Document:

Exhibit 10.2

 

THE NOTE AND THE COMMON STOCK ISSUABLE UPON THE CONVERSION OF THE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES  ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THE NOTE AND THE COMMON STOCK MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE TERMS OF THE NOTE AND UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.  TO THE EXTENT TRANSFER IS PERMITTED UNDER THE NOTE, THE ISSUER OF THE NOTE AND THE COMMON STOCK MAY, IN CONNECTION WITH ANY PERMITTED TRANSFER, REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

CONVERTIBLE SUBORDINATED UNSECURED NOTE PURCHASE AGREEMENT

 

This CONVERTIBLE SUBORDINATED UNSECURED NOTE PURCHASE AGREEMENT (this “Agreement”), dated effective as of December 12, 2012 (the “Effective Date”), is between Computer Vision Systems Laboratories, Corp., a Florida corporation (the “Company”), and Richmont Capital Partners V LP, a Texas limited partnership (“Investor”).

 

RECITALS

 

A.            The Company desires to issue and sell a Convertible Subordinated Unsecured Promissory Note to Investor in the original principal amount of $20,000,000 in the form attached hereto as Exhibit A (the “Note”) with the original principal amount of the Note being convertible, as set forth in the Note, into a maximum of 64,000,000 shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”).

 

B.            On the terms and subject to the conditions set forth herein, Investor is willing to purchase from the Company, and the Company is willing to issue and sell to Investor, the Note.

 

C.            Capitalized terms not otherwise defined herein shall have the meanings set forth in the Note.

 

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.             The Note.

 

(a)           Issuance of the Note.  Subject to all of the terms and conditions hereof, the Company agrees to issue and sell to Investor, and Investor agrees to purchase from the Company, the Note.

 

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(b)           Delivery. The sale and purchase of the Note shall take place at a closing (the “Closing”) to be held no later than December 31, 2012, at such place and on such day and time as the Company shall determine.  At the Closing, the Company will deliver to Investor the Note, against receipt by the Company of $20,000,000 by wire transfer of immediately available funds to a bank account designated in writing by the Company.

 

(c)           Use of Proceeds. The proceeds of the sale and issuance of the Note, less all expenses incurred by the Company in connection with this Agreement, the Note and the transactions contemplated hereby and thereby, shall be used for general corporate purposes and for the funding of all or a portion of the purchase price for acquisitions of the equity or assets of entities to be acquired (by purchase, consolidation, share exchange, merger or otherwise) by the Company or a direct or indirect subsidiary of the Company.

 

(d)           Payments. The Company will make any cash payment required to be paid under the Note in accordance with the terms of the Note.

 

(e)           Certain Closing Delivery.  At the Closing, each equity owner of Investor will agree to not transfer, with or without consideration, any equity interests in Investor to any individual or entity without the prior written consent of the Company; provided, however, this provision will not prohibit any equity owner of Investor from transferring any equity interest in Investor to (i) Investor or (ii) another equity owner of Investor.

 

2.             Representations and Warranties of the Company.  Subject to Investor’s acknowledgment that, as of the Effective Date, the Company does not have sufficient unissued authorized Common Stock to effect the Conversion (as contemplated by the Note) and that the following representations and warranties are qualified by such fact, the Company represents and warrants to Investor that:

 

(a)           Due Incorporation.  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the state of Florida.

 

(b)           Authority.  The execution, delivery and performance by the Company of the Note, this Agreement and all other documents in connection herewith or therewith (collectively, the “Transaction Documents”) to be executed by the Company  and the consummation of the transactions contemplated hereby and thereby (i) are within the requisite corporate power and authority of the Company and (ii) have been duly authorized by all requisite actions on the part of the Company.

 

(c)           Enforceability.  Each Transaction Document executed, or to be executed, by the Company has been, or will be, duly executed and delivered by the Company and constitutes, or will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

 

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(d)           Non-Contravention.  The execution and delivery by the Company of the Transaction Documents executed by the Company and the performance and consummation of the transactions contemplated thereby do not violate, and will not violate, in any material respect, the Company’s Articles of Incorporation (as amended, the “Articles”), the Company’s bylaws, as amended, or any material judgment, order, writ, decree, statute, rule or regulation applicable to the Company.

 

(e)           Approvals.  Other than the amendment of the Company’s Articles in order to create sufficient additional authorized shares of Common Stock to effect the Conversion, no consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, the shareholders of any Person) is required in connection with the execution and delivery of the Transaction Documents executed  or to be executed by the Company and the performance and consummation of the transactions contemplated thereby, other than such as have been obtained and remain in full force and effect and other than such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.

