Document:

Exhibit 4.3

EXECUTION VERSION

 

 

 

2.125% Senior Notes due 2030

 

GUARANTEE

 

from

 

PRINCIPAL FINANCIAL SERVICES, INC.,
as Guarantor

 

to

 

THE BANK OF NEW YORK MELLON TRUST COMPANY,
N.A., as Trustee

 

Dated as of June 12, 2020

 

 

 

    	 	 	 

     

    

 

GUARANTEE

 

This Guarantee (this “Guarantee”)
is made and entered into as of June 12, 2020 from PRINCIPAL FINANCIAL SERVICES, INC., a corporation duly organized and existing
under the laws of the State of Iowa, as guarantor (herein called the “Guarantor,” which term includes any successor
hereunder), to THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association incorporated and existing under
the laws of the United States of America, as trustee (the “Trustee,” as further defined in the Indenture hereinafter
referred to). Defined terms used herein without definition shall have the meanings given to them in the Senior Indenture, dated
as of May 21, 2009, among Principal Financial Group, Inc., a Delaware corporation (the “Company,”
as further defined in the Indenture hereinafter referred to), the Guarantor and the Trustee, as supplemented by the Fourteenth
Supplemental Indenture, dated as of June 12, 2020, among the Company, the Guarantor and the Trustee with respect to the Senior
Notes as defined below (the “Indenture”).

 

RECITALS

 

The Guarantor is a wholly-owned subsidiary
of the Company and has duly authorized the execution and delivery of this Guarantee to provide for the guarantee by the Guarantor
for the benefit of the Holders of the Company’s 2.125% Senior Notes due 2030 (the “Senior Notes”) issued
pursuant to the Indenture.

 

For and in consideration of the premises
and the purchase of the Senior Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit of
all Holders of the Senior Notes, as follows:

 

Article
I

Representations and Warranties of Guarantor

 

Section
1.1.           
Guarantor Representations and Warranties.

 

The Guarantor does hereby represent
and warrant that it is a corporation duly incorporated and in good standing under the laws of the State of Iowa, has the
power to enter into and perform this Guarantee and to own its corporate property and assets, has duly authorized the
execution and delivery of this Guarantee by proper corporate action and neither this Guarantee, the authorization, execution,
delivery and performance hereof, the performance of the agreements herein contained nor the consummation of the transactions
herein contemplated will violate in any material respect any provision of law, any order of any court or agency of government
or any agreement, indenture or other instrument to which the Guarantor is a party or by which it or its property is bound, or
in any material respect be in conflict with or result in a breach of or constitute a default under any indenture, agreement
or other instrument or any provision of its certificate of incorporation, bylaws or any requirement of law. This Guarantee
constitutes the legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its
terms, except as the enforceability hereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by general equitable principles.

 

    	 	 	 

     

    

 

Article
II

Guarantee of Obligations

 

Section
2.1.           
Obligations Guaranteed.

 

Subject to the provisions of this Article
II, the Guarantor hereby fully, unconditionally and irrevocably guarantees (a) to each Holder of a Senior Note authenticated
and delivered by the Trustee or Authenticating Agent, (i) the full and prompt payment of the principal of, and premium,
if any, and interest on, and any Redemption Price with respect to, such Senior Note, when, where and as the same shall become due
and payable, whether at the stated maturity thereof, by acceleration, call for redemption or otherwise in accordance with the terms
of such Senior Note and the Indenture and (ii) the full and prompt payment of interest on the overdue principal and
interest, if any, on such Senior Note, at the rate specified in such Senior Note and to the extent lawful and (b) to
the Trustee the full and prompt payment upon written demand therefor of all amounts due to it in accordance with the terms of the
Indenture (collectively the “Guaranteed Obligation”). If for any reason the Company shall fail punctually to
pay any such Guaranteed Obligation, the Guarantor hereby agrees to cause any such Guaranteed Obligation to be made punctually when,
where and as the same shall become due and payable, whether at the stated maturity thereof, by acceleration, call for redemption
or otherwise. All payments by the Guarantor hereunder shall be paid in lawful money of the United States of America.
This Guarantee is unsecured and ranks equally in right of payment with all of the Guarantor’s existing and future
senior indebtedness.

 

Section
2.2.           
Obligations Unconditional.

 

The obligations of the Guarantor under this
Guarantee shall be absolute, unconditional and irrevocable and shall constitute a continuing guarantee of payment and not of collectability.
Such obligations shall remain in full force and effect until this Guarantee shall terminate in accordance with the provisions of
Section 5.1 hereof, and, to the maximum extent permitted by applicable law, such obligations shall not be affected, modified, released
or impaired by any state of facts or the happening from time to time of any event, including, without limitation, any of the following,
whether or not with notice to, or the consent of, the Guarantor:

 

(a)              
the waiver, compromise, settlement, release or termination of any or all of the obligations, covenants or agreements of
the Company contained in the Senior Notes or the Indenture, or of the payment, performance or observance thereof;

 

(b)              
the failure to give notice to the Guarantor of the occurrence of any default or an Event of Default under the terms and
provisions of the Senior Notes or the Indenture;

 

(c)              
the assignment or purported assignment of any of the obligations, covenants and agreements contained in this Guarantee;

 

    	 	2	 

     

    

 

(d)              
 the extension of the time for payment of any principal of, premium, if any, or interest on, or any Redemption Price with
respect to, the Senior Notes or of the time for performance of any obligations, covenants or agreements under or arising out of
the Senior Notes or the Indenture or the extension or the renewal of any thereof;

 

(e)              
the modification or amendment (whether material or otherwise) of any obligation, covenant or agreement set forth in the
Senior Notes or the Indenture;

