2012-05-08_PERMIT FILE - C2009087A

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the mine tipple, or by state certified scales;•provided that if it is not possible to determine accurately the weight by such means Lessor may, by its duly authorized agent or agents, elect to compute a ton of coal at 27 cubic feet of coal in the solid or by the measurements of the space from which the coal is mined, deducting therefrom all space occupied by slate or other impurities, and in such case the said computation shall be final and binding. upon •Lessee: : f • ; -:::: 4. ROYALTY-R4 RIND = At the option`of essor•and•with 6.months': notice to-.Lessee, Lessor may`take= its: royalty. coal in-kind; in which : -event'Lessee shall deliver -such i6yalty'eoal'to - Lessor-- on'the Zeased ' premises; into slurry, pipelines• or onto storage piles designated byl-Lessor;:and Lessee'shall'not in -such case be required td provide free storage or pay slurry charges for any such coal run onto storage piles or into slurry pipelines. = 5. EXTENSION -- Lessor is not obligated to issue a new lease or to renew this lease. IioWever, Lessee may have a preferential'right to renew this Lease or to receive a new lease, under the following conditions: A.. -Lessee shall furnish to Lessor satisfactory evidence of plans for' mining during the term of the renewed• lease or during the term oT a new Wise.: Lessee shall furnish adequate geological evidence'to'Lessor that the acreage subject to the renewed or new lease is in fact an integral part of and contains reserves in a logical mining unit. Whether the acreage is or is not a part of a logical mining •unit will. be determined by Lessor. '4 5m extension of.this Lease would; as determined by Lessor, be in the best interest of the State. - *tthe time of ezpiration•of this Lease,'the following•may'be'considered in•ihedetermination of the conditions df ari• extension or a'iiew leaser ' L B.'' '' 'An advance kiirrimuin r6ydlty,'the amount fo be'neg'otiated'at�the time of�this,extensioii, will'be duh• and pay6le -anndallk•commericing -6i1 the-date this•Lea"se is'renewed'or a'--new lease is'execufed and Shall coritihue until-the expiration of the new or renewed.Tease., T- Wimbuht' inay be' adjusted by lessor of the end• of each five -year peri od of the renewed or new lease. At the end of the lease term oriat any time during this lease tens when a permit issued by the Division of Minerals and Geology• for a mining operation on a specific parcel of these described lands, Lessee may be required to -apply to the Board for•one or more individual -mineral leases of not more than 640 acres if state mineral nghts•stand alone; or not more than 1280j acres if state mineral rights have a common boundary, but in no case not more than the acreage of this' lease. 6. EXTENSION BY PRODUCTION = This.Lease may not be held in perpetuity; however, this Lease will continue 'in effect subsequent to the Primary.-Term so long as coal- is produced in paying quantities. Cessation of production for a period in excess of 180 consecutive days subsequent to the Primary Term will automatically remove this Lease from producing status unless otherwise agreed to in writing by Lessor. Lessee-shall notify Lessor of each cessation of production, the reasons therefor, and the time period during which,,production will or did cease. "Paying quantities" means'production sufficient to return royalties to - Lessor equal to the advance' minimum royalty: 7. PENALTIES — A penalty shall be imposed for, but not limited to, late payments, improper payments, violations of any covenants of this Lease, or any false statements made to Lessor. Penalties shall be determined by'Lessor and may, be in the form of; but not limited to, interest, • fees.- and• fines. , 8. OVERRIDING' ROYALTY LIMITATIONS —It -is agreed that this Lease or- any• subsequent assignment hereof shall not be burdened with overriding royalties the aggregate of which exceeds-2 percent of the-gross l Page 4 of 10