 

(f)            Compliance with Laws. To its actual knowledge, the Company and its properties, assets, business and operations are being operated in material compliance with all applicable statutes, rules, regulations, orders or restrictions of any domestic or foreign government or any instrumentality or agency thereof, except where the failure to be in compliance would not have a material adverse effect on the Company.

 

3.             Representations and Warranties of Investor.  Investor represents and warrants to the Company that:

 

(a)           Due Formation.  Investor is a limited partnership duly formed and validly existing under the laws of the state of Texas.

 

(b)           Authority.  The execution, delivery and performance by Investor of the Transaction Documents to be executed by Investor and the consummation of the transactions contemplated hereby and thereby (i) are within the requisite power and authority of Investor and (ii) have been duly authorized by all requisite actions on the part of Investor.

 

(c)           Enforceability.  Each Transaction Document executed, or to be executed, by Investor has been, or will be, duly executed and delivered by Investor and constitutes, or will constitute, a legal, valid and binding obligation of Investor, enforceable against Investor in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

 

(d)           Non-Contravention.  The execution and delivery by Investor of the Transaction Documents executed by Investor and the performance and consummation of the transactions contemplated thereby do not violate, and will not violate, in any material respect, Investor’s “governing documents” (as that term is defined in the Texas Business Organizations

 

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Code or any material judgment, order, writ, decree, statute, rule or regulation applicable to Investor.

 

(e)           Approvals.  No consent, approval, order or authorization of, or registration, declaration or filing with, any governmental authority or other Person (including, the general and limited partners of Investor) is required in connection with the execution and delivery of the Transaction Documents executed or to be executed by Investor and the performance and consummation of the transactions contemplated thereby, other than such as have been obtained and remain in full force and effect and other than such qualifications or filings under applicable securities laws as may be required in connection with the transactions contemplated by this Agreement.

 

(f)            Securities Law Compliance.  Investor has been advised that the Note and the Common Stock issuable upon the Conversion have not been registered under the Securities Act or any state securities laws and, therefore, cannot be resold unless they are registered under the Securities Act and applicable state securities laws or unless an exemption from such registration requirements is available.  Investor is aware that, other than making Investor a party to that certain Registration Rights Agreement, dated September 25, 2012, between the Company and Rochon Capital Partners, Ltd. (the “RRA”), the Company is under no obligation to effect any such registration with respect to the Note or the Common Stock issuable upon the Conversion or to file for or comply with any exemption from registration.  Investor is purchasing the Note for Investor’s own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  Investor has such knowledge and experience in financial and business matters that Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing Investor’s financial condition and is able to bear the economic risk of such investment for an indefinite period of time.  Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company.  The address of Investor’s principal place of business is correctly set forth on the Investor related signature page to this Agreement.

 

(g)           Access to Information.  Investor acknowledges that (i) the Company makes periodic filings with the Securities and Exchange Commission (the “SEC”), (ii) Investor has reviewed the Form 8-K/A filed by the Company with the SEC on November 26, 2012, as such filing may hereafter be amended (the “Specified 8-K”), including all “Risk Factors” and their implications regarding Investor’s ability to resell shares of Common Stock as disclosed in the Specified 8-K, and (iii) Investor has been provided access to all documents and other information regarding the Company that is required for Investor to make an informed decision with respect to the purchase of the Note and the Common Stock issuable upon the Conversion.

 

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4.             The Company’s Covenants.

 

(a)           Amendment of the Articles, Reincorporation or Surrender of Existing Outstanding Shares.  The Company covenants that, within one year from the Closing, it will (i) amend the Articles to increase the number of its authorized and unissued shares of Common Stock so as to provide for the Conversion, (ii) reincorporate to Delaware and, as a part of such reincorporation, cause there to be sufficient authorized and unissued shares of Common Stock so as to provide for the Conversion or (iii) cause the surrender by Rochon Capital Partners, Ltd. (“RCP”) of a sufficient number of issued and outstanding shares of Common Stock to effect the Conversion.

 

(b)           Reservation of Shares.  Following the amendment of the Articles, the reincorporation to Delaware or the surrender by RCP, the Company shall reserve sufficient shares of Common Stock to allow for the Conversion.

 

(c)           Registration Rights Agreement.  At the Closing, the Company shall cause Investor to be made a party to the RRA.

 

5.             Miscellaneous.

 

(a)           Waivers and Amendments. Any provision of this Agreement may be amended, waived or modified only upon the prior express written consent of the Company and Investor.

 

(b)           Governing Law. This Agreement and all actions arising out of or in connection with this Agreement shall be governed by and construed in accordance with the laws of the state of Texas, without regard to the conflicts of law provisions of the state of Texas.

