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• 3. Production Rovalties. C~ A. For all Materials mined, quarried, extracted, removed and sold from the Property during each calendaz month, the Company shall pay to Lessors a royalty at the rate of -cents (~ per ton of 2,000 pounds within twenty (20) days after the close of such calendaz month, which royalty rate shall be adjusted every year on the first day of the month following the anniversary of the date this Lease becomes effective by the ratio of the last Consumer Price Index, All Urban Consumers, Denver-Boulder-Greeley azea ("CPI-U") published by the United States Department of Labor, Bureau of Labor Statistics before such adjustment date, divided by the CPI-U last published when this Lease becomes effective. If the CPI-U is discontinued or revised during the term of this Lease, such other governmental index or computation with which it is replaced shall be used in order to obtain substantially the same result as would be obtained if the CPI-U had not been discontinued or revised. The royalty rate shall in no event be adjusted so as to be less than $~er ton. The royalty payments shall be accompanied by a monthly statement with the royalty calculation that includes an accounting of the tons of Materials mined from the Property and sold for the month. B. The Company shall keep and maintain adequate and accurate records of the quantities sold for Materials mined, removed, and sold. Lessors shall have the right at all reasonable times during business hours and upon reasonable prior notice to examine such records of the Company at the offices of the Company and to verify the quantities of Materials mined, removed, and sold and the accuracy of the scales used to weigh the Materials. 4. Minimum Rovalties. The initial $~paid to or credited for the benefit of Lessors at the time this Lease becomes effective shall be deemed advance minimum royalty and shall apply to maintain the Lease in effect for the period commencing on the date this Lease becomes effective until the end of the first Lease Yeaz. In addition to the initial advance minimum royalty paid or credited when this Lease becomes effective, advance minimum royalty shall be paid at the rate of (~ far each Lease Year after the first ease eaz, prove e at t t e ompany expec s to complete mining of Materials in any Lease Yeaz for which such a minimum payment will be due, and the estimated amount of Material to be removed in that fmal Lease Year is less than ~ons, the annual advance minimum royalty payment for that Lease Yeaz shall be reduced to the amount of production royalty estimated to be attributable to that remaining material after accounting for all prior payments of advance minimum royalty and production royalty. The advance minimum royalty payments for a Lease Yeaz shall be due on or prior to commencement of that Lease Year. Amounts paid as advance minimum royalty shall be credited against and applied to reduce amounts otherwise payable as production royalty pursuant to Paragraph 3. Production royalties paid pursuant to Pazagraph 3, after taking into account advance minimum royalties paid pursuant to this Paragraph, shall be applied in succeeding yeazs to reduce amounts subsequently payable as advance minimum royalty. Upon termination of this Lease for any reason, the obligation to make advance minimum royalty payments shall likewise terminate except as to payments that became due prior to termination. There is no implied covenant or obligation of the Company to develop or mine the Property or to sell Materials. The Company may maintain this Lease in effect for the term of the Lease by Z RECEIVED MAR 3 0 2000 piwsion of Minerals & Geology