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ie <br />and Lessee. Appraisal will be conducted at the time Lessee wishes to exercise its <br />rights under Section 4e. Lessee shall bear the cost of the appraisal. <br />(ii) Lessor shall lease to Lessee the surface affected by Lessee's mining activities. Lease <br />value shall be determined by taking the value of surface improvements plus the <br />annual gross income from crops and other income bearing activities, such as but not <br />limited to, hunting and recreational activities, all based on Lessor's federal income <br />tax return averaged over the past five years pertaining to this surface and <br />improvements, multiplied by number of years the lease is in effect. This total divided <br />by the number of years equals annual lease payment. <br />Example: (improvements = $20,000.00) + (annual income = $20,000.00 x years of <br />lease = 20 years) = $420,000.00/20 years = $21,000 per year <br />(iii) In lieu of (i) or (ii), Lessee shall purchase the surface and surface improvements or <br />make a like kind exchange of surface and improvements of comparable value, <br />whichever the Lessor selects. The value will be determined as noted in W. <br />Lessor shall have the exclusive right to select either (i), (ii) or (iii). <br />f. Lessor hereby grants to Lessee, the option, for ten (10) years after the expiration or <br />termination of the lease on Parcel B, to lease temporary rights -of -way on Parcel B <br />property for facilities for any requirement of its mining activities in the township(s) in <br />which the properties are situated, and any township contiguous to said township(s). <br />Lessor and Lessee shall mutually agree upon the location of rights -of -way, but <br />Lessor shall not unreasonably withhold its consent to Lessee's request. Lease <br />payments for said rights -of -way shall be determined in the same manner as stated <br />in Section 4e(i) or (ii), for the area actually used for such right -of -way. <br />No provision of this lease shall be construed to deprive Lessor or his successors of <br />the exclusive right to determine the uses to which property B is to be put or the <br />methods used subject to Lessee's right to development of its mineral interests and <br />subject to reclamation obligations determined by Division of Minerals & Geology. <br />Upon successful reclamation and release of reclamation bond, this area will be <br />released unconditionally to Lessor. <br />5. IfLe. Lessor represents and warrants to Lessee that Lessor has title to the Parcel <br />A property and Leased Coal sufficient in extent and legal quality to grant to Lessee the leasehold <br />estate and the Rights specified in this Lease and Contract. Lessor can and does warrant quiet <br />possession thereof sijb;ect only t0 those (if any) rights of �i%ay, easements, leases, encumbrances, <br />