 

(c)           Survival. The representations, warranties, covenants and agreements made herein shall survive the execution and delivery of this Agreement.

 

(d)           Successors and Assigns. Subject to the restrictions on transfer described in the Note and Section 5(f) below, the rights and obligations of the Company and Investor shall be binding upon and benefit the successors, assigns, legatees, heirs, administrators and transferees of the parties.

 

(e)           Further Assurances.  Investor agrees and covenants that at any time and from time to time it will promptly execute and deliver to the Company such further instruments and documents and take such further action as the Company may reasonably require in order to carry out the full intent and purpose of this Agreement and to comply with state or federal securities laws or other regulatory approvals.

 

(f)            Assignment by Investor.  The rights and interests of Investor hereunder or under the Note may not be assigned, by operation of law or otherwise, in whole or in part, by Investor without the prior express written consent of the Company; provided, however, Investor

 

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may assign the Note and Investor’s rights hereunder to a limited liability company wholly owned, beneficially and of record, by Investor and for which Investor acts as the sole “governing authority” (as that term is defined in the Texas Business Organizations Code).

 

(g)           Entire Agreement.  This Agreement, together with the other Transaction Documents, constitute and contain the entire agreement between the Company and Investor with respect to the subject matter hereof, and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties or among the parties and others, whether written or oral, with respect to the subject matter hereof.

 

(h)           Notices.  All notices, requests, demands, consents, instructions or other communications required or permitted hereunder shall be in writing and faxed, mailed or delivered to each party as follows: (i) if to Investor, at Investor’s address or facsimile number set forth on the Investor related signature page to this Agreement, or at such other address or facsimile number as Investor shall have furnished the Company in writing or (ii) if to the Company, at the Company’s address or facsimile number set forth on the Company related signature page, or at such other address or facsimile number as the Company shall have furnished to Investor in writing.  All such notices and communications will be deemed effectively given the earlier of (i) when received, (ii) when delivered personally, (iii) one (1) business day after being delivered by facsimile (with receipt of appropriate confirmation), (iv) one (1) business day after being deposited with Federal Express or UPS for overnight delivery, or (v) four (4) days after being deposited in the U.S. mail, first class with postage prepaid.

 

(i)            Expenses.  Each of the Company and Investor will pay its own fees and expenses, including attorneys’ fees and expenses in connection with the preparation, execution and delivery of this Agreement and the other Transaction Documents; provided, however, the Company will reimburse Investor for up to $10,000 of out-of-pocket fees and expenses, including legal fees and expenses, incurred by Investor in connection with the Transaction Documents.

 

(j)            Severability of this Agreement.  If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby.

 

(k)           Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same agreement.  Facsimile copies, and copies transmitted by pdf, of the signed signature pages to this Agreement will be deemed binding originals.

 

(l)            Construction.  The terms “herein”, “hereof”, “hereunder” and similar terms refer to this Agreement in its entirety and not to any specific provision of this Agreement.  Whenever the term “including” is used in this Agreement or in the Note, it shall for all purposes mean “including without limitation.”

 

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(m)          Drafting Party.  The parties to this Agreement acknowledge and agree that (i) each party and such party’s counsel have reviewed and revised this Agreement and the Transaction Documents and (ii) no single party bears sole responsibility for the drafting or preparation of this Agreement and/or the Transaction Documents.  Consequently, no rule of construction to the effect that ambiguities are to be resolved against the drafting party should be employed in the interpretation of this Agreement and/or the Transaction Documents.

 

(n)           Legal Counsel.  Each party to this Agreement acknowledges and agrees that this Agreement and the Transaction Documents have been prepared by counsel to the Company, Gardere Wynne Sewell LLP (“Gardere”), and that Gardere does not represent and has not represented any other party to this Agreement and/or the Transaction Documents.  Investor for itself and for all of Investor’s affiliated Persons (such Investor affiliated Persons being referred to individually and collectively, for purposes of the section alone, as “Investor”) acknowledges and agrees that Investor has been advised to seek, and has obtained, legal counsel to represent Investor in connection with this Agreement, the Transaction Documents, and/or any of the transactions contemplated hereby and/or thereby.  Investor further acknowledges and agrees that Investor has not received or relied on any advice or guidance from Gardere in connection with this Agreement, the Transaction Documents, and/or any of the transaction contemplated hereby and/or thereby.

 

(This space intentionally blank.  Signature Pages Follow.)

