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11. The Coal Mining Lease provides for payment of advance and production royalties <br />to the Morgans. Advance royalties will total $1.075 Million Dollars, of which $1 Million has <br />been paid to date. In addition, production royalties may accrue to the Lessors depending on the <br />total yield of coal from the Morgan Property. <br />12. Among the rights granted WFC under the Coal Mining Lease is the right to mine <br />the coal from the Property "including mining by the strip and/or any other methods now or <br />hereafter in existence, without any liability to Lessor for any current or future damages <br />(including damage or loss to other minerals or strata) to Lessor's estate." Coal Mining Lease ¶ <br />3(b). <br />13. The Coal Mining Lease also provides WFC the right "to undertake any other <br />thing or use necessary or convenient for exercising the Rights otherwise specified in this Section <br />... all with respect to the mining of the Coal and with respect to the mining of other coal on other <br />lands situated in the same township(s) in which the Property is situated, or any township <br />contiguous to said township(s)." Id. <br />14. The Coal Mining Lease also provided WFC the "exclusive right to determine the <br />uses to which the Property is to be put after mining, or the crops, if any, to be raised, or the <br />methods to be employed and the costs to be incurred as part of such after- mining uses." Id. ¶ <br />3(e). <br />15. The Coal Mining Lease also contains an express covenant of quiet possession <br />"subject only to those (if any) rights of way, easements, leases, encumbrances, reservations and <br />exceptions of record and the easement for a powerline used to supply two residences located on <br />the adjacent property." Id. ¶ 4(a). Under the terms of the Coal Mining Lease, this express <br />warranty is supplemental to, and in addition to, the covenant of quiet enjoyment that is implied in <br />every lease of real property under Colorado law. <br />16. At the conclusion of the term of the Coal Mining Lease, WFC is to return the <br />Property so that it is "approximately in the same condition as when Lessee entered the Property <br />(i.e. a farmable condition). This includes returning the land to cropland to grow alfalfa or row <br />crops, leaving land flat enough for irrigation and picking rocks to the extent a rock picker is <br />capable." Id. ¶ 8(d). The reclamation standard shall be as approved by the Division with consent <br />of Lessor. <br />17. During the term of the Coal Mining Lease, "Lessor agrees to refrain from <br />interfering with, delaying or obstructing Lessee's exercise of any of its Rights hereunder, or <br />similar rights on other lands by any means whatever." Id. ¶ 7(f). <br />18. While the Coal Mining Lease was being negotiated and thereafter, WFC offered <br />contract employment to M &M Custom Farming, which in turn employed JoEllen Turner and <br />Mike Morgan. The two were contracted to conduct farming operations on land that WFC was <br />reclaiming following the completion of its mining activities. <br />19. In 1998, and for purposes of revising the Permit to allow entry onto the Morgan <br />Property, WFC engaged Jim Irvine, a soil scientist, to conduct a soil survey. Mr. Irvine <br />determined that the Morgan Property contained no Prime Farmland soils as defined in the <br />(00026036.1) 3 <br />