CONTINUING GUARANTY
FOR
VALUE
RECEIVED and in consideration of credit given or to be given, and of other
financial accommodations afforded or to be afforded to SUNRISE
COAL, LLC,
an
Indiana limited liability company (hereinafter
referred to as "Borrower"), pursuant to that certain Credit Agreement dated
April 19, 2006, (the "Credit Agreement"), and other credit and collateral
documents (hereinafter collectively referred to as "Loan Documents") executed
or
to be executed by and between the Borrower and OLD
NATIONAL BANK,
(hereinafter referred to as "Bank"), the receipt and sufficiency of which
consideration is hereby acknowledged, and as an inducement to the Bank to
extend
such financial accommodations to the Borrower, the undersigned, HALLADOR
PETROLEUM COMPANY,
a
Colorado corporation (hereinafter referred to as "Guarantor"), hereby guaranties
the full and complete payment, when due, whether at maturity, by acceleration
or
otherwise, of any and all indebtedness of the Borrower to the Bank pursuant
to
the Credit Agreement, that certain Line of Credit Note, dated of even date
herewith, payable to the order of the Bank in the original aggregate principal
amount of Thirty Million and No/100 Dollars ($30,000,000.00) and that certain
Term Loan Note to be executed and delivered by the Borrower in favor of the
Bank
at a future date as specified in the Credit Agreement (collectively the "Note")
and all extensions, renewals, re-amortizations, restatements, modifications
and
amendments thereof, together with all costs, expenses and attorneys' fees
(the
above-described obligations and liabilities are hereinafter referred to as
"Liabilities"), all without relief from valuation and appraisement laws;
provided that the Guarantor shall not be responsible or liable for any advances
or loans made by the Bank that exceed $15,000,000 unless Guarantor shall
have
approved in writing, such advances or loans (the “Guaranty
Limitation”).
If
a
Default (as such term is defined in the Credit Agreement) exists under the
Credit Agreement, then immediately upon written demand by the Bank, the
Guarantor shall pay the Liabilities as if such Liabilities constituted the
direct and primary debts and obligations of the Guarantor, subject to the
Guaranty Limitation. Except as provided herein, the Bank shall not be required
to make any demand upon or pursue or exhaust any of its rights or remedies
against the Borrower or others, including, without limitation, other guarantors,
with respect to the payment or performance of any of the Liabilities or to
pursue or exhaust any of its rights or remedies with respect to any collateral
held by the Bank.
This
Guaranty shall remain fully enforceable irrespective of any defenses which
the
Borrower may assert on the underlying Liabilities (other than the defense
of
payment of the Liabilities), including, without limitation, the failure of
consideration, breach of warranty, statute of frauds, statute of limitations,
accord and satisfaction, and usury.
This
Guaranty shall be secured by a collateral assignment of the Guarantor’s rights
in certain gas xxxxx located in the San Xxxx Basin, New Mexico, as evidenced
by
that certain Master Purchase/Sale Agreement by and between Hallador Petroleum
LLP and
Coral
Energy Resources, L.P., dated November 12, 2001.
1
This
Guaranty shall continue in force with respect to the Guarantor until the
Bank
receives written notice of the Guarantor's election not to guaranty any new
Liabilities arising after receipt of such notice. Any such notice shall not
in
any way affect or limit either (i) the promise of the Guarantor giving such
notice to pay all Liabilities existing at the time such notice is received
by
the Bank or (ii) the promises, obligations and undertakings of the remaining
guarantors, if any, with respect to any Liabilities, including without
limitation, those arising after the date of such notice. Regardless of when
a
renewal or extension of pre-termination Liabilities occurs (with or without
adjustment of interest rate or other terms), the Liabilities shall be deemed
to
have been incurred prior to the termination to the extent of the renewal
or
extension and to be fully covered and included within this
Guaranty.
