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Pinion Ridge Gravel Pit <br />• Nucla, Colorado <br />THIS AGREEMENT made this 7th day of April 2008, by and between Sally Ann Kichelmann herein <br />called "Landlord," and Black Canyon Aggregate, Inc. dba Rocky Mountain Aggregate & Construction <br />herein called "Lessee." Landlord hereby agrees to allow the lessee to utilize the natural resources (bank run <br />gravel) on the permitted site in a manner to process and sell that material in return for royalty price per ton <br />as mentioned below. This agreement will be made effective as of the date listed above and be binding for a <br />period of 5 years. This agreement assumes that the lessee will have the first right of refusal at the end of <br />that 5 year period if he as successfully satisfied the terms listed below during his previous lease. <br />1. Royalty & Yearly Minimum Payment <br />Lessee agrees to pay Landlord a minimum of $3,000Near. Lessee agrees to pay Landlord a <br />royalty of $1.50/Ton for native material that is mined, scaled and exported from the property. <br />Payment will be made to the landlord quarterly unless job specific terms require an amendment to <br />this time frame. <br />Example of Payment: <br />• If producer sells 50,000 tons in one year, landlord will receive the following: <br />Base Payment $3,000.00 <br />(@ $1.50/Ton accounts for 2,000 Tons) <br />Tonnage payment 48,000 tons @ $1.50/Ton $72,000.00 <br />Total Example $75,000 <br />2. Responsibilities of the Landlord: <br />A. Allow lessee to operate on premises during the duration of the lease. <br />B. Allow lessee sole right to market the products generated from the permitted area. <br />3. Responsibilities of the Lessee: <br />A. Operate under the guidelines and policies listed in the Reclamation Permit. <br />• B. Adhere to the agreements made between Montrose County (special use permit) and Lessee. <br />C. Maintain a safe work environment based on MSHA & other governing agencies. <br />D. Make a good faith effort to market the product in a profitable and efficient manner to generate <br />royalty income for the Landlord. <br />E. Notify the owner of significant operations such as crushing and large job orders. <br />F. Maintain insurance for lessee's operations, pay applicable taxes and fees for his work. <br />4. Transfer of ownership of property <br />If the landowner wishes to sell the property during a period of a lease, landowner agrees to contact <br />lessee about The potential sale. Landowner agrees to allow lessee an opportunity to at least match <br />the selling price of the property and or ensure that the new owners honor the existing lease until its <br />period is terminated. <br />5. Termination of Lease <br />Upon the termination of the lease due to the expiration of the 5 year time frame and no further <br />agreements are planned to be made, lessee reserves the right to sell its remaining product and <br />remove its equipment and facilities from the property in a timely manner. <br />Accepted this.,60 day of <br />S y Ann Kichelmann Chauncey Z uttrell -Sack Canyon Aggregate, Inc. dba <br />R Mountain Aggregate & Construction <br />!l <br /> <br />Pinion Ridge Agreement Page l <br />0??ep <br />r