MEMBERSHIP INTEREST PURCHASE AGREEMENT AMONG PROSPECT GLOBAL RESOURCES, INC., A DELAWARE CORPORATION, AMERICAN WEST POTASH, LLC AND THE KARLSSON GROUP, INC. DATED AS OF MAY 30, 2012

Exhibit 10.1

EXECUTION COPY

[*The information in Schedule 5.01 (Updated 2012 AWP Approved Budget) has been omitted from this agreement in connection with a request for confidential treatment. The omitted information has been filed separately with the Securities and Exchange Commission as part of the request for confidential treatment. The omitted information is indicated by a blank and marked with an asterisk.]

MEMBERSHIP INTEREST PURCHASE AGREEMENT

AMONG

PROSPECT GLOBAL RESOURCES, INC., A DELAWARE CORPORATION,

AMERICAN WEST POTASH, LLC

AND

THE KARLSSON GROUP, INC.

DATED AS OF

MAY 30, 2012

TABLE OF CONTENTS

i

ii

EXHIBITS

iii

SCHEDULES

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

This Membership Interest Purchase Agreement (this “Agreement”), dated as of May 30, 2012 (the “Effective Date”), is entered into between The Karlsson Group, Inc., an Arizona corporation, having an office located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“Seller”), American West Potash, LLC, a Delaware limited liability company with its principal office located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (“AWP” or “Company”), and Prospect Global Resources Inc., a Delaware corporation (“Buyer”), a wholly-owned subsidiary of Prospect Global Resources Inc., a Nevada corporation (“PGRX”), with its principal office located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.  Buyer, Seller and Company are sometimes referred to in this Agreement, collectively, as the “Parties,” and individually, as a “Party.”

RECITALS

WHEREAS, Seller owns fifty percent (50%) of all of the issued and outstanding membership interests (the “Membership Interests”) in the Company; and

WHEREAS, Seller wishes to sell to Buyer, and Buyer wishes to purchase from Seller, the Membership Interests, subject to the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I
DEFINITIONS

The following terms have the meanings specified or referred to in this Article I:

“Acquisition Proposal” has the meaning set forth in Section 5.03(a).

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Additional Consideration” means the additional consideration granted to Seller by AWP pursuant to the Additional Consideration Agreement.

“Additional Consideration Agreement” means that certain Additional Consideration Agreement by and between Company and Seller in the form attached hereto as Exhibit A.

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person.  The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Allocable Amount” has the meaning set forth in Section 2.10(b).

“Assignment” has the meaning set forth in Section 2.06(b)(xiii).

“AWP” has the meaning set forth in the Preamble.

“AWP Operating Agreement” means the Third Amended and Restated Operating Agreement of AWP dated as of January 21, 2011.

“Breach” means any breach, inaccuracy, failure to perform, failure to comply, conflict with, default, or violation.

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Phoenix, Arizona are authorized or required by Law to be closed for business.

“Buyer” has the meaning set forth in the preamble.

“Buyer Indemnitees” has the meaning set forth in Section 8.03.

“Closing” has the meaning set forth in Section 2.08.

“Closing Date” has the meaning set forth in Section 2.08.

“Closing Date Payment” has the meaning set forth in Section 2.02(a)(i).

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” has the meaning set forth in the recitals.

“Collateral Assignment of Mineral Leases” means that certain Collateral Assignment by and between the Company and Seller in the form attached hereto as Exhibit B.

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“Collateral Assignment of Mining Permits” means that certain Collateral Assignment by and between the Company and Seller in the form attached hereto as Exhibit C.

“Collateral Assignment of Royalty Agreement” means that certain Collateral Assignment of Royalty Agreement by and between the Company and Seller in the form attached hereto as Exhibit D.

 “Contracts” means all contracts, leases, deeds, mortgages, licenses, Permits, instruments, notes, commitments, undertakings, indentures, joint ventures and all other legally binding agreements and commitments, whether written or oral.

“Covenant Not To Compete” means that certain Covenant Not To Compete by and among Buyer, the Company, Seller, and each shareholder of Seller in the form attached hereto as Exhibit E.

“Deed of Trust” means that certain Leasehold Deed of Trust by and between the Company and Seller in the form attached hereto as Exhibit F.

“Direct Claim” has the meaning set forth in Section 8.05(c).

“Disclosure Schedules” means the Disclosure Schedules delivered by each of Seller and Buyer concurrently with the execution and delivery of this Agreement.

“Dollars or $” means the lawful currency of the United States.

 “Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement or covenant.

“Expiration Date” means 5:00 pm, Los Angeles time, on August 10, 2012.

 “First Exclusivity Consideration” means One Million Dollars ($1,000,000) paid by Buyer to Seller on February 13, 2012.

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Guaranty” means that certain Guaranty made by the Company in favour of Seller in the form attached hereto as Exhibit G.

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“Indemnified Party” has the meaning set forth in Section 8.04.

“Indemnifying Party” has the meaning set forth in Section 8.04.

“Knowledge of Buyer or Buyer’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.

“Knowledge of Seller or Seller’s Knowledge” or any other similar knowledge qualification, means the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Liability” or “Liable” means any liability or obligation, whether known or unknown, asserted or unasserted, absolute or contingent, matured or unmatured, conditional or unconditional, latent or patent, accrued or unaccrued, liquidated or unliquidated, or due or to become due.

“Losses” means losses and damages due to: Liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers.

“Membership Interests” has the meaning set forth in the recitals.

“Organizational Documents” means (a) in the case of a Person that is a corporation, its articles or certificate of incorporation and its by-laws, regulations or similar governing instruments required by the laws of its jurisdiction of formation or organization; (b) in the case of a Person that is a partnership, its articles or certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability, general or otherwise); (c) in the case of a Person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement; and (d) in the case of a Person that is none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person, its governing instruments as required or contemplated by the laws of its jurisdiction of organization.

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

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“PGRX” has the meaning set forth in the Preamble.

“Pledge Agreement” means that certain Pledge Agreement issued by Buyer in favour of Seller in the form attached hereto as Exhibit H.

“Promissory Note” has the meaning set forth in Section 2.02.

“Purchase Price” has the meaning set forth in Section 2.02.

“Quitclaim ▇▇▇▇ of Sale” means that certain Quitclaim ▇▇▇▇ of Sale made by Karlsson Group, Inc., a Nevada corporation (“Karlsson Nevada”), Seller and each shareholder of Seller in favour of the Company, pursuant to which Karlsson Nevada, Seller and each shareholder of Seller shall, subject to the transactions contemplated herein, quitclaim to the Company their respective rights, titles or interests, if any, in and to the personal property and assets of the Company.  Buyer will record the quitclaim deed in the records of Apache County, Arizona on the Closing Date. The Quitclaim ▇▇▇▇ of Sale shall be on such terms and in the form attached hereto as Exhibit I.

“Quitclaim Deed” means that certain Quitclaim Deed made by Karlsson Nevada, Seller and each shareholder of Seller in favour of the Company, pursuant to which Karlsson Nevada, Seller and each shareholder of Seller shall, subject to the transactions contemplated herein, quitclaim to the Company their respective rights, titles or interests, if any, in and to the Real Property of the Company.  Buyer will record the quitclaim deed in the records of Apache County, Arizona on the Closing Date. The Quitclaim Deed shall be on such terms and in the form attached hereto as Exhibit J.

“Real Property” means the real property owned, leased or subleased by the Company, together with all buildings, structures and facilities located thereon.

“Registration Rights Agreement” means that certain Registration Rights Agreement in the form attached hereto as Exhibit K.

“Representative” means, with respect to any Person, any and all directors/managing members, managers, officers, employees, consultants, contractors, spouses(s), financial advisors, counsel, accountants and other agents of such Person.

 “Second Exclusivity Consideration” has the meaning set forth in Section 2.05.

“Security Agreement” means that certain Security Agreement by and between Company and Seller in the form attached hereto as Exhibit L.

“Seller” has the meaning set forth in the preamble.

“Seller Indemnitees” has the meaning set forth in Section 8.03.

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“SK Land Holdings” means SK Land Holdings, LLC, a Nevada limited liability company.

“Supplemental Payment” has the meaning set forth in Section 2.04.

“Supplemental Payment Agreement” has the meaning set forth in Section 2.04.

“Third Party Claim” has the meaning set forth in Section 8.05(a).

“Transaction Documents” means this Agreement, the Supplemental Payment Agreement, the Covenant Not To Compete, the Assignment, the Promissory Note, the Security Agreement, the Guaranty, the Pledge Agreement, the Deed of Trust, the Warrant, the Registration Rights Agreement, the Additional Consideration Agreement, the Quitclaim Deed and the Quitclaim ▇▇▇▇ of Sale.

“Warrant” means that certain warrant to purchase 9.4% of the outstanding shares of PGRX’s common stock calculated on a fully diluted basis as of the Effective Date, including, but not limited to, the shares reserved for issuance of options, and on such terms and in the form attached hereto as Exhibit M.

