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maintain such water rights, including by taking reasonable efforts to continue to use the water
<br />rights in the same manner as Sandco, Inc.
<br />2. Leasehold. Lessor hereby leases to Lessee each of the Properties to use for any
<br />lawful purpose, including without limitation with respect to the Pit Properties, the exclusive right
<br />as against Lessor and all third parties to sample, drill and test for, develop, mine, excavate,
<br />quarry, extract, process, sell, and remove all stone, sand, rock, gravel, aggregates and rock
<br />products and fill material of any kind mined in, on, under or from the Pit Properties pursuant to
<br />Permit # M -87 -064, Permit # M -86 -165, or any other permit acquired or applied for by Lessor or
<br />Lessee from time to time, and including without limitation any active or inactive permits to mine
<br />in and along the Animas River, (generally described collectively and individually as the
<br />"Aggregates ").
<br />3. Laws.
<br />(i) Lessee. Lessee shall comply with all federal, state and local rules,
<br />regulations, laws, ordinances and/or administrative orders (including, but not limited to,
<br />Environmental Laws) in all material respects, and Lessee shall not place any Hazardous
<br />Materials on the Properties, except to the extent used in the operations of Lessee in the ordinary
<br />course of business in accordance with Environmental Laws. Lessee shall maintain all licenses,
<br />permits and any other authorizations from federal, state and local governments that are
<br />necessary, in Lessee's judgment, to be maintained with respect to the Properties and Lessee's
<br />operations and activities thereon. Lessee may, without being in violation of this Section 3(i),
<br />contest in good faith the application of any federal, state and local rules, regulations, laws,
<br />ordinances and/or administrative orders (including, but not limited to, Environmental Laws)
<br />affecting Lessee or the Properties.
<br />(ii) Lessor. Prior to the date hereof, and with respect to each of the Properties,
<br />Lessor has complied with all federal, state and local rules, regulations, laws, ordinances and/or
<br />administrative orders (including, but not limited to, Environmental Laws), and Lessor has not
<br />placed any Hazardous Materials on the Properties, except to the extent used in the operations of
<br />Lessor in the ordinary course of business in accordance with Environmental Laws.
<br />Notwithstanding the foregoing, both parties acknowledge that activities related to servicing and
<br />fueling vehicles or equipment have been conducted on the Properties in the ordinary course of
<br />business in material compliance with Environmental Laws, which activities include the handling,
<br />storage, use, discharge, and/or disposal of petroleum products, including diesel fuel, gasoline,
<br />and motor oil, and any such substances released on the Properties other than in compliance with
<br />Environmental Laws have been remediated or removed to the extent required by, and in
<br />compliance with, Environmental Laws.
<br />(iii) Definitions. As used herein, "Environmental Laws" shall mean any and
<br />all federal, state or local laws (including common law), rules, orders, regulations, statutes,
<br />ordinances, codes, guidelines enforced by governmental agencies, administrative orders, or
<br />requirements of any governmental authority regulating or imposing standards of liability,
<br />standards of conduct or standards of remediation with respect to protection of public health or
<br />environmental media (including, without limitation, soil, surface water, ground water, stream
<br />sediments or air), including, without limitation, the Resource Conservation and Recovery Act,
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