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-2- <br />Each sight draft so drawn and presented shall be honored by us if presented prior to the close of business on the expiration date <br />of this letter of credit. This credit r e f e r s to x i 1 lion Enterprises , L L C company's application for a <br />permit to engage in mining and reclamation activities within the State of Colorado. <br />It is an express condition of this letter of credit that it shall be automatically extended for successive additional periods of one <br />year each, from the initial and each future expiration date unless the First S t a.t e <br />Bank of Torrington ("the Bank") shall notify the Director at least 90 days prior to an expiration <br />date in writing by registered mail, at the above address, that the Bank elects not to extend the credit for such additional period. <br />In such event, in addition to his power to draw hereon under the preceding paragraphs; the Director may draw the full or any <br />lesser amount hereof at any time prior to such expiration date by sight draft, or drafts, accompanied by the written statement of <br />the Director certifying that the amount drawn will be held as a cash deposit in lieu of financial warranty, as provided in <br />applicable Colorado statutes governing mined land and reclamation. <br />The original signed letter of credit and any amendments will be presented to the Bank by the beneficiary along with any draft <br />presented pursuant to this letter of credit, and will be surrendered to the Bank with any draft which draws the full amount, or the <br />balance remaining available, under this letter of credit. <br />This Letter of Credit is subject to Uniform Customs and Practice for Documentary Credits (1993 Revision), International <br />Chamber of Commerce - Publication 500 (the "UCP500") and shall be governed by the laws of the State of Colorado. In the <br />event of any conflict between the laws of the State of Colorado and the UCP 500, the laws of the State of Colorado will control. <br />If any expiration date specified herein shall fall upon a day other than a regular business day of the Bank, the expiration date <br />shall ipso facto be extended to the close of business on the next successive business day of the Bank. <br />The <br />By <br />Bank of Torrington,. WY <br />Date 3-22-04 <br />NOTES: 1. The Letter of Credit shall not be in excess of 10 percent of the bank's capital surplus account or in excess of <br />30 percent if the applicant has more than one Letter of Credit for different permits. To demonstrate this <br />requirement, the issuing bank shall provide a balance sheet certified by a Certified Public Accountant. <br />Generally, this is available in the Bank's most recent Annual Report or Call Report. <br />2. The Letter of Credit shall be submitted on the Bank's letterhead.