Exhibit 10.1

EIGHTH AMENDMENT TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT

EIGHTH AMENDMENT TO THE THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), dated as of August 5, 2022, by and among HALLADOR ENERGY COMPANY (the “Borrower”), the Guarantors party hereto, the lenders listed on the signature pages hereof and PNC BANK, NATIONAL ASSOCIATION, as administrative agent for the Lenders (the “Administrative Agent”) under the Credit Agreement referred to below.

WlTNESSETH:

WHEREAS, the Borrower, the Lenders and the Administrative Agent are party to the Third Amended and Restated Credit Agreement dated as of May 21, 2018, as amended by the First Amendment dated as of March 26, 2019, the Second Amendment dated as of September 30, 2019, the Third Amendment dated as of April 15, 2020, the Fourth Amendment dated as of July 2, 2020, the Fifth Amendment dated as of May 27, 2021, the Sixth Amendment dated as of March 25, 2022, and the Seventh Amendment dated as of May 20, 2022 (and as may be further amended, restated, modified or supplemented, the “Credit Agreement”) (capitalized terms used without definition in this Amendment have the meanings given to them in the Credit Agreement), pursuant to which the Lenders have extended credit to the Borrower;

WHEREAS, the Borrower has requested that certain amendments be made as set forth in more detail herein; and

WHEREAS, capitalized terms not otherwise defined herein shall have the meanings assigned thereto in the Credit Agreement.

NOW, THEREFORE, in consideration of their mutual covenants and agreements hereafter set forth, and intending to be legally bound, the parties hereto agree as follows:

ARTICLE I

Section 1.1    Amendments to Credit Agreement. The Credit Agreement is hereby amended to be as set forth in the conformed copy attached hereto as Exhibit A. The Credit Agreement as so amended is referred to herein as the “Amended Credit Agreement.”

ARTICLE II

Section 2.1    No Other Amendments. Except as amended hereby, the terms and provisions of the Credit Agreement remain unchanged, are and shall remain in full force and effect unless and until modified or amended in writing in accordance with their terms, and are hereby ratified and confirmed. Except as expressly provided herein, this Amendment shall not constitute an amendment, waiver, consent or release with respect to any provision of any Loan Document, a waiver of any Potential Default or Event of Default under any Loan Document, or a waiver or release of any of the Lenders’ or Administrative Agent’s rights and remedies (all of which are hereby reserved).

Section 2.2    Representations and Warranties. The Borrower hereby represents and warrants to the Lenders and the Administrative Agent that the representations and warranties set forth in Article 6 of the Credit Agreement, are true and correct in all material respects on and as of the date hereof (except for any representation or warranty which was expressly limited to an earlier date, in which case such representation and warranty shall be true and correct in all material respects on and as of such date), and that after giving effect to this Amendment, no Event of Default, or Potential Default, has occurred and is continuing or exists on or as of the date hereof.

Section 2.3    Conditions to Effectiveness. This Amendment shall become effective on the date (such date, the “Amendment No. 8 Effective Date”) that the following conditions have been satisfied:

(a)    Amendment. The Administrative Agent shall have received an executed counterpart of this Amendment executed on behalf of (i) each of the Loan Parties and (ii) Lenders constituting the Required Lenders.

(b)    Certain Representations. (i) The representations and warranties of the Loan Parties contained in Section 6 of the Credit Agreement including as amended by the modifications and additional representations and warranties of this Amendment, and of each Loan Party in each of the other Loan Documents shall be true and accurate in all material respects on and as of the date hereof with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct in all material respects on and as of the specific dates or times referred to therein), (ii) each of the Loan Parties shall have performed and complied with all covenants and conditions hereof and thereof, (iii) no Event of Default or Potential Default shall have occurred and be continuing or shall exist, and (iv) the execution of this amendment has been duly authorized by the Loan Parties.

(c)    No Defaults under Other Obligations. No default under any note, credit agreement or other document relating to existing Indebtedness of any of the Loan Parties shall occur as a result of this Amendment.

(d)    No Actions or Proceedings. No action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, this Amendment, the other Loan Documents or the consummation of the transactions contemplated hereby or thereby or which, in the Administrative Agent’s sole discretion, would make it inadvisable to consummate the transactions contemplated by this Amendment or any of the other Loan Documents.

(e)    Consents. All material consents required to effectuate the transactions contemplated by this Amendment and the other Loan Documents and shall have been obtained.

(f)    Confirmation of Guaranty. Each of the Guarantors confirms that they have read and understand the Amendment. In order to induce the Lenders, the Administrative Agent and the other Agents to enter into the Amendment, each of the Guarantors: (i) consents to the Amendment and the transactions contemplated thereby; (ii) ratifies and confirms each of the Loan Documents to which it is a party; (iii) ratifies, agrees and confirms that it has been a Guarantor and a Loan Party at all times since it became a Guarantor and a Loan Party and from and after the date hereof, each Guarantor shall continue to be a Guarantor and a Loan Party in accordance with the terms of the Loan Documents, as the same may be amended in connection with the Amendment and the transactions contemplated thereby; and (iv) hereby ratifies and confirms its obligations under each of the Loan Documents (including all exhibits and schedules thereto), as the same may be amended in connection with the Amendment and the transactions contemplated thereby, by signing below as indicated and hereby acknowledges and agrees that nothing contained in any of such Loan Documents is intended to create, nor shall it constitute an interruption, suspension of continuity, satisfaction, discharge of prior duties, novation or termination of the indebtedness, loans, liabilities, expenses, guaranty or obligations of any of the Loan Parties under the Credit Agreement or any other such Loan Document.

