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Cheryl A. Linden <br /> April 61 1994 <br /> Page 2 <br /> The remaining question is the source of funds for the <br /> redemption. In our conversation yesterday I stated that the funds <br /> would need to come from the proceeds at closing of the sale of the <br /> Rockdust Plant. You stated that the funds should be made from <br /> other funds held by Resources, so as to increase the amount of <br /> funds available for reclamation this Spring. <br /> Resources disagrees. Property taxes are a non-recourse <br /> obligation, and the general concept in bankruptcy is that such <br /> taxes are paid from the property to which the taxes attach. This <br /> is consistent with the pending Plan. Section 1.26 of the Plan <br /> defines "Net Proceeds" as "cash proceeds of property sold under the <br /> Plan, after payment of reasonable fees, commissions, title <br /> insurance, advertising expenses, property taxes, or similar costs <br /> of sale. . . Section 4.3. 1 of the Plan provides for the sale of <br /> the Rockdust Plant and the distribution of the Net Proceeds to the <br /> MLRB. Alternatively, the Plan permits the MLRB to foreclose on the <br /> plant. In foreclosure, the MLRB would take title subject to the <br /> property taxes. <br /> This is not really an economic issue. Resources is <br /> holding about $200,000 of cash. The sum of $66,775 is earmarked <br /> for distributions to Classes 3, 5, 7, 8, and 11 under the Plan. <br /> Much of the rest is going to be spent on reclamation this Spring <br /> and Summer, prior to the Effective Date of the Plan. For example, <br /> completion of portal sealing, which is part of the reclamation <br /> plan, will cost about $50,000. Resources has authorization under <br /> prior cash collateral orders to pay for portal sealing and plans to <br /> pay this expense using existing funds. <br /> Money is fungible. If Resources expends funds to seal <br /> portals, and proceeds of the Rockdust Plant are expended to clear <br /> property taxes, it has the same effect as using funds of Resources <br /> to clear property taxes, with the proceeds of the Rockdust Plant <br /> being used to pay for portal sealing. <br /> In anticipation of our meeting on April 8, I refer to <br /> Mike Long's letter of March 30 to Dave Wattenberg. In that letter, <br /> Mr. Long states that "Mid-Continent would need to undertake <br /> reclamation of the mine site during the 1994 construction season <br /> . . . . Reclamation conducted after 1994 will be done in <br /> accordance with the State contracting requirements. . . . Although <br /> it is unclear in the [bankruptcy] plan how money will be <br /> distributed from the trustee to the reclamation contractor (whether <br /> that is Mid-Continent or a State contractor) , it is assumed that <br /> such distributions will, be made only after the Division has <br />