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AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT

BY AND BETWEEN

HALLADOR PETROLEUM COMPANY
(a Colorado corporation)

and

[______________]
(an individual)

with respect to

SUNRISE COAL, LLC
(an Indiana limited liability company)

Dated

As of July  , 2008

DB2/20755110.1
 
 

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AMENDED AND RESTATED
PURCHASE AND SALE AGREEMENT
 
This Amended and Restated Purchase and Sale Agreement (this “Agreement”) is made
and entered into as of July __, 2008, by and between [____________] (“Seller”)
and Hallador Petroleum Company, a Colorado corporation (“Purchaser”).
 
RECITALS
 
WHEREAS, Seller and Purchaser are each members of Sunrise Coal, LLC, an Indiana
limited liability company (“Sunrise”).
 
WHEREAS, Seller and Purchaser and the other members of Sunrise are each a party
to the Amended and Restated Operating Agreement of Sunrise dated as of July 31,
2006 (the “Operating Agreement”).  Capitalized terms used and not otherwise
defined herein shall have the meaning provided in the Operating Agreement.
 
WHEREAS, Seller and Purchaser previously entered into a Purchase and Sale
Agreement wherein Seller agreed to sell and Purchaser agreed to purchase certain
membership interests held in Sunrise by Seller and certain promissory notes
issued by Sunrise in favor of Seller.
 
WHEREAS, Seller and Purchaser have determined that the Purchase and Sale
Agreement should be amended and restated to more accurately describe the assets
which Seller will sell and which Purchaser will Purchase.
 
WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to purchase
from Seller (i) the Common Units and percentage of membership interest in
Sunrise held by Seller as set forth opposite the name of Seller on Exhibit A
(the “Interest”) and (ii) an equal percentage of the Unreturned Capital Balance
held by Seller equal to the amount as set forth opposite the name of Seller on
Exhibit A (the “Unreturned Capital Balance”).
 
NOW, THEREFORE, in consideration of the promises and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Purchaser agree as follows:
 
ARTICLE 1
 
PURCHASE AND SALE
 
1.1 Agreement to Purchase and Sell.  In consideration of the representations,
warranties and agreements contained in or made pursuant to this Agreement,
Seller hereby (a) agrees to assign, transfer, convey and deliver to Purchaser,
and Purchaser agrees to accept the assignment, transfer and conveyance to it of
the Interest, together with the Preferred Return related thereto in accordance
with the Operating Agreement, and Purchaser agrees to assume all of the
obligations of Seller with respect to the Interest as of the Closing Date and
(b) agrees to sell, assign, transfer and convey or cause the sale, assignment,
transfer or conveyance to Purchaser, and Purchaser hereby agrees to purchase and
accept the sale, assignment, transfer and conveyance to it of the Unreturned
Capital Balance.
 
1.2 Purchase Price.  Upon the terms and subject to the satisfaction of the
conditions contained herein, in consideration of the aforesaid sale, assignment,
transfer and conveyance of the Interest, the Unreturned Capital Balance and the
Preferred Return, Purchaser will pay to Seller an aggregate price of
[______________] Dollars ($_________), calculated on the basis of (a) Five
Hundred Thousand and No/100 Dollars ($500,000.00) per percentage of membership
interest in Sunrise transferred to Purchaser, (b) an amount equal to the
Unreturned Capital Balance and (c) an amount equal to the unpaid Preferred
Return accrued on the Unreturned Capital Balance through the date immediately
preceding the Closing Date, as set forth opposite the name of Seller on
Exhibit A, on the terms and conditions set forth herein.
 
1.3 Closing.  Subject to the satisfaction or waiver of each of the conditions
precedent to the Closing set forth in Article 4 by the party for whose benefit
such conditions precedent exist, the closing of the transactions contemplated
hereunder (the “Closing”) shall take place on July 24, 2008 (the “Closing
Date”), at 10:00 a.m. at the offices of Morgan, Lewis & Bockius LLP, 300 South
Grand Avenue, 22nd Floor, Los Angeles, California 90071, or at such other time
and place as mutually agreed upon between Purchaser and Seller.
 
1.4 Closing Deliveries.
 
(a) At the Closing, Seller will deliver, or cause to be delivered to Purchaser:
 
(i)   (A) (x) The certificate representing the Interest or (y) the Affidavit of
Lost Certificate (the “Affidavit”) in the form attached hereto as Exhibit B and
(B) an applicable assignment in favor of Purchaser.
 
