Upon the written request of the Investors Group, the Company will
deliver to the Investors Group a written statement as to whether it has complied with such requirements. 

        4.8    Holdback.    The Company agrees that, if requested by the underwriters managing any underwritten offering of
Registrable Securities, the Company (whether or not participating in such offering) agrees not to, and agrees to use its reasonable best efforts to cause each of its officers and directors other than
an Investor Director (whether or not participating in such offering) not to, issue or Transfer any shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares
of Common Stock without the prior written consent of such underwriters, during the period specified by the managing underwriters, which period shall not exceed ten (10) days prior or ninety
(90) days following any registered offering of such Registrable Securities; provided that the Investors Group shall have likewise agreed with
such underwriters and the Company not to Transfer any Registrable Securities during such period pursuant to an agreement that is substantially identical to the lock-up agreement to be
signed by the Company, which agreement may not be waived or amended without the consent of the Company. This Section 4.9 shall not apply to any
offering of Registrable Securities effected pursuant to a Registration Request made during the period following the filing of any registration statement with the Commission with respect to any
offering by the Company of shares of Common Stock or any securities convertible into or exchangeable or exercisable for shares of Common Stock until ninety (90) days after the date on which
such registration statement is declared effective. 

        4.9    Furnishing Information.    

        (a)   It
shall be a condition to the obligations of the Company to file any registration statement pursuant to  Section 4.1 that the Investors Group shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and
the intended method of disposition of such securities reasonably requested by the Company to the extent such information is necessary to effect the registration of its Registrable Securities. 

17

 
 
 

  ARTICLE V
  
    INDEMNIFICATION    
    

        5.1    Indemnification.    

        (a)   The
Company agrees to indemnify and hold harmless the Investors, their respective officers, directors, managers, employees, fiduciaries and general and limited partners
and each Person who is a controlling Person of any of the Investors within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (and the officers, directors,
managers, employees, fiduciaries and general and limited partners thereof) (each such person being referred to herein as a "Covered Person") against,
and pay and reimburse such Covered Persons for, any losses, claims, damages or liabilities, joint or several, to which such Covered Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged
untrue statement of material fact contained or incorporated by reference in any Registration Statement, prospectus or preliminary prospectus used to register Registrable Securities pursuant to this
Agreement or any amendment thereof or supplement thereto, or any document incorporated by reference therein, (ii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading and (iii) any violation by the Company of any federal, state or common law rule, regulation or law applicable to the Company
and relating to action required of or inaction by the Company in connection with any registration or offering of Registrable Securities, and the Company will pay and reimburse such Covered Persons for
any legal or any other expenses actually and reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability, action or proceeding;  provided
that the Company shall not be liable to a Covered Person in any such case to the extent that any such loss, claim, damage, liability (or action
or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement, or omission or alleged omission, made or incorporated by reference in such
Registration Statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto, or any document incorporated by reference therein, in reliance upon, and in conformity
with, written information prepared and furnished to the Company by such Covered Person expressly for use therein, or arises out of or is based on the failure of the Investors Group to deliver a copy
of the Registration Statement or prospectus or any amendments or supplements thereto after the Company has furnished the Investors Group with copies thereof. 

        (b)   In
connection with any Registration Statement in which any Investor is participating, the Investor shall furnish to the Company in writing such information as the
Company reasonably requests for use in connection with any such Registration Statement or prospectus and shall indemnify and hold harmless the Company, its directors and officers and any Person who is
or might be deemed to be a controlling person of the Company or any of its subsidiaries within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act against
any losses, claims, damages, liabilities, joint or several, to which the Company or any such director, officer, or controlling person may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue or alleged untrue
statement of material fact contained in the Registration Statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or (ii) any omission or alleged omission
of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent (x) that such untrue statement or omission is made in such
Registration Statement, any such prospectus or preliminary prospectus or any amendment or supplement thereto in reliance upon and in conformity with written information prepared and furnished to the
Company by the Investor expressly for use therein and (y) such statement or omission was not corrected in a subsequent writing prior to or concurrently with the sale of the securities to the
Person asserting such loss, and the Investor will reimburse the Company and each such director, officer 

18

 

and
controlling Person for any legal or any other expenses actually and reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, damage, liability,
action or proceeding; provided that the obligation to indemnify and hold harmless and reimburse shall be individual and several to each Investor and
shall be limited to the net proceeds received by such Investor from the sale of its Registrable Securities pursuant to the offering which gives rise to the right to so indemnify, hold harmless and
reimburse (less the aggregate amount of any damages that the Investor has otherwise been required to pay in respect of such loss, claim, damage, liability, action or expense or any substantially
similar loss, claim, damage, liability, action or expense arising from the sale of such Registrable Securities). 

