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l RED'' <br /> JAN 1 199 <br /> December 28, 1992 <br /> MINERAL.- <br /> MEMORANDUM, RE: MID-CONTINENT RESOURCES, INC. (MCR) <br /> LIQUIDATION <br /> Following is a summary of the situation as it relates to <br /> MCR ' s liquidation program within the scope of my knowledge: <br /> 1 . Mr. William G. Boswell (Garth Boswell ) as President <br /> of Redstone Development Company (LLC) , a Utah corporation, and also <br /> a principal of the NEBO Trust represented to John Reeves that NEBO <br /> Trust and Alta-Bates & Company signed a Joint Venture Agreement to <br /> acquire Mid-Continent properties, and have been escrowing <br /> securities, apparently with the intention of using the same for <br /> collateral, to fund the MCR purchase. United Title Agency of <br /> Arizona, Inc. in Phoenix confirmed by letter the opening of an <br /> escrow with deposit of securities. On December 4, 1992 Garth <br /> Boswell sent John Reeves document entitled "Heads of Agreement" <br /> outlining proposal for the purchase. <br /> I responded on December 8, 1992 by letter indicating a <br /> basis on which I thought the transaction could proceed involving <br /> escrow of purchase price in Denver. <br /> John Reeves indicated approval of this letter approach by <br /> Mr. Boswell and on December 21, 1992 Mr. Boswell requested that <br /> MCR' s attorney prepare a draft of Contract which I did and sent the <br /> same to him on December 24, 1992, with copies to Board members, to <br /> Jim Holden and to Sanwa. <br /> The Contract draft provides for suspension of further <br /> sales of MCR assets upon deposit of $6, 000,000 in escrow, together <br /> with reclamation bond, but with no suspension of such activities <br /> until deposit is made. <br /> 2. Salvage and reclamation activities have been <br /> substantially suspended in Coal Basin and M&E/King have withdrawn <br /> their employees, with the exception of one person. However, sales <br /> activities continue by M&E following circulation of their Brochure. <br /> Lou LaGiglia is working with M&E attempting to reconcile as many <br /> accounting differences as possible. We anticipate going to <br /> arbitration on several items, such as charging attorney fees in <br /> negotiation of the salvage contract to the project, salary and <br /> expense account for Mr. King, etc. <br /> 3. On environmental matters, negotiations have <br /> proceeded with MLRD on changes in reclamation planning which would <br /> result in substantial cost reductions. Several items, however, <br /> have not been resolved, and are the subject to continuing <br />