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ROCK, SAND AND GRAVEL QUARRY LEASE
<br />THIS ROCK, SAND AND GRAVEL QUARRY LEASE (the "Lease ") is made and enter into as of the
<br />2 3 day of N 0 V 2011 by and between Orlando E. Martinez and Rose Marie Martinez, whose
<br />address is #1 Kiowa, Pueblo, CO 81006; hereinafter called LESSOR (whether one or more), and
<br />Huerfano County Government, a County in the State of Colorado, whose address is 401 Main Street,
<br />Suite 201, Walsenburg, CO 81089, hereinafter called LESSEE.
<br />1. Grant of Lease. LESSOR, for the consideration described herein, hereby exclusively
<br />leases to LESSEE, and LESSEE agrees to lease from LESSOR, for purposes herein described, that
<br />certain real property located in Huerfano County, Colorado more particularly described in the
<br />attachment marked as Exhibit "A ".
<br />LESSOR hereby represents and warrants that it presently has full right, title and interest in and
<br />to the real property comprising the Leased Property subject only to this Lease, and has not granted
<br />any other interests therein, and that so long as the Lease remains in effect, LESSOR will defend such
<br />right, title and interest, and will not do or suffer anything that will interfere or impair LESSEE'S rights
<br />hereunder. LESSOR hereby further agrees that, during the TERM of this lease, LESSOR will not
<br />lease, convey or otherwise transfer any of the minerals located in, on or underneath the Leased
<br />Property to any other person or entity whatsoever, other than LESSEE, nor grant any other rights
<br />thereto, unless the written permission of LESSEE is first obtained.
<br />2. Term of Lease. The Lease shall be for an initial period of Fifteen (15) years with a
<br />one time option to extend an additional Five (5) years. The lease term shall begin upon
<br />the date the State of Colorado, Division of Reclamation, Mining & Safety issues a permit to the
<br />LESSEE, for the parcel of and described in the attached Exhibit "A ". This ROCK, SAND AND
<br />GRAVEL QUARRY LEASE supersedes The ROCK, SAND AND GRAVEL QUARRY LEASE
<br />executed October 24, 2001, and the MEMORANDUM OF UNDERSTANDING executed April
<br />20, 2011.
<br />3. Permitted Uses. This Lease is granted for purposes of giving LESSEE the exclusive right
<br />to explore for, mine, preserve, operate, remove, produce, process, and transport all rock, sand, gravel
<br />and /or earth fill available from the Property during the Term. In connection with the foregoing,
<br />LESSOR agrees that the LESSEE shall also have the right to conduct all activity on the Property
<br />typically associated with the foregoing uses, including,without limitation: (1) rights of access, ingress
<br />and egress to, from and throughout the Leased Property by way of the construction of "haul roads" or
<br />other roadways on, over and across the Leased Property, (ii) the right to maintain on the Property an
<br />office shed or building, and such machinery, equipment loaders, trucks, crushers, conveyors and
<br />related equipment associated with LESSEE'S exploration, mining, removal, processing, production,
<br />and transportation activities for the rock, sand, gravel and/or earth fill, and (iii) the right to stockpile
<br />materials produced from such activities for future transportation.
<br />4. Rent And Royalty Obligations. In lieu of any implied covenants. LESSEE shall have the
<br />following rent and royalty payment obligations under this Lease.
<br />A. Base Rent Payment. The LESSEE will pay to the LESSOR, as consideration for
<br />the exclusive mining and related rights described, a payment in the amount of Ten Dollars ($10.00).
<br />such amount being payable in advance for the lease term.
<br />B. Royalty Payment. In addition to the Base Rent Payment, upon LESSEE's election to
<br />conduct mining operations on the Property, LESSEE will also pay to the LESSOR a annual royalty
<br />payment. The royalty payment shall be made within fifteen (15) days from the first day of actual
<br />mining.
<br />a) If LESSEE's total crushing operations for the applicable Lease Year is 0 tons LESSEE
<br />shall pay to LtoUi - Ruyafty Payments at the rate o f $0.00 during such Lease Year.
<br />b) LESSEE shall pay LESSOR the sum of $3,500.00 for the total amount of processed
<br />material not to exceed 69,999 tons permitted on a yearly basis at .05 (five cents) per ton.
<br />c) In addition for the one year period in which mining operations are greater than 0 tons
<br />but not exceeding 69,999 tons the LESSEE will pay LESSOR 4,000 tons of crushed gravel per year.
<br />The crushed gravel stockpile shall be available to LESSOR at the end of each crushing period. The
<br />LESSOR shall acknowledge by signature receipt of the crushed gravel stockpile each fiscal year of
<br />actual mining.
<br />d) The mining periods shall commence on the first day of mining and end one year
<br />thereafter.
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