REGISTRATION RIGHTS AGREEMENT
Exhibit 4.5
THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of this 25th day of
April, 2011 by and between Prospect Global Resources Inc., a Delaware corporation (the
“Company”), and Hexagon Investments, LLC and any assignees or transferees thereof (the
“Investor”).
1. Certain Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:
(a) An “Affiliate” of any Person (as defined herein) means a Person that, directly or
indirectly, through one or more intermediaries, controls, is controlled by or is under common
control with the first mentioned Person. A Person shall be deemed to control another Person if
such first Person possesses, directly or indirectly, the power to direct, or cause the direction
of, the management and policies of the second Person, whether through the ownership of voting
securities, by contract or otherwise.
(b) “Board of Directors” means the Board of Directors of the Company.
(c) “Commission” shall mean the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act and the Exchange Act.
(d) “Common Stock” shall mean the common stock of the Company, par value $0.001 per
share, and any other class of securities into which such securities may hereafter be reclassified
or changed.
(e) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any
similar successor federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
(f) “Holders” shall mean the holders of Registrable Securities.
(g) “Majority Interest” means Holders holding not less than a majority in interest of
the Registrable Securities held by all Holders.
(h) “Note” means the Convertible Secured Promissory Note dated as of the date hereof
in the principal amount of $2,500,000 issued by the Company to the Investor.
(i) “Person” shall mean an individual, a corporation, an association, a joint venture,
a partnership, a limited liability company, an estate, a trust, an unincorporated organization, and
any other entity or organization, governmental or otherwise.
(j) “Registrable Securities” shall mean (i) any shares of Common Stock held by the
Investor or its transferees that were issued pursuant to the conversion of the Note or exercise of
the Warrants and any other securities issued or issuable with respect to any such shares by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization; provided, however, that
notwithstanding anything to the contrary contained herein, “Registrable Securities” shall
not at any time include any securities (i) registered and sold pursuant to the Securities Act, (ii)
sold to the public pursuant to Rule 144 promulgated under the Securities Act or (iii) which could
then be sold in their entirety pursuant to Rule 144(k) promulgated under the Securities Act without
limitation or restriction.
(k) “Registration Expenses” shall mean the expenses so described in Section 5 hereof.
(l) “Securities Act” shall mean the Securities Act of 1933, as amended, or any similar
successor federal statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
(m) “Warrants” shall mean the $9,500,000 Warrants dated the date hereof issued to
Purchaser to purchase shares of Common Stock.
2. Piggyback Registration. If the Company at any time proposes to register any of its
Common Stock under the Securities Act for sale to the public either for its own account or for the
account of another Person other than Holders, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or equity securities
issuable in connection with stock option or other employee benefit plans, each such time it will
promptly give written notice to the Holders of its intention to effect such registration. Upon the
written request of any such Holder given within 30 days after receipt by such Holder of such
notice, the Company will, subject to the limits contained in this Section 2, use its reasonable
best efforts to cause all Registrable Securities of such Holder that such Holder so requests to be
registered under the Securities Act and qualified for sale under any state blue sky law, all to the
extent required to permit such sale or other disposition of said Registrable Securities; provided,
however, that if the Company is advised in writing in good faith by the managing underwriter of the
Company’s securities being offered in an underwritten public offering pursuant to such registration
statement that the amount to be sold by persons other than the Company (collectively, “Selling
Stockholders”) is greater than the amount which can be offered without adversely affecting the
marketability of the offering, the Company may reduce the amount offered for the accounts of
Selling Stockholders (including any Holders) to a number reasonably deemed satisfactory by such
managing underwriter; and provided, further, that the securities to be excluded shall be determined
in the following sequence: (i) first, securities held by any Persons not having any contractual
incidental or “piggy back” registration rights, and (ii) second, Registrable Securities and
securities held by any Persons having contractual incidental or “piggy back” registration rights
pursuant to an agreement which is not this Agreement. If there is a reduction in the number of
shares of Common Stock or Registrable Securities to be registered pursuant to clauses (i) and (ii)
above, such reduction shall be made within each tranche on a pro rata basis (based upon the
aggregate number of shares of Common Stock or Registrable Securities held by the holders in each
such tranche).