(g)    Legal Details. All legal details and proceedings in connection with the transactions contemplated by this Amendment and the other Loan Documents shall be in form and substance satisfactory to the Administrative Agent and counsel for the Administrative Agent, and the Administrative Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Administrative Agent and its counsel, as the Administrative Agent or its counsel may reasonably request. Without limiting the generality of the foregoing, the Loan Parties and Lenders hereby (i) agree that, for all purposes of this Amendment, electronic images of this Amendment or any other Loan Documents (in each case, including with respect to any signature pages thereto) shall have the same legal effect, validity and enforceability as any paper original, and (ii) waive any argument, defense or right to contest the validity or enforceability of the Amendment or any other Loan Documents based solely on the lack of paper original copies of such Amendment and Loan Documents, including with respect to any signature pages thereto.

(h)    Fees. All fees, costs and expenses for which the Administrative Agent (and its Affiliates) are entitled to be paid or reimbursed, including but not limited to the fees and expenses of the Administrative Agent’s legal counsel shall have been paid.

Section 2.4    Miscellaneous.

(a)    This Amendment shall become effective as provided in Section 2.3.

(b)    The Credit Agreement, as amended by this Amendment, is in all respects ratified, approved and confirmed, and shall, as so amended, remain in full force and effect. From and after the date that the amendments herein described take effect, all reference to the “Agreement” in the Credit Agreement and in the other Loan Documents, shall be deemed to be references to the Credit Agreement as amended by this Amendment.

(c)    This Amendment shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania, and for all purposes shall be governed by, construed and enforced in accordance with the laws of said Commonwealth. This Amendment shall be a Loan Document.

(d)    Except as amended hereby, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect. The Borrower, the other Loan Parties, each Lender party hereto, and the Administrative Agent acknowledge and agree that this Amendment is not intended to constitute, nor does it constitute, a novation, interruption, suspension of continuity, satisfaction, discharge or termination of the obligations, loans, liabilities, or indebtedness under the Credit Agreement or the other Loan Documents.

(e)    This Amendment may be executed in any number of counterparts by the different parties hereto on separate counterparts. Each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one in the same instrument.

Section 2.5    General Release.

(a)    In consideration of, among other things, the Administrative Agent’s and the Lenders’ execution and delivery of this Amendment, the Borrower and each other Loan Party, on behalf of itself and its agents, representatives, officers, directors, advisors, employees, subsidiaries, affiliates, successors and assigns (collectively, “Releasors”), hereby forever agrees and covenants not to sue or prosecute against any Releasee (as hereinafter defined) and hereby forever waives, releases and discharges, to the fullest extent permitted by law, each Releasee from any and all claims (including, without limitation, crossclaims, counterclaims, rights of set-off and recoupment), actions, causes of action, suits, debts, accounts, interests, liens, promises, warranties, damages and consequential damages, demands, agreements, bonds, bills, specialties, covenants, controversies, variances, trespasses, judgments, executions, costs, expenses or claims whatsoever, that such Releasor now has or hereafter may have, of whatsoever nature and kind, whether known or unknown, whether now existing or hereafter arising, whether arising at law or in equity (collectively, the “Claims”), against any or all of the Secured Parties in any capacity and their respective affiliates, subsidiaries, shareholders and “controlling persons” (within the meaning of the federal securities laws), and their respective successors and assigns and each and all of the officers, directors, employees, agents, attorneys, advisors and other representatives of each of the foregoing (collectively, the “Releasees”), based in whole or in part on facts, whether or not now known, existing on or before the Amendment No. 8 Effective Date, that relate to, arise out of or otherwise are in connection with: (i) any or all of the Credit Agreement or any other Loan Documents or transactions contemplated thereby or any actions or omissions in connection therewith, (ii) any aspect of the dealings or relationships between or among the Borrower and the other Loan Parties, on the one hand, and any or all of the Secured Parties, on the other hand, relating to any or all of the documents, transactions, actions or omissions referenced in clause (i) hereof, or (iii) any aspect of the dealings or relationships between or among any or all of the Releasors, on the one hand, and any or all of the Releasees, on the other hand, but only to the extent such dealings or relationships relate to any or all of the documents, transactions, actions or omissions referenced in clause (i) hereof. In entering into this Amendment, the Borrower and each other Loan Party consulted with, and has been represented by, legal counsel and expressly disclaims any reliance on any representations, acts or omissions by any of the Releasees and hereby agrees and acknowledges that the validity and effectiveness of the releases set forth above do not depend in any way on any such representations, acts and/or omissions or the accuracy, completeness or validity thereof. The provisions of this Section 2.5 shall survive the termination of this Amendment, the Credit Agreement, the other Loan Documents and payment in full of the Obligations.

(b)    The Borrower and each other Loan Party hereby agrees that the Releasees shall each be an Indemnitee and entitled to the benefits of Section 11.3 of the Credit Agreement, including, without limitation, with respect to any Claims arising from or in connection with the negotiation, preparation, execution, delivery, performance, administration and enforcement of this Amendment or any other document executed and/or delivered in connection therewith.