 

(f)               
the taking or the omission to take any of the actions referred to in this Guarantee or in the Indenture;

 

(g)              
any failure, omission or delay on the part of, or the inability of, the Trustee or the Holders of the Senior Notes to enforce,
assert or exercise any right, power or remedy conferred on the Trustee, such Holders or any other person in this Guarantee or in
the Indenture for any reason;

 

(h)              
the voluntary or involuntary liquidation, dissolution, merger, consolidation, sale or other disposition of all or substantially
all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition with creditors or readjustment of, or other similar proceedings affecting the Company
or any or all of its assets, or any allegation or contest of the validity of the Senior Notes or the Indenture or the disaffirmance
of the Senior Notes or the Indenture in any such proceeding; it being specifically understood, consented and agreed to that this
Guarantee shall remain and continue in full force and effect and shall be enforceable against the Guarantor to the same extent
and with the same force and effect as if such proceedings had not been instituted, and it is the intent and purpose of this Guarantee
that the Guarantor shall and does hereby waive, to the maximum extent permitted by applicable law, all rights and benefits which
might accrue to the Guarantor by reason of any such proceedings;

 

(i)               
any event or action that would, in the absence of this clause, result in the release or discharge by operation of law of
the Guarantor from the performance or observance of any obligation, covenant or agreement contained in this Guarantee;

 

(j)               
the default or failure of the Guarantor fully to perform any of its obligations set forth in this Guarantee;

 

(k)              
the release, substitution or replacement of any security pledged for the benefit of the Holders of the Senior Notes under
the Indenture;

 

(l)               
the disposition by the Company of any or all of its interest in any capital stock of the Guarantor, or any change, restructuring
or termination of the corporate structure, ownership, corporate existence or any rights or franchises of the Guarantor;

 

(m)             
any other circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or a guarantor;
or

 

(n)              
any other occurrence whatsoever, whether similar or dissimilar to the foregoing.

 

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Section
2.3.           
No Waiver or Set-Off.

 

The Guarantor agrees that, to the maximum
extent permitted by law, (a) no act of commission or omission of any kind or at any time on the part of the Trustee
or any Holder of the Senior Notes, or their successors and assigns, in respect of any matter whatsoever shall in any way impair
the rights of the Trustee or such Holders to enforce any right, power or benefit under this Guarantee, and (b) no set-off,
counterclaim, reduction, or diminution of any obligation, or any defense of any kind or nature (other than performance), which
the Guarantor or the Company has or may have against the Trustee or such Holders or any assignee or successor thereof shall be
available hereunder to the Guarantor.

 

Section
2.4.           
Waiver of Notice; Expenses.

 

The Guarantor hereby expressly waives notice
from the Trustee or the Holders of the Senior Notes of their acceptance and reliance on this Guarantee. The Guarantor further waives,
to the maximum extent permitted by law, any right that it may have (a) to require the Trustee or the Holders of the
Senior Notes to take action or otherwise proceed against the Company, (b) to require the Trustee or the Holders of
the Senior Notes to proceed against or exhaust any security pledged for the benefit of the Holders of the Senior Notes under the
Indenture or (c) to require the Trustee or the Holders of the Senior Notes otherwise to enforce, assert or exercise
any other right, power or remedy that may be available to the Trustee or such Holders. The Guarantor agrees to pay all costs, expenses
and fees, including all reasonable attorneys’ fees and expenses, that may be incurred by the Trustee in enforcing or attempting
to enforce this Guarantee or protecting the rights of the Trustee or the Holders of the Senior Notes following any default on the
part of the Guarantor hereunder, whether the same shall be enforced by suit or otherwise.

 

Section
2.5.           
Subrogation of Guarantor; Subordination.

 

Notwithstanding any payment or payments
made by the Guarantor, the Guarantor agrees that it will not enforce, by reason of subrogation, contribution, indemnity or otherwise,
any rights the Trustee or the Holders of the Senior Notes may have against the Company until all of the Guaranteed Obligations
shall have been finally, indefeasibly and unconditionally paid in full. Any claim of the Guarantor against the Company arising
from payments made by the Guarantor by reason of this Guarantee shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Guaranteed Obligations guaranteed hereby.

 

Section
2.6.           
Reinstatement.

 

This Guarantee shall continue to be effective,
or be automatically reinstated, as the case may be, if at any time payment, or any part thereof, made by or on behalf of the Company
or the Guarantor in respect of any of the Senior Notes is rescinded or must otherwise be restored or returned by the Trustee or
any Holder of such Senior Notes for any reason whatsoever, whether upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee
or similar officer for the Company or any substantial part of its properties, or otherwise, all as though such payment had not
been made.

 

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Section
2.7.          
Rights of Holders.

 

The Guarantor expressly acknowledges that
the Trustee has the right to enforce this Guarantee on behalf of the Holders of the Senior Notes in accordance with and subject
to the provisions of the Indenture.

 

Article
III

Covenants of the Guarantor

 

Section
3.1.          
Consolidation, Merger Conveyance, Transfer or Lease.

 

(a)         
Subject to Section 3.1(c), the Guarantor shall not consolidate with or merge with or into any other Person or convey, transfer
or lease its assets substantially as an entirety to any Person, and the Guarantor shall not permit any Person to consolidate with
or merge with or into the Guarantor, unless:

 

(1)              
the Guarantor or the Company is the surviving corporation in any merger or consolidation; or

 

(2)              
if the Guarantor conveys, transfers or leases its assets substantially as an entirety to any Person, the Person to which
such conveyance, transfer or lease is made is a corporation, partnership, trust or limited liability company organized and validly
existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume,
by a supplemental agreement hereto, executed and delivered to the Trustee, all of the obligations of the Guarantor under the Indenture
and this Guarantee; and

 

(3)              
immediately after giving effect to the consolidation, merger, conveyance, transfer or lease, no Event of Default, and no
event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and

 

(4)              
the Guarantor has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental agreement is required in connection with such transaction,
such supplemental agreement comply with this Section 3.1 and that all conditions precedent herein provided for relating to such
transaction have been complied with.

