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import clean inert fi21 for reclamation purposes provided Lessee, at Lessee's
<br />expense, secures all necessary approvals.
<br />3.2. During the Term of this Lease and as otherwise expressly allowed
<br />herein, Lessee shall have the right to install, construct, operate, maintain,
<br />dismantle and remove on or from the Property all of its plants, machinery,
<br />equipment, improvements' and other facilities including, without limitation,
<br />roads, rail lines, pipelines, power lines, telephone lines, water courses, dams,
<br />ponds and stockpile areas on the Property and otherwise to use and occupy the
<br />Property, all as reasonably required in connection with mining, quarrying,
<br />extracting, processing, storage, sale and removal of Saad ~ Gravel in, on, under
<br />or from the Property. Lessee shall maintain the mining area in a reasonably neat
<br />and orderly condition consistent with the operation of an efficient gravel pit.
<br />Lessee will conduct its operations so as not to damage Owner's ditches, wells,
<br />culverts, utility lines or access roads, normal wear and tear, with customary
<br />maintenance, excepted. Zn the event Lessee's operations require an irrigation
<br />ditch to be moved or impacted, Lessee will restore the ditch to an operating
<br />condition within seven (?) days.
<br />3.3 Exclusivity. Owner warrants that during the term of this Lease, the
<br />Owner shall not excavate and sell Sand & Gravel or cause the same to occur on
<br />any part of the Schmidt/Gypsum Ranch or any other property owned by Owner in
<br />Eagle County; provided, however, that this covenant shall not preclude Merv
<br />Lapin or any other gartnership is which he is involved from excavating or
<br />selling sand and gravel from other properties than that leased hereunder.
<br />3.4 Operational Consideration. It is mutually agreed that the Lessee, to
<br />the extent reasonably feasible, will reduce adverse impacts to Schmidt/Gypsum
<br />Ranch.
<br />3.S~Dit,~plav of~Signs, Showing and Sale. Lessee shall have the privilege of
<br />displaying signs on the Property.
<br />4. Rovalty Payments. The,PZOduction Royalty payments and the Minimum
<br />Royalty Payments provided below are the only consideration Lessee is required to
<br />pay for all of the Lessee's rights and uses under this Lease.
<br />4.1. Initial Rovalty Rate. No later than the fifteenth (15"') day from
<br />the last day of the preceding month, Lessee shall pay owner a royalty (the
<br />"Production Royalty") at a rate of per ton for
<br />any Sand & Gravel removed from the Property during the preceding month. The
<br />Production Royalty rate shall be subject to annual adjustments beginning on
<br />December 31, 2002 in the manner described in Paragraph 4.3 below.
<br />4.2. Sand & Gravel Excavated on Which No Rovalty is Due. Lessee shall not
<br />be required to pay for, nor pay a Production Royalty on, quantities of Sand &
<br />Gravel used by Lessee in constructing, maintaining or repairing roadways on the
<br />Property or used in other areas on the Property, or sand & Gravel used for
<br />reclamation or flood protection on or in connection with the Property.
<br />Production Royalty shall not be payable on asphalt, gravel, concrete or similar
<br />materials brought onto the Property by Lessee to use in recycling operations.
<br />Lessee shall not be required to pay far, nor pay a Production Royalty on, Sand &
<br />Gravel excavated but not suitable for sale. Such Sand & Gravel shall be used on
<br />the Property for reclamation in accordance with the approved reclamation plan or
<br />otherwise disposed of on the Property at the reasonable direction of Owner, in
<br />accordance with sound and economic mining and reclamation practices, at the
<br />expense of Lessee.
<br />RECEI\lEL~
<br />FEB 12 2003
<br />Division ai Minerals and Geology
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