2011-04-29_PERMIT FILE - M2011001 (18)

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It .. . Sales Royalties. A. Subject to Paragraphs 3.B. and 4, for all Materials sold from the Property during each calendar month, the Company shall pay to Lessor a royalty at the rate of? per product ton of 2.000 pounds (the "Base Royalty") within twenty (20) days after the clo, e of such calendar month. B. The royalty rate shall be adjusted every year on the first day of the month following the'anniversary of the date this Lease becomes effective (the "Adjustment Date"). The basis for this adjustment shall be the Producer Price Index---Construction Sand/Gravel%Crushed Stone-Series ID No. WPU 1321, published by the United States Department of Labor, Bureau of Labor Statistics (the "Index"). The adjusted royalty shall be determined by dividing thd,- monthly Index last published before such Adjustment Date by the monthly Index last published when this Lease becomes effective and then multiplying the quotient by the Base Royalty so as to increase or decrease the Production Royalty rate per ton beginning on the first Adjustment Date and each subsequent Adjustment Date thereafter based on such calculation. The foregoing ratio or Indexes shall be calculated on data with base year 1982 =100 until the Bureau of Labor Statistics 1 ublishes data with a new base period. If the Index just described or one reasonably similar thereto is no longer published, then an index or adjustment accomplishing as nearly as practical the result which-would have been obtained by using the stated Index if it had been available shall be selected by agreement of the parties hereto. C. The Company shall keep and maintain. adequate and accurate records of the quantities of Materials mined and sold. 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 or deemed sold pursuant to Paragraph 5.C. for the month. Lessor 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 removed, and sold and the accuracy of the scales used. to weigh the Materials. 4. Advance Minimum Royalties. The Company shall pay annually to 'Pr for the benefit of the Lessor. The initial payment shall'be made at the time this Lease commences. All payments 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 to the final Term of the Lease. The cumulative amount of Advance Minimum Royalty.the Company is required to pay during the term of this Lease shall in no event exdeed the lesser of i a. or i b. the equivalent of the production Loyalty. (using the Base Royalty rate) onmiM of the mineable aiid permitted quantity of the Materials that the 2 z