Document:

Exhibit 10.2

 

FOURTEENTH AMENDMENT TO
 SENIOR FIRST PRIORITY SECURED PROMISSORY NOTE

 

This FOURTEENTH AMENDMENT TO SENIOR FIRST PRIORITY SECURED PROMISSORY NOTE (this Fourteenth Amendment”) is made as of April 29, 2014 by and between Prospect Global Resources, Inc., a Delaware corporation (“Maker”), and the Karlsson Group, Inc., an Arizona corporation (“Holder”), with respect to the following facts:

 

RECITALS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

WHEREAS, Maker and Holder entered into a Thirteenth Amendment to Senior First Priority Secured Promissory Note dated as of April 25, 2014; and

 

WHEREAS, Maker has requested that Holder agree to modify the Note to extend the deadline for discounted payoff of the Note in full, until May 16, 2014, and to make certain conforming changes to the Note.

 

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

 

AGREEMENT

 

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

 

2.                                      Amendments.

 

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

 

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

 

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Section 3.2(a).  For purposes hereof, the “Initial 453A Payment Date” shall mean the earlier of (i) May 16, 2014; and (ii) the date of occurrence of the first Event of Default to occur under this Note on or after November 14, 2013.  For the avoidance of doubt, no payment made pursuant to any other provision of this Note, including but not limited to Section 3.2(c) hereof, shall satisfy in whole or any part Maker’s obligation to make the payments set forth in this Section 2.2.”

 

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

 

“Prepayment Discount.  In the event that Maker makes payments under the Note totaling Fifteen Million Dollars ($15,000,000) on or after December 10, 2013 and on or before May 16, 2014, whether through one or multiple payments, and whether pursuant to Section 2.2, Section 3.2 or Section 3.3, then all of Maker’s obligations under this Note shall be deemed to have been satisfied in full by Maker as of the date of such payment, or, in the case of multiple payments, the date on which the last such payment is made.”

 

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

 

“No later than May 16, 2014, deliver a completed and updated 43-101 final resource report for purposes of the Definitive Feasibility Study.”

 

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

 

5.13                        “Section 3.4 Prepayment.  Maker shall not have prepaid the Note in the full amount of Fifteen Million Dollars ($15,000,000) on or after December 10, 2013 and on or before May 16, 2014 in accordance with Section 3.4 of the Note.”

 

3.                                      Miscellaneous.

 

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

 

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

 

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

 

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(d)                                 Counterparts.  This Fourteenth Amendment may be executed by the parties hereto on any number of separate counterparts, any of which may be executed and transmitted by facsimile, and each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument.

 

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

 

	
 
    	
 
    	
MAKER:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PROSPECT   GLOBAL RESOURCES, INC.,
    
	
 
    	
 
    	
a   Delaware corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gregory Dangler
    
	
 
    	
 
    	
Name:   Gregory Dangler
    
	
 
    	
 
    	
Title:   President, CEO and Secretary
    
	
 
    	
 
    	
 
    
	
ACKNOWLEDGED   AND AGREED TO
    	
 
    	
 
    
	
EFFECTIVE   AS OF APRIL 29, 2014:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
THE   KARLSSON GROUP, INC.,
    	
 
    	
 
    
	
an   Arizona corporation
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
/s/ Michael Stone
    	
 
    	
 
    
	
Name: Michael Stone
    	
 
    	
 
    
	
Title: CFO/Treasurer
    	
 
    	
 
    
					

 

5Exhibit 10.3

 

AMENDMENT NO. 2 TO
 ADDITIONAL CONSIDERATION AGREEMENT

 

This AMENDMENT NO. 2 TO ADDITIONAL CONSIDERATION AGREEMENT (this “Amendment”) is made as of April 29, 2014, by and among American West Potash LLC, a Delaware limited liability company (the “Company”), Apache County Land & Ranch, LLC, a Nevada limited liability company (“Apache”), and The Karlsson Group, Inc., an Arizona corporation (“Karlsson”), with respect to the following facts:

 

RECITALS

 

WHEREAS, the Company and Karlsson entered into that certain Additional Consideration Agreement dated as of August 1, 2012 (the “Original Agreement”);

 

WHEREAS, the Company, Apache, and Karlsson entered into that certain Amendment to Additional Consideration Agreement dated as of April 15, 2013, amending the Original Agreement (as so amended, the “Additional Consideration Agreement”);

 

WHEREAS, Prospect Global Resources, Inc., a Delaware corporation, Prospect Global Resources, Inc., a Nevada corporation, the Company and Karlsson are entering into that certain Seventh Extension Agreement dated as of April 29, 2014 (the “Seventh Extension Agreement”); and

 

WHEREAS, it is a requirement of the Seventh Extension Agreement that the Company, Apache and Karlsson amend the Additional Consideration Agreement.

 

NOW THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:

 

AGREEMENT

 

1.                                      Amendments.

 

(a)                                 Section 3(a) of the Additional Consideration Agreement is hereby deleted and replaced in its entirety with the following:

 

“In accordance with the terms and conditions of this Agreement, the Company hereby grants to Karlsson as additional consideration an amount equal to three percent (3%) of one hundred percent (100%) of the Gross Sales of all Authorized Minerals extracted and sold by the Company from the AWP Area (the “Additional Consideration”). An example of the calculation of the Additional Consideration is attached hereto as Exhibit “B.”

