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"M3r <br />N G // <br />~ .. • E.rH/Q/T • <br />_~~ <br />.~~' , <br />~. ~ <br />GRAVEL PRODUCTION ROYALTY <br />j,'~ H <br />i ~ <br />f <br />This Gravel Production Royalty made and entered into <br />i this ~ day of ~itilw_ r , 1980~.by Donn A. Calder, hereinafter <br />referre to ae the er" and PIONEER SAND CO:, 4NC „ a <br />Colorado Corporation, hereinafter referred to ae the "Company". <br />WITNESSETH: <br />1. GRANT. The Owner, in consideration of the terms <br />of this RoyT Agreement, does hereby grant unto the <br />Company, its successors, and assigns, the exclusive right <br />to investigate, explore, prospect, ;mine, produce, clean, <br />treat, extract, remove and dispose of sand, gravel, and <br />rock from the property described as follows: Description <br />in exhiblt "A" affixed. <br />2. TERM. The initial term of this Royalty Agreement <br />shall be for wive (5) years starting on the above date. <br />The Owner grants to the Company the option to renew this <br />Royalty Agreement for an additional five (5) year period <br />on the same terms and conditions hereof, provided that <br />Company is diligently pursuing mining operations on said <br />property and provided that Company shall, at least six (6) <br />month prior to the expiration date of this Royalty Agreement, <br />notify the Owner in writing of the Company's intentions. <br />3. CONSIDERATION. Company shall pay to Owner twenty- <br />five cents ~ per ton Royalty for gravel aggregate <br />r<mzoved. Company agrees to keep track of the amount of <br />gravel aggregate removed by maintaining daily records which <br />shall indicate the amount hauled from the site. The Owner <br />shall have the right to audit companies records of gravel <br />aggregate removed. Company shall pay Owner for the amount <br />hauled on a monthly basis, payable on the twentieth (20th) <br />day of the month following the month during which the gravel <br />was removed. Because of initial operation expenses to be incurred <br />by Company, no Royalty shall be paid on the first 59,000 tons. <br />The per ton Royalty to be paid by Company to <br />Owner shall be increased at the end of the second year <br />following the commencement of the Royalty Agreement and <br />each year thereafter. The increase will be in accordance <br />with increases in the Consumer Price Index for all Urban <br />Cansumera for the United States, for All Items, using the <br />year 1980 as a base year. The increase shall not be charged <br />on. that gravel previously committed by the Company by contract <br />where an indexed increase is not permitted. Price to increase <br />the end of the third year in any case. <br />The Company's payment for gravel aggregate will <br />be in addition to the amount of any tax, levy, or assessment <br />made by any governmental authority upon such removed gravel <br />aggregate. <br />k: TAXES. Company agrees to pay all taxes lawfully <br />assessed ag nia at all machinery, tools, equipment, supplies, <br />and all other propert~+ laced by it on the real property <br />described in Exhibit 'A'. Company agrees to resell all <br />material removed or disposed of same in a manner as to <br />cause no sales tax liability to be imposed on Owner. Company <br />agrees to pay any aeverence taxes levied on any material it <br />removes from property. <br />5. INDEMNIFICATION. Company agrees to defend, save <br />harmless an n emn y er from any liability arising <br />out of Company's operations on said premises. This indemnification <br />shall include indemnification for all valid claims and demands <br />of whatsoever kind and character, whether or not from any <br />negligence of Company on the property described on Exhibit <br />"A or in connection therewith. <br />