        (c)   Promptly
after receipt by an indemnified party under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of
the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability under such subsection except to the extent that the indemnifying party is
actually prejudiced by such failure to notify. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party under such subsection for any other legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified
party, in connection with the defense thereof other than reasonable costs of investigation. Notwithstanding the foregoing, any indemnified party shall have the right to retain its own counsel, but the
fees and expenses of such counsel shall be at the expense of such indemnified person unless the indemnifying party and the indemnified party shall have mutually agreed to the contrary or the named
parties in any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interest between them. It is understood and agreed that the indemnifying party shall not, in connection with any proceeding or related proceeding, be
liable for the fees and expenses of more than one separate firm (in addition to any one firm of local counsel for each jurisdiction) retained by the indemnified persons for all indemnified persons and
that all such fees and expenses of such separate counsel shall be reimbursed as they are incurred. The indemnifying party shall not be liable for any settlement of any proceeding effected without its
written consent, which consent shall not be unreasonably denied, withheld, conditioned or delayed, but if settled with such consent or if there shall be a judgment for the plaintiff, the indemnifying
party agrees to indemnify each indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes
an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to (or an admission of) fault, culpability or a
failure to act, by or on behalf of any indemnified party. 

        (d)   The
indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party
or any officer, director or controlling Person of such indemnified party and will survive the registration and sale of any securities by any Person entitled to any indemnification hereunder and the
expiration or termination of this Agreement. 

19

 

        (e)   If
the indemnification provided for in Section 5.1(a) or  Section 5.1(b) is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim,
damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party thereunder, will contribute to the amount paid or payable by such indemnified party
as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and of the indemnified
party, on the other hand, in connection with the statements or omissions or violations that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified party will be determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the amount any Investor shall be obligated to contribute pursuant to this  Section 5.1(e)
shall be limited to an amount equal to the net proceeds received by such Investor from the sale of its Registrable Securities
pursuant to the offering which gives rise to such obligation to contribute (less the aggregate amount of any damages that the Investor has otherwise been required to pay in respect of such loss,
claim, damage, liability, action or expense or any substantially similar loss, claim, damage, liability, action or expense arising from the sale of such Registrable Securities). No person 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 guilty of such fraudulent
misrepresentation. 

 
 

  ARTICLE VI
  
    DEFINITIONS    
    

        6.1    Defined Terms.    Capitalized terms when used in this Agreement have the following meanings: 

        "Affiliate" means, with respect to any Person, any Person who directly or indirectly Controls, is Controlled by, or is under common
Control with the specified Person. For purposes of this Agreement, Apollo Global Management, LLC and its Affiliates shall not be deemed to be Affiliates of the Company or any of its
Subsidiaries. 

        "Agreement" has the meaning set forth in the Preamble. 

        "Annual Budget" has the meaning set forth in Section 1.3(b). 

        "Applicable Law" means all applicable provisions of (i) constitutions, statutes, laws, rules, regulations, ordinances, codes or
orders of any Governmental Entity, and (ii) any orders, decisions, injunctions, judgments, awards or decrees of any Governmental Entity. 

        "Apollo Warrants" has the meaning set forth in the Purchase Agreement. 

        "Apollo Preferred Shares" has the meaning set forth in the Purchase Agreement. 

        "Associate" means, with respect to any Person, (a) such Person's directors, managers or executive or senior officers and
(b) (i) a corporation or organization (other than the Group Companies) of which such director, manager or officer is an officer, director or partner or is, directly or indirectly, the
Beneficial Owner of ten percent (10%) or more of any class of equity securities, (ii) any trust or other estate in which such director, manager or officer has a substantial beneficial interest
or as to which such director, manager or officer serves as trustee or in a similar capacity, and (iii) any relative or spouse of such director, manager or officer, or any relative of such
spouse, who has the same home as such director, manager or officer or who is a director, manager or officer of any of the Group Companies. 

