PSA Sunrise


    MEMBERSHIP
      INTEREST PURCHASE AGREEMENT 

     

    by
      and
      among

     

    HALLADOR
      PETROLEUM COMPANY,

     

    a
      Colorado
      corporation,

     

    and

     

    SUNRISE
      COAL, LLC,

     

    an
      Indiana
      limited liability company

     

    


     

    Dated
      as of
      July 31, 2006

     


    
      
        
          1-LA/887883.7 

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        TABLE
          OF CONTENTS

      

    

    


      
        	
                ARTICLE I

                 

              	
                DEFINITIONS

                 

              	
                2

                 

              
	
                1.1

              	
                Certain
                  Defined Terms

              	
                2

              
	
                1.2

              	
                Other
                  Defined Terms

              	
                7

              
	 	 	 
	
                ARTICLE II

              	
                REORGANIZATION

                 

              	
                7

                 

              
	
                2.1

              	
                Purchase
                  and
                  Sale of the Sunrise Interests

              	
                7

              
	
                2.2

              	
                Closing

              	
                8

              
	
                2.3

              	
                Transactions
                  to be Effected at the Closing

              	
                8

              
	 	 	 
	
                ARTICLE III

                 

              	
                REPRESENTATIONS
                  AND WARRANTIES OF SUNRISE

                 

              	
                8

                 

              
	
                3.1

              	
                Organization
                  and Good Standing

              	
                8

              
	
                3.2

              	
                Capitalization

              	
                9

              
	
                3.3

              	
                Sunrise
                  Subsidiaries.

              	
                10

              
	
                3.4

              	
                Authority
                  and
                  Enforceability

              	
                10

              
	
                3.5

              	
                No
                  Conflicts;
                  Authorizations

              	
                11

              
	
                3.6

              	
                Financial
                  Statements.

              	
                11

              
	
                3.7

              	
                No
                  Undisclosed Liabilities

              	
                12

              
	
                3.8

              	
                Coal
                  Reserves

              	
                12

              
	
                3.9

              	
                Accounts
                  Receivable

              	
                12

              
	
                3.10

              	
                Taxes.

              	
                13

              
	
                3.11

              	
                Compliance
                  with Law

              	
                13

              
	
                3.12

              	
                Authorizations

              	
                14

              
	
                3.13

              	
                Title
                  to
                  Personal Properties.

              	
                14

              
	
                3.14

              	
                Condition
                  of
                  Tangible Assets

              	
                15

              
	
                3.15

              	
                Real
                  Property

              	
                15

              
	
                3.16

              	
                Intellectual
                  Property

              	
                16

              
	
                3.17

              	
                Absence
                  of
                  Certain Changes or Events

              	
                17

              
	
                3.18

              	
                Contracts

              	
                19

              
	
                3.19

              	
                Litigation.

              	
                21

              
	
                3.20

              	
                Employee
                  Benefits

              	
                21

              
	
                3.21

              	
                Labor
                  and
                  Employment Matters

              	
                24

              
	
                3.22

              	
                Environmental.

              	
                25

              
	
                3.23

              	
                Related
                  Party
                  Transactions

              	
                28

              
	
                3.24

              	
                Insurance.

              	
                29

              
	
                3.25

              	
                Books
                  and
                  Records

              	
                29

              
	
                3.26

              	
                Brokers
                  or
                  Finders

              	
                30

              
	
                3.27

              	
                No
                  Illegal
                  Payments

              	
                30

              
	
                3.28

              	
                Suppliers
                  and
                  Customers

              	
                30

              
	
                3.29

              	
                Bank
                  Accounts

              	
                30

              
	
                3.30

              	
                Powers
                  of
                  Attorney

              	
                30

              
	
                3.31

              	
                Completeness
                  of Disclosure

              	
                31

              
	 	 	 
	
                ARTICLE IV

                 

              	
                REPRESENTATIONS
                  AND WARRANTIES OF HALLADOR

                 

              	
                31

                 

              
	
                4.1

              	
                Organization
                  and Good Standing

              	
                31

              
	
                4.2

              	
                Authority
                  and
                  Enforceability

              	
                31

              
	
                4.3

              	
                No
                  Conflicts;
                  Authorizations

              	
                31

              
	
                4.4

              	
                Purchase
                  for
                  Investment

              	
                32

              
	
                4.5

              	
                Availability
                  of Funds

              	
                32

              
	
                4.6

              	
                Brokers
                  or
                  Finders

              	
                32

              
	 	 	 
	
                ARTICLE V

                 

              	
                CERTAIN
                  COVENANTS

                 

              	
                32

                 

              
	
                5.1

              	
                Access
                  to
                  Information

              	
                32

              
	
                5.2

              	
                Conduct
                  of
                  Businesses Pending Closing

              	
                32

              
	
                5.3

              	
                No
                  Solicitation of Transactions

              	
                34

              
	
                5.4

              	
                Authorizations

              	
                34

              
	
                5.5

              	
                Public
                  Announcements

              	
                34

              
	
                5.6

              	
                Non-Disclosure
                  of Proprietary Data

              	
                35

              
	
                5.7

              	
                Disclosure
                  Schedule Update

              	
                35

              
	 	 	 
	
                ARTICLE VI

                 

              	
                CONDITIONS
                  TO
                  THE OBLIGATIONS OF HALLADOR

                 

              	
                35

                 

              
	
                6.1

              	
                Accuracy
                  of
                  Representations and Warranties

              	
                35

              
	
                6.2

              	
                Performance

              	
                36

              
	
                6.3

              	
                Absence
                  of
                  Governmental Orders

              	
                36

              
	
                6.4

              	
                Certificates

              	
                36

              
	
                6.5

              	
                Sunrise
                  Members

              	
                36

              
	
                6.6

              	
                Sunrise
                  Required Consents

              	
                36

              
	
                6.7

              	
                Articles
                  of
                  Organization

              	
                36

              
	
                6.8

              	
                Sunrise
                  Coal,
                  Inc

              	
                36

              
	 	 	 
	
                ARTICLE VII

                 

              	
                CONDITIONS
                  TO
                  THE OBLIGATIONS OF SUNRISE

                 

              	
                36

                 

              
	
                7.1

              	
                Accuracy
                  of
                  Representations and Warranties

              	
                36

              
	
                7.2

              	
                Performance

              	
                37

              
	
                7.3

              	
                Absence
                  of
                  Governmental Orders

              	
                37

              
	
                7.4

              	
                Officers’
                  Certificates

              	
                37

              
	
                7.5

              	
                Operating
                  Agreement

              	
                37

              
	 	 	 
	
                ARTICLE VIII

                 

              	
                TERMINATION

                 

              	
                37

                 

              
	
                8.1

              	
                Termination

              	
                37

              
	
                8.2

              	
                Written
                  Notice

              	
                38

              
	
                8.3

              	
                Effect
                  of
                  Termination

              	
                38

              
	
                8.4

              	
                Waiver

              	
                38

              
	
                8.5

              	
                Nonsurvival
                  of Representations and Warranties

              	
                38

              
	 	 	 
	
                ARTICLE IX

                 

              	
                GENERAL
                  PROVISIONS

                 

              	
                38

                 

              
	
                9.1

              	
                Expenses,
                  Taxes, Etc

              	
                38

              
	
                9.2

              	
                Notices

              	
                38

              
	
                9.3

              	
                Interpretation

              	
                39

              
	
                9.4

              	
                Severability

              	
                40

              
	
                9.5

              	
                Assignment

              	
                40

              
	
                9.6

              	
                No
                  Third-Party Beneficiaries

              	
                40

              
	
                9.7

              	
                Amendment

              	
                40

              
	
                9.8

              	
                No
                  Other
                  Remedies

              	
                40

              
	
                9.9

              	
                Further
                  Assurances

              	
                40

              
	
                9.10

              	
                Mutual
                  Drafting

              	
                40

              
	
                9.11

              	
                Governing
                  Law

              	
                40

              
	
                9.12

              	
                Dispute
                  Resolution

              	
                40

              
	
                9.13

              	
                Counterparts

              	
                41

              
	
                9.14

              	
                Entire
                  Agreement

              	
                42

              


      

      


    

     

    
      
        
          
            	
                    1-LA/887883.7 

                  	
                    --

                  	 


          

          


        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
           

        

      

    


    EXHIBITS:

     

    EXHIBIT
      A CARLISLE
      MINE
      DEVELOPMENT BUDGET

    


    EXHIBIT
      B FORM
      OF
      OPINION

    


    EXHIBIT
      C FORM
      OF
      CONTRIBUTION AGREEMENT

    


    SCHEDULES:

     

    1.1 SUNRISE
      KNOWLEDGE
      PERSONS AND HALLADOR KNOWLEDGE PERSONS

    


    SUNRISE
      DISCLOSURE SCHEDULE

    


     

    


    



    
      
        
          1-LA/887883.7 

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          


        

      

    



    MEMBERSHIP
      INTEREST PURCHASE AGREEMENT 

     

    MEMBERSHIP
      INTEREST
      PURCHASE AGREEMENT, dated as of July 31, 2006, by and between Hallador Petroleum
      Company, a Colorado corporation (“Hallador”) and Sunrise Coal, LLC, an Indiana
      limited liability company (“Sunrise”).

     

    RECITALS

     

    A. The
      Sunrise Members
      hold all of the currently issued membership interests in Sunrise.

     

    B. The
      Sunrise Members
      have approved, and deem it advisable and in the best interest of Sunrise, for
      Sunrise to issue the Sunrise Interests (defined below). 

     

    C. Sunrise
      desires to
      sell the Sunrise Interests to Hallador and Hallador desires to purchase the
      Sunrise Interests from Sunrise, upon the terms and subject to the conditions
      set
      forth in this Agreement and the Operating Agreement.

     

    D. In
      furtherance of
      this Agreement, the Sunrise Members and Hallador have entered into that certain
      Amended and Restated Operating Agreement of Sunrise Coal, LLC, dated as of
      the
      date hereof (the “Operating Agreement”).

     

    E. Sunrise
      and
      Hallador desire to make certain representations, warranties, covenants and
      agreements in connection with the Operating Agreement and the transactions
      contemplated hereby and thereby.

     

    NOW,
      THEREFORE, in
      consideration of the foregoing, and of the representations, warranties,
      covenants and agreements contained herein, the parties hereto hereby agree
      as
      follows:

     

    
      
        1

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE I  

    DEFINITIONS

     

    1.1  Certain
      Defined Terms.
      As used in this
      Agreement, the following terms shall have the following meanings (such
      definitions to be equally applicable to both the singular and plural forms
      of
      the terms defined):

     

    “Acquisition”
has
      the meaning
      specified in Section 2.1.

     

    “Action”
means
      any claim,
      action, suit or arbitration, or any other proceeding, in each instance by or
      before any Governmental Authority or any nongovernmental arbitration, mediation
      or other nonjudicial dispute resolution body.

     

    “Affiliate”
has
      the meaning
      set forth in Rule 12b-2 of the regulations under the Exchange Act.

     

    “Agreement”
means
      this
      Membership Interest Purchase Agreement, including all schedules and exhibits
      hereto, as it may be further amended from time to time as herein
      provided.

     

    “Agreement
      Date”
means
      July 31,
      2006.

     

    “Antitrust
      Authorities”
has
      the meaning
      specified in Section 5.4(b).

     

    “Audited
      Financial Statements”
has
      the meaning
      specified in Section 3.6(a).

     

    “Authorization”
means
      any
      authorization, approval, consent, certificate, license, permit or franchise
      of
      or from any Governmental Authority or pursuant to any Law. 

     

    “Balance
      Sheet”
has
      the meaning
      specified in Section 3.6(b).

     

    “Balance
      Sheet
      Date”
has
      the meaning
      specified in Section 3.6(b).

     

    “Benefit
      Plan”
has
      the meaning
      specified in Section 3.20(a).

     

    “Books
      and
      Records”
means
      all of the
      following which pertain to the conduct of the Sunrise Business: books, records,
      manuals and other materials, accounting books and records, continuing property
      records for property, plant and equipment, files, computer tapes, disks, other
      storage media and records, advertising matter, catalogues, price lists,
      correspondence, mailing lists, lists of customers and suppliers, distribution
      lists, photographs, production data, sales and promotional materials and
      records, purchasing materials and records, personnel records, credit records,
      manufacturing and quality control records and procedures, blueprints, research
      and development files, data and laboratory books, patent and trademark files
      and
      disclosures, media materials and plates, sales order files, litigation files,
      deeds, easements and other instruments relating to the Real Property, any Tax
      Returns filed by Sunrise, including all work papers and calculations in support
      of such Tax Returns, and any comparable information with respect to predecessors
      of Sunrise to the extent available.

     

    “CERCLA”
has
      the meaning
      specified in Section 3.22(a)(iv).

     

    “Charter
      Documents”
means
      a company’s
      certificate of formation, articles of organization, articles of incorporation,
      certificate of incorporation, bylaws, limited liability company operating
      agreement, partnership agreement, formation agreement, joint venture agreement
      or other similar organizational documents of such entity (in each case, as
      amended).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Closing”
means
      the closing
      of the transactions contemplated by this Agreement as specified in
      Section 2.2.

     

    “Closing
      Date”
has
      the meaning
      specified in Section 2.2.

     

    “Coal
      Reserves”
has
      the meaning
      specified in Section 3.8(a).

     

    “Code”
means
      the United
      States Internal Revenue Code of 1986, as amended, and any successor statute
      thereto, and the rules and regulations of the IRS thereunder.

     

    “Consents”
means
      all
      consents, waivers, assignments and other approvals and actions.

     

    “Contract”
means
      any
      agreement, contract, license, lease, commitment, arrangement or understanding,
      written or oral, including any sales order and purchase order.

     

    “Encumbrance”
means
      any
      interest (including any security interest), pledge, mortgage, lien, charge,
      adverse claim or other right of third Persons.

     

    “Environment”
has
      the meaning
      specified in Section 3.22(a)(i).

     

    “Environmental
      Action”
has
      the meaning
      specified in Section 3.22(a)(ii).

     

    “Environmental
      Clean-Up Site”
has
      the meaning
      specified in Section 3.22(a)(iii).


     

    “Environmental
      Laws”
has
      the meaning
      specified in Section 3.22(a)(iv).

     

    “Environmental
      Liabilities”
has
      the meaning
      specified in Section 3.22(a)(v).

     

    “Environmental
      Permit”
has
      the meaning
      specified in Section 3.22(a)(vi).

     

    “ERISA”
has
      the meaning
      specified in Section 3.20(a).

     

    “ERISA
      Affiliate”
has
      the meaning
      specified in Section 3.20(a).

     

    “Exchange
      Act”
means
      the
      Securities Exchange Act of 1934, as amended, and any successor statute thereto,
      and the rules and regulations of the SEC thereunder.

     

    “Financial
      Statements”
has
      the meaning
      specified in Section 3.6(a).


     

    “GAAP”
means
      U.S.
      generally accepted accounting principles, unless expressly described
      otherwise.

     

    “Governmental
      Authority”
means
      any
      international, national, Federal, state, municipal or local government,
      governmental authority, regulatory or administrative agency, governmental
      commission, department, board, bureau, agency or instrumentality, court,
      tribunal, arbitrator or arbitral body.

     

    “Governmental
      Order”
means
      any order,
      writ, rule, judgment, injunction, decree, stipulation, determination or award
      entered by or with any Governmental Authority.

     

    “Hallador”
has
      the meaning
      specified in the preamble.

     

    “Hallador
      Note”
means
      that
      certain Promissory Note dated June 1, 2006 issued by Sunrise in favor of
      Hallador in the original principal amount of up to $5,000,000.

