Document:

Exhibit 4.3

Exhibit 4.3

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of this 3rd day of
August, 2011 by and between Prospect Global Resources Inc., a Nevada corporation (the
“Company”), and Avalon Portfolio, LLC and any assignees or transferees thereof (the
“Investor”).

1. Certain Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:

(a) An “Affiliate” of any Person (as defined herein) means a Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with the first mentioned Person. A Person shall be deemed to control another Person if
such first Person possesses, directly or indirectly, the power to direct, or cause the direction
of, the management and policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.

(b) “Board of Directors” means the Board of Directors of the Company.

(c) “Commission” shall mean the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act and the Exchange Act.

(d) “Common Stock” shall mean the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be reclassified
or changed.

(e) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any
similar successor federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.

(f) “Holders” shall mean the holders of Registrable Securities.

(g) “Majority Interest” means Holders holding not less than a majority in interest of
the Registrable Securities held by all Holders.

(h) “Note” means the Convertible Secured Promissory Note dated as of the date hereof
in the principal amount of $1,500,000 issued by the Company to the Investor.

(i) “Person” shall mean an individual, a corporation, an association, a joint venture,
a partnership, a limited liability company, an estate, a trust, an unincorporated organization, and
any other entity or organization, governmental or otherwise.

(j) “Registrable Securities” shall mean (i) any shares of Common Stock held by the
Investor or its transferees that were issued pursuant to the conversion of the Note or exercise of
the Warrants and any other securities issued or issuable with respect to any such shares by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided, however, that
notwithstanding anything to the contrary contained herein, “Registrable Securities” shall
not at any time include any securities (i) registered and sold pursuant to the Securities Act, (ii)
sold to the public pursuant to Rule 144 promulgated under the Securities Act or (iii) which could
then be sold in their entirety pursuant to Rule 144(k) promulgated under the Securities Act without
limitation or restriction.

 

 

 

(k) “Registration Expenses” shall mean the expenses so described in Section 5 hereof.

(l) “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar
successor federal statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.

(m) “Warrants” shall mean the $5,700,000 Warrants dated the date hereof issued to
Purchaser to purchase shares of Common Stock.

2. Piggyback Registration. If the Company at any time proposes to register any of its
Common Stock under the Securities Act for sale to the public either for its own account or for the
account of another Person other than Holders, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, each such time it will
promptly give written notice to the Holders of its intention to effect such registration. Upon the
written request of any such Holder given within 30 days after receipt by such Holder of such
notice, the Company will, subject to the limits contained in this Section 2, use its reasonable
best efforts to cause all Registrable Securities of such Holder that such Holder so requests to be
registered under the Securities Act and qualified for sale under any state blue sky law, all to the
extent required to permit such sale or other disposition of said Registrable Securities; provided,
however, that if the Company is advised in writing in good faith by the managing underwriter of the
Company’s securities being offered in an underwritten public offering pursuant to such registration
statement that the amount to be sold by persons other than the Company (collectively, “Selling
Stockholders”) is greater than the amount which can be offered without adversely affecting the
marketability of the offering, the Company may reduce the amount offered for the accounts of
Selling Stockholders (including any Holders) to a number reasonably deemed satisfactory by such
managing underwriter; and provided, further, that the securities to be excluded shall be determined
in the following sequence: (i) first, securities held by any Persons not having any contractual
incidental or “piggy back” registration rights, and (ii) second, Registrable Securities and
securities held by any Persons having contractual incidental or “piggy back” registration rights
pursuant to an agreement which is not this Agreement. If there is a reduction in the number of
shares of Common Stock or Registrable Securities to be registered pursuant to clauses (i) and (ii)
above, such reduction shall be made within each tranche on a pro rata basis (based upon the
aggregate number of shares of Common Stock or Registrable Securities held by the holders in each
such tranche).

 

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3. Registration Procedures. If and whenever the Company is required by the provisions
of this Agreement to effect the registration of any of its securities under the Securities Act, the
Company will, as expeditiously as possible:

(a) use its reasonable best efforts diligently to prepare and file with the Commission a
registration statement on the appropriate form under the Securities Act with respect to such
securities, which form shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the Commission to be filed
therewith, and use its reasonable best efforts to cause such registration statement to become and
remain effective until completion of the proposed offering (but not for more than 180 days);

(b) use its reasonable best efforts to prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective until the completion of the offering
(but not for more than 180 days) and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such registration statement
whenever the seller or sellers of such securities shall desire to sell or otherwise dispose of the
same, but only to the extent provided in this Agreement;