 

(b)         
Subject to Section 3.1(c), any indebtedness which becomes an obligation of the Guarantor or any of its Subsidiaries as a
result of any such transaction shall be treated as having been incurred by the Guarantor or such Subsidiary at the time of such
transaction.

 

(c)         
The provisions of Section 3.1(a) and (b) shall not be applicable to:

 

(1)              
the direct or indirect conveyance, transfer or lease of all or any portion of the stock, assets or liabilities of any of
the Guarantor’s wholly owned Subsidiaries to the Guarantor or to the Company or to other wholly owned Subsidiaries of the
Guarantor; or

 

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(2)              
 any recapitalization transaction, highly leveraged transaction or change of control of the Guarantor unless such transaction
or change of control is structured to include a merger or consolidation by the Guarantor or the conveyance, transfer or lease of
the Guarantor’s assets substantially as an entirety.

 

(d)         
Upon any consolidation of the Guarantor with, or merger of the Guarantor into, the Company, this Guarantee shall terminate
on the effective date of such consolidation or merger. Upon any conveyance, transfer or lease of the assets of the Guarantor substantially
as an entirety in accordance with this Section 3.1, the successor Person to which such conveyance, transfer or lease is made shall
succeed to, and may exercise every right and power of, the Guarantor under this Guarantee with the same effect as if such successor
Person had been named as the Guarantor herein; provided that the Guarantor shall not be relieved of its obligations and
covenants under this Guarantee.

 

In case of any such conveyance, transfer
or lease, such changes in phraseology and form may be made in this Guarantee thereafter to be issued as may be appropriate.

 

Section
3.2.          
Reports by the Guarantor.

 

During the term hereof, the Guarantor covenants:

 

(a)         
to file with the Trustee, within 30 days after the Guarantor is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the Guarantor may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended; or, if the
Guarantor is not required to file information, documents or reports pursuant to either of such sections, then to file with the
Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission pursuant
to Section 314(a) of the Trust Indenture Act, such of the supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, in respect of a security
listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations.
All reports, information and documents described in this Section 3.2(a) and filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval (EDGAR) system or any successor system shall be deemed to be filed with the Trustee;

 

(b)         
to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time
by the Commission pursuant to Section 314(a) of the Trust Indenture Act, such additional information, documents and reports
with respect to compliance by the Guarantor with the conditions and covenants provided for in this Guarantee and the Indenture,
as may be required from time to time by such rules and regulations;

 

(c)          to
transmit to all Holders of the Senior Notes within 30 days after the filing thereof with the Trustee, in the manner and to
the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and
reports required to be filed by the Guarantor pursuant to subsections (a) and (b) of this Section 3.2, as may be
required by rules and regulations prescribed from time to time by the Commission pursuant to Section 314(a) of
the Trust Indenture Act; and

 

    	 	6	 

     

    

 

(d)         
to deliver to the Trustee, within 120 days after the end of each fiscal year of the Guarantor, a brief certificate from
the principal executive officer, principal financial officer, or principal accounting officer as to his or her knowledge of the
Guarantor’s compliance with all conditions and covenants under this Guarantee. For purposes of this Section 3.2, such compliance
shall be determined without regard to any period of grace or requirement of notice provided under this Guarantee.

 

Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive
notice of any information contained therein or determinable from information contained therein, including the Company’s compliance
with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

 

Article
IV

Notices

 

Section
4.1.           
Notices.

 

All notices, certificates or other communications
to the Guarantor hereunder shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid,
to the Guarantor addressed to it at Principal Financial Services, Inc. 711 High Street, Des Moines, Iowa 50392, Attention:
General Counsel, or at any other address previously furnished in writing to the Trustee by the Guarantor.

 

Article
V

Miscellaneous

 

Section
5.1.           
Effective Date; Termination.

 

The obligations of the Guarantor hereunder
shall arise absolutely and unconditionally upon the date of the initial delivery of and authentication of the Senior Notes. Subject
to Section 2.6, this Guarantee shall terminate on such date as the Indenture is discharged and satisfied.

 

Section
5.2.           
Evidence of Compliance with Conditions Precedent.

 

The Guarantor shall provide the Trustee
with such evidence of compliance with such conditions precedent, if any, provided for in this Guarantee that relate to the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers’ Certificate.

 

    	 	7	 

     

    

 

Section
5.3.           
Remedies Not Exclusive.

 

No remedy herein conferred upon or reserved
to the Trustee or Holders of the Senior Notes is intended to be exclusive of any other available remedy or remedies, but, to the
maximum extent permitted by law, each and every such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guarantee or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power
accruing upon any default, omission or failure of performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient.
In order to entitle the Trustee and Holders of the Senior Notes to exercise any remedy reserved to any of them in this Guarantee,
to the maximum extent permitted by applicable law, it shall not be necessary to give any notice. In the event any provision contained
in this Guarantee should be breached, and thereafter duly waived, such waiver shall be limited to the particular breach so waived
and shall not be deemed to waive any other breach hereunder. To the maximum extent permitted by applicable law, no waiver, amendment,
release or modification of this Guarantee shall be established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties to this Guarantee and consistent with the terms of the Indenture.

