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mined, processed, and sold from the leased property, equal to the then current Federal royalty rate <br />paid on each ton of coal mined and sold from adjacent Federal coal reserves. Payments to lessor <br />shall be made as shown on Exhibit C attached hereto as a part hereof in the percentages shown <br />thereon. <br />6.2 Gross Sales Price -Generally <br />The royalty payments described in Section 6.1 shall be based upon the value of all coal mined, <br />processed, and sold from the leased property, and before transporting from the minelto a point of <br />sale, storage or processing, less all federal, state, and local sales and use taxes required,by the taxing <br />authority to be chazged and collected from the pwchaser by the Lessee and all amounts, representing <br />federal, excise, reclamation, and state severance taxes and other taxes of a similar natwe levied <br />against the extraction ofcoal. No royalties shall be due or payable until coal mined from the Leased <br />Premises has actually been sold by the Lessee. <br />6.3 Arbitration of Tonnaee Royalty Disuutes <br />A bona fide dispute as to the correct amount of tonnage royalty owed may be referred by <br />Lessor or Lessee to arbitration as provided in Section 22 but the existence of a dispute as to the <br />amount of royalty shall not relieve Lessee of the duty of paying, when due, the amounts not in <br />I <br />dispute. i <br />6.4 Royalty Payment Date <br />Lessee covenants and agrees to pay to Lessor on or before the 25th day of each calendar <br />month the tonnage royalties for all coal sold from the Leased Premises dwing the preceding calendar <br />month. I <br />I <br />Section 7. Minimum Royalties; Recoupment; Definition of Lease Year <br />7. I Minimum Royalties <br />As rental for the Leased Premises Lessee hereby covenants and agrees to pay unto Lessor <br />without necessity of previous demand at the times hereinafter specified and at such place or places <br />as Lessor shall from time to time designate in writing for each lease year, or portion thereof, that this <br />Lease remains in effect a minimum annual rental or royalty ("minimum royalty"), equal to a fraction <br />as shown on Exhibit C, of the sum of One Thousand and 00/100 Dollars ($1000.00). This minimum <br />royalty shall also serve as rent for the privilege of using the leased property for access to adjacent <br />I <br />coal. <br />7.2 Recoupment ofRovalties <br />If Lessee shall pay the minimum royalty pursuant [o Section 7.1 and shall not have mined in <br />such a yeaz a sufficient quantity of coal to produce, at the said rate of tonnage royalty, the said <br />minimum royalty, then Lessee may dwing the next succeeding five (5) years, and not thereafter, make <br />Page 4 of 17 <br />