SUBSCRIPTION AGREEMENT
This
Subscription
Agreement (this “Agreement”)
is made as of
September 26, 2007 by and between HALLADOR PETROLEUM COMPANY, a Colorado
corporation (the “Corporation”)
and TECOVAS
PARTNERS V, L.P., a Texas limited partnership (“Subscriber”).
1. Subscription.
(a) Subscriber
hereby
subscribes for 215,054 shares (the “Shares”)
of the
Corporation’s common stock, par value $0.01 per share (the “Common
Stock”),
at a
subscription price of $3.10 per share (the “Per
Share
Subscription Price”),
for a total
subscription price of $666,667.40 (the “Total
Subscription Price”).
(b) The
closing of the
sale and purchase of the Shares (the “Closing”)
will take place
in the offices of Xxxxxx, Xxxxx & Xxxxxxx LLP, 000 X. Xxxxx Xxxxxx, Xxxxx
0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000 at 9:00 a.m. local time on October 5,
2007, or such later date and time as the Corporation and Subscriber agree (the
“Closing
Date”).
At the Closing,
(i) the Corporation will deliver to Subscriber a copy of this Agreement
countersigned by the Corporation, and (ii) Subscriber will pay the Total
Subscription Price to the Corporation by wire transfer of immediately available
funds to an account designated by the Corporation to Subscriber in writing.
Subject to the Closing, the Corporation shall cause its transfer agent to issue
a certificate representing the Shares in the name of Subscriber and to deliver
such certificate to Subscriber at the address set forth on the signature page
hereto, within five (5) business days after the date on which the Closing
occurs.
2. Acknowledgments.
Subscriber hereby
acknowledges that Subscriber, either alone or together with Subscriber’s
advisors (if any), has read, understands and agrees with and to the
following:
(a) AN
INVESTMENT IN
THE SHARES INVOLVES A HIGH DEGREE OF RISK; THE CORPORATION MAY NEED ADDITIONAL
CAPITAL IN THE FUTURE TO REACH ITS GROWTH OBJECTIVES OR MEET ITS EXPENSES AND
THE SHARES MAY LOSE ANY VALUE OR MAY NOT GAIN ANY VALUE; THE SHARES ARE NOT
REGISTERED AND MAY NOT BE SOLD EXCEPT IN COMPLIANCE WITH STATE AND FEDERAL
SECURITIES LAWS AND REGULATIONS.
(b) Subscriber
acknowledges and agrees that the Corporation may at any time sell shares of
its
capital stock at a price greater or less than the Per Share Subscription Price
pursuant to this Agreement. Subscriber acknowledges and agrees that the Shares
may ultimately prove to be worth significantly more or significantly less than
Subscriber perceives them to be worth now, and that no representation or
warranty is made by the Corporation as to the “fair value” of the Shares or the
interest in the Corporation that they represent, either now or in the
future.
(c) The
Shares have not
been registered under the Securities Act of 1933, as amended (the “Securities
Act”),
or any state
securities laws by reason of specific exemptions under the provisions thereof
which depend in part upon the representations made by Subscriber in this
Agreement. The Corporation is relying upon Subscriber’s representations
contained in this Agreement for the purpose of determining whether this
transaction meets the requirements for such exemptions.
(d) The
Shares are
“restricted securities” under applicable federal securities laws and the
Securities Act and the rules of the Securities and Exchange Commission provide,
in substance, that Subscriber may only dispose of the Shares pursuant to an
effective registration statement under the Securities Act or an exemption from
such registration if available. The Corporation has no obligation or intention
to register any of the Shares under, or to take action so as to permit sales
pursuant to, the Securities Act. Accordingly, Subscriber may dispose of the
Shares only in certain transactions that are exempt from registration under
the
Securities Act, including “private placements,” in which event the transferee
will acquire “restricted securities” subject to the same limitations as in the
hands of Subscriber. Additionally, applicable state securities laws may allow
sales of the Shares only if the Shares are registered or the transaction is
subject to an applicable exemption. As a consequence, Subscriber must bear
the
economic risks of an investment in the Shares for an indefinite period of
time.
(e) The
certificate(s)
evidencing the Shares will bear the following legend, which shall be in addition
to any other legends required by law or contract:
THE
SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED
IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES
ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
(f) Neither
the
Corporation nor any person acting on its behalf has offered or sold the Shares
to Subscriber by any form of general solicitation, general or public media
advertising or mass mailing.
3. Representations
and Warranties.
Subscriber hereby
represents and warrants to the Corporation as follows:
(a) Subscriber
has all
necessary power and authority under all applicable provisions of law to execute
and deliver this Agreement and to carry out its provisions. All action on
Subscriber’s part required for the lawful execution and delivery of this
Agreement has been taken. Upon the execution and delivery of this Agreement,
this Agreement will be a valid and binding obligation of Subscriber, enforceable
in accordance with its terms, except as limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights, and (b) general
principles of equity that restrict the availability of equitable remedies.
(b) Subscriber
has such
knowledge, skill and experience in investment financial and business matters
that Subscriber is capable of evaluating the merits and risks of the purchase
of
the Shares and of protecting Subscriber’s interests in connection therewith.
