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further and future mining and extraction of sand, gravel and rock products. Cugnini and <br />CLACC acknowledge and agree that FCM's right to seek future expansion of the Gravel <br />Permit is a material consideration for FCM to enter into this Lease Agreement. Cugnini <br />and CLACC hereby authorize FCM to act as their agent smith respect to all matters <br />associated with such expansion of the Gravel Permit and the Land Use Permit and <br />agree to execute all documents required by all governmental entities, including but not <br />limited to the Colorado Division of Minerals and Geology and La Plata County, <br />associated with such expansion. <br />4.03 Surface Area. Subject to the terms of this Lease Agreement and in <br />consideration of the royalty payments and other consideration due Cugnini, FCM has <br />the right to utilize the Gravel Pit area, and any future expansion area thereof, for the <br />installation and use of its equipment and facilities. FCM's right to use the Gravel Pit <br />area and any future area of expansion includes, but is not limited to, the exclusive right <br />to install a screening plant, crushing plant, washing plant, asphalt plant, and/or a <br />concrete batch plant, along with a yard site and field office site. <br />4.04 Laws and Regulations. In conducting its activities under this Lease <br />Agreement, FCM shall comply with all applicable local, state and federal laws and <br />regulations, including those related to: mining and reclamation, safety, environmental <br />protection and mitigation, and workers compensation and employment. FCM shall be <br />solely responsible for the cost of compliance of such laws and regulations. <br />Section 5. RECORDKEEPING <br />5.01 Daily Logs and Sales Records. FCM shall maintain accurate records of all <br />gravel products sold from the Gravel Pit, and future expansion area, on a daily basis, <br />and no sand, gravel or related rock products shall be removed from said areas without a <br />contemporary written record of the amount so removed. <br />5.02 Maintenance of Records. FCM shall maintain its records related to the <br />gravel products sold from the Gravel Pit, and future expansion area, for a period of one <br />(1) year after termination of this Lease Agreement and such records shall be open for <br />reasonable inspection by Cugnini for the purpose of conducting an audit of said records. <br />Section 6. ROYALTIES <br />6.01 Royaltk Except for gravel provided to Cugnini and CLACC, FCM shall <br />pay a royalty for each and every ton of gravel or of rock related products mined, <br />removed and sold by FCM from the Gravel Pit and future ex ansion area of the Gravel <br />Pit. Said royalty shall be at the rate of per ton of <br />mined and sold material for the October 1, t roug Septem er , 2006 term. <br />Ltignini Pit Lease <br />10729/02 <br />Page 3 of 15 <br />