COLLATERAL ASSIGNMENT OF HALLADOR MASTER PURCHASE/SALE AGREEMENT
COLLATERAL
ASSIGNMENT OF HALLADOR MASTER
PURCHASE/SALE
AGREEMENT
THIS
COLLATERAL ASSIGNMENT OF HALLADOR MASTER PURCHASE/SALE AGREEMENT (the
“Assignment”) is made by HALLADOR PETROLEUM COMPANY, a Colorado corporation
(“Hallador”), and certain of its affiliates and subsidiaries made a party
hereto, to OLD NATIONAL BANK, a national banking association (“Bank”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to that certain Credit Agreement, dated April 19th, 2006, between
Sunrise Coal, LLC (the “Borrower”) and Bank (the “Credit Agreement”), Bank has
agreed to make to Borrower, and Borrower has agreed to accept from Bank, certain
loans in the total maximum amount of Thirty Million and 00/100 Dollars
($30,000,000.00) (collectively,
the “Loans”);
WHEREAS,
Bank has agreed to make the Loans to Borrower upon certain terms and conditions,
including, among other things, that Hallador guaranty the Loans pursuant to
that
certain Continuing Guaranty executed by Hallador in favor of the Bank, dated
of
even date herewith (the “Guaranty”);
WHEREAS,
Hallador Production Company, a Colorado corporation (“Hallador Production”) and
Hallador are the sole partners of Hallador Petroleum LLLP, a Colorado limited
liability limited partnership (“Hallador LLLP”);
WHEREAS,
Hallador Production is a wholly owned subsidiary of Hallador (for purposes
hereof, Hallador, Hallador Production and Hallador LLLP shall be collectively
referred to herein as the “Assignor”);
WHEREAS,
Hallador LLLP has entered into that certain Master Purchase/Sale Agreement
with
Coral Energy Resources, L.P. (“Coral”), dated November 12, 2001, a copy of which
is attached hereto as Exhibit
A
(the
“Gas Contract”);
WHEREAS,
in consideration of the Loans to Borrower and as collateral security for
Guarantor’s obligations to Bank pursuant to the Guaranty, Assignor has agreed to
collaterally assign all of its rights to receive payment for Gas delivered
(as
described in the Gas Contract) under the Gas Contract to the Bank pursuant
to
the terms and conditions of this Assignment.
NOW,
THEREFORE,
in order
to induce the Bank to extend the Loans, and for other good and valuable
consideration, the Assignor, intending to be legally bound, hereby covenants
in
favor of the Bank and agrees as follows:
Assignment.
The
Assignor has collaterally granted, transferred and assigned, and does hereby
collaterally grant, transfer and assign unto the Bank, its successors and
assigns, Assignor’s rights to receive payment for Gas delivered pursuant to the
Gas Contract (the “Right to Payment”), as amended, extended, modified,
supplemented, and all right of the Assignor thereto, to have and to hold unto
the Bank as security for Hallador’s Guaranty obligations
and any
amendments to the Guaranty, and all out-of-pocket costs and expenses of the
Bank
incurred in the documentation, negotiation, modification, enforcement,
collection and otherwise in connection with any of the foregoing, including
reasonable attorneys’ fees and expenses (hereinafter referred to collectively as
the “Obligations”). The
Assignor agrees that the Bank shall have the rights stated in this Assignment
with respect to the Gas Contract, in addition to the other rights which the
Bank
may have by law. The Assignor represents and warrants that: (a) the
Assignor has not executed any prior assignment of any of its rights under the
Gas Contract; (b) to Assignor’s knowledge the Gas Contract and the
obligations thereunder are valid and enforceable and the Assignor has not done
anything which might prevent the Bank from or limit the Bank in operating under
any of the provisions of this Assignment; (c) payments provided for under
the Gas Contract have not been collected in advance of the time when the same
became due under terms of the Gas Contract; (d) there is no present default
under the Gas Contract; (e) the Assignor is the sole owner of the entire
interest in the Gas Contract; (f) the Gas Contract is in full force and
effect and have not been altered, amended or modified, and (g) Assignor will
provide notice of this Assignment to Coral as required pursuant to
Section 13.2 of the Gas Contract.
Performance
of Gas Contract by Assignor.