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3. Registration Procedures. If and whenever the Company is required by the provisions
of this Agreement to effect the registration of any of its securities under the Securities Act, the
Company will, as expeditiously as possible:
(a) use its reasonable best efforts diligently to prepare and file with the Commission a
registration statement on the appropriate form under the Securities Act with respect to such
securities, which form shall comply as to form in all material respects with the requirements of
the applicable form and include all financial statements required by the Commission to be filed
therewith, and use its reasonable best efforts to cause such registration statement to become and
remain effective until completion of the proposed offering (but not for more than 180 days);
(b) use its reasonable best efforts to prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective until the completion of the offering
(but not for more than 180 days) and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such registration statement
whenever the seller or sellers of such securities shall desire to sell or otherwise dispose of the
same, but only to the extent provided in this Agreement;
(c) furnish to each selling Holder and the underwriters, if any, such number of copies of such
registration statement, any amendments thereto, any documents incorporated by reference therein,
the prospectus, including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such selling holder may reasonably request in order to
facilitate the public sale or other disposition of the securities owned by such selling holder;
(d) use its reasonable best efforts to register or qualify the securities covered by such
registration statement under and to the extent required by such other securities or state blue sky
laws of such jurisdictions as each selling holder shall reasonably request, and do any and all
other acts and things which may be necessary under such securities or blue sky laws to enable such
selling holder to consummate the public sale or other disposition in such jurisdictions of the
securities owned by such selling holder, except that the Company shall not for any such purpose be
required to qualify to do business as a foreign corporation in any jurisdiction wherein it is not
so qualified;
(e) within a reasonable time before each filing of the registration statement or prospectus or
amendments or supplements thereto with the Commission, furnish to counsel selected by a Majority
Interest (“Holders’ Counsel”) copies of such documents proposed to be filed, which
documents shall be subject to the reasonable approval of such counsel;
(f) promptly notify each selling holder of Registrable Securities, Holders’ Counsel and any
underwriter and (if requested by any such Person) confirm such notice in writing, of the happening
of any event which makes any statement made in the registration statement or related prospectus
untrue or which requires the making of any changes in such registration statement or prospectus so
that they will not contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make
the statements therein in the light of the circumstances under which they were made not
misleading; and, as promptly as practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
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(g) use its best efforts to prevent the issuance of any order suspending the effectiveness of
a registration statement, and if one is issued use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of a registration statement at the earliest
possible moment;
(h) if requested by the managing underwriter or underwriters (if any), any selling holder, or
Holders’ Counsel, promptly incorporate in a prospectus supplement or post-effective amendment such
information as such Person requests to be included therein with respect to the selling holder or
the securities being sold, including, without limitation, with respect to the securities being sold
by such selling holder to such underwriter or underwriters, the purchase price being paid therefor
by such underwriter or underwriters and with respect to any other terms of an underwritten offering
of the securities to be sold in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;
(i) make available to each selling Holder, any underwriter participating in any disposition
pursuant to a registration statement, Holders’ Counsel and any accountant or other agent or
representative retained by a Majority Interest (collectively, the “Inspectors”), all
financial and other records, pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company’s officers, directors and employees to
supply all information requested by any such Inspector in connection with such registration
statement subject, in each case, to such confidentiality agreements as the Company shall reasonably
request;
(j) enter into any reasonable underwriting agreement required by the proposed underwriter(s)
for the selling holders, if any, and use its reasonable best efforts to facilitate the public
offering of the securities;
(k) use its reasonable best efforts to cause the securities covered by such registration
statement to be listed on the securities exchange or quoted on the quotation system on which the
Common Stock is then listed or quoted (including the Over-the-Counter Bulletin Board);
(l) otherwise use its reasonable best efforts to comply with all applicable rules and
regulations of the Commission and make generally available to its security holders, in each case as
soon as practicable, but not later than 90 days after the close of the period covered thereby, an
earnings statement of the Company which will satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any comparable successor provisions); and
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(m) otherwise cooperate with the underwriter(s), the Commission and other regulatory agencies
and take all reasonable actions and execute and deliver or cause to be executed and delivered all
documents reasonably necessary to effect the registration of any securities under this Agreement.
4. Expenses. All reasonable expenses incurred by the Company, the Investor and any
other Holders in effecting the registrations provided for in Section 2, including, without
limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel
for the Company, reasonable fees and disbursements of Holders’ Counsel, underwriting expenses
(other than fees, commissions or discounts), expenses of any audits incident to or required by any
such registration and expenses of complying with the securities or blue sky laws of any
jurisdiction pursuant to Section 3(d) hereof (all of such expenses referred to as “Registration
Expenses”), shall be paid by the Company. The Registration Expenses of Demand Registrations on
Form S-3 after the first two shall be paid by the Holders effecting such Demand Registrations.
