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a fine against Monks Construction in the amount of $5,100 for operating in the Property without a permit from June 1984 through approximately September 1984. 4. The Board also assessed a fine against Mr. Kerrigan in the amount of $10,200 for Mr. Kerrigan mining the Property without a permit. (Exhibit A, para. 4d.) The Board found that the Property was mined by Mr. Kerrigan without a permit in 1982 and 1983, prior to Monks Construction initiating its mining operations. See Board Minutes from April 24 and 25, 1991, the pertinent parts of which are attached hereto as Exhibit C. The Board also "found that Mr. Kerrigan was responsible for 80~ of the disturbance at the site." See Board Minutes from January 22 and 23, 1992, the pertinent parts of which are attached hereto as Exhibit D. 5. On or about July 11, 1991, Mr. Kerrigan initiated proceedings before the American Arbitration Association against Monks Construction. In that arbitration proceeding, Mr. Kerrigan alleged, in part, that the Mining Lease had been orally amended in regard to who was responsible to obtain the mining permits for the Property. A two-day hearing, which included evidence on that issue, was held on November 24 and 25, 1992. The final decision contained in the Award of Arbitrator was entered on December 17, 1992, a copy of which is attached hereto as Exhibit E.2 6. Pursuant to the notice of Corrective Action and Order to Pay Civil Penalty (Exhibit A), the Board ordered Monks Construction to pay the $5,100 by August 3, 1992, unless certain corrective action was taken. As a result of the arbitration proceedings pending throughout 1992, Monks Construction did not pay the $5,100 fine or take any corrective action. Monks Construction was advised by its legal counsel not to take any such action during the pendency of the arbitration proceedings so as not to severally prejudice Monks Construction's case in such proceedings. One of the issues to be determined in the arbitration proceedings was to determine whether Mr. Kerrigan or Monks Construction was responsible to obtain the proper mining permits on the Property. By paying the $5,100 fine while the arbitration proceedings were pending could have been construed as an admission that Monks Construction was responsible for obtaining the permits. 2 The Award of Arbitrator was subsequently modified by the E1 Paso County District Court to provide that the Arbitrator exceeded his jurisdiction in ordering Monks Construction to pay Mr. Kerrigan's $10,200 fine. Mr. Kerrigan has since filed a Notice of Appeal with the Colorado Court of Appeals regarding the district court's modification. That appeal is currently pending. - 2 -