SUBSCRIPTION AGREEMENT
This
Subscription Agreement (this “Agreement”)
is made
as of February 14, 2006 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 90,909 shares (the “Shares”)
of the
Corporation’s common stock, par value $0.01 per share (the “Common
Stock”),
at a
subscription price of $2.20 per share (the “Per
Share Subscription Price”),
for a
total subscription price of $199,999.80 (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 10:00 a.m. local time
on
February 14, 2006, or such later date and time as the Corporation and Subscriber
agree (the “Closing
Date”).
At
the Closing, (i) he 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/866241.2
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
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By:
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Xxxxx
Operating Company, its general partner
|
By:
Name:
Title:
Address:
Tecovas
Partners V, L.P. c/o Marsh Operating Company 000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000 Attention: Xxx Xxxxx
E-Mail
Address: xxx@xxxxxx.xxx
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FEIN:
|
00-0000000
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