5. Indemnification.
(a) The Company shall indemnify and hold harmless each selling Holder of Registrable
Securities, each underwriter (as defined in the Securities Act), and each other Person who
participates in the offering of such securities and each other Person, if any, who controls (within
the meaning of the Securities Act) such seller, underwriter or participating Person (individually
and collectively, the “Indemnified Person”) against any losses, claims, damages or
liabilities (collectively, the “liability”), joint or several, to which such Indemnified
Person may become subject under the Securities Act or any other statute or at common law, insofar
as such liability (or action in respect thereof) arises out of or is based upon (i) any untrue
statement or alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, (ii) any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, or (iii)
any violation by the Company of the Securities Act, any state securities or “blue sky” laws or any
rule or regulation thereunder in connection with such registration. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this Section 5(a) as it
pertains to any preliminary prospectus, shall not inure to the benefit of any Indemnified Person if
the untrue statement or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected
prospectus was timely made available by the Company pursuant to Section 3(f), and the Indemnified
Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving
rise to a violation and such Indemnified Person, notwithstanding such advice, used such incorrect
prospectus. Except as otherwise provided in Section 5(d), the Company shall reimburse each such
Indemnified Person in connection with investigating or defending any such liability as expenses in
connection with the same are incurred; provided, however, that the Company shall
not be liable to any Indemnified Person in any such case to the extent that any such liability
arises out of or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary or final prospectus, or amendment
or supplement thereto in reliance upon and in conformity with information furnished in writing to
the Company by such Indemnified Person specifically for use therein.
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(b) Each selling Holder of any securities included in such registration being effected shall
indemnify and hold harmless each other selling holder of any securities, the Company, its directors
and officers, each underwriter and each other Person, if any, who controls the Company or such
underwriter (individually and collectively also the “Indemnified Person”), against any
liability, joint or several, to which any such Indemnified Person may become subject under the
Securities Act or any other statute or at common law, insofar as such liability (or actions in
respect thereof) arises out of or is based upon (i) any untrue statement or alleged untrue
statement of any material fact contained, on the effective date thereof, in any registration
statement under which securities were registered under the Securities Act at the request of such
selling holder, any preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any omission or alleged omission by such selling holder to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading, in the case of (i) and (ii) to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made in such registration
statement, preliminary or final prospectus, amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by such selling holder specifically
for use therein. Such selling Holder’s obligations hereunder shall be limited to an amount equal
to the proceeds to such selling Holder of the securities sold in any such registration.
(c) Indemnification similar to that specified in Section 5(a) and Section 5(b) shall be given
by the Company and each selling Holder (with such modifications as may be appropriate) with respect
to any required registration or other qualification of their securities under any federal or state
law or regulation of governmental authority other than the Securities Act.
(d) If the indemnification provided for in this Section 5 for any reason is held by a court of
competent jurisdiction to be unavailable to an Indemnified Person in respect of any losses, claims,
damages, expenses or liabilities referred to therein, then each Indemnifying Party under this
Section 5, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses, claims, damages,
expenses or liabilities (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company, the selling Holders and the underwriters from the offering of the
Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also the relative fault of the Company, the other selling
Holders and the underwriters in connection with the statements or omissions which resulted in such
losses, claims, damages, expenses or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the selling Holders and the
underwriters shall be deemed to be in the same respective proportions that the net proceeds from
the offering (before deducting expenses) received by the Company and the selling Holders and the
underwriting discount received by the underwriters, in each case as set forth in the table on the
cover page of the applicable prospectus, bear to the aggregate public offering price of the
Registrable Securities. The relative fault of the Company, the selling Holders and the
underwriters shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the selling Holders or the underwriters and
the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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The Company, the selling Holders and the underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 5 were determined by pro rata or per capita
allocation or by any other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. In no event, however, shall a
selling Holder be required to contribute any amount under this Section 5(d) in excess of the lesser
of (i) that proportion of the total of such losses, claims, damages or liabilities indemnified
against equal to the proportion of the total Registrable Securities sold under such registration
statement which are being sold by such selling Holder or (ii) the net proceeds received by such
selling holder from its sale of Registrable Securities under such registration statement. No
person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not found guilty of such
fraudulent misrepresentation.