ARTICLE II
PURCHASE AND SALE

Section 2.01         Purchase and Sale. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell to Buyer, and Buyer shall purchase from Seller, all of Seller’s right, title and interest in and to the Membership Interests, free and clear of all Encumbrances.

Section 2.02         Purchase Price. The aggregate purchase price for the Membership Interests (collectively, the “Purchase Price”) shall consist of the following:

(a)           Cash payment (the “Cash Payment”) of One Hundred Fifty Million Dollars ($150,000,000), subject to adjustment pursuant to the terms of the Promissory Note (as defined below), and payable in accordance with the following schedule, as such schedule may be subject to adjustment pursuant to the Promissory Note (as defined below):

(i)            On the Closing Date, Twenty Five Million Dollars ($25,000,000), less (A) fifty percent (50%) of the First Exclusivity Consideration and (B) the Second Exclusivity Consideration (the “Closing Date Payment”);

(ii)           Fifty Million Dollars ($50,000,000) on or before December 24, 2012; and

(iii)          Seventy Five Million Dollars ($75,000,000) on or before July 31, 2013.

(b)           On the Closing Date, such additional warrants, if any, on the same terms and conditions as the form of Warrant attached hereto, to purchase shares of PGRX’s common stock as may be required to adjust the Warrant in accordance with the following formula: in the event

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of a Qualified Financing (as such term is defined in the Promissory Note), that is in excess of $200,000,000, and which occurs prior to the Closing Date, then the amount of shares issuable pursuant to the Warrant shall be increased to an amount that represents 9.4% of the outstanding shares of PGRX on the Closing Date, on a fully-diluted basis, including, but not limited to, the shares reserved for issuance of options, and which shall be determined by a calculation on the Closing Date that does not include securities related to the first $200,000,000 of any Qualified Financing, but that does include all securities related to any amount of a Qualified Financing that exceeds $200,000,000 (but only with respect to the incremental amount greater than $200,000,000), and also includes all other outstanding securities on a fully diluted basis on the Closing Date; and provided further that, the Registration Rights Agreement attached hereto as Exhibit K shall be modified to reflect any more favourable terms (but not less favourable terms granted to any holders of existing registration rights of PGRX before the Closing Date);

(c)           The Additional Consideration; and

(d)           The Supplemental Payment (as defined below), if any.

The payments in Sections 2.02(a)(ii) and 2.02(a)(iii) above shall be evidenced by that certain secured promissory note issued by Buyer in favour of Seller in the form attached hereto as Exhibit N  (the “Promissory Note”).

Section 2.03         Intentionally Omitted.

Section 2.04         Supplemental Payment. In the event a Company Sale (as defined in the Supplemental Payment Agreement) is consummated on or before the fourth (4th) anniversary of the Closing Date, Seller shall be entitled to receive a supplemental payment (the “Supplemental Payment”) on such terms and in the form attached hereto as Exhibit O (the “Supplemental Payment Agreement”).

Section 2.05         Second Exclusivity Consideration and Warrant. Concurrently with the execution of this Agreement, Buyer shall deliver, to an account designated in writing by Seller, by means of wire transfer of immediately available funds, Five Million Dollars ($5,000,000) (the “Second Exclusivity Consideration”).  The Second Exclusivity Consideration shall not be refundable to Buyer under any circumstances; provided, however, that the Second Exclusivity Consideration shall be credited against the Closing Date Payment.  In addition, PGRX shall deliver the Warrant on the Effective Date.

Section 2.06         Deliveries at Closing.

(a)           At the Closing, Buyer shall deliver to Seller:

(i)            the Closing Date Payment, by wire transfer of immediately available funds to an account of Seller designated in writing no later than two Business Days prior to the Closing Date by Seller to Buyer;

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(ii)           the Covenant Not To Compete, duly executed by the Company and Buyer;

(iii)          the Supplemental Payment Agreement, duly executed by Buyer;

(iv)          the Promissory Note, duly executed by Buyer;

(v)           the Security Agreement, duly executed by the Company;

(vi)          the Collateral Assignment of Mineral Leases, duly executed by the Company;

(vii)         the Collateral Assignment of Mining Permits, duly executed by the Company;

(viii)        the Collateral Assignment of Royalty Agreement, duly executed by the Company;

(ix)          the Guaranty, duly executed by the Company;

(x)           the Pledge Agreement, duly executed by Buyer;

(xi)          the Deed of Trust, duly executed by the Company;

(xii)         the adjusted Warrant, if required pursuant to Section 2.02(b), duly executed by PGRX; provided that such adjusted Warrant shall replace the Warrant issued on the Effective Date;

(xiii)        the Registration Rights Agreement, duly executed by PGRX;

(xiv)        the Additional Consideration Agreement, duly executed by the Company;

(xv)         an Officer’s Certificate certifying the incumbency of Buyer’s officers and directors;

and

(xvi)        the Acknowledgement, duly executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇.

(b)           At the Closing, Seller shall deliver, or cause to be delivered, to Buyer:

(i)            the Covenant Not To Compete, duly executed by Seller and each shareholder of Seller;

(ii)           the Supplemental Payment Agreement, duly executed by Seller;

(iii)          the Security Agreement, duly executed by Seller;

(iv)          the Collateral Assignment of Mineral Leases, duly executed by Seller;

(v)           the Collateral Assignment of Mining Permits, duly executed by Seller;

(vi)          the Collateral Assignment of Royalty Agreement, duly executed by Seller;

(vii)         the Pledge Agreement, duly executed by Seller;

(viii)        the Deed of Trust, duly executed by Seller;

(ix)          the Registration Rights Agreement, duly executed by Seller;

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(x)           the Additional Consideration Agreement, duly executed by Seller;

(xi)          an Officer’s Certificate certifying the incumbency of Seller’s officers and directors;

(xii)         an assignment of the Membership Interests to Buyer in the form attached hereto as Exhibit P (the “Assignment”), duly executed by Seller;

(xiii)        the Quitclaim Deed, duly executed by Seller and each shareholder of Seller;

(xiv)        the Quitclaim ▇▇▇▇ of Sale, duly executed by Seller and each shareholder of Seller;

(xv)         the Option Agreement, duly executed by SK Land Holdings, LLC;

(xvi)        the written resignations of the Seller designated managers of the Company pursuant to Section 5.05.

Section 2.07         Purchase Price Adjustment for Tax Purposes. Any payments or adjustment made pursuant to the Promissory Note, the Supplemental Payment Agreement or the Additional Consideration Agreement shall be treated as an adjustment to the Purchase Price by the parties for tax purposes, unless otherwise required by Law.

Section 2.08         Closing. Subject to the terms and conditions of this Agreement, the purchase and sale of the Membership Interests contemplated hereby shall take place at a closing (the “Closing”) to be held at 10 a.m., Los Angeles, California time, no later than three (3) Business Days after the last of the conditions to Closing set forth in Article VII have been satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), at the offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, a Professional Corporation, or at such other time or on such other date or at such other place as Seller and Buyer may mutually agree upon in writing (the day on which the Closing takes place being the “Closing Date”) but in no event shall the Closing occur before August 1, 2012.

Section 2.09         Withholding Tax. Buyer and the Company shall be entitled to deduct and withhold from the Purchase Price all taxes that Buyer and the Company are required to deduct and withhold under any provision of any applicable Law. All such withheld amounts shall be treated as delivered to Seller hereunder.

Section 2.10         Tax Treatment; Purchase Price Allocation.

(a)           Buyer and Seller agree that, for U.S. federal income tax purposes (and state and local income tax purposes, to the extent that applicable state and local income tax Law conforms to U.S. federal income tax Law): (i) Seller shall report the transaction as the sale of a partnership interest, and report gain or loss, if any, resulting from the sale of such partnership interest in accordance with Code Section 741 and Treasury Regulations promulgated thereunder; (ii) the

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parties acknowledge and agree that the Purchase Price represents consideration solely for the sale of a capital asset, that is Seller’s membership interest; and (iii) for Buyer’s purposes only, Buyer shall report the transaction as an acquisition of the assets of the Company (or the undivided portion thereof) deemed to have been distributed to Seller in connection with a deemed liquidating distribution of all of the Company’s assets to Buyer and Seller immediately prior to such acquisition.  None of the Parties shall take any position on any Tax Return that is inconsistent with such treatment, unless otherwise required by law.

(b)           Buyer and Seller shall allocate the Purchase Price and Seller’s share of the liabilities of AWP assumed by Buyer (the “Allocable Amount”) among the assets of the Company in accordance with Schedule 2.10.  The Parties hereby agree to report the transactions contemplated herein for all tax purposes in a manner consistent with such allocation and shall not make any allocation of the Allocable Amount that is contrary to such allocation.  Buyer shall file IRS Form 8594 (and/or any corresponding state or local tax form), which shall be completed consistent with Schedule 2.10, and other than the foregoing, Buyer and the Seller agree that no other forms are to be filed, except as may be required by a taxing authority.

(c)           Buyer shall provide the Seller with drafts of all documents to be filed with any taxing authority that might have an effect on the payment of any tax by the Seller Parties (collectively, “tax returns”) and Seller shall have ten (10) days to review and comment on any such tax returns, provided that Buyer shall have the right to accept or reject any comments from Seller in its reasonable discretion.

