Murchison Capital Partners


    
      

    
EXHIBIT
    10.2


    SUBSCRIPTION
      AGREEMENT

     

    This
      Subscription
      Agreement (this “Agreement”)
      is made as of
      September 26, 2007 by and between HALLADOR PETROLEUM COMPANY, a Colorado
      corporation (the “Corporation”)
      and MURCHISON
      CAPITAL PARTNERS, L.P. (“Subscriber”).

     

    1.  Subscription.


     

    (a)  Subscriber
      hereby
      subscribes for 107,527 shares (the “Shares”)
      of the
      Corporation’s common stock, par value $0.01 per share (the “Common
      Stock”),
      at a
      subscription price of $3.10 per share (the “Per
      Share
      Subscription Price”),
      for a total
      subscription price of $333,333.70 (the “Total
      Subscription Price”).


     

    (b)  The
      closing of the
      sale and purchase of the Shares (the “Closing”)
      will take place
      in the offices of Morgan, Lewis & Bockius LLP, 300 S. Grand Avenue, Suite
      2200, Los Angeles, California 90071 at 9:00 a.m. local time on October 5,
      2007, or such later date and time as the Corporation and Subscriber agree (the
      “Closing
      Date”).
      At the Closing,
      (i) the Corporation will deliver to Subscriber a copy of this Agreement
      countersigned by the Corporation, and (ii) Subscriber will pay the Total
      Subscription Price to the Corporation by wire transfer of immediately available
      funds to an account designated by the Corporation to Subscriber in writing.
      Subject to the Closing, the Corporation shall cause its transfer agent to issue
      a certificate representing the Shares in the name of Subscriber and to deliver
      such certificate to Subscriber at the address set forth on the signature page
      hereto, within five (5) business days after the date on which the Closing
      occurs. 

     

    2.  Acknowledgments.
      Subscriber hereby
      acknowledges that Subscriber, either alone or together with Subscriber’s
      advisors (if any), has read, understands and agrees with and to the
      following:

     

    (a)  AN
      INVESTMENT IN
      THE SHARES INVOLVES A HIGH DEGREE OF RISK; THE CORPORATION MAY NEED ADDITIONAL
      CAPITAL IN THE FUTURE TO REACH ITS GROWTH OBJECTIVES OR MEET ITS EXPENSES AND
      THE SHARES MAY LOSE ANY VALUE OR MAY NOT GAIN ANY VALUE; THE SHARES ARE NOT
      REGISTERED AND MAY NOT BE SOLD EXCEPT IN COMPLIANCE WITH STATE AND FEDERAL
      SECURITIES LAWS AND REGULATIONS.

     

    (b)  Subscriber
      acknowledges and agrees that the Corporation may at any time sell shares of
      its
      capital stock at a price greater or less than the Per Share Subscription Price
      pursuant to this Agreement. Subscriber acknowledges and agrees that the Shares
      may ultimately prove to be worth significantly more or significantly less than
      Subscriber perceives them to be worth now, and that no representation or
      warranty is made by the Corporation as to the “fair value” of the Shares or the
      interest in the Corporation that they represent, either now or in the
      future.

     

    (c)  The
      Shares have not
      been registered under the Securities Act of 1933, as amended (the “Securities
      Act”),
      or any state
      securities laws by reason of specific exemptions under the provisions thereof
      which depend in part upon the representations made by Subscriber in this
      Agreement. The Corporation is relying upon Subscriber’s representations
      contained in this Agreement for the purpose of determining whether this
      transaction meets the requirements for such exemptions.

     

    (d)  The
      Shares are
“restricted securities” under applicable federal securities laws and the
      Securities Act and the rules of the Securities and Exchange Commission provide,
      in substance, that Subscriber may only dispose of the Shares pursuant to an
      effective registration statement under the Securities Act or an exemption from
      such registration if available. The Corporation has no obligation or intention
      to register any of the Shares under, or to take action so as to permit sales
      pursuant to, the Securities Act. Accordingly, Subscriber may dispose of the
      Shares only in certain transactions that are exempt from registration under
      the
      Securities Act, including “private placements,” in which event the transferee
      will acquire “restricted securities” subject to the same limitations as in the
      hands of Subscriber. Additionally, applicable state securities laws may allow
      sales of the Shares only if the Shares are registered or the transaction is
      subject to an applicable exemption. As a consequence, Subscriber must bear
      the
      economic risks of an investment in the Shares for an indefinite period of
      time.