 

Section
5.4.           
Limitation of Guarantor’s Liability.

 

Any term or provision of this Guarantee
notwithstanding, the Guarantee shall not exceed the maximum amount that can be guaranteed by the Guarantor without rendering the
Guarantee voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.

 

Section
5.5.           
Entire Agreement; Counterparts.

 

This Guarantee constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral, between the parties with respect to the subject
matter hereof and may be executed simultaneously in several counterparts, each of which shall be deemed an original, and all of
which together shall constitute one and the same instrument. The words “execution,” “signed,” “signature,”
and words of like import in this Guarantee shall include images of manually executed signatures transmitted by facsimile, email
or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other
electronic signatures (including without limitation, DocuSign and AdobeSign or any other similar platform identified by the Guarantor
and reasonably available at no undue burden or expense to the Trustee). The use of electronic signatures and electronic records
(including, without limitation, any contract or other record created, generated, sent, communicated, received, or stored by electronic
means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based
record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global
and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without
limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code. The Trustee shall have
no duty to inquire into or investigate the authenticity or authorization of any such electronic signature and shall be entitled
to conclusively rely on any such electronic signature without any liability with respect thereto.

 

    	 	8	 

     

    

 

Section
5.6.           
Severability.

 

To the maximum extent permitted by applicable
law, the invalidity or unenforceability of any one or more phrases, sentences, clauses or sections contained in this Guarantee
shall not affect the validity or enforceability of the remaining portions of this Guarantee, or any part thereof.

 

Section
5.7.           
Governing Law.

 

THIS GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. This Guarantee is subject to the Trust Indenture Act and if any
provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required by the Trust Indenture
Act to be a part of and govern this Guarantee, the latter provision shall control. If any provision of this Guarantee modifies
or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed
to apply to this Guarantee as so modified, or to be excluded, as the case may be, whether or not such provision of this Guarantee
refers expressly to such provision of the Trust Indenture Act.

 

The Guarantor shall be an “obligor”
with respect to the Senior Notes as such term is defined in and solely for the purposes of the Trust Indenture Act and shall comply
with those provisions of the Indenture compliance with which is required by an “obligor” under the Trust Indenture
Act.

 

Section
5.8.           
Amendment; Modification.

 

This Guarantee may be amended or modified
pursuant to the terms of the Indenture.

 

    	 	9	 

     

    

 

IN WITNESS WHEREOF, the Guarantor has caused
this instrument to be duly executed.

 

	 	PRINCIPAL FINANCIAL SERVICES, INC.

	 	 	 
	 	By:	/s/ Christopher J. Littlefield
	 	Name:	Christopher J. Littlefield
	 	Title: 	Executive Vice President, General Counsel and Secretary

 

[Signature Page
to 2030 Senior Notes Guarantee]ex_189473.htm

Exhibit 10.1

 

HALLADOR ENERGY COMPANY

2020 PLAN

 

	
			Capitalized terms used and not otherwise defined herein are defined for purposes of this 2020 Plan as follows:

			 

			“Cause” means:

			 

			(i) The Covered Person’s willful and continued material failure to perform the reasonable duties and responsibilities of his or her position after the Corporation has provided the Covered Person with a written demand for performance that describes the basis for the Corporation’s belief that the Covered Person has not substantially performed his or her duties and the Covered Person has not corrected the failure within thirty (30) days of the written demand;

			 

			(ii) Any act of personal dishonesty taken by the Covered Person in connection with his or her responsibilities as an employee of the Corporation and intended to result in his or her substantial personal enrichment;

			 

			(iii) The Covered Person’s conviction of, or plea of nolo contendere to, a felony that the Board reasonably believes has had or will have a material detrimental effect on the Corporation’s reputation or business; or

			 

			(iv) The Covered Person’s breach of any fiduciary duty owed to the Corporation by the Covered Person that has a material detrimental effect on the Corporation’s reputation or business.

			 

			“Change of Control” means any Change of Control or ownership of the Corporation which occurs by reason of one or more of the following events:

			 

			(i) the acquisition by any person or group of related persons (as determined pursuant to section 13(d)(3) of the 1934 Act) of beneficial ownership of securities of the Corporation representing fifty percent (50%) or more of the total number of votes that may be cast for the election of Board members, or

			 

			(ii) stockholder approval of (A) any agreement for a merger or consolidation in which the Corporation will not survive as an independent corporation or other entity, or (B) any sale, exchange or other disposition of all or substantially all of the Corporation’s assets, including, without limitation, the sale, exchange or other disposition of the equity securities or assets of Sunrise Coal, LLC.

			 

			Notwithstanding anything herein to the contrary, with respect to any amounts that constitute nonqualified deferred compensation under Code Section 409A and that would be payable in connection with a Change of Control, to the extent required to avoid accelerated or additional taxation under such section, no Change of Control will be deemed to have occurred unless such Change of Control also constitutes a change in the ownership or effective control of the Corporation or a change in the ownership of a substantial portion of the Corporation’s assets within the meaning of Code Section 409A(a)(2)(A)(v).

				 	
			Definitions

			

 

 

 

 

	
			“Closing” means the closing date of a transaction that results in a Change of Control, as set forth in the definitive agreement governing such transaction.

			 

			“Covered Person” means the Corporation’s Chief Executive Officer and President, Corporate Secretary and Chairman of the Board, and Chief Financial Officer.

