UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

PROSPECT GLOBAL RESOURCES INC.

(Exact name of registrant as specified in its charter)

Nevada		000-54438		26-3024783
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

600 17th Street Suite 2800 South Denver, CO		80202
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (303) 634-2239

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 1.01 Entry into a Material Definitive Agreement.

On September 19, 2011 the Company issued a $1,500,000 convertible secured note due September 19, 2012 to Hexagon Investments, LLC, which accrues interest at 10% per annum. The note is secured pari passu by all of our assets with our other $6,500,000 of outstanding convertible notes. The principal amount plus accrued interest on the Hexagon note may convert at Hexagon’s option at any time during the term into shares of our common stock at $4.00 per share, subject to adjustment solely for capital reorganization events. The principal amount plus accrued interest will automatically convert into shares of our common stock at $4.00 per share upon completion by us of the issuance of at least $10,000,000 of securities; provided, that if such issuance of securities occurs at a per share purchase price of less than $4.44, additional shares will be issued upon conversion such that the total shares received by the holder upon conversion equals the aggregate principal amount (X) plus all accrued interest (Y) divided by 0.9 times the per share purchase price of the securities issuance (Z). For clarity, the total shares received by the holder shall be equal to (X + Y)÷(0.9 * Z).

We also issued Hexagon a warrant to purchase our common stock. The warrant is exercisable until September 19, 2013 for up to $3,750,000 of shares at a purchase price equal to the conversation price of the Hexagon note.

In connection with issuance of the convertible note, we granted piggy-back registration rights to Hexagon for the shares issuable upon conversion of the note and exercise of the warrants.

As previously disclosed on Form 8-K filed July 8, 2011, the Company entered a Fee Agreement with Brownstein Hyatt Farber Schreck LLP (“BHFS”), pursuant to which BHFS will provide government relations services to the Company and its subsidiaries, including American West Potash LLC. Attached as an exhibit to this Form 8-K are the Secured Promissory Note and the Pledge Agreement related thereto.

Item 3.02 Unregistered Sale of Equity Securities.

Issuance of the convertible note and warrant described above was not registered under the Securities Act of 1933. The issuance of the convertible note and warrant was exempt from registration, pursuant to Section 4(2) of the Securities Act of 1933 and Regulation D and Rule 506 promulgated thereunder. These securities qualified for exemption since the issuance securities by us did not involve a public offering and the purchasers are all accredited investors as defined in Regulation D. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the sale, size of the offering, manner of the offering and number of securities offered. In addition, these shareholders have the necessary investment intent as required by Section 4(2) since each agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the 1933 Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act and Regulation D for this transaction.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit No.				Identification of Exhibits
	4.1			$1,500,000 Convertible Secured Promissory Note with Hexagon Investments, LLC
	4.2			Two year Common Stock Purchase Warrant with Hexagon Investments
	4.3			Registration Rights Agreement with Hexagon Investments
	10.1			Securities Purchase Agreement with Hexagon Investments
	10.2			Security Agreement with Hexagon Investments
	10.3			Secured Partial Recourse Promissory Note
	10.4			Pledge Agreement

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.