HALLADOR PETROLEUM COMPANY RESTRICTED STOCK UNIT ISSUANCE AGREEMENT
This RESTRICTED
STOCK UNIT ISSUANCE AGREEMENT (this “Agreement”) is made and entered into as of
July 19, 2007 by and between Hallador Petroleum Company, a Colorado corporation
(the “Corporation”), and Xxxxx X. Xxxxxxxx, an individual
(“Participant”).
RECITALS
A. Participant serves
as the President of Sunrise Coal, LLC, which is a Subsidiary of the Corporation,
and as such is to render valuable services to the Corporation, and this
Agreement evidences the special equity incentive award authorized by the
Corporation for Participant as an inducement to continue to provide such
services to the Corporation.
B. All
capitalized terms in this Agreement shall have the meaning assigned to them in
the attached Appendix A.
NOW, THEREFORE, it is hereby
agreed as follows:
1. Grant of
Restricted Stock Units. The Corporation hereby awards to
Participant, as of the Award Date, Restricted Stock Units for the number of
shares of Common Stock indicated below. Each Restricted Stock Unit which vests
during Participant’s period of Service shall entitle Participant to receive one
share of Common Stock on the specified issue date. The number of
shares of Common Stock subject to the awarded Restricted Stock Units, the
applicable vesting schedule for those shares, the applicable date or dates on
which those vested shares shall become issuable to Participant and the remaining
terms and conditions governing the award (the “Award”) shall be as set forth in
this Agreement.
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Award Date:
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July 19,
2007
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Number of
Shares Subject to
Award:
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165,000
shares of Common Stock (the “Shares”)
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Vesting Schedule:
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The Shares
shall vest upon Participant’s completion of the three (3)-year period of
Service measured from the Award Date. However, the Shares may
be subject to accelerated vesting in accordance with the provisions of
Paragraph 5 below. The Shares which vest hereunder shall be
issued in accordance with the provisions of Paragraph 7 of this Agreement,
subject to the Corporation’s collection of the applicable Withholding
Taxes.
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2. Limited
Transferability. Prior to actual receipt of the Shares which
vest and become issuable hereunder, Participant may not transfer any interest in
the Award or the underlying Shares. Any Shares which vest hereunder but which
otherwise remain unissued at the time of Participant’s death may be transferred
pursuant to the provisions of Participant’s will or the laws of inheritance or
to Participant’s designated beneficiary or beneficiaries of this
Award. Participant may make such a beneficiary designation at any
time by filing the appropriate form with the Board or its designee.
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3. Cessation
of Service. Should Participant cease Service for any reason
prior to vesting in the Shares subject to this Award, then the Restricted Stock
Units awarded hereunder shall be immediately cancelled, and Participant shall
thereupon cease to have any right or entitlement to receive any Shares under
those cancelled units.
4. Stockholder
Rights. The holder of this Award shall not have any
stockholder rights, including voting, dividend or liquidation rights, with
respect to the Shares subject to the Award until the Participant becomes the
record holder of those Shares upon their actual issuance following the
Corporation’s collection of the applicable Withholding Taxes.
5. Reorganization/Change
in Control.
A. Any Restricted
Stock Units subject to this Award at the time of a Reorganization may be assumed
by the successor entity or otherwise continued in full force and effect. In the
event of such assumption or continuation of the Award, no accelerated vesting of
the Restricted Stock Units shall occur at the time of the Reorganization; provided,
however, that if the Reorganization event also constitutes a Change in
Control, then the special vesting acceleration provisions of Paragraph 5.C of
this Agreement shall be applicable.
B. In the event the
Award is assumed or otherwise continued in effect, the Restricted Stock Units
subject to the Award will be adjusted immediately after the consummation of the
Reorganization so as to apply to the number and class of securities into which
the Shares subject to those units immediately prior to the Reorganization would
have been converted in consummation of that Reorganization had the Shares
actually been issued and outstanding at that time.