(c) furnish to each selling Holder and the underwriters, if any, such number of copies of such
registration statement, any amendments thereto, any documents incorporated by reference therein,
the prospectus, including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such selling holder may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by such selling holder;

(d) use its reasonable best efforts to register or qualify the securities covered by such
registration statement under and to the extent required by such other securities or state blue sky
laws of such jurisdictions as each selling holder shall reasonably request, and do any and all
other acts and things which may be necessary under such securities or blue sky laws to enable such
selling holder to consummate the public sale or other disposition in such jurisdictions of the
securities owned by such selling holder, except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in any jurisdiction wherein it is not
so qualified;

(e) within a reasonable time before each filing of the registration statement or prospectus or
amendments or supplements thereto with the Commission, furnish to counsel selected by a Majority
Interest (“Holders’ Counsel”) copies of such documents proposed to be filed, which
documents shall be subject to the reasonable approval of such counsel;

(f) promptly notify each selling holder of Registrable Securities, Holders’ Counsel and any
underwriter and (if requested by any such Person) confirm such notice in writing, of the happening
of any event which makes any statement made in the registration statement or related prospectus
untrue or which requires the making of any changes in such registration statement or prospectus so
that they will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein in the light of the circumstances under which they were made not
misleading; and, as promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;

 

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(g) use its best efforts to prevent the issuance of any order suspending the effectiveness of
a registration statement, and if one is issued use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of a registration statement at the earliest
possible moment;

(h) if requested by the managing underwriter or underwriters (if any), any selling holder, or
Holders’ Counsel, promptly incorporate in a prospectus supplement or post-effective amendment such
information as such Person requests to be included therein with respect to the selling holder or
the securities being sold, including, without limitation, with respect to the securities being sold
by such selling holder to such underwriter or underwriters, the purchase price being paid therefor
by such underwriter or underwriters and with respect to any other terms of an underwritten offering
of the securities to be sold in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;

(i) make available to each selling Holder, any underwriter participating in any disposition
pursuant to a registration statement, Holders’ Counsel and any accountant or other agent or
representative retained by a Majority Interest (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any such Inspector in connection with such registration
statement subject, in each case, to such confidentiality agreements as the Company shall reasonably
request;

(j) enter into any reasonable underwriting agreement required by the proposed underwriter(s)
for the selling holders, if any, and use its reasonable best efforts to facilitate the public
offering of the securities;

(k) use its reasonable best efforts to cause the securities covered by such registration
statement to be listed on the securities exchange or quoted on the quotation system on which the
Common Stock is then listed or quoted (including the Over-the-Counter Bulletin Board);

(l) otherwise use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission and make generally available to its security holders, in each case as
soon as practicable, but not later than 90 days after the close of the period covered thereby, an
earnings statement of the Company which will satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any comparable successor provisions); and

 

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(m) otherwise cooperate with the underwriter(s), the Commission and other regulatory agencies
and take all reasonable actions and execute and deliver or cause to be executed and delivered all
documents reasonably necessary to effect the registration of any securities under this Agreement.

4. Expenses. All reasonable expenses incurred by the Company, the Investor and any
other Holders in effecting the registrations provided for in Section 2, including, without
limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel
for the Company, reasonable fees and disbursements of Holders’ Counsel, underwriting expenses
(other than fees, commissions or discounts), expenses of any audits incident to or required by any
such registration and expenses of complying with the securities or blue sky laws of any
jurisdiction pursuant to Section 3(d) hereof (all of such expenses referred to as “Registration
Expenses”), shall be paid by the Company. The Registration Expenses of Demand Registrations on
Form S-3 after the first two shall be paid by the Holders effecting such Demand Registrations.

5. Indemnification.

(a) The Company shall indemnify and hold harmless each selling Holder of Registrable
Securities, each underwriter (as defined in the Securities Act), and each other Person who
participates in the offering of such securities and each other Person, if any, who controls (within
the meaning of the Securities Act) such seller, underwriter or participating Person (individually
and collectively, the “Indemnified Person”) against any losses, claims, damages or
liabilities (collectively, the “liability”), joint or several, to which such Indemnified
Person may become subject under the Securities Act or any other statute or at common law, insofar
as such liability (or action in respect thereof) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, or (iii)
any violation by the Company of the Securities Act, any state securities or “blue sky” laws or any
rule or regulation thereunder in connection with such registration. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 5(a) as it
pertains to any preliminary prospectus, shall not inure to the benefit of any Indemnified Person if
the untrue statement or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section 3(f), and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice, used such incorrect
prospectus. Except as otherwise provided in Section 5(d), the Company shall reimburse each such
Indemnified Person in connection with investigating or defending any such liability as expenses in
connection with the same are incurred; provided, however, that the Company shall
not be liable to any Indemnified Person in any such case to the extent that any such liability
arises out of or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary or final prospectus, or amendment
or supplement thereto in reliance upon
and in conformity with information furnished in writing to the Company by such Indemnified
Person specifically for use therein.

