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lessor as hereinafter provided of its election to discontinue and the giving of <br />such notice shall constitute a cancellation and termination of this lease, but <br />the lessee shall continue to be liable for all obligations then owing by it <br />hereunder. It is specifically understood and agreed that this lease is taken in <br />conjunction with a Contract between the lessee and the Colorado -Ute Electric <br />Association, Inc., for the supplying of fuel to said Electric Association at its <br />steam generation plant at Nucla, Colorado, and that this lease is contingent upon <br />the execution of said contract. It is further understood that the lessee will <br />offer coal for sale on the open market from said premises at its sole discretion, <br />provided that without the consent of the lessor such sales to purchasers other V <br />than the said Electric Association shall not exceed 50,000 tons per year. <br />12. Upon failure of the lessee to perform any of the covenants, <br />agreements or conditions herein contained to be performed by the lessee, the <br />lessor may give notice thereof to the lessee as hereinafter provided, pointing <br />out in such notice wherein the lessee is in default hereunder. the lessee shall <br />then have thirty (30) days from the time of the giving of such notice to rectify <br />its defaults, and if the lessee shall fail within said thirty (30) clays period <br />fully to rectify such default specified in said notice, then the lessor shall <br />have the right immediately to cancel and terminate this entire lease; provided, <br />however, that if any default of minor importance occurs hereunder which otherwise <br />could constitute a cause for cancellation or forfeiture of the lessee's rights <br />hereunder, and if such default can be compensated for in damages, and is so <br />compensated for withih sixty (60) days after demand by the lessor, then such <br />default shall not be basis for cancellation or forfeiture of this lease or any of <br />the lessee's rights hereunder. <br />Any cancellation or termination of this lease by the lessor shall be <br />made by giving the lessee written notice thereof as hereinafter provided. No <br />waiver by the lessor of any breach or default shall affect or be deemed to affect <br />any of the lessor's rights or remedies as to any subsequent ox other breach or <br />default. <br />13. In the event minerals other than coal are discovered, produced and <br />sold from described premises, lessee agrees to pay lessor a royalty on such <br />minerals of ten per cent (10%) of the net smelter or mill returns for all such <br />- 4 - <br />