2008-02-04_PERMIT FILE - M2008006

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Lessor's Covenants. 7.1 Lessor covenants that it has good title to the Property and the Materials to be removed from the Property, and warrant and will defend the title to the Property and Material. Furthermore, Lessor will inde-nnify Lessee against any and all claims, demands, suits, liabilities, damages, losses, costs and expenses (including reasonable attorney's fees) arising from or related to any lien, encumbrance, restriction, or defect in the title to the Property and Material. In the event the holder of any lien or encumbrance against the property commences foreclosure proceedings against the Property, Lessee shall have the right, but not the obligation, to make any cure or redemption payments to stop the foreclosure. In such case, all sums paid by Lessee to stop the foreclosure shall be credited against sums Lessee then owes or may in the future owe to Lessor under Section 3 above. 7.2 Lessor grants to Lessee all necessary access across any of Lessor's Property which is necessary to provide Lessee with access for its operations under this Lease. 7.3 If this Lease is terminated for any reason other than a default by Lessee, and Lessee has incurred expenses in permitting and/or preparing the Property for future operations, then Lessor shall pro-nptly pay Lessee for fifty percent (50%) of such expenses incurred. However, the Lessor's share of the expenses shall not exceed 50% of the amounts of $31,700 for mining and $10,000 for traffic study. The By way of illustration only, if Lessee prepares a portion of the Property for future excavation but the Lease is terminated before the excavation commences, Lessor shall be responsible for 50% ofthe preparation expenses. These expenses shall include all permitting, labor and overhead costs of Lessee as well as other expenses. If both parties mutually terminate this Lease because the Permits have not been issued, or the conditions required by the governmental authorities for issuance of the Permits are unacceptable to Lessee, or the cost requirements associated with complying with the Permits are excessive (as determined by the Lessee), then each party shall pay one half of the above described expenses. 7.3.1 The Lessor and Lessee agree to schedule a meeting six (6) months after execution of this agreement to mutual consider the feasibility of the continuance of this pit development. 7.4 In the event of any termination of this Lease, Lessor shall allow Lessee access to the Property for removal of equipment and extracted material per Section 6.4. 7.5 Lessor warrants and represents that it has no knowledge of any condemnation actions pending or threatened against the Property or any portion thereof. 7.6 Lessee is entitled to use any water right of Lessor necessary for Lessee's operations on the Property. Lessor is entitled to the unicumbered sale of said water rights. If Lessor sells the water rights utilized in the operations, Lessor shall supply water to the Lessee to replace the aforementioned water rights. 7.7 Lessor is responsible for the landscaping and irrigation as part of any required permit and reclamation plan. 7.8 Lessor is responsible for all expenses relating to well relocation including but not limited to: drilling, capping, electrical. However, Lessee shall pay such expenses as they arise and submit proper documentation to be reimbursed in full by Lessor. MBG (8/13/2007)