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<br /> GRAMUEASEAGRERAENT
<br /> This Gravel Lease Agreement ("Lease") is made this 25th day of Marc",2014,by and between Happy
<br /> Creek Inc.,aNevada corporation,2955 County Rd 30,Stratton,CO 80836,('Lessor")and McCormick Excavation c
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<br /> &Paving, LLC, 30887 Highway 24, Stratton, CO 80836("Tenant"). 0 M
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<br /> 1. GRANT OF LEASE. V U.l.l Lessor,in consideration of the agreements to be performed by Tenant and the payment of U o o c
<br /> royalties by Tenant as provided in this Lease, and subject to the terms and conditions in this Lease,leases to
<br /> Tenant that certain tract of land situate in Kit Carson County,Colorado ("Premises"),described as SE/4 � —
<br /> Section 33 and SW/4 Section 34,Township 11 South,Range 46 West of the 6th P.M.,for the sole purpose of o
<br /> quarrying,mining,removing and marketing sand,gravel,and rock from the Premises(referred to as
<br /> "Material"), and the operation of a crushing plant and a sorter/separator facility (all such activity by Tenant on
<br /> the Premises is collectively referred to as ('Gravel Mining Operations").Tenant accepts the Premises in its
<br /> present condition.
<br /> Local permits/licenses required to operate its Gravel Mining
<br /> 1.2 Tenant has acquired all state and
<br /> Operations.
<br /> 1.3 Tenant will not assign this Lease,sublease the Premises or convey any interest in this Lease to
<br /> any third party except as permitted under the terms of Section 12,and Lessor will not lease the Premises to any
<br /> third party. Tenant has the sole right to sell material from the Premises. If Lessor sells any material,it will be a
<br /> violation of the mining permit.Lessor will be allowed to remove in-place pit run material for its use without
<br /> compensation to Tenant,however, if Lessor desires to obtain for its use Material that has been processed and
<br /> stock piled by Tenant,Lessor must compensate Tenant at an agreed price.
<br /> 2.TERM OF LEASE.The term of this Lease shall commence on March 25,2014 and will expire at the end of
<br /> the day on March 24,2017,unless terminated sooner pursuant to the provisions of this Lease. There shall be a
<br /> one year renewal option, which is to be exercised by Tenant serving upon Lessor,no later than ninety(90)days
<br /> prior to the end of the initial three year term, a written notice of Tenant's intention to renew the Lease for an
<br /> additional one year period. The parties will negotiate in good faith during the initial 60 days of that 90 day time
<br /> period and will attempt to reach an agreement as to the renewal terms. The renewal option will be effective only
<br /> if the parties are able to reach such an agreement in writing by the end of that initial 60 days.
<br /> 3. ROYALTIES.
<br /> 11 Tenant shall pay to Lessor,as royalty,the sum of sixty cents($0.60)for each ton of sand and
<br /> pit run removed from the Premises and sixty cents($0.60)for each ton of rock and gravel removed from the
<br /> Premises. The tonnage of Material shall be determined by certified scales at the Tenant's Stratton plant site
<br /> location, and the original load tickets will be maintained by Tenant as part of its files.Tenant agrees to pay
<br /> Lessor the royalty on a quarterly basis no later than the 15th day of the month following the end of a calendar
<br /> quarter,with the initial payment due July 15,2014,for the time period from the beginning of this Lease through
<br /> June 2014.
<br /> 3.2 Tenant shall forward to Lessor quarterly reports showing the tonnage of Material removed
<br /> from the Premises during the preceding quarter according to numbered load tickets,with the date of loading.
<br /> The reports shall be forwarded to Lessor by the fifteenth(15th)day of the following month,whether Material
<br /> is removed or not.
<br /> 3.3 Tenant agrees to keep a complete and accurate record of all Material removed from the
<br /> Premises and all sales thereof. Lessor shall have the right, at reasonable times,of examining the mining
<br /> procedures and checking the books and records of Tenant for the purpose of verifying the amount of royalties
<br /> paid or payable.
<br /> 3.4 In November of each year in which this Lease is effective,the royalty rate to be paid for
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