The
Assignor agrees to faithfully abide by, perform and discharge each and every
obligation of the Gas Contract that is to be performed by the Assignor. As
long
as no Default (as defined in the Credit Agreement) exists, Assignor shall be
entitled to enforce all of its rights under the Gas Contract, including the
Right to Payment. The Assignor shall use its best efforts to enforce or secure
the performance of each and every term of the Gas Contract. The Assignor agrees
to provide prompt written notice to the Bank of the occurrence or existence
of
any default by any party to either Gas Contract.
Power
to Modify the Gas Contract.
The
Assignor hereby expressly releases, relinquishes and surrenders all of the
Assignor’s right, power and authority to in any material way, amend or modify
any of the financial terms of the Gas Contract or Assignor’s Right to Payment,
in either case without the Bank’s prior written consent, which consent shall not
be unreasonably withheld, conditioned or delayed. Any attempt on the part of
the
Assignor to exercise any such right, power or authority without the Bank’s prior
written consent shall constitute a default hereunder.
Assignment
of the Gas Contract.
The
Assignor will not make additional assignments of the Right to Payment under
the
Gas Contract or assign the Gas Contract or any part thereof without the Bank’s
prior written consent. No such assignment shall discharge the Assignor from
its
liability hereunder, or arising out of the Obligations or under any other
agreement between the Assignor and the Bank.
Bank’s
Right to Make Payments Under the Gas Contract.
If the
Assignor fails to make any payment or to do any act as provided herein or in
the
Gas Contract, then the Bank may, but shall not be obligated to, make or do
the
same in such manner and to such extent as the Bank may deem necessary to protect
the Right to Payment and the security hereof.
Bank’s
Right to Enforce and Perform Under the Gas Contract.
Upon
the
occurrence of and during the continuance of a Default, the Bank, in addition
to
its rights and remedies under the Credit Agreement and the agreements and
instruments executed in connection therewith (collectively, the “Loan
Documents”) evidencing and securing the Loans and applicable law may, at its
option, upon at least 48 hours prior written notice to the Assignor, and without
waiving or releasing any Obligations, either in person or by agent with or
without bringing any action or proceeding or by a receiver to be appointed
by a
court, to the extent permitted by law and the express requirements of the Gas
Contract, cure defaults in the Assignor’s performance under the Gas Contract,
negotiate with the other parties to the Gas Contract regarding the Right to
Payment, and do any and all other acts which the Bank deems reasonably necessary
to protect the Right to Payment, the security hereof and the lien hereof.
Bank
Not Obligated to Perform.
This
Assignment is given only as collateral security, and the Bank shall not be
obligated to perform or discharge any obligation or liability of the Assignor
under the Gas Contract. No payment, action or inaction of the Bank under or
in
connection with the Gas Contract shall in any manner release the Assignor from
its obligations under this Assignment or the Obligations.
Indemnity.
The
Assignor agrees to indemnify each of the Bank, each legal entity, if any, who
controls the Bank and each of their respective directors, officers and employees
(collectively, the “Indemnified Parties” and each individually an “Indemnified
Party”), and to hold each Indemnified Party harmless from and against, any and
all claims, damages, losses, liabilities and expenses (including all reasonable
fees and charges of counsel with whom any Indemnified Party may consult and
all
reasonable expenses of litigation and preparation therefor) which any
Indemnified Party may incur, or which may be asserted against any Indemnified
Party by any person, entity or governmental authority (including any person
or
entity claiming derivatively on behalf of the Assignor), in connection with
or
arising out of or relating to the Gas Contract or arising out of or by reason
of
this Assignment, whether: (a) arising from or incurred in connection with
any breach of a representation, warranty or covenant by the Assignor; or
(b) arising out of or resulting from any suit, action, claim, proceeding or
governmental investigation, pending or threatened, whether based on statute,
regulation or order, or tort, or contract or otherwise, before any court or
governmental authority; provided, however, that the foregoing indemnity
agreement shall not apply to any claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party’s gross negligence or
willful misconduct. The indemnity agreement contained in this Section shall
survive the termination of this Assignment, payment of any Loans and assignment
of any rights hereunder. The Assignor may participate at its expense in the
defense of any such action or claim.
Default.
