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3.4 Unitized Riyhu. Paymenu to Lessor pursuant to Article N shall be <br />considered as firll cmm~en~ar;nn fnr the grant to, and exercise of, any ana all rrghts <br />granted to Lessee pursuant to this Article III. <br />ARTICLE N <br />PAYMENTS <br />4.1 Payment URpn Execution. As partial consideration for entering into <br />this Lease, Lessee agrees to pay Lessor, at the time the Lease is signed, the sum of ten <br />dollars (S10) and other good and valuable consideration. <br />4.2 Minimum Rpyal~y P~ymenu. On each anniversary of the effective <br />date of this Lease, Lessee shall pay to Lessor as a minimum royalty payment, without <br />regard to the quantity of Coal mined from the Unitized Premises, the following sum per <br />acre for the total number of acres specified in Schedule 1: <br />Anniversary S/Leased Acre <br />1st - 5th S 5.00 <br />6th - 10th 7.50 <br />11th - 20th 10.00 <br />21st and beyond 12.50 <br />Any minimum royalty payment which becomes due under this Section 4.2 shall be offset <br />and reduced, but not below zero, by any production royalty payments pursuant to <br />Section 4.3 which were made during the most recently concluded lease year. Any <br />production royalties which become due under Section 4.3 shall not be offset by any <br />minimum royalty payments previously made or to be made under this Section. <br />4.3 Production Roy la ties <br />(a) Coal Production Royal. For Coal in or under the Unitized <br />Premises which is reined or produced and sold by Lessee through arms-length bargaining <br />to a third party not affiliated with Lessee in any way, the production royalty payable to <br />Lessor shall be that percentage of the gross sales price, F.O.B. truck or railcar (as <br />applicable), that is set forth in Schedule 3, which is attached to and made a part of this <br />Lease, for each ton of 2,000 pounds thus sold. T'he term "gross sales price" as used in <br />this I-ease shall allow for a maximum 2% commission or brokerage fee to be deducted, <br />where actually incurred with respect to a sate of Coal from the Unitized Premises. <br />Lessee shall have the right, without any royalty obligation to Lessor, to <br />utilize Coal in iu Mining Operations so long as such use is reasonably related to the <br />development, production, preparation or marketing of Coal from the mine. Also, for <br />purposes of this Lease, the existence of a long-term sales agreement with a party or <br />entity not otherwise related by ownership to Lessee shall be deemed a sale through arms- <br />length bargaining. <br />If Coal in and under the Unitized Premises is removed for Lessee's own <br />use outride of or unrelated to iu Mining Operations, or is sold to a purchaser owned or <br />controlled by Lessee or iu corporate owner, the price of such Coal for production royalty <br />purposes shall be the greater of the gross sales price, F.O.B. truck or railcar, actually <br />received by Lessee or the then Current Market Value of the Coal. <br />(b) Unitized Production Royalty. Pursuant to Article III, the <br />Premises have been and are hereby declared to be unitized for royalty purposes on the <br />basis set forth iR Schedule 2, and the royalties on production sold from the Unitized <br />Premises shall be paid to Lessor in accordance with the following formula: <br />Y= RxT P <br />U <br />where <br />-3- <br />