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i tequested By: sib 03128120081 <br />Instrument Book Pase <br />2008NO694B OR 1075 1940 <br />the coal is mined, deducting therefrom a ll space occupied by slate or other impurities, and <br />in such case the said computation shall be final and binding upon Lessee. <br />6. EXTENSION BY PRODUCTION This Lease may not be held in perpetuity; however, <br />this Lease shall automatically continue in effect subsequent to the Primary Term so long <br />as coal is produced in paying quantities. The term " navinfL quantities means an amount <br />of production from the Leased Premises during the period between one annual <br />anniversary of the Effective Date and the next succeeding annual anniversary that <br />generates Production Royalty m an amount equal to or greater than the Annual Advance <br />Minimum Royalty for such period as described in Section 2 above. However, if at any <br />time after the expiration of the Primary Term there is a cessation of production for a <br />period in excess of 180 consecutive days, then this Lease shall automatically be <br />terminated, except as otherwise provided in Section 7 or unless otherwise agreed to in <br />writing by Lessor. Lessee shall notify Lessor of each cessation of production, the reasons <br />therefor, and the time period during which production will or did cease. <br />7. OTHER EXTENSION In the event that, after the expiration of the Primary Term, <br />Lessee desires to maintain this Lease in effect without production of coal in paying <br />quantities, or to obtain a new lease from Lessor, in order to transport coal mined from <br />lands adjacent to or in the vicinity of the Leased Premises underground through the <br />Leased Premises, then Lessee shall provide written notice to Lessor. While extension of <br />this Lease in the absence of production of coal in paying quantities will not be automatic, <br />Lessor agrees that Lessee shall have the first right to obtain a lease granting the right to <br />use the Leased Premises for underground haulage purposes. Any extension of this Lease <br />or new lease that is granted for haulage purposes shall be on terms and conditions <br />mutually agreeable to Lessor and Lessee. <br />If this Lease expires or is terminated pursuant to its terms, then Lessor is not obligated to issue a <br />new lease or to renew this Lease for coal mining purposes. However, Lessee may renew this <br />Lease or receive a new lease under the following conditions: <br />A. Lessee shall furnish to Lessor satisfactory evidence of plans for mining during the <br />term of the renewed lease or during the term of a new lease; and <br />B. An extension of this Lease would, as determined by Lessor, be in the best interest <br />of the State. <br />At the time of expiration of this Lease, the following may be considered in the <br />determination of the conditions of an extension or a new lease: An advance minimum <br />royalty, the amount to be negotiated at the time of this extension, will be due and payable <br />annually commencing on the date this Lease is renewed or a new lease is executed and <br />shall continue until the expiration of the new or renewed lease. This amount may be <br />adjusted by Lessor at the end of each five -year period of the renewed or new lease as <br />described in Section 2, above; <br />PENALTIES A penalty in the amount of one percent (1 %) shall be imposed for any <br />payment not received within 30 days of the payment due date. Such penalty shall be <br />Page 6 of 17. <br />