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I • ~ <br />1 <br />I B. At the appropriate time during or after the adjudication process described in <br />Paragraph S.A., above, Delta Paving shall apply for a well pernlit from the Colorado State <br />I Engineer's office for the minine of the Frazier Property under this lease (the "Well Permit"), <br />at tts sole cost and expense. The application shall be filed in the name of Delta Pavins, as <br />the lessee under this lease. <br />I C. After the expiration of the lease term or other termination of this lease, Delta <br />Paving shall assign all rights and obligations under the Well Permit, all water and water <br />I rights, including any lakes or pools that may be left on or with the Frazier Property as a result <br />of Delta Paving's mining, and all augmentation and replacement plans to Lessor. Thereafter, <br />Delta Paving shall have no further interest in or obligations under such Well Permit, water, <br />I water rights, or auy augmentation or replacement plans, except to the extent they are needed <br />for the proper reclamation of the Frazter Property, in which case Lessor agrees that they can <br />be used for reclamation purposes. <br />' 6. In consideration of this lease. Delta Paving agrees to pay to Lessor as follows: <br />I A. Delta Paving shall pay a production royalty to Lessor at [he rate of SOSO per <br />ton of sand and gravel mined from the Frazier Property and removed from Delta Paving's <br />stockpiles, subject to adjustment as provided below. <br />I B Annually on the anniversary date of the lease term, the royalty payable to <br />Lessor shall increase in proportion to the increase in the Consumer Price Index for Urban <br />I Wage Earners and Clerical Workers, "All Items" category, U.S. City Average, as prepared <br />and published by [he Department of Labor. United States of Amenca. Such increase shall <br />relate to the index published for the month in which the lease term commences, as compared <br />I to the most current monthly index available on the anniversary date in each year of the lease <br />term. Such increase, if any, when so determined, shall control until the next anniversary <br />date. If for any reason the described Index shall no longer be published, then the parties shall <br />I attempt to reach a mutual agreement on an index reasonably similar thereto. If no mutual <br />agreement can be obtained, then the index to be applied shall be determtneri by arbitration <br />I under the Rules and Procedures of the American Arbitration Association (Commercial). <br />C. De]ta Paving owns approximately 39 acres of real property located directly <br />I north of the Frazier Property (the "Delta Paving Property"). Delta Paving may stockpile <br />gravel mined from the Framer Property under this lease on either the Frazier Property or the <br />Delta Paving Property. Subject to the provisions of Paragraphs 7 and 1~, below, no <br />I production royalty shall be payable while the mined materials are in Delta Paving's <br />stockpiles, whether those stockpiles are located on the Frazier Property or on the Delta <br />Paving Property. The production royalty shall be due and payable to Lessor at such time as <br />I product mined from the Frazier Property is permanently removed from Delta Paving's <br />I D:~MAFPGlPIPE~FRAZ[ER~GRnvLEAS.~S '4' <br />1 <br />