     

    
      
        3

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Hazardous
      Substances”
has
      the meaning
      specified in Section 3.22(a)(vii).

     

    “Indebtedness”
means
      any of the
      following: (a) any
      indebtedness for borrowed money, (b) any obligations evidenced by bonds,
      debentures, notes or other similar instruments, (c) any obligations to pay
      the deferred purchase price of property or services, except trade accounts
      payable and other current Liabilities arising in the ordinary course of
      business, (d) any obligations as lessee under capitalized leases,
      (e) any indebtedness created or arising under any conditional sale or other
      title retention agreement with respect to acquired property, (f) any
      obligations, contingent or otherwise, under acceptance credit, letters of credit
      or similar facilities, and (g) any guaranty of any of the
      foregoing.

     

    “Initial
      Cash
      Payment”
means
      the initial
      payment of the Purchase Price in an amount equal to Seven Million Five Hundred
      Thousand Dollars ($7,500,000), to be made by Hallador to Sunrise on the Closing
      Date.

     

    “Intellectual
      Property”
has
      the meaning
      specified in Section 3.16.

     

    “Interim
      Balance
      Sheet”
has
      the meaning
      specified in Section 3.6(b).

     

    “Interim
      Balance
      Sheet Date”
has
      the meaning
      specified in Section 3.6(b).

     

    “Interim
      Financial Statements”
has
      the meaning
      specified in Section 3.6(a).

     

    “IRS”
means
      the
      Internal Revenue Service.

     

    “Knowledge”
means
      the actual
      knowledge after due inquiry of only the Persons listed on
      Schedule 1.1.
      Anything herein
      to the contrary notwithstanding, no Person listed on any of such schedules
      shall
      have any personal Liability with respect to any of the matters set forth in
      this
      Agreement or any representation or warranty herein being or becoming untrue,
      inaccurate or incomplete, except to the extent such Person may be liable
      hereunder as a Sunrise Member.

     

    “Law”
means
      any
      statute, law (including common law), constitution, treaty, ordinance, code,
      order, decree, judgment, rule, regulation and any other binding requirement
      or
      determination of any Governmental Entity.

     

    “Leased
      Real
      Property”
has
      the meaning
      specified in Section 3.15(a).

     

    “Liabilities”
means
      any and all
      debts, liabilities and obligations of any nature whatsoever, whether accrued
      or
      fixed, absolute or contingent or mature or unmatured.

     

    “Material
      Adverse Effect”
means
      any
      event(s) with respect to, change(s) in, or effect(s) on, a Person which,
      individually or in the aggregate, is reasonably likely to be adverse to the
      business, results of operations or financial condition of such Person in a
      manner that is material to such Person, excluding any such events, changes
      or
      effects resulting from or arising in connection with (i) changes
      or
      conditions generally affecting the coal industry or (ii) changes
      or
      conditions generally affecting the U.S. economy or financial
      markets.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “Material
      Contracts”
has
      the meaning
      specified in Section 3.18(b).


     

    “Other
      Antitrust
      Laws”
has
      the meaning
      specified in Section 3.5(b).

     

    “Operating
      Agreement”
has
      the meaning
      specified in the recitals to this Agreement.

     

    “Outstanding
      Interests”
has
      the meaning
      specified in Section 3.2(b).


     

    “Owned
      Real
      Property”
has
      the meaning
      specified in Section 3.15(a).

     

    “PCBs”
has
      the meaning
      specified in Section 3.22(i).

     

    “Pension
      Plan”
has
      the meaning
      specified in Section 3.20(b).

     

    “Permitted
      Liens”
means
      any
      (a) mechanics’, carriers’, workers’ and other similar liens arising in the
      ordinary course of business which are not delinquent and which in the aggregate
      are not material in amount, and do not interfere with the present use of the
      assets of the Sunrise Entities to which they apply; (b) liens for current
      Taxes and assessments not yet due and payable; and (c) the title and other
      interests of lessors under capital or operating leases or of licensors under
      licenses or royalty agreements; and (d) liens that are immaterial in
      character, amount, and extent and which do not detract from the value or
      interfere with the present or proposed use of the properties they
      affect.

     

    “Person”
shall
      include any
      individual, trustee, firm, corporation, partnership, limited liability company,
      Governmental Authority or other entity, whether acting in an individual,
      fiduciary or any other capacity.

     

    “Policies”
has
      the meaning
      specified in Section 3.24(a).

     

    “Purchase
      Price”
has
      the meaning
      specified in Section 2.1.

     

    “RCRA”
has
      the meaning
      specified in Section 3.22(a)(iv).

     

    “Real
      Property”
has
      the meaning
      specified in Section 3.15(a).

     

    “Release”
has
      the meaning
      specified in Section 3.22(a)(viii).

     

    “SEC”
means
      the United
      States Securities and Exchange Commission.

     

    “Securities
      Act”
means
      the
      Securities Act of 1933, as amended, and any successor statute thereto, and
      the
      rules and regulations of the SEC thereunder.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    “Sunrise”
has
      the meaning
      specified in the preamble.

     

    “Sunrise
      Business”
means
      the Sunrise
      Entities’ business of owning, operating and developing coal mines.

     

    “Sunrise
      Disclosure Schedule”
means
      the
      Disclosure Schedule dated as of the Agreement Date, as amended in accordance
      with this Agreement, as delivered to Hallador by Sunrise and forming a part
      of
      this Agreement.

     

    “Sunrise
      Entities”
means,
      collectively, Sunrise and the Sunrise Subsidiaries.

     

    “Sunrise
      Interests”
means
      the
      additional membership interests to be issued by Sunrise and purchased by
      Hallador, which shall be made up of 60 Common Units and the right to receive
      the
      Preferred Return, as those terms are defined in the Operating
      Agreement.

     

    “Sunrise
      Members”
means
      the parties
      listed on Schedule 3.2
      hereof.

     

    “Sunrise
      Required Consents”
means
      those
      consents, waivers, approvals, orders and authorizations of, notices to, and
      registrations, declarations, designations, qualifications and filings with,
      Governmental Authorities and third Persons, domestic or foreign, (a) set
      forth in Sunrise Disclosure Schedule Section 3.5(b),
      (b) required
      in order to eliminate the items set forth in Sunrise Disclosure Schedule
      Section 3.5(a)
      from such section,
      (c) that otherwise are necessary in order to make the representations and
      warranties set forth in Section 3.5
      true and correct
      as of the Closing Date and (d) with respect to financings of the Sunrise
      Entities, set forth on Sunrise Disclosure Schedule Section 1.1.

     

    “Sunrise
      Subsidiaries”
means,
      collectively, the Persons in which Sunrise has a direct or indirect equity
      or
      ownership interest in excess of 10%.

     

    “Tax”
or
“Taxes”
means
      any and all
      federal, state, local, or foreign net or gross income, gross receipts, net
      proceeds, sales, use, ad valorem, value added, franchise, bank shares,
      withholding, payroll, employment, excise, property, deed, stamp, alternative
      or
      add-on minimum, environmental, profits, windfall profits, transaction, license,
      lease, service, service use, occupation, severance, energy, unemployment, social
      security, workers’ compensation, capital, premium, and other taxes, assessments,
      customs, duties, fees, levies, or other governmental charges of any nature
      whatever, whether disputed or not, together with any interest, penalties,
      additions to tax, or additional amounts with respect thereto.

     

    “Tax
      Returns”
means
      any return,
      declaration, report, claim for refund, or information return or statement
      relating to Taxes, including any schedule or attachment thereto, and including
      any amendment thereof.

     

    “Taxing
      Authority”
means
      any
      Governmental Authority having jurisdiction with respect to any Tax.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    1.2  Other
      Defined Terms.
      In addition to
      the terms defined in Section 1.1,
      certain other
      terms are defined elsewhere in this Agreement and, whenever such terms are
      used
      in this Agreement, they shall have their respective defined
      meanings.

     

    ARTICLE II  

    REORGANIZATION

     

    2.1  Purchase
      and Sale of the Sunrise
      Interests.
      Upon the terms
      and subject to the conditions of this Agreement, at the Closing, Sunrise shall
      sell to Hallador, and Hallador shall purchase from Sunrise, the Sunrise
      Interests free and clear of all Encumbrances. The aggregate purchase price
      for
      the Sunrise Interests consists of the Initial Cash Payment and the additional
      capital contributions to be made to Sunrise by Hallador pursuant to the Hallador
      Capital Commitment as set forth in the Operating Agreement (the “Purchase
      Price”). The
      purchase and
      sale of the Sunrise Interests is referred to in this Agreement as the
“Acquisition.” 

     

    
      
        
        

      

      
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    2.2  Closing.
      Subject to the fulfillment or waiver of the conditions
      precedent set forth in Article VI
      and Article VII,
      the consummation
      of the transactions contemplated by this Agreement (the “Closing”) shall take
      place at the offices of Morgan, Lewis & Bockius LLP, Los Angeles,
      California, at 9:00 a.m., local time (a) on
      July 31, 2006, or (b) at
      such other
      date, time or place as the parties hereto may agree upon in writing. The date
      on
      which the transactions contemplated by Section 2.1
      hereof are
      consummated is referred to herein as the “Closing Date.”

     

    2.3  Transactions
      to be Effected at the
      Closing. 

     

    2.3.1  At
      the Closing
      Hallador shall deliver to Sunrise (i) the Initial Cash Payment in
      immediately available funds by deposit to an account of Sunrise at Old National
      Bank, (ii) a certificate of Hallador, dated the Closing Date, certifying as
      to
      the matters requested by Sunrise pursuant to Section 7.4,
      (iii) the
      cancelled Hallador Note and (iv) all other documents, instruments or
      certificates required to be delivered by Hallador at or prior to the Closing
      pursuant to Article VII. 

     

    2.3.2  At
      the Closing
      Sunrise shall deliver to Hallador (i) payment in cash in full of the
      outstanding principal amount of the Hallador Note plus all accrued interest
      thereon in an amount equal to Five Million Forty Three Thousand Five Hundred
      Twenty Eight Dollars and Seventy Seven Cents ($5,043,528.77) by deposit of
      immediately available funds into an account of Hallador at Old National Bank,
      (ii) certificates for the Sunrise Interests, (iii) certificates of
      Sunrise dated the Closing Date, certifying as to the matters requested by
      Hallador pursuant to Sections 6.4
      and 6.5,
      (iv) an
      opinion or opinions of Krieg DeVault LLP substantially in the form attached
      hereto as Exhibit B,
      (v) all
      other documents and instruments necessary to vest in Hallador all of Sunrise’s
      right, title and interest in and to the Sunrise Interests, free and clear of
      all
      Encumbrances, and (iv) all other documents, instruments or certificates
      required to be delivered by Sunrise at or prior to the Closing pursuant to
      Article VI.

     

    ARTICLE III  

    REPRESENTATIONS
      AND WARRANTIES OF SUNRISE

     

    Sunrise
      represents
      and warrants to Hallador as of the date hereof and as of the Closing Date that
      the statements contained in this Article III
      are true and
      correct, except as set forth in the Sunrise Disclosure Schedule. The Sunrise
      Disclosure Schedule shall be arranged in paragraphs corresponding to each
      representation and warranty set forth in this Article III,
      but the
      disclosures in any Section of the Sunrise Disclosure Schedule shall qualify
      any other Section in Article III
      to the extent each
      disclosure specifically references such other Section; provided, however, that
      the mere inclusion of an item in the Sunrise Disclosure Schedule as an exception
      to a representation or warranty shall not be deemed an admission by Sunrise
      that
      such item represents a material exception or fact, event or circumstance or
      that
      such item is reasonably likely to result in a Material Adverse Effect with
      respect to Sunrise. 

     

    3.1  Organization
      and Good
      Standing.

     

    (a)  Each
      of the Sunrise
      Entities is a limited liability company, validly existing and in good standing
      under the Laws of the jurisdiction of its formation, has all requisite power
      to
      own, lease and operate its properties and to carry on its business as now being
      conducted and as proposed to be conducted, and is duly qualified to do business
      and is in good standing as a foreign Person in each jurisdiction in which it
      owns or leases property or conducts any business so as to require such
      qualification. The Sunrise Disclosure Schedule lists each jurisdiction in which
      the Sunrise Entities are qualified to do business.

     

    (b)  Each
      of the Sunrise
      Entities has complied with and is not in default under its Charter Documents.
      The Charter Documents of the Sunrise Entities in the forms attached to the
      Sunrise Disclosure Schedule are the Charter Documents of each Sunrise Entity
      as
      in effect on the date of this Agreement and as of the Closing Date.


     

    
      
        
        

      

      
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    3.2  Capitalization.

     

    (a)  The
      outstanding
      membership interests in Sunrise will, upon issuance of the Sunrise Interests
      to
      Hallador, consist of one hundred (100) Common Units (as defined in the Operating
      Agreement) and the rights to receive the Preferred Return as provided in the
      Operating Agreement. All of the Outstanding Interests were and the Sunrise
      Interests will be issued in compliance with all applicable federal and state
      securities Laws. The Sunrise Interests will be issued to Hallador free and
      clear
      of all Encumbrances, other than pursuant to the Operating Agreement.


     

    (b)  Schedule
      3.2
      contains a true
      and complete list of the record holders of the membership interests in Sunrise
      outstanding as of the date hereof (the “Outstanding Interests”) and sets forth
      the full name, current address and number of Outstanding Interests owned by
      each. 

     

    (c)  Except
      for the
      Outstanding Interests, Sunrise does not have outstanding equity securities
      of
      any kind. Except for this Agreement and the Operating Agreement, Sunrise is
      not
      party to any Contract obligating Sunrise, directly or indirectly, to issue
      additional securities and there is no circumstance or condition that may give
      rise to a claim by any Person that such Person is entitled to acquire any
      securities of Sunrise. 

     

    (d)  None
      of the
      Outstanding Interests were issued or have been transferred in violation of,
      or
      are subject to, any preemptive rights, rights of first offer or subscription
      agreements. Sunrise is not party to any stockholder agreements, voting
      agreements, voting trusts or any such other similar arrangements with respect
      to
      the transfer, voting or other rights associated with its securities, and there
      are no such agreements to which Sunrise is not a party. Sunrise does not have
      outstanding or authorized any stock appreciation, phantom stock, profit
      participation, or similar rights.

     

    (e)  Sunrise
      has not
      repurchased or otherwise reacquired any of its securities. There are no
      obligations, contingent or otherwise, of Sunrise to repurchase, redeem or
      otherwise acquire any of its securities. There are no declared or accrued unpaid
      dividends with respect to any of Sunrise’s securities. 

     

    (f)  Sunrise
      does not
      have outstanding any bonds, debentures, notes or other obligations or debt
      securities the holders of which have the right to vote (or convertible into,
      or
      exercisable or exchangeable for, securities having the right to vote) on any
      matter. 

     

    
      
        
        

      

      
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    3.3  Sunrise
      Subsidiaries.


     

    (a)  The
      Sunrise
      Disclosure Schedule contains a true and complete list of the Sunrise
      Subsidiaries and sets forth with respect to each such Sunrise Subsidiary the
      jurisdiction of formation, the authorized and outstanding ownership interests
      of
      such Sunrise Subsidiary, the owner(s) of record of such outstanding ownership
      interests, and the federal, state and local tax classification of such Sunrise
      Subsidiary. All of the outstanding ownership interests of each Sunrise
      Subsidiary are owned by Sunrise free and clear of all Encumbrances.

     

    (b)  Each
      Sunrise
      Subsidiary is validly existing and in good standing under the Laws of the
      jurisdiction of its formation, has all requisite power to own, lease and operate
      its properties and to carry on its business as now being conducted and as
      proposed to be conducted, and is duly qualified to do business and is in good
      standing in each jurisdiction in which it owns or leases property or conducts
      any business so as to require such qualification.