The
Guarantor waives (a) notice to the Guarantor or the Borrower or other guarantors
of (i) acceptance of this Guaranty by the Bank, (ii) the Borrower incurring
additional Liabilities (but subject to the provision above regarding the
Guaranty Limitation), and (iii) the amount of the Liabilities at any time
outstanding; (b) except as provided herein, presentment for payment, demand,
protest, notice to the Guarantor, the other guarantors or the Borrower of
dishonor, nonpayment, default and non-performance with respect to any of
the
Liabilities; (c) the right to require proration among the Guarantor and other
guarantors; (d) any and all rights to require the Bank to marshal assets
of the
Borrower or any other guarantor or other party providing any security for
the
Liabilities; (e) any defense which the Borrower or other guarantors have
against
the Bank other than payment; (f) all defenses given to sureties or guarantors
at
law or in equity other than payment; and (g) all errors and omissions in
connection with the Bank's administration of the Liabilities, except actions
or
inactions which amount to bad faith, gross negligence or
willful misconduct. All remedies or actions by the Bank for payment or
fulfillment of the Liabilities are cumulative and the pursuit of one shall
not
preclude the exercise of any other rights or remedies.
The
Guarantor hereby grants to the Bank full power, in its uncontrolled discretion
and without notice to the Guarantor, the other guarantors or the Borrower,
to
deal in any manner with the Liabilities, including, without limitation, the
following powers: (a) to modify or otherwise change any terms of the
Liabilities, or the rate of interest thereon, or to grant any extension or
renewal thereof, and any other indulgence with respect thereto, and to effect
any release, compromise, or settlement with respect thereto, all in accordance
with the terms of the Loan Documents; (b) to forbear from enforcing payment
or
any term of the Liabilities; or (c) to release any other guarantor or surety
of
the Liabilities; provided, however, that (i) the Guarantor shall not be liable
for any increase in debt, interest rate, or fees unless approved in writing
by
Guarantor; and (ii) the Bank shall not release any Collateral unless approved
in
writing by Guarantor. The obligations of the Guarantor hereunder shall not
be
released, discharged, or in any way affected, nor shall the Guarantor have
any
rights or recourse against the Bank by reason of any action the Bank may
take,
omit to take, or delay in taking under the foregoing powers. The obligations
of
the Guarantor under this Guaranty shall be joint and several obligations
of the
Guarantor and any other guarantors (now existing or hereafter arising) of
the
obligations of the Borrower to the Bank.
2
Without
limiting the foregoing waivers by the Guarantor of right to notice, and without
obligating the Bank to follow the following procedure if demand is made after
the occurrence of a Default, the Bank may at any time demand payment from
the
Guarantor by mailing to the Guarantor written demand therefor addressed to
any
address set forth below and the Guarantor agrees that the sending of such
written demand as herein provided shall be sufficient demand for payment
hereunder.
Any
notice required or permitted to be given under this Guaranty may be, and
shall
be deemed effective if made in writing and delivered to the recipient's address,
telex number or facsimile number addressed to Borrower, Guarantor or Bank
at the
addresses indicated below, or as changed or modified in writing delivered
to the
other hereafter, by any of the following means: (a) hand delivery, (b) United
States first class mail, postage prepaid, (c) registered or certified mail,
postage prepaid, with return receipt requested, (d) by a reputable overnight
delivery service, or (e) by telegraph or telex when delivered to the appropriate
office for transmission, charges prepaid, with request for assurance of receipt
in a manner typical with respect to communication of that type. Notice made
in
accordance with this paragraph shall be deemed given upon receipt if delivered
by hand or wire transmission, three (3) Banking Days after mailing if mailed
by
first class, registered or certified mail, or one (1) Banking Day after deposit
with an overnight courier service if delivered by overnight courier. Borrower,
Guarantor and Bank may each change the address for service of notice upon
it by
a notice in writing to the other parties hereto.
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If
to the Bank:
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Old
National Bank
0
Xxxx Xxxx Xxxxxx
Xxxxxxxx,
Xxxxxxxx 00000
Attn:
Xxx Xxxxxxxx, Vice President
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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With
a copy
(which
shall not constitute
notice
hereunder) to
|
Xxxxxxx
XxXxxx LLP
0000
Xxxxxx Xxxxx
Xxxxxxxxxxxx,
Xxxxxxx 00000-0000
Attn:
Xxxxx X. Xxxxxx, Esq.
Facsimile:
(000) 000-0000
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|
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If
to the Borrower:
|
Sunrise
Coal, LLC
0000
X. Xxxxx Xxxx 00
Xxxxx
Xxxxx, Xxxxxxx 00000
Attn:
Xxxxx Xxxxxxxx
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
|
|
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With
copies
(which
shall not constitute
notice
hereunder) to:
|
Xxxxx
XxXxxxx LLP
Xxx
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxxx Xxxxxxxxx, Esq
Facsimile:
(000) 000-0000
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|
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If
to the Guarantor
|
0000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attn:
Xxxxxx Xxxxxx
Xxxxxxxxx:
(000) 000-0000
|
|
|
With
copies
(which
shall not constitute
notice
hereunder) to:
|
Xxxxxx,
Xxxxx & Xxxxxxx LLP
000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Attn:
Xxxxxx X. Xxxxx, Esq.