6. Compliance with Rule 144. The Company will use its reasonable best efforts to file
with the Commission such information as is required under the Exchange Act for so long as there are
holders of Registrable Securities; and in such event, the Company shall use its reasonable best
efforts to take all action as may be required as a condition to the availability of Rule 144 under
the Securities Act (or any comparable successor rules). The Company shall furnish to any holder of
Registrable Securities upon request a written statement executed by the Company as to the steps it
has taken to comply with the current public information requirement of Rule 144 (or such comparable
successor rules). Subject to the limitations on transfers imposed by this Agreement, or any other
agreement to which the Holders and the Company are a party, the Company shall use its reasonable
best efforts to facilitate and expedite transfers of Registrable Securities pursuant to Rule 144
under the Securities Act, which efforts shall include timely notice to its transfer agent to
expedite such transfers of Registrable Securities.
7. Amendments. The provisions of this Agreement may be amended, and the Company may
take any action herein prohibited or omit to perform any act herein required to be performed by it,
only with the written consent of the Company and a Majority Interest.
8. Transferability of Registration Rights. The registration rights set forth in this
Agreement are transferable by the Investor to each transferee of Registrable Securities. Each
subsequent holder of Registrable Securities must consent in writing to be bound by the terms and
conditions of this Agreement in order to acquire the rights granted pursuant to this Agreement.
9. Rights Which May Be Granted to Subsequent Parties. Other than transferees of
Registrable Securities under Section 8 hereof, the Company shall not, without the prior written
consent of a Majority Interest, allow purchasers of the Company’s securities to become a party to
this Agreement.
10. Damages. The Company recognizes and agrees that each Holder of Registrable
Securities will not have an adequate remedy if the Company fails to comply with the terms and
provisions of this Agreement and that damages will not be readily ascertainable, and the Company
expressly agrees that, in the event of such failure, it shall not oppose an application by
any holder of Registrable Securities or any other Person entitled to the benefits of this
Agreement requiring specific performance of any and all provisions hereof or enjoining the Company
from continuing to commit any such breach of this Agreement.
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11. Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and
construed under the laws of the State of Colorado without regard to principles of conflict of laws.
The parties irrevocably consent to the jurisdiction and venue of the state courts located in
Denver, Colorado and federal courts located in Denver, Colorado in connection with any action
relating to this Agreement.
12. Miscellaneous.
(a) All notices, requests, demands and other communications provided for hereunder shall be in
writing and mailed (by first class registered or certified mail, postage prepaid), telegraphed,
sent by express overnight courier service or electronic facsimile transmission (with a copy by
mail), or delivered to the applicable party at the addresses indicated below:
If to the Company:
|
Prospect Global Resources Inc. 000 00xx Xxxxxx, Xxxxx 0000-Xxxxx Xxxxxx, XX 00000 Attention: Xxx Xxxxx Facsimile: 000-000-0000 |
|
If to the Investor:
|
Hexagon Investments, LLC 000 00xx Xxxxxx, Xxxxx 000 Xxxxxx, XX 00000 Attn: Xxxxx Xxxxxxxxxxx Fax: *********** email: ************ |
If to any other holder of Registrable Securities:
At such Person’s address for notice as set forth in the books and
records of the Company.
or, as to each of the foregoing, at such other address as shall be designated by such Person in a
written notice to other parties complying as to delivery with the terms of this subsection (a).
All such notices, requests, demands and other communications shall, when mailed, faxed or sent,
respectively, be effective (i) two days after being deposited in the mails or (ii) one day after
being delivered to the telegraph company, deposited with the express overnight courier service or
sent by electronic facsimile transmission, respectively, addressed as aforesaid.
(b) This Agreement may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.
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(c) If any provision of this Agreement shall be held to be illegal, invalid or unenforceable,
such illegality, invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal, invalid or unenforceable
provision were not contained herein.
The parties hereto have caused this Registration Rights Agreement to be duly executed as of
the date first set forth above.
| PROSPECT GLOBAL RESOURCES INC. |
||||
| By: | /s/ Xxxxxxx Xxxxx | |||
| Name: | Xxxxxxx Xxxxx | |||
| Title: | Chief Executive Officer | |||
| HEXAGON INVESTMENTS, LLC |
||||
| By: | /s/ Xxxxx Xxxxxxxxxxx | |||
| By: Xxxxx Xxxxxxxxxxx | ||||
| Title: | Executive Vice President | |||
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