2012-06-08_GENERAL DOCUMENTS - C1981008

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Dave Berry June 8, 2012 Page 6 of 7 C S I V I B The conduct of the parties conclusively demonstrates the weakness of Mr. Guire's arguments. His single proffered explanation for the 1992 extension (Exhibit C) was that the intent of the extension was "in order for Peabody Coal Company to have a valid lease to sell and assign to WFC on April 21, 1992." See, email from Jim Guire to David Berry dated May 16, 2012. As a construction of the parties' intent, this simply makes no sense whatsoever. April 21, 1992 was within the expiration period of the Mining Lease even without the extension set forth in Exhibit C. Therefore, there would have been no need to extend the lease at all if this had been the parties' intent. Moreover, Western Fuels- Colorado began mining on the Property in 1993 — consistent with industry practice in relation to this Mining Lease. Western Fuels - Colorado paid a substantial amount in production royalties, in excess of $640,000 all after 1993. Western Fuels - Colorado's activity on the Property has been continuous since early 1993 to the present day and has all taken place without dispute or protest by the Lessor until Mr. Guire came along. None of the foregoing facts is remotely consistent with any suggestion that the Mining Lease had expired on the date Mr. Guire suggests. Even the 2002 release (Exhibit E) is significant because Western Fuels - Colorado would not have released lands, and San Miguel Power Association would not have accepted the release, had either party considered the Mining Lease to have expired. Most importantly, though he is the one raising the complaint, the conduct of Mr. Guire's own company in expressly assuming the Mining Lease and its obligations is, to put it mildly, inconsistent with his assertion that Mining Lease has expired. "One of the most reliable indications of the true intent of the parties to a contract is their behavior and interpretation of the contract before a controversy arises." Blecker v. Kofoed, 672 P.2d 526, 528 (Colo. 1983), see also East Ridge of Ft. Collins v. Larimer and Weld Irr. Co., 109 P.3d 969, 975 (Colo. 2005). "When a contract or agreement has been given a practical construction, as reflected by the conduct and acts of the parties in its performance, such construction may, and perhaps even should, be considered by the court in eliminating any ambiguity, and in ascertaining the mutual meaning of the parties at the time of the contracting." Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1314 (Colo. 1984). In addition, under the applicable Colorado statute of limitations the time for the Lessor to challenge the Mining Lease in a court of law based on the 1992 lease extension (Exhibit C) has expired. Under CRS § 38 -41- 101(1), such an action would have to be brought within 18 years of its accrual, or in other words before April 30, 2011. See also, CRS § 38 -41 -102 (providing date of accrual). Here, prior to Mr. Guire's attempt to raise a dispute, the parties had given the Mining Lease a practical construction by their conduct and acts supported by an unbroken chain of at least 20 years of consistent activity, all of which is consistent with the plain language of the Mining Lease and industry practice as articulated above, and all of which is inconsistent with Mr. Guire's interpretation of the instrument. Western Fuels- Colorado takes very seriously its {00103813.1 }