Subscriber is able to fend for itself in connection with the transactions
contemplated by this Agreement and has the ability to bear the economic risk
of
the investment, including complete loss of the investment. Subscriber
understands that no federal or state agency has passed upon the Shares or made
any finding or determination concerning the fairness or advisability of this
investment. To the extent that Subscriber has deemed it appropriate to do so,
Subscriber has retained, and relied upon, appropriate professional advice
regarding the tax, legal and financial merits and consequences of an investment
in the Shares.
(c) Subscriber,
either
alone or together with Subscriber’s advisors (if any), has made such independent
investigation of the Corporation, its management and related matters as
Subscriber deems to be, or such advisors (if any) have advised to be, necessary
or advisable in connection with an investment in the Shares. Subscriber and
Subscriber’s advisors (if any) have received all information and data that
Subscriber and such advisors (if any) believe to be necessary in order to reach
an informed decision as to the advisability of an investment in the
Shares.
(d) Subscriber,
either
alone or together with Subscriber’s advisors (if any), has reviewed Subscriber’s
financial condition and commitments and, based on such review, Subscriber is
satisfied that (i) Subscriber has adequate means of providing for
Subscriber’s financial needs and possible contingencies and has assets or
sources of income which, taken together, are more than sufficient so that
Subscriber could bear the risk of loss of Subscriber’s entire investment in the
Shares, (ii) Subscriber has no present or contemplated future need to
dispose of all or any portion of the Shares to satisfy any existing or
contemplated undertaking, need or indebtedness, and (iii) Subscriber is
capable of bearing the economic risk of an investment in the Shares for the
indefinite future.
(e) Subscriber
is
acquiring the Shares for Subscriber’s own account, for investment only and not
with a view to or in connection with any resale or distribution of the Shares,
and Subscriber has no present intention of making any sale, assignment, pledge,
gift, transfer or other disposition of the Shares or any interest therein.
Subscriber understands that the Shares have not been registered under the
Securities Act or any state securities laws by reason of specific exemptions
which depend upon, among other things, the bona fide nature of the investment
intent and the accuracy of Subscriber’s representations as expressed
herein.
(f) Subscriber
understands that any public market for any of the securities issued by the
Corporation is limited and that there is no assurance that an active public
market will ever exist for such securities.
(g) Subscriber
is an
“Accredited Investor” within the meaning of Rule 501 promulgated under the
Securities Act, and has completed or will complete and deliver an Accredited
Investor Questionnaire to the Corporation on or before the Closing
Date.
(h) Subscriber
is a
limited partnership and the office or offices of Subscriber in which its
investment decision was made is located at the address or addresses of
Subscriber set forth on the signature page hereof.
4. Covenant.
Subscriber hereby
agrees to furnish any additional information requested by the Corporation to
assure compliance of this transaction with applicable federal and state
securities laws, and to make any filings with the Securities and Exchange
Commission as may be required of Subscriber pursuant to the Securities Exchange
Act of 1934, as amended, and the rules promulgated thereunder.
5. General
Provisions.
(a) Governing
Law;
Jurisdiction.
This Agreement
shall be governed, construed and interpreted in accordance with the laws of
the
State of Colorado, without giving effect to principles of conflicts of law
and
choice of law that would cause the laws of any other jurisdiction to apply.
(b) Successors
and
Assigns.
This Agreement
may not be assigned, conveyed or transferred without the prior written consent
of the Corporation. Subject to the foregoing, the rights and obligations of
the
Corporation and Subscriber under this Agreement shall be binding upon and
benefit their respective permitted successors, assigns, heirs, administrators
and transferees. The terms and provisions of this Agreement are for the sole
benefit of the parties hereto and their respective permitted successors and
assigns, and are not intended to confer any third-party benefit on any other
person.
(c) Entire
Agreement.
This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to
any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein.
(d) Severability.
In case any
provision of the Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not
in
any way be affected or impaired thereby.
(e) Amendment
or
Waiver.
This Agreement
may not be amended, and no term or provision of this Agreement may be waived,
except upon the written consent of the Corporation and Subscriber.
(f) Expenses.
Each party shall
pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of the Agreement.
(g) Titles
and
Subtitles.
The titles of the
sections and subsections of the Agreement are for convenience of reference
only
and shall not be considered in construing this Agreement.
(h) Counterparts.
This Agreement
may be executed in any number of counterparts and by facsimile, each of which
shall be an original, but all of which together shall constitute one instrument.
If executed by facsimile, the parties shall subsequently exchange original
signed copies by mail or courier service.
[SIGNATURES
ON
FOLLOWING PAGE]
1-LA/947088.4
IN
WITNESS WHEREOF, the undersigned has caused this Subscription Agreement to
be
executed as of the date first written above.
SUBSCRIBER:
TECOVAS
PARTNERS V,
L.P., a Texas limited partnership
By:
Xxxxx
Operating
Company,
its
general partner
By: /s/
Xxxxx X.
Xxxxx
Name: Xxxxx
X.
Xxxxx
Title: President
CORPORATION:
By: /s/
Xxxxxx X.
Xxxxxx
Name: Xxxxxx
X.
Xxxxxx
Title: Chief
Executive
Officer and President