     

    (c)  Other
      than the
      ownership interests set forth in the Sunrise Disclosure Schedule, no Sunrise
      Subsidiary has outstanding securities of any kind. No Sunrise Subsidiary is
      party to any Contract obligating such Subsidiary, directly or indirectly, to
      issue any additional securities and there is no circumstance or condition that
      may give rise to a claim by any Person that such Person is entitled to acquire
      the securities of any such Subsidiary. No Sunrise Subsidiary has outstanding
      or
      authorized any stock appreciation, phantom stock, profit participation, or
      similar rights.

     

    (d)  No
      Sunrise
      Subsidiary has outstanding any bonds, debentures, notes or other obligations
      or
      debt securities the holders of which have the right to vote (or convertible
      into, or exercisable or exchangeable for, securities having the right to vote)
      on any matter.

     

    (e)  Other
      than the
      Subsidiaries set forth in the Sunrise Disclosure Schedule, none of the Sunrise
      Entities, directly or indirectly, owns any securities or other interest in
      any
      corporation, partnership, joint venture or other business association or entity,
      or to provide funds to or make any investment.

     

    (f)  There
      are no
      obligations, contingent or otherwise, of any Sunrise Entity to provide funds
      to
      or make an investment (in the form of a loan, capital contribution or otherwise)
      in any entity.

     

    3.4  Authority
      and
      Enforceability.
      Sunrise has all
      necessary power and authority to enter into this Agreement, to perform its
      obligations hereunder and to consummate the transactions contemplated hereby.
      The execution and delivery of this Agreement by Sunrise and the consummation
      by
      Sunrise of the transactions contemplated hereby have been duly authorized by
      all
      necessary limited liability company action. This Agreement has been duly
      executed and delivered by Sunrise and, assuming due authorization, execution
      and
      delivery by Hallador, constitutes the valid and binding obligation of Sunrise,
      enforceable against it in accordance with its terms, except as such
      enforceability may be limited by (i) bankruptcy,
      insolvency, reorganization, moratorium or other similar Laws affecting or
      relating to creditors’ rights generally, and (ii) the
      availability of injunctive relief and other equitable remedies. The Operating
      Agreement has been duly authorized by the Sunrise Members.

     

    
      
        
        

      

      
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    3.5  No
      Conflicts;
      Authorizations.

     

    (a)  Except
      as set forth
      in the Sunrise Disclosure Schedule, the execution and delivery of this Agreement
      by Sunrise does not, and the performance by Sunrise of its obligations hereunder
      and the consummation by Sunrise of the transactions contemplated hereby (in
      each
      case, with or without the giving of notice or lapse of time, or both) will
      not,
      directly or indirectly, (i) violate
      the
      provisions of any of the Charter Documents of any Sunrise Entity, (ii) violate
      or
      conflict with, or constitute a default, an event of default or an event creating
      rights of acceleration, termination, cancellation, imposition of additional
      obligations or loss of rights, or require a consent to assignment, under any
      Contract (A) to
      which any
      of the Sunrise Entities is a party, (B) of
      which any
      of the Sunrise Entities is a beneficiary or (C) by
      which any
      of the Sunrise Entities or any of their respective assets is bound, or
(iii) assuming
      compliance by the Sunrise Entities with the matters referred to in
      Section 3.5(b),
      violate or
      conflict with any Law, Authorization or Governmental Order applicable to any
      of
      the Sunrise Entities, or give any Governmental Authority or other Person the
      right to challenge any of the transactions contemplated hereby or to exercise
      any remedy, obtain any relief under or revoke or otherwise modify any rights
      held under, any such Law, Authorization or Governmental Order.

     

    (b)  No
      Authorization or
      Governmental Order of, registration, declaration or filing with, or notice
      to
      any Governmental Authority or other Person, is required to be made, obtained,
      performed or given to or with respect to any of the Sunrise Entities in
      connection with the execution and delivery of this Agreement.

     

    3.6  Financial
      Statements.


     

    (a)  True
      and complete
      copies of the Sunrise Entities’ unaudited consolidated financial statements
      consisting of the consolidated balance sheet of the Sunrise Entities as at
      December 31, 2005 and the related statements of income and retained earnings,
      members’ equity and cash flow for the year then ended (the “Annual Financial
      Statements”), and unaudited consolidated financial statements consisting of the
      balance sheet of the Sunrise Entities as at June 30, 2006 and the related
      statements of income and retained earnings, stockholders’ equity and cash flow
      for the six month period then ended (the “Interim Financial Statements” and
      together with the Annual Financial Statements, the “Financial Statements”), are
      included in the Sunrise Disclosure Schedule. 

     

    (b)  The
      Financial
      Statements are true, complete and correct and have been prepared in accordance
      GAAP applied on a consistent basis throughout the periods involved, subject,
      in
      the case of the Interim Financial Statements, to normal year-end adjustments
      (the effect of which will not be materially adverse) and the absence of notes
      (that, if presented, would not differ materially from those presented in the
      Annual Financial Statements). The Financial Statements are based on the books
      and records of the Sunrise Entities, and fairly present the financial condition
      of the Sunrise Entities as of the respective dates they were prepared and the
      results of the operations of the Sunrise Entities for the periods indicated.
      The
      consolidated balance sheet of the Sunrise Entities as of December 31, 2005
      is
      referred to herein as the “Balance Sheet” and the date thereof as the “Balance
      Sheet Date” and the consolidated balance sheet of the Sunrise Entities as of
      June 30, 2006 is referred to herein as the “Interim Balance Sheet” and the date
      thereof as the “Interim Balance Sheet Date.” Each of the Sunrise Entities
      maintains a standard system of accounting established and administered in
      accordance with GAAP.

     

    (c)  There
      is and has
      been no fraud, whether or not material, that involves management or other
      employees who have a significant role in the Sunrise Entities’ internal
      controls. 

     

    
      
        
        

      

      
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    3.7  No
      Undisclosed
      Liabilities.
      The Sunrise
      Entities have no Liabilities except (a)those
      which are
      adequately reflected or reserved against in the Balance Sheet as of the Balance
      Sheet Date, and (b) those
      which
      have been incurred in the ordinary course of business and consistent with past
      practice since the Balance Sheet Date and which do not, individually or in
      the
      aggregate, equal to or more than $10,000.

     

    3.8  Coal
      Reserves. 

     

    (a)  The
      Sunrise
      Entities reserve estimates of measured, indicated and inferred reserves (as
      defined in United States Geological Survey Circular 891) (the “Coal Reserves”)
      are set forth on Section 3.8
      of the Sunrise
      Disclosure Schedule.

     

    (b)  The
      Sunrise
      Entities possess the legal rights to access and extract coal from the Coal
      Reserves.

     

    (c)  None
      of the Coal
      Reserves are within an area designated as unsuitable for mining activities
      or
      under study for designation as unsuitable for mining activities under the
      Federal Surface Mining Control and Reclamation Act, 30 U.S.C. Section 1201,
      et seq. or analogous state laws.

     

    (d)  The
      Coal Reserves
      can be mined utilizing approved methods and procedures commonly used by
      competent mine operators in the region.

     

    3.9  Accounts
      Receivable.
      The accounts
      receivable of the Sunrise Entities as set forth on the Interim Balance Sheet
      or
      arising since the date thereof are, to the extent not paid in full by the
      account debtor prior to the date hereof, (a) valid
      and
      genuine, have arisen solely out of bona fide sales and deliveries of goods,
      performance of services and other business transactions in the ordinary course
      of business consistent with past practice, (b) not subject to valid defenses,
      set offs or counterclaims, and (c) collectible within 90 days after billing
      at
      the full recorded amount thereof less, in the case of accounts receivable
      appearing on the Sunrise Interim Balance Sheet, the recorded allowance for
      collection losses on the Interim Balance Sheet or, in the case of accounts
      receivable arising since the Interim Balance Sheet Date, the recorded allowance
      for collection losses shown on the accounting records of the Sunrise Entities.
      The allowance for collection losses on the Interim Balance Sheet and, with
      respect to accounts receivable arising since the Interim Balance Sheet Date,
      the
      allowance for collection losses shown on the accounting records of the Sunrise
      Entities, have been determined in accordance with GAAP consistent with past
      practice. The accounts receivable existing as of the Closing Date will be
      collectible within 90 days after billing at the full recorded amount thereof
      net
      of the reserves shown on the accounting records of the Sunrise Entities as
      of
      the Closing Date (which reserve shall be adequate and shall not represent a
      greater percentage of the accounts receivable as of the Closing Date than the
      reserve reflected in the Interim Balance Sheet represented of the accounts
      receivable reflected therein).

     

    
      
        
        

      

      
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    3.10  Taxes.


     

    (a)  Each
      of the Sunrise
      Entities has duly and timely filed all Tax Returns required to have been filed
      by or with respect to the Sunrise Entities and will duly and timely file all
      Tax
      Returns due between the date hereof and the Closing Date. Each such Tax Return
      correctly and completely reflects all liability for Taxes and all other
      information required to be reported thereon. All Taxes owed by the Sunrise
      Entities (whether or not shown on any Tax Return) have been timely paid (or,
      if
      due between the date hereof and the Closing Date, will be duly and timely paid).
      Each of the Sunrise Entities has adequately provided for, in its books of
      account and related records, all liability for all unpaid Taxes, being current
      Taxes not yet due and payable.

     

    (b)  None
      of the Sunrise
      Entities is the beneficiary of any extension of time within which to file any
      Tax Return, nor has any of the Sunrise Entities made (or had made on its behalf)
      any requests for such extensions. None of the Sunrise Entities has waived (or,
      to the Knowledge of Sunrise, is subject to a waiver of) any statute of
      limitations in respect of Taxes or has agreed to (or, to the Knowledge of
      Sunrise, is subject to) any extension of time with respect to a Tax assessment
      or deficiency.

     

    (c)  The
      Sunrise
      Disclosure Schedule indicates those Tax Returns that have been audited and
      those
      Tax Returns that currently are the subject of audit. Except as set forth in
      the
      Sunrise Disclosure Schedule there is no Action now pending or, to the Knowledge
      of Sunrise, threatened against or with respect to the Sunrise Entities in
      respect of any Tax or any assessment or deficiency. There are no liens for
      Taxes
      (other than current Taxes not yet due and payable) upon the assets of the
      Sunrise Entities. Sunrise has delivered to Hallador correct and complete copies
      of all federal income Tax Returns, examination reports, and statements of
      deficiencies assessed against or agreed to by the Sunrise Entities.

     

    (d)  The
      Sunrise
      Disclosure Schedule lists, as of the date of this Agreement, all jurisdictions
      in which any of the Sunrise Entities currently files Tax Returns. No claim
      has
      been made by an authority in a jurisdiction where any of the Sunrise Entities
      does not file Tax Returns that any of them is or may be subject to taxation
      by
      that jurisdiction or that any of them must file Tax Returns. 

     

    (e)  None
      of the Sunrise
      Entities (i) has
      ever been
      a party to any Tax allocation or sharing agreement or Tax indemnification
      agreement, (ii) has
      ever been
      a member of an affiliated, consolidated, condensed or unitary group, or
(iii) has
      any
      liability for or obligation to pay Taxes of any other Person under Treas. Reg.
      1.1502-6 (or any similar provision of Tax Law), or as transferee or successor,
      by contract or otherwise.

     

    3.11  Compliance
      with Law.

     

    (a)  Each
      of the Sunrise
      Entities has complied with each, and is not in material violation of, any
      applicable Law to which any of the Sunrise Entities or its business, operations,
      assets or properties is or has been subject. 

     

    (b)  No
      event has
      occurred and no circumstances exist that (with or without the passage of time
      or
      the giving of notice) may result in a violation of, conflict with or failure
      on
      the part of any of the Sunrise Entities to comply with, any Law. Except as
      set
      forth in the Sunrise Disclosure Schedule, none of the Sunrise Entities has
      received notice regarding any such violation of, conflict with, or failure
      to
      comply with, any Law, except such violations, conflicts or failures to comply
      that (i) have been resolved, or (ii) cannot reasonably be expected to result
      in
      a Material Adverse Effect on Sunrise or its assets or properties.

     

    
      
        
        

      

      
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    3.12  Authorizations.

     

    (a)  Except
      as set forth
      in the Sunrise Disclosure Schedule, each of the Sunrise Entities owns, holds
      or
      lawfully uses in the operation of its business all Authorizations which are
      necessary for it to conduct its business as currently conducted or as proposed
      to be conducted or for the ownership and use of the assets owned or used by
      such
      Sunrise Entity in the conduct of its business free and clear of all
      Encumbrances. The Authorizations held by the Sunrise Entities are valid and
      in
      full force and effect and none of such Authorizations will be terminated or
      impaired or become terminable as a result of the transactions contemplated
      by
      this Agreement.

     

    (b)  No
      event has
      occurred and no circumstances exist that (with or without the passage of time
      or
      the giving of notice) may result in a violation of, conflict with, failure
      on
      the part of any of the Sunrise Entities to comply with the terms of, or the
      revocation, withdrawal, termination, cancellation, suspension or modification
      of
      any Authorization. None of the Sunrise Entities has received notice regarding
      any violation of, conflict with, failure to comply with the terms of, or any
      revocation, withdrawal, termination, cancellation, suspension or modification
      of, any Authorization. None of the Sunrise Entities is in default, nor has
      any
      of the Sunrise Entities received notice of any claim of default, with respect
      to
      any Authorization.

     

    (c)  No
      Person other
      than one of the Sunrise Entities owns or has any proprietary, financial or
      other
      interest (direct or indirect) in any Authorization which any of the Sunrise
      Entities owns, possesses or uses in the operation of its business as now or
      proposed to be conducted.

     

    3.13  Title
      to
      Personal Properties.


     

    (a)  The
      Sunrise
      Disclosure Schedule sets forth a complete and accurate list of all the personal
      properties and assets owned, leased or used by any of the Sunrise Entities
      or
      otherwise used in the businesses of the Sunrise Entities as of the date of
      this
      Agreement, with a current fair market value in excess of $100,000, specifying
      whether and by whom each such asset is owned or leased and, in the case of
      leased assets, indicating the parties to and annual payments under, the lease.
      

     

    (b)  With
      respect to
      personal properties and assets that they purport to own, including all
      properties and assets reflected as owned on the Interim Balance Sheet (other
      than inventory sold in the ordinary course of business since the date thereof),
      the Sunrise Entities named on the Sunrise Disclosure Schedule have good and
      valid title to all of such properties and assets, free and clear of all
      Encumbrances other than Permitted Liens.

     

    (c)  With
      respect to
      personal properties and assets that are leased, the Sunrise Entities named
      on
      the Sunrise Disclosure Schedule have a valid leasehold interest in such
      properties and assets and all such leases are in full force and effect and
      constitute valid and binding obligations of the other party(ies) thereto. None
      of the Sunrise Entities nor any other party thereto is in violation of any
      of
      the terms of any such lease. 

     

    
      
        
        

      

      
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    3.14  Condition
      of Tangible
      Assets.
      All buildings,
      plants, leasehold improvements, structures, facilities, equipment and other
      items of tangible property and assets which are owned, leased or used by any
      of
      the Sunrise Entities are structurally sound, are in good operating condition
      and
      repair (subject to normal wear and tear given the use and age of such assets),
      are usable in the regular and ordinary course of business and conform, to the
      Knowledge of Sunrise, to all Laws and Authorizations relating to their
      construction, use and operation.

