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Sf3 x.307 <br />eighth (118) of the 'Gross Proceeds' at:ribu~able to the one-fourth (1/4) undivided coal <br />interest leased herein, whether mining occurs by underground, surface or other mining <br />methods. <br />(a) With respx•t t.r bona ~5de arm's length transactions for the sale of coal, <br />gross Procceds 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 oC <br />the mine, without deduction for any sales commissions, selling expenses or preparation <br />costs; provides that, if the coal is sold (.o.b. some other delivery point witl~ the Lessee <br />bearing transportation expenses Crom the mouth of the mine to that delivery point, then <br />these transportation expenses shall be deducted from the Gross Proceeds before <br />computation of the royally. <br />(b) ](coal mined from the Leased Premises under the terms of this i.ease <br />is sold by the Lessee other than by a bona fide arm's length transaction or is used or <br />otherwise disposed of by the Lessee, including by gasification, slurrification or combustion, <br />then Cross Proceals shall mean the prevailing fair market value of the coal at tl~c tipple <br />or the mouth of the mine. The prevailing fair market value shall be determined with <br />reference to bona fide arm's length coal sale transactions by others which are most <br />comparable to the prevailing circumstances related to this Lease, giving consideration to <br />quantity, siu ar~d quality of the coal, length of term and delivery of commitment of <br />contracts, availability and cost of transportation, 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) Production royalty Payments are due and payable on or before the <br />twentieth (20th) day of each calendar month for the coal mined and removed, and sold, <br />used or otherwise disposed of from the Leased Premises during the preceding calendar <br />month. The Lessee shall furnish to the Lessors a statement of production a-~d sale or <br />other disposition to accompany each royally payment showing the amount of coal mined, <br />remos•ed and. sold or etherv.•ise disposed of from the Leased Premises during the <br />preceding calendar month. <br />5. f\o tti'arrantits of Title. This Lease is executed by Lessor solely in his <br />3 <br />