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<br />5. In light of the foregoing changes in ownership and interests and in order to <br />extend the coal and mining rights leased by Morgan under the 1964 Lease and for other <br />good and valuable consideration, the parties agree as follows: <br />AGREEMENT <br />SECTION I. SUBLEASE. Morgan hereby subleases to Peabody the right and privi- <br />lege of exploring and prospecting for coal in, and mining and taking coal by surface, <br />underground, auger or any other mining method from any seam or seams. on, those lands <br />described on Exhibit A, attached, hereto and incorporated herein by this reference <br />("Property"). <br />1.01 State Lease. This sublease is made expressly subject to the terms and provi- <br />sions of that certain State of Colorado Coal Mining Lease No. 235-13, dated September <br />6, 1961, as amended, ("State Lease"). By means of this sublease Morgan subleases to <br />Peabody all coal mining rights held by. Morgan under the State Lease, but reserving a <br />right of re-entry upon termination under Section 1.07 or Section 1.08 below. <br />1.02 Term. The term of this sublease shall be coincident with the term of the State <br />Lease, including any extensions, renewals or replacements thereof. <br />103 Obligations, State Lease Royalties. Peabody covenants that it will comply <br />with all the terms and conditions of the State Lease and shall pay directly to the State of <br />Colorado all rents and royalties due under the State Lease ("State Royalties"). <br />1.04 Morgan Royalty In addition to payment of the State Royalties, Peabody shall <br />pay as royalty to Morgan ("Morgan Royalty") on all coal mined and sold from the Prop- <br />erty during the first five (5 ) years of this sublease an amount equal to two percent (2%) <br />of the gross realization (defined below), during the next eight (8) years an amount equal <br />to one percent (I%) of the gross realization and during the remaining term of this sub- <br />lease an amount equal to one-half of one percent (0.5%) of the gross realization. Peo- <br />-2-