     

    3.15  Real
      Property.

     

    (a)  The
      Sunrise
      Disclosure Schedule contains (i) a
      list of all
      real property and interests in real property owned in fee by any of the Sunrise
      Entities (the “Owned Real Property”), and (ii) a
      list of all
      real property and interests in real property leased by any of the Sunrise
      Entities (the “Leased Real Property” and together with the Owned Real Property,
      the “Real Property”). The Real Property listed on the Sunrise Disclosure
      Schedule includes all interests in real property used in or necessary for the
      conduct of the businesses and operations of the Sunrise Entities as currently
      conducted and as proposed to be conducted. 

     

    (b)  With
      respect to
      each parcel of Owned Real Property:

     

    (i)  One
      of the Sunrise
      Entities has good and marketable title to each such parcel of Owned Real
      Property free and clear of all Encumbrances, except (A) Permitted
      Liens and (B) zoning
      and
      building restrictions, easements, covenants, rights of way and other similar
      restrictions of record, none of which impairs the current or proposed use of
      such Owned Real Property.

     

    (ii)  The
      legal
      description for such parcel of Owned Real Property contained in the deed thereof
      describes the property fully and accurately. All buildings, structures and
      facilities located on, and improvements to, such parcel of Owned Real Property
      are located within the boundary lines of such Owned Real Property and do not
      encroach on any easement, right of way or other encumbrance which burdens any
      portion of the Owned Real Property. No structures, facilities or other
      improvements on any parcel adjacent to the Owned Real Property encroach onto
      any
      portion of the Owned Real Property.

     

    (iii)  The
      Sunrise
      Entities have provided (or made available) to Hallador copies of the deeds
      and
      other instruments (as recorded) by which the Sunrise Entities acquired such
      parcel of Owned Real Property, and copies of all title insurance policies,
      opinions, abstracts and surveys in the possession of any of the Sunrise Entities
      relating thereto.

     

    (iv)  There
      are no
      outstanding options or rights of first refusal to purchase such parcel of Owned
      Real Property, or any portion thereof or interest therein.

     

    (c)  With
      respect to
      Leased Real Property, the Sunrise Entities have delivered (or made available)
      to
      Hallador a true and complete copy of every lease and sublease pursuant to which
      any of the Sunrise Entities is a party or by which any of them is bound. The
      applicable Sunrise Entity has peaceful, undisturbed and exclusive possession
      of
      the Leased Real Property.

     

    (d)  The
      uses for which
      the buildings, facilities and other improvements located on the Real Property
      are zoned do not restrict, or impair, the use of the Real Property for purposes
      of the business. None of the Sunrise Entities has received any notice from
      any
      Governmental Authority or other Person that the Real Property does not comply
      with all applicable building and zoning codes, deed restrictions, ordinances
      and
      rules.

     

    (e)  No
      Governmental
      Authority having the power of eminent domain over the Real Property has
      commenced or, to the Knowledge of Sunrise, intends to exercise the power of
      eminent domain or a similar power with respect to all or any part of the Real
      Property. There are no pending or, to the Knowledge of Sunrise, threatened
      condemnation, fire, health, safety, building, zoning or other land use
      regulatory proceedings, lawsuits or administrative actions relating to any
      portion of the Real Property or any other matters which do or may adversely
      effect the current use, occupancy or value thereof. None of the Sunrise Entities
      has received notice of any pending or threatened special assessment proceedings
      affecting any portion of the Real Property.

     

    (f)  The
      Real Property
      and all present uses and operations of the Real Property comply with all Laws,
      Authorizations, covenants, conditions, restrictions, easements, disposition
      agreements and similar matters affecting the Real Property. The continued use,
      occupancy and operation of the Real Property as currently used, occupied and
      operated do not constitute a nonconforming use and are not the subject of a
      special use permit under any Law.

     

    (g)  The
      Real Property
      is in suitable condition for the businesses of the Sunrise Entities as currently
      conducted and as proposed to be conducted. Each of the Sunrise Entities has
      good
      and valid rights of ingress and egress to and from all Real Property from and
      to
      the public street systems for all usual street, road and utility
      purposes.

     

    (h)  No
      Person other
      than a Sunrise Entity is in possession of any of the Real Property or any
      portion thereof, and there are no leases, subleases, licenses, concessions
      or
      other agreements, written or oral, granting to any Person other than a Sunrise
      Entity the right of use or occupancy of the Real Property or any portion
      thereof. To the Knowledge of Sunrise, no easement, utility transmission line
      or
      water main located on the Real Property adversely affects the use of the Real
      Property or any improvement on the Real Property.

     

    
      
        
        

      

      
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    3.16  Intellectual
      Property. 

     

    (a)  The
      Sunrise
      Disclosure Schedule contains an accurate and complete list of (b) all
      patents
      throughout the world, (c) all
      trademarks, trade names and service marks and applications therefore throughout
      the world, (d) all
      copyrights and applications therefor throughout the world, (e) all
      software
      and computer programs, and (f) all
      licenses
      relating to patents, patent rights, know how, trade secrets, trademarks, trade
      names, service marks, software and computer programs or other intellectual
      property, in each case issued to or used or held for use by the Sunrise Entities
      in the operation of the Sunrise Business (collectively, the “Intellectual
      Property”; provided, however, that the Sunrise Disclosure Schedule need not
      contain any Intellectual Property consisting of “off-the shelf” software or
      computer programs). Except as set forth in the Sunrise Disclosure Schedule,
      the
      Sunrise Entities are the sole and exclusive owner or licensee of, with all
      right, title and interest in and to (free and clear of any Encumbrances, other
      than Permitted Liens), the Intellectual Property. To the Knowledge of Sunrise,
      the use of any such Intellectual Property in the conduct of the Sunrise Business
      as presently conducted does not violate any rights of any third Person. The
      Sunrise Entities have not received written notice that the use of any such
      Intellectual Property in the conduct of the Sunrise Business as presently
      conducted violates any rights of any third Person.

     

    
      
        
        

      

      
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    3.17  Absence
      of Certain Changes or
      Events.
      Since the Balance Sheet Date to the date
      of this Agreement (with respect to the representation and warranty made as
      of
      the date of this Agreement) and to the Closing Date (with respect to the
      representation and warranty made as of the Closing Date):

     

    (a)  there
      has not been
      any material adverse change in the business, financial condition, operations,
      prospects or results of operations of the Sunrise Entities taken as a whole;
      

     

    (b)  None
      of the Sunrise
      Entities has amended or otherwise modified its Charter Documents;

     

    (c)  None
      of the Sunrise
      Entities has declared, set aside or paid any dividend or other distribution
      (whether in cash, stock or property) with respect to any of its securities
      other
      than customary distributions intended to enable the Sunrise Members to satisfy
      Tax liabilities associated with their respective allocable shares of Sunrise
      taxable income as determined pursuant to Section 702 and 704 of the Code
      and any similar provisions of state or local law and in all events agreed to
      by
      Hallador; 

     

    (d)  None
      of the Sunrise
      Entities has split, combined or reclassified any of its securities, or issued,
      or authorized for issuance, any securities;

     

    (e)  None
      of the Sunrise
      Entities has altered any term of any outstanding securities;

     

    (f)  None
      of the Sunrise
      Entities has (i) increased
      or
      modified the compensation or benefits payable or to become payable to any of
      their respective current or former directors, employees, contractors or
      consultants, (ii) increased
      or
      modified any bonus, severance, termination, pension, insurance or other employee
      benefit plan, payment or arrangement made to, for or with any of its current
      or
      former directors, employees, contractors or consultants or (iii) entered
      into
      any employment, severance or termination agreement;

     

    (g)  None
      of the Sunrise
      Entities has sold, leased, transferred or assigned any property or assets of
      the
      Sunrise Entities, except for the sale of inventory, in each case in the ordinary
      course of business consistent with past practice;

     

    (h)  None
      of the Sunrise
      Entities has incurred, assumed or guaranteed any Indebtedness, or modified
      the
      terms of any Indebtedness outstanding as of the Balance Sheet Date;

     

    
      
        
        

      

      
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    (i)  None
      of the Sunrise
      Entities has incurred any material Liability or created or assumed any
      Encumbrance on any asset, except for Permitted Liens, Encumbrances arising
      under
      lease financing arrangements existing as of the Balance Sheet Date and
      Encumbrances for taxes not yet due and payable with respect to which the Sunrise
      Entities maintain adequate reserves;

     

    (j)  None
      of the Sunrise
      Entities has made any loan, advance or capital contribution to, or investment
      in, any Person other than travel loans or advances in the ordinary course of
      business consistent with past practice; 

     

    (k)  None
      of the Sunrise
      Entities has entered into any Material Contract;

     

    (l)  (i) no
      Material
      Contract has been modified, (ii) no
      rights
      under any Material Contract have been waived or accelerated and (iii) no
      Contract
      that would be required to be listed as a Material Contract pursuant to
      Section 3.18
      hereof if such
      Contract were in effect on the date hereof has been terminated or
      cancelled;

     

    (m)  None
      of the Sunrise
      Entities has sold, transferred, pledged or assigned, and there has been no
      material reduction in the value of, any Intellectual Property;

     

    (n)  there
      has not been
      any labor dispute, other than individual grievances, or any activity or
      proceeding by a labor union or representative thereof to organize any employees
      of any of the Sunrise Entities;

     

    (o)  there
      has not been
      any violation of or conflict with any Law to which the business, operations,
      assets or properties of any of the Sunrise Entities are subject;

     

    (p)  None
      of the Sunrise
      Entities has agreed or entered into any arrangement to take any action which,
      if
      taken prior to the date hereof, would have made any representation or warranty
      set forth in this Article III
      untrue or
      incorrect as of the date when made; 

     

    (q)  there
      has not been
      any material damage, destruction or loss with respect to the property and assets
      of any of the Sunrise Entities, whether or not covered by
      insurance;

     

    (r)  None
      of the Sunrise
      Entities has made any change in accounting practices; or

     

    (s)  None
      of the Sunrise
      Entities has agreed, whether in writing or otherwise, to do any of the
      foregoing.

     

    
      
        
        

      

      
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    3.18  Contracts.

     

    (a)  The
      Sunrise
      Disclosure Schedule contains a complete and accurate list of each Contract
      or
      series of related Contracts to which any of the Sunrise Entities is a party
      or
      is subject, or by which any of their respective assets are bound:

     

    (i)  for
      the purchase of
      materials, supplies, goods, services, equipment or other assets and that
      involves or would reasonably be expected to involve (A) annual
      payments by any of the Sunrise Entities of $50,000 or more, or (B) aggregate
      payments by any of the Sunrise Entities of $250,000 or more;

     

    (ii)  (A) for
      the sale
      by any of the Sunrise Entities of materials, supplies, goods, services,
      equipment or other assets, and that involves (1) a specified annual minimum
      dollar sales amount by any of the Sunrise Entities of $50,000 or more, or
      (2) aggregate payments to any of the Sunrise Entities of $50,000 or more,
      or (B) pursuant
      to
      which any of the Sunrise Entities received payments of more than $100,000 in
      the
      year ended 2006 or expects to receive payments of more than $100,000 in the
      year
      ending 2006;

     

    (iii)  that
      requires any
      of the Sunrise Entities to purchase its total requirements of any product or
      service from a third party or that contains “take or pay”
provisions;

     

    (iv)  pursuant
      to which
(A) any
      of the
      Sunrise Entities purchases components for inclusion into its products other
      than
      components purchased solely on a purchase order basis or (B) pursuant
      to
      which a third party manufactures or assembles products on behalf of any of
      the
      Sunrise Entities; 

     

    (v)  that
      continues over
      a period of more than six months from the date hereof, other than arrangements
      disclosed pursuant to the preceding subparagraphs (i) and (ii); 

     

    (vi)  that
      is an
      employment, consulting, termination or severance Contract, other than any such
      Contract that is terminable at-will by any of the Sunrise Entities without
      liability to such Sunrise Entity;

     

    (vii)  that
      is a
      partnership, joint venture or similar Contract;

     

    (viii)  that
      is a
      distribution, dealer, representative or sales agency Contract;

     

    (ix)  that
      is a
(A) lease
      or
      sublease pursuant to which any of the Sunrise Entities is a party or by which
      any of them is bound or (B) Contract
      for
      the lease of personal property, in either case which provides for payments
      to or
      by any of the Sunrise Entities in any one case of $5,000 or more annually or
      $10,000 or more over the term of the lease;

     

    (x)  which
      provides for
      the indemnification by any of the Sunrise Entities of any Person, the
      undertaking by any of the Sunrise Entities to be responsible for consequential
      damages, or the assumption by any of the Sunrise Entities of any Tax,
      environmental or other Liability;

     

    (xi)  with
      any
      Governmental Authority;

     

    (xii)  that
      is a note,
      debenture, bond, equipment trust, letter of credit, loan or other Contract
      for
      Indebtedness or lending of money (other than to employees for travel expenses
      in
      the ordinary course of business) or Contract for a line of credit or guarantee,
      pledge or undertaking of the Indebtedness of any other Person;

     

    
      
        
        

      

      
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    (xiii)  for
      a charitable or
      political contribution in any one case in excess of $1,000 or any such Contracts
      in the aggregate greater than $5,000;

     

    (xiv)  for
      any capital
      expenditure or leasehold improvement in any one case in excess of $100,000
      or
      any such Contracts in the aggregate greater than $500,000;

     

    (xv)  that
      restricts or
      purports to restrict the right of any of the Sunrise Entities to engage in
      any
      line of business, acquire any property, develop or distribute any product or
      provide any service (including geographic restrictions) or to compete with
      any
      Person or granting any exclusive distribution rights, in any market, field
      or
      territory;

     

    (xvi)  that
      relates to the
      acquisition or disposition of any material business (whether by merger, sale
      of
      stock, sale of assets or otherwise); 

     

    (xvii)  that
      is a
      collective bargaining Contract or other Contract with any labor organization,
      union or association; and

     

    (xviii)  that
      is otherwise
      material to the Sunrise Entities as a whole and not previously disclosed
      pursuant to this Section 3.18.

     

    (b)  Each
      Contract
      required to be listed in Section 3.18(a)
      of the Sunrise
      Disclosure Schedule (collectively, the “Material Contracts”) is in full force
      and effect and valid and enforceable in accordance with its terms. 

     

    (c)  None
      of the Sunrise
      Entities is, and to the Knowledge of Sunrise, no other party thereto is, in
      default in the performance, observance or fulfillment of any obligation,
      covenant, condition or other term contained in any Material Contract, and none
      of the Sunrise Entities has given or received notice to or from any Person
      relating to any such alleged or potential default that has not been cured.
      To
      the Knowledge of Sunrise, no event has occurred which with or without the giving
      of notice or lapse of time, or both, may conflict with or result in a violation
      or breach of, or give any Person the right to exercise any remedy under or
      accelerate the maturity or performance of, or cancel, terminate or modify,
      any
      Sunrise Material Contract. 

     

    (d)  The
      Sunrise
      Entities have provided (or made available) accurate and complete copies of
      each
      Material Contract to Hallador.

     

    (e)  All
      Contracts other
      than Material Contracts to which any of the Sunrise Entities is a party or
      is
      subject, or by which any of their respective assets are bound are in all
      material respects valid and enforceable in accordance with their terms. None
      of
      the Sunrise Entities is in default in the performance, observance or fulfillment
      of any obligation, covenant or condition contained therein, and no event has
      occurred which with or without the giving of notice or lapse of time, or both,
      would constitute a default thereunder by any of the Sunrise Entities, except
      in
      either case where any such default or defaults could not reasonably be expected
      have, individually or in the aggregate, a material adverse effect on any of
      the
      Sunrise Entities taken as a whole. 

     

    
      
        
        

      

      
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    3.19  Litigation.

