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GO~~(15 <br />the mine, without dcducnon for any sales commissions, selling expenses or preparation <br />costs; provided that, if the coal is sold f.o.b. some other delivery por:rt 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 rrined from the Leased Pre;,rises 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, slurrification or cc+mbustion, <br />Then Gross Proceeds shall mean toe prevailing fair market value of the coal al the fipple <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, size anc' quality of the coal, length of Icrm and delivery of commitment of <br />contracts, availability and cost of transportation, and other pertinent market conditions. <br />(c) Production royalty payments shall be fret 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 (201h) 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 of from the Leased Premises during the <br />preceding calendar month. <br />5. No N'arrantics of Title. Lessor makes no warranties of title to the Leased <br />Premises, either expressed or implied. <br />6. Lesser Interest. If Lessor owns less than aone-fourth (1/4) undivided <br />interest in and to the coal in, upon or underlying the Leased Premises, th~~ the <br />production royalty provided for herein shall be paid to Lessor only in the prop~•-tions <br /> which its interests bear to the whole, undivided ownership of the coal. <br /> 'l. Conduct of Operations. Lessee shall conduct all operations and maintain <br />3 <br />