			 

			“Good Reason” means the occurrence of one or more of the following without the Covered Person’s written consent:

			 

			(i) A fifteen percent (15%) or more reduction in the Covered Person’s total annual cash compensation opportunity (base salary and target bonus opportunity collectively), which the parties agree is a material reduction, as compared to the Covered Person’s total annual cash compensation opportunity immediately prior to the Closing;

			 

			(ii) A change in the Covered Person’s principal work location resulting in a new one-way commute that is more than twenty-five (25) miles greater than the Covered Person’s one-way commute prior to the change in the Covered Person’s principal work location, regardless of whether the Covered Person receives an offer of relocation benefits; or

			 

			(iii) A material reduction in the Covered Person’s authority, duties and/or responsibilities as compared to the Covered Person’s authority, duties and/or responsibilities in effect immediately prior to the Closing (for example, but not by way of limitation, this determination will include an analysis of whether the Covered Person maintains at least the same level, scope and type of duties and responsibilities with respect to the management, strategy, operations and business of the combined entity resulting from such transaction, taking the Corporation, any acquirer and their respective parent corporations, subsidiaries and other affiliates, together as a whole).

			 

			With respect to any termination for Good Reason, the Covered Person shall give the Corporation written notice, which shall identify with reasonable specificity the grounds for the Covered Person’s resignation, and provide the Corporation a period of thirty (30) days from the day such notice is given to cure the alleged grounds for termination for Good Reason contained in the notice. A termination will not be for Good Reason if such notice is given by the Covered Person to the Corporation more than ninety (90) days after the occurrence of the event that the Covered Person alleges is Good Reason for her or her termination.

			 

			“Payment Date” means the date on which the Corporation pays the Retention Bonus to the Covered Persons, which shall be on the date of the Closing.

			 

			“RSU Plan” means that certain Amended and Restated 2008 Restricted Stock Unit Plan as adopted by the Corporation in May 2017.

				 	
			Definitions

			

 

 

 

 

	
			“Section 280G” means Section 280G of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder.

			 

			 

			“Section 409A” means Section 409A of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder.

			 

			 

			“Section 4999” means Section 4999 of the Internal Revenue Code of 1986, as amended, and the final regulations and any guidance promulgated thereunder.

				 	Definitions

 

	
			Each of the Covered Persons, along with other employees of the Corporation as determined by the Compensation Committee of the Board, shall be eligible to participate in this 2020 Plan, provided that such Covered Person is employed by the Corporation on the Effective Date, and is not excluded from this 2020 Plan as provided below.

				 	
			Participation in 2020 Plan

			

 

	
			Each Covered Person who remains employed with the Corporation upon a Change of Control through the Closing shall receive a retention bonus under this 2020 Plan (the “Retention Bonus”) and, provided that the conditions for payment of any Retention Bonus set forth in this 2020 Plan are satisfied, one-hundred percent (100%) of the Retention Bonus, as specified with respect to each Covered Person in Schedule 1 attached hereto, shall be paid in a lump-sum payment on the Payment Date.

				 	
			Retention Bonus Eligibility and Payment Date

			

 

	
			If, prior to the date of a Change of Control, a Covered Person (i) voluntarily terminates his or her employment, or (ii) is terminated for Cause, he or she will not receive a Retention Bonus, and any funds that would have been utilized for such Covered Person’s Retention Bonus will revert to the Corporation and will not be reallocated to any other Covered Person.

				 	
			Ineligibility to Receive Retention Bonuses

			

 

	
			In the event that, following an announcement by the Corporation of a transaction that would result in a Change of Control, but prior to the Closing relating to such announced Change of Control, a Covered Person’s employment with the Corporation is terminated without Cause or the Covered Person terminates his or her employment with the Corporation for Good Reason, such Covered Person shall be eligible to receive the Retention Bonus that he or she would otherwise have been entitled to receive had he or she remained employed with the Corporation through the Closing.

				 	
			Termination Without Cause or Termination for Good Reason

			

 

	
			This 2020 Plan shall provide benefits to each Covered Person and his or her respective heirs, representatives, successors, and assigns, and will be binding on all successors and assigns of the Corporation and any acquirer of the Corporation.

				 	
			Benefits to Covered Persons and Their Heirs

			

 

	
			Participation in this 2020 Plan will not provide any guarantee or promise of employment or continued service of any Covered Person or any employee of the Corporation or its subsidiaries with the Corporation or any of its subsidiaries, and the Corporation shall retain the right, and its subsidiaries shall retain the right, to terminate the employment of any Covered Person or any other employee of the Corporation or its subsidiaries, as applicable, at any time.

				 	
			No Guarantee of Continued Service

			

 

 

 

 

	
			The Corporation will withhold from any payments under this 2020 Plan (including to a beneficiary or estate) any amount required to satisfy all applicable federal, state, local, or foreign income, employment, and other tax withholding obligations.

				 	
			Withholding

			

 

	
			It is intended that Retention Bonuses under this 2020 Plan meet the short-term deferral exception under Section 409A (accordingly, notwithstanding anything herein to the contrary, no payments to be made hereunder shall be made later than the fifteenth (15th) day of the third (3rd) month following the taxable year in which the Change of Control is effectuated or otherwise in which the payment right vests) and, if not exempt, the Retention Bonuses payable pursuant to this 2020 Plan are intended to comply with Section 409A, to the extent the requirements of Section 409A are applicable hereto. The provisions of this 2020 Plan shall be construed and administered in a manner consistent with that intention.