     

    (a)  There
      is no Action
      pending or, to the Knowledge of Sunrise, threatened (i) against
      or
      affecting any of the Sunrise Entities or (ii) that
      challenges or seeks to prevent, enjoin or otherwise delay the Acquisition.
      No
      event has occurred or circumstances exist that may give rise or serve as a
      basis
      for any such Action. To the Knowledge of Sunrise, there is no Action against
      any
      current or former director or employee of any of the Sunrise Entities with
      respect to which any of the Sunrise Entities has or is reasonably likely to
      have
      an indemnification obligation. 

     

    (b)  There
      is no
      unsatisfied judgment, penalty or award against or affecting any of the Sunrise
      Entities or any of their respective properties or assets. There is no
      Governmental Order to which any of the Sunrise Entities or any of their
      respective properties or assets are subject.

     

    3.20  Employee
      Benefits.

     

    (a)  The
      Sunrise
      Disclosure Schedule sets forth a complete and accurate list of all Benefit
      Plans. A current, accurate and complete copy of each Benefit Plan has been
      provided to Hallador. None of the Sunrise Entities has any intent or commitment
      to create any additional Benefit Plan or amend any Benefit Plan. “Benefit Plan”
means any “employee benefit plan” as defined in Section 3(3) of the
      Employee Retirement Income Security Act of 1974 (“ERISA”), including any
(i) nonqualified
      deferred compensation or retirement plan or arrangement which is an Employee
      Pension Benefit Plan (as defined in ERISA Section 3(2)), (ii) qualified
      defined contribution retirement plan or arrangement which is an Employee Pension
      Benefit Plan, (iii) qualified
      defined benefit retirement plan or arrangement which is an Employee Pension
      Benefit Plan (including any Multiemployer Plan (as defined in ERISA
      Section 3(37)), (iv) Employee
      Welfare Benefit Plan (as defined in ERISA Section 3(1)) or material fringe
      benefit plan or program, or (v) stock
      purchase, stock option, severance pay, employment, change-in-control, vacation
      pay, Sunrise Members awards, salary continuation, sick leave, excess benefit,
      bonus or other incentive compensation, life insurance, or other employee benefit
      plan, contract, program, policy or other arrangement, whether or not subject
      to
      ERISA, in each case which is sponsored, maintained or contributed to by any
      of
      the Sunrise Entities or any ERISA Affiliate, or with respect to which the
      Sunrise Entities or any ERISA Affiliate otherwise has any present or future
      Liability. “ERISA Affiliate” means any entity which is a member of a “controlled
      group of corporations” with, under “common control” with or a member of an
“affiliated services group” with, the any of the Sunrise Entities, as defined in
      Section 414(b), (c), (m) or (o) of the Code.

     

    (b)  Each
      Benefit Plan
      has been and is currently administered in compliance with its constituent
      documents and with all reporting, disclosure and other requirements of ERISA
      and
      the Code applicable to such Benefit Plan. Each Benefit Plan that is an Employee
      Pension Benefit Plan (as defined in Section 3(2) of ERISA) and which is
      intended to be qualified under Section 401(a) of the Code (a “Pension
      Plan”), has been determined by the Internal Revenue Service to be so qualified
      and no condition exists that would adversely affect any such determination.
      No
      Benefit Plan is a “defined benefit plan” as defined in Section 3(35) of
      ERISA.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (c)  None
      of any Sunrise
      Entity, any ERISA Affiliate or any trustee or agent of any Benefit Plan has
      been
      or is currently engaged in any prohibited transactions as defined by
      Section 406 of ERISA or Section 4975 of the Code for which an
      exemption is not applicable which could subject any Sunrise Entity, any ERISA
      Affiliate or any trustee or agent of any Benefit Plan to the tax or penalty
      imposed by Section 4975 of the Code or Section 502 of
      ERISA.

     

    (d)  There
      is no event
      or condition existing which could be deemed a “reportable event” (within the
      meaning of Section 4043 of ERISA) with respect to which the 30 day notice
      requirement has not been waived. To the Knowledge of Sunrise, no condition
      exists which could subject any of the Sunrise Entities to a penalty under
      Section 4071 of ERISA.

     

    (e)  None
      of any Sunrise
      Entity or any ERISA Affiliate is, or has been, party to any “multi employer
      plan,” as that term is defined in Section 3(37) of ERISA.

     

    (f)  True
      and correct
      copies of the most recent annual report on Form 5500 and any attached schedules
      for each Benefit Plan (if any such report was required by applicable Law) and
      a
      true and correct copy of the most recent determination letter issued by the
      Internal Revenue Service for each Pension Plan have been provided to
      Hallador.

     

    (g)  With
      respect to
      each Benefit Plan, there are no actions, suits or claims (other than routine
      claims for benefits in the ordinary course) pending or, to the Knowledge of
      Sunrise, threatened against any Benefit Plan, any Sunrise Entity, any ERISA
      Affiliate or any trustee or agent of any Benefit Plan.

     

    (h)  With
      respect to
      each Benefit Plan to which any Sunrise Entity or any ERISA Affiliate is a party
      which constitutes a group health plan subject to Section 4980B of the Code,
      each such Benefit Plan complies, and in each case has complied, with all
      applicable requirements of Section 4980B of the Code.

     

    (i)  Full
      payment has
      been made of all amounts which any Sunrise Entity or any ERISA Affiliate was
      required to have paid as a contribution to any Benefit Plan as of the last
      day
      of the most recent fiscal year of each of the Benefit Plans ended prior to
      the
      date of this Agreement, and none of Benefit Plans has incurred any “accumulated
      funding deficiency” (as defined in Section 302 of ERISA and
      Section 412 of the Code), whether or not waived, as of the last day of the
      most recent fiscal year of each such Sunrise Benefit Plan ended prior to the
      date of this Agreement.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    (j)  Each
      Benefit Plan
      is, and its administration is and has been during the six year period preceding
      the date of this Agreement, in compliance with, and none of any Sunrise Entity
      nor any ERISA Affiliate has received any claim or notice that any such Sunrise
      Benefit Plan is not in compliance with, all applicable Laws and Governmental
      Orders and prohibited transaction exemptions, including to the extent
      applicable, the requirements of ERISA.

     

    (k)  None
      of any Sunrise
      Entity nor any ERISA Affiliate is in default in performing any of its
      contractual obligations under any Sunrise Benefit Plans or any related trust
      agreement or insurance contract.

     

    (l)  There
      are no
      material outstanding Liabilities of any Benefit Plan other than Liabilities
      for
      benefits to be paid to participants in any Benefit Plan and their beneficiaries
      in accordance with the terms of such Benefit Plan.

     

    (m)  Subject
      to ERISA
      and the Code, each Benefit Plan may be amended, modified, terminated or
      otherwise discontinued by a Sunrise Entity or an ERISA Affiliate at any time
      without liability.

     

    (n)  No
      Benefit Plan
      other than a Pension Plan, retiree medical plan or severance plan provides
      benefits to any individual after termination of employment.

     

    (o)  The
      sale of the
      Sunrise Interests will not (either alone or in conjunction with any other event)
      (i) entitle
      any
      current or former director, employee, contractor or consultant of any of the
      Sunrise Entities to severance pay, unemployment compensation or any other
      payment, (ii) accelerate
      the time of payment or vesting, or increase the amount of compensation due
      to
      any such director, employee, contractor or consultant, or result in the payment
      of any other benefits to any Person or the forgiveness of any Indebtedness
      of
      any Person, (iii) result
      in any
      prohibited transaction described in Section 406 of ERISA or
      Section 4975 of the Code for which an exemption is not available, or
(iv) result
      in the
      payment or series of payments by Sunrise or any of its Affiliates to any person
      of an “excess parachute payment” within the meaning of Section 280G of the
      Code. 

     

    (p)  With
      respect to
      each Benefit Plan that is funded wholly or partially through an insurance
      policy, all premiums required to have been paid to date under the insurance
      policy have been paid, all premiums required to be paid under the insurance
      policy through the Closing will have been paid on or before the Closing and,
      as
      of the Closing, there will be no liability of any Sunrise Entity or any ERISA
      Affiliate under any insurance policy or ancillary agreement with respect to
      such
      insurance policy in the nature of a retroactive rate adjustment, loss sharing
      arrangement or other actual or contingent liability arising wholly or partially
      out of events occurring prior to the Closing.

     

    (q)  Each
      Benefit Plan
      that constitutes a “welfare benefit plan,” within the meaning of
      Section 3(1) of ERISA, and for which contributions are claimed by any
      Sunrise Entity or any ERISA Affiliate as deductions under any provision of
      the
      Code, is in compliance with all applicable requirements pertaining to such
      deduction. With respect to any welfare benefit fund (within the meaning of
      Section 419 of the Code) related to a welfare benefit plan, there is no
      disqualified benefit (within the meaning of Section 4976(b) of the Code)
      that would result in the imposition of a tax under Section 4976(a) of the
      Code. All welfare benefit funds intended to be exempt from tax under
      Section 501(a) of the Code have been determined by the Internal Revenue
      Service to be so exempt and no event or condition exists which would adversely
      affect any such determination.

     

    
      
        
        

      

      
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    3.21  Labor
      and
      Employment Matters.

     

    (a)  The
      Sunrise
      Disclosure Schedule sets forth (i) (A) a
      list of all
      managers, directors, employees, contractors and consultants of the Sunrise
      Entities (including title and position) as of the date hereof, and (B) the
      base
      compensation and benefits of each such manager, director, employee, contractor
      and consultant in the years ending 2005 and as of July 1, 2006, and (ii) a
      list of all
      former managers, directors, employees, contractors and consultants of Sunrise
      and each of its Subsidiaries who are receiving benefits or scheduled to receive
      benefits in the future, and the pension benefit, medical insurance coverage
      and
      other benefits of each such manager, director, employee, contractor and
      consultant. All managers, directors, employees, contractors and consultants
      of
      the Sunrise Entities may be terminated by the relevant Sunrise Entity at any
      time with or without cause and without any severance or other Liability to
      the
      Sunrise Entities. 

     

    (b)  None
      of the Sunrise
      Entities is a party or subject to any labor union or collective bargaining
      Contract. There have not been and there are not pending or, to the Knowledge
      of
      Sunrise, threatened any labor disputes, work stoppages, requests for
      representation, pickets, work slow-downs due to labor disagreements or any
      actions or arbitrations which involve the labor or employment relations of
      any
      of the Sunrise Entities. There is no unfair labor practice, charge or complaint
      pending, unresolved or, to the Knowledge of Sunrise, threatened before the
      National Labor Relations Board. To the Knowledge of Sunrise, no event has
      occurred or circumstance exist that may provide the basis of any work stoppage
      or other labor dispute.

     

    (c)  Each
      of the Sunrise
      Entities has complied with each, and is not in violation of any, Law relating
      to
      anti-discrimination and equal employment opportunities and there are, and have
      been, no violations of any other Law respecting the hiring, hours, wages,
      occupational safety and health, employment, promotion, termination or benefits
      of any employee or other Person. Each of the Sunrise Entities has filed all
      reports, information and notices required under any Law respecting the hiring,
      hours, wages, occupational safety and health, employment, promotion, termination
      or benefits of any employee or other Person, and will timely file prior to
      Closing all such reports, information and notices required by any Law to be
      given prior to Closing.

     

    (d)  Each
      of the Sunrise
      Entities has paid or properly accrued in the ordinary course of business all
      wages and compensation due to employees, including all vacations or vacation
      pay, holidays or holiday pay, sick days or sick pay, and bonuses.

     

    (e)  None
      of the Sunrise
      Entities is a party to any Contract which restricts any of the Sunrise Entities
      from relocating, closing or terminating any of its operations or facilities
      or
      any portion thereof. None of the Sunrise Entities have since December 31, 2005
      effectuated (i) a
“plant
      closing” (as defined in the Worker Adjustment and Retraining Notification Act of
      1988 (the “WARN Act”)) or (ii) a
“mass
      lay-off” (as defined in the WARN Act), in either case affecting any site of
      employment or facility of any of the Sunrise Entities, except in accordance
      with
      the WARN Act. The consummation of the Acquisition will not create liability
      for
      any act by any of the Sunrise Entities on or prior to the Closing Date under
      the
      WARN Act or any other Law respecting reductions in force or the impact on
      employees on plant closings or sales of businesses. 

     

    (f)  Each
      of the Sunrise
      Entities has complied and is in compliance with the requirements of the
      Immigration Reform and Control Act of 1986. The Sunrise Disclosure Schedule
      sets
      forth a true and complete list of all employees working in the United States
      who
      are not U.S. citizens and a description of the legal status under which each
      such employee is permitted to work in the United States. All employees of the
      Sunrise Entities who are performing services for any of the Sunrise Entities
      in
      the United States are legally able to work in the United States and will be
      able
      to continue to work in the United States following the Closing.

     

    
      
        
        

      

      
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    3.22  Environmental.


     

    (a)  As
      used in this
      Agreement, the following words and terms have the following
      definitions:

     

    (i)  “Environment”
means
      all air, surface water, groundwater, land, including land surface or subsurface,
      including all fish, wildlife, biota and all other natural
      resources.

     

    (ii)  “Environmental
      Action” means any claim, proceeding or other Action brought or threatened under
      any Environmental Law or otherwise asserting that any of the Sunrise Entities
      has incurred any Environmental Liability.

     

    (iii)  “Environmental
      Clean up Site” means any location that is listed or proposed for listing on the
      National Priorities List, the Comprehensive Environmental Response, Compensation
      and Liability Information System, or on any similar state or foreign list of
      sites requiring investigation or cleanup, or which is the subject of any pending
      or threatened Action related to or arising from any alleged violation of any
      Environmental Law, or at which there has been a threatened or actual Release
      of
      a Hazardous Substance.

     

    (iv)  “Environmental
      Laws” means any and all applicable Laws and Authorizations issued, promulgated
      or entered into by any Governmental Authority relating to the Environment,
      worker health and safety, mine safety, extraction of minerals, preservation,
      or
      reclamation of natural resources, or to the management, handling, use,
      generation, treatment, storage, transportation, disposal, manufacture,
      distribution, formulation, packaging, labeling, Release or threatened Release
      of
      or exposure to Hazardous Substances, whether now existing or subsequently
      amended or enacted, including but not limited to: the Comprehensive
      Environmental Response, Compensation, and Liability Act, 42 U.S.C.
      Section 9601 et seq. (“CERCLA”); the Federal Water Pollution Control Act,
      33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C.
      Section 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C.
      Section 2601 et seq.; the Surface Mining Control and Reclamation Act of
      1977, 30 U.S.C. Section 1201 et seq.; the Occupational Safety and Health
      Act, 29 U.S.C. Section 651 et seq.; the Federal Coal Mine Health and Safety
      Act of 1969, P.L. 91-173 and the Federal Mine Safety and Health Act of 1977,
      P.L. 95-164 (collectively, the “Mine Safety and Health Acts”); Title XI of the
      Organized Crime Control Act of 1970, 18 U.S.C. Ch. 40; the Emergency Planning
      and Community Right to Know Act of 1986, 42 U.S.C. Section 11001 et seq.;
      the Safe Drinking Water Act, 42 U.S.C. Section 300(f) et seq.; the
      Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the
      Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section 136 et
      seq.; the Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C.
      Section 6901 et seq.; the Toxic Substances Control Act, 15 U.S.C.
      Section 2601 et seq.; the Oil Pollution Act of 1990, 33 U.S.C.
      Section 2701 et seq.; and any similar or implementing state or local Law,
      and any non U.S. Laws and regulations of similar import, and all amendments
      or
      regulations promulgated thereunder; and any common law doctrine, including
      but
      not limited to, negligence, nuisance, trespass, personal injury, or property
      damage related to or arising out of the presence, Release, or exposure to
      Hazardous Substances or the extraction of minerals. 