 

(b)                                 Exhibit B to the Additional Consideration Agreement is hereby deleted and replaced in its entirety by Exhibit B to this Agreement.

 

 

2.                                      Miscellaneous.

 

(a)                                 No Other Amendment.  Except as expressly amended by this Amendment (and as the Additional Consideration Agreement may hereafter be amended, including, but not limited to, by those certain Royalty Agreements executed in favor of Karlsson by the Company and Apache, respectively, dated as of April 29, 2014), all provisions of the Additional Consideration Agreement shall remain in full force and effect, and the parties thereto and hereto shall continue to have all their rights and remedies under the Additional Consideration Agreement. In the event of a conflict between the terms and provisions of this Amendment and the terms and provisions of the Additional Consideration Agreement, the provisions of this Amendment shall govern.

 

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

 

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

 

(d)                                 Counterparts.  This Amendment may be executed by the parties hereto on any number of separate counterparts, any of which may be executed and transmitted by facsimile, and each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument.

 

(e)                                  Governing Law.  This Amendment shall be governed by, and construed in accordance with, the laws of the State of Arizona, without regard to its principles of conflicts of law.

 

[Signature Page Follows]

 

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

 

	
 
    	
 
    	
THE COMPANY:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
AMERICAN WEST POTASH LLC,
    
	
 
    	
 
    	
a Delaware limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Gregory Dangler
    
	
 
    	
 
    	
Name:   Gregory Dangler
    
	
 
    	
 
    	
Title:   President, CEO and Secretary
    
	
 
    	
 
    	
 
    
	
STATE OF                                      
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
COUNTY OF                                      
    	
} SS.
    	
 
    	
 
    

 

On                                            before me,                                                                                     , personally appeared                                                                                     , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	
Signature:
    	
 
    	
 
    

 

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APACHE:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
APACHE   COUNTY LAND & RANCH, LLC
    
	
 
    	
 
    	
a   Nevada limited liability company
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:   American West Potash LLC
    
	
 
    	
 
    	
Its:   Sole Member
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Gregory Dangler
    
	
 
    	
 
    	
Name:   Gregory Dangler
    
	
 
    	
 
    	
Title:   President, CEO and Secretary
    
	
 
    	
 
    	
 
    
	
STATE   OF                                      
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
COUNTY   OF                                      
    	
} SS.
    	
 
    	
 
    

 

On                                            before me,                                                                                     , personally appeared                                                                                     , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

 

WITNESS my hand and official seal.

 

 

	
Signature:
    	
 
    	
 
    

 

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KARLSSON:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
THE   KARLSSON GROUP, INC.,
    
	
 
    	
 
    	
an   Arizona corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Michael Stone
    
	
 
    	
 
    	
Name:   Michael Stone
    
	
 
    	
 
    	
Title:   CFO/Treasurer
    
	
 
    	
 
    	
 
    
	
STATE OF                                      
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
COUNTY   OF                                         } SS.
    	
 
    	
 
    

 

On                                            before me,                                                                                     , a notary public, personally appeared                                                                                     , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

 

Certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

 

	
Signature:
    	
 
    	
 
    	
(Seal)
    

 

5

 

Amendment No. 2 to Additional Consideration Agreement
 Exhibit B

 

Exhibit “B”

 

Apache and American West Potash/Karlsson Group Royalty Calculation Example

 

	
Quarter Ending 
   (Mo./Yr.)
    	
 
    	
Quarterly Weighted
   Averages Sales price
   per Ton of Potash
    	
 
    	
Potash Sold (tons)*
    	
 
    	
Gross Sales ($)*
    	
 
    	
Total Royalty Due 
   (3%)*
    	
 
    	
Cumulative Royalty
   Paid ($)*
    	
 
    
	
June-14
    	
 
    	
$
    	
494.33
    	
 
    	
1500.00
    	
 
    	
$
    	
741,495.00
    	
 
    	
$
    	
22,244.85
    	
 
    	
$
    	
22,244.85
    	
 
    
	
Sep-14
    	
 
    	
$
    	
536.03
    	
 
    	
2290.00
    	
 
    	
$
    	
1,227,508.70
    	
 
    	
$
    	
36,825.26
    	
 
    	
$
    	
59,070.11
    	
 
    
	
Dec-14
    	
 
    	
$
    	
506.04
    	
 
    	
2335.00
    	
 
    	
$
    	
1,181,603.40
    	
 
    	
$
    	
35,448.10
    	
 
    	
$
    	
94,518.21
    	
 
    
	
Mar-15
    	
 
    	
$
    	
500.39
    	
 
    	
2250.00
    	
 
    	
$
    	
1,125,877.50
    	
 
    	
$
    	
33,776.33
    	
 
    	
$
    	
128,294.54
    	
 
    

 

* Numbers in thousands

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