1994-02-08_GENERAL DOCUMENTS - C1981017

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I. BACKGROUND INFORMATION REGARDING THE DEBTOR A. Corporate Structure Mid-Continent Resources, Inc. is a Delaware corporation which was originally organized in 1922 under the name Bell Coal and Navigation Company. With subsequent name changes the company became known as Mid-Continent Coal & Coke Company. The company operated as two separate and distinct profit centers: a coal mining operation based in Carbondale, Colorado, and a coke processing business based in Cleveland. In 1973, Mid-Continent Coal & Coke Company changed its name to Mid-Continent Resources, Inc. At that time, the coke business was severed from the coal business, through the formation of a wholly-owned subsidiary of Mid-Continent Resources, Inc. , a new Delaware corporation called Mid-Continent Coal & Coke Company. This permitted the retention of the proprietary name for use by the coke operation. Beginning in the mid-1970's, a corporate reorganization was planned involving the creation of a new parent company. The parent company, Mid-Continent Minerals, Inc. , was formed in 1975 as a Delaware corporation. The new entity remained dormant until 1980, when a revenue ruling was issued which permitted the corporate reorganization to proceed. In that year, Mid-Continent Resources, Inc. became a wholly-owned subsidiary of Mid-Continent Minerals, Inc. Mid-Continent Coal & Coke Company became a wholly- owned subsidiary of Mid-Continent Minerals, Inc. , thereby becoming a sister company rather than a subsidiary of Mid-Continent Resources, Inc. For additional information regarding corporate affiliates of the Debtor, see Section I.C, "Intercompany Relationships, " on page 2 below. B. The Mining Operation The Debtor started producing coal from the Dutch Creek Mine #1 in Coal Basin, Pitkin County, Colorado in 1956. Other mine openings were developed in Coal Basin over the next 35 years, during which the Debtor produced over 22 million tons of metallurgical coking coal used to process iron into steel. This mine (the "Mine" ) was the only source of high fluidity, medium- volatile coking coal in the western United States. The coal is low in sulfur and is considered a premium blending stock for coke manufacture. The coal was sold to both domestic and foreign steel producers. The Debtor was highly profitable during the 1970 's but experienced business reversals in the 19801s. In particular, the Debtor was adversely affected by increased foreign competition in 1