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Snell &Wilmer <br />L.L.P. <br />Cheryl A. Linden, Esq. <br />Robert D. Clazk, Esq. <br />February 9, 2001 <br />Acordia of Kentucky -(Pete Gibson, Senior Vice President} - Mr. Gibson presently writes <br />the casualty and liability policies for the company and has been retained to make contacts on <br />behalf of Powderhom. Mr. Gibson recently brokered a meeting between Powderhom and <br />Cumberland Surety (described infra). Unfortunately, it appeazs as though Mr. Gibson has no <br />further suggestions for surety contacts to obtain a replacement bond. (Contact Information: <br />Lexington Green Two, Suite 410, 220 Lexington Green Circle, Lexington, KY 40503-3311; <br />Tel: 859/273-6600), <br />Mazsh USA, Inc. -(Drew Brach- Senior Vice president & Midwest Surety Practice Leader) - <br />The company met with two Senior Vice Presidents from Marsh, Messrs. Drew Brach and <br />Samuel Robinson, to discuss Powderhorn's need for a replacement surety in Colorado. <br />Following the meeting, Marsh wrote that an "out-of--the-box" solution would be necessary, <br />and indicated hope that a strategy might exist, but with no commitment as to timeline. Marsh <br />stated that it is "exploring" similaz arrangements for other companies. A copy of the letter is <br />enclosed. (Contact Information: Drew Brach - 171 Monroe Avenue N.W., Suite 800, Grand <br />Rapids, MI 49503-2683; Tel: 616/233-4227; Samuel F. Robinson, Jr. - 4700 Old Kingston <br />Pike, PO Box 19810, Knoxville, TN 37939-2810; Tel: 865/450-3358). <br />• City Insurance - (Chazles Morton, Executive Vice President) - is Powderhorn's broker of <br />record for Frontier. We have not received an update from City Insurance. (Contact <br />Information: 3601 MacCorkle Avenue, SE, PO Box 1126, Chazleston, WV 25324; Tel: <br />304/926-7412). <br />During the intervening period, Powderhorn representatives met with Cumberland Surety <br />Vice President, Mr. Bill Adams, at the suggestion of Mr. Gibson of Acordia. Mr. Adams is a <br />coal-industry specialist and, as such, was aware of the issues facing Quaker Coal and its <br />subsidiaries. Mr. Adams was provided with recent financials and information on the current <br />status and Chapter 11 process. Although Mr. Adams did not rule out the possibility of a <br />replacement for the Colorado bond, he did indicate that realistically there needed to be additional <br />security or significant progress in the reorganization. We also understand that Cumberland no <br />longer writes its own bonds but instead brokers for Linden. {Contact Information: Cumberland <br />Surety Insurance Company, Inc., 367 West Short Street, Lexington, KY 40507; Tel: 859/254- <br />8622). <br />The company informs me that to the best of its understanding, these aze the only sureties <br />that presently write reclamation bonds for coal companies. The company will continue to <br />explore options in the mazketplace, <br />rroz.~ <br />