If
any
Default or any default by Assignor under either Gas Contract exists, then,
and
at any time thereafter: (a) the Bank shall have, in addition to any
remedies provided herein or by any applicable law or in equity, all the remedies
of a secured party under the Indiana Uniform Commercial Code as the same may
be
amended from time to time; and (b) the Bank may, at its election and in
addition to all other remedies, declare this Assignment to be absolute and
not
merely a collateral assignment, and thereupon this Assignment shall become
and
be absolute and in full force and effect.
Power
of Attorney.
The
Assignor hereby irrevocably constitutes and appoints the Bank and any officer
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of the Assignor or in its name, from time to time in the Bank’s discretion
for the purpose of carrying out the terms of this Assignment, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Assignment and, without limiting the generality of the foregoing, the Assignor
hereby gives the Bank the power and right on behalf of the Assignor, during
a
Default, and without notice to or assent by the Assignor, to do the
following:
to
receive payment of, endorse, and receipt for, any and all monies, claims and
other amounts due and to become due at any time in respect of or arising out
of
the Gas Contract;
to
commence and prosecute any suits, actions or proceeding at law or in equity
in
any court of competent jurisdiction to collect any amounts due under the Gas
Contract and to enforce any other right in respect of the Right of Payment
pursuant to the Gas Contract;
to
settle, compromise or adjust any suit, action or proceeding described above,
and, in connection therewith, to give such discharges or releases as the Bank
may deem appropriate;
to
negotiate with, enter into further agreements with, and otherwise deal with
the
other parties to the Gas Contract with respect to the Right of Payment pursuant
to the Gas Contract and the subject matter thereof; and
to
do at
any time, or from time to time, all acts and things which the Bank deems
necessary to protect or preserve the Right of Payment pursuant to the Gas
Contract and the Bank’s security interest and rights therein in order to effect
the intent of this Assignment, all as fully and effectively as the Assignor
might do.
The
Assignor hereby ratifies all that such attorneys shall lawfully do or cause
to
be done by virtue hereof. This power of attorney is a power coupled with an
interest, will be irrevocable and shall terminate only upon payment in full
of
the Obligations and the termination of this Assignment. The powers conferred
upon the Bank hereunder are solely to protect the Bank’s interests in the Gas
Contract and will not impose any duty upon it to exercise any such powers.
The
Bank will be accountable only for amounts that it actually receives as a result
of the exercise of such powers.
Notices.
All
notices, demands, requests, consents, approvals and other communications
required or permitted hereunder (“Notices”) must be in writing and will be
effective upon receipt. Notices may be given in any manner to which the parties
may separately agree, including electronic mail. Without limiting the foregoing,
first-class mail, facsimile transmission and commercial courier service are
hereby agreed to as acceptable methods for giving Notices. Regardless of the
manner in which provided, Notices may be sent to a party’s address as set forth
in the Credit Agreement or to such other address as any party may give to the
other for such purpose in accordance with this section.
Preservation
of Rights. No
delay or omission on the Bank’s part to exercise any right or power arising
hereunder will impair any such right or power or be considered a waiver of
any
such right or power, nor will the Bank’s action or inaction impair any such
right or power. The Bank’s rights and remedies hereunder are cumulative and not
exclusive of any other rights or remedies which the Bank may have under other
agreements, at law or in equity.
Illegality.
If
any
provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, it shall not affect or impair the validity,
legality and enforceability of the remaining provisions of this
Agreement.
Changes
in Writing.
No
modification, amendment or waiver of, or consent to any departure by the
Assignor from, any provision of this Agreement will be effective unless made
in
a writing signed by the Bank, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice
to
or demand on the Assignor will entitle the Assignor to any other or further
notice or demand in the same, similar or other circumstance.
Successors
and Assigns.
This
Assignment will be binding upon and inure to the benefit of the Assignor and
the
Bank and their respective successors and assigns; provided, however, that the
Assignor may not assign this Assignment in whole or in part without the Bank’s
prior written consent and the Bank at any time may assign this Assignment in
whole or in part.
Interpretation.
In
this
Assignment, unless the Bank and the Assignor otherwise agree in writing, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to statutes are to be construed
as
including all statutory provisions consolidating, amending or replacing the
statute referred to; the word “or” shall be deemed to include “and/or”, the
words “including”, “includes” and “include” shall be deemed to be followed by
the words “without limitation”; references to articles, sections (or
subdivisions of sections) or exhibits are to those of this Assignment; and
references to agreements and other contractual instruments shall be deemed
to
include all subsequent amendments and other modifications to such instruments,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Assignment. Section headings in this Assignment
are included for convenience of reference only and shall not constitute a part
of this Assignment for any other purpose. Defined terms not otherwise defined
herein shall have the meaning ascribed to such term in the Credit
Agreement.