 

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(b) Each selling Holder of any securities included in such registration being effected shall
indemnify and hold harmless each other selling holder of any securities, the Company, its directors
and officers, each underwriter and each other Person, if any, who controls the Company or such
underwriter (individually and collectively also the “Indemnified Person”), against any
liability, joint or several, to which any such Indemnified Person may become subject under the
Securities Act or any other statute or at common law, insofar as such liability (or actions in
respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any registration
statement under which securities were registered under the Securities Act at the request of such
selling holder, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any omission or alleged omission by such selling holder to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, in the case of (i) and (ii) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by such selling holder specifically
for use therein. Such selling Holder’s obligations hereunder shall be limited to an amount equal
to the proceeds to such selling Holder of the securities sold in any such registration.

(c) Indemnification similar to that specified in Section 5(a) and Section 5(b) shall be given
by the Company and each selling Holder (with such modifications as may be appropriate) with respect
to any required registration or other qualification of their securities under any federal or state
law or regulation of governmental authority other than the Securities Act.

(d) If the indemnification provided for in this Section 5 for any reason is held by a court of
competent jurisdiction to be unavailable to an Indemnified Person in respect of any losses, claims,
damages, expenses or liabilities referred to therein, then each Indemnifying Party under this
Section 5, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses, claims, damages,
expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, the selling Holders and the underwriters from the offering of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company, the other selling
Holders and the underwriters in connection with the statements or omissions which resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the selling Holders and the
underwriters shall be deemed to be in the same respective proportions that the net proceeds from
the offering (before deducting expenses) received by the Company and the selling Holders and the
underwriting discount received by the underwriters, in each case as set forth in the table on the
cover page of the applicable prospectus, bear to the aggregate public offering price of the
Registrable Securities. The relative fault of the Company, the selling Holders and the
underwriters shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company, the selling Holders or the underwriters and
the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.

 

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The Company, the selling Holders and the underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata or per capita
allocation or by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. In no event, however, shall a
selling Holder be required to contribute any amount under this Section 5(d) in excess of the lesser
of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified
against equal to the proportion of the total Registrable Securities sold under such registration
statement which are being sold by such selling Holder or (ii) the net proceeds received by such
selling holder from its sale of Registrable Securities under such registration statement. No
person found 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 found guilty of such
fraudulent misrepresentation.

6. Compliance with Rule 144. The Company will use its reasonable best efforts to file
with the Commission such information as is required under the Exchange Act for so long as there are
holders of Registrable Securities; and in such event, the Company shall use its reasonable best
efforts to take all action as may be required as a condition to the availability of Rule 144 under
the Securities Act (or any comparable successor rules). The Company shall furnish to any holder of
Registrable Securities upon request a written statement executed by the Company as to the steps it
has taken to comply with the current public information requirement of Rule 144 (or such comparable
successor rules). Subject to the limitations on transfers imposed by this Agreement, or any other
agreement to which the Holders and the Company are a party, the Company shall use its reasonable
best efforts to facilitate and expedite transfers of Registrable Securities pursuant to Rule 144
under the Securities Act, which efforts shall include timely notice to its transfer agent to
expedite such transfers of Registrable Securities.

7. Amendments. The provisions of this Agreement may be amended, and the Company may
take any action herein prohibited or omit to perform any act herein required to be performed by it,
only with the written consent of the Company and a Majority Interest.

8. Transferability of Registration Rights. The registration rights set forth in this
Agreement are transferable by the Investor to each transferee of Registrable Securities. Each
subsequent holder of Registrable Securities must consent in writing to be bound by the terms and
conditions of this Agreement in order to acquire the rights granted pursuant to this Agreement.

9. Rights Which May Be Granted to Subsequent Parties. Other than transferees of
Registrable Securities under Section 8 hereof, the Company shall not, without the prior written
consent of a Majority Interest, allow purchasers of the Company’s securities to become a party to
this Agreement.

10. Damages. The Company recognizes and agrees that each Holder of Registrable
Securities will not have an adequate remedy if the Company fails to comply with the terms and
provisions of this Agreement and that damages will not be readily ascertainable, and the Company
expressly agrees that, in the event of such failure, it shall not oppose an application by any
holder of Registrable Securities or any other Person entitled to the benefits of this Agreement
requiring specific performance of any and all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.