(ii) The Spousal Consent (the “Spousal Consent”), substantially in the form
attached hereto as Exhibit C, executed by Seller’s spouse.
 
(b) At the Closing, Purchaser will deliver, or cause to be delivered to Seller:
 
(i) The Purchase Price.
 
(ii) A new certificate representing the Common Units retained by Seller, if any.
 
ARTICLE 2                                
 
REPRESENTATIONS AND WARRANTIES OF SELLER
 
Seller hereby represents and warrants to Purchaser as follows:
 
2.1 Authority; Binding Obligations.  Seller has the full legal capacity and
authority to enter into this Agreement and has entered into this Agreement as
its own free act.  This Agreement (a) has been duly executed and delivered by
Seller and (b) assuming the due execution and delivery thereof by the other
parties hereto and thereto, constitutes legal, valid and binding obligations of
Seller, enforceable in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws in effect from time to time relating to or affecting the
enforcement of creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
 
2.2 Title; Liens.  Except as set forth on Schedule 2.2 hereto, Seller is the
owner of the Interest, the Unreturned Capital Balance and the Preferred Return,
free and clear of all liens, pledges and encumbrances, other than those
restrictions imposed by applicable federal and state securities laws.  At the
Closing, Seller will deliver, or cause to be delivered to Purchaser good and
valid title to the Interest, the Unreturned Capital Balance and the Preferred
Return, free and clear of all liens, pledges or encumbrances, other than those
restrictions imposed by applicable federal and state securities laws.
 
2.3 No Bankruptcy.  No voluntary proceeding or petition has been instituted by
Seller and no proceeding has been instituted or, to Seller’s knowledge, been
threatened to be instituted against Seller under the bankruptcy laws of the
United States or any other country or any political subdivision thereof.  Seller
has not made any assignment of any assets or properties for the benefit of
creditors, consented to the appointment of a receiver or trustee for any assets
or properties, been adjudicated bankrupt or made a bulk sale or taken any action
which contemplates the making of a bulk sale.  No court has entered any order
appointing a receiver or trustee for any assets or properties of Seller or has
assumed the custody of or sequestered any assets or properties of Seller and no
attachment has been made on any assets or properties of Seller.
 
2.4 Independent Decision to Sell.  Seller acknowledges that he or she has
independently and without reliance upon Purchaser made its own analysis and
decision to sell the Interest, the Unreturned Capital Balance and the Preferred
Return to Purchaser.  Seller further acknowledges that Purchaser may possess
material non-public information not known to Seller regarding or relating to
Sunrise, and Seller acknowledges that it has not requested such information and
agrees that the Purchaser shall have no liability whatsoever (and Seller hereby
waives and releases all claims which it would otherwise have) with respect to
the non-disclosure of such information either prior to the date hereof or
subsequent hereto.
 
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Purchaser hereby represents and warrants to Seller as follows:
 
3.1 Organization; Due Authorization.  Purchaser is a corporation duly formed,
validly existing and in good standing under the laws of the State of
Colorado.  This Agreement (a) has been duly authorized, executed and delivered
by Purchaser and (b) assuming the due execution and delivery thereof by the
other parties thereto, constitutes legal, valid and binding obligations of
Purchaser, enforceable in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws in effect from time to time relating to or affecting the
enforcement of creditors’ rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
 
ARTICLE 4
                                
CLOSING CONDITIONS
 
4.1 Conditions to Purchaser’s Obligations.  The obligation of Purchaser to
purchase the Interest, the Unreturned Capital Balance and the Preferred Return
pursuant to this Agreement is subject to the satisfaction prior to or on the
Closing Date of the following conditions, any of which may be waived in whole or
in part by Purchaser:
 
(a) The representations and warranties of Seller contained herein shall be true
and correct in all material respects as of the Closing Date with the same effect
as though made on the Closing Date.
 
(b) Seller shall have performed and complied with all agreements, obligations
and covenants contained herein.
 
(c) Seller shall have delivered (i) either (A) the certificate representing the
Interest or (B) the Affidavit, and (ii) an assignment in accordance with
Section 1.4(a)(i).
 
(d) Seller shall have delivered the Spousal Consent in accordance with
Section 1.4(a)(ii).
 