(d)           Following the Closing Date, Buyer shall provide Seller’s appraiser with such information of Buyer, Company and PGRX as may be reasonably requested by Seller’s appraiser related to the valuation of the Warrant, so long as Seller and Seller’s appraiser enter into confidentiality agreements reasonably acceptable to Buyer.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller represents and warrants to Buyer that the statements contained in this Section 2.10(b) are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date.

Section 3.01         Organization and Authority of Seller. Seller is a corporation duly organized, validly existing and in good standing under the Laws of the state of Arizona. Seller has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all

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requisite corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms. When each other Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms.

Section 3.02         Capitalization.

(a)           Set forth on Schedule 3.02 is a complete and correct list of the current shareholders of Seller.  Seller is the record owner of and has good and valid title to the Membership Interests, free and clear of all Encumbrances. Upon consummation of the transactions contemplated by this Agreement, Buyer shall own all of the Membership Interests, free and clear of all Encumbrances.

(b)           To Seller’s Knowledge, there are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments of any character relating to the Membership Interests or obligating Seller or the Company to issue or sell any Company membership interests (including the Membership Interests), or any other interest, in the Company. Other than the Organizational Documents, there are no voting trusts, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Membership Interests, other than the shareholders’ agreement of Seller and all requisite action to approve this Agreement and the Transaction Documents has been taken thereunder.

Section 3.03         No Conflicts; Consents. The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or Breach of, or default under, any provision of the Organizational Documents of Seller; (b) conflict with or result in a violation or Breach of any provision of any Law or Governmental Order applicable to Seller; or (c) require the consent, notice or other action by any Person under any Contract to which Seller is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller in connection with the execution and delivery of this Agreement and the other Transaction Documents which would, in the aggregate, have a material adverse effect.

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Section 3.04         Legal Proceedings; Governmental Orders.

(a)           Except as set forth on Schedule 3.04, there are no Actions pending or, to Seller’s Knowledge, threatened (a) by or against Seller or any of its Affiliates which relate to the Company, its Business, Real Property, personal property or assets; or (b) against Seller or any Affiliate of Seller. To Seller’s Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

(b)           To Seller’s Knowledge, there are no outstanding Governmental Orders pending or threatened and no unsatisfied judgments, penalties or awards against or affecting Seller or any of its properties, assets or business.

Section 3.05         AWP Operating Agreement. Seller has not directly or indirectly taken any action in violation of the AWP Operating Agreement.

Section 3.06         Permits and Contracts. With respect to all Permits assigned by Seller to the Company, Seller properly perfected all forms and maintained all Permits, in all material respects, up to the date of such assignment to the Company.

Section 3.07         Full Disclosure. No representation or warranty by Seller in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

Section 3.08         Investment Purpose. Seller is acquiring the Warrant solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof other than as provided in the Registration Rights Agreement. Seller acknowledges that the Warrant is not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Warrant may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended, or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER

Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Buyer represents and warrants to Seller that the statements contained in this Article IV are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date.

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Section 4.01         Organization and Authority of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the state of Delaware. Buyer has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms. When each other Transaction Document to which Buyer is or will be a party has been duly executed and delivered by Buyer (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Buyer enforceable against it in accordance with its terms.

Section 4.02         No Conflicts; Consents. The execution, delivery and performance by Buyer of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or Breach of, or default under, any provision of the Organizational Documents of Buyer; (b) conflict with or result in a violation or Breach of any provision of any Law or Governmental Order applicable to Buyer; or (c) require the consent, notice or other action by any Person under any Contract to which Buyer is a party. No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, except for such consents, approvals, Permits, Governmental Orders, declarations, filings or notices which, in the aggregate, would not have a material adverse effect.

Section 4.03         Legal Proceedings; Governmental Orders.

(a)           There are no Actions pending or, to Buyer’s Knowledge, threatened (a) by or against Buyer or any of its Affiliates which relate to the Company, its Business, Real Property, personal property or assets; or (b) against Buyer or any Affiliate of Buyer. To Buyer’s Knowledge, no event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.

(b)           To Buyer’s Knowledge, there are no outstanding Governmental Orders pending or threatened and no unsatisfied judgments, penalties or awards against or affecting Buyer or any of its properties, assets or business.

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Section 4.04         AWP Operating Agreement.  Buyer has not directly or indirectly taken any action in violation of the AWP Operating Agreement.

Section 4.05         Investment Purpose. Buyer is acquiring the Membership Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof. Buyer acknowledges that the Membership Interests are not registered under the Securities Act of 1933, as amended, or any state securities laws, and that the Membership Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act of 1933, as amended, or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

Section 4.06         Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer.

Section 4.07         Full Disclosure. No representation or warranty by Buyer in this Agreement and no statement or any certificate or other document furnished or to be furnished to Seller pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

ARTICLE V
COVENANTS

Section 5.01         Conduct of Business Prior to the Closing. The Parties acknowledge that the Company managers have unanimously approved the budget items set forth on Schedule 5.01 attached hereto, which will result in a total of $4.5 million of approved items, including all Company liabilities outstanding as of the Closing Date, which shall be paid in full at Closing, or for which Seller shall be released and receive a written indemnity from the Company.

Section 5.02         Access to Information. From the date hereof until the Closing, Seller shall, and shall cause the Company to (a) afford Buyer and its Representatives full and free access to and the right to inspect all of the Real Property, properties, assets, premises, Permits, books and records, Contracts and other documents and data related to the Company; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to the Company as Buyer or any of its Representatives may reasonably request; and (c) instruct the Representatives and Affiliates of Seller and the Company to cooperate with Buyer in its investigation of the Company.  No investigation by Buyer or other information received by Buyer shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement. Additionally, from the date hereof until the Closing,

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Buyer shall keep Seller’s representatives, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇, reasonably informed, via weekly verbal updates, regarding the status of Buyer’s or its ultimate Parent’s financing related to the transactions contemplated herein and shall promptly inform them if it appears that such financing cannot be obtained on terms and conditions satisfactory to Buyer’ or its ultimate Parent before the Expiration Date.

Section 5.03         No Solicitation of Other Bids.

(a)           Seller shall not, and shall not authorize or permit any of its Affiliates (including the Company) or any of its or their Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any additional agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. In consideration of the Second Exclusivity Consideration, Seller agrees that from and after the date hereof, until such time as this Agreement has terminated in accordance with the provisions of Article IX, neither Seller nor any of its Shareholders, directors or officers shall initiate, entertain, solicit, negotiate, accept or discus, directly or indirectly any proposal or offer (an “Acquisition Proposal”) to acquire directly or indirectly all or any portion of the Membership Interests, whether by merger, purchase or otherwise, or provide any non-public information to any third party in connection with an Acquisition Proposal, or enter into any agreement, arrangement or understanding requiring it to abandon, terminate or fail to consummate the transactions contemplated herein or take any action in furtherance of the foregoing. Seller agrees to immediately notify Buyer if Seller of any of its Shareholders, officer or directors receives requests for information or offers in respect of an Acquisition Proposal, and will communicate to Buyer in reasonable detail the terms of any such indication, request or offer, and will provide Buyer with copies of all written communications other than unsolicited ones relating to any such indication, request or offer. Seller shall terminate promptly any and all existing discussions or negotiations with any person or group of persons other than Buyer and its affiliates regarding an Acquisition Proposal.

(b)           Seller agrees that the rights and remedies for noncompliance with this Section 5.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such Breach or threatened Breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.

Section 5.04         Notice of Certain Events.

(a)           From the date hereof until the Closing, each Party shall promptly notify the other Party in writing of:

(i)            any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a material adverse effect, (B) has resulted in, or could reasonably be expected to result in, any

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representation or warranty made by such Party hereunder not being true and correct, (C) has resulted in, or could reasonably be expected to result in a loss or impairment of the Company’s landholdings (including all Permits and leases), or (D) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 to be satisfied;

(ii)           any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(iii)          any notice or other communication from any Governmental Authority (including, without limitation, any notice regarding the Company’s Permits, Contracts or Real Property); and

(iv)          any Actions commenced or, to Seller’s Knowledge or Buyer’s Knowledge, as applicable, threatened against, relating to or involving or otherwise affecting such Party or the Company that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 3.04 or that relates to the consummation of the transactions contemplated by this Agreement.

Section 5.05         Resignations. Seller shall deliver to Buyer written resignations, effective as of the Closing Date, of the Seller designated managers of the Company set forth in the Officer’s certificate at the Closing.

Section 5.06         Confidentiality. From and after the Closing, Seller shall, and shall cause its Affiliates to, hold, and shall use its commercially reasonable efforts to cause its or their respective Representatives to hold in confidence any and all information, whether written or oral, concerning Buyer or the Company, except this prohibition shall not apply if such information (a) is generally available to and known by the public through no fault of Seller, any of its Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller, any of its Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation.

