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~~ ~ ~ • <br />-2 <br />' 2.3. The MAPR for a!! years after the first, year of this lease shall be paid at <br />eighty percent (80%) of each previous year's (AR) paid. <br />2.3(a) Any royalty overpayment Sor any preceding year, including the <br />first year, is recoverable by the Lessee on a pro-rata basis for the following <br />years (i.e., first year, MAPR is $36,000.00; if AR is $30,000.00, then second <br />year's 1r1APR is 80% of $30,000.00 ($24,000), less $500.00 per month to recover <br />previous year's overpayment. <br />• 2.3(b) The Jast six (6) months of the last year of any option period shall <br />be used as the recovery period for adjustmenu between the MAPR and AR. <br />2.4. All royalty payments shall be paid to: Douglas R. Kerrigan Escrow <br />Accounr, c% First National Bank of Florence, CO. <br />' 3. LE'SSOR'S COVENANTS <br />3.3. Lessor covenanu and agrees that he is entitled to lease the Property to <br />Lessee. <br />~~ 3.2. Lessor is responsible for payment of all mortgages, liens or other <br />encumbrances upon the Property. <br />• r <br />3.3. Lessor covenants that arty and all federal, state and local licenses or <br />• permits to operate this mining operation arc in full tone and efteet and shall inure to <br />the benefit of Lessee. • <br />3.4. Leuor shall pay all real estate taxes due upon the Property and any <br />personal property taxes due for arty personal equipment or inventory upon the <br />premises. ~ <br />3.5. In the event of a breach of any of Lessar's covenants, and in addition to <br />any other rightt ar remedies, Lessee may: (]) terminate this lease ar-d retain all <br />royalties due at that time as liquidated damages; or (2) without terminating the lease, <br />pay any default by Lessor for Lessor's benefit and deduct said payments cram any <br />royalties due. <br />3.6. Lessor agrees not to mine. produce. or market material in direct <br />competition with Lessee in Fremont County, Colorado. <br />3.7. Lessor grants to Lessee a right of first refusal to lease from Lessor any <br />subsequent additional reserves which Lessor may obtain in the future and to ofler to <br />Lessee such reserves on the same terms and conditions as any other bona fide otter to <br />lease. <br />k. LESSEE'S COVENANTS <br />4.1. Lessee shall furnish any necessary bonds or certificates of insurance upon <br />written notice by Lessor. <br />~ 4.2. Lessee will respect and cwt solicit sales to r tail stomers currently <br />supplied by Lessor, as indit:ated by the list attached hereto as xhibit C. <br />~I 4.3. Lessee may not refuse to make outside sales so lone ac rhr•v ~~~ <br />eeonomicaliv (oacitit.....-.-•---•- ' - -- <br />