				 	
			Section 409A

			

 

	
			If payment of any amount under this 2020 Plan that is subject to Section 409A at the time specified therein would subject such amount to any additional tax under Section 409A, the payment of such amount shall be postponed to the earliest commencement date on which the payment of such amount could be made without incurring such additional tax. In addition, to the extent that any guidance issued under Section 409A would result in the Covered Person being subject to the payment of interest or any additional tax under Section 409A, the Corporation shall, to the extent reasonably possible and as allowed by applicable treasury regulations, amend this 2020 Plan in order to avoid the imposition of any such interest or additional tax under Section 409A, which amendment shall have the minimum economic effect necessary and be reasonably determined in good faith by the Corporation.

				 	
			409A Payment Adjustments

			

 

	
			Notwithstanding the foregoing, the Corporation makes no representations that the payments and benefits provided under this 2020 Plan comply with Section 409A and in no event will the Corporation be liable or be required to reimburse a Covered Person for all or any portion of any taxes, penalties, interest or other expenses that may be imposed on or incurred by him or her as a result of this 2020 Plan being subject to Section 409A.

				 	
			No Representation Regarding 409A

			

 

	
			If a Covered Person is deemed to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provisions of any benefit that is required to be delayed pursuant to such Code Section 409A(a)(2)(B), such payment or benefit shall not be made or provided prior to the earlier of:

			 

			(i) the expiration of the six (6) month period measured from the date of the Covered Person’s “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h)), or

			(ii) the date of the Covered Person’s death (the “Delay Period”),

			 

			and all payments and benefits delayed pursuant to the foregoing (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to a Covered Person in a lump sum within ten (10) days following the expiration of the Delay Period.

				 	
			409A Delay Payments

			

 

	
			No provision of this 2020 Plan will require the Corporation, for the purpose of satisfying any obligations under this 2020 Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor will the Corporation maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes.

				 	
			No Trust Assets

			

 

 

 

 

	
			Nothing contained in this 2020 Plan and no action taken pursuant to the provisions of this 2020 Plan will create or be construed to create a trust of any kind.

				 	
			No Trust

			

 

	
			No property that may be acquired or invested by the Corporation in connection with this 2020 Plan will be deemed security for the obligations to the Covered Persons hereunder, but will be, and continue for all purposes to be, part of the general funds of the Corporation, and Covered Persons will have no rights under this 2020 Plan other than as unsecured general creditors of the Corporation.

				 	
			No Property Will Constitute Security

			

 

	
			This 2020 Plan is intended to be a “bonus program” as defined under U.S. Department of Labor Regulation Section 2510.3-2(c) and will be construed and administered in accordance with such intention.

				 	
			Bonus Program

			

 

	
			All questions concerning the construction, validation, and interpretation of this 2020 Plan will be governed by the laws of the State of Colorado without regard to its conflict of law’s provisions.

				 	
			Choice of Law

			

 

	
			The Corporation reserves the right to amend or terminate this 2020 Plan at any time; provided, however, that (i) any such amendment or termination shall be made in writing and approved by resolution of the Compensation Committee or the Board, and (ii) following the Effective Date, the Corporation may not, without a Covered Person’s written consent, amend or terminate this 2020 Plan in any way that (x) prevents the Covered Person from becoming eligible for his or her Retention Bonus under this 2020 Plan, or (y) reduces the amount of Retention Bonuses payable, or potentially payable to a Covered Person under this 2020 Plan.

				 	
			Amendment

			

 

	
			Under this 2020 Plan effective January 1, 2020, the salaries (the “2020 Plan Annual Base Salary”) of the Covered Persons shall be as specified with respect to each such Covered Person in Schedule 1 attached hereto.

				 	
			2020 Plan Annual Base Salaries

			

 

	
			If a Change of Control occurs before January 1, 2021, for purposes of calculating the Retention Bonuses in Schedule 1, the 2020 Plan Annual Base Salaries shall be as set forth immediately above.

				 	
			Change of Control Salaries

			

 

	
			As promptly as practical after the adoption of this 2020 Plan, the Covered Persons shall be granted restricted stock units in accordance with the RSU Plan and pursuant to award agreements under said RSU Plan approved by the Compensation Committee as specified with respect to each such Covered Person in Schedule 1 attached hereto.

			 

			Such restricted stock units shall vest in amounts and at times as set forth in Schedule 1 attached hereto and in accordance with the terms of the RSU Plan and applicable award agreement with respect thereto, which includes full vesting on a Change of Control as defined therein, on the event of death of the holder of restricted stock units, and on such other terms as set forth in the RSU Plan and applicable award agreements with respect thereto.

				 	
			2020 Plan Restricted Stock Units

			

 

	
			The Covered Persons shall be entitled to annual and performance bonuses in amounts as the Compensation Committee shall determine in its discretion but not less than the amounts as specified with respect to each such Covered Person in Schedule 2 attached hereto, payable within 30 days after the end of each fiscal year, provided that such persons are continuing in the services of the Corporation through the fiscal year in respect of which bonuses are paid.

				 	
			2020 Plan Bonuses

			

 

 

 

 

	
			To the maximum extent allowed by law, the right of each of the Covered Persons to receive the Retention Bonus due pursuant to this 2020 Plan in the event of a Change of Control shall be subject to such Covered Person having entered into an agreement with the party that acquires the Company upon such Change of Control whereby such Covered Person shall agree to continue to work for the acquirer or its affiliate or the Company, as applicable, for a period of 3 months or such lesser period as determined by the acquirer (the “Post Change of Control Employment Period”); provided, that the foregoing shall not apply to a Covered Person unless: (a) the acquiror desires to engage such Covered Persons to continue to work for the acquirer (or its affiliate or the Company); (b) the agreement between such Covered Person and the acquiror requires the acquiror to pay such Covered Person a monthly salary equivalent to the per month amount of such Covered Person’s 2020 Plan Annual Base Salary for each month during the Post Change of Control Employment Period; and (c) the agreement between such Covered Person and the acquiror requires the acquiror to pay such Covered Person a bonus payment equivalent to three (3) months of the Retention Bonus due to such Covered Person under this 2020 Plan upon a Change of Control, which payment shall be due and payable within thirty (30) days after the end of the Post Change of Control Employment Period as long as the Covered Person continued to work for the acquirer, its affiliate or the Company until the last day of the Post Change of Control Employment Period or the acquirer, its affiliate or the Company terminates such agreement with such Covered Person prior to such date.