(c)    The Borrower and each other Loan Party, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee, and will not assert in any proceeding any counterclaim or crossclaim against any Releasee, in each case on the basis of any Claim released, remised and discharged by the Borrower or any other Loan Party pursuant to Section 2.5(a) hereof. If the Borrower, any other Loan Party or any of its successors, assigns or other legal representatives violates the foregoing covenant, the Borrower and each other Loan Party, each for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys' fees and costs incurred by any Releasee as a result of such violation.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly authorized, have executed this Amendment as of the day and year first above written.

BORROWER:

HALLADOR ENERGY COMPANY

By:         /s/ Lawrence D. Martin         
Name: Lawrence D. Martin
Title: Chief Financial Officer

GUARANTORS:

EDWARDSPORT CONSTRUCTION COMPANY, LLC

GIBSON COUNTY LOGISTICS, LLC

OAKTOWN FUELS MINE NO. 1, LLC

OAKTOWN FUELS MINE NO. 2, LLC

PROSPERITY MINE, LLC

SFI COAL SALES, LLC

SUNRISE COAL, LLC

SUNRISE LAND HOLDINGS, LLC

SUNRISE ADMINISTRATIVE SERVICES, LLC

SYCAMORE COAL, INC.

By:         /s/ Lawrence D. Martin         
Name: Lawrence D. Martin
Title: President

SUMMIT TERMINAL, LLC

HALLADOR POWER COMPANY, LLC

By:         /s/ Lawrence D. Martin         
Name: Lawrence D. Martin
Title: Vice President

RAILPOINT SOLUTIONS, LLC

By:         /s/ Heather L. Tryon         
Name: Heather L. Tryon
Title: Manager

PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent and as Lender

By:         /s/ Daniel Scherling         
Name: Daniel Scherling
Title: Vice President

Iroquois Federal Savings & Loan Association,
as Lender

By:         /s/ Thomas J. Chamberlain         
Name:         Thomas J. Chamberlain
Title:          Senior Executive Vice President and Chief Lending Officer

[If second signature is required:]

By:         
Name:
Title: First Financial Bank, N.A.,
as Lender

By:         /s/ Dan Laughner                                    
Name:         Dan Laughner
Title:          Vice President

[If second signature is required:]

By:         
Name:
Title:

Old National Bank,
as Lender

By:         /s/ Kevin Blaylock         
Name:         Kevin Blaylock
Title:          Special Assets Officer

First Merchants Bank,
as Lender

By:         /s/ Jeff Pangburn         
Name:         Jeff Pangburn
Title:          Vice President

[If second signature is required:]

By:         
Name:
Title:

FIRST HORIZON BANK,
as Lender

By:         /s/ Jim Hennigan         
Name:         Jim Hennigan
Title:          Senior Vice President

The Huntington National Bank          
as Lender

By:         /s/ Cameron Hinojosa         
Name:         Cameron Hinojosa
Title:          Vice President

UMB BANK, N.A.,
as Lender

By:         /s/ John Mastro         
Name:         John Mastro
Title:          Senior Vice President

Exhibit A

[Credit Agreement as Amended by the Eighth Amendment]

Exhibit 10.4

NEITHER THIS UNSECURED CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THIS NOTE AND SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THE HOLDER OF THIS NOTE OR THE SECURITIES ISSUED UPON CONVERSION OF THIS NOTE MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

HALLADOR ENERGY COMPANY

UNSECURED CONVERTIBLE PROMISSORY NOTE

$3,000,000         Original Issue Date: August 8, 2022

Subject to the terms and conditions of this Note, for value received, Hallador Energy Company, a Colorado corporation (the “Company”), hereby promises to pay to the order of Lubar Opportunities Fund I, LLC (“Holder”), the principal sum of Three Million Dollars ($3,000,000) (the “Principal Balance”), together with accrued interest, as set forth in this Note.

The Holder acknowledges that this Note is one of a series of notes of substantially similar terms and conditions (collectively, the “Notes”) issued by the Company to the Holder and other holders (such holders with the Holder, collectively, the “Holders”) pursuant to that certain Convertible Note Purchase Agreement dated July 29, 2022 by and among the Company and the Holders (the “Purchase Agreement”), and to certain other Persons on May 2, 2022 and May 20, 2022 (collectively, the “May 2022 Notes”). Capitalized terms not defined herein shall have the meaning ascribed thereto in the Purchase Agreement.

The following is a statement of the rights of the Holder and the terms and conditions to which this Note is subject, and to which Holder, by the acceptance of this Note, agrees.

1.     DEFINITIONS. The following definitions shall apply for purposes of this Note.

“Applicable Rate” means a rate equal to the lower of: (a) the Highest Lawful Rate; and (b) eight percent (8%) per annum.

“Business Day” means a weekday on which banks are open for general banking business in Indiana.

“Change of Control” means (i) any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting shareholders of the Company prior to such event cease to own 50.1% or more of the voting power, or corresponding voting equity interests, of the surviving entity after such event, (ii) any person (as defined in Section 13(d) of the Exchange Act), together with its affiliates and associates (as such terms are defined in Rule 405 under the Securities Act), but excluding the Holder together with its affiliates and associates, beneficially owns or is deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act without regard to the 60-day exercise period) in excess of 35% of the Company’s voting power, (iii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company’s Board of Directors on the date thereof, (iv) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (v) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

“Common Stock” means the common stock of the Company, par value $0.01.

“Conversion Price” means the greater of (i) $3.33 and (ii) the 30-Trading Day trailing VWAP ending on and including the Trading Day of July 28, 2022.

“Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Highest Lawful Rate” means the maximum non-usurious rate of interest, as in effect from time to time, which may be charged, contracted for, reserved, received or collected by Holder in connection with this Note under applicable law.

“Lost Note Documentation” means documentation reasonably satisfactory to the Company with regard to a lost or stolen Note, including, if required by the Company, an affidavit of lost note and an indemnification agreement by Holder in favor of the Company with respect to such lost or stolen Note.

“Maturity Date” means the earlier of (i) December 31, 2026 and (ii) the time at which the Balance of this Note is due and payable upon an Event of Default; provided, however that if the Event of Default is cured as permitted in this Note, then the Maturity Date shall not thereafter be deemed to have occurred with regard to such Event of Default under this clause (ii).

“Note” means this Unsecured Convertible Promissory Note.

“Original Issue Date” means the date of the first issuance of this Note, regardless of any transfers of the Note and regardless of the number of instruments which may be issued to evidence this Note.

“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other entity or any governmental authority.

“Principal Market” means the Nasdaq Capital Market, or such other principal market or exchange on which the Common Stock is then listed for trading.

“Securities Act” means the Securities Act of 1933, as amended.

“Trading Day” means any day during which the Principal Market is open for trading.

“VWAP” means the daily dollar volume-weighted average sale price for the Common Stock on the Principal Market on any particular Trading Day during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” functions or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by the OTC Markets. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as determined by the Company. All such determinations of VWAP shall be appropriately and equitably adjusted in accordance with the provisions set forth herein for any stock dividend, stock split, stock combination or other similar transaction.

2.      INTEREST; PAYMENT; RANKING.

2.1    Interest. Interest shall accrue on the Principal Balance semi-annually at the Applicable Rate, beginning on the Original Issue Date until the entire Principal Balance and accrued but unpaid interest is paid in full (or until the date on which this Note redeemed or converted, as provided herein). Accrued interest on this Note shall be computed on the basis of a 365-day year. Any interest due hereunder shall be payable by the Company in cash or, at the election of the Company, in shares of Common Stock (or a combination thereof). Such in-kind payment of interest at any time will be calculated valuing the Common Stock at the lower of (a) the Conversion Price, or (b) the 30-Trading Day trailing VWAP, with the final number of shares of Common Stock issuable with respect to such in-kind payment rounded up to the next whole share.

2.2    Payment. The Principal Balance and all accrued and unpaid interest due hereunder shall be paid to the Holder in U.S. dollars on the Maturity Date. The Company shall make such payments by wire transfer of immediately available funds for the account of the Holder as the Holder may designate from time to time and notify in writing to the Company at least three Business Days prior to the Maturity Date. If the Maturity Date falls on a day that is not a Business Day, the required payment will be made on the next succeeding Business Day and no interest on such payment will accrue in respect of the delay.

2.3    No Prepayment. Other than as expressly permitted under this Note, the Company may not pay any unpaid Principal Balance or accrued but unpaid interest of this Note before the Maturity Date.

2.4    Ranking. This Note shall rank senior or pari passu to all existing unsecured indebtedness of the Company, and senior or pari passu to all future unsecured indebtedness of the Company, but subordinate to all current and future secured indebtedness of the Company.

3.      CONVERSION.

3.1    Optional Conversion. At any time during the period beginning on August 18, 2022 and ending on the Maturity Date, the entire Principal Balance and all accrued and unpaid interest then outstanding under this Note shall, at the option of the Holder, be convertible (in whole, not in part) into Conversion Shares at the Conversion Price. The Holder shall effect such conversion by providing the Company a conversion notice. Such conversion notice shall specify the entire Principal Balance and accrued but unpaid interest to be converted, the effective Conversion Price, and the effective date of conversion.

3.2    Mechanics of Conversion. Not later than five Business Days after any conversion date, the Company shall issue, or cause to be issued to the Holder the number of Conversion Shares being acquired upon the conversion of this Note. Upon conversion, this Note shall no longer be deemed to be outstanding and all rights with respect to this Notes shall immediately cease and terminate at the date of conversion, except only the right to receive Conversion Shares in exchange therefor as provided herein, and to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided herein. The Holder agrees to surrender this Note to the Company (or Lost Note Documentation where applicable) as soon as practicable after conversion, and the Holder shall not be entitled to receive any certificates representing the Conversion Shares issuable upon conversion of this Note unless and until Holder has surrendered the original of this Note (or Lost Note Documentation where applicable).

3.3    No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. If upon any conversion of this Note, a fraction of a share would otherwise be issued, then in lieu of such fractional share, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

3.4    Reservation of Shares. The Company agrees that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company agrees that all Conversion Shares that shall be so issuable shall, upon issue in accordance with the terms herein, be duly authorized, validly issued, fully paid and nonassessable.