 

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11. Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and
construed under the laws of the State of Colorado without regard to principles of conflict of laws.
The parties irrevocably consent to the jurisdiction and venue of the state courts located in
Denver, Colorado and federal courts located in Denver, Colorado in connection with any action
relating to this Agreement.

12. Miscellaneous.

(a) All notices, requests, demands and other communications provided for hereunder shall be in
writing and mailed (by first class registered or certified mail, postage prepaid), telegraphed,
sent by express overnight courier service or electronic facsimile transmission (with a copy by
mail), or delivered to the applicable party at the addresses indicated below:

	 	 	 
	If to the Company:

	 	Prospect Global Resources Inc.
	 

	 	600 17th Street, Suite 2800-South
	 

	 	Denver, CO 80202
	 

	 	Attention: Pat Avery
	 

	 	Facsimile: 720-294-0402
	 
	 	 
	If to the Investor:

	 	Avalon Portfolio, LLC
	 

	 	PO Box 1397
	 

	 	North Sioux City, SD 57049
	 

	 	Attn: Shane Hartnett
	 

	 	Fax: 605-232-9486
	 

	 	email: shartnett@avalon.com

If to any other holder of Registrable Securities:

At such Person’s address for notice as set forth in the books and
records of the Company.

or, as to each of the foregoing, at such other address as shall be designated by such Person in a
written notice to other parties complying as to delivery with the terms of this subsection (a).
All such notices, requests, demands and other communications shall, when mailed, faxed or sent,
respectively, be effective (i) two days after being deposited in the mails or (ii) one day after
being delivered to the telegraph company, deposited with the express overnight courier service or
sent by electronic facsimile transmission, respectively, addressed as aforesaid.

(b) This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.

 

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(c) If any provision of this Agreement shall be held to be illegal, invalid or unenforceable,
such illegality, invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable
provision were not contained herein.

The parties hereto have caused this Registration Rights Agreement to be duly executed as of
the date first set forth above.

	 	 	 	 	 
	 	PROSPECT GLOBAL RESOURCES INC.

 	 
	 	By:  	/s/ Jonathan Bloomfield
 	 
	 	 	Name:  	Jonathan Bloomfield 	 
	 	 	Title:  	Chief Financial Officer 	 

	 	 	 	 	 
	 	AVALON PORTFOLIO, LLC

By its Manager Avalon Capital Group, Inc.

 	 
	 	By:  	/s/ Shane Hartnett
 	 
	 	 	By:  Shane Hartnett 	 
	 	 	Its Manager 	 

 

9Exhibit 10.1

Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made as of the 3rd
day of August, 2011 by and between AVALON PORTFOLIO, LLC, a Delaware limited liability company, and
any assignees or transferees thereof (the “Purchaser”) and PROSPECT GLOBAL RESOURCES INC.,
a Nevada corporation (the “Company”). Purchaser and the Company are sometimes each
referred to herein as a “Party” and collectively as the “Parties.”

ARTICLE I.

DEFINITIONS

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

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

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

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

“Common Stock” means the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be
reclassified or changed.

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

“Note” means the Convertible Secured Promissory Note dated the date hereof in
the amount of $1,500,000 issued by the Company to the Purchaser.

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

“Purchase Price” means $1,500,000 in cash.

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

“Securities” means the Note and the Warrants.

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

 

 

 

“Security Agreement” means the Amended and Restated Security Agreement dated
the date hereof among the Company, the Purchaser, Richard Merkin, COR Capital LLC and
Hexagon Investments, LLC.

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

“Warrants” means the $5,700,000 Warrants dated the date hereof issued to
Purchaser to purchase Shares.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing.

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

2.2 Deliveries.

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

(i) this Agreement duly executed by the Company;

(ii) the Note duly executed by the Company;

(iii) the Warrants duly executed by the Company;

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

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

(vi) Fully executed copies of valid potash mineral leases and potash sharing
agreements with American General Life Insurance Company (as set forth on the Term
Sheet dated April 22, 2011); PAP & POP Family Ltd., 3MKJ, LP, (as set forth on the
Term Sheet dated April 20, 2011) and the members of the Spurlock and Wetzler
families (as set forth on the Term Sheet dated May 28, 2011).

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

(i) this Agreement duly executed by the Purchaser;

 

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

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

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

2.3 Closing Conditions. 

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

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

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

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

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

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

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

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

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

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

3.1 Organization of the Company. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to own, use, lease and license its assets and its properties and to
carry on its business as it is now being conducted.

