APPCOR12073

• Permit No: C1996084
• IBM Index Class Name: Application Correspondence
• Doc Date: 5/10/2001
• Doc Name: Letter to the Hills On Lease & Surface Use Agreement
• From: DORSEY & WHITNEY LLP
• To: HILL RANCH - F E HILL CO
• Media Type: D
• Archive: No

05/10/2001 12:12 FA3 DORSEY & WAIT!~'EY f~1J000
DORSEY & WHITNEY LLP
Mr. Bobby Hill, Managing Partner
Mr_ Dickie Hill
May 10, 2001
Page 2
I
46.54%a interest in certain surface use rights appurtenant to such mineral interest. Pursuant to
that deed recorded in [he real properly records of Las Animas County in Book 998 at Page 276,
Hill Ranch is the owner of 100% of the surface estate in the Leased Lands (including sand,
gavel and surface minerals).
2. Definitive Agreements. Lessors and Lorencito will proceed in good faith towazd
negotiation and execution of the Agreements. If the Agreements have not been executed by
5:00 p.m. MST, on June 1, 2001, this letter shall automatically terminate.
3. Compliance with Law. The Agreements will require Lorencito to comply with all
applicable federal, state, and governmental laws, rules, regulations, orders and standards with
respect to the Leased Lands and the mining of coal on the Leased Lands.
4. Conditions. The Agreements will be subject to: (a) negotiation and execution of
the Agreements with mutually agreeable terms, representations, conditions, covenants and
indemnities, (b) receipt by Lorencito of a permit to mine coal on the Leased Lands (the
"Permit"), and (c) receipt by Lorencito of an agreement by which Lorencito will be able to ship
coal from the Leased Lands by railroad.
5. Agreements. Until the fast to occur of the execution of the Agreements or
termination of this letter, Lessors agree that they will not dispose of the rights to be granted to
Lorencito in the Agreements, and will not grant any unusual or extraordinary rights to third
parties (including easements and rights of way) that would interfere with Lorencito's use of the
Leased Lands for coal mining purposes.
6. No Shopping. Until the first to occur of the execution of the Agreements ar the
termination of this letter, neither Lessors nor Lomecito will, directly or indirectly, entertain any
proposal or offer from any person, group or entity relating to any coal acquisition of the Leased
Lands and will inform the other parties of any such inquiry.
7. Pu61ic Annour~tement. Neither Lessors nor Lorencito will make any public
announcement regarding the existence of this letter other than its submission to the Colorado
Division of Minerals and Geology or other federal, state or local governmental agencies in
connection with Lorencito's application for the Permit.
8. Fees and Expenses. Each party will be responsible for its own legal, accounting,
investment banking and other expenses incurred in connection with this letter, the Agteerttents
and all matters related thereto.