3.5    Adjustment to Conversion Price. If the Company at any time subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced, and if the Company at any time combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 3.5 shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 3.5 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

3.6    Limitations on Conversion. Notwithstanding anything herein to the contrary, the Holder shall not attempt to convert any portion of this Note and the Company shall not issue to the Holder any Conversion Shares to the extent such shares, after giving effect to such issuance and when added to the number of shares of Conversion Shares issued and issuable to the other Holders pursuant to the other Notes and to the Persons that hold the May 2022 Notes, would result in the Holders and the Persons that hold the May 2022 Notes (and their respective affiliates) being issued Common Stock that in the aggregate would exceed (i) 19.99% of the number of shares of Common Stock outstanding (the “Maximum Aggregate Ownership Amount”), or (ii) 19.99% of the total voting power of the Company’s securities outstanding that are entitled to vote on a matter being voted on by holders of the Common Stock (the “Maximum Aggregate Voting Amount”), unless and until the Company obtains shareholder approval permitting such issuance in accordance with applicable rules of the NASDAQ Capital Market (or any other applicable national securities exchange) (“Stockholder Approval”). In determining the number of outstanding shares of Common Stock for purposes of this Section 3.6, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be, filed with the Securities and Exchange Commission, (y) a more recent public announcement by the Company, or (z) any other notice by the Company or the Company's transfer agent setting forth the number of shares of Common Stock outstanding. If on any attempted conversion of this Note the resulting issuance of Conversion Shares would result in the Holders and the Persons that hold the May 2022 Notes (and their respective affiliates) exceeding the Maximum Aggregate Ownership Amount or the Maximum Aggregate Voting Amount and the Company shall not have previously obtained Stockholder Approval at the time of conversion, then the Company shall only issue to the Holder such number of Shares as may be issued below the Maximum Aggregate Ownership Amount or Maximum Aggregate Voting Amount, as the case may be.

4.    REDEMPTION.

4.1    Optional Redemption. At any time on or after the third anniversary of the Original Issue Date, the Company may, at its option and upon 30 days written notice provided to the Holder, elect to redeem the Note (in whole and not in part) and the Holder shall be obligated to surrender the Note, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. Notwithstanding the preceding or anything in Section 3 to the contrary, after receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares as set forth in Section 3 by giving written notice of such election to the Company no later than 5 days prior to the date fixed for redemption.

4.2    Change of Control Transactions. In the event the Company enters into a definitive agreement to consummate a Change of Control, the Company may, at its option and upon ten Business Days prior written notice to the Holder, elect to redeem the Note (in whole and not in part), and the Holder shall be obligated to surrender the Note, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. Notwithstanding the preceding or anything in Section 3 to the contrary, after receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares as set forth in Section 3 by giving written notice of such election to the Company no later than 15 days prior to the date fixed for redemption.

5.      EVENTS OF DEFAULT. Each of the following events shall constitute an “Event of Default” hereunder:

(a)    The Company fails to make any payment when due under this Note on the applicable due date or within five Business Days after written notice of such failure has been given by Holder to the Company;

(b)    The Company fails to comply with its obligation to convert or redeem this Note as described herein, and such default continues for a period of five Business Days;

(c)    Any representation or warranty made by the Company under or in connection with the issuance of this note shall prove to have been incorrect in any material respect when made;

(d)    Any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company in excess of $1,000,000, or for money borrowed the repayment of which is guaranteed by the Company for in excess of $1,000,000, whether such indebtedness or guarantee now exists or shall be created hereafter;

(e)    A receiver is appointed for any material part of the Company’s property, the Company makes a general assignment for the benefit of creditors, or the Company becomes a debtor or alleged debtor in a case under the U.S. Bankruptcy Code or becomes the subject of any other bankruptcy or similar proceeding for the general adjustment of its debts or for its liquidation; or

(f)    The Company’s Board of Directors adopts a resolution for the liquidation, dissolution or winding up of the Company.

If an Event of Default occurs and is continuing, the Holder may declare all of the then outstanding Principal Balance any accrued but unpaid interest due thereon, to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (d) and (e) of this Section 5, this Note shall become due and payable without further action or notice.

6.      GENERAL PROVISIONS.

6.1    Waivers. The Company and all endorsers of this Note hereby waive notice, presentment, protest and notice of dishonor.

6.2    Attorneys’ Fees. In the event any party is required to engage the services of an attorney for the purpose of enforcing this Note, or any provision thereof, each party shall bear its own expenses and costs, including attorneys’ fees.

6.3    Transfer; Successors and Assigns. Subject to compliance with applicable securities laws, this Note, and all rights, privileges and obligations hereunder, may be assigned by Holder to any transferee that is an affiliate of Holder, provided that the transferee executes and delivers an acknowledgement that such transferee agrees to be subject to, and bound by, all the terms and conditions of this Note, and the terms and conditions of such assigned Note shall inure to the benefit of and be binding upon such transferee. None of the rights, privileges, or obligations set forth in, arising under, or created by this Note may be assigned or transferred by the Company without the prior consent in writing of the Requisite Holders. Except as otherwise provided, the terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.

6.4    Governing Law. This Note shall be governed by and construed under the internal laws of the State of Colorado, without reference to principles of conflict of laws or choice of laws.

6.5    Headings. The headings and captions used in this Note are used only for convenience and are not to be considered in construing or interpreting this Note. All references in this Note to sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.

6.6    Notices. All notices and other communications given or made pursuant to this Note shall be in writing to the address of the Holder or the Company, as applicable, as set forth in the signature pages to the Purchase Agreement, and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt.

6.7    Interest Rate Limitation. Anything herein to the contrary notwithstanding, if during any period for which interest is computed hereunder, the amount of interest computed on the basis provided for in this Note, together with all fees, charges and other payments which are treated as interest under applicable law, as provided for herein or in any other document executed in connection herewith, would exceed the amount of such interest computed on the basis of the Highest Lawful Rate, then the Company shall not be obligated to pay, and Holder shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Highest Lawful Rate, and during any such period the interest payable hereunder shall be computed on the basis of the Highest Lawful Rate.