Facsimile:
(000) 000-0000
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Whenever
possible, each provision of this Guaranty shall be interpreted in such a
manner
as to be effective and valid under applicable law, but if 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 remaining provisions of this
or
any related agreement or instrument.
3
Notwithstanding
any other terms or conditions set forth in this Guaranty, the Guarantor
subordinates (until such time as the Bank has been paid in full with respect
to
the Liabilities) any claim or other right which it might now have or hereafter
acquire against the Borrower or any other person that is primarily or
contingently liable on the Liabilities that arise from the existence or
performance of the Guarantor's obligations under the Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration,
contribution, indemnification, any right to participate in any claim or remedy
of the Bank against the Borrower or any collateral security therefore which
the
Bank now has or hereafter acquires, whether or not such claim, remedy, or
right
arises in equity, or under contract, statute, or common law.
After
the
occurrence of a default under the Loan Documents, Guarantor shall have the
right
(but not the obligation) to purchase the Liabilities, which exist at the
time of
such default at a price equal to the outstanding amount of such Liabilities
(the
“Purchase Price”), and the Bank shall be obligated to sell such Liabilities on
the terms and conditions set forth herein. The Liabilities may be purchased
by
Guarantor upon the following terms:
(a) The
Purchase Price shall be payable to Guarantor in immediately available funds
within ten (10) days after Guarantor notifies the Bank in writing of its
election to purchase the Liabilities;
(b) The
transfer of title to the Liabilities shall be evidenced by a loan assignment
agreement and such other agreements, notices, and documents as Guarantor
reasonably requests to complete and sale the assignment of all of the Bank’s
right, title, and interest in and to the Liabilities and all collateral securing
such Liabilities; provided that such sale and assignment shall be without
recourse and without representation or warranty (express or implied) whatsoever;
and
(c) The
Bank
shall sell and assign the Liabilities, together with all collateral for such
liabilities, free and clear of any rights or participants or other parties
in
such Liabilities and collateral.
The
Guarantor represents to and for the benefit of the Bank, upon which the Bank
is
entitled to rely and the Guarantor acknowledges that the Bank is relying,
that
(i) the execution, delivery, and performance hereof will not violate any
law or
any other material contract, agreement, or understanding which is binding
upon
the Guarantor; (ii) this Guaranty is the valid and binding obligation of
the
Guarantor, enforceable in accordance with its terms; and (iii) the financial
statements of the Guarantor provided as of the date hereof and to be provided
hereafter to the Bank are and will be true, accurate, and complete, have
been
and will continue to be prepared on a consistent basis, and currently and
will
continue to fairly present the financial position of the Guarantor as of
the
date hereof and as of the dates of such future financial statements of the
Guarantor delivered to the Bank.
4
While
the
Liabilities are outstanding, the Guarantor agrees to provide true and correct
copies of any and all filings made by it with the SEC, including without
limitation, all 10-K and 10-Q filings.
The
Guarantor acknowledges that (i) the Guarantor is capable of and responsible
for
obtaining information on and keeping informed as to all aspects of the
Borrower's business, including, without limitation, its financial affairs
and
business prospects, and the status of the Liabilities from time to time and
(ii)
the Bank has no responsibility to so inform the Guarantor.
The
Guarantor acknowledges that separate guaranties may be given in connection
with
the Liabilities (including other guaranties by the Guarantor) and this Guaranty
shall not be modified, amended, limited (other than in accordance with the
terms
hereof) or extinguished if one or more of the terms of the other guaranty
agreements differ from those of this Guaranty or are subsequently amended,
modified, limited, and extinguished. The execution of this Guaranty shall
not
affect the validity or enforceability of any existing guaranties, which
guaranties shall remain in full force and effect. All obligations hereunder
shall continue, notwithstanding the incapacity or lack of authority of the
other
guarantors, and any failure by the Bank to file, pursue, or enforce a claim
against any of the other guarantors, or any waiver, release, consent, or
other
accommodation given or provided to any of the other guarantors, shall not
operate to release the Guarantor or other guarantors from liability hereunder,
or limit the rights of the Bank against the Guarantor or any other guarantor.
