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<br />cotnmencetnent of the lease term (as provided in Paragraph 2; above). Thereafrer, GJP shall <br />pay Lessor advance royalties of ~2~,000.00 per year, commencing on the first anniversary <br />date of the commencement of the ]ease terns, and continuing on each annual anniversary date <br />of the lease term thereafrer (through and including the ninth atmiversary date). <br />B. The advance royalties payable hereunder shall be offset against royalties <br />which shall accrue and be payable to Lessor for sand and gravel nuned and removed from <br />the Property under this lease. If the advance royalty paid for a year exceeds the amount of <br />royalties accreting in that year, the excess shall not Ue used to reduce the amount of any <br />advance royalties payable in future year's, but this excess shall be carried ibtward to offset <br />' royalties actually due in any future years during the term of this lease. If the amount of <br />royalties acctutne m a vear exceeds the advance royalty paid For that year, the amotmt of the <br />excess shall be used to reduce the amount of advance royalty accruing for the next vear. If <br />' any excess advance royalties remain at the end of the term or other termination of this (ease; <br />Lessor shall be entitled to retain such excess royalties, and shall not be required to refimd die <br />excess to GJP. <br />' C. If conunercial sand and grave( shall be mined out of the Property before all <br />advance rovalty payments are due and payable. GJP may give written notice thereof to <br />' Lessor, and thereafter G.(P shall not be obligated to pay any additional advance royalties. <br />GJP shall then vacate the Property with reasonable dispatch and this lease shall ternuna[e. <br />subject to the obligations far reclamation as set forth in Paagraph 14, below. For the <br />1 purposes of this Paragraph, "mined ou[" means the removal of substantialh~ all of the <br />turnable commercial sand and gravel from the Property, with the exception of the area <br />needed For processing of the mined material, which area shall not exceed Five (i) acres in <br />' size. <br />D. If GJP exercises its option to extend this lease for an additional ten year term, <br />' as set forth in Paragraph =; above, GJP shall pay advance royalties of ~'_~,OOQ00 per year <br />during the extension term, on the same terms and conditions as set forth in Paragraphs 7..4., <br />' 7.B., and 7.C., above, with the following changes: Lessor shall be entitled to retain any <br />excess advance royalties existing at the end of the initial lease teen, and such excess royalties <br />shall not be applied against the royalties accruing on materials mined during the extension <br />' term. The first advance rovalty payment for the extension term shall be due on the <br />conunencement of the extension term, and additional payments shall be due on each atutual <br />anriversary date of the extension term thereafter (tluough and inchidine the ninth anniversary <br />1 date). <br />8. A. Except as otherwise stated in Paragraph 8.B, below, Lessor warrants tide to <br />the Property and to all sand and gravel located on the Property, and futther warrants and co~'enants <br />F1MAH\GI PIPE\BARN ES\GP.V LSB?.A R`.'I -7' June I, 1998 <br />J <br />