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~0~30n <br />Ixswrs harmless in acconiance with the term of this lrax. - <br />4. Production Royattr. Lessors hereby reserve to themselves, and Lessee shall <br />pay to Lessors, a nonparticipating pnoduct~an royt:lty for all coal mined and removed, and <br />sold, used or othcrwise disposed of, from the Leased Prcrt,ises in an amount equal ro <br />one eighth (1/8) of the 'Gross Proceeds' attrih~ttable to the one-fourth (1/4) undivided <br />coal int=rest leased herein, whether mining occurs by undergrwnd, surface or other <br />mining methods. <br />(a) Wirh respect to bona frdt app's length tr~ursactions for the sale of coal, <br />Gro^s Proceeds shall mean the aggregate amount of consideration received or receivable <br />by the Lessee, directly or indirectly, for the sale of coal f.o.b.the tipple or the mouth of <br />the mine, without deduction for any sales commissions, selling expenses or preparation <br />costs; provided that, if the coal is wld f.o.b. some other delivery point with the Lesser <br />bearing transportation exprnses from the mouth of the mine to that delivery point, thrn <br />those transportation e~ penses shall be t'educted from the Gross Proceeds before <br />computation of th:, royalty. <br />~, tf coal mined from the Leased Premises under the terms of this Ltase <br />is sold by the Le ~e other than by a Kona fide arm's length transaction or is used or <br />otherwise dispoer.+ of by the Lessee, including by gazification, slurrification or wmbustion, <br />then Gross Procc.-.: shall mean the prevailing fair market value of the coal at the tipple <br />or the mouth of the mine. The prevailing (sir market value shall be determined with <br />reference to bona frdr arm's length coal sale transactions by. others which are most <br />comparabl: to the prevailing ~:,ct: nstances related to this Lease, giving ~:onsideration to <br />quantity, ;iu and quality of the coal, length of term and delivery of commitment of <br />contracts, availability and cost of transpor~ation, and other pertinent market conditions. <br />(c) Production royalty payments shall be free of any expense of exploration, <br />mine development or operation. <br />(d) Proauctien royalty payments are due and payable on or before the <br />twentieth (:~th) day of each calendar month for the coal mined and removed, and sold, <br />used or othrrtt•ise disposed of from the Erased Premises during the preceding calrndar <br />month. The r.essee shall (umish to the lessors a statement of production and sale cr <br />3 ~ <br />i <br />