6.8    Amendments and Waivers. This Note may not be amended and provisions hereunder may not be waived without the written consent of each of the Company and the Requisite Holders (or the Holder pursuant to Section 8.9 of the Purchase Agreement).

6.9    Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Note to the extent they are held to be unenforceable and the remainder of this Note shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

[Signature page follows]

IN WITNESS WHEREOF, the Company has caused this Unsecured Convertible Promissory Note to be signed in its name as of the date first written above.

Exhibit 10.5

NEITHER THIS UNSECURED CONVERTIBLE PROMISSORY NOTE (THIS “NOTE”) NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF APPLICABLE STATES. THIS NOTE AND SUCH SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION UNDER SUCH LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS. THE HOLDER OF THIS NOTE OR THE SECURITIES ISSUED UPON CONVERSION OF THIS NOTE MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THIS NOTE AND ANY SECURITIES ISSUABLE UPON CONVERSION OF THIS NOTE MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS.

HALLADOR ENERGY COMPANY

UNSECURED CONVERTIBLE PROMISSORY NOTE

$1,000,000         Original Issue Date: August 8, 2022

Subject to the terms and conditions of this Note, for value received, Hallador Energy Company, a Colorado corporation (the “Company”), hereby promises to pay to the order of Hallador Alternative Asset Fund, LLC (“Holder”), the principal sum of One Million Dollars ($1,000,000) (the “Principal Balance”), together with accrued interest, as set forth in this Note.

The Holder acknowledges that this Note is one of a series of notes of substantially similar terms and conditions (collectively, the “Notes”) issued by the Company to the Holder and other holders (such holders with the Holder, collectively, the “Holders”) pursuant to that certain Convertible Note Purchase Agreement dated July 29, 2022 by and among the Company and the Holders (the “Purchase Agreement”), and to certain other Persons on May 2, 2022 and May 20, 2022 (collectively, the “May 2022 Notes”). Capitalized terms not defined herein shall have the meaning ascribed thereto in the Purchase Agreement.

The following is a statement of the rights of the Holder and the terms and conditions to which this Note is subject, and to which Holder, by the acceptance of this Note, agrees.

1.  DEFINITIONS. The following definitions shall apply for purposes of this Note.

“Applicable Rate” means a rate equal to the lower of: (a) the Highest Lawful Rate; and (b) eight percent (8%) per annum.

“Business Day” means a weekday on which banks are open for general banking business in Indiana.

“Change of Control” means (i) any consolidation, merger or other business combination of the Company with or into any other corporation or other entity or person (whether or not the Company is the surviving corporation), or any other corporate reorganization or transaction or series of related transactions in which in any of such events the voting shareholders of the Company prior to such event cease to own 50.1% or more of the voting power, or corresponding voting equity interests, of the surviving entity after such event, (ii) any person (as defined in Section 13(d) of the Exchange Act), together with its affiliates and associates (as such terms are defined in Rule 405 under the Securities Act), but excluding the Holder together with its affiliates and associates, beneficially owns or is deemed to beneficially own (as described in Rule 13d-3 under the Exchange Act without regard to the 60-day exercise period) in excess of 35% of the Company’s voting power, (iii) there is a replacement of more than one-half of the members of the Company’s Board of Directors which is not approved by those individuals who are members of the Company’s Board of Directors on the date thereof, (iv) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the assets of the Company, determined on a consolidated basis, or (v) the Company enters into any agreement providing for an event set forth in (i), (ii), (iii) or (iv) above.

“Common Stock” means the common stock of the Company, par value $0.01.

“Conversion Price” means the greater of (i) $3.33 and (ii) the 30-Trading Day trailing VWAP ending on and including the Trading Day of July 28, 2022.

“Conversion Shares” means the shares of Common Stock issuable upon conversion of this Note.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Highest Lawful Rate” means the maximum non-usurious rate of interest, as in effect from time to time, which may be charged, contracted for, reserved, received or collected by Holder in connection with this Note under applicable law.

“Lost Note Documentation” means documentation reasonably satisfactory to the Company with regard to a lost or stolen Note, including, if required by the Company, an affidavit of lost note and an indemnification agreement by Holder in favor of the Company with respect to such lost or stolen Note.

“Maturity Date” means the earlier of (i) December 29, 2028 and (ii) the time at which the Balance of this Note is due and payable upon an Event of Default; provided, however that if the Event of Default is cured as permitted in this Note, then the Maturity Date shall not thereafter be deemed to have occurred with regard to such Event of Default under this clause (ii).

“Note” means this Unsecured Convertible Promissory Note.

“Original Issue Date” means the date of the first issuance of this Note, regardless of any transfers of the Note and regardless of the number of instruments which may be issued to evidence this Note.

“Person” means an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization, joint venture or other entity or any governmental authority.

“Principal Market” means the Nasdaq Capital Market, or such other principal market or exchange on which the Common Stock is then listed for trading.

“Securities Act” means the Securities Act of 1933, as amended.

“Trading Day” means any day during which the Principal Market is open for trading.

“VWAP” means the daily dollar volume-weighted average sale price for the Common Stock on the Principal Market on any particular Trading Day during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg through its “Volume at Price” functions or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30 a.m., New York City Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported by the OTC Markets. If the VWAP cannot be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market value as determined by the Company. All such determinations of VWAP shall be appropriately and equitably adjusted in accordance with the provisions set forth herein for any stock dividend, stock split, stock combination or other similar transaction.

