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540196/365 <br />At the end of the lease term or at any time during this lease term when a permit issued by the Division <br />of Minerals and Geology for a mining operation on a specific pazcel of these described ]ands, Lessee may <br />be required w apply w the Board for one or mare individual mineral ]eases of not more than 640 acres if state <br />mineral rights stand alone, or not more than 1,280 acres if state mineral rights have a common boundary, <br />but in no case not more than the aaeage of this ]ease. <br />6. EXTENSION BY PRODUCTION -This Lease may not be held in perpetuity; however, this Lease will <br />continue in effect subsequent to the Primary Term so long as coal is produced in paying quantities. Cessation <br />of production for a period is excess of 180 consecutive days subsequent to the Primary Term will <br />automatically remove this Lease from producing status unless otherwise agreed to in writing by Lessor. <br />Lessee shall notify Lessor of each cessation of production, the reasons therefor, and the time period during <br />which production will or did cease. "Paying quantities" means production sufficient to return royalties, to <br />Lessor equal to the advance minimum royalty. <br />7. PENALTIES - A penalty shall be imposed for, 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 form of, but not limited to, interest, fees, and fines. <br />8. OVERRIDING ROYALTY LIMITAT]ONS - It is agreed that this Lease or any subsequent assignment <br />hereof shall not be burdened with overriding royalties the aggregate of which exceeds 2 percent of the gross <br />value of the coal at the first point of sale. Lessor must be notified of all overtiding royalties accruing w this <br />Lease. Violation of the above may subject this Lease to cancellation by Lessor. <br />9. ASSIGNMENT -Lessee, with written consent of Lessor, may assign this Lease as W the leasehold interest <br />of Lessee in all or part of the lands covered hereby; not less, however, than tracts of approximately 40 acres <br />of Governmental lots corresponding m aquarter-quarter section for partial assignment. For approval of such <br />assignment Lessor may charge an assignment fee in an amount currently in effeM at the time of the <br />assignmert.- - <br />If an. assignment of a part of this Lease is approved, a new lease designated as an assignment will be <br />issued to the assignee covering the ]ands 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 will <br />be released and discharged from all further obligations for such lands assigned, as if the same had never been <br />a part of this lease. <br />No assignment or vansfer of this Lease will be held valid by Lessor unless made with its consent in <br />writing and duly entered in the books or records of Lessor. <br />Notwithstanding the foregoing provisions of this Section 9, Lessee shall have the right, without the <br />approval of Lessor, to assign or sublease its rights hereunder to any parent corporation, or subsidiary Of <br />Lessee. <br />10. ASSIGNMENT CONS]DERATION - The consideration for approval of assignment by Lessor shall be 1096 <br />of the value of any consideration tendered to Assignor by Assignee for the assignment but not less than <br />and no/100 Dollars aer acre - (3 50.00/acre ). Divulgence of the value of these considerations shall <br />be mandatory, in affidavit form, which form shall be presented to Lessor along with the other assignment <br />instruments in order to obtain Lessor's approval for the assignment. An assignment does not constitute a new <br />]ease but is a continuation of the base lease. Any attempt to withhold this information shall be construed as <br />an attempt W defraud the State of Colorado and shall render this lease null, void and nonexistent, and all <br />monies paid W Lessor shall be forfeited to Lessor. In addition, the current statutory foes will be paid at the <br />time the assignment record form is submitted. <br />Page ~ of l Q <br />