Section 5.07         Conduct of AWP. From the date hereof until the Closing Date, Buyer covenants and agrees with Seller that all action taken in preparation for potash mining operations in the ▇▇▇▇▇▇▇▇ Basin shall be conducted exclusively through the Company.  Buyer further covenants and agrees that in the event Buyer or any of its Affiliates intends to acquire the mineral leases set forth on Schedule 5.07 attached hereto, that such acquisition shall be made by AWP.  So long as the Promissory Note remains outstanding, Buyer agrees that all funds contributed to the Company by Buyer or PGRX shall be in the form of a contribution upon the equity capital of Buyer or the Company, as the case may be, and not in the form of debt, whether interest bearing or not.  Any such contributions of capital shall have no effect on the membership interests or voting or other rights provided for in the AWP Operating Agreement, with the sole exception of increasing Buyer’s basis in its membership interest for tax purposes.

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Section 5.08         Governmental Approvals and Consents.

(a)           Each party hereto shall, as promptly as possible, (i) make, or cause or cause to be made, all filings and submissions required under any Law applicable to such Party or any of its Affiliates; and (ii) use commercially reasonable efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the other Transaction Documents. Each Party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The Parties shall not willfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

(b)           Seller and Buyer shall use commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 3.03 of the Disclosure Schedules.

Section 5.09         Closing Conditions. From the date hereof until the Closing, each Party shall use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.

Section 5.10         Public Announcements. Unless otherwise required by applicable Law, Seller shall not, and shall cause its shareholders to not, make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate fully as to the timing and contents of any such announcement. Seller acknowledges that PGRX is a public reporting company under the Securities Act of 1933 and the Securities and Exchange Act of 1934, and that as a result PGRX is subject to the disclosure requirements under such laws and other applicable securities laws. PGRX may disclose any and all information about this Agreement or the other transactions contemplated hereby as required by all applicable securities laws without the consent of Seller.  Buyer shall provide Seller with a copy of any such public announcement prior to issuance for Seller’s review.

Section 5.11         Release.

(a)           Seller and each of its heirs, Representatives, successors, and assigns, hereby releases and forever discharges Buyer and each of its officers, directors, managers, employees, agents, stockholders, controlling persons, Representatives, Affiliates, successors, assigns, and the Company (individually, a “Buyer Releasee” and collectively, “Buyer Releasees”) from any and all Actions, orders, Losses, Liabilities, and, except as expressly contemplated by this Agreement, Contracts whatsoever, whether known or unknown, suspected or unsuspected, both at Law and in equity, which Seller or any of its heirs, Representatives, successors or assigns now has, have ever had or may hereafter have against the respective Buyer Releasees arising contemporaneously

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with or prior to the Closing Date or on account of or arising out of any matter, cause, or event occurring contemporaneously with or prior to the Closing Date including any rights to indemnification or reimbursement from the Company, whether pursuant to their respective Organizational Documents, Contract or otherwise and whether or not relating to Actions pending on, or asserted after, the Closing Date; provided, however, that nothing contained herein will operate to release any obligations of Buyer arising under this Agreement.

(b)           Buyer hereby releases and forever discharges Seller and each of its officers, directors, managers, employees, agents, stockholders, controlling persons, Representatives, Affiliates, successors, assigns (individually, a “Seller Releasee” and collectively, “Seller Releasees”) from any and all Actions, orders, Losses, Liabilities, and, except as expressly contemplated by this Agreement, Contracts whatsoever, whether known or unknown, suspected or unsuspected, both at Law and in equity, which Buyer or any of Buyer’s Representatives, successors or assigns now has, have ever had or may hereafter have against the respective Seller Releasees arising contemporaneously with or prior to the Closing Date or on account of or arising out of any matter, cause, or event occurring contemporaneously with or prior to the Closing Date including any rights to indemnification or reimbursement from the Company, whether pursuant to their respective Organizational Documents, Contract or otherwise and whether or not relating to Actions pending on, or asserted after, the Closing Date; provided, however, that nothing contained herein will operate to release any obligations of Seller under this Agreement.

Section 5.12         Buyer Financial Statements and Tax Returns.  Buyer shall provide Seller with copies of its most recent monthly interim financial statements (i) no more than fifteen (15) Business Days prior the Closing Date, and (ii) within fifteen (15) Business Days following the Closing Date, which financial statements include the Closing Date.  On or before the fifteenth (15th) day of the fourth (4th) month following the Closing Date, Buyer shall deliver to Seller a final K-1 and partnership return for all federal and state taxes.

Section 5.13         Further Assurances. Following the Closing, each of the Parties shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement. Immediately following the Closing, Buyer will cause the Company’s managers to authorize, ratify, confirm and approve each and every Transaction Document to which the Company is a party.

Section 5.14         Collateral Documents.  The Parties will cooperate diligently to finalize Exhibit A (including each of its Parts) and Schedule 1 to the Deed of Trust within 30 days after the Effective Date, with the intent that it will include all of the Fee Lands, Leasehold Lands, Mineral Permits and other interests in Minerals, Related Agreements or real estate (including all easements, rights-of-way, royalty interests and miscellaneous real property interests) in which Company has an interest as of the Closing Date.  In addition, the Parties will cooperate diligently

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to provide access to legal counsel to address certain outstanding title issues to the reasonable satisfaction of Buyer and Seller.  Any changes, additions, or deletions to the information included in Exhibit A (including each of its Parts) and Schedule I to the Deed of Trust shall, as applicable, be incorporated into the documents to be delivered pursuant to Section 2.06 of this Agreement.

ARTICLE VI
TAX MATTERS

Section 6.01         Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, and other similar taxes, if any, incurred in connection with this Agreement and the Transaction Documents (including any real property transfer tax and any other similar tax) shall be borne and paid by Seller when due. Seller shall, at its own expense, timely file any tax return or other document with respect to such taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

ARTICLE VII
CONDITIONS TO CLOSING

Section 7.01         Conditions to Obligations of All Parties. The obligations of each Party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:

(a)           No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

(b)           Seller shall have received all material consents, authorizations, orders and approvals referred to in Section 3.03 and Buyer shall have received all material consents, authorizations, orders and approvals referred to in Section 4.02, in each case, in form and substance reasonably satisfactory to Buyer and Seller, and no such consent, authorization, order and approval shall have been revoked.

Section 7.02         Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Buyer’s written waiver, at or prior to the Closing, of each of the following conditions:

(a)           The representations and warranties of Seller contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those

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representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

(b)           Seller shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Seller shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

(c)           All of the deliveries in Section 2.06(b) shall have been made.

(d)           Buyer shall have obtained financing on terms and conditions satisfactory to Buyer, in its sole and absolute discretion, to consummate the transactions contemplated by this Agreement on or prior to the Closing Date.

Section 7.03         Conditions to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Seller’s waiver, at or prior to the Closing, of each of the following conditions:

(a)           The representations and warranties of Buyer contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all material respects on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

(b)           Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Buyer shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

(c)           All of the deliveries in Section 2.06(a) shall have been made.

ARTICLE VIII
INDEMNIFICATION

Section 8.01         Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is eighteen (18) months from the Closing Date; provided, that the representations and warranties in Section 3.01, Section 4.01, Section 3.02, Section 4.02, Section 3.03, and Section 4.03 shall survive until the end of the relevant statute of limitations. All covenants and agreements of the Parties contained herein shall survive until the end of the relevant statute of limitations.

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Section 8.02         Indemnification By Seller. Subject to the other terms and conditions of this Article VIII, Seller shall indemnify and defend each of Buyer and its Affiliates (including the Company) and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless for, from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

(a)           any inaccuracy in or Breach of any of the representations or warranties of Seller contained in this Agreement or in any certificate or instrument delivered by or on behalf of Seller pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or Breach of which will be determined with reference to such specified date);

(b)           any Breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement; or

(c)           any Losses arising out of or related to any Seller arrangement with any broker in connection with the transactions contemplated herein.

Section 8.03         Indemnification By Buyer. Subject to the other terms and conditions of this Article VIII, Buyer shall indemnify and defend each of Seller and its Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless for, from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

(a)           any inaccuracy in or Breach of any of the representations or warranties of Buyer contained in this Agreement or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or Breach of which will be determined with reference to such specified date); or

(b)           any Breach or non-fulfillment of any covenant, agreement or obligation to be performed by Buyer pursuant to this Agreement.

Section 8.04         Limitations on Indemnification.  Neither Party shall have any Liability for Losses related to Breaches of representations and warranties in Articles III and IV unless and until the aggregate Losses claimed under Sections 8.03 and 8.04 exceed Fifty Thousand Dollars ($50,000).  For purposes of this Section 8.04, for the avoidance of doubt, the Fifty Thousand Dollar ($50,000) amount is a true deductible and if a Breach can be characterized as a Breach of a representation and warranty and a covenant, it shall be characterized as a Breach of a representation and a warranty.

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Section 8.05         Indemnification Procedures. The party making a claim under this Article VIII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Article VIII is referred to as the “Indemnifying Party”.

