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~n2evz z ~~ ~ i o~~.PMCs~ ~ .i RECEIVED (~,aYn, L~.Iru~ (~~Lstt't~im NOV 1 2 2002 „- R O Y A L T Y A G R E E M E N T/ Diuisian of Minerals and Geology This Royalty Agreement ("Agreement") is made effective as of ~L{~~ `~~yr, 2002 by and between Fetcher Ranch Land, LLP, and Charles E. Vale and Bobbie ea Vale, owners of Hassle Haven Ranch, ("Lessors"), and ELAM CONSTRUCTION, INC. ("Elam"). The parties agree as follows: LEGAL DESCRIPTION. The legal description for the Premises, owned in combination by above Lessors, is: N1/2 SW l/4 SWl/2 and NWI/4 SW 1/4 Section 28 Township 9 North Range 85 West TERM. The agreement term will begin on May 1, 2002 and will terminate on Apri130, 2012. ROYALTY PAYMENTS. Elam shall pay to Lessors as follows, with one half to Fetcher Ranch Land, LLP and one half to the owners of Hassle Haven Ranch (Charles W. Vale and Bobbie Jean Vale): 1) Royalty of $1.00 per ton for gravel mined and removed from property 2) Royalty of $0.30 per cubic yard for fill dirt removed from the property 3) Annual lease payment of five hundred dollars ($500.00), due on May 1" of each lease year. Royalty shall be paid on all material removed from the premises. Elam shall weigh all material or use a load count factor as material is removed from the premises and keep good and accurate records thereof. Elam shall also provide Lessors with a written statement as to all materials removed from the premises in the preceding month and make payment to the Lessors of the royalty due by the 20's day of each month for materials removed the preceding month. After each 5 years of this agreement, royalty rates may be modified upon mutual agreement by all parties. USE OF PREMISES. Lessors hereby grant unto Elam the exclusive right to enter upon the premises described above and to extract, process, stockpile and remove therefrom sand, gravel, fill dirt, and topsoil. Any equipment Elam deems necessary to accomplish the foregoing, including, but without ]imitation, the right to operate a hot mix asphalt plant, gravel crusher, and concrete plant, is allowed in accordance with the terms set forth herein. Elam shall be entitled to store items of personal property within the premises owned by Lessors during the term of this agreement. Lessors shall not be liable for loss of, or damage to, such stored items. POSSESSION. Elam shall be entitled to possession on the first day of the term of this Agreement, and shall yield possession to Lessors on the last day of the term of this agreement, unless otherwise agreed by both parties in writing. After the last day of the term of this Agreement, Elam shall be entitled to access the premises for reclamation operations and maintenance activities until such time as the reclamation efforts are accepted by the appropriate agencies. PERMITS. Elam agrees to maintain with Routt County, Colorado, a permit to extract gravel from the leased premises. Elam also agrees to maintain with the State of Colorado, Division of Minerals and Geology gravel mining permits relating thereto, and any other relevant permits for any other operations by Elam on the premises which may require a permit. if any required permits are denied or become invalid then this Agreement shall terminate and be of no further force and effect. Elam shall be responsible for obtaining and paying for all necessary permits to extract materials and to operate gravel facilities, i.e.: annual fees, transfer fees, and permits from the US Government, the State of Colorado, and Routt County. Lessors agree to assist in completing or complying with any permit applications, conditions or renewals by providing necessary documentation that may be required by the various government agencies. WA'CER Lessors hereby grant to Elam the right to extract water from or discharge water to the Ekhart Ditch under state permit in such amounts as may be necessary for Elam's operations on the property. Elam agrees to coordinate such water utilization with the irrigation uses and hay harvesting of the Lessors. MAINTENANCE. Royalty Agreement Page 1 of 3