Defeasance.
Upon
payment in full of the Obligations, this Assignment shall become null and void
and of no force and effect.
Governing
Law and Jurisdiction.
This
Assignment has
been
executed and delivered and is intended to be performed in the State of Indiana
and shall be governed, construed and enforced in all respects in accordance
with
the laws of the State of Indiana, without regard to principles of conflicts
of
law. ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS ASSIGNMENT
SHALL
BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY OF MARION,
STATE OF INDIANA, OR THE FEDERAL COURTS WHOSE VENUE INCLUDES THE COUNTY OF
MARION, STATE OF INDIANA, OR, AT THE SOLE OPTION OF BANK, IN ANY OTHER COURT
IN
WHICH BANK SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. THE ASSIGNOR AND BANK HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE ANY RIGHT TO
HAVE
A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT,
OR OTHERWISE) BETWEEN OR AMONG ASSIGNOR AND BANK ARISING OUT OF OR IN ANY WAY
RELATED TO THIS ASSIGNMENT, OR ANY RELATIONSHIP BETWEEN BANK AND ASSIGNOR.
THIS
PROVISION IS A MATERIAL INDUCEMENT TO BANK TO PROVIDE THE LOANS OR IN THE LOAN
DOCUMENTS. Whenever possible, each provision of this Assignment or any related
agreement or instrument shall be interpreted in such manner as to be effective
and valid under applicable law, but if any such provision shall be prohibited
by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder
of
such provision or the remaining provisions of this or any related agreement
or
instrument.
The
Assignor acknowledges that it has read and understood all the provisions of
this
Agreement, including the waiver of jury trial, and has been advised by counsel
as necessary or appropriate.
IN
WITNESS WHEREOF, Assignor, by its duly authorized representative, has executed
this Collateral Assignment of Hallador Master Purchase/Sale Agreement as of
the
date and year first written above.
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“ASSIGNOR”
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By:
/S/XXXXXX X. XXXXXX
Xxxxxx
X. Xxxxxx,
President,
Chief Executive Officer
and
Chief Financial Officer
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HALLADOR
PRODUCTION COMPANY
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By:
/S/XXXXXX X. XXXXXX
Xxxxxx
X. Xxxxxx,
President
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HALLADOR
PETROLEUM LLLP
By:
Hallador Petroleum Company, its General Partner
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By /S/XXXXXX X. XXXXXX
Xxxxxx
X. Xxxxxx,
President,
Chief Executive Officer
and
Chief Financial Officer
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STATE
OF
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SS:
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COUNTY
OF
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Subscribed
and sworn to before me, a Notary Public, in and for said county and state,
this
19th day of April, 2006, at which time Xxxxxx X. Xxxxxx, the
authorized ______________ of Hallador Petroleum Company, a Colorado
corporation, personally appeared and acknowledged the execution of the above
and
foregoing to be his voluntary act and deed on behalf of such
corporation.
My
Commission Expires:
,
Notary
Public
A
resident of County
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STATE
OF
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SS:
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COUNTY
OF
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Subscribed
and sworn to before me, a Notary Public, in and for said county and state,
this
19th day of April, 2006, at which time Xxxxxx X. Xxxxxx, the authorized
of
Hallador Production Company, a Colorado corporation, personally appeared
and
acknowledged the execution of the above and foregoing to be his voluntary
act
and deed on behalf of such corporation.
My
Commission Expires:
,
Notary
Public
A
resident of County
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STATE
OF
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)
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)
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SS:
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COUNTY
OF
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)
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Subscribed
and sworn to before me, a Notary Public, in and for said county and state,
this
19th day of April, 2006, at which time, Xxxxxx X. Xxxxxx, the authorized of
Hallador Petroleum LLLP, a Colorado limited liability limited partnership,
personally appeared and acknowledged the execution of the above and foregoing
to
be his voluntary act and deed on behalf of such limited liability limited
partnership.
My
Commission Expires:
,
Notary
Public
A
resident of County
