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the royalty calculation that includes an accounting of the tons of Materials mined from the <br />Property and sold for the month. <br />E. The Company shall keep and maintain adequate and accurate records of <br />the quantities sold for Materials mined, removed, and sold. Lessor shall have the right at all <br />reasonable times during business hours and upon reasonable prior notice to examine such records <br />of the Company at the offices of the Company and to verify the quantities of Materials mined, <br />removed, and sold and the accuracy of the scales used to weigh the Materials. <br />4. Minimum Royalties. The initial paid to Lessor at the time this Lease <br />becomes effective shall be deemed "Advance Minimum Royalty" (or "AMR") and shall apply to <br />maintain the Lease in effect for the period commencing on the Effective Date until the end of the <br />first Lease Year. Thereafter, the Company shall pay the following amounts as Advance <br />Minimum Royalty to keep the Lease in effect for each Lease Year after the first: <br />Second Lease Year - AMR of $ <br />Third Lease Year and Fourth Lease Year - AMR of $ <br />Subsequent Years of Lease Agreement (as <br />extended) to Depletion of Reserve - AMR of $ <br />provided that, at such time as the Company has paid Lessor at least in Advance <br />Minimum Royalty and Production Royalty in excess of that recouped from Advance Minimum <br />Royalty, the obligation to pay Advance Minimum Royalty shall cease. The Advance Minimum <br />Royalty payments for a Lease Year shall be due on or prior to commencement of that Lease <br />Year. <br />Advance Minimum Royalty payments made under this Lease shall be credited as an advance <br />payment of and applied to reduce Material tonnages otherwise subject to the Production Royalty <br />pursuant to Paragraph 3, based upon the tonnage associated with the Production Royalty rate in <br />effect at the time the Advance Minimum Royalty is paid. (For example, the paid upon <br />execution of this Lease shall be deemed advance payment of Production Royalty at the Base <br />Rate of per Net Sale Ton for 100,000 Net-Sale Tons of Materials from the Property, <br />whenever sold under this Lease. If the Index ratio of Paragraph 3.B. has become 1.05 at the time <br />the Advance Minimum Royalty payment for the third Lease Year is made, thus making <br />the Production Royalty rate cents per Net Sale Ton, then the payment made shall <br />be deemed advance payment of Production Royalty for per Net Sale Ton, or <br />142,857 Net Sale Tons of Materials, whenever removed and sold thereafter under this Lease). <br />Production Royalties paid pursuant to Paragraph 3, after taking into account and in excess of <br />Advance Minimum Royalties paid pursuant to this Paragraph, shall be applied in succeeding <br />years to reduce amounts subsequently payable as Advance Minimum Royalty. <br />Upon termination of this Lease for any reason, and subject to the Company's early termination <br />payment obligation under Section 15(F), the obligation to make Advance Minimum Royalty <br />payments shall likewise terminate except as to payments that became due prior to termination. <br />-3-