C. If the Restricted
Stock Units subject to this Award at the time of the Reorganization are not
assumed or otherwise continued in effect in accordance with Paragraph 5.A above
or in event such Reorganization also constitutes a Change in Control, then those
units shall vest immediately upon the effective date of such Reorganization or
Change in Control. The Shares subject to those vested units shall be
issued on the closing date of the Change in Control or Reorganization
transaction triggering such accelerated vesting (or shall otherwise be converted
into the right to receive the same consideration per share of Common Stock
payable to the other stockholders of the Corporation in consummation of that
Reorganization or Change in Control and distributed at the same time as such
stockholder payments), subject to the Corporation’s collection of applicable
Withholding Taxes pursuant to the provisions of Paragraph 7. In no
event, however, shall the issuance of the vested Shares or the distribution of
any other consideration for those Shares be made to Participant later than the
later
of (i) the close of the calendar year in which the Change in Control or
Reorganization transaction is effected, or (ii) the fifteenth (15th) day of the
third (3rd) calendar month following the effective date of such
transaction.
D. This Agreement
shall not in any way affect the right of the Corporation to adjust, reorganize
or otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
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6. Adjustment
in Shares. Should any change
be made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares, spin-off
transaction, extraordinary dividend or distribution or other similar change
affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, or should the value of outstanding shares of Common
Stock be substantially reduced as a result of a spin-off transaction or an
extraordinary dividend or distribution, or should there occur any merger,
consolidation or other reorganization, then equitable adjustments shall be made
to the total number and/or class of securities issuable pursuant to this Award.
Such adjustments shall be made in such manner as the Board deems appropriate in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder. The determination of the Board shall be final,
binding and conclusive. In the event of a Change in Control or
Reorganization, the adjustments (if any) shall be made in accordance with the
provisions of Paragraph 5.
7. Issuance
of Shares of Common Stock/Collection of Withholding Taxes.
A. On the date on
which the Shares vest in accordance with the provisions of this Agreement or as
soon as administratively practicable following such vesting date, the
Corporation shall issue to or on behalf of Participant a certificate for those
vested Shares, subject to the Corporation’s collection of the applicable
Withholding Taxes and Participant’s delivery of any representations required of
him or her pursuant to Paragraph 8.B. Such issuance shall be effected
no later than the later of
(i) the end of the calendar year in which the applicable vesting date occurs, or
(ii) the fifteenth (15th) day of the third (3rd) calendar month following such
vesting date, with the applicable Withholding Taxes to be collected on or before
such issuance.
B. Unless Participant
(i) otherwise makes satisfactory arrangements with the Corporation on or before
the date on which the Shares vest under this Award to pay the applicable
Withholding Taxes through the delivery of a check payable to the
Corporation in a dollar amount equal to the Withholding Taxes which the
Corporation must collect from Participant in connection with the vesting and
concurrent issuance of such Shares, and (ii) in fact delivers such check to the
Corporation not later than that vesting date, the Corporation shall collect the
applicable Withholding Taxes by withholding from the vested Shares otherwise
issuable to Participant at that time, a portion of those Shares with a Fair
Market Value (measured as of the vesting date) equal to the applicable
Withholding Taxes; provided,
however, that the number of Shares so withheld shall not
exceed in Fair Market Value the amount necessary to satisfy the Corporation’s
required tax withholding obligations using the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes, that are
applicable to supplemental taxable income.
C. Except as otherwise
provided in Paragraph 5 and Paragraph 7.B, the settlement of all Restricted
Stock Units which vest under the Award shall be made solely in shares of Common
Stock. In no event, however, shall any fractional shares be issued.
Accordingly, the total number of shares of Common Stock to be issued pursuant to
that Award shall, to the extent necessary, be rounded down to the next whole
share in order to avoid the issuance of a fractional share.
8. Securities Law
Compliance
A. The Shares issued
under this Agreement will not be registered under the 1933 Act and will be
issued to Participant in reliance upon the private placement exemption from such
registration provided under Section 4(2) of the 1933 Act. Participant
hereby confirms that Participant has been informed that the issued Shares will
be restricted securities under the 1933 Act and may not be resold or transferred
unless those shares are first registered under the Federal securities laws or
unless an exemption from such registration is available. Accordingly,
Participant hereby acknowledges that Participant will acquire the Shares for
investment purposes only and not with a view to resale and will hold the Shares
for an indefinite period and that Participant is aware that SEC Rule 144 issued
under the 1933 Act which exempts certain resales of restricted securities will
require such shares to be held for a period of at least one year after their
issuance pursuant to this Agreement.
B. Upon demand by the
Corporation, Participant shall deliver to the Corporation a representation in
writing that Participant will acquire the Shares issued under this Agreement for
investment only and not for resale or with a view to distribution, and
containing such other representations and provisions with respect thereto as the
Corporation may require. Should the Corporation make such demand,
then delivery of such representation shall be a condition precedent to
Participant’s right to the issuance of the Shares.
