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permitted by any temporary or permanent permits, and iu conformance with applicable laws <br />and regulations. <br />(b) During the Option Tenn, LESSEE shall have the right to perform such tests, <br />inquiries and other due diligence as LESSEE shall deem necessary or desirable in order to <br />determine ifthe Leased Premises, and the Leased Substances situate thereunder, are adequate <br />for LESSEE'S intended mining operations. During the Option Tenn, LESSEE shall have the <br />right to apply for and process such permit and other applications as may be necessary, and <br />on terms and conditions acceptable to LESSEE, in LESSEE'S sole discretion, to allow <br />LESSEE to conduct mining operations and ancillary activities on the Leased Premises. <br />LESSOR agrees to provide LESSEE with all reasonable cooperation in the submission and <br />processing of such applications and permits as may be requested by LESSEE; provided that <br />all such cooperation shall be at the sole cost and expense of LESSEE. <br />(c) AC any time during the Option Tenn, the LESSEE may exercise the Option <br />herein granted to lease the Leased Premises upon the terms herein stated. <br />(d) The LESSEE shall exercise the Option by giving LESSOR written notice of <br />its election. <br />(e) Upon giving such notice of election (the "Exercise Date"), the ]ease terms of <br />this Agreement shall be in full force and effect. <br />(f) Prior to the LESSEE'S exercise of the Option, LESSEE shall have no <br />obligations or other liability under this Agreement with respect to the Leased Premises unless <br />LESSEE shall commence mining operations, in which event LESSEE shall comply with the <br />terms and conditions of this Agreement applicable to LESSEE'S conduct of such activities. <br />(g) In the event that LESSEE shall not exercise the Option prior to the expiration <br />of the Option Tenn, then the Option shall expire and be of no further force or effect, and <br />FORTY THOUSAND DOLLARS ($40,000.00) of the Option Payment shall be returned by <br />LESSOR to LESSEE within five (5) business days following the expiration of the Option <br />Terns. The remaining amount of the Option Payment shall be retained by the LESSOR in <br />consideration ofthe grant ofthe Option to LESSEE. Ifthe Option is not exercised, LESSEE <br />shall repair any damage to the Leased Premises caused by or at the request of LESSEE and <br />shall restore the Leased Premises to the condition it was in prior to the date of this Lease <br />Agreement, excepting the removal of piles of Leased Materials. <br />(h) Upon exercise of the Option, the entire Option Payment shall be deemed <br />prepaid Minimum Annual Royalty. <br />09!06!2002 L.G. Cverist /Rock Island Land Co. Page 2 <br />Op[ion and Lease Agreement <br />