20

 

        "Beneficially Own" with respect to any securities shall mean having "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act without giving effect to the sixty (60)-day limitation on determining beneficial ownership contained in
Rule 13d-3(d)), including pursuant to any agreement, arrangement or understanding, whether or not in writing. 

        "Board" has the meaning set forth in Section 1.1. 

        "Board Observer" has the meaning set forth in Section 1.1(b). 

        "Business Day" means any day on which banks are not required or authorized to close in the City of New York. 

        "Certificate of Designation" has the meaning set forth in the Purchase Agreement. 

        "Charter Designation Rights" has the meaning set forth in Section 1.1(a). 

        "Charter Designation Termination Date" means the first date following the Closing Date (as defined in the Purchase Agreement) on which the
Charter Designation Rights no longer entitle the Majority Holders to elect directors to the Board. 

        "Closing" has the meaning set forth in the Purchase Agreement. 

        "Closing Date" has the meaning set forth in the Purchase Agreement. 

        "Commission" means the Securities and Exchange Commission or any other federal agency administering the Securities Act. 

        "Common Stock" has the meaning set forth in the Recitals. 

        "Company" has the meaning set forth in the Preamble. 

        "Company Registration" has the meaning set forth in Section 4.2(a). 

        "Contract" means any contract, agreement, obligation, note, bond, mortgage, indenture, guarantee, agreement, subcontract, lease or
undertaking (whether written or oral and whether express or implied). 

        "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or otherwise. 

        "Covered Person" has the meaning set forth in Section 5.1(a). 

        "Conversion Milestone" has the meaning set forth in the Purchase Agreement. 

        "Demand Registration" has the meaning set forth in Section 4.1(a). 

        "Equity-based Security" has the meaning set forth in Section 1.3(f). 

        "Exchange Act" has the meaning set forth in Section 1.3(c). 

        "Governmental Entity" means any foreign, federal or local government, or regulatory or enforcement authority of any such government or any
court, administrative agency or commission or other authority or instrumentality of any such government. 

        "Group" has the meaning assigned to such term in Section 13(d)(3) of the Exchange
Act. 

        "Group Companies" has the meaning set forth in Section 1.3. 

        "Indebtedness" has the meaning set forth in the Purchase Agreement. 

        "Initial Threshold" means twenty percent (20%). 

21

 

        "Investment Fund" means any investment fund or separate investment account that is managed by any Investor or its Affiliates. 

        "Investor" means (i) each of the Investors (as defined in the Preamble), and (ii) any Permitted Transferee (x) who
acquires Securities (or to whom Securities are Transferred), whether from an Investor, the Company or otherwise or (y) to whom any rights, interests or obligations hereunder are assigned
pursuant to Section 7.4. 

        "Investors Group" has the meaning set forth in the Preamble (and shall be deemed to include any other Persons who become "Investors" after
the date here, including any Permitted Transferees). 

        "Investor Director" means a director who has been elected or appointed to the Board by the Preferred Share Purchaser or the Majority
Holders (pursuant to and in accordance with the Charter Designation Rights). 

        "Investor Percentage Interest" means, as of any date of determination, the percentage of the total number of votes that may be cast in the
election of directors generally of the Company that is represented by the Securities (or any other securities of the Company) Beneficially Owned by the Investors Group, any of its Affiliates and its
or their Permitted Transferees, in the aggregate (for purposes of this definition, treating any Apollo Warrants held at such time by such Persons as having been exercised by such Persons for all of
the shares of Common Stock underlying such Apollo Warrants, with such Persons having Beneficial Ownership over such shares). 

        "Investor Representative" has the meaning set forth in Section 7.2. 

        "Investor Rights Termination Event" shall be deemed to occur if, as of the end of any Business Day following the Closing, none of the
Investors Beneficially Own any Securities. 

        "Karlsson Purchase" means the transactions contemplated by that certain Membership Interest Purchase Agreement, dated as of May 30,
2012, between Prospect Global Resources, Inc., a Delaware corporation, and Karlsson Group, Inc., an Arizona corporation, including all ancillary agreements and documentation entered in
connection therewith. 

        "Liens" has the meaning set forth in the Purchase Agreement. 

        "Majority Holders" has the meaning set forth in the Certificate of Designations. 

        "Non-Underwritten Shelf Takedown" has the meaning set forth in  Section 4.3(b). 

