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RECEIVED <br />1 � FEB 2 1 2012 <br />GRAND JUNCTION FIELD OFFICE <br />GRAVEL LEASE OF <br />W/K LAND COMPANY, LESSOR RECLAMATION �ING & SAFETY <br />PAT J. AND BONNIE WEBER, dba HARD ROCK SAND AND GRAVEL, LESSEE <br />GENERAL INFORMATION: <br />This LEASE AGREEMENT. Made and entered into August 15, 2008, between W/K Land Company, 911 Kimbark St., <br />Longmont, CO 80501, "Lessor", and Pat J. Weber and Bonnie Weber, dba Hard Rock Sand and Gravel, "Lessees" <br />P O Box 141, Craig, CO 81625. <br />WI NESSETH: <br />The legal description of the property is: Weber minor subdivision; lots 2, 3, and 4. Subdivision is in Moffat <br />County, Colorado, and contains 28 acres. <br />a. Much of the land has previously been mined and the sand product was extracted and sold away. <br />b. Some sand product remains for mining and the Lessees are desirous of completing the sand mining. <br />c. The Colorado Mine Land Reclamation permit is M 1977 —143. <br />d. A Colorado Mine Land Reclamation bond is in place for reclaiming the land in the total principal amount <br />of $15,000.00. The bond and reclamation of the property was and will remain the responsibility of the <br />Lessees to return the property to the agreed upon reclamation terrain and topography as specified in the <br />original application and permit, dated 1977. <br />GENERAL TERMS DESCRIPTION: <br />As a part of the sale consideration; the Lessor is purchasing the real property described above and is leasing back <br />the sand extraction business to the Lessees. <br />a. The Colorado Mine Land Reclamation permit, M1977 —143, will continue and remain in the name of the <br />Weber's, dba, Hard Rock Sand and Gravel. The mining operation will be conducted under that permit <br />and by this name and the obligation for reclamation will continue between the Lessees and the State of <br />Colorado Mine Land Reclamation, and the Lessor. The Lessor is to be held harmless from liability to the <br />State. <br />TERMS OF LEASE AND ROYALTY: <br />The lease herein shall begin on the date of property purchase and Lease Back, July 15, 2008, and shall exist for an <br />initial period of 5 years. The Lessees agree to comply with all Mine Land Reclamation regulations and provide <br />annual reporting, comply with all State of CO laws for workman's compensation insurance, all property and liability <br />insurance, naming Lessor as an additional insured on all insurances, and promptly pay all royalty payments, at <br />least, monthly during mining operations. <br />The Royal Payment shall be $0.25 per ton for the initial lease term. Advance Royalty Payment of $1,000.00 per <br />year shall be paid annually, beginning on the date of dosing and each anniversary of the lease thereafter. <br />Advance Royalty shall be counted against production royalties, and if the Lessees fail to produce sufficient offset, <br />then the Advance Royalty payment shall not be a carry forward from one year to the next. <br />Lessor shall pay all ad valorem taxes, Lessees shall pay all severance and levied income taxes. <br />TERMINATION: <br />This Lease is not assignable. <br />This lease may be terminated for Lessees failure to observe the Lease obligations or failure to pay advance <br />royalties or failure to pay the Royal Payments. Upon termination, then Lessor may re -enter the property and re- <br />possess it, subject to the clause herein and the actual reclamation obligation. <br />