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from one property added to a stockpile at any time during a calendar month shall be deemed added <br />simultaneously and pro rata with Materials from any other Property. The quantity of Materials <br />determined to be in the stockpile as of the commencement of any calendar month shall be deemed <br />sold and removed, on a first-in first-out basis, prior to the sale of any Materials addedto the stockpile <br />during a subsequent calendar month The Company's measurement and determination shall be <br />initially conclusive, but subject to audit by Lessor. <br />I). Accounting; Records. Recycle or Waste Material shall be weighed upon <br />delivery or return to the Property, with the quantity and type of material being recorded. Products <br />containing reprocessed Recycle Material or Waste Material shall be weighed upon leaving the <br />Property in the same manner as otherproducts containing sand and gravel aggregate. As the Recycle <br />Material is used by the Company, records shall be kept of quantities in order to pen-nit Lessor to <br />verify the amount of Recycle Material brought onto the Property, used for asphalt or concrete <br />production, and removed from the Property as new production or otherwise. Recycle Material and <br />Waste Material may be commingled in a single stockpile with new Materials only after being <br />weighed and properly accounted for. Withdrawals from any such stockpile for production of new <br />asphaltic or concrete products shall be deemed to be on a "first-in first-out" basis for determining <br />when payment of any Import Pee or other Sand and Gravel Pee for Materials included in the <br />commingled stockpile becomes payable. <br />E. 03wgership. Recycle Material and. Waste Material shall be the properly of the <br />Company. As deemed necessary by the Company, the Company shall bring in crushing equipment to <br />crush. the Recycle Material or Waste Material. <br />F. Allowance for Tailings. Tannage for purposes of calculation of Sales Royalty <br />shall be based on processed Materials sold. If Materials are not being commingled from separate <br />properties, then the tonnage sold shall be calculated pursuant to Paragraph 5.A. above. If due to <br />commingling, Materials are weighed as pit run before processing and sale by the Company pursuant <br />to Paragraph S.A, above, the weight of tailings and washed fines shall be deducted from the total pit <br />run weight of the Materials attributed to each property for purposes of calculating Sales Royalties. <br />Both parties agree that as much as approximately fifteen percent (15%) of the minable in situ (in <br />place, in the ground) sand and gravel onsite may need to be rejected as washed fines or tailings or <br />otherwise in order to meet commercial specifications for salable Material. If rejected mined <br />Materials exceed twenty five percent (25%) of total tonnage mined, the Company shall pay Sales <br />Royalty on the percentage of tonnage of rejected Materials that exceeds fifteen percent (1510) of total <br />tonnage of Materials mined. Materials that are deemed non-economic to mine shall not be included <br />in the foregoing calculation, which pertains only to Materials mined, processed and rejected. <br />6. Water. During the Term of this Lease, and until reclamation of the Property is completed, <br />Lessor shall make available the water and water rights yielding, on average, at least 29.3 acre feet per <br />year listed in the November 18, 2008 report of Applegate Croup, Inc., attached hereto as Exhibit B. <br />If thq total available yield of the Exhibit l3 water rights is reduced due to senior calls or physical <br />availability, the 29.3 acre feet shall be proportionally reduced. If in any year, such water rights do <br />not yield at least 29.3 acre feet due to senior calls or physical unavailability, or if, for any other <br />reason, additional water or water rights are required, the Company shall provide at its sole cost and <br />-6-