				 	
			Service Agreements

			

 

	
			Upon a Change of Control of the Corporation, in accordance with terms of this 2020 Plan, the Chief Executive Officer shall grant additional bonuses in an aggregate amount equal to 1% of the total consideration paid by the acquirer in such Change of Control to the Corporation or the equity holders of the Corporation (subject to all applicable withholding for income, employment and other withholding tax purposes) to be divided up, in the Chief Executive Officer’s sole discretion, between those employees of the Corporation and its subsidiaries other than the Covered Persons whom the Chief Executive Officer determines in his sole discretion shall be granted cash bonuses to compensation such persons for services performed prior to the Change of Control.

			 

			One-hundred percent (100%) of the additional bonuses as described above shall be paid in lump-sum payments to the employees receiving additional bonuses, on the date of the Closing.

			 

			Notwithstanding the preceding, if any payment, benefit or distribution of any type to or for the benefit of any employee (other than the Covered Persons), whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this 2020 Plan or otherwise (collectively, the “Transaction Payments”) could subject the employee to the excise tax imposed under Section 4999 (the “Excise Tax”) or may not be deductible as a result of Section 280G, then the Corporation shall cause to be determined, before any amounts of the Transaction Payment are paid to the person, which of the following two alternative forms of payment would result in the employee’s receipt, on an after-tax basis, of the greater amount of the Transaction Payment notwithstanding that all or some portion of the Transaction Payment may be subject to the Excise Tax: (1) payment in full of the entire amount of the Transaction Payment (a “Full Payment”), or (2) payment of only a part of the Transaction Payment so that the employee receives the largest payment possible without the imposition of the Excise Tax (a “Reduced Payment”). For purposes of determining whether to make a Full Payment or a Reduced Payment, the Corporation shall cause to be taken into account the value of all applicable federal, state and local income and employment taxes and the Excise Tax (all the Transaction Payments shall be reduced so that the maximum amount of the Transaction Payments (after reduction) with respect to any such employee shall be one dollar ($1.00) less than the amount which would cause the Transaction Payments to be subject to the Excise Tax or would cause the Transaction Payments to not be deductible. If a Reduced Payment is made, (x) the employee shall have no rights to any additional payments and/or benefits constituting the Transaction Payment, and (y) reduction in payments and/or benefits shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit to the employee.

			 

			Notwithstanding the foregoing, if the Reduction Method would result in any portion of the Transaction Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method will be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification will preserve to the greatest extent possible, the greatest economic benefit for the employee as determined on an after-tax basis; (B) as a second priority, any amounts of the Transaction Payment that are contingent on future events (e.g., being terminated without Cause), will be reduced (or eliminated) before any amounts of the Transaction Payment that are not contingent on future events; and (C) as a third priority, any amounts of the Transaction Payment that are “deferred compensation” within the meaning of Section 409A will be reduced (or eliminated) before any amounts of the Transaction Payment that are not deferred compensation within the meaning of Section 409A.

				 	
			2020 Plan Additional Bonuses to Employees

			

 

 

 

 

Schedule 1

 

The Covered Person’s total compensation under the 2020 Plan shall be as follows:

 

	
			Covered Person Title

				
			2020 Plan Annual Base Salary

			
	
			President and Chief Executive Officer

				
			$500,000 per year

			
	
			Chief Financial Officer

				
			$300,000 per year

			
	 
	 	
			Retention Bonus Amount

			
	
			President and Chief Executive Officer

				
			An amount equal to the sum of:

			(1) the product of (a) such executive officer’s/key person’s 2020 Plan Annual Base Salary, divided by twelve (12), and then multiplied by (b) twenty-four (24) in the event the acquiring company following a Change of Control does not engage the executive to continue to work for the acquirer, or twenty-one (21) in the event the acquiring company does engage the executive to continue to work for the acquirer pursuant to the requirements of the provisions in the 2020 plan titled “Service Agreements”; plus

			(2) the equivalent dollar value of the restricted stock units granted to such executive officer/key person that are due to be granted under this 2020 Plan but that have not been granted as of the relevant date; plus

			(3) an amount equal to the performance bonus that would have been earned by such executive officer/key person based on performance relative to the target goals as of the relevant date.

			
	
			Chief Financial Officer

				
			An amount equal to the sum of:

			(1) the product of (a) such executive officer’s/key person’s 2020 Plan Annual Base Salary, divided by twelve (12), and then multiplied by (b) twenty-four (24) in the event the acquiring company following a Change of Control does not engage the executive to continue to work for the acquirer, or twenty-one (21) in the event the acquiring company does engage the executive to continue to work for the acquirer pursuant to the requirements of the provisions in the 2020 plan titled “Service Agreements”; plus

			(2) the equivalent dollar value of the restricted stock units granted to such executive officer/key person that are due to be granted under this 2020 Plan but that have not been granted as of the relevant date; plus

			(3) an amount equal to the performance bonus that would have been earned by such executive officer/key person based on performance relative to the target goals as of the relevant date.