C. Participant shall
make no disposition of the issued Shares unless and until there is compliance
with all of the following requirements:
(i) Participant shall
have provided the Corporation with a written summary of the terms and conditions
of the proposed disposition.
(ii) Participant shall
have provided the Corporation with an opinion of counsel, in form and substance
satisfactory to the Corporation, that (i) the proposed disposition does not
require registration of the Shares under the 1933 Act, or (ii) all appropriate
action necessary for compliance with the registration requirements of the 1933
Act or any exemption from registration available under the 1933 Act (including
Rule 144) has been taken.
The Corporation shall not be required (i)
to transfer on its books any Shares issued pursuant to this Agreement which have
been sold or transferred in violation of the provisions of this Agreement, or (ii) to treat as
the owner of those Shares, or otherwise to accord voting, dividend or
liquidation rights to, any transferee to whom the Shares have been transferred
in contravention of this Agreement.
D. The stock
certificates for any Shares issued under this Agreement shall be endorsed with
the following restrictive legend:
“The shares represented by this certificate
have not been registered under the Securities Act of 1933. The shares
may not be sold or offered for sale in the absence of (a) an effective
registration statement for the shares under such Act, (b) a ‘no action’ letter
of the Securities and Exchange Commission with respect to such sale or offer or
(c) an opinion of counsel, in form satisfactory to the Corporation, that
registration under such Act is not required with respect to such sale or
offer.”
9. Benefit
Limit. In
the event the vesting and issuance of the Shares subject to this Award would
constitute a parachute payment under Code Section 280G, the vesting and issuance
of those Shares shall be subject to reduction to the extent necessary to assure
that the number of Shares which vest and are issued under this Award will be
limited to the greater of
(i) the number of Shares which can vest and be issued without triggering a
parachute payment under Code Section 280G, or (ii) the maximum number of
Shares which can vest and be issued under this Award so as to provide the
Participant with the greatest after-tax amount of such vested and issued Shares
after taking into account any excise tax the Participant may incur under Code
Section 4999 with respect to those Shares and any other benefits or payments to
which the Participant may be entitled in connection with any change in control
or ownership of the Corporation or the subsequent termination of the
Participant’s Service.
10. Compliance
with Other Laws and Regulations. The issuance of shares of
Common Stock pursuant to the Award shall be subject to compliance by the
Corporation and Participant with all applicable requirements of law relating
thereto and with all applicable regulations of any Stock Exchange on which the
Common Stock may be listed for trading at the time of such
issuance.
11. Notices. Any
notice required to be given or delivered to the Corporation under the terms of
this Agreement shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or
delivered to Participant shall be in writing and addressed to Participant at the
address indicated below Participant’s signature line on this
Agreement. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.
12. Successors
and Assigns. Except to the extent otherwise provided in this
Agreement, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Corporation and its successors and assigns and Participant
and the legal representatives, heirs and legatees of Participant’s estate and
any beneficiaries of the Award designated by Participant.
13. Construction. All
interpretations and constructions of the provisions of this Agreement and all
determinations on any questions arising under this Agreement shall be made by
the Board, and its decisions on such matters shall be conclusive and binding on
all persons having an interest in this option.
14. Governing
Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Colorado without resort
to that State’s conflict-of-laws rules.
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15. Employment
at Will. Nothing in this Agreement shall confer upon
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Subsidiary employing or retaining Participant) or of Participant, which
rights are hereby expressly reserved by each, to terminate Participant’s Service
at any time for any reason, with or without cause.
IN WITNESS WHEREOF, the
parties have executed this Agreement on the day and year first indicated
above.
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By:
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/S/XXXXXX X.
XXXXXX
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Title:
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President and CEO
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PARTICIPANT:
Xxxxx
X. Xxxxxxxx
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Signature:
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/S/XXXXX X.
XXXXXXXX
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Address:
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0000 Xxxxxxxx Xxxx
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APPENDIX
A
DEFINITIONS
The following
definitions shall be in effect under the Agreement:
A. Agreement shall mean this
Restricted Stock Unit Issuance Agreement.
B. Award
shall mean the award of Restricted Stock Units made to Participant pursuant to
the terms of the Agreement.
C. Award
Date shall mean the date the Restricted Stock Units are awarded to
Participant pursuant to the Agreement and shall be the date indicated in
Paragraph 1 of the Agreement.