(a)           Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.  In connection with any Third Party Claim, (i) the Indemnified Party may defend with attorneys of its choice against, and consent to the entry of any order with respect to, the Third Party Claim in any manner it may reasonably deem appropriate in its reasonable discretion (provided the Indemnified Party shall consult with any Indemnifying Party in connection therewith), (ii) each Indemnifying Party will be jointly and severally obligated to reimburse the Indemnified Party promptly and periodically for the Losses relating to defending against the Third Party Claim, and (iii)  each Indemnifying Party will remain jointly and severally Liable for any Losses.  Seller and Buyer shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 5.06) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party.

(b)           Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within thirty (30) days after its receipt of such notice, the Indemnified Party may continue to contest or defend such Third Party Claim. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the

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Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without first consulting with the Indemnifying Party.

(c)           Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim.

Section 8.06         Tax Treatment of Indemnification Payments.  All indemnification payments made under this Agreement shall be treated by the Parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by Law.

ARTICLE IX
TERMINATION

Section 9.01         Termination. This Agreement may be terminated at any time prior to the Closing as provided below:

(a)           Buyer and Seller may terminate this Agreement as to all Parties by mutual written consent at any time prior to the Closing.

(b)           Buyer or Seller may terminate this Agreement upon delivery of written notice to the other Party if the Closing has not occurred on or before the Expiration Date; provided that the Party delivering such notice will not have caused such failure to close; provided however that this Agreement shall terminate automatically on August 15, 2012, unless Buyer has initiated an action contemplated by Section 10.12 based on the refusal of Seller to provide the closing deliveries.

(c)           Buyer may terminate this Agreement by giving notice to Sellers on or before the Expiration Date that it has not obtained on terms and conditions reasonably satisfactory to Buyer in its sole discretion all of the financing it needs to consummate the transactions contemplated herein.

Section 9.02         Effect of Termination. In the event of termination of this Agreement in accordance with this Agreement, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:

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(a)           as set forth in this Article IX and, in the event Buyer initiates a lawsuit for specific performance pursuant to Section 10.12, Article X hereof; and

(b)           that nothing herein shall relieve any party hereto from liability for any willful Breach of any provision hereof.

ARTICLE X
MISCELLANEOUS

Section 10.01       Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

Section 10.02       Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

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Section 10.03       Interpretation. The Parties had previously agreed, and hereby agree, that the First Exclusivity Consideration and the Second Exclusivity Consideration are not refundable. The Parties further agree that said payments constitute fair market value for those exclusivity rights and further agree that such payments constitutes reasonable liquidated damages for the damages caused to Seller by foregoing the full benefit of its ownership interest in Company during the period of such exclusivity. In the event of any default under the Promissory Note, Seller will have the sole and exclusive right to elect the available remedies available to it as a secured creditor, including, but not limited to the right to foreclose on all membership interests and/or assets of the Company.  For purposes of this Agreement, (a) the words “include,” “include” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an

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agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 10.04       Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 10.05       Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 10.06       Acknowledgement. Seller acknowledges that Buyer makes no express or implied representation or warranty as to the accuracy or completeness of any information furnished or made available to Seller or its Representatives regarding the Buyer’s ability to obtain financing (including that certain letter prepared by Apollo Management, L.P. dated April 19, 2012).

Section 10.07       Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 10.08       Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations hereunder.

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Section 10.09       No Third-party Beneficiaries. Except as provided in Article VIII, this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.10       Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, Breach or default not expressly identified by such written waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof.

Section 10.11       Governing Law; Submission to Jurisdiction.

(a)           This Agreement shall be governed by and construed in accordance with the internal laws of the State of Arizona without giving effect to any choice or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of Arizona.

(b)           The Parties consent to the sole and exclusive jurisdiction and venue in the Federal or State courts in the Superior Court for the State of Arizona, County of Maricopa, and agree that any and all disputes based on or arising out of this Agreement shall only be submitted to and determined by said courts.

Section 10.12       Specific Performance. In the event that Seller refuses to provide the deliveries required hereunder, as set forth in Section 2.06, and if Buyer has otherwise tendered its performance and provided proof of immediately available funds for the Closing Date Payment, then the Parties agree that Buyer would suffer irreparable damage and that Buyer shall be entitled to seek specific performance of the terms hereof, in addition to any other remedy available at law or in equity.

Section 10.13       Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

EXHIBIT A

FORM OF ADDITIONAL CONSIDERATION AGREEMENT

THIS ADDITIONAL CONSIDERATION AGREEMENT (this “Agreement”), dated as of                         , 2012 (the “Effective Date”), is by and between American West Potash, LLC, a Delaware limited liability company (the “Company”), and The Karlsson Group, Inc., an Arizona corporation, (“Karlsson”). The Company and Karlsson are sometimes referred to in this Agreement, collectively, as the “Parties,” and individually, as a “Party.”

R E C I T A L S

WHEREAS, the Company will be a wholly-owned subsidiary of Prospect Global Resources, Inc., a Delaware corporation (“Prospect”);

WHEREAS, Prospect and Karlsson entered into that certain Membership Interest Purchase Agreement dated as of May 30, 2012 (the “Purchase Agreement”), whereby Prospect purchased, and Karlsson sold, all of Karlsson’s limited liability company membership interests (the “Membership Interests”), representing fifty percent (50%) of the total limited liability company membership interests, in the Company;

WHEREAS, as partial consideration for the Membership Interests, Prospect agrees to cause the Company to grant to Karlsson additional consideration measured by the Gross Sales (as defined below) of potash from the Company’s current landholdings, as set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

AGREEMENT

1.             Recitals Incorporated. The foregoing Recitals are incorporated herein by reference.

2.             Definitions.  The following terms shall have the following respective meanings:

a.     “Authorized Minerals” shall mean all potash which is known to exist or which is discovered to exist after the Effective Date in and under the AWP Area , extracted, mined or processed by underground mining, solution mining or other mining methods now existing or developed or invented after the Effective Date.

b.     “AWP Area” means the real property legally described on Exhibit “A” attached hereto, where the Company has certain leases, licenses, and permits for mining purposes as such AWP Area may be modified pursuant to the provisions of Sections 3(d) below.

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c.     “Gross Sales” shall mean a sum calculated based on tons of Authorized Minerals actually sold during a calendar quarter at the actual average quarterly per ton sales price received by the Company during such calendar quarter on a weighted basis, whether such sales are made pursuant to purchase orders, off-take agreements or otherwise.  In the case of sales of Authorized Minerals sold under non-arms length contracts, “Gross Sales” shall mean the fair market value of such Authorized Minerals without deduction for any costs, expenses, liabilities or obligations paid or incurred by the Company other than transportation from the point of shipment to market at the mine (but not intra-mine transportation costs). In the event of a sale made pursuant to a long-term contract where a deposit is made, such deposit shall be treated as a Gross Sale.

d.     “Potash Sharing Agreement” means that certain Potash Sharing Agreement dated as of July 27, 2011, among the Company, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ H.W.W. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Pride ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, American General Life Insurance Company, a Texas corporation, Pap and Pop Family Ltd., a Texas limited partnership, and 3MKJ LP, a Texas limited partnership.

3.             Additional Consideration.

a.     In accordance with the terms and conditions of this Agreement, the Company hereby grants to Karlsson as additional consideration an amount equal to one percent (1%) 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”); provided that the total amount of payments that Karlsson shall be entitled to receive hereunder shall not exceed seventy-five million dollars ($75,000,000). An example of the calculation of the Additional Consideration is attached hereto as Exhibit “B”.

b.     The definition of “Additional Consideration” shall also be deemed to include an amount equal to twenty-five percent (25%) of all amounts received by the Company from ▇▇▇▇ NZ, LLC (“HNZ”) in connection with the transaction described in that certain letter from the Company to ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ dated April 5, 2012 (the “HNZ Consideration”), attached hereto as Exhibit “C”. In the event that the HNZ Consideration is memorialized in a long-form agreement between the Company and HNZ, then such agreement will also be included as Exhibit “C”, and a copy of same shall be provided to Karlsson.

c.     Additional Consideration shall be calculated quarterly as of the last day of March, June, September and December; provided, however, that Additional Consideration paid upon written off receivables shall be credited to the next calendar quarter. Additional Consideration payments for each preceding calendar quarter shall be paid in arrears within forty-five (45) days of the end of each of June, September, and December and within ninety (90) days of the end of each March, by the Company to Karlsson.

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d.     This Agreement and the Additional Consideration described herein shall immediately terminate when the cumulative total of the Additional Consideration payments made to Karlsson equal seventy-five million dollars ($75,000,000).

e.     The Company may, in the good faith exercise of its reasonable discretion, modify and amend its existing leases applicable to the AWP Area to release portions of the AWP Area (the “Released Areas”) from such leases and/or replace such Released Areas with other real property owned by the applicable lessors (the “Replacement Areas”) on which the Company will in the immediate future conduct mining of Authorized Minerals and in connection therewith shall add any such Replacement Areas to the AWP Area and remove any such Released Areas from the AWP Area.

f.     Nothing herein shall be deemed to create any ownership interests of Karlsson in the Minerals or the AWP Area or in any other real property owned, leased, or otherwise subject to a license, permit or other agreement benefitting the Company or to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ any interest in proceeds from mining activities of the Company related to real property other than the AWP Area. It is the intent of the Company to provide Additional Consideration for the benefit of Karlsson related to mining of the Minerals on the AWP Area as described in this Agreement.