(e) Between the date hereof and the Closing Date, there shall have been no
material adverse change in the business, financial condition or operations of
Sunrise.
 
4.2 Conditions to Seller’s Obligations.  The obligation of Seller to sell the
Interest, the Unreturned Capital Balance and the Preferred Return pursuant to
this Agreement is subject to the satisfaction prior to or on the Closing Date of
the following conditions, any of which may be waived in whole or in part by
Seller:
 
(a) The representations and warranties of Purchaser contained herein shall be
true and correct in all material respects as of the Closing Date with the same
effect as though made on the Closing Date.
 
(b) Purchaser shall have delivered the Purchase Price.
 
ARTICLE 5
 
MISCELLANEOUS
 
5.1 Termination.  This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing Date:
 
(a) by mutual written consent of the parties hereto;
 
(b) by Purchaser, if (i) Seller fails to comply in any material respect with any
of its covenants or agreements contained herein, (ii) any of the representations
and warranties of Seller set forth in Article 2 hereof is breached or is
inaccurate in any material respect, or (iii) if there is any material adverse
change in the business, financial condition or operation of Sunrise, including,
but not limited to Sunrise’s operation of the Carlisle Mine.
 
(c) by Seller, if (i) Purchaser fails to comply in any material respect with any
of its covenants or agreements contained herein, or (ii) any of the
representations and warranties of Purchaser set forth in Article 3 hereof is
breached or is inaccurate in any material respect.
 
In the event of termination of this Agreement pursuant to Sections 5.1(b) or
5.1(c), the party entitled to terminate shall provide written notice to the
other parties and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned without further action by any party.
 
5.2 Notices.  All notices, requests and other communications to any party
hereunder shall be in writing (including facsimile or similar writing) and shall
be given to such party at its address or facsimile number set forth below, or
such other address or facsimile number as such party may hereafter specify for
the purpose to the party giving such notice.  Each such notice, request or other
communication shall be effective (a) if given by facsimile, when such facsimile
is transmitted to the facsimile number specified in this Section and the
appropriate electronic confirmation is received, or, (b) if given by overnight
mail, 72 hours after such communication is deposited with an overnight courier,
addressed as aforesaid, or (c) if given by any other means, when delivered at
the address specified in this Section.
 
If to Seller, to:
 

 
[______________]
 
[______________]
 
Tel:
 
Fax:
 
If to Purchaser, to:
 

 
Hallador Petroleum Company
 
1660 Lincoln Street, Suite 2700
 
Denver, Colorado  80264
 
Attn:  Victor P. Stabio
 
Tel:  (303) 839-5506
 
Fax:  (303) 832-3013
 
with a copy to:
 

 
Morgan, Lewis & Bockius LLP
 
300 South Grand Avenue
 
22nd Floor
 
Los Angeles, California 90071
 
Attn: Ingrid A. Myers
 
Tel:  (213) 612-2500
 
Fax:  (213) 612-2501
 
5.3 Further Assurance.  From time to time, Seller and Purchaser agree to execute
such instruments and documents and take such action as may be reasonably
necessary or appropriate to carry out the provisions of this Agreement and the
intentions of the parties as expressed herein.
 
5.4 Entire Agreement.  This Agreement together with any exhibits or schedules
attached hereto and any other agreements and documents executed and delivered in
connection herewith and therewith, constitute the entire agreement by and
between the parties and supersedes any prior understandings, agreements or
representation by or between the parties, written or oral, to the extent they
have related in any way to the subject matter hereof.
 
5.5 Amendments and Modifications.  This Agreement may be amended or modified
only by an instrument in writing duly executed by the parties hereto.
 
5.6 Successors and Assigns.  All the terms and conditions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto; provided, however, that
neither party may assign any of its rights, benefits, interest or obligations
under this Agreement without the prior written consent of the other party
hereto, except as otherwise permitted in this Section 5.6.  Purchaser’s rights
or interests under this Agreement may be assigned at any time, to any affiliate
of Purchaser, including, without limitation, to Sunrise.
 
5.7 Benefits.  Except as otherwise specifically provided herein, nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.
 
5.8 GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF INDIANA WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS
THEREOF.
 
5.9 Severability.  If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
 
5.10 Headings.  The captions and section headings used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
 
5.11 Counterparts.  This Agreement may be executed in two or more counterparts,
each of which, when executed and delivered to the other party, shall be deemed
an original, but all of which together shall constitute one and the same
instrument.
 
