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<br />3, PENALTIES -- A penalty shall be imposed fur, but not limited to, late payments, improper payments, <br />violations of any covenants of this lease, or any false statements made to Lessor. Penalties shall be <br />determined by Lessor and may be in the for of, but not limited to, interest, fees, and fines. <br />4. OVERRIDING ROYALTY LIMITATIONS -- It is agreed that this lease or any subsequent assignment <br />hereof shall not be burdened with overriding royalties the aggregate of which exceeds two percent (250} <br />of the gross value of the material at the first point of sale. Lessor must be notified of all overriding <br />royalties accruing to this lease. Violation of the above may subject this lease to cancellation by Lessor. <br />ASSIGNMENT -- Lessee, with the written consent of Lessor, may assign this lease as to the leasehold <br />interest of Lessee in all or part of the lands covered hereby, not less, however, than tracts of <br />approximately forth (40) acres, or governmental lots corresponding to aquarter-quarter section for partial <br />assignment. For approval of such assignment Lessor may charge an assignment fee in an amount <br />currently in effect at the time of the assignment. <br />]fan assignment of a part of this lease is approved, a new lease designated as an assignment will be issued <br />to the assignee covering the lands assigned for the balance of the term of the base lease on the mining <br />lease form in use at the time of assignment and limited as to term as said lease is limited. The assignor <br />will be released and discharged from all further obligations for such lands assigned, as if the same had <br />never been a part of this lease. <br />No assignment or transfer of this lease will beheld valid by Lessor unless made with its consent in writing <br />and duly entered in the books or records of Lessor. <br />Assienment Consideration -- The consideration for approval of assignment by Lessor shall be en percent <br />( 0 %) of the value of any consideration tendered to Assignor by Assignee for the assignment. <br />Divulgence of the value of these considerations shall be mandatory, in affidavit form, which form shall <br />be presented to Lessor along with the other assignment instruments in order to obtain Lessor's approval <br />for the assignment. An assignment does not constitute a new lease but is a continuation of the base lease. <br />Any attempt to withhold this information shall be construed as an attempt to defraud the State of Colorado <br />and shall render this lease null, void, and nonexistent, and all monies paid to Lessor shall be forfeited to <br />Lessor. In addition, the current statutory fees will be paid at the time the assignment record form is <br />submitted. <br />6. AGREEMENTS OUTSIDE THE TERMS OF THIS LEASE -- No assignment of undivided interests or <br />retention or reservation of overriding royalties will be recognized or approved by Lessor; and the effect, <br />if any, of any such assignments or reservations will be strictly and only as between the parties thereto, <br />and outside the terms of this lease, and no dispute between parties to any such assignment or reservation <br />shat) operate to relieve Lessee from performance of any terms or conditions hereof or to postpone the time <br />therefor. Lessor will and shall at all times be entitled to look solely to Lessee or its assignee shown on <br />Lessor's books as being the sole owner hereof, and for the sending of all notices required by this lease <br />and for the performance of all terms and conditions hereof, <br />Although not binding on Lessor, all instruments of every kind and nature whatsoever, including but not <br />limited to sublease agreements and operating agreements, affecting this lease shall be filed in the records <br />of the Mineral Department of Lessor. Upon request, such instruments furnished may be kept confidential <br />as consistent within the law. <br />Page 3 of S <br />