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-,. ~ + B~Ok1J`t~J FAG'. 8(l ' permits shall be denied, then this Agreement shall terminate and be of no further force or effect. This lease shall become effect- ive upon the date when the last of the said permits shall issue. 4. This lease shall extend for a period of five (S) years from and after the effective date, as defined in paragraph 3 above. Thereafter, Corn shall have the right and option to extend this Lease Agreement from year to year for a total of fifteen (15) addi- tional years. The option to extend must be exercised by written notice to Lathams not less than thirty (30) days prior to the expi- ration of the original five-year term and thereafter, not less than thirty days prior to the expiration of any extension. 5. In consideration of this Lease Agreement, and each and every covenant of the Lathams herein contained, Corn agrees to pay to Lathams as follows: A. A production royalty shall be paid to Lathams at the rate of $.60 per ton of sand and gravel mined. and removed from the premises, subject to increase as provided hereinafter. B. The royalty to be paid to Lathams shall be subject to increase each year in accordance with the percent change in the Consumer Price Index (1967=100)--All Urban Consumers for the Area of Denver, Colorado, as published by the United States Department of Labor. On each anniversary date of the beginning of the lease term, the most current available Index shall be consulted and the percent change from one year prior • thereto as revealed therein shall be initially applied to the $.60 per ton and thereafter to the new price per ton currently being paid. The new price per ton shall then control until the next anniversary date. For example, if the "percent change from one year ago" as it is available in the most recent publica- tion on the first anniversary date reports an increase of 10.08, the price being paid prior to that anni- versary date shall then increase for the next 12 months by 10.08 (.10 X .60 + .60 = .66). Subsequently, on the next anniversary date, the royalty for the next ensuing year shall be determined by the percent increase revealed in the most recent publication avail- able on the second anniversary date and applied to the figure $.66. The royalty shall be recomputed in the same manner on each anniversary date. C. The parties agree that the Index may not be used to cause a decrease in the price per ton at any time. If in fact the application of such Index would result in a decrease in the royalty rate then the rate shall continue at the same level for the ensuing year and, thereafter, any future rate of increase to be caused by an increase in the Index shall be calculated by determining the percentage of increase in the Index applicable to the year for which the calculation is being made as compared to either the Index applicable on the effective date or the last anniversary date which resulted in an increase in the royalty rate, whichever is later. - 2 -