2.  INTEREST; PAYMENT; RANKING.

2.1    Interest. Interest shall accrue on the Principal Balance at the Applicable Rate, beginning on the Original Issue Date until the entire Principal Balance and accrued but unpaid interest is paid in full (or until the date on which this Note redeemed or converted, as provided herein). Accrued interest on this Note shall be computed on the basis of a 365-day year. Any interest due hereunder shall be payable by the Company in cash or, at the election of the Company, in shares of Common Stock (or a combination thereof). Such in-kind payment of interest at any time will be determined by the 30-Trading Day trailing VWAP, with the final number of shares of Common Stock issuable with respect to such in-kind payment rounded up to the next whole share.

2.2    Payment. The Principal Balance and all accrued and unpaid interest due hereunder shall be paid to the Holder in U.S. dollars on the Maturity Date. The Company shall make such payments by wire transfer of immediately available funds for the account of the Holder as the Holder may designate from time to time and notify in writing to the Company at least three Business Days prior to the Maturity Date. If the Maturity Date falls on a day that is not a Business Day, the required payment will be made on the next succeeding Business Day and no interest on such payment will accrue in respect of the delay.

2.3    No Prepayment. Other than as expressly permitted under this Note, the Company may not pay any unpaid Principal Balance or accrued but unpaid interest of this Note before the Maturity Date.

2.4    Ranking. This Note shall rank senior or pari passu to all existing unsecured indebtedness of the Company, and senior or pari passu to all future unsecured indebtedness of the Company, but subordinate to all current and future secured indebtedness of the Company.

3.  CONVERSION.

3.1    Optional Conversion. At any time during the period beginning on August 18, 2022 and ending on August 17, 2024, the entire Principal Balance and all accrued and unpaid interest then outstanding under this Note shall, at the option of the Holder, be convertible (in whole, not in part) into Conversion Shares at the Conversion Price. The Holder shall effect such conversion by providing the Company a conversion notice. Such conversion notice shall specify the entire Principal Balance and accrued but unpaid interest to be converted, the effective Conversion Price, and the effective date of conversion.

3.2    Mechanics of Conversion. Not later than five Business Days after any conversion date, the Company shall issue, or cause to be issued to the Holder the number of Conversion Shares being acquired upon the conversion of this Note. Upon conversion, this Note shall no longer be deemed to be outstanding and all rights with respect to this Notes shall immediately cease and terminate at the date of conversion, except only the right to receive Conversion Shares in exchange therefor as provided herein, and to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided herein. The Holder agrees to surrender this Note to the Company (or Lost Note Documentation where applicable) as soon as practicable after conversion, and the Holder shall not be entitled to receive any certificates representing the Conversion Shares issuable upon conversion of this Note unless and until Holder has surrendered the original of this Note (or Lost Note Documentation where applicable).

3.3    No Fractional Shares. No fractional shares shall be issued upon conversion of this Note. If upon any conversion of this Note, a fraction of a share would otherwise be issued, then in lieu of such fractional share, the Company shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

3.4    Reservation of Shares. The Company agrees that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall be issuable upon the conversion of this Note. The Company agrees that all Conversion Shares that shall be so issuable shall, upon issue in accordance with the terms herein, be duly authorized, validly issued, fully paid and nonassessable.

3.5    Adjustment to Conversion Price. If the Company at any time subdivides (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced, and if the Company at any time combines (by any stock split, stock dividend, stock combination, recapitalization or other similar transaction) its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased. Any adjustment pursuant to this Section 3.5 shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this Section 3.5 occurs during the period that a Conversion Price is calculated hereunder, then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.

3.6    Limitations on Conversion. Notwithstanding anything herein to the contrary, the Holder shall not attempt to convert any portion of this Note and the Company shall not issue to the Holder any Conversion Shares to the extent such shares, after giving effect to such issuance and when added to the number of shares of Conversion Shares issued and issuable to the other Holders pursuant to the other Notes and to the Persons that hold the May 2022 Notes, would result in the Holders and the Persons that hold the May 2022 Notes (and their respective affiliates) being issued Common Stock that in the aggregate would exceed (i) 19.99% of the number of shares of Common Stock outstanding (the “Maximum Aggregate Ownership Amount”), or (ii) 19.99% of the total voting power of the Company’s securities outstanding that are entitled to vote on a matter being voted on by holders of the Common Stock (the “Maximum Aggregate Voting Amount”), unless and until the Company obtains shareholder approval permitting such issuance in accordance with applicable rules of the NASDAQ Capital Market (or any other applicable national securities exchange) (“Stockholder Approval”). In determining the number of outstanding shares of Common Stock for purposes of this Section 3.6, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, as the case may be, filed with the Securities and Exchange Commission, (y) a more recent public announcement by the Company, or (z) any other notice by the Company or the Company's transfer agent setting forth the number of shares of Common Stock outstanding. If on any attempted conversion of this Note the resulting issuance of Conversion Shares would result in the Holders and the Persons that hold the May 2022 Notes (and their respective affiliates) exceeding the Maximum Aggregate Ownership Amount or the Maximum Aggregate Voting Amount and the Company shall not have previously obtained Stockholder Approval at the time of conversion, then the Company shall only issue to the Holder such number of Shares as may be issued below the Maximum Aggregate Ownership Amount or Maximum Aggregate Voting Amount, as the case may be.