The failure of any other person to sign this Guaranty or any other guaranty
shall not release or affect the liability of the signer hereof. The Loan
Documents have been submitted to the Guarantor for examination, and the
Guarantor acknowledges that, by execution of this Guaranty, the Guarantor
has
reviewed and approved the Loan Documents.
This
writing is intended by the parties hereto as a final expression of this Guaranty
and is also intended as a complete and exclusive statement of the terms of
that
agreement. No course of dealing, course of performance or trade usage, and
no
parole evidence of any nature, shall be used to supplement or modify any
terms
hereof.
The
Guarantor further agrees that, to the extent that the Borrower makes a payment
or payments to the Bank, or the Bank receives any proceeds of collateral,
which
payment or payments or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside, or otherwise is required to
be
repaid to the Borrower, its estate, trustee, receiver or any other party,
including, without limitation, under any bankruptcy law, state or federal
law,
common law or equitable cause, then to the extent of such payment or repayment,
the Liabilities or part thereof which has been paid, reduced, or satisfied
by
such amount shall be reinstated and continued in full force and effect as
of the
date such initial payment, reduction, or satisfaction occurred. The Guarantor
shall defend and indemnify the Bank from any claim or loss under this paragraph
with respect to the Liabilities, including the Bank's attorneys' and paralegal's
fees and expenses and other expenses in the defense of any such action or
suit.
5
The
Guarantor agrees that the Guarantor's responsibility under the Guaranty to
pay
to the Bank the Liabilities and any payments thereof repaid as preferences
shall
not be extinguished or modified by any release of the Borrower or other party
primarily liable on the Liabilities, whether by voluntary release, settlement
of
litigation, settlement of a claim not yet resulting in litigation, settlement
of
a preference claim or otherwise. In all events the responsibility of the
Guarantor to pay the Bank and the Bank's right to recover from the Guarantor
the
full amount of the Liabilities shall extend until the Bank has received actual
payment in full in cash, and performance, of all of the Liabilities, without
regard to any modification or a release thereof, and shall continue until
such
payment, by the passage of time and the statute of limitations, cannot be
recovered by the Borrower, the Borrower as debtor in possession, a trustee
in
bankruptcy of the Borrower or any other person or organization.
This
Guaranty shall extend to and bind the successors and assigns of the Guarantor.
This Guaranty shall inure to the benefit of all affiliates, transferees,
assignees, and/or endorsees of the Bank of any part or parts or all of the
liabilities and of the Bank's successors and assigns.
THE
VALIDITY OF THIS GUARANTY, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
AND
THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF INDIANA, WITHOUT REGARD
TO
PRINCIPLES OF CONFLICTS OF LAW. THE GUARANTOR AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY 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 XXXXX,
STATE
OF INDIANA, OR, AT THE SOLE OPTION OF THE 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 GUARANTOR AND THE BANK (BY
ITS
ACCEPTANCE HEREOF) 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
THE
GUARANTOR AND THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT,
ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN THE BANK AND THE
GUARANTOR. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE BANK TO PROVIDE
THE
FINANCING DESCRIBED HEREIN OR IN THE LOAN DOCUMENTS.
The
Guaranty shall terminate and be of no further force and effect upon payment
in
full of the amounts due under the Note.
6
IN
WITNESS WHEREOF,
the
undersigned has executed this Continuing Guaranty effective as of this
19TH
day
of
April, 2006.
|
By:
/S/XXXXXX X. XXXXXX
Xxxxxx
X. Xxxxxx,
President,
Chief Executive Officer and
Chief
Financial Officer
|
|
|
U.S.
Employer Identification Number:
00-0000000
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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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BEFORE
ME, a Notary Public in and for said County and State, personally appeared
Xxxxxx
X. Xxxxxx, the duly authorized President, Chief Executive Officer and Chief
Financial Officer of HALLADOR PETROLEUM COMPANY, a Colorado corporation,
who
executed the foregoing instrument on behalf of such corporation and acknowledged
the signing and execution of said instrument to be his voluntary act and
deed.
IN
TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed my notarial
seal, on this 19TH
day of
April, 2006.
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My
Commission Expires:
|
|
|
_______________________,
Notary Public
and
Resident of _______________ County
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