4.             Company Representations. The Company hereby represents and warrants to Karlsson the following:

a.     The Company is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware and the Company is qualified to do business in the State of Arizona.

b.     The Company has all requisite power and authority to enter into this Agreement, and perform its obligations under this Agreement. The consummation of the transactions contemplated by this Agreement will not violate nor be in conflict with any provision of the Company’s certificate of formation, limited liability company agreement, or any agreement or instrument, to which the Company is a party or is bound, or any judgment, decree, order, writ, injunction, statute, rule or regulation applicable to the Company. The execution, delivery and performance of this Agreement, and the transactions contemplated hereby, have been duly and validly authorized by all requisite action on the part of the Company.

5.             Karlsson Representations. Karlsson hereby represents and warrants to the Company the following:

a.     Karlsson is a corporation, duly organized, validly existing and in good standing under the laws of the State of Arizona.

▇.     ▇▇▇▇▇▇▇▇ has all requisite power to enter into this Agreement, and perform its obligations under this Agreement. The consummation of the transactions contemplated by this Agreement will not violate nor be in conflict with any provision of Karlsson’s articles of

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organization or organizational documents, or any agreement or instrument to which it is a party or is bound, or any judgment, decree, order, writ, injunction, statute, rule or regulation applicable to Karlsson. The execution, delivery and performance of this Agreement, and the transactions contemplated hereby, have been duly and validly authorized by all requisite action on the part of Karlsson.

6.             Inspection. During business hours and upon reasonable written notice to the Company, Karlsson and its duly authorized representatives shall, at its own cost and expense, have the right to periodically, but not more than once per calendar quarter, inspect and audit the books and records of the Company with respect to the subject matter of this Agreement.

7.             Miscellaneous.

a.     Expenses. Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such costs and expenses.

b.     Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 7(b)):

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c.     Construction; Representation by Counsel. The Parties acknowledge and agree that they have been represented and advised by counsel in connection with the negotiation and preparation of this Agreement, and this Agreement shall be deemed to have been drafted jointly by the Parties, notwithstanding that one Party or the other may have performed the actual drafting hereof.  This Agreement shall be construed and interpreted in accordance with the plain meaning of its language, and not for or against any Party, and as a whole, giving effect to all the terms, conditions and provisions hereof.  Whenever the context may require, any provisions used in this Agreement shall include the corresponding masculine, feminine, or neuter forms.

d.     Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

e.     Severability.  If any provision of this Agreement is held invalid or unenforceable, such decision shall not affect the validity or enforceability of any other provision of this Agreement, all of which other provisions shall remain in full force and effect.

f.     Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the transactions contemplated hereby, and supersedes all negotiations, agreements, representations, warranties, commitments, whether in writing or oral, prior to the Effective Date.

g.     Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. Neither Party may assign its rights and obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed; provided that no consent shall be required for an assignment by Karlsson to a liquidating trust for the benefit of the current equity interest holders of Karlsson.

h.     No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or

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implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

i.      Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

j.      Governing Law; Submission to Jurisdiction.

i.        This Agreement shall be governed by and construed in accordance with the internal laws of the State of Arizona without giving effect to any choice or conflict of law provision or rule (whether of the State of Arizona or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Arizona.

ii.       The Parties consent to the sole and exclusive jurisdiction and venue in the Federal or State courts in Arizona, and agree that all disputes based on or arising out of this Agreement shall only be submitted to and determined by said courts, which shall have sole and exclusive jurisdiction.

k.     Acknowledgment. Karlsson acknowledges and agrees to be bound by the terms and conditions of the Potash Sharing Agreement.

l.      Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement as of the Effective Date.

STATE OF CALIFORNIA

COUNTY OF                                                                                                  } SS.

On                                                                                                                          before me,                                                                                                                                                 , personally appeared

personally known to me (or proved to me on the basis of satisfactory evidence) to 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.

STATE OF CALIFORNIA

COUNTY OF                                                                                                  } SS.

On                                                                                                         before me,                                                                                                                                                 , personally appeared

personally known to me (or proved to me on the basis of satisfactory evidence) to 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.

EXHIBIT A

AWP AREA

EXHIBIT A

(Legal Description)

PART I (Fee Lands)

Parcel No. 1:

All right, title or interest to minerals located in Sections 25, 27, 29, 31, 33 and 35, in Township 17 North, Range 25 East of the Gila and Salt River Base and Meridian, Apache County, Arizona.

EXCEPT for any title or rights to petrified wood, artifacts and fossils assigned in instrument recorded December 28, 2010, in Document No. 2010-007258, Official Records of Apache County, Arizona.

Parcel No. 2:

All right, title or interest to minerals located in Sections 30 and 34 in Township 17 North, Range 25 East of the Gila and Salt River Base and Meridian, Apache County, Arizona.

EXCEPT for any title or rights to petrified wood, artifacts and fossils assigned in instrument recorded December 28, 2010, in Document No. 2010-007258, Official Records of Apache County, Arizona.

Parcel No. 3:

All right, title or interest to minerals located in Section 32, Township 17 North, Range 25 East of the Gila and Salt River Base and Meridian, Apache County, Arizona.

EXCEPT the Northwest quarter of the Northwest quarter thereof.

EXCEPT for any title or rights to petrified wood, artifacts and fossils assigned in instrument recorded December 28, 2010, in Document No. 2010-007258, Official Records of Apache County, Arizona.

PART II (Mineral Leases)

PART III (Permitted Lands)

EXHIBIT B

American West Potash/Karlsson Group Royalty Calculation Example

*Numbers in thousands

EXHIBIT C

▇▇▇▇▇▇▇▇▇,

As you aware, HNZ has appealed two of AWP’s state exploration permits which were obtained by the Karlsson Group prior to the formation of AWP. HNZ cites that that AWP does not have access to the following sections:

Extensive legal discussions with the ASLD have exhausted all reasonable remedies and we’ve subsequently learned that the ASLD will deny AWP’s renewal of these exploration permits. We’ve also learned that HNZ has appealed numerous state exploration permits held by Passport and HNZ plans to appeal the following two additional AWP sections that also lack access and are not contiguous with the bulk of our acreage:

HNZ is willing to grant AWP a 4% royalty in exchange for the exploration permits on these sections. We believe this is an optimal outcome due to:

a)     None of the sections are contiguous with AWP acreage and no potash resource underlying these sections was included in AWP’s 43-101 or PEA

b)    AWP would have no ongoing financial liability and this structure preserves cash

c)     Without this structure, AWP will lose these sections

Please respond by 2pm MDT on Monday, April 9, 2012 if you approve AWP entering into this agreement.

Regards, ▇▇▇

▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇  ▇▇▇▇▇ ▇▇▇  ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

▇▇▇-▇▇▇-▇▇▇▇ o  ▇▇▇-▇▇▇-▇▇▇▇ f

When recorded return to:

POLSINELLI ▇▇▇▇▇▇▇▇ PC

Attn:  ▇▇▇▇ ▇. ▇▇▇▇▇

CityScape

One ▇. ▇▇▇▇▇▇▇▇▇▇ St., Ste. 1200

▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇

EXHIBIT B

FORM OF COLLATERAL ASSIGNMENT
OF MINERAL LEASES

This Collateral Assignment of Mineral Leases (the “Assignment”) is made as of                   , 2012 (the “Effective Date”), by and between American West Potash LLC, a Delaware limited liability company (“Assignor”), and The Karlsson Group, Inc., an Arizona corporation (“Assignee”) (collectively, the “Parties”), with reference to the following facts and intentions:

RECITALS:

A.                                    Pursuant to that certain Membership Interest Purchase Agreement dated as of May 30, 2012 (the “Purchase Agreement”), Assignee has agreed to sell its membership interests in Assignor to Prospect Global Resources, Inc., a Delaware corporation (“Borrower”).

B.                                    Part of the purchase price payable to Assignee pursuant to the Purchase Agreement is evidenced by that certain Promissory Note, dated as of         , 2012, made by Borrower in favor of Assignee in the original principal amount of One Hundred Twenty-Five Million Dollars ($125,000,000.00) (as the same may be amended, renewed, increased, reduced or otherwise modified from time to time, the “Note”).

C.                                    Assignor has a unity of economic interest with Borrower and will benefit from the Purchase Agreement, and it is in Assignor’s interest that Borrower issues the Note to Assignee.

D.                                    Assignor owns all right, title and interest in, to and under the Lease dated July 27, 2011 by and between Assignor, as Lessee, and the “▇▇▇▇▇▇▇▇ Group” (as defined therein) as Lessor, and the Lease dated July 27, 2011 by and between Assignor, as Lessee, and the “▇▇▇▇▇▇▇▇▇▇▇ Group” (as defined therein) as Lessor, Memoranda of which are recorded respectively as Instruments No. 2011-005754 and 2011-005753, in the Official Records of Apache County, Arizona, (collectively, the “Mineral Leases”), pursuant to which Assignor leases from the respective Lessor the mineral estate in to and under the land described on the attached Exhibit A (the “Land”) and all rights associated therewith, including the right to construct improvements (collectively, the “Improvements”) on the Land (the Assignor’s interest in the Land and the Improvements is hereinafter collectively referred to as the “Real Estate”).