     

    
      
        
        

      

      
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    (v)  “Environmental
      Liabilities” means Liabilities based upon or arising out of (A) the
      ownership
      or operation of the business of any of the Sunrise Entities or (B) the
      ownership, operation or condition of the Real Property or any other real
      property currently or formerly owned, operated or leased by any of the Sunrise
      Entities, in each case to the extent based upon or arising out of
      (i) Environmental Law, (ii) a failure to obtain, maintain or comply
      with any Environmental Permit, (iii) a Release of any Hazardous Substance
      or (iv) the use, generation, storage, transportation, treatment, sale or
      disposal of Hazardous Substances at any location.

     

    (vi)  “Environmental
      Permit” means any Authorization under Environmental Law, and includes any and
      all Governmental Orders issued or entered into by a Governmental Authority
      under
      Environmental Law.

     

    (vii)  “Hazardous
      Substances” means all explosive or radioactive materials or substances,
      hazardous or toxic materials, wastes or chemicals, petroleum, petroleum
      hydrocarbons, or petroleum products (including crude oil or any fraction
      thereof), petroleum by-products, asbestos or asbestos-containing materials,
      and
      any other materials, chemicals, substances, or wastes in any amount or
      concentration, which are now or hereafter become defined as or included in
      the
      definition of “hazardous substances,” “hazardous materials,” hazardous wastes,”
“extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,”
“toxic pollutants,” “pollutants,” “regulated substances,” “solid wastes,”
“wastes,” “contaminants,” or words of similar import, under any Environmental
      Law.

     

    (viii)  “Release”
means
      any
      spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
      escaping, leaching, dumping, or disposing of Hazardous Substances into or in
      the
      Environment.

     

    (b)  Each
      of the Sunrise
      Entities has secured, and is in material compliance with, all Environmental
      Permits required in connection with its operations and the Real Property. Each
      Environmental Permit, together with the name of the Governmental Authority
      issuing such Environmental Permit, is set forth in the Sunrise Disclosure
      Schedule. All such Environmental Permits are valid and in full force and effect
      and none of such Environmental Permits will be terminated or impaired or become
      terminable as a result of the consummation of the Acquisition. Each of the
      Sunrise Entities has been, and are currently, in material compliance with all
      Environmental Laws. Except as set forth in the Sunrise Disclosure Schedule,
      none
      of the Sunrise Entities has received notice alleging that it is not in such
      compliance with Environmental Laws.

     

    
      
        
        

      

      
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    (c)  There
      are no past,
      pending or, to the Knowledge of Sunrise, threatened Environmental Actions
      against or affecting any of the Sunrise Entities, and Sunrise is not aware
      of
      any facts or circumstances which could be expected to form the basis for any
      Environmental Action against any of the Sunrise Entities.

     

    (d)  None
      of the Sunrise
      Entities has entered into or agreed to any Governmental Order, and none of
      the
      Sunrise Entities is subject to any Governmental Order, relating to compliance
      with any Environmental Law or to investigation or cleanup of a Hazardous
      Substance under any Environmental Law.

     

    (e)  No
      Encumbrance has
      been attached to, or asserted against, the assets, property or rights of any
      of
      the Sunrise Entities pursuant to any Environmental Law, and, to the Knowledge
      of
      Sunrise, no such Encumbrance has been threatened. To the Knowledge of Sunrise,
      there are no facts, circumstances or other conditions that could be expected
      to
      give rise to any Encumbrances on or affecting any Real Property.

     

    (f)  There
      has been no
      treatment, storage, disposal or Release of any Hazardous Substance at, from,
      into, on or under any Real Property or any other property currently or formerly
      owned, operated or leased by any of the Sunrise Entities. No Hazardous
      Substances are present in, on, about or, to the Knowledge of Sunrise, migrating
      to or from any Real Property that could be expected to give rise to an
      Environmental Action against any of the Sunrise Entities.

     

    (g)  None
      of the Sunrise
      Entities has received a CERCLA 104(e) information request nor has any of the
      Sunrise Entities been named a potentially responsible party for any
      Environmental Clean-up Site. None of the Sunrise Entities has received an
      analogous notice or request from any non U.S. Governmental
      Authority.

     

    (h)  There
      are no active
      or abandoned aboveground storage tanks or underground storage tanks on, under
      or
      about the Real Property. Any aboveground or underground tanks previously
      situated on the Real Property or any other property currently or formerly owned,
      operated or leased by any of the Sunrise Entities have been removed in
      accordance with all Environmental Laws and no residual contamination, if any,
      remains at such sites in excess of applicable standards.

     

    (i)  To
      the Knowledge of
      Sunrise, there are no polychlorinated biphenyls (“PCBs”) leaking from any
      article, container or equipment on, under or about the Real Property and there
      are no such articles, containers or equipment containing PCBs. There is no
      asbestos containing material or lead based paint containing materials in at,
      on,
      under or within the Real Property.

     

    (j)  None
      of the Sunrise
      Entities has transported or arranged for the treatment, storage, handling,
      disposal, or transportation of any Hazardous Substance to any off site location
      which is an Environmental Clean up Site.

     

    (k)  None
      of the Real
      Property is an Environmental Clean up Site.

     

    (l)  The
      Sunrise
      Entities have paid all reclamation fees required by §402 of the Federal Surface
      Mining Control and Reclamation Act, 30 U.S.C. Section 1232, and any
      analogous state law.

     

    (m)  There
      are no claims
      for subsidence damage or diminution/contamination of water supplies as a result
      of mining operations pending against the Sunrise Entities.

     

    (n)  None
      of the Sunrise
      Entities have had a mining bond or other analogous form of financial assurance
      under Environmental Laws forfeited by a Governmental Authority.

     

    (o)  The
      Sunrise
      Entities have public liability insurance in force at their mining operations
      as
      required by §507(f) of the Federal Surface Mining Control and Reclamation Act,
      30 U.S.C. Section 1257, and analogous state law.

     

    (p)  The
      Sunrise
      Entities have in force insurance to guarantee the payment of benefits for which
      they may be liable under the Mine Safety and Health Acts.

     

    (q)  The
      Sunrise
      Entities have provided to Hallador true and complete copies of, or access to,
      all environmental, worker health and safety, and mine safety investigations,
      studies, audits, tests, reviews, reports and/or materials that have been
      prepared by or on behalf of any of the Sunrise Entities with respect to any
      of
      the Real Property or operations.

     

    
      
        
        

      

      
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    3.23  Related
      Party Transactions.
      Except as set
      forth in the Sunrise Disclosure Schedule, there are no Contracts of any kind,
      written or oral, entered into by any of the Sunrise Entities with, or for the
      benefit of, any officer, director or stockholder of any Sunrise Entity or any
      Affiliate of any of them, except in each case, for (a)employment
      agreements, fringe benefits and other compensation paid to directors, officers
      and employees consistent with previously established policies (including normal
      merit increases in such compensation in the ordinary course of business) and
      copies of which have been provided to Hallador and are listed on the Sunrise
      Disclosure Schedule, (b) reimbursements
      of ordinary and necessary expenses incurred in connection with their employment
      or service, and (c)
      amounts paid
      pursuant to Benefit Plans of which copies have been provided to Hallador. None
      of such Persons has any material direct or indirect ownership interest in any
      firm or corporation with which any of the Sunrise Entities has a business
      relationship, or with any firm or corporation that competes with any of the
      Sunrise Entities (other than ownership of securities in a publicly traded
      company representing less than one percent of the outstanding stock of such
      company). No officer or director of any of the Sunrise Entities or member of
      his
      or her immediate family or greater than 5% stockholder of any Sunrise Entity
      or
      any Affiliate of any of them or any employee of any of the Sunrise Entities
      is
      directly or indirectly interested in any Material Contract.

     

    
      
        
        

      

      
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    3.24  Insurance.


     

    (a)  The
      Sunrise
      Disclosure Schedule sets forth (i) an
      accurate
      and complete list of each insurance policy, binder of insurance and fidelity
      bond which covers the Sunrise Entities or their respective businesses,
      properties, assets, directors or employees (the “Policies”) and (ii) a
      list of all
      pending claims and the claims history for each Sunrise Entity during the current
      year and the preceding three years (including with respect to insurance obtained
      but not currently maintained). There are no pending claims under any of such
      Policies as to which coverage has been questioned, denied or disputed by the
      insurer or in respect of which the insurer has reserved its rights.

     

    (b)  The
      Sunrise
      Disclosure Schedule describes any self-insurance arrangement by or affecting
      any
      of the Sunrise Entities, including any reserves thereunder, and describes the
      loss experience for all claims that were self-insured in the current year and
      the preceding three years.

     

    (c)  All
      Policies are
      issued by an insurer that is financially sound and reputable, are in full force
      and effect and are enforceable in accordance with their terms and will continue
      in full force and effect with respect to the Sunrise Entities following the
      Closing and the consummation of the Acquisition. Such Policies provide adequate
      insurance coverage for the Sunrise Entities and their respective businesses,
      properties, assets and employees, and are sufficient for compliance with all
      Laws and Contracts to which any of the Sunrise Entities is a party or by which
      it is bound.

     

    (d)  All
      premiums due
      under the Policies have been paid in full or, with respect to premiums not
      yet
      due, accrued. None of the Sunrise Entities has received a notice of cancellation
      of any Policy or of any material changes that are required in the conduct of
      the
      business of any of the Sunrise Entities as a condition to the continuation
      of
      coverage under, or renewal of, any such Policy. To the Knowledge of Sunrise,
      there is no existing default or event which, with the giving of notice or lapse
      of time or both, would constitute a default under any Policy or entitle any
      insurer to terminate or cancel any Policy. Sunrise has no knowledge of any
      threatened termination of, or material premium increase with respect to, any
      Policy and none of such Policies provides for retroactive premium
      adjustments.

     

    
      
        
        

      

      
        
        

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    3.25  Books
      and
      Records.
      The books,
      records and accounts of the Sunrise Entities accurately and fairly reflect,
      in
      reasonable detail, the transactions and the assets and Liabilities of the
      Sunrise Entities. None of the Sunrise Entities has engaged in any transaction,
      maintained any bank account or used any of the funds of any of the Sunrise
      Entities other than transactions, bank accounts and funds which have been and
      are reflected in the normally maintained books and records of the business.
      The
      minute books (containing the records of the meetings, or written consents in
      lieu of such meetings, of the stockholders, the board of directors and any
      committees of the board of directors), the stock certificate books, and the
      stock record books of the Sunrise Entities are correct and complete, and have
      been maintained in accordance with sound business practices. There are no
      resolutions or other actions of the stockholders, the board of directors or
      any
      committee of the board of directors other than as disclosed in the records
      of
      the meetings and written consents contained in the minute books. At the Closing,
      all of those books and records will be in the possession of Sunrise. At the
      Closing, Sunrise will deliver, or cause to be delivered, to Hallador or its
      designee all of the minute books of the Sunrise Entities. 

     

    3.26  Brokers
      or
      Finders.
      Except as set
      forth in the Sunrise Disclosure Schedule, there is no investment banker, broker,
      finder, financial advisor or other intermediary which has been retained by
      or is
      authorized to act on behalf of the Sunrise Entities who is entitled to any
      fee
      or commission in connection with the transactions contemplated by this
      Agreement. No claim exists or will exist against the Sunrise Entities, based
      on
      any action by any of the Sunrise Entities, against Hallador for payment of
      any
“topping,” “break up” or “bust-up” fee or any similar compensation or payment
      arrangement as a result of the transactions contemplated hereby.

     

    
      
        
        

      

      
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    3.27  No
      Illegal
      Payments.
      None of the
      Sunrise Entities or any Affiliate, officer, agent or employee thereof, directly
      or indirectly, has, since inception, on behalf of or with respect to any of
      the
      Sunrise Entities, (a) made
      any
      unlawful domestic or foreign political contributions, (b)made
      any payment or
      provided services which were not legal to make or provide or which the Sunrise
      Entities or any Affiliate thereof or any such officer, employee or other Person
      should reasonably have known were not legal for the payee or the recipient
      of
      such services to receive, (c) received
      any
      payment or any services which were not legal for the payer or the provider
      of
      such services to make or provide, (d) had
      any
      material transactions or payments which are not recorded in its accounting
      books
      and records or (e) had
      any
      off-book bank or cash accounts or “slush funds.”

     

    3.28  Suppliers
      and Customers.
      The Sunrise
      Disclosure Schedule sets forth (a) the
      names of
      the 10 suppliers with the greatest dollar volume of sales to the Sunrise
      Entities in the year ended December 31, 2005 and the six-month period ended
      June
      30, 2006; (b) each
      supplier
      who constitutes a sole source of supply, or is otherwise material, to the
      Sunrise Entities; and (c) the
      names of
      the 10 customers with the greatest dollar volume of purchases from the Sunrise
      Entities in the year ended December 31, 2005 and the six-month period ended
      June 30, 2006. The relationship of the Sunrise Entities with each such
      supplier and customer are good commercial working relationships. Except as
      set
      forth on the Sunrise Disclosure Schedule, no such supplier or customer has
      canceled or otherwise terminated, or, to the Knowledge of Sunrise, threatened
      to
      cancel or otherwise terminate, its relationship with the Sunrise Entities.
      None
      of the Sunrise Entities has received notice that any such supplier or customer
      may cancel or otherwise materially and adversely modify its relationship with
      such Sunrise Entity or limit its services, supplies or materials to the such
      Sunrise entity, as a result of the consummation of the Acquisition or
      otherwise.

     

    3.29  Bank
      Accounts.
      The Sunrise
      Disclosure Schedule sets forth the name of each bank, safe deposit company
      or
      other financial institution in which any of the Sunrise Entities has an account,
      lock box or safe deposit box and the names of all persons authorized to draw
      thereon or have access thereto.

     

    3.30  Powers
      of
      Attorney.
      Except as set
      forth in the Sunrise Disclosure Schedule, there are no outstanding powers of
      attorney executed by or on behalf of any of the Sunrise Entities in favor of
      any
      Person. 

     

    
      
        
        

      

      
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    3.31  Completeness
      of Disclosure.
      No representation
      or warranty by Sunrise in this Agreement, and no statement made by Sunrise
      in
      the Sunrise Disclosure Schedule, the Exhibits attached hereto or any certificate
      furnished or to be furnished to Hallador pursuant hereto, or in connection
      with
      the negotiation, execution or performance of this Agreement, contains or will
      at
      the Closing contain any untrue statement of a material fact or omits or will
      omit to state any material fact necessary to make any statement herein or
      therein, in light of the circumstances under which they were made, not
      misleading.

     

    ARTICLE IV 

    REPRESENTATIONS
      AND WARRANTIES OF HALLADOR

     

    Hallador
      represents
      and warrants to Sunrise as of the date hereof and as of the Closing Date that
      the statements contained in this Article IV
      are true and
      correct.

     

    4.1  Organization
      and Good Standing.
      Hallador is a
      corporation duly organized, validly existing and in good standing under the
      Laws
      of the State of Colorado, has all requisite corporate power to own, lease and
      operate its properties and to carry on its business as now being conducted
      and
      as proposed to be conducted, and is duly qualified to do business and is in
      good
      standing as a foreign Person in each jurisdiction in which it owns or leases
      property or conducts any business so as to require such
      qualification.

