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<br />R~V~`V~ UNITED STATES
<br />MpR 1~ 2~ABU~AUMOFTLANDTHMANAGEMENTR
<br />COAL LEASE READJUSTMENT
<br />serial Number D-056298
<br />Lease Date December 1. 1949
<br />PART 1. LEASE RIGHTS GRANTED
<br />This lease, entered into by and between the UNITED STATES OF AMERICA, hereinafter called lessor, through
<br />the Bureau of Land Management, and
<br />RAG Empire Corporation
<br />P.O. Box 68
<br />Craig, Colorado 81626
<br />hereinafter called lessee, is readjusted, effective Sune 21, 2002, for a period of 1D years and for so
<br />long thereafter as coal is produced in commercial quantities from the leased lands, subject to
<br />readjustment of lease terms at the end of each to-year lease period.
<br />Sec. 1. This lease readjustment is issued pursuant and subject to the terms and provisions of the Mineral
<br />Lands Leasing Act of 1920, Act of February 25, 1920, as amended, 41 Stat. 437, 30 U.S.C. 151-287,
<br />hereinafter referred to as the Act;
<br />and to the regulations and formal orders of the Secretary of the Interior which are now or hereafter in
<br />force, when not inconsistent with the express and specific provisions herein.
<br />Sec. 2. Lessor, in consideration of any rents, and royalties to be paid, and the conditions and covenants
<br />to be observed as herein set forth, hereby grants to lessee the exclusive right and privilege to drill
<br />for, mine, extract, remove, or otherwise process and dispose of the coal deposits in, upon, or under the
<br />following described lands:
<br />T. 5 N., R. 91 W., 6t° P.M.
<br />sec.6, lot 8;
<br />containing 41.21 acres, more or less, together with the right to construct such works, buildings, plants,
<br />structures, equipment and appliances and the right to use such on-lease rights-of-way which may be
<br />necessary and convenie»t in the exercise of the rights and privileges granted, subject to the conditions
<br />herein provided.
<br />PART IZ. TERMS AND CONDITIONS
<br />Sec. 1. (a) RENTAL RATE - Lessee shall pay lessor
<br />rental annually and in advance for each acre or
<br />fraction thereof during the continuance of the
<br />lease at the rate of $3.00 for each lease year.
<br />(b) RENTAL CREDITS - Rental shall not be credited
<br />against either production or advance royalties
<br />for any year.
<br />Sec. 2. (a) PRODUCTION ROYALTIES - The royalty
<br />shall be 8.0 percent of the value of the coal as
<br />set forth in the regulations. Royalties are due
<br />to lessor the final day of the month succeeding
<br />the calendar month in which the royalty
<br />obligation accrues.
<br />(b) ADVANCE ROYALTIES - Upon request by the
<br />lessee, the authorized officer may accept, for a
<br />total of not more than to years, the payment of
<br />advance royalties in lieu of continued operation,
<br />consistent with the regulations. The advance
<br />royalty shall be based on a percent of the value
<br />of a minimum number of tons determined in the
<br />manner established by the advance royalty
<br />regulations in effect at the time the lessee
<br />requests approval to pay advance royalties in
<br />lieu of continued operation.
<br />Sec. 3. BONDS - Lessee shall maintain in the
<br />proper office a lease bond in the amount of
<br />$5,000. The authorized officer may require an
<br />increase in this amount when additional coverage
<br />is determined appropriate.
<br />Sec. 4. DILIGENCE - The lessee is subject to the
<br />conditions of diligent development and continued
<br />operations, except that these conditions are
<br />excused when operations under the lease are
<br />interrupted by strikes, the elements, or
<br />casualties not attributable to the lessee. The
<br />lessor in the public interest, may suspend the
<br />conditions of continued operation upon payment of
<br />advance royalties in accordance with the
<br />regulations in existence at the time of the
<br />suspension. Lessee's failure to produce coal in
<br />commercial quantities at the end of 10 years
<br />shall terminate the lease, pursuant to Section 7
<br />of the Act. If not submitted already, lessee
<br />shall submit an operation and reclamation plan
<br />pursuant to Section 7 of the Act no later than 3
<br />years after the effective date of this lease
<br />readjustment.
<br />The lessor reserves the power to assent to or
<br />order the suspension of the terms and conditions
<br />of this lease in accordance with, inter alia,
<br />Section 39 of the Mineral Leasing Act, 30 U.S.C.
<br />209.
<br />Sec. 5. LOGICAL MINING UNIT (LMU) - Either upon
<br />approval by the lessor of the lessees
<br />application or at the direction of the lessor,
<br />this lease shall become an LMU or part of an LMU
<br />subject to the provisions set forth in the
<br />regulations.
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