4.  REDEMPTION.

4.1    Optional Redemption. At any time on or after August 18, 2025, the Company may, at its option and upon 30 days written notice provided to the Holder, elect to redeem the Note (in whole and not in part) and the Holder shall be obligated to surrender the Note, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. Notwithstanding the preceding or anything in Section 3 to the contrary, after receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares as set forth in Section 3 by giving written notice of such election to the Company no later than 5 days prior to the date fixed for redemption; provided that if the redemption notice is issued after May 31, 2027, the foregoing right of the Holder to elect to convert this Note into Conversion Shares shall not apply.

4.2    Change of Control Transactions. In the event the Company enters into a definitive agreement to consummate a Change of Control, the Company may, at its option and upon ten Business Days prior written notice to the Holder, elect to redeem the Note (in whole and not in part), and the Holder shall be obligated to surrender the Note, at a redemption price equal to 100% of the outstanding Principal Balance, together with any accrued but unpaid interest thereon to the redemption date. Notwithstanding the preceding or anything in Section 3 to the contrary, after receipt of such redemption notice from the Company, the Holder may, at its option, elect to convert the Principal Balance and accrued interest into Conversion Shares as set forth in Section 3 by giving written notice of such election to the Company no later than 15 days prior to the date fixed for redemption.

5.  EVENTS OF DEFAULT. Each of the following events shall constitute an “Event of Default” hereunder:

(a)    The Company fails to make any payment when due under this Note on the applicable due date or within five Business Days after written notice of such failure has been given by Holder to the Company;

(b)    The Company fails to comply with its obligation to convert or redeem this Note as described herein, and such default continues for a period of five Business Days;

(c)    Any representation or warranty made by the Company under or in connection with the issuance of this note shall prove to have been incorrect in any material respect when made;

(d)    Any default after any cure period under, or acceleration prior to maturity of, any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company in excess of $1,000,000, or for money borrowed the repayment of which is guaranteed by the Company for in excess of $1,000,000, whether such indebtedness or guarantee now exists or shall be created hereafter;

(e)    A receiver is appointed for any material part of the Company’s property, the Company makes a general assignment for the benefit of creditors, or the Company becomes a debtor or alleged debtor in a case under the U.S. Bankruptcy Code or becomes the subject of any other bankruptcy or similar proceeding for the general adjustment of its debts or for its liquidation; or

(f)    The Company’s Board of Directors adopts a resolution for the liquidation, dissolution or winding up of the Company.

If an Event of Default occurs and is continuing, the Holder may declare all of the then outstanding Principal Balance any accrued but unpaid interest due thereon, to be due and payable immediately, except that in the case of an Event of Default arising from events described in clauses (d) and (e) of this Section 5, this Note shall become due and payable without further action or notice.

6.  GENERAL PROVISIONS.

6.1    Waivers. The Company and all endorsers of this Note hereby waive notice, presentment, protest and notice of dishonor.

6.2    Attorneys’ Fees. In the event any party is required to engage the services of an attorney for the purpose of enforcing this Note, or any provision thereof, each party shall bear its own expenses and costs, including attorneys’ fees.

6.3    Transfer; Successors and Assigns. Subject to compliance with applicable securities laws, this Note, and all rights, privileges and obligations hereunder, may be assigned by Holder to any transferee that is an affiliate of Holder, provided that the transferee executes and delivers an acknowledgement that such transferee agrees to be subject to, and bound by, all the terms and conditions of this Note, and the terms and conditions of such assigned Note shall inure to the benefit of and be binding upon such transferee. None of the rights, privileges, or obligations set forth in, arising under, or created by this Note may be assigned or transferred by the Company without the prior consent in writing of the Requisite Holders. Except as otherwise provided, the terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties.

6.4    Governing Law. This Note shall be governed by and construed under the internal laws of the State of Colorado, without reference to principles of conflict of laws or choice of laws.

6.5    Headings. The headings and captions used in this Note are used only for convenience and are not to be considered in construing or interpreting this Note. All references in this Note to sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.

6.6    Notices. All notices and other communications given or made pursuant to this Note shall be in writing to the address of the Holder or the Company, as applicable, as set forth in the signature pages to the Purchase Agreement, and shall be deemed effectively given upon the earlier of actual receipt, or (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next Business Day delivery, with written verification of receipt.

6.7    Interest Rate Limitation. Anything herein to the contrary notwithstanding, if during any period for which interest is computed hereunder, the amount of interest computed on the basis provided for in this Note, together with all fees, charges and other payments which are treated as interest under applicable law, as provided for herein or in any other document executed in connection herewith, would exceed the amount of such interest computed on the basis of the Highest Lawful Rate, then the Company shall not be obligated to pay, and Holder shall not be entitled to charge, collect, receive, reserve or take, interest in excess of the Highest Lawful Rate, and during any such period the interest payable hereunder shall be computed on the basis of the Highest Lawful Rate.

6.8    Amendments and Waivers. This Note may not be amended and provisions hereunder may not be waived without the written consent of each of the Company and the Requisite Holders (or the Holder pursuant to Section 8.9 of the Purchase Agreement).

6.9    Severability. If one or more provisions of this Note are held to be unenforceable under applicable law, then such provision(s) shall be excluded from this Note to the extent they are held to be unenforceable and the remainder of this Note shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

[Signature page follows]

IN WITNESS WHEREOF, the Company has caused this Unsecured Convertible Promissory Note to be signed in its name as of the date first written above.