 

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The Company has caused this Agreement to be duly executed and delivered by its duly authorized officer as of the date and year first written above.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
COMPUTER VISION SYSTEMS   LABORATORIES, CORP., a Florida corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
John P. Rochon
    
	
 
    	
 
    	
John P. Rochon, President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address: 
    	
2400 North Dallas Parkway
    
	
 
    	
 
    	
Suite 230
    
	
 
    	
 
    	
Plano, Texas 75093
    
	
 
    	
 
    
	
 
    	
Facsimile Number: 
    	
(972) 398-7121
    
	
 
    	
Attention: 
    	
John P. Rochon and
    
	
 
    	
 
    	
John P. Rochon, Jr.
    
	
 
    	
 
    
	
 
    	
With a copy (which shall not constitute   notice) to:
    
	
 
    	
 
    
	
 
    	
Gardere Wynne Sewell LLP
    
	
 
    	
1601 Elm Street
    
	
 
    	
3000 Thanksgiving Tower
    
	
 
    	
Dallas, Texas 75201
    
	
 
    	
Facsimile Number: 214.999.3670
    
	
 
    	
Attention: Douglas D. Haloftis
    
					

 

SIGNATURE PAGE

 

 

Investor has caused this Agreement to be duly executed and delivered by the duly authorized officer of Investor’s General Partner as of the date and year first written above.

 

	
 
    	
INVESTOR:
    
	
 
    	
 
    
	
 
    	
RICHMONT CAPITAL PARTNERS V LP, a Texas   limited partnership
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
RICHMONT STREET LLC, a Texas limited liability   company, as its sole general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
John P. Rochon Jr.
    
	
 
    	
 
    	
John P. Rochon Jr., President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
2400 North Dallas Parkway
    
	
 
    	
 
    	
Suite 230
    
	
 
    	
 
    	
Plano, Texas 75093
    
	
 
    	
 
    	
 
    
	
 
    	
Facsimile Number:
    	
(972) 398-7121
    
	
 
    	
Attention:
    	
John P. Rochon Jr.
    
					

 

SIGNATURE PAGE

 

 

Exhibit A

 

Form of

 

Convertible Subordinated Unsecured Promissory Note

 

(See attached)

 

Exhibit AExhibit 10.1

 

Employment Agreement

 

Employment Agreement (this “Agreement”) dated as of December 13, 2012, by and between Prospect Global Resources Inc. a Nevada corporation (the “Company”), and Mr. Damon Barber (the “Executive”).

 

WHEREAS, the Company recognizes that the Executive’s talents and abilities are unique, and are integral to the success of the Company, and thus wishes to secure the ongoing services of the Executive on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants set forth below, Company and the Executive agree as follows:

 

1.              Employment:  The Company hereby agrees to employ the Executive as Executive Vice President and Chief Financial Officer (“CFO”) of the Company, and the Executive hereby accepts such employment, commencing on December 13, 2012 (the “Effective Date”) on the terms and conditions set forth below.  The Executive shall work exclusively for the Company; provided that nothing contained herein shall preclude the Executive from managing personal investments, participating in charitable, community, and academic activities, and, after the first anniversary of the Effective Date, serving as an independent member of the board of directors (and any board committees) of not more than one for-profit business that does not compete with the Company so long as such activities do not materially interfere with his obligations to the Company.

 

2.              Compensation and Related Matters:

 

a.              Base Salary. During the Executive’s term of service commencing on the Effective Date (the “Employment Period”), the Company shall pay the Executive a base salary at the rate of not less than $450,000 per year (“Base Salary”).  The Executive’s Base Salary shall be paid in accordance with the Company’s normal payroll practice.  The Executive’s Base Salary shall be reviewed at least annually by the Company in accordance with its procedures for reviewing the compensation of senior officers, and may be increased, but not decreased, in the Company’s discretion, other than as part of a general reduction of senior management base compensation that does not apply disproportionately to the Executive.  If the Executive’s Base Salary is increased by the Company, such increased Base Salary shall then constitute the Base Salary for all purposes of this agreement.

 

b.              Stock Options: Subject to approval by the Compensation Subcommittee (the “Compensation Committee”) of the Governance, Nominating and Compensation Committee of the Board, but in no event later than the 

 

 

Effective Date, the Executive will be granted options to purchase 1,000,000 shares (the “Options”) of the Company’s common stock (“Common Stock”) at the greater of $2.60 or current market value (as determined pursuant to the Company’s 2011 Employee Equity Incentive Plan).  The Options shall vest, subject to acceleration as provided below, as follows:  333,334 Options on the later of the Effective Date or the grant date; 333,333 Options on the one year anniversary of the Effective Date and 333,333 Options on the second year anniversary of the Effective Date, in each case so long as the Executive either (i) is employed as the Company’s CFO on such date or (ii) has died or become permanently disabled prior to such date and was employed as the Company’s CFO at the time of death or disability.  The Executive shall also be eligible for additional grants of equity or long-term incentive compensation, in the Committee’s discretion, on the same basis as other senior executives of the Company.  In the event of any conflict between the terms of this Agreement and either the 2011 Employee Equity Incentive Plan or any agreement evidencing the grant of the Options, the terms of this Agreement shall control.