        "Notes" has the meaning set forth in the Purchase Agreement 

        "Notes Purchaser" means the Investors set forth in Schedule A under such heading, and shall include any Permitted Transferee of any
such Investor. 

        "Permitted Junior Debt" has the meaning set forth in the Purchase Agreement (except that the incurrence or issuance thereof occurs after
the Closing). 

        "Permitted Transferee" means, with respect to any Investor, any Affiliate or Investment Fund of such Investor (or of any of the members or
limited partners of such Investor) that agrees to be bound by the provisions of this Agreement as if it were an Investor by executing and delivering to the Company a joinder in substantially the form
attached hereto as Exhibit A. 

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

        "Piggyback Registration" has the meaning set forth in Section 4.2(a). 

22

 

        "Pre-Closing Issuance" has the meaning set forth in Section 2.1(d). 

        "Preemptive Rights Cap Amount" means, with respect to a Preemptive Rights Issuance, a number of securities which, if divided by the sum of
(i) such number of securities plus (ii) the number of securities issued in such Preemptive Rights Issuance, would represent a percentage that is equal to the Investor Percentage Interest
(as of immediately prior to the Preemptive Rights Issuance). A Royalty Purchaser's "pro rata portion" of the Preemptive Rights Cap Amount applicable to a Preemptive Rights Issuance shall be determined
by the Investor Group, from time to time, with notice to the Company, in a manner intended to maintain the relative percentage interests of ownership of Company securities of the Royalty Purchasers
and their ultimate investors. 

        "Preemptive Rights Issuance" has the meaning set forth in Section 2.1(a). 

        "Preemptive Rights Notice" has the meaning set forth in Section 2.1(b). 

        "Principal Market" means the Nasdaq Stock Exchange, or, if the Nasdaq Stock Exchange is not the principal trading market for the shares of
Common Stock, then on the principal securities exchange or securities market on which the shares of Common Stock are then traded. 

        "Preferred Share Purchaser" means the Investor set forth in Schedule A under such heading, and shall include any Permitted
Transferee of any such Investor. 

        "Project Completion" has the meaning set forth in the Purchase Agreement. 

        "Project Finance Facility" has the meaning set forth in Section 2.2(a)(iii). 

        "Public Offering" means a public offering of securities of the Company pursuant to an effective Registration Statement under the
Securities Act (other than a Special Registration). 

        "Purchase Agreement" has the meaning set forth in the Recitals. 

        "Register," "registered" and
"registration" shall refer to a registration effected by preparing and (i) filing a registration statement in compliance with the Securities Act
and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration statement or (ii) filing a prospectus and/or prospectus supplement in
respect of an appropriate effective registration statement on Form S-3. 

        "Registrable Securities" means the shares of Common Stock (including such shares underlying the Notes or Apollo Warrants) held by the
Investors Group; provided that the Investors Group can convert or exercise the Notes or Apollo Warrants to Common Stock prior to consummating any
offering, and provided, further, that the shares of Common Stock shall cease to be Registrable
Securities when (i) they are sold pursuant to an effective registration statement under the Securities Act, (ii) they are sold pursuant to Rule 144 under the Securities Act or
(iii) they shall have ceased to be outstanding. 

        "Registration Expenses" means all expenses incurred by the Company in effecting any registration pursuant to this Agreement, including all
registration and filing fees, Financial Industry Regulatory Authority, Inc. fees, printing expenses, fees and disbursements of counsel for the Company, fees and disbursements of one counsel for
the Investors Group, blue sky fees and expenses and expenses of the Company's independent accountants in connection with any regular or special reviews or audits incident to or required by any such
registration, but shall not include Selling Expenses. 

        "Registration Request" has the meaning set forth in Section 4.1(a). 

        "Registration Statement" means the prospectus and other documents filed with the Commission to effect a registration under the Securities
Act. 

23

 

        "Royalty Purchaser" means the Investors set forth in Schedule A under such heading, and shall include any Permitted Transferee of
any such Investor. 

        "SEC" means the United States Securities and Exchange Commission. 

        "Securities" shall have the meaning set forth in the Recitals (and shall also be deemed to refer to and include any other securities of
any Group Company held by the Investors Group). 

        "Securities Act" has the meaning set forth in Section 1.3(c). 

        "Selling Expenses" means all underwriting discounts, selling commissions and transfer taxes applicable to the sale of Registrable
Securities hereunder, fees and disbursements of counsel for any Investors to the extent the same does not constitute a Registration Expense, and any Registration Expenses required by Applicable Law to
be paid by a selling shareholder. 