     

    4.2  Authority
      and Enforceability.
      Hallador has the
      requisite power and authority to enter into this Agreement and to consummate
      the
      Acquisition. The execution and delivery of this Agreement and the consummation
      of the Acquisition have been duly authorized by all necessary corporate action
      on the part of Hallador. This Agreement has been duly executed and delivered
      by
      Hallador and, assuming due authorization, execution and delivery by Sunrise,
      constitutes the valid and binding obligation of Hallador, enforceable against
      it
      in accordance with its terms, except as such enforceability may be limited
      by
      (a) bankruptcy, insolvency, reorganization, moratorium or other similar
      Laws affecting or relating to creditors’ rights generally, and (b) the
      availability of injunctive relief and other equitable remedies. 

     

    4.3  No
      Conflicts; Authorizations.

     

    4.3.1  The
      execution and
      delivery of this Agreement by Hallador does not, and the performance by Hallador
      of its obligations hereunder and the consummation by Hallador of the Acquisition
      will not, (i) violate the provisions of any of the Charter Documents of
      Hallador, (ii) violate any Contract to which Hallador is a party,
      (iii) to the knowledge of Hallador, violate any Law of any Governmental
      Entity applicable to Hallador on the date hereof, or (iv) to the knowledge
      of Hallador, result in the creation of any Encumbrances upon any of the assets
      owned or used by Hallador, except in each such case where such violation or
      Encumbrances would not reasonably be expected to impair materially the ability
      of Hallador to perform its obligations under this Agreement or consummate the
      Acquisition. 

     

    4.3.2  No
      Authorization or
      Order of, registration, declaration or filing with, or notices to any
      Governmental Entity is required by Hallador in connection with the execution
      and
      delivery of this Agreement and the consummation of the Acquisition, except
      for
      (i) such filings as may be required under the HSR Act and the Other
      Antitrust Laws, or (ii) such Authorizations, Orders, registrations,
      declarations, filings and notices the failure to obtain or make which would
      not
      reasonably be expected to impair materially the ability of Hallador to perform
      its obligations under this Agreement or consummate the Acquisition.

     

    4.4  Purchase
      for Investment.
      The Sunrise
      Interests purchased by Hallador pursuant to this Agreement are being acquired
      for investment only and not with a view to any public distribution thereof.
      Hallador shall not offer to sell or otherwise dispose of, or sell or otherwise
      dispose of, the Sunrise Interests so acquired by it in violation of any of
      the
      registration requirements of the Securities Act or any state securities
      laws.

     

    
      
        
        

      

      
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    4.5  Availability
      of Funds.
      Hallador has cash
      available or has existing borrowing facilities which together are sufficient
      to
      enable it to consummate the Acquisition.

     

    4.6  Brokers
      or
      Finders.
      No broker, finder
      or investment banker is entitled to any brokerage, finder’s or other fee or
      commission in connection with the transactions contemplated by this Agreement
      based upon arrangements made by or on behalf of Hallador or any Affiliate of
      Hallador.

     

    ARTICLE V  

    CERTAIN
      COVENANTS

     

    5.1  Access
      to
      Information.
(a) From
      the
      Agreement Date through the Closing Date, but subject to any rights of third
      Persons, upon reasonable notice, the Sunrise Entities shall (i) afford
      the
      officers, employees and authorized agents and representatives of Hallador
      reasonable access during normal business hours to the offices, properties and
      Books and Records of the Sunrise Entities and (ii) furnish
      to
      the officers, employees and authorized agents and representatives of Hallador
      such additional financial and operating data and other information regarding
      the
      assets, properties and Liabilities of the Sunrise Entities and the Sunrise
      Business (or legible copies thereof) as Hallador may from time to time
      reasonably request; provided, however, that such investigation shall not
      unreasonably interfere with any of the businesses or operations of the Sunrise
      Entities. Without limiting the generality of the foregoing, the Sunrise Entities
      shall cooperate fully with Hallador’s investigation of such assets, properties
      and Liabilities and the Sunrise Business and provide copies of such documents
      in
      its possession as Hallador may reasonably request to confirm the title to any
      and all properties or assets owned or leased by the Sunrise Entities. Sunrise
      shall not be responsible for any bodily injury suffered by any of the officers,
      employees or authorized agents and representatives of Hallador conducting any
      investigation of the Sunrise Entities’ assets and properties. No investigation
      by Hallador shall affect the representations and warranties of
      Sunrise.

     

    5.2  Conduct
      of
      Businesses Pending Closing.
      From the
      Agreement Date through the Closing Date, except as set forth in Sunrise
      Disclosure Schedule Section 5.2,
      or as required by
      this Agreement or otherwise consented to or approved by the parties in writing,
      which consent or approval shall not be unreasonably withheld:

     

    (a)  The
      Sunrise
      Entities shall operate the Sunrise Business only in its usual, regular and
      ordinary manner and substantially in the same manner as heretofore conducted.
      The Sunrise Entities shall use commercially reasonable efforts to (i) preserve
      the
      Sunrise Business; (ii) maintain
      the
      services of the present officers, employees, agents and independent contractors
      of the Sunrise Entities; (iii) maintain
      the
      assets of the Sunrise Business in their current state of repair, order and
      condition, usual and ordinary wear and tear excepted and subject to requirements
      in the ordinary course of business; and (iv) maintain
      in
      effect insurance upon the assets of the Sunrise Entities and with respect to
      the
      conduct of the Sunrise Business in such amounts and of such kinds comparable
      in
      all material respects to that in effect on the Agreement Date.

     

    (b)  The
      Sunrise
      Entities shall not:

     

    (i)  amend
      the Charter
      Documents of any of the Sunrise Entities, except for the purpose of organizing
      entities for the purpose of acquiring land in the ordinary course of
      business;

     

    (ii)  incur
      or assume or
      become subject to any additional Indebtedness, except in the ordinary course
      of
      business and consistent with past practices;

     

    (iii)  declare
      or pay any
      dividend or make any other distribution to any of the Sunrise Members, other
      than distributions for payment of income Taxes due to the taxable income of
      the
      Sunrise Entities;

     

    (iv)  redeem
      or otherwise
      acquire any shares or interest of capital stock or other equity of any Sunrise
      Entity or issue any capital stock or other equity of any Sunrise Entity or
      any
      option, warrant or right relating thereto or any securities exchangeable for
      or
      convertible into any such shares or equity;

     

    (v)  permit
      or allow any
      Sunrise Entities’ assets or properties to be subject to any additional
      Encumbrance (other than Permitted Liens) or sell, transfer, lease or otherwise
      dispose of any such assets or properties, in each case except in the ordinary
      course of business and consistent with past practices;

     

    (vi)  grant
      any increase
      in salaries or commissions payable or to become payable to any employee of
      the
      Sunrise Entities, or to any sales agent or representative of the Sunrise
      Entities, except normal periodic increases in salaries and commissions in
      accordance with the Sunrise Entities’ existing compensation
      practices;

     

    (vii)  make
      any capital
      expenditure or commitment therefor for additions to property, equipment or
      facilities in excess of $100,000 in the aggregate per month, other than land
      acquisitions and expenditures associated with home building in the ordinary
      course of business and consistent with past practices, except as otherwise
      used
      in connection with the development of the Carlisle mine pursuant to the budget
      attached hereto as Exhibit A;

     

    (viii)  license,
      sell,
      transfer, pledge, modify, disclose, dispose of or permit to lapse any right
      under or respecting, or enter into any settlement regarding the breach or
      infringement of, any material Intellectual Property;

     

    (ix)  terminate,
      renew,
      enter into or amend any Material Contract or contract or agreement which would
      qualify as a Material Contract;

     

    (x)  establish
      or adopt
      any severance pay plan or arrangement with respect to, or for the benefit of,
      employees;

     

    (xi)  make
      any change in
      any method of accounting or accounting practice or policy, other than those
      required by GAAP;

     

    (xii)  engage
      in any
      transactions with a Sunrise Entity, other than transactions in the ordinary
      course and consistent with past practices; or

     

    (xiii)  agree,
      whether in
      writing or otherwise, to do any of the foregoing.

     

    
      
        32

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.3  No
      Solicitation of Transactions.
      From the
      Agreement Date through the Closing Date, none of the Sunrise Entities nor any
      of
      their representatives, Affiliates, directors, officers, employees, members,
      managers, subsidiaries or agents will solicit, consider, encourage or accept
      any
      inquiries, proposals or offers to acquire, or offer or sell, or agree to sell,
      any of the Outstanding Interests, the Sunrise Interests or the securities,
      assets or properties of any Sunrise Entities (other than sales of properties
      in
      the ordinary course of business consistent with past practices) or assist any
      third Person in preparing or soliciting such an inquiry, proposal or offer.
      The
      Sunrise Entities shall not have, and shall cause such representatives,
      Affiliates, directors, officers, employees, members, managers, subsidiaries
      and
      agents not to have, any discussions, conversations, negotiations or other
      communication with, or provide any information or data to, any Person(s)
      expressing an interest in making or effecting any such inquiry, proposal or
      offer.

     

    5.4  Authorizations.


     

    (a)  Each
      of Hallador
      and Sunrise as promptly as practicable after the Agreement Date, shall
(i) deliver,
      or
      cause to be delivered, all notices and make, or cause to be made, all such
      declarations, designations, registrations, filings and submissions under all
      statutes, laws, regulations and Governmental Orders applicable to it as may
      be
      required for it to consummate the transactions contemplated hereby and by the
      Ancillary Agreements in accordance with the terms of this Agreement and the
      Ancillary Agreements; (ii) use
      commercially reasonable efforts to obtain, or cause to be obtained, all
      authorizations, approvals, orders, consents and waivers from all Persons
      necessary to consummate the foregoing; and (iii) use
      commercially reasonable efforts to take, or cause to be taken, all other actions
      necessary, proper or advisable in order for it to fulfill its respective
      obligations hereunder and to carry out the intentions of the parties expressed
      herein.

     

    (b)  Each
      party shall
      use its commercially reasonable efforts to satisfy the conditions to Closing
      applicable to it in Article VI
      and Article VII
      as soon as
      commercially practicable.

     

    5.5  Public
      Announcements.
      Neither Sunrise
      nor Hallador shall make any public announcement with respect to this Agreement
      or the transactions contemplated hereby or thereby without the prior written
      consent of the other party hereto. The foregoing notwithstanding, any such
      public announcement may be made if required by applicable statute, law,
      regulation, Governmental Order, the NASD or NASDAQ rule or listing agreement,
      provided that the party required to make such public announcement, to the extent
      reasonably possible, shall confer with the other party concerning the timing
      and
      content of such public announcement before the same is made.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    5.6  Non-Disclosure
      of Proprietary Data.
      Each of the
      parties agrees that such party will not, at any time, make use of, divulge
      or
      otherwise disclose, directly or indirectly, any trade secret or other
      proprietary data or confidential information concerning the business or policies
      of any Sunrise Entity or of Hallador obtained in connection with the
      negotiation, execution, or performance of this Agreement. The parties’
obligations under this Section 5.6
      with respect to
      any trade secret or other proprietary data or confidential information of
      Hallador or the Sunrise Entities is independent of any obligations under the
      Confidentiality Agreement and shall survive the termination of this Agreement
      if
      this Agreement is terminated prior to Closing.

     

    5.7  Disclosure
      Schedule Update.
      Sunrise will, from
      time to time prior to the Closing, promptly supplement or amend the Sunrise
      Disclosure Schedules with respect to any matter arising after the date of this
      Agreement, which, if existing as of the date of this Agreement, would have
      been
      required to be set forth or described in the Sunrise Disclosure Schedules in
      order to make any representation or warranty set forth in this Agreement true
      and correct as of such date. Any disclosure pursuant to this
      Section 5.7
      will be deemed to
      amend and supplement the Sunrise Disclosure Schedules and to have qualified
      the
      representations and warranties contained in this Agreement. If the items
      disclosed on such supplemented or amended Sunrise Disclosure Schedules have
      had
      or could reasonably be expected to have a Material Adverse Effect and Sunrise
      shall not have cured such existing or potential Material Adverse Effect within
      10 days of such amended disclosure, then Hallador may, in accordance with
      Section 8.1,
      terminate this
      Agreement, after the expiration of the 10 day cure period, by written notice
      thereof to Sunrise; provided, however, that if Hallador does not exercise such
      right to terminate this Agreement within 5 business days thereafter, then
(i) Hallador
      will
      be deemed to have waived any right to terminate this Agreement based upon such
      amendment and supplement, (ii) Hallador
      will
      be deemed to have accepted such amendment and supplement, and (iii) such
      amendment or supplement will be deemed to amend and supplement the Sunrise
      Disclosure Schedules, as applicable. 

     

    ARTICLE VI  

    CONDITIONS
      TO THE OBLIGATIONS OF HALLADOR

     

    The
      obligations of
      Hallador to effect the transactions contemplated herein shall be subject to
      the
      fulfillment, satisfaction or waiver, on or before the Closing Date, of each
      of
      the following conditions:

     

    6.1  Accuracy
      of
      Representations and Warranties.
      The
      representations and warranties of Sunrise contained in Article III
      and taken as a
      whole shall be true and correct in all material respects at and as of the
      Closing Date with the same effect as though made at and as of the Closing Date,
      except that representations and warranties made as of, or in respect of, only
      a
      specified date or period shall be true and correct in all material respects
      in
      respect of, or as of, such date or period.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

    6.2  Performance.
      The Sunrise
      Members and the Sunrise Entities shall have performed and complied in all
      material respects with all agreements and obligations required by this Agreement
      to be performed or complied with by them on or prior to the Closing
      Date.

     

    6.3  Absence
      of
      Governmental Orders.
      No temporary or
      permanent Governmental Order shall be in effect which prohibits or makes
      unlawful consummation of the transactions contemplated hereby.

     

    6.4  Certificates.
      Sunrise shall
      have furnished Hallador with such certificates certifying as to compliance
      with
      the conditions set forth in this Article VI
      as may be
      reasonably requested by Hallador. 

     

    6.5  Sunrise
      Members.
      Each of the
      Sunrise Members shall have duly authorized and executed the Operating Agreement
      and the documents related thereto, including a contribution agreement between
      each such Sunrise Member and Sunrise in the form attached hereto as Exhibit
      C,
      and shall have delivered the same to Hallador. The Sunrise Members shall have
      duly authorized the issuance of the Sunrise Interests and the admittance of
      Hallador as a member of Sunrise. Each of the Sunrise Members that is a trust
      shall have executed and delivered to Hallador a certificate certifying as to
      the
      authority of the trustees to execute the Operating Agreement and that such
      trust
      is duly organized and validly existing under the Laws of the jurisdiction of
      its
      formation.

     

    6.6  Sunrise
      Required Consents.
      The Sunrise
      Entities shall have obtained the Sunrise Required Consents.

     

    6.7  Articles
      of
      Organization.
      The Sunrise
      Members shall have approved an amendment to the Articles of Organization of
      Sunrise that provides that Sunrise may be managed by one or more managers,
      and
      such amendment shall have been filed with and accepted by the Secretary of
      State
      of the State of Indiana.

     

    6.8  Sunrise
      Coal, Inc.
      Any assets of
      Sunrise held in the name of Sunrise Coal, Inc. shall be transferred to Sunrise
      in a manner reasonably acceptable to Hallador and Sunrise Coal, Inc. shall
      be
      dissolved and withdrawn in accordance with the laws of the State of Indiana
      and
      all other relevant jurisdictions.

     

    ARTICLE VII  

    CONDITIONS
      TO THE OBLIGATIONS OF SUNRISE

     

    The
      obligations of
      Sunrise to effect the transactions contemplated herein shall be subject to
      the
      fulfillment, satisfaction or waiver, on or before the Closing Date, of each
      of
      the following conditions:

     

    
      
        
        

      

      
        7.1

        
          

        

      

      
        
        

      

    

    7.1  Accuracy
      of
      Representations and Warranties.
      The
      representations and warranties of Hallador contained in Article IV
      and taken as a
      whole shall be true and correct in all material respects at and as of the
      Closing Date with the same effect as though made at and as of the Closing Date,
      except that representations and warranties made as of, or in respect of, only
      a
      specified date or period shall be true and correct in all material respects
      in
      respect of, or as of, such date, or period.