 

Notwithstanding any provision to the contrary, the Options shall immediately vest in full upon either a “Change in Control” or the termination of the Executive’s services as CFO by the Company other than for “Cause” or by the Executive for “Good Reason” (as all such terms are defined below).

 

For purposes of this Agreement, “Change in Control” shall mean the occurrence, subsequent to the Effective Date, of any of the following: (A) by a transaction or series of transactions, any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) other than Apollo Management VII, L.P. and its affiliates (or any group of which they are a part) (“Apollo”), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 35% of the combined voting power of the Company’s then outstanding securities (provided such person or group was not a beneficial owner of more than 35% of the combined voting power of the Company’s then outstanding securities as of the Effective Date); or (B) as a result of any merger, consolidation, combination or sale or issuance of securities of the Company, or as a result of or in connection with a contested election of directors, the Continuing Directors (as defined below) cease to constitute a majority of the Board of Directors of the Company (the “Board”).

 

For purposes of this Agreement, “Continuing Directors” means (A) the persons who were directors of the Company as of the Effective Date, (B) any persons nominated, designated, appointed or elected by or on behalf of Apollo and (C) any new directors whose election or nomination was approved by at least a majority of the directors either who were directors as of the Effective Date or whose election or nomination was previously so approved.

 

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For purposes of this Agreement, “Cause” shall mean (A) the Executive’s conviction by a court of competent jurisdiction as to which no further appeal can be taken of a felony (other than a violation based on operation of a vehicle) or entering the plea of nolo contendere to such crime by the Executive; (B) the Executive’s commission of a crime involving fraud or intentional dishonesty, which results in the Executive’s substantial personal enrichment and material adverse effect to the Company; or (C) the Executive becoming subject to any securities related sanctions related to the Company other than those based on an act of the Company itself for which the Executive is charged solely as a result of his position with the Company.

 

For purposes of this Agreement, “Good Reason” shall mean any of the following:  (A) reduction of Executive’s title, position, responsibilities, authority or duties to a level less than the title, position, responsibilities, authorities or duties he occupied or possessed, on the date immediately preceding such reduction; (B) a reduction in Executive’s Base Salary or Annual Bonus opportunity, other than as part of a general reduction of senior management compensation that does not apply disproportionately to the Executive; (C) the Company requiring the Executive to be based at a materially different geographic location, other than as part of a relocation of a significant portion of the Company’s senior management; (D) the Company’s material breach of any provision of this Agreement, or any other agreement between the Company and the Executive; or (E) a failure by the Company to obtain the assumption of this Agreement by any successor to or assignee of substantially all of the Company’s business and/or assets.  Notwithstanding the foregoing, the Executive’s resignation shall not be considered to be for Good Reason unless the Company receives, within 90 days following the date on which the Executive knows, or with the exercise of reasonable diligence would know, of the occurrence of any of the events set forth in clauses (A) through (E) above, written notice from the Executive specifying the specific basis for his belief that he is entitled to terminate employment for Good Reason, the Company fails to cure the event constituting Good Reason within 30 days after receipt of such written notice thereof, and the Executive terminates employment within 30 days following expiration of such cure period.

 

c.               Annual Bonus: For each full fiscal year of the Company that begins and ends during the Employment Period, and for the portion of the fiscal year of the Company that begins in 2012 (“Fiscal Year 2012”), the Executive shall be eligible to earn an annual cash bonus in such amount as shall be determined by the Compensation Committee (the “Annual Bonus”); 

 

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provided, that each Annual Bonus shall be no greater than 120% of the then-current Base Salary (pro rated in the case of Fiscal Year 2012). The Compensation Committee (or the Board if there is no Compensation Committee) shall establish objective criteria to be used to determine the extent to which performance goals have been satisfied.  These criteria shall be established, in consultation with the Executive, within 60 days of the Effective Date in the case of Fiscal Year 2012, and within the first 60 days of each subsequent fiscal year.

 

d.              Vacation: The Executive shall be entitled to four weeks of vacation per fiscal year. Vacation shall accrue to the Executive at rate of not less than one week per quarter in advance. Once the Executive has accrued four weeks of vacation, he shall accrue no further vacation, until and unless he uses vacation. At that point, he shall accrue back to the maximum of four weeks of vacation.