        "Shareholder Registration" has the meaning set forth in Section 4.2(a). 

        "Shelf Registration" has the meaning set forth in Section 4.3(a). 

        "Shelf Registration Statement" means a Registration Statement on Form S-3 (or any successor or similar provision) or
any similar short-form or other appropriate Registration Statement that may be available at such time, in each case for an offering to be made on a continuous or delayed basis pursuant to
Rule 415 (or any successor or similar provision) under the Securities Act covering Registrable Securities. To the extent that the Company is a "well-known seasoned issuer" (as such
term is defined in Rule 405 (or any successor or similar rule) of the Securities Act), a "Shelf Registration Statement" shall be deemed to refer to an "automatic shelf registration statement,"
as such term is defined in Rule 405 (or any successor or similar rule) of the Securities Act. 

        "Shelf Takedown" has the meaning set forth in Section 4.3(b). 

        "Special Registration" means the registration of (i) equity securities and/or options or other rights in respect thereof solely
registered on Form S-4 or Form S-8 (or any successor or similar forms) or (ii) shares of equity securities and/or options or other rights in respect
thereof to be offered to directors, members of management, employees, consultants or sales agents, distributors or similar representatives of the Company or its direct or indirect subsidiaries or in
connection with dividend reinvestment plans. 

        "Transfer" means (i) any direct or indirect sale, assignment, disposition or other transfer, either voluntary or involuntary, of
any capital stock or interest in any capital stock or (ii) in respect of any capital stock or interest in any capital stock, to enter into any swap or any other agreement, transaction or series
of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of such capital stock or interest in capital stock, whether any such
transaction, swap or series of transactions is to be settled by delivery of securities, in cash or otherwise. 

        "Underwritten Shelf Takedown" has the meaning set forth in Section 4.3(b). 

        6.2    Terms Generally.    The words "hereby," "herein," "hereof," "hereunder" and words of similar import refer to
this Agreement as a whole and not merely to the specific section, paragraph or clause in which such word appears. All references herein to "Articles" and "Sections" shall be deemed references to
Articles and Sections of this Agreement unless the context shall otherwise require. The words "include," "includes" and "including" shall be deemed to be followed by the phrase "without limitation."
References to "$" or "dollars" means United States dollars. The definitions given for terms in this Article VI and elsewhere in this Agreement
shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
References herein to any agreement or letter 

24

 

(including
the Purchase Agreement) shall be deemed references to such agreement or letter as it may be amended, restated or otherwise revised from time to time
(provided any reference to the "date of the Purchase Agreement" shall mean November 29, 2012). 

 
 

  ARTICLE VII    
    
    MISCELLANEOUS    
    

        7.1    Term.    This Agreement will be effective as of the Closing and, except as otherwise set forth herein, will
continue in effect thereafter until the earliest of (a) an Investor Rights Termination Event or (b) its termination by the consent of all parties hereto or their respective
successors-in-interest. Notwithstanding any termination (other than a termination pursuant to the last sentence of this  Section 7.1) or expiration of this Agreement, the provisions set forth in
Article V and in  Article VII shall survive such termination. This Agreement shall terminate and be of no further force and effect if the Purchase
Agreement shall
terminate prior to the Closing. 

        7.2    Investors Group Actions.    The parties hereto agree that any right granted to the "Investors Group" (but not
to individual "Investors") under this Agreement, including any consent or approval rights, shall be exercised exclusively by the Preferred Share Purchaser, or such other Investor as designated by the
Investor Group from time to time (the "Investor Representative") on behalf of the Investors Group, and only an act of the Investor Representative on
behalf of the Investors Group shall be deemed to be an act of the Investors Group for purposes of this Agreement. 

        7.3    Amendments and Waivers.    Except as otherwise provided herein, the provisions of this Agreement may be amended
or waived only upon the prior written consent of the Company and the Investors Group. No failure or delay by any 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 right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law. 