     

    7.2  Performance.
      Hallador shall
      have performed and complied in all material respects with all agreements and
      obligations required by this Agreement to be performed or complied with by
      it on
      or prior to the Closing Date.

     

    7.3  Absence
      of
      Governmental Orders.
      No temporary or
      permanent Governmental Order shall be in effect which prohibits or makes
      unlawful consummation of the transactions contemplated hereby.

     

    7.4  Officers’
      Certificates.
      Hallador shall
      have furnished Sunrise with such certificates of its officers certifying as
      to
      compliance with the conditions set forth in this Article VII
      as may be
      reasonably requested by Sunrise.

     

    7.5  Operating
      Agreement.
      Hallador shall
      have duly authorized and executed the Operating Agreement and the documents
      related thereto and shall have delivered the same to Sunrise.

     

    ARTICLE VIII 

    TERMINATION

     

    8.1  Termination.
      This Agreement
      may be terminated at any time prior to the Closing:

     

    (a)  by
      the mutual
      written consent of Hallador and Sunrise; or

     

    (b)  by
      either Hallador,
      on the one hand, or Sunrise, on the other hand, if (i) a
      United
      States federal or state court of competent jurisdiction or United States federal
      or state governmental, regulatory or administrative agency or commission shall
      have issued an order, decree or ruling or taken any other action permanently
      restraining, enjoining or otherwise prohibiting the transactions contemplated
      by
      this Agreement and such order, decree, ruling or other action shall have become
      final and non-appealable; provided, however, that the party seeking to terminate
      this Agreement pursuant to this clause (i) shall have used all reasonable
      efforts to remove such injunction, order or decree; or (ii) if
      the
      Closing shall not have occurred by August 31, 2006; provided, however, that
      the
      right to terminate this Agreement pursuant to this subsection shall not be
      available to any party or parties whose failure to fulfill any obligation under
      this Agreement shall have been the cause of, or shall have resulted in, the
      failure of the Closing to occur prior to such date; or

     

    (c)  by
      Hallador, as a
      result of the breach in any material respect of any of the representations
      and
      warranties of the Sunrise contained in Article III
      or the failure by
      Sunrise to perform and comply in any material respect with any of the agreements
      and obligations required by this Agreement to be performed or complied with
      by
      Sunrise, provided that such breach or failure is not cured within 30 days of
      Sunrise’s receipt of a written notice from Hallador that such a breach or
      failure has occurred; 

     

    (d)  by
      Sunrise, as a
      result of the breach in any material respect of any of the representations
      and
      warranties of Hallador contained in Article IV
      or the failure by
      Hallador to perform and comply in any material respect with any of the
      agreements and obligations required by this Agreement to be performed or
      complied with by Hallador, provided that such breach or failure is not cured
      within 30 days of Hallador’s receipt of a written notice from Sunrise that such
      a breach or failure has occurred; or

     

    (e)  in
      accordance with
      Section 5.7,
      by Hallador
      immediately upon written notice to Sunrise within the 5 business day period
      after the expiration of the 10 day cure period as provided therein.

     

    
      
        
        

      

      
        37

        
          

        

      

      
        
        

      

    

    8.2  Written
      Notice.
      In order to
      terminate this Agreement pursuant to Section 8.1,
      the party so
      acting shall give written notice of such termination to the other parties,
      specifying the grounds thereof.

     

    8.3  Effect
      of
      Termination.
      In the event of
      the termination of this Agreement in accordance with Section 8.1,
      this Agreement
      (other than Sections 9.1
      and 9.12,
      which shall
      survive the termination hereof) shall become void and have no effect, with
      no
      liability on the part of any party or its Affiliates, directors, officers,
      employees, shareholders or agents in respect thereof; provided, however, that
      nothing in this Section 8.3
      shall deprive
      Sunrise, on the one hand, and Hallador, on the other, from bringing any Action
      pursuant to Section 9.12
      for breach of the
      Agreement by the other.

     

    8.4  Waiver.
      At any time prior
      to the Closing, Hallador, on the one hand, and Sunrise, on the other hand,
      may
(a) extend
      the
      time for the performance of any of the obligations or other acts of the other
      party hereto, (b) waive
      any
      inaccuracies in the representations and warranties contained herein or in any
      document delivered pursuant hereto or (c) waive
      compliance with any of the agreements or conditions contained
      herein.

     

    8.5  Nonsurvival
      of Representations and Warranties.
      The
      representations and warranties of the parties contained in this Agreement shall
      expire at the earlier of the termination of this Agreement and the Closing
      Date,
      and thereafter Sunrise, Hallador, and all of their respective directors,
      managers, officers, employees and agents shall have no further liability with
      respect thereto.

     

    ARTICLE IX  

    GENERAL
      PROVISIONS

     

    9.1  Expenses,
      Taxes, Etc. Except
      as otherwise
      provided herein or in the Operating Agreement, each party shall pay all fees
      and
      expenses incurred by it in connection with this Agreement, the Operating
      Agreement and the transactions contemplated hereby and thereby; provided,
      however, that all sales, use, documentary, stamp and excise Taxes and all
      transfer, filing, recordation and similar Taxes and fees (including all real
      estate transfer Taxes and conveyance and recording fees, if any) incurred by
      any
      party or the Sunrise Entities in connection with this Agreement and the
      transactions contemplated hereby and thereby will be borne equally by Hallador,
      on the one hand, and Sunrise, on the other hand.

     

    9.2  Notices.
      All notices and
      other communications given or made pursuant hereto shall be in writing and
      shall
      be deemed to have been duly given or made as of the date delivered or mailed
      if
      delivered personally or by recognized overnight delivery service or mailed
      by
      registered or certified mail (postage prepaid, return receipt requested), or
      sent by facsimile transmission (confirmation received) to the parties at the
      following addresses and facsimile transmission numbers (or at such other address
      or number for a party as shall be specified by like notice), except that notices
      after the giving of which there is a designated period within which to perform
      an act and notices of changes of address or number shall be effective only
      upon
      receipt:

     

    (a)  if
      to
      Sunrise:

     

    Sunrise
      Coal,
      LLC

                                       
      6641 State Road 46

                                       
      Terre Haute, Indiana 47802

                                       
      Attn: Brent Bilsland

     

    Facsimile
      No.: 

                                       
      with a copy to:

     

    Kreig
      DeVault
      LLP

                                       
      One Indiana Square, Suite 2800

                                       
      Indianapolis, IN 46204-2017

                                        Attn:
      Michael Messaglia, Esq.

     

    Facsimile
      No.:
      (317) 636-1507

     

    (b)  if
      to
      Hallador:

     

    Hallador
      Petroleum
      Company

                                       
      1660 Lincoln Street, Suite 2700

                                       
      Denver, CO 80264

                                       
      Attn: Victor Stabio

     

    Facsimile
      No.:
      (303) 832-3013

                                       
      with a copy to:

     

    Morgan,
      Lewis &
Bockius LLP

                                       
      300 South Grand Avenue, Suite 2200

                                       
      Los Angeles, CA 90071

                                       
      Attn: Ingrid A. Myers, Esq.

     

    Facsimile
      No.:
      (213) 612-2501

     

    
      
        
        

      

      
        38

        
          

        

      

      
        
        

      

    

    9.3  Interpretation.
      When a reference
      is made in this Agreement to Sections, subsections, Schedules or Exhibits,
      such
      reference shall be to a Section, subsection, Schedule or Exhibit to this
      Agreement unless otherwise indicated. The words “include,” “includes” and
“including” when used herein shall be deemed in each case to be followed by the
      words “without limitation.” The table of contents and the headings contained in
      this Agreement are for reference purposes only and shall not affect in any
      way
      the meaning or interpretation of this Agreement. The words “herein” and “hereby”
and similar references mean, except where a specific Section or Article
      reference is expressly indicated, the entire Agreement rather than any specific
      Section or Article. Except as otherwise expressly provided herein, all
      monetary amounts referenced in this Agreement shall mean U.S. dollars. All
      capitalized terms defined herein are equally applicable to both the singular
      and
      plural forms of such terms.

     

    9.4  Severability.
      If any term or
      other provision of this Agreement is invalid, illegal or incapable of being
      enforced by any rule of law or public policy, all other conditions and
      provisions of this Agreement shall nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner adverse to any party. Upon such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties hereto shall negotiate in good faith to modify
      this Agreement so as to effect the original intent of the parties as closely
      as
      possible in an acceptable manner to the end that the transactions contemplated
      hereby are fulfilled to the greatest extent possible.


      
      


    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    9.5  Assignment.
      This Agreement
      may not be assigned by operation of law or otherwise.

     

    9.6  No
      Third-Party Beneficiaries.
      This Agreement is
      for the sole benefit of the parties hereto and their permitted assigns and
      nothing herein expressed or implied shall give or be construed to give to any
      Person, other than the parties hereto and such assigns, any legal or equitable
      rights or remedies hereunder.

     

    9.7  Amendment.
      This Agreement
      may not be amended or modified except by an instrument in writing signed by
      Sunrise and Hallador. 

     

    9.8  No
      Other
      Remedies.
      Except as
      provided in Sections 8.3
      and 9.12,
      any and all
      remedies herein expressly conferred upon a party hereby are deemed exclusive
      of
      any other remedy conferred hereby or by law or equity on such party.
      Notwithstanding any provision hereof, neither party shall be liable hereunder
      for any incidental or consequential damages, damages for loss of profits or
      opportunities or exemplary or punitive damages, regardless of the circumstances
      from which such damages arose.

     

    9.9  Further
      Assurances.
      Each party agrees
      to cooperate fully with the other parties and to execute such further
      instruments, documents and agreements and to give such further written
      assurances as may be reasonably requested by any other party to evidence and
      reflect the transactions described herein and contemplated hereby and to carry
      into effect the intents and purposes of this Agreement.

     

    9.10  Mutual
      Drafting.
      This Agreement is
      the joint product of Hallador and Sunrise and each provision hereof has been
      subject to the mutual consultation, negotiation and agreement of Hallador and
      Sunrise and shall not be construed for or against any party hereto.

     

    9.11  Governing
      Law.
      This Agreement
      shall be governed by, and construed in accordance with, the internal laws of
      the
      State of Colorado applicable to agreements made and to be performed entirely
      within such State (without giving effect to such State’s choice of law
      principles).

     

    9.12  Dispute
      Resolution.
      Any dispute,
      controversy or claim between the parties relating to, arising out of or in
      connection with this Agreement (or any subsequent agreements or amendments
      thereto), including as to its existence, enforceability, validity,
      interpretation, performance or breach or as to damages, including claims in
      tort, whether arising before or after the termination of this Agreement (any
      such dispute, controversy or claim being herein referred to as a “Dispute”),
      shall be settled without litigation and only by use of the following alternative
      dispute resolution procedure:

     

    (a)  At
      the written
      request of Sunrise, on the one hand, or Hallador, on the other hand, each party
      shall appoint a knowledgeable, responsible representative to meet and negotiate
      in good faith to resolve any Dispute. The discussions shall be left to the
      discretion of the representatives. Upon agreement, the representatives may
      utilize other alternative dispute resolution procedures such as mediation to
      assist in the negotiations. Discussions and correspondence among the parties’
representatives for purposes of these negotiations shall be treated as
      confidential information developed for the purposes of settlement, exempt from
      discovery and production, and without the concurrence of both parties shall
      not
      be admissible in the arbitration described below or in any lawsuit. Documents
      identified in or provided with such communications, which are not prepared
      for
      purposes of the negotiations, are not so exempted and may, if otherwise
      admissible, be admitted in the arbitration.

     

    (b)  If
      negotiations
      between the representatives of the parties do not resolve the Dispute within
      60
      days of the initial written request, the Dispute shall be submitted to binding
      arbitration by a panel of three arbitrators (each of which shall have at least
      ten years of experience in the industry in which the Sunrise Business operates
      or some material aspect thereof relating to the matter subject to arbitration)
      pursuant to the Commercial Arbitration Rules, as then amended and in effect,
      of
      the American Arbitration Association (the “Rules”). Any party may demand such
      arbitration in accordance with the procedures set out in the Rules. Sunrise
      and
      Hallador shall each select one arbitrator, and the two arbitrators so selected
      shall select the third arbitrator. The arbitration shall take place in Denver,
      Colorado. The arbitration hearing shall be commenced within 60 days of such
      party’s demand for arbitration. The arbitrators shall control the scheduling (so
      as to process the matter expeditiously) and any discovery. The parties may
      submit written briefs. At the arbitration hearing, each party may make written
      and oral presentations to the arbitrators, present testimony and written
      evidence and examine witnesses. No party shall be eligible to receive, and
      the
      arbitrators shall not have the authority to award, incidental or consequential
      damages, damages for loss of profits or opportunities or exemplary or punitive
      damages. The arbitrators shall rule on the Dispute by issuing a written opinion
      within 30 days after the close of hearings. The arbitrators’ decision shall be
      binding and final. Judgment upon the award rendered by the arbitrators may
      be
      entered in any court having jurisdiction.

     

    (c)  Each
      party will
      bear its own costs and expenses in submitting and presenting its position with
      respect to any Dispute to the arbitrators. Hallador, on the one hand, and
      Sunrise, on the other hand, shall pay one-half of the fees and expenses of
      the
      arbitrators and the American Arbitration Association. Notwithstanding anything
      to the contrary in the foregoing, the prevailing party in the Dispute shall
      be
      entitled to recover its costs and reasonable attorneys’ fees.

     

    
      
        
        

      

      
        40

        
          

        

      

      
        
        

      

    

    9.13  Counterparts.
      This Agreement
      may be executed in one or more counterparts, and by the different parties hereto
      in separate counterparts, each of which when executed shall be deemed to be
      an
      original but all of which taken together shall constitute one and the same
      agreement.

     

    
      
        
        

      

      
        41

        
          

        

      

      
        
        

      

    

    9.14  Entire
      Agreement.
      This Agreement,
      together with all Schedules and Exhibits hereto, and the documents and
      instruments and other agreements among the parties delivered pursuant hereto,
      including the Operating Agreement, constitute the entire agreement and supersede
      all prior agreements and undertakings, both written and oral, other than the
      Confidentiality Agreement, among Sunrise, the Sunrise Members and Hallador
      with
      respect to the subject matter hereof.

     

    


    


     


    
      
        
          1-LA/887883.7 

        

        
        

      

      
        42

        
          

        

      

      
        
        

        
          


        

      

    



    IN
      WITNESS WHEREOF, Hallador and Sunrise have caused this Agreement to be executed
      as of the date first written above by their respective officers thereunto duly
      authorized.

     

    HALLADOR
      PETROLEUM
      COMPANY,

    a
      Colorado corporation

    


    


    


    By:
      /S/VICTOR P.
      STABIO

         

                                                                          
      Name:  Victor P. Stabio

     

    Title:   
      President and CEO

     

    SUNRISE
      COAL, LLC,


    an
      Indiana limited liability company

    


    


    


    By: /S/BRENT BILSLAND     

     

    Name: 
Brent
      Bilsland

     

    Title:

     

    



    
      
        
          {Signature
            page
            to Membership Interest Purchase Agreement}

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          


        

      

    



    SCHEDULE
      1.1

    


    


    SUNRISE
      KNOWLEDGE
      PERSONS:

    


    Brent
      K.
      Bilsland

    Ronald
      Laswell

    


    


    HALLADOR
      KNOWLEDGE
      PERSONS:

    


    Vic
      Stabio