 

e.               Expenses: The Company will reimburse the Executive for all expenses related to Company business, including, but not limited to travel, marketing, communication, due diligence, legal fees and expenses, etc.

 

f.                Welfare, Pension and Incentive Benefit Plans: During the Employment Period, the Executive (and his eligible spouse and dependents) shall be entitled to participate in all the welfare benefit plans and programs maintained by the Company from time to time for the benefit of its senior executives generally including, without limitation, all medical, hospitalization, dental, disability, accidental death and dismemberment and travel accident insurance plans and programs.  In addition, during the Employment Period, the Executive shall be eligible to participate in all pension, retirement, savings and other employee benefit plans and programs maintained from time to time by the Company for the benefit of its senior executives generally.

 

g.               Professional Development.  The Company will reimburse the Executive for education and professional development expenses related to courses or programs selected by the Executive in the natural resources sector up to $10,000 per calendar year. The Executive may take such courses during normal business hours and will not be required to utilize vacation time.

 

3.              Responsibilities: As the CFO, the Executive will have the responsibilities and authority customary for a chief financial officer of a company comparable to the Company in the United States, and shall also assist the Company’s President and Chief Executive Officer in developing the Company’s strategic direction, identifying and pursuing acquisition targets, personnel hiring, budget 

 

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preparation, development of an annual operating plan and periodic long range plans, overseeing all portfolio companies’ operations, budgets and strategic direction, and compliance with all regulatory requirements developing and implementing the Company’s business plan.  The CFO shall report directly to the Chief Executive Officer.

 

4.              At-Will Employment; Severance: The Executive’s employment with the Company is on an at-will basis.  If terminated by the Company for any reason other than Cause, including a Change in Control, or by the Executive for Good Reason, the Company shall provide severance to the Executive, payable in installments, each of which shall be considered a separate “payment” for purposes of Section 409A of the Internal Revenue Code (“Section 409A”), in accordance with the Company’s normal payroll practice, of (i) six month’s Base Salary if termination is effective on or prior to earlier of the date that the Executive purchases a home in the Denver, Colorado metropolitan area (or signs a rental lease for at least 12 months for such a home) or July 31, 2013 (the “Trigger Date”), and 12 month’s Base Salary if termination is thereafter, (ii) the Executive’s Annual Bonus for the fiscal year prior to the fiscal year in which the termination occurs to the extent not paid prior to termination, (iii) if termination is effective on or after the Trigger Date an Annual Bonus of 120% of the then-current Base Salary, (iv) Base Salary through the date of termination, and (v) accrued vacation, any reimbursement of all business and professional development expenses incurred but not yet reimbursed, and any benefits payable upon termination of employment under the Company’s employee benefit plans (other than any severance pay plan).  In addition if termination occurs after the Trigger Date the Company shall reimburse the Executive for COBRA payments made by the Executive for himself and his eligible dependents for 12 months following termination by the Company for any reason other than Cause, including a Change in Control, or by the Executive for Good Reason.

 

Notwithstanding the foregoing, the Executive shall not be entitled to receive the severance pay and benefits described in the preceding paragraph (other than Base Salary through the date of termination, accrued vacation, any reimbursement of all business and professional development expenses incurred but not yet reimbursed, and any benefits payable upon termination of employment under the Company’s employee benefit plans), until the Executive has executed a general release (the “Release”) of all claims against the Company arising out of his employment, other than claims arising after the date of execution, the Executive’s right to indemnification and continued coverage under the Company’s Director’s and Officer’s policy, and claims that cannot by law be released.  The Release shall be on commercially reasonable terms, in the form customarily used by the Company for its senior executives, and shall also provide for the Company to release any claims against the Executive not involving fraudulent or illegal conduct.  In order to receive such severance, the 

 

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Executive must have signed the Release, and the period provided therein for revocation must have expired, by the sixtieth day after the date of termination.  Payment of severance shall commence as soon as practical after the revocation period has expired, provided that if the 60th day following the date of termination falls in the calendar year after the year of termination, no form of severance that is subject to Section 409A shall be paid until the first day of the second calendar year.

 

The Executive shall not be required to mitigate damages in order to receive the severance pay and benefits, and the Executive’s severance pay and benefits shall not be offset by any compensation received by the Executive from other sources, except to the extent that the Executive’s medical coverage is discontinued by reason of his becoming covered by another medical plan in accordance with COBRA.