        7.4    Successors and Assigns.    Except as otherwise provided below, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties hereto, in whole or in part (whether by operation of law or otherwise), without the prior written consent of the Company and
the Investors Group. Notwithstanding the foregoing, (i) an Investor may assign all or any portion of its rights, interests or obligations under this Agreement to a Permitted Transferee of such
Investor (whether such assignment occurs prior to, at or after the Closing), (ii) an Investor may assign all or any portion of its rights, interests or obligations under  Articles IV and
V to any Person to whom such Investor Transfers Registrable Securities, and
(iii) this Agreement may be assigned by operation of law by the Company. This Agreement will be binding upon, inure to the benefit of, and be enforceable by the parties and their respective
permitted successors and assigns. Any attempted assignment in violation
of this Section 7.4 shall be void. Upon any assignment by Investors, Schedule A shall be updated to reflect the effect of any such
assignment. 

        7.5    Severability.    Whenever possible, each provision of this Agreement will be interpreted in such manner as to
be effective and valid under Applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any Applicable Law or rule in any jurisdiction,
such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 

        7.6    Counterparts.    This Agreement may be executed in two or more counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have 

25

 

been
signed by each of the parties and delivered to the other parties, it being understood that each party need not sign the same counterpart. 

        7.7    Entire Agreement.    This Agreement (including the documents and the instruments referred to in this
Agreement), together with the Purchase Agreement, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to
the subject matter of this Agreement. 

        7.8    Governing Law; Jurisdiction.    This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York (excluding choice-of-law principles of the laws of such State that would permit the application of the laws of a jurisdiction other than
such State), other than to the extent the laws of the State of Nevada (including chapters 78 and 92A of the Nevada Revised Statutes) mandatorily apply, without regard to any applicable
conflicts-of-law principles. The parties hereto agree that any suit, action or proceeding brought by any party to enforce any provision of, or based on any matter arising out
of or in connection with, this Agreement or the transactions contemplated hereby shall be brought exclusively in the federal courts of the United States of America located in the City and County of
New York, Borough of Manhattan, or the courts of the State of New York located in the City and County of New York, Borough of Manhattan. Each of the parties hereto submits to the exclusive
jurisdiction of any such court in any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of, or in connection with, this Agreement or the transactions
contemplated hereby and hereby irrevocably waives the benefit of jurisdiction derived from present or future domicile or otherwise in such action or proceeding. Each party hereto irrevocably waives,
to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 

        7.9    WAIVER OF JURY TRIAL.    EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 

        7.10    Specific Performance.    The parties hereto agree that irreparable damage would occur if any provision of this
Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to an injunction or injunctions or other equitable relief to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in any court set forth in Section 7.8, in addition to any other
remedy to which they are entitled at law or in equity. 

        7.11    No Third-Party Beneficiaries.    Nothing in this Agreement shall confer any rights upon any Person other than
the parties hereto and each such party's respective heirs, successors and permitted assigns, all of whom shall be third-party beneficiaries of this Agreement; provided  that (i) for the avoidance of
doubt, any Permitted Transferee, or other Transferee to whom rights are assigned pursuant to Section 7.4, shall be an intended third-party beneficiary hereof and (ii) the Persons indemnified
under Article V  are intended third-party beneficiaries of Article V. 

        7.12    Notices.    All notices and other communications in connection with this Agreement shall be in writing and
shall be deemed given if delivered personally, sent via facsimile (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier 

26

 

(with
confirmation) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): 

If
to the Company, to: 

Prospect
Global Resources Inc.

1401 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer

Facsimile: 303-990-8440 

with
a copy to (which shall not constitute notice): 

Brownstein
Hyatt Farber Schreck, LLP

410 17th Street

Suite 2200

Denver, CO 80439

Attention: Jeff Knetsch

Facsimile: 303-223-1160 

If
to any Investors or the Investors Group, to: 

c/o
Apollo Global Management, LLC

9 West 57th Street

New York, NY 10019

Attention: Laurie Medley

Facsimile: (646) 607-0528 

with
a copy to (which shall not constitute notice): 

Wachtell,
Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Attention: Andrew Nussbaum

                  Ante Vucic

Facsimile: 212-403-2000 

        7.13    Stock Dividends, Etc.    The provisions of this Agreement shall apply to any and all shares of capital stock
of the Company or other Group Company or any successor or assignee of the Company or other Group Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect
of, in exchange for or in substitution for the shares of Common Stock, by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or
otherwise in such a manner and with such appropriate adjustments as to reflect the intent and meaning of the provisions hereof and so that the rights, privileges, duties and obligations hereunder
shall continue with respect to the capital stock of the Company or other Group Company as so changed. 