E.                                     Assignor has guaranteed the payment of the Note and the performance of all of Borrower’s other obligations under the Purchase Agreement pursuant to the terms of the Guaranty in favor of Assignee of even date herewith (the “Guaranty”).

F.                                      Assignor has secured the payment of the Note and the payment and performance of Assignor’s obligations under the Guaranty in part pursuant to, among other things, a first priority lien on the Real Estate and other collateral, including “Minerals” extracted from the Land and all “Production” and “Proceeds of Production” as provided in a Deed of Trust, Assignment of Production and Proceeds, Security Agreement, Fixture Filing and Financing Statement dated as of the Effective Date (the “Deed of Trust”).

G.                                    All of the obligations of Assignor arising under the Guaranty, including but not limited to those set forth in this Assignment, are referred to collectively as the “Obligations”).

H.                                   In order to secure the payment and performance of the Obligations Assignor intends to collaterally assign to signee all of Assignor’s right, title and interest in and to the Mineral Leases upon the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the Note, and in order to secure the payment and performance of the Obligations, Assignor and Assignee hereby agree as follows:

1.                                      Assignment.  Assignor hereby collaterally assigns, transfers and sets over to Assignee, its successors and assigns, all of the rights, title and interest of Assignor, as Lessee, in, to and under the Mineral Leases, whether now or hereafter existing upon the terms and conditions as set forth in this Assignment; provided, however, notwithstanding anything in this Assignment to the contrary, such assignment, transfer and set over of the respective Mineral Lease shall become effective only upon and after the occurrence of an Event of Default, and upon Assignee’s election to exercise Assignor’s rights and obligations with respect to the respective Mineral Lease as provided in Section 6 below.

2.                                      Security.  This Assignment is made and given as collateral security for, and shall remain in full force and effect until the payment in full of all principal, interest, reasonable attorneys’ fees and expenses of collection, if any, associated with the Note.  So long as there is no uncured Event of Default, Assignor shall have the sole right to exercise all rights of Assignor as Lessee under the Mineral Leases.  So long as there is no uncured Event of Default, this Assignment is not intended to limit Assignor’s ability to engage in reasonable and customary day-to-day operations of the potash mining business as contemplated by the Mineral Leases.

3.                                      Warranties and Representations.  Assignor warrants and represents that:

(a)                                 Assignor has full right and authority to make this Assignment, and has not heretofore made any assignment, pledge, alienation or other transfer of any of it rights under the Mineral Leases or in any of the Real Estate.

(b)                                 To Assignor’s knowledge, (i) the Mineral Leases are in full force and effect, (ii) no default by Assignor or the respective Lessor has occurred with respect to any of the Mineral Leases, and (iii) there is no condition that, but for the giving of notice

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or passage of time or both, would constitute a default of either Assignor or the respective Lessor.

(c)                                  Assignor shall continue to comply with all of its obligations pursuant to the terms of each of the Mineral Leases.

4.                                      No Assignment or Modification of Mineral Leases.  Assignor shall not have the authority to, and covenants and agrees not to, assign, pledge, encumber or otherwise transfer its interest in either of the Mineral Leases, and Assignor shall not materially modify the terms of either of the Mineral Leases, or grant any waiver or concession to Lessor under either of the Mineral Leases, without the prior written consent of Assignee, which consent shall not be unreasonably delayed, withheld or conditioned by Assignee.

5.                                      Event of Default.  The failure of Assignee to pay or perform any of the Obligations within the applicable grace, notice and cure period, if any, shall constitute an “Event of Default.”

6.                                      Rights and Remedies Upon Default.  If an Event of Default shall have occurred and be continuing, then Assignee shall have all the rights of a secured party under the UCC (including, without limitation, the right to enforce, waive, amend, modify, terminate, sell, dispose or cause to be assigned to Assignee all or any part of the Mineral Leases in any manner permitted under the UCC), shall have all rights now or hereafter existing under all other applicable laws or in equity, and, subject to any requirements of applicable law then in effect, shall have all the rights set forth in this Assignment.

7.                                      Waivers.  To the fullest extent permitted by law, Assignor unconditionally and irrevocably waives all rights and benefits under and the provisions of A.R.S. §§ 12-1566, 44-142, 12-1641 et seq. and Rule 17(f) of the Arizona Rules of Civil Procedure and any similar statutes or rules of procedure; all suretyship rights and defenses as may be recognized by law in the State of Arizona, including but not limited to those arising under the Uniform Commercial Code as adopted by the State of Arizona; any right to any collateral now or hereafter held by Assignee for the Obligations; any right to assert against Assignee any defense, setoff, counterclaim or claim which Borrower or any guarantor may have against Assignee; and any right of subrogation (prior to repayment in full of the Note), reimbursement, indemnification or contribution (contractual, statutory or otherwise) under any federal, state or local law now or hereafter in effect (including but not limited to any laws relating to bankruptcy, insolvency, liquidation, receivership, reorganization, arrangement or any similar law effecting the rights of creditors) which Borrower or any guarantor may now or hereafter have against Assignee.

8.                                      Further Assurances - Recording and Filing  At any time, and from time to time, upon request of Assignee, Assignor will make, execute, acknowledge and deliver, or will cause to be made, executed, acknowledged and delivered, to Assignee or its designee, and when requested by Assignee, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Assignee may deem appropriate, any and all such, security agreements, financing statements, continuation statements, instruments of further assurances, certificates, and other documents as may, in the sole opinion of Lender, be necessary

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or desirable in order to effectuate, complete, perfect, continue, or preserve the liens and security interests created by this Assignment as a first and prior lien on the Mineral Leases and all proceeds thereof.  Assignor shall reimburse Assignee for all costs and expenses incurred in connection with the matters referred to in this Section 8.  If Assignor fails to timely perform any of its duties in this Section 8, Assignee may do so for and in the name of Assignor and at Assignor’s expense.

9.                                      Power of Attorney.  Assignor hereby appoints Assignee as Assignor’s attorney-in-fact for the purposes of making, executing, delivering, filing, recording, and doing all other things as may be necessary or desirable, in Assignee’s sole opinion, to accomplish the matters referred to in Section 8 and for the purpose of exercising any rights or remedies when there is an uncured Event of Default.  This power of attorney is a power coupled with an interest, shall be irrevocable, and shall survive the dissolution, termination, reorganization or other incapacity of Assignor.

10                                  Cumulative Remedies.  The rights, powers and remedies of Assignee under this Assignment shall be cumulative and not exclusive of any other right, power or remedy of Assignee at law or in equity.

11.                               Notification of Assignee.  Assignor shall promptly notify Assignee of any act or event made known to Assignor which would allow Assignee to exercise any rights under the Mineral Leases or the respective Lessor to enforce any remedies under the Mineral Leases, and shall do so in sufficient time for Assignee to exercise the rights assigned hereunder.

12.                               Notices.  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.  Such communications must be sent to the respective party at the following addresses (or at such other address for the party as shall be specified in a notice given in accordance with this Section):

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13.                               Reassignment.  Upon payment in full of the Note, Assignee covenants that it will cooperate with Assignor in order to cause the Mineral Leases to be released to Assignor.

[SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties have hereunto caused this Assignment to be executed on the day and year first above written.

On                         before me,                                    , a notary public, personally appeared                                              , who 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.

I 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.

On                         before me,                                    , a notary public, personally appeared                                              , who 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.

I 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.

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When recorded return to:

POLSINELLI ▇▇▇▇▇▇▇▇ P.C.

Attn:  ▇▇▇▇ ▇. ▇▇▇▇▇

CityScape

One ▇. ▇▇▇▇▇▇▇▇▇▇ St., Ste. 1200

▇▇▇▇▇▇▇, ▇▇  ▇▇▇▇▇

EXHIBIT C

FORM OF COLLATERAL ASSIGNMENT
OF STATE MINING PERMITS

This Collateral Assignment of State Mining Permits (“Assignment”) is made as of                , 2012 (the “Effective Date”), by and between American West Potash LLC, a Delaware limited liability company (“Assignor”), and The Karlsson Group, Inc., an Arizona corporation (“Assignee”) (collectively, the “Parties”), with reference to the following facts and intentions:

RECITALS:

A.                                    Pursuant to that certain Membership Interest Purchase Agreement dated as of May 30, 2012 (the “Purchase Agreement”), Assignee has agreed to sell its membership interests in Assignor to Prospect Global Resources, Inc., a Delaware corporation (“Borrower”).

B.                                    Part of the purchase price payable to Assignee pursuant to the Purchase Agreement is evidenced by that certain Promissory Note, dated as of                , 2012, made by Borrower in favor of Assignee in the original principal amount of One Hundred Twenty-Five Million Dollars ($125,000,000.00) (as the same may be amended, renewed, increased, reduced or otherwise modified from time to time, the “Note”).

