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The balance of funds would be distributed to Sanwa. <br /> Based on the assumptions pointing to total Net Proceeds of <br /> $5, 350,000, there would be little or nothing left for Sanwa. <br /> Dealing with Sanwa <br /> Resources is willing to urge Sanwa, the senior secured <br /> creditor, to accept the Plan outlined above in order to make <br /> peace with the unsecured creditors and insulate Minerals and Coal <br /> & Coke from the current litigation. <br /> The insulation of corporate affiliates would be <br /> provisional rather than final. <br /> In exchange for the increased allocation under the <br /> Plan, the DMG and OSM (i) would acknowledge that their <br /> reclamation claims are governed by the approved reclamation plan, <br /> with a cost estimated at $3,000,000; and (ii) would agree that <br /> upon confirmation of the Plan, they would forebear from <br /> initiating or continuing any action to collect or otherwise <br /> enforce their reclamation claims against any other persons other <br /> than Resources, including but not limited to the corporate <br /> affiliates. <br /> Forebearance would continue until all funds made <br /> available under the Plan had been spent, or until completion of <br /> the Reclamation Plan, whichever is earlier. In other words, <br /> there would be no release of corporate affiliates until <br /> reclamation is completed. If reclamation consumes $2.2� million <br /> and without completing the job, the agencies could renew <br /> litigation against third parties. <br /> Other Settlement Points <br /> Resources believes that the litigation in Pitkin County <br /> initiated by the DMG should be used as a vehicle for working out <br /> a revised reclamation schedule. Resources would join in the <br /> litigation and enter into a stipulated judgment that would <br /> contain the schedule for performing reclamation. The third party <br /> defendants would not join in this stipulated judgment. Claims <br /> against the third parties, and the third parties' defenses, would <br /> be preserved and held in abeyance. <br /> Conclusion <br /> The proposal outlined above, together with the Rockdust <br /> Plant and services to be provided by M&E/King, would fully fund <br /> the Reclamation Bond. There are no other funds available. The <br /> proposal essentially treats Sanwa's senior secured claim as <br /> though it was the most junior claim. This is a result that <br /> cannot be achieved outside a negotiated bankruptcy settlement. <br /> 7 <br />