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Hills, the Leased Lands aze free and clear of all encumbrances and claims by third <br />• parties created by, through or under the Hills which might interfere with the rights <br />of Lorencito granted herein except as disclosed in the public record. ht the event <br />the Hills are determined to own less than one hundred percent (100%) of their <br />interest in the Leased Lands as listed in the Recital paragraph of this Lease, the <br />rights granted Lorencito herein shall at Lorencito's sole option, continue to be <br />valid as to that portion owned or controlled by the Hills, and Lorencito may <br />proportionally reduce the actual production royalty paid to the Hills herein to <br />coincide with the actual interest determined to be owned by the Hills. The Hills <br />further represent that they have no knowledge of any condition on the Leased <br />Lands which would constitute a violation of or require action to be taken under, <br />any environmental law of a local, state or federal government. <br />8. Representations of Lorencito <br />a. Lorencito represents: that it has made its own independent examination of the title <br />to and adequacy of the Leased Lands; that all necessary corporate actions have <br />been taken authorizing Lorencito to enter into this Lease; that entering into this <br />Lease will not cause Lorencito to default upon or breach any other contracts, <br />agreements, or obligations to which it is a party; and that the person signing this <br />document is fully authorized to do so. <br />b. Lorencito will defend and hold harmless Hills against any claims by third parties <br />• arising from Lorencito's operations or activities under this Lease. <br />9. Additional Obligations of Lorencito <br />a. Lorencito agrees to keep complete and accurate records and data and analyses <br />related to coal produced from the Leased Lands and to provide Hills with such <br />information in electronic form where available and in written form where not <br />available electronically. <br />b. Lorencito shall conduct all operations in a good and workmanlike manner and in <br />accordance and compliance with all applicable local, state and federal laws or <br />regulations of a general nature, and specifically, Lorencito shall conduct all of its <br />operations in compliance with all existing and future laws of the United States, <br />the State of Colorado and all county and local governmental laws, roles and <br />regulations which are applicable to mining and mineral processing operations and <br />which are intended for the protection of the environment. <br />c. Lorencito shall be responsible for obtaining, at its sole cost, all environmental and <br />other permits and approvals necessary for its operation on the Leased Lands. <br />Lorencito will not extract coal Crom the Leased Lands before all permits aze in <br />place. <br />d. Lorencito will conduct its operations on the Leased Lands so as to keep the <br />• Leased Lands and the royalty interest granted herein to the Hills, free and clear of <br />all liens and encumbrances. Lorencito reserves the right to dispute any such lien <br />COAL LEASE FINAL 6-25-0I.doc <br />