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5. Lease Deposit. Lessee shall pay to Lessors, on or before the Effective Date, in cash or <br />certified funds, a non - refundable deposit of <br />Production Royalty. Lessee shall pay Lessor a royalty (the "Production Royalty ") per ton <br />for any Sand and Gravel and Soil_ removed from the Property. The Production Royalty <br />shall be calculated at the rate of per ton for production up to sixty -five <br />thousand (65,000) tons per year. For production in quantities exceeding sixty -five <br />thousand (65,000) tons per year, but less than one million (1,000,000) tons per year, the <br />Production Royalty shall be per ton. For production in quantities <br />exceeding one million (1,000,000) tons per year, the Production Royalty shall be M <br />The Production Royalty shall be due to the Lessor, in check or <br />certified funds, within ten (10) calendar days after the end of each respective calendar <br />month. Payment of the minimum royalty described in the next paragraph shall be a credit <br />against the Production Royalty otherwise due on actual production. <br />The Lease is based on royalty payments for a minimum annual quantity of sixty -five <br />thousand tons (65,000) per year. Lessee shall snake minimum quarterly payments of <br />beginning on May 25, 2014 and <br />subsequently on the same day of each succeeding quarter (Minimum Quarterly <br />Payments). See Exhibit B. In the event this Lease is terminated, per the terms herein, <br />these aforementioned payments shall be non- refundable to Lessee and retained by Lessor <br />as liquidated damages. <br />Prior royalty payments (both minimum monthly payments and the regularly scheduled <br />payments based on actual production described in the preceding paragraph) shall be <br />allowed as a credit against the cumulative minimum royalty payment otherwise due. <br />Any unearned minimum quarterly royalty payment will be applied as a credit to the <br />ensuing year Production Royalties on a ton - for -ton basis. However, production in any <br />year for which prior year minimum royalty payments are applied as credit, is not counted <br />toward the minimum quantity of tons for that year. At the expiration of the Term of this <br />Lease, any minimum royalty payments for which Lessee has not utilized crust are <br />forfeited to Lessor. <br />7. Use of Scale. Quantities of Sand and Gravel removed from the Property on which <br />royalty is due will be measured as follows: Lessee shall install, and maintain in good <br />working order and property calibrated, its own scale over which all materials removed <br />from the Property shall be weighed, and keep accurate records of all weights of such <br />materials, including date and time when weighed, and a reasonable identification of such <br />vehicles, which shall be available for inspection by Lessor at all reasonable times during <br />business hours. If Sand and Gravel on which royalty is due are mixed with non- excavated <br />materials prior to weighing (for example, in case of mixing gravel with asphalt cement or <br />water and Portland cement prior to removal) then the mixed material shall be weighed <br />and/or measured when it leaves Lessor's Property, and an appropriate deduction from the <br />weight of the mixed materials shall be made for the weight of the materials added. <br />