        7.14    Effectiveness.    This Agreement shall become effective as of the Closing. 

[Signature
page follows] 

27

        IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement by their authorized representatives as of the date first above written. 

 

					
	

 	
 	
PROSPECT GLOBAL RESOURCES INC.
	

 	
 	
 By:	
 	
/s/ PATRICK L. AVERY  
	 	 	 	 	

  Name:  Patrick L. Avery

Title:    Chief Executive Officer and President

 

 

 

					
	

 	
 	
AIF VII PG O&R HOLDINGS, L.P.
	

 	
 	
 By:	
 	
Apollo Advisors VII (APO FC), L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo Advisors VII (APO FC-GP), LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY  
	 	 	 	 	

  Name:  Laurie D. Medley

Title:    Vice President

 

 

 

					
	

 	
 	
AIF VII PG HOLDINGS, L.P.
	

 	
 	
 By:	
 	
Apollo Advisors VII, L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo Capital Management VII, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY  
	 	 	 	 	

  Name:  Laurie D. Medley

Title:    Vice President

 

 

 

					
	

 	
 	
ANRP PG HOLDINGS, L.P.
	

 	
 	
 By:	
 	
Apollo ANRP Advisors, L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo ANRP Capital Management, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY  
	 	 	 	 	

  Name:  Laurie D. Medley

Title:    Vice President

 

 

 

					
	

 	
 	
ANRP PG O&R HOLDINGS, L.P.
	

 	
 	
 By:	
 	
Apollo ANRP Advisors (APO FC), L.P.,

its general partner
	

 	
 	
 By:	
 	
Apollo ANRP Advisors (APO FC-GP), LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY  
	 	 	 	 	

  Name:  Laurie D. Medley

Title:    Vice President

 

 

 

					
	

 	
 	
AP PG GOLDEN SHARE, LLC
	

 	
 	
 By:	
 	
Apollo Management VII, L.P.,

its manager
	

 	
 	
 By:	
 	
AIF VII Management, LLC,

its general partner
	

 	
 	
 By:	
 	
/s/ LAURIE D. MEDLEY  
	 	 	 	 	

  Name:  Laurie D. Medley

Title:    Vice President

 

 

 

 
 

  Schedule A    
    

 Preferred Share Purchaser: 

AP
PG Golden Share, LLC 

 Royalty Purchasers: 

AIF
VII PG O&R Holdings, L.P. 

ANRP
PG O&R Holdings, L.P. 

 Notes Purchasers: 

AIF
VII PG Holdings, L.P. 

ANRP
PG Holdings, L.P. 

 
 

  EXHIBIT A  
    

 
  JOINDER AGREEMENT  

Prospect
Global Resources Inc.

1401 17th Street

Suite 1550

Denver, CO 80439

Attention: Chief Executive Officer 

Ladies
and Gentlemen: 

        Reference
is made to the Investors Rights Agreement, dated as of November 29, 2012 (as such agreement may have been or may be amended from time to time) (the
"Investors Rights Agreement"), by and among Prospect Global Resources Inc., a Nevada corporation, each of the other parties signatory thereto and
any other parties identified on the signature pages of any joinder agreements substantially similar to this joinder agreement executed and delivered in accordance with the Investors Rights Agreement.
Capitalized terms used but not otherwise defined herein have the meanings set forth in the Investors Rights Agreement. 

        The
undersigned agrees that, as of the date written below, the undersigned shall become a party to the Investors Rights Agreement, and shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Investors Rights Agreement as an "Investor," as though an original party thereto. 

[SIGNATURE
PAGE FOLLOWS] 

        IN
WITNESS WHEREOF, the undersigned has executed this Joinder as of the [    ]th day of [                ],
[        ]. 

 

							
	 
	 	[                        ]
	 
	 	 By:
	 	 

 
	 
	 	Name:	 	 	 	 
	 
	 	Title:	 	 	 	 

 

 

QuickLinks

Exhibit 10.2

TABLE OF CONTENTS

W I T N E S S E T H

ARTICLE I GOVERNANCE

ARTICLE II OTHER COVENANTS

ARTICLE III REPRESENTATIONS AND WARRANTIES

ARTICLE IV REGISTRATION

ARTICLE V INDEMNIFICATION

ARTICLE VI DEFINITIONS

ARTICLE VII MISCELLANEOUS

Schedule A

EXHIBIT A

JOINDER AGREEMENT

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}]]