 

In the event of the Executive’s termination of employment by reason of death or permanent disability, the Executive or his personal representative shall be entitled to receive the Executive’s Annual Bonus for the fiscal year prior to the fiscal year in which the termination occurs to the extent not paid prior to termination, an Annual Bonus of 120% of the then-current Base Salary, Base Salary through the date of termination, accrued vacation, any reimbursement of all business and professional development expenses incurred but not yet reimbursed, and any benefits payable upon termination of employment under the Company’s employee benefit plans.

 

5.              Location: The Executive will be based in the Denver, Colorado, metropolitan area.  During the Employment Period, the Company shall provide the Executive with an office and appropriate equipment and support staff.  For a period of 90 days commencing on the Effective Date (the “Relocation Period”), the Company shall reimburse the Executive for all reasonable relocation expenses incurred by the Executive during the Relocation Period, including commuting expenses prior to relocation, temporary housing, moving expenses, and up to two trips for the Executive and his spouse to search for a new residence.

 

6.              Representations and Warranties:

 

a.              The Company represents and warrants to the Executive that this Agreement has been duly authorized, executed and delivered by the Company and, assuming the due execution by the Executive, constitutes a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms.

 

b.              The Executive has furnished the Company with true and complete copies of any noncompete, confidentiality, or other restrictive covenant 

 

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agreement to which he is a party, and the Company acknowledges receipt of such agreements.  The Executive represents that such agreements will not preclude the Executive from accepting employment by the Company or performing his obligations in accordance with the provisions of this Agreement.  The Executive represents and warrants that he is not a party to, or bound by, any other agreement that would preclude him from entering into this Agreement and performing his obligations hereunder.

 

7.              Indemnity:  The Company agrees that if the Executive is made a party or is threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”) by reason of the fact that the Executive is or was a trustee, director, member, agent or officer of the Company or any predecessor to the Company or any of their affiliates or is or was serving at the request of the Company, any predecessor to the Company or any of their affiliates as a trustee, director, officer, member, employee or agent of another corporation or a partnership, joint venture, limited liability company, trust or other enterprise, including, without limitation, service with respect to employee benefit plans, whether or not the basis of such Proceeding is alleged action in an official capacity as a trustee, director, officer, member, employee or agent while serving as a trustee, director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent authorized by Nevada law, as the same exists or may hereafter be amended, against all Expenses incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if the Executive has ceased to be an officer, director, trustee or agent, or is no longer employed by the Company and shall inure to the benefit of his heirs, executors and administrators.

 

a.              Expenses. As used in this Section 7, the term “Expenses” shall include, without limitation, damages, losses, judgments, liabilities, fines, penalties, excise taxes, settlements, and costs, attorneys’ fees, accountants’ fees, and disbursements and costs of attachment or similar bonds, investigations, and any expenses of establishing a right to indemnification under this Agreement.

 

b.              Enforcement. If a claim or request under this Section 7 is not paid by the Company or on its behalf, within 30 days after a written claim or request has been received by the Company, the Executive may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim or request and if successful in whole or in part, the Executive shall be entitled to be paid also the expenses of prosecuting such suit. All obligations for indemnification hereunder shall be subject to, and paid in accordance with, applicable Colorado law.

 

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c.               Advances of Expenses. Expenses incurred by the Executive in connection with any Proceeding shall be paid by the Company in advance upon request of the Executive that the Company pay such Expenses, but only in the event that the Executive shall have delivered in writing to the Company (i) an undertaking to reimburse the Company for Expenses with respect to which the Executive is not entitled to indemnification and (ii) a statement of his good faith belief that the standard of conduct necessary for indemnification by the Company has been met.

 

d.              Insurance.  The Company will maintain a Director’s and Officer’s Insurance Policy naming the Executive as a covered party in an amount deemed mutually sufficient to the Company and the Executive.  The Company will use its best commercial efforts to have this policy in place within 90 days of the Effective Date.  The Executive shall continue to be covered by the policy following the termination of his employment for any reason, at the same level of coverage as the most senior executives in active employment.

 

8.              Nondisparagement.  During the term of his employment and thereafter, the Executive will not make any negative or disparaging statements or comments, either as fact or as opinion, about Company, its employees, officers, directors, shareholders, vendors, products or services, business, technologies, market position or performance, and the Company (including its subsidiaries and affiliates) will not make, and agrees to use reasonable efforts to cause its directors and senior executives to refrain from making, any negative or disparaging statements or comments, either as fact or as opinion, about the Executive (or authorizing any statements or comments to be reported as being attributed to the Company).  Nothing in this Section 8 shall prohibit the Executive or the Company from providing truthful information in response to a subpoena or other legal process.