 

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3.2 Power and Authority. The Company has full power and authority to enter into the
Loan Documents and to consummate the transactions contemplated hereby and thereby. The
Company has duly and validly executed and delivered the Loan Documents. Each of the Loan
Documents constitute legal, valid and binding obligations of the Company, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization, fraudulent conveyance or similar laws in effect which affect the
enforcement of creditors’ rights generally and by equitable limitations on the availability of
specific remedies.

3.3 No Conflict. The execution and delivery by the Company of the Loan Documents and
the consummation of the transactions contemplated hereby will not conflict with or result in any
violation of or default under (with or without notice or lapse of time, or both) or give rise to a
right of termination, cancellation, modification or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation of the Company, as amended, or
Bylaws of the Company, (ii) any mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise or license to which the Company or any of its properties
or assets is subject, or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or its properties or assets.

3.4 Government Approvals. Except as may be required by any state “blue sky” laws, no
authorization, consent, approval, license, qualification or formal exemption from, nor any filing,
declaration or registration with, any court, governmental agency, regulatory authority or political
subdivision thereof, any securities exchange or any other Person is required in connection with the
execution, delivery or performance by the Company of this Agreement or the business of the Company.

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

3.6 Litigation. There is no action, suit, proceeding, or investigation pending or
currently threatened against the Company that questions the validity of this Agreement or any
related agreement or the right of the Company to enter into such agreements, or to consummate the
transactions contemplated hereby or thereby, or that might result, either individually or in the
aggregate, in any material adverse change in the assets, business plans for mining potash set forth
in the offering documents dated May 2011, properties, prospects, or financial condition of the
Company, or in any material change in the current equity ownership of the Company. The Company is
not a party to, or to the best of its knowledge, named in any order, writ, injunction, judgment, or
decree of any court, government agency, or instrumentality. There is no action, suit, or proceeding
by the Company currently pending or that the Company currently intends to initiate.

3.7 Permits and Leases. The Company has the necessary exploration permits on its
current acreage and will comply with applying for all future permits with any federal and state
governmental authority which are necessary for the performance of its business purpose as set forth
in the offering documents dated May 2011, specifically the mining of potash.

3.8 Limitation on Business. For so long as the Note is outstanding, the Company shall
limit its business to mining for and preparing for market, buying, selling, exchanging, producing
and otherwise dealing in potash and related natural resources and in the products and by-products
of those materials, of every type and description: to buy, sell, exchange, lease, acquire and deal
in lands, mines, and mineral rights and claims, and to conduct all business appertaining to those
properties, rights and interests.

 

4

 

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

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

4.1 Power and Authority. The Purchaser has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby and thereby. The Purchaser
has duly and validly executed and delivered this Agreement. Each Loan Document to which the
Purchaser is a party constitutes legal, valid and binding obligations of the Purchaser, enforceable
in accordance with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar laws in effect
which affect the enforcement of creditors’ rights generally and by equitable limitations on the
availability of specific remedies.

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

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

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

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

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

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

 

5

 

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

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

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

 

6

 

ARTICLE V.

COVENANTS

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

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

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

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

ARTICLE VI.

MISCELLANEOUS

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

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

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

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

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

 

7

 

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

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

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

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

 

8

 

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

	 	 	 	 	 	 	 	 	 
	PROSPECT GLOBAL RESOURCES INC.,
	 	 	 	Address for Notice:	 	 
	a Delaware corporation	 	 	 	600 17th St. Suite 2800 South	 	 
	 

	 	 	 	 	 	Denver, CO 80202	 	 
	By:

	 	/s/ Jonathan Bloomfield
 

Name: Jonathan Bloomfield
	 	 	 	Attn:: Patrick Avery 

Fax: 720-294-0402	 	 
	 

	 	Title: Chief Financial Officer	 	 	 	email: pavery@prospectgri.com	 	 
	 
	 	 	 	 	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Brownstein Hyatt Farber Schreck, LLP	 	 	 	 	 	 
	410 Seventeenth Street, Suite 2200	 	 	 	 	 	 
	Denver, CO 80202-4437	 	 	 	 	 	 
	Attn: Jeff Knetsch	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	AVALON PORTFOLIO, LLC	 	 	 	Address for Notice:	 	 
	 

	 	 	 	 	 	PO Box 1397	 	 
	By its Manager Avalon Capital Group, Inc.	 	 	 	North Sioux City, SD 57049	 	 
	 

	 	 	 	 	 	Attention: Shane Hartnett	 	 
	By:

	 	/s/ Shane Hartnett
 

By: Shane Hartnett
	 	 	 	Fax: 605-232-8486

email: shartnett@avalon.com	 	 
	 

	 	Its Manager	 	 	 	 	 	 

 

9

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