5.12 Entire Agreement.  This Agreement constitutes the entire agreement and
understanding among the Parties with respect to the subject matter hereof and
thereof and supersedes the Purchase and Sale Agreement dated as of [_______],
2008 in its entirety, and any and all prior agreements and understandings,
written or oral, relating to the subject matter hereof.
 
* * *
 

DB2/20755110.1
 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
 

 
SELLER:
 
 
 
 
 
SSN:                                                                
 
     
PURCHASER:
HALLADOR PETROLEUM COMPANY
a Colorado corporation
By:           
Name:                                                                
Title:                                                                
 

 

{Signature page to Purchase and Sale Agreement}
DB2/20755110.1
 
 

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Exhibit A
 
MEMBER BUYOUT SUMMARY
 

 
{see attached}
 

DB2/20755110.1
 
 

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[Missing Graphic Reference]
 

DB2/20755110.1
 
 

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Exhibit B
 
FORM OF AFFIDAVIT OF LOST CERTIFICATE
 
The undersigned (“Declarant”) hereby makes the following declaration of facts
and undertakes the following covenants for the benefit of SUNRISE COAL, LLC (the
“Company”):
 
1. Declarant was the lawful owner of membership interests in the Company
constituting [___]% of the Company (the “Securities”) represented by Membership
Certificate No. [___] of the Company (the “Certificate”).
 
2. As of [_______________], Declarant was entitled to the full and exclusive
possession of the Certificate.
 
3. The Certificate is lost and Declarant has made or caused to be made diligent
search for the Certificate and has been unable to find or recover it.  Declarant
agrees immediately to surrender the original Certificate to the Company if they
at any time hereafter come into the possession or control of the Declarant.
 
4. On [____________], Declarant entered into that certain Amended and Restated
Purchase and Sale Agreement (the “Agreement”) whereby Declarant sold to Hallador
Petroleum Company (“Hallador”), [___]% of the Securities, constituting [___]% of
the membership interests in the Company (the “Purchased Securities”).
 
5. Declarant agrees, for itself, and his successors and assigns, to fully and
completely reimburse, hold harmless, indemnify and defend the Company from and
against any and all claims, damages, losses, liabilities and expenses, including
reasonable attorneys’ fees, which may be incurred, directly or indirectly, by
the Company in connection with the presentment to the Company of the Certificate
by any person, firm, partnership, corporation or other entity other than
Hallador (collectively, the “Third Party”), whether or not the Third Party is a
holder in due course, from and after the date hereof.
 
6. Declarant hereby requests that the Company accept this Affidavit of Lost
Certificate and issue to Hallador a certificate representing the Purchased
Securities.
 
Declarant declares that the matters set forth in this document are true and
correct of Declarant’s own knowledge.
 
Signed effective as of this [___] day of [________], 2008.
 
 
__________________________________________
 
 
[Name of member]
 

DB2/20755110.1
 
 

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Exhibit C
 
FORM OF SPOUSAL CONSENT
 
I, [                                ], declare:
 
I am the spouse of [____________], and acknowledge that I may have an interest
in the issued and outstanding membership interests of Sunrise Coal, LLC, an
Indiana limited liability company (the “Company”), the Unreturned Capital
Balance and the Preferred Return.
 
I have read and understand the Amended and Restated Purchase and Sale Agreement,
dated as of the date hereof (the “Agreement”) and acknowledge that [__________]
is a party thereto.  Capitalized terms used and not defined herein will have the
meaning provided in the Agreement.
 
To whatever extent I have a marital property or other interest in the membership
interests of the Company, the Unreturned Capital Balance or the Preferred
Return, I hereby consent to the provisions of the Agreement and agree to abide
by its terms and conditions.
 
I have been advised to secure counsel of my own choosing to represent me in
connection with this matter and acknowledge that the provisions of the Agreement
have been fully explained to me by my counsel or I have declined to retain
counsel.
 
I have carefully read the Agreement and am fully aware of the content of the
Agreement and its legal effect.
 
I acknowledge that the Spousal Consent shall be attached to the Agreement and
made a part thereof.
 

 
Dated:  [                                           ]
 

 
 

 
 
[                                ]
 

DB2/20755110.1
 
 

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Schedule 2.2
 
Title; Liens
 

 
{to be completed by Seller, if none state “None”}