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1 \ Grand N~_sa ~~~ ~~~~~~~~~~~~~~~~ ~_~ Properties Company P. O. Box 1353 Palisade, CO 61526 (303) 464-7951 June 20, 1986 Certified Mail Return Receipt Requested Mr. Dean Allen Allen Brothers Coal 2880 Highway 92 Hotchkiss, CO 81419 Dear Mr. Allen: Grand Mesa Properties Company, successor to Sunflower Energy Corporation under the Purchase Agreement dated December 31, 1975, hereby notifies the Aliens as Sellers that it will terminate the Agreement at midnight on December 31, 1986, and surrender all of its rights, title and interest in all property subject to the Agreement at that time. This notice is given pursuant to paragraph 10 of the Agreement and the surrender will be made in accordance with its terms. The Aliens have claimed that they are entitled under paragraph 10 to the surrender of Sublease I, which was described in the letter from our attorney, Mr. Fanyo, to your attorney, Mr. Woodrow, of May 6, 1986. We continue to deny the validity of that claim. However, we are willing to convey Sublease I to the Aliens, since we do not intend to hold it anyway. We are also willing to include Sublease II for the same reason, if you want it, even though it is not subject to the Agreement either. Since both Sublease I and Sublease II are subleases of federal Coal Lease No. C-033301, Bureau of Land Management approval is required for the assignments to be effective. The Aliens will have to request BLM's approval in writing and file lease bonds in the amount determined by BLM. In addition, U.S. Steel's consent is required for any assignment of Sublease II. We will cooperate to the extent reasonably feasible to assist the Aliens in obtaining BLM's approval as well as U.S. Steel's consent. We are prepared to assign the two Subleases to the Aliens now. But, our offer to assign Sublease 7I will expire on July 11, 1986. If we have not received your written acceptance of this offer by that date, we will relinquish it to U.S. Steel. Obj. F