C.                                    Assignor has a unity of economic interest with Borrower and will benefit from the Purchase Agreement, and it is in Assignor’s interest that Borrower issues the Note to Assignee.

D.                                    Assignor has guaranteed the payment of the Note pursuant to the terms of the Guaranty in favor of Assignee of even date herewith (the “Guaranty”).

E.                                     Assignor owns all right, title and interest in, to and under the Mineral Exploration Permits issued by the State Land Department of the State of Arizona (the “ASLD”) and more particularly described on the attached Exhibit A (collectively, the “Mining Permits”), pursuant to which Assignor has the right to prospect and explore for minerals upon and under the land described on the attached Exhibit B (the “Land”) and all rights associated therewith.

F.                                      All obligations of Assignor arising under the Guaranty, including but not limited to those set forth in this Assignment, are referred to collectively as the “Obligations”.

G.                                    Assignor intends to collaterally assign to Assignor all of Assignor’s right, title and interest in to the Mining Permits upon the terms and conditions set forth below.

NOW, THEREFORE, in consideration of the Note, and in order to secure the payment and performance of the Obligations, Assignor and Assignee hereby agree as follows:

1.                                      Assignment.  Assignor hereby collaterally assigns, transfers and sets over to Assignee, its successors and assigns, all of the rights, title and interest of Assignor, as Permittee, in, to and under the Mining Permits, whether now or hereafter existing upon the terms and conditions as set forth in this Assignment; provided, however, notwithstanding anything in this Assignment to the contrary, such assignment, transfer and set over of the Mining Permits shall become effective only upon and after the occurrence of an Event of Default, and upon Assignee’s election to exercise Assignor’s rights and obligations with respect to the respective Mining Permits as provided in Section 7 below.

2.                                      Renewal of Mining Permits:  Assignor at its own expense shall pay and perform as and when due all of its obligations arising pursuant to each of the Mining Permits so as to cause each of them to be renewed annually unless (a) Assignor demonstrates to the satisfaction of Assignee, as evidenced by the written approval of Assignee, which shall not be unreasonably withheld, delayed, or conditioned by Assignee, that it would not be commercially reasonable to do so, or (b) Assignor elects in lieu thereof to obtain from the ASLD a Mineral Lease with respect to the portion of the Land that is subject to the pertinent Mining Permit.  Without limiting the foregoing, Assignor shall perform all obligations and pay all amounts to the ASLD for the renewal of each of the Mining Permits not less than 45 days prior to the date when due and shall provide written notice thereof to Assignee.

3.                                      Security.  This Assignment is made and given as collateral security for, and shall remain in full force and effect until the payment in full of all principal, interest, reasonable attorneys’ fees and expenses of collection, if any, associated with the Note.  So long as there is no uncured Event of Default, Assignor shall have the sole right to exercise all rights of Assignor as Permittee under the Mining Permits.  So long as there is no uncured Event of Default, this Assignment is not intended to limit the Assignor’s ability to engage in reasonable and customary day-to-day operations of the potash mining business as contemplated by the Mining Permits.

4.                                      Warranties and Representations.  Assignor warrants and represents that:

(a)                                 Assignor has full right and authority to make this Assignment, and has not heretofore made any assignment, pledge, alienation or other transfer of any of it rights under the Mining Permits.

(b)                                 To Assignor’s knowledge, (i) the Mining Permits are in full force and effect; (ii) no default by Assignor has occurred with respect to any of the Mining Permits, and (iii) there is no condition that, but for the giving of notice or passage of time or both, would constitute a default of Assignor.

(c)                                  Assignor shall continue to comply with all of its obligations pursuant to the terms of each of the Mining Permits.

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5.                                      No Assignment or Modification of Mining Permits.  Assignor shall not have the authority to, and covenants and agrees not to, assign, pledge, encumber or otherwise transfer its interest in either of the Mining Permits, and Assignor shall not materially modify the terms of any of the Mining Permits, or grant any waiver or concession to any other person under any of the Mining Permits, without the prior written consent of Assignee, which consent shall not be unreasonably delayed, withheld or conditioned by Assignee.

6.                                      Event of Default.  The failure of Assignee to pay or perform any of the Obligations within the applicable grace, notice and cure period, if any, shall constitute an “Event of Default.”

7.                                      Rights and Remedies Upon Default.  If an Event of Default shall have occurred and be continuing, then Assignee shall have all the rights of a secured party under the UCC (including, without limitation, the right to enforce, waive, amend, modify, terminate, sell, dispose or cause to be assigned to Assignee all or any part of the Mining Permits in any manner permitted under the UCC), shall have all rights now or hereafter existing under all other applicable laws or in equity, and, subject to any requirements of applicable law then in effect, shall have all the rights set forth in this Assignment.

8.                                      Waivers.  To the fullest extent permitted by law, Assignor unconditionally and irrevocably waives all rights and benefits under and the provisions of A.R.S. §§ 12-1566, 44-142, 12-1641 et seq. and Rule 17(f) of the Arizona Rules of Civil Procedure and any similar statutes or rules of procedure; all suretyship rights and defenses as may be recognized by law in the State of Arizona, including but not limited to those arising under the Uniform Commercial Code as adopted by the State of Arizona; any right to any collateral now or hereafter held by Assignee for the Obligations; any right to assert against Assignee any defense, setoff, counterclaim or claim which Borrower or any guarantor may have against Assignee; and any right of subrogation (prior to repayment in full of the Note), reimbursement, indemnification or contribution (contractual, statutory or otherwise) under any federal, state or local law now or hereafter in effect (including but not limited to any laws relating to bankruptcy, insolvency, liquidation, receivership, reorganization, arrangement or any similar law effecting the rights of creditors) which Borrower or any guarantor may now or hereafter have against Assignee.

9.                                      Further Assurances - Recording and Filing  Concurrently with the execution of this Assignment, Assignor shall execute, acknowledge and deliver to Assignee an application to assign to Assignee each of the Mining Permits; provided, however that Assignee shall not file such applications except upon the occurrence of an Event of Default.  At any time, and from time to time, upon request of Assignee, Assignor will make, execute, acknowledge and deliver, or will cause to be made, executed, acknowledged and delivered, to Assignee or its designee, and when requested by Assignee, cause to be filed, recorded, refiled, or rerecorded, as the case may be, at such times and in such offices and places as Assignee may deem appropriate (a) an application to renew any or all of the Mining Permits or to assign to Assignee the right to apply for a Mineral Lease with respect to the Land that was subject to any of the Mining Permits; provided, however that Assignee shall not file such applications except upon the occurrence of an Event of Default; and (b) any and all deeds of trust, any and all such, security agreements, financing statements,

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continuation statements, instruments of further assurances, certificates, and other documents as may, in the sole opinion of Lender, be necessary or desirable in order to effectuate, complete, perfect, continue, or preserve the liens and security interests created by this Assignment as a first and prior lien on the Mining Permits and all proceeds thereof, including but not limited to any Mineral Leases, Right of Way Permits or other rights issued by the State Land Department of the State of Arizona with respect to the Land or any surface, mineral or other estate therein, whether now owned or hereafter acquired by Assignor.  Assignor shall reimburse Assignee for all costs and expenses incurred in connection with the matters referred to in this Section 9.  If Assignor fails to timely perform any of its duties in this Section 9, Assignee may do so for and in the name of Assignor and at Assignor’s expense.  Notwithstanding the foregoing, Assignee’s rights pursuant to this Section 9 may be exercised only with the prior written approval of the State Land Department of the State of Arizona, which approval shall be obtained by Assignee prior to Assignee doing any of the things authorized in this Section 9.

10.                               Powers of Attorney.  Assignor hereby appoints Assignee as its attorney-in-fact for the purposes of making, executing, delivering, filing, recording, paying and doing all other things as may be necessary or desirable, in Assignee’s sole and absolute discretion, to accomplish the matters referred to in Sections 2 and 9 above and for the purpose of exercising any rights or remedies when there is an uncured Event of Default.  These powers of attorney are powers coupled with an interest, shall be irrevocable, and shall survive the dissolution, termination, reorganization or other incapacity of Assignor.

11.                               Cumulative Remedies.  The rights, powers and remedies of Assignee under this Assignment shall be cumulative and not exclusive of any other right, power or remedy of Assignee at law or in equity.

12.                               Notification of Assignee.  Assignor shall promptly notify Assignee of any act or event made known to Assignor which would allow Assignee to exercise any rights under the Mining Permits or the State of Arizona to enforce any remedies under the Mining Permits, and shall do so in sufficient time for Assignee to exercise the rights assigned hereunder.

13.                               Notices.  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.  Such communications must be sent to the respective party at the following addresses (or at such other address for the party as shall be specified in a notice given in accordance with this Section 11):

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1.4                               Reassignment.  Upon payment in full of the Note, Assignee covenants that it will cooperate with Assignor in order to cause the Mining Permits to be released to Assignor.

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