D. Board
shall mean the Corporation’s Board of Directors.
E. Change in
Control shall mean any change in control or ownership of the Corporation
which occurs by reason of one or more of the following events:
(i) the acquisition of
any person or group of related persons (as determined pursuant to section
13(d)(3) of the 0000 Xxx) of beneficial ownership of securities of the
Corporation representing fifty percent (50%) or more of the total number of
votes that may be cast for the election of Board members, or
(ii) stockholder
approval of (A) any agreement for a merger or consolidation in which the
Corporation will not survive as an independent corporation or (B) any sale,
exchange or other disposition of all or substantially all of the Corporation’s
assets.
In determining whether a subparagraph (i)
acquisition has occurred, the person acquiring beneficial ownership of the
securities must be someone other than a person or an affiliate of a person that,
as of January 15, 1993, is the beneficial owner of securities of the Corporation
representing twenty percent (20%) or more of the total number of votes that may
be cast for the election of Board members. The Board’s reasonable
determination as to whether a Change in Control event has occurred shall be
final and conclusive.
F. Code shall mean the Internal
Revenue Code of 1986, as amended.
G. Common
Stock shall mean the shares of the Corporation’s common
stock.
H. Corporation
shall mean Hallador Petroleum Company and any successor corporation to all or
substantially all of the assets or voting stock of Hallador Petroleum Company,
which shall by appropriate action assume the Award.
I. Employee
shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary), subject to the control and direction of the employer entity as
to both the work to be performed and the manner and method of
performance.
J. Fair
Market Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock
is listed upon one or more established Stock Exchanges, then the Fair Market
Value per share shall be deemed to be the averages of the quoted closing prices
of the Common Stock on such Stock Exchanges on the date for which the
determination is made, or if no sale shall have been made on any Stock Exchange
on that day, on the next preceding day on which there was such a
sale.
(ii) If the Common Stock
is not listed upon an established Stock Exchange but is actively traded on the
NASDAQ System, the Fair Market Value per share shall be deemed to be the last
reported sale price for the date for which the determination is made or (in the
absence of any sale on such date) the mean between the dealer “bid” and “ask”
closing prices of the Common Stock on the NASDAQ System on such day or, if there
shall have been no trading or quotes of the Common Stock on that day, on the
next preceding day on which there was such trading or quotes.
(iii) If none of the
foregoing apply, the Fair Market Value per share shall be deemed to be an amount
as determined in good faith by the Board by applying any reasonable valuation
method.
K. 1933
Act shall mean the Securities Act of 1933, as amended.
L. 1934
Act shall mean the Securities Exchange Act of 1934, as
amended.
M. Participant
shall mean the person to whom the Award is made pursuant to the
Agreement.
N. Parent shall mean any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation, provided each corporation in the unbroken chain
(other than the Corporation) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
O. Restricted
Stock Unit shall mean each unit
subject to the Award which shall entitle Participant to receive one (1) share of
Common Stock upon the vesting of that unit.
P. Reorganization
shall mean the occurrence of any of the following transactions:
(i) the Corporation is
merged or consolidated with another corporation and the Corporation is not the
surviving corporation, or
(ii) all or
substantially all of the assets of the Corporation are acquired by another
entity, or
(iii) the Corporation is
liquidated or reorganized,
Q. Service
shall mean Participant’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee, a non-employee member of
the Board or a consultant or independent advisor. Participant shall
be deemed to cease Service immediately upon the occurrence of either of the
following events: (i) Participant no longer performs services in any of the
foregoing capacities for the Corporation (or any Parent or Subsidiary), or (ii)
the entity for which Participant performs such services ceases to remain a
Parent or Subsidiary of the Corporation, even though Participant may
subsequently continue to perform services for that entity. Service
shall not be deemed to cease during a period of military leave, sick leave or
other personal leave approved by the Corporation. Except to the extent otherwise
required by law or expressly authorized by the Board or the Corporation’s
written leave of absence policy, no Service credit shall be given for vesting
purposes for any period Participant is on a leave of absence.
R. Stock
Exchange shall mean the American
Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock
Exchange.
S. Subsidiary
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
T. Withholding
Taxes shall mean (i) the employee portion of the federal, state and local
employment taxes required to be withheld by the Corporation in connection with
the vesting and concurrent issuance of the shares of Common Stock under the
Award and (ii) the federal, state and local income taxes required to be withheld
by the Corporation in connection with such vesting and issuance of those
shares.
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