 

9.              Survival of Certain Provisions: All provisions of this Agreement, including without limitation the representations, warranties and covenants and indemnity provisions contained in Sections 2, 4, 6 and 7 of this Agreement and the Company’s obligation to pay the Executive any compensation earned pursuant hereto shall remain operative and in full force and effect regardless of any completion or termination of this Agreement or the Executive’s employment to the extent necessary to enable the parties to enforce their respective rights hereunder, and shall be binding upon, and shall inure to the benefit of, any successors, assigns, heirs and personal representatives of the Company, the indemnified parties and any such person.

 

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10.       Notices: Any notice given with respect to this Agreement shall be in writing and shall be mailed or delivered (a) if to the Company, at its offices at 1401 17th Street, Suite 1550, Denver Colorado 80202, and (b) if to the Executive, at *************, NC 28079, in either case with a copy to the Company’s legal counsel, Jeff Knetsch, Brownstein Hyatt Farber Schreck, LLP, 410 17th Street, 22nd Floor, Denver, CO 80202.  Either party may change the address to which notices shall be given by notice given in the same manner.

 

11.       Counterparts: This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

12.       Third Party Beneficiaries: This Agreement has been and is made solely for the benefit of the parties hereto, and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement.

 

13.       Validity: The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

14.       Dispute Resolution: If a dispute arises out of or relating to this Agreement or the breach of this Agreement, and if the dispute cannot be settled through direct discussions, the parties agree to first endeavor to settle the dispute in an amicable manner by mediation. Mediation shall consist of an informal, nonbinding conference or conferences between the parties and the mediator jointly, and at the discretion of the mediator, then in separate caucuses in which the mediator will seek to guide the parties to a resolution of the case. Each party shall pick a mediator selector and the two mediator selectors shall then pick and appoint a mediator.  The Company will pay all mediation related costs, including , without limitation, the Executive’s costs and reasonable fees, including attorneys’ fees, incurred in selecting a mediator and obtaining counsel for purposes of the mediation.

 

15.       Choice of Law, Jurisdiction and Venue: This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of Colorado. Any and all actions, suits, or judicial proceedings upon any claim arising from or relating to this Agreement, shall be instituted and maintained in the State or Federal courts sitting in the State of Colorado.  Each party waives the right to change of venue.

 

16.       Expenses:  The Company agrees to reimburse the Executive for up to $10,000 in legal expenses in connection with the preparation and review of this Agreement and all related documents.

 

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17.       Public Announcement:  No public announcement of the Executive’s hiring or of this Agreement shall be made prior to the Effective Date.

 

18.       Miscellaneous: No provisions of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing signed by the Executive and by a duly authorized officer or a director of the Company, and such waiver is set forth in writing and signed by the party to be charged. No waiver by either party hereto at any time of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The respective rights and obligations of the parties hereunder of this Agreement shall survive the Executive’s termination of employment and the termination of this Agreement to the extent necessary for the intended preservation of such rights and obligations.

 

19.       Section 409A:  It is the intent of the parties that all amounts payable to the Executive pursuant to this Agreement or otherwise shall either be exempt from Section 409A, or shall be paid in a manner that complies with all requirements of Section 409A, and to the maximum extent possible this Agreement shall be so construed.  Without limiting the generality of the foregoing, any reimbursement of expenses that constitutes taxable income shall be paid to the Executive not later than the last day of the year following the year in which the expense is incurred, and, to the extent that any amount payable to the Executive by reason of his termination of employment constitutes deferred compensation subject to Section 409A, (A) if the Executive incurs a termination of employment that does not constitute a “separation from service” as defined in Section 409A, then Executive’s right to payment of such amount shall be vested at the time of his termination of employment, but payment shall be deferred until the Executive incurs a separation from service as so defined or dies, and (B) if the Executive is a “specified employee” as defined in Section 409A at the time he incurs a separation from service, any amount payable by reason of such separation from service (including an amount deferred pursuant to (A)) shall not be paid until the first day of the seventh month following the month that includes the separation from service, or if earlier the date of the Executive’s death.  Any amounts deferred pursuant to (A) or (B) shall be paid in a lump sum, without interest, at the time specified in (A) or (B).

 

20.       Section Headings: The section headings in this Agreement are for convenience of reference only, and they form no part of this Agreement and shall not affect its interpretation.

 

[Signature page follows]

 

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The parties have executed this Agreement as of the date first written above.

 

 

	
Executive
    	
 
    	
Prospect Global Resources Inc.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Damon G.   Barber
    	
 
    	
By:  
    	
/s/ Patrick L.   Avery
    
	
Damon G. Barber
    	
 
    	
 
    	
Patrick   L. Avery
    
	
 
    	
 
    	
 
    	
President   and Chief Executive Officer
    

 

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