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• <br />• <br /> <br /> <br /> (30) days before the end of the initial five (5) <br /> year term, to extend and renew this lease for a <br /> successive term of five (5) years, provided strip <br /> mining is being performed on the leased premises at <br /> the end of the initial five (5) year term. In the <br /> event that such option is so exercised by American <br /> Fuels, C&U reserves the right to reasonably adjust <br /> the production royalty rate for the ensuing five <br /> (5) year term. <br />2. ROYALTY PAYMENTS <br />a) Quality Coal <br /> American Fuels agrees to pay C&U a production <br /> royalty for coal mined or recovered from surface <br /> materials in the amount of Two Dollars ($2.00) per <br /> ton of 2,000 pounds of quality merchantable coal, <br /> except as provided in (c) below. <br />' b) Computation of Royalty Payment <br /> Royalty payments shall be computed from and com- <br /> mence with the effective date of this lease for the <br /> ensuing 12-month period, with each succeeding 12 <br /> months thereafter constituting a year. The effect- <br /> ive date of this lease shall be November 9, 1982. <br />c) Increased Royalty Payment <br /> Royalty payments as provided for in (a) and (b) <br /> above will be applicable to this lease agreement <br /> until or unless the market price at the minehead <br /> reaches $19.00 per ton of 2,000 pounds for quality <br /> coal. if and when the market price reaches $19.00 <br /> per ton for such coal, the royalty is changed here- <br /> under to thirteen percent (138) of said market <br /> price and shall continue at the 138 rate until-sllch'~~-" -- <br /> time, if ever, that the market price falls below <br /> $19.00 per ton, at which time the royalty rate <br /> shall revert to $2.00 per ton. <br />d) Basis of Royalty Payment <br /> The royalty payment contemplated in this Agreement <br /> will become due at the time coal is sold by <br />` -3- ~~ G <br />