     

    (e)  The
      certificate(s)
      evidencing the Shares will bear the following legend, which shall be in addition
      to any other legends required by law or contract:

     

    THE
      SHARES
      REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
      ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED
      IN
      THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE SECURITIES
      ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.

     

    (f)  Neither
      the
      Corporation nor any person acting on its behalf has offered or sold the Shares
      to Subscriber by any form of general solicitation, general or public media
      advertising or mass mailing.

     

    3.  Representations
      and Warranties.
      Subscriber hereby
      represents and warrants to the Corporation as follows:

     

    (a)  Subscriber
      has all
      necessary power and authority under all applicable provisions of law to execute
      and deliver this Agreement and to carry out its provisions. All action on
      Subscriber’s part required for the lawful execution and delivery of this
      Agreement has been taken. Upon the execution and delivery of this Agreement,
      this Agreement will be a valid and binding obligation of Subscriber, enforceable
      in accordance with its terms, except as limited by (a) applicable
      bankruptcy, insolvency, reorganization, moratorium or other laws of general
      application affecting enforcement of creditors’ rights, and (b) general
      principles of equity that restrict the availability of equitable remedies.
      

     

    (b)  Subscriber
      has such
      knowledge, skill and experience in investment financial and business matters
      that Subscriber is capable of evaluating the merits and risks of the purchase
      of
      the Shares and of protecting Subscriber’s interests in connection therewith.
      Subscriber is able to fend for itself in connection with the transactions
      contemplated by this Agreement and has the ability to bear the economic risk
      of
      the investment, including complete loss of the investment. Subscriber
      understands that no federal or state agency has passed upon the Shares or made
      any finding or determination concerning the fairness or advisability of this
      investment. To the extent that Subscriber has deemed it appropriate to do so,
      Subscriber has retained, and relied upon, appropriate professional advice
      regarding the tax, legal and financial merits and consequences of an investment
      in the Shares.

     

    (c)  Subscriber,
      either
      alone or together with Subscriber’s advisors (if any), has made such independent
      investigation of the Corporation, its management and related matters as
      Subscriber deems to be, or such advisors (if any) have advised to be, necessary
      or advisable in connection with an investment in the Shares. Subscriber and
      Subscriber’s advisors (if any) have received all information and data that
      Subscriber and such advisors (if any) believe to be necessary in order to reach
      an informed decision as to the advisability of an investment in the
      Shares.

     

    (d)  Subscriber,
      either
      alone or together with Subscriber’s advisors (if any), has reviewed Subscriber’s
      financial condition and commitments and, based on such review, Subscriber is
      satisfied that (i) Subscriber has adequate means of providing for
      Subscriber’s financial needs and possible contingencies and has assets or
      sources of income which, taken together, are more than sufficient so that
      Subscriber could bear the risk of loss of Subscriber’s entire investment in the
      Shares, (ii) Subscriber has no present or contemplated future need to
      dispose of all or any portion of the Shares to satisfy any existing or
      contemplated undertaking, need or indebtedness, and (iii) Subscriber is
      capable of bearing the economic risk of an investment in the Shares for the
      indefinite future.

     

    (e)  Subscriber
      is
      acquiring the Shares for Subscriber’s own account, for investment only and not
      with a view to or in connection with any resale or distribution of the Shares,
      and Subscriber has no present intention of making any sale, assignment, pledge,
      gift, transfer or other disposition of the Shares or any interest therein.
      Subscriber understands that the Shares have not been registered under the
      Securities Act or any state securities laws by reason of specific exemptions
      which depend upon, among other things, the bona fide nature of the investment
      intent and the accuracy of Subscriber’s representations as expressed
      herein.

