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The two-year feud between former best friends Paris Hilton and Nicole Richie appears to be over.
The Simple Life stars were spotted dining together on Caesar salads and penne pasta at the West Hollywood restaurant Dan Tana's on Sunday night.
"They looked like best friends to me," a fellow diner tells PEOPLE. "It seemed as if they had never gotten into a fight. They were laughing really loud and seemed more than happy to be together. There wasn't a slow moment in their conversation – they chatted non-stop. They left hand-in-hand, smiling."
Richie's rep could not be reached for comment, but Hilton's publicist, Elliot Mintz, tells PEOPLE: "They had a meal last night. It's not my place to say what was discussed or the nature of the meal. But it's a good thing when people have a meal together."
When asked if they're best friends again, Mintz said: "I wouldn't characterize it that way because I don't know if it was a business or personal discussion. Let's just watch it unfold."
Hilton and Richie have known each other since childhood. Neither has ever revealed the exact cause of their falling-out, which dates to early 2005. In April of that year, Hilton said in a statement, "Nicole knows what she did, and that's all I'm ever going to say about it."
At the time, a source close to Hilton told PEOPLE that Richie was jealous of the attention her friend was getting – including Hilton's hosting gig on Saturday Night Live in February 2005.
Richie's friends countered that Richie had simply outgrown her wild ways. In November 2005, Richie told PEOPLE that she and Hilton "just grew apart, we're not friends."
Whatever the cause, the feud introduced all sorts of logistical problems for two stars, whose professional and personal lives tend to overlap. They also endured awkward moments when out socially: In early August, both showed up at Hyde Lounge in L.A., and proceeded to ignore each other. Later that month, they bumped into each other in the green room at MTV's Video Music Awards, with similar results.
And last year, The Simple Life producers were left scrambling to determine what, if anything, could be done with the show, given that its stars refused to work together. In the end, a fourth season was filmed, although Hilton and Richie shared little screen time in it.
But their reconciliation couldn't have come at a better time: The two are set to begin filming the fifth season of The Simple Life in late fall, and FOX studios and the E! network have required they shoot this season together.
A source at E! denies speculation that the make-up was encouraged by the network or studio. The new season of the show is tentatively scheduled to air in March 2007.