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60 ~. z09 <br />• eigh~h (I/8) of the "Gross Proceeds' attributable to the one-fourth (1/4) undivided coal <br />interest leased herein, whether mining occurs by underground, surface or other mining <br />methods. <br />t (a) With respect to bona fide arm's length transactions for the sale of coal, <br />Gross Proceeds shalt mean the aggregate amount of consideration receivrd or receivable <br />by the Ixssee, directly or indirectly, for the sale of coal f.o.b. the tipple or the mouth c,f <br />i the mine, without deduction for any sales commissions, selling expenses or preparation <br />~ costs; provided that, if the coal is sold f.o.b. some other delivery point with the Lessee <br />bearing transportation expenses from the mouth of the mine to that delivery point, then <br />those transportation expenses shall be deducted from the Gross Proceeds before <br />computation of the royalty. <br />(b) If coal mined from the Leased Premises under the terms of this Lease <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, slurtitication or combustion, <br />. then Gross Proceeds shall mean the prevailing fair market value of the coal at the tipple <br />or the mouth of the mine. The prevailing fair market value shall be determined with <br />reference to bona ftde 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, size and 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 and sale or <br />other disposition to accompany each royalty payment showing the amount of coal mined, <br />removed and sold or otherwise disposed oC from the Leased Premises d;tring the <br />preceding calendar month. <br />S. No Warranties of Title. This irase is executed by Lessor solely in its <br />3 <br />