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On May 16, 1984, DCC and Peerless, anticipating DCC's successful negotiation of the Sublease Agreement, entered into an Option and Joint Venture Agreement ("Joint Venture Agreement") whereby these entities agreed to put the Sublease Properties into production. Towards that end, DCC and Peerless began the legal and physical groundwork for developing what is known as the Coal Gulch Mine. Under the Joint Venture Agreement, DCC granted Peerless the exclusive option to earn and acquire up to an undivided 50 percent interest in and to the sublease properties (subject only to the terms of the AMCC/DCC Sublease Agreement), excluding the overriding royalty interest of DCC. Peerless was to fund all mine costs and sublease requirements, and to act as the mine operator. At the time of entering into the Joint Venture Agreement, DCC loaned Peerless approximately $445,000 with which Peerless purchased its interest in the subleased properties. In order for the Coal Gulch Mine to be developed, the Colorado Mined Land Reclamation Division ("MLRD") required Peerless to obtain a coal mining permit. In order to obtain the permit, Peerless was required to post a 5140,000 bond with the MLRD to ensure adequate funds would exist to reclaim the mined land following termination of mining activity. Peerless was unable to post the bond on its own and sought the assistance of Springer Building Materials ("Springer"). On PJovember 6, 1985, Springer, Peerless, Jasco Trucking Company ("Jasco"), DCC and AMCC executed the Springer Agreement. Under the Springer Agreement, Springer agreed to provide the MLRD with a letter of credit in the amount of 5140,000 drawn on Sun West Bank of Albuquerque ("Sun West"). In return, AMCC and Peerless provided Springer with a promissory note and deed of trust covering AMCC's surface rights. Furthermore, as additional security, Peerless agreed to deposit funds into an escrow account at Sun West until a balance of 5140,000 was accumulated. Specifically, Peerless agreed to deposit 51.50 from the sale of each ton of coal mined into the escrow account at Sun west Bank. Once 5140,000 was accumulated in the escrow account, Peerless was to arrange for Sun West to issue a certificate of deposit in the amount of 5140,000 so that the letter of credit would be replaced. Since Peerless would be, in effect, using Springer's money, Peerless agreed to pay Springer 10 percent per annum of the 5140,000. As further consideration for Springer's posting the 5140,000, Peerless provided Springer a stock option. Furthermore, Peerless provided Jasco, a company associated with Springer, with the option to provide trucking services at the mine.