			
	 
	 	
			Restricted Stock Units

			
	
			President and Chief Executive Officer

				
			A total of 137,500 restricted stock units, which shall vest in the amount of 68,750 restricted stock units on December 16th of each of 2020 and 2021 or otherwise in accordance with the terms of the RSU Plan and the applicable award agreement.

			
	
			Chief Financial Officer

				
			A total of 75,000 restricted stock units, which shall vest in the amount of 37,500 restricted stock units on December 16th of each of 2020 and 2021 or otherwise in accordance with the terms of the RSU Plan and the applicable award agreement.

			

 

 

 

 

Schedule 2

 

RESOLUTIONS OF THE COMPENSATION COMMITTEE 

 

Approval of the 2020 Hallador Energy Bonus Performance Plan Performance Goals

 

WHEREAS, the Company desires to establish an annual bonus performance plan (“Bonus Plan”) to reward and motivate certain employees of the Company for attainment of certain performance goals for fiscal year 2020;

 

WHEREAS, the Committee deems it advisable and in the best interests of the Company to establish terms and conditions for Bonus Plan award consistent with the Company’s goals for the performance period of January 1, 2020 to December 31, 2020 (the “Performance Period”).

 

NOW, THEREFORE, BE IT:

 

RESOLVED, that the Committee hereby approves the Bonus Plan as set forth in Exhibit A;

 

FURTHER RESOLVED, that the Committee hereby approves the Performance Goals for each of the following as set forth in Exhibit B:

 

	
			Area

				
			Performance Goals

			
	
			Safety*

				
			Severity Measure #1

			
	
			Safety*

				
			Severity Measure #2

			
	
			Safety*

				
			Violations per Inspection Day #1

			
	
			Safety*

				
			Violations per Inspection Day #2

			
	
			Financial

				
			EBITDA

			
	
			Discretionary

				 

 

*Safety is based on Sunrise Coal’s performance percentage relative to the national average for underground coal mines over the preceding 4 years (i.e., for 2020, it will be relative to 2016 – 2019).

 

FURTHER RESOLVED, that the Committee reserves the discretion, at any time prior to the final determination of whether the Performance Goals have been attained, to change the Performance Goals to reflect a change in corporate capitalization, such as a stock split or stock dividend, or a corporate transaction, such as a merger, consolidation, separation, reorganization or partial or complete liquidation, or to equitably reflect the occurrence of any extraordinary event, any change in applicable accounting rules or principles, any change in the Company’s method of accounting, any change in applicable law, any change due to any merger, consolidation, acquisition, reorganization, stock split, stock dividend, combination of shares or other changes in the Company’s corporate structure or shares, or any other change of a similar nature;

 

FURTHER RESOLVED, that the Committee hereby approves the following 2020 Bonus Plan award opportunities for the following named executive officers:

 

	
			Position

				
			Target Amount

				
			Threshold

				
			Target

				
			Maximum

			
	
			CEO & President

				
			$150,000

				
			80% of Target Amount

				
			100% of Target Amount

				
			120% of Target Amount

			
	
			Chief Financial Officer

				
			$100,000

				
			80% of Target Amount

				
			100% of Target Amount

				
			120% of Target Amount

			

 

 

 

 

General Authority

 

RESOLVED, that all such other acts or things which would cause the transactions contemplated by these resolutions to be consummated and performed be, and hereby are, authorized, approved and adopted; and it is further

 

RESOLVED, that each officer is hereby authorized to perform such further acts and execute and deliver such further documents or instruments as such officer may deem necessary or desirable to carry out with respect to the Company the intents and purposes of the foregoing resolutions.

 

 

 

 

Exhibit A

 

Bonus Performance Plan

 

The chart below sets forth the applicable weighting for each performance level for each performance measure for each Performance Period:

 

	
			Area

				
			Goals

				
			Base Points

			
	
			 

				
			 

				
			 

			
	
			Safety *

				
			Severity Measure #1

				
			8.75

			
	
			 

				
			Severity Measure #2

				
			8.75

			
	
			 

				
			 

				
			 

			
	
			Safety *

				
			Violations per Inspection Day #1

				
			8.75

			
	
			 

				
			Violations per Inspection Day #2

				
			8.75

			
	
			 

				
			 

				
			 

			
	
			Financial

				
			EBITDA

				
			35

			
	
			 

				
			 

				
			 

			
	
			Discretionary

				
			Discretionary

				
			30

			
	
			 

				
			 

				
			 

			
	
			Total

				
			 

				
			100

			

 

2020 performance bonus amounts, if any, will be paid in a lump sum net of applicable withholding in March 2021, after audit completion.

 

 

 

 

Exhibit B

 

Performance Goals

 

	
			Area

				
			Goals

				
			Minimum Goal Amount

				
			Target Goal

			Amount

				
			Maximum Goal Amount

			
	
			 

				
			 

				
			 

				 	
			 

			
	
			Safety *

				
			Severity Measure #1 (Oaktown Mines)

				
			100.00%

				
			89%

				
			78.00%

			
	
			 

				
			Severity Measure #2 (Oaktown Mines)

				
			323

				
			288

				
			253

			
	
			 

				
			 

				
			 

				 	
			 

			
	
			Safety *

				
			Violations per Inspection Day #1 (Oaktown Mines)

				
			61%

				
			51%

				
			41%

			
	
			 

				
			Violations per Inspection Day #2 (Oaktown Mines)

				
			31

				
			26

				
			21

			
	
			 

				
			 

				
			 

				 	
			 

			
	
			Financial

				
			EBITDA (adjusted)

				
			54.4

				
			68.0

				
			81.6

			
	 	 	 	 	 

 

Actual results for each Safety Measure will be calculated by Sunrise Coal management with final results available.

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