     

    (f)  Subscriber
      understands that any public market for any of the securities issued by the
      Corporation is limited and that there is no assurance that an active public
      market will ever exist for such securities. 

     

    (g)  Subscriber
      is an
“Accredited Investor” within the meaning of Rule 501 promulgated under the
      Securities Act, and has completed or will complete and deliver an Accredited
      Investor Questionnaire to the Corporation on or before the Closing
      Date.

     

    (h)  Subscriber
      is a
      limited partnership and the office or offices of Subscriber in which its
      investment decision was made is located at the address or addresses of
      Subscriber set forth on the signature page hereof.

     

    4.  Covenant.
      Subscriber hereby
      agrees to furnish any additional information requested by the Corporation to
      assure compliance of this transaction with applicable federal and state
      securities laws, and to make any filings with the Securities and Exchange
      Commission as may be required of Subscriber pursuant to the Securities Exchange
      Act of 1934, as amended, and the rules promulgated thereunder. 

     

    5.  General
      Provisions.

     

    (a)  Governing
      Law;
      Jurisdiction.
      This Agreement
      shall be governed, construed and interpreted in accordance with the laws of
      the
      State of Colorado, without giving effect to principles of conflicts of law
      and
      choice of law that would cause the laws of any other jurisdiction to apply.
      

     

    (b)  Successors
      and
      Assigns.
      This Agreement
      may not be assigned, conveyed or transferred without the prior written consent
      of the Corporation. Subject to the foregoing, the rights and obligations of
      the
      Corporation and Subscriber under this Agreement shall be binding upon and
      benefit their respective permitted successors, assigns, heirs, administrators
      and transferees. The terms and provisions of this Agreement are for the sole
      benefit of the parties hereto and their respective permitted successors and
      assigns, and are not intended to confer any third-party benefit on any other
      person.

     

    (c)  Entire
      Agreement.
      This Agreement
      constitutes the full and entire understanding and agreement between the parties
      with regard to the subjects hereof and no party shall be liable or bound to
      any
      other in any manner by any representations, warranties, covenants and agreements
      except as specifically set forth herein.

     

    (d)  Severability.
      In case any
      provision of the Agreement shall be invalid, illegal or unenforceable, the
      validity, legality and enforceability of the remaining provisions shall not
      in
      any way be affected or impaired thereby.

     

    (e)  Amendment
      or
      Waiver.
      This Agreement
      may not be amended, and no term or provision of this Agreement may be waived,
      except upon the written consent of the Corporation and Subscriber.

     

    (f)  Expenses.
      Each party shall
      pay all costs and expenses that it incurs with respect to the negotiation,
      execution, delivery and performance of the Agreement.

     

    (g)  Titles
      and
      Subtitles.
      The titles of the
      sections and subsections of the Agreement are for convenience of reference
      only
      and shall not be considered in construing this Agreement.

     

    (h)  Counterparts.
      This Agreement
      may be executed in any number of counterparts and by facsimile, each of which
      shall be an original, but all of which together shall constitute one instrument.
      If executed by facsimile, the parties shall subsequently exchange original
      signed copies by mail or courier service.

     

    [SIGNATURES
      ON
      FOLLOWING PAGE]

    


     


    
      
        
          1-LA/947090.3 

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
          


        

      

    



    IN
      WITNESS WHEREOF, the undersigned has caused this Subscription Agreement to
      be
      executed as of the date first written above.

     

    SUBSCRIBER:

     

    


     

    MURCHISON
      CAPITAL
      PARTNERS, L.P.

     

    By:
 Murchison
      Management Corp., 

     

    its
      general
      partner

     

     

     

    


     

    By:  /s/
      Robert F.
      Murchison 

     

    Name:  Robert
      F.
      Murchison  

     

    Title:  President   

     

    


     

    


     

    


     

    CORPORATION:

     

    


     

    HALLADOR
      PETROLEUM
      COMPANY

     

    


     

    


     

    By:  /s/
      Victor P.
      Stabio   

     

    Name:  Victor
      P.
      Stabio   

     

    Title:  Chief
      Executive
      Officer and President