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12.2 Asphalt Plant Operation. The Lessee will make a reasonable attempt <br />to include Elam Construction Co., Inc. as the exclusive asphalt producer on the <br />Property. The Lessee shall handle all negotiation with Elam related to the <br />Property. <br />13. Recovery of Precious Metals. Lessee agrees to deliver to Owner one- <br />half (1/2) of all gold or other precious metals extracted and reclaimed in any <br />way by Lessee from the Property and Lessee shall be entitled to retain the <br />remaining one-half. Owner's share shall be subject to any postextraction costs <br />of recovering, processing, refining or selling the precious metals including <br />severance taxes, attributable to its share of the precious metals as provided in <br />this paragraph, other than costs attributable to work performed by Lessee's own <br />personnel. In the event Lessee does not elect to reclaim or make effort toward <br />reclaiming gold, or other precious metals, no obligations regarding gold or such <br />metals shall exist for the benefit of the Owner. <br />14. Obligation to Pay Taxes. During the Term of this Lease, Lessee will <br />pay all personal property taxes levied on personal property owned or used by <br />Lessee located on the Property, and will pay all real property taxes levied upon <br />the Property to the extent they exceed the amount which would be payable were <br />the Property classified as agricultural land. If the Property is not separately <br />valued and assessed for agricultural use, valuations of agricultural properties <br />in the vicinity of the Property shall be considered in determining the value on <br />which to base such allocation. Any sales and use taxes arising from Lessee's <br />operations are to be borne (or collected) by Lessee. Owner shall pay any <br />increase in any taxes imposed on Lessee or Owner which is a direct result of <br />annexation or rezoning caused by Owner, except as to taxes attributable to Owner <br />Production Royalty. In the event that any local, state or federal authority <br />shall impose any tax, surcharge or financial obligation upon either Owner or <br />Lessee wherein the basis for such tax, surcharge or financial obligation upon <br />either Owner or Lessee shall be severance, removal or processing of Sand 6 <br />Gravel, the Lessee agrees that during the term of this Lease the Lessee shall <br />pay all such obligations, taxes or surcharges, or reimburse the Owner for such <br />amounts in the event that the Owner shall be so required to pay such amounts <br />Property taxes will be prorated for the first and last years of the Lease and <br />shall be prorated among areas on the basis of acreage, if the Property is <br />assessed as part of a larger tract. Any change in use or, method of assessment <br />or levy upon or in connection with commencement or termination of this Lease <br />shall also be taken into account in any proration. If either party receives tax <br />notices, schedules or declarations pertaining to taxes which are in whole or in <br />part the responsibility of the other party, such forms shall promptly be <br />Forwarded to the other party. <br />15. Compliance With Applicable Statutes, Ordinances, Regulations and <br />Permits. Lessee will conduct its operations in compliance with all applicable <br />statutes, ordinances and governmental regulations and permits; provided, <br />however, that Lessee shall not be deemed to be in violation of any statute, <br />ordinance, regulation or permit so long as it is actively contesting or <br />protesting *he terms thereof in good faith, in an appropriate forum, so long as, <br />upon final termination of the contest or protest, Lessee promptly complies as <br />required by the result thereof. Lessee shall keep the Property free and clear of <br />any liens for labor done or work performed on the Property or materials <br />furnished to Lessee for the operations under this Lease, but Lessee shall have <br />~~ the right to dispute or contest the validity of such liens, provided that such <br />actions will not create a risk of loss of title to the Property. Lessee will <br />post and keep posted such notices as Owner reasonably requests and supplies to <br />Lessee to advise third parties, including parties who may be entitled to assert <br />. ~~ /~/i <br />~~ 8 of 14 ~/ <br />