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2- <br />WHEREAS, the Board has determined that the Financial Warrantyby the Warrantor equals the estimated costs <br />of reclamation, as approved by the Board, with regard to the Affected Lands. <br />WHEREAS, as proof of its financial responsibility, the Warrantor has proceeded pursuant to Section <br />34-32-117(3)(2)(1) of the Act and has caused the Wachovia Bank of Winston-Salem <br />State of North Carolina (the "Bank") to issue its Irrevocable Letter of Credit No. SM2129 67W <br />dated March 31 2005 , payable to the Board in the amount of Fort yNineThou sandFourHundredF if t <br />Dollars ($ 49,450.00 ) for the period from March 31 2005 'through April 1 <br />2006 and has delivered it to the Board to be held by the Board as proof of the Operator's financial <br />responsibility under this financial warranty, The Bank is not a party to this agreement; its obligations are set forth in <br />its Letter of Credit. Nothing in this Financial Warranty diminishes or qualifies the Bank's obligation under its Letter <br />of Credit. <br />NOW THEREFORE, the Operator and the Warrantor are held hereby firmly unto the State of Colorado in the <br />amount of those sums for those periods of time as set forth herein, until this financial warranty is amended or released <br />in accordance with applicable law. <br />The Board may, for good cause shown, increase or decrease the amount and duration of this financial warranty. <br />The Operator shall have sixty (60) days after the date of notice of any such adjustment to fulfill all new requirements. <br />The Operator and the Warrantor shall notify the Board immediately of any event which may impair this <br />financial warranty. If the Board receives such notice, or otherwise has reason to believe that this Financial Warranty <br />has been materially impaired, it may convene a hearing in accordance with the Act for the purpose of determining <br />whether impairment has occurred. <br />No misrepresentation by the Warrantor which may have induced the Bank to deliver its Letter of Credit shall <br />be any defense to any draft by the State under such Letter of Credit. <br />The Board may present drafts upon the Bank for payment under the Letter of Credit if the Board determines <br />that reclamation which ought to have been performed by the Operator, or its successors or assigns, remains <br />unperformed. - No other condition precedent need be fulfilled to entitle the Board to receive the amounts of such <br />drafts. However, if, upon completion of such reclamation by the Board, the amounts expended for reclamation shall <br />be less than the amount received from the Bank, the excess shall be promptly refunded to the Warrantor. <br />If or to the extent that the Bank shall cancel its Letter of Credit and such assurance shall not concurrently be <br />reduced to a cash deposit as substitute assurance, the Operator agrees that it will forthwith provide substitute <br />assurance, in form and substance approved by the Board, equal to the amount of the Letter of Credit which has been <br />so cancelled and not reduced to a cash deposit. <br />With the prior consent of the Board, which consent shall not be unreasonably withheld, the Operator and/or <br />Warrantor may from time to time change the Bank whose Letter of Credit is held by the State as assurance or alter the <br />form of assurance of financial responsibility held by the State for the faithful performance by the Operator of its <br />obligations hereunder, provided that at all times there shall be in existence and delivered to the Board such assurance <br />or other evidence of financial responsibility as shall be required by applicable laws and regulations of the State of <br />Colorado and as shall be, in form and substance, approved by the Board or the Division. <br />The obligation of the Operator and the Warrantor shall continue until the Board has released this Financial <br />Warranty or has ordered it forfeited in accordance with applicable provisions of the Act. It is understood that periods <br />of years may necessarily be required before determination can be made that reclamation of the Affected Lands has <br />been satisfactorily completed It is also recognized that, as reclamation is accomplished, the amount of this Financial <br />Warranty may be reduced with the approval of the Board so that it reflects the then current estimated cost of the <br />remaining reclamation of the Affected Lands. No revision, extension, or renewal of the permit or of the time allowed <br />