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11!03/2006 13:52 9705323953 NCWCD ~~~~~`/~D PAGE 04112 NOV 0 3 2006 Division of Reclam i Transportation is defined as all haulage beyond the Division oFliolop~g~~,~reology Permit boundary to the first point of sale to an independent purchaser. Transportation charges shall not exceed the average per ton-mile rate for independent local transporters. Further, at the end of each five-year period, commencing from the original lease date, for so long as this lease remains in effect, Lessor may increase the minimum per ton production royalty by a rate not to exceed the rate of increase of the average Producer's Price Index for natural stone building materials or a suitable equivalent for the previous five-year period, as published by the U.S. Department of Labor, Bureau of Labor Statistics, to be paid during each yeaz of the succeeding five- year period. Failure to comply with any new royalty rate set by Lessor may subject this lease to cancellation by thirty-day written notice to Lessor. Reporting of production royalty that is credited against advanced minimum royalty is also due on or before the last day of each calendar month for mining during the preceding calendaz month. 3. EXTENSION BY PRODUCTION -This ]ease may not be held in perpetuity; however, the lease will continue in effect for an additional ten years, the secondary term, until 2024 if materials are produced in paying quantities prior to the end of the primary term. Cessation of production for a period in excess of 180 consecutive days will automatically remove lease from producing status unless otherwise agreed to in writing by Lessor. Lessee shall notify Lessor of each cessation of production, the reasons therefor, and the time period during which production will or did cease. As used in this lease, Paving quantities means production sufficient to return royalties to Lessor equal to the advance minimum royalty. 4. ANCILLARY USE AND ACCESS -Lessee may use the Leased Premises only for the purposes of mining and removing materials, placing on the Leased Premises stockpiles of mined materials from the Leased Premises, and placing such equipment as is approved by Lessor for this removal. All other uses of the Leased Premises not specifically permitted herein will be subject to a separate lease and approval of Lessor. Haul roads and/or access roads, which do not directly benefit the Leased Premises, will be subject to a separate lease and approval of Lessor. The Leased Premises shall be accessed solely using the road permitted in the License Agreement dated May13, 2004, by and between the parties, or from adjoining lands owned by the State of Colorado and subject to General Qttarry Lease No. OR3454 (so long as such Quarry Lease is in effect). 5. REPORTS AND RECORDS -After operations begin, on or before the last day of each month during the term of this lease Lessee shall submit a sworn, verified, written report to Lessor, in which report shall be entered and set down the exact amount in weight of al] materials, and the value thereof, mined and removed from the Leased Premises during the preceding calendar month. Lessee agrees to keep and to have in possession complete and accurate books and records showing the production and disposition of any and all materials produced on the Leased Premises and to permit Lessor at all reasonable hours, to examine the same or to furnish copies of same to Lessor within 60 days following written request along with purchaser's support documentation. All said books and records shall be retained by Lessee and made available in Colorado to Lessor for a period of not less than 10 years. If any such examination shall reveal, or if either parry shall discover any error or inaccuracy in its own or the other party's statement, payment, calculation, or determination, then proper adjustment or correction thereof shall be made as promptly as practicable thereafter, except H:UTANGMEN'MGREEMN712004\09-10-04 Quarry Leau-Sro~ Whoksak Corporation-FWAL.wpd Page 3 of 10