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If during the course of reclamation of the surface of the exchanged property, Lessee requires grazing <br />or haying of Parcel A, Lessor will be allowed to hay or graze its livestock on this property without <br />charge. <br />Lessor is hereby granted the option to repurchase Parcel A from Lessee, constituting the surface <br />rights and improvements appurtenant to the Leased Coal, for $500 per acre at the end of the Lease <br />Term or at sudh time as Lessee decides to sell or otherwise dispose of Parcel A. This option and <br />purchase price shall include the associated 21 shares in the Colorado Cooperative Ditch Company. <br />Lessee agrees to fence the peri meter of the Parcel A before selling it back to Lessor. Lessee further <br />agrees to leave the irrigation system used to irrigate Parcel A on completion of reclamation of the <br />property. <br />3. Aoyaltia Lessee shall pay to Lessor, as total payment for all of the benefits <br />secured by Lessee under or in connection with the Lease, production royalties as stated herein. It <br />is expressly understood that Lessor owns 50% of the coal. The remaining coal is owned by others <br />(the Weimers) that are parties to a separate lease agreement. Lessee shall pay to Lessor a <br />production royalty of $0.70 per ton (or one -half of the normal royalty of $1.40 per ton) for each and <br />every ton (2,000 pounds) of coal mined. The production royalty shall be paid pursuant to the <br />following schedule: <br />Lessee shall pay Lessor a lump sum advance royalty payment of <br />$36,000 within 30 days after execution of this lease, or finalization of <br />property trade between Lessor and Lessee, whichever event occurs <br />last. Thereafter, lump sum payments of $36,000 each shall be made <br />on or before the anniversary date of this lease for the next nine <br />years. <br />On the tenth anniversary of this lease, the following adjustment will be made: if the computed <br />production royalty due has exceeded the actual payment made during the preceding ten years, the <br />Lessor shall be due a lump sum payment for the royalty shortage. On the other hand, if the <br />computed production royalty due is less than the actual payment made during the preceding ten <br />years, the excess payment made to Lessor shall be treated as advance royalty to be recouped from <br />future royalty obligations. If production continues after the tenth anniversary date, production royalty <br />to Lessor shall continue to be $0.70 (or one -half of $1.40 per ton mined), payable by the twenty -fifth <br />(25th) day of each January for all coal mined by Lessee during the preceding calendar year. The <br />production royalty herein described is Lessor's share of royalty on each and every ton of coal mined. <br />(a) Payer All payments hereunder shall be made by check and, for purposes <br />of this Lease, remittance thereof may be effectuated by mailing the same to the address of Lessor <br />3 <br />a , <br />rib <br />