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royalties provided for herein are being paid by LESSEE as provided in paragraph 4, below, tt being the express intention of the parties hereto that this Lease shall remain in full force and effect, unless sooner terminated as herein provided, for the maximum period permissible under the laws of the State of Colorado (including the common law) in effed on the date of the execution hereof. 3. For the purpose of calculating payments hereinafter provided for based on acreage the LESSOR'S interest in the Property covered hereby is deemed to comprise 100% interest in 1,360.00 net acres, whether it actually~comprisee mdre or less. It is agreed that in the event tt is determined that LESSOR owns an interest in the Coal leased hereby which amounts to more or less than that used fo calculate the net acres set out above, then the annual rental and -nnuaf=minirmum-~dvance-~nyalties-and/ar3he~arped-royalties-fo-be_^"-r..._-•~~ ESS013_ilnder paragraph 4, below, shall be increased or reduced proportionately. If LESSOR'S interest is greater than that shown above, then. LESSEE shall promptty pay LESSOR the diffference between any previously made payments as calculated above and the amount of such payments calculated upon the basis of LESSOR'S greater interest. If LESSOR'S interest is less than :hat shown above, LESSOR shall be entitled to retain such proportion of any such monies previously paid hereunder as LESSOR'S said interest bears to the interest reflected above, and LESSEE shall be entitled to offset all other mohies previously paid LESSOR against any payments which thereafter became due and payable to LESSOR hereunder. LESSOR agrees to reimburse LESSEE against any overpayment~it may incur as a result of any such lesser interest owned by LESSOR. 4. In consideration of the granting of this Lease, LESSEE shall pay LESSOR the following royalties in the manner set forth below: (a)^Ainimum AnnL^i Advance Royalties. On. or before each of the first through sixth subsequent anniversaries of the effective date of this Lease, LESSEE shall not be obligated to pay to LESSOR any amount as a minimum advance royalty, and commencing, on the seventh anniversary and each subsequent anniversary of the effective date of this Lease, if the total earned royalty payable to LESSOR for the preceding four calendar quarters is less than the product obtained by multiplying the sum of Ten'and 00!100 Dollars (510.00) by the number of acres covered by this Lease on said anniversary date, LESSEE agrees to pay Ne difference to LESSOR within thirty (30) days following said anniversary date, as a minimum advance royalty, provided that such minimum annual advance-royalty payments shall be fully recoupable out of any earned royalties payable to LESSOR hereunder. All minimum annual advance royalty payments shall be made pursuant to paragraph 13 of this Lease. (b)Farned Rovalti ~. Dunng the term of this Lease, LESSEE shall pay LESSOR an earned royalty equal to P~Oht o r of gross value on every ton of 2,000 pounds of run of mine, merchantable coal which is mined and removed from the Property and sold by LESSEE and which is attributable to LESSOR'S undNided interest in the Property, but subject to paragraph 10 of this Lease. For the purposes -of Nis Lease, the term "gross value" shall mean the gross selling price received by LESSEE for each and every ton oT coal which is mined and sold from the Property and which is attributable to LESSOR'S undivided interest in the Property, but subject to paragraph 10 of this Lease, F.O.B. mine, deducting therefrom: (i) all transportation and delivery vests borne by LESSEE, in the event that the Coal is sold other than F.0.8. mine; (ii) any tax assessed upon, measured, or earned by the severance Hereof of the Coal from the Property, or the sale thereof, whether such tax is imposed upon LESSEE or LESSEE'S customers; (iii) any royalty assessment, levy or charge upon the mining, extracting or removing of coal for the beneftt of any employee of LESSEE, tts successors or assigns, made, charged or assessed upon any contract of employment, or levied by any representative or bargaining agent of said employees for Ne benefd of said employees or far the benefit of employees of the coal mining industry; and (iv) any energy tax or tax based upon or related to the energy content of the Cczl severed from the PropeM, whether actualy paid by LESSEE or LESSEE'S customers. (c)Payment of any earned royalties due LESSOR by LESSEE during the term of this Lease shall be made to LESSOR within thirty (30) days after the end of each calendar year within which the coal was mined and sold and tonnage shall be supported by certifred copies, or equivalent, of truck style weight bills or rail cer bills of lading. All earned royalty payment shall be made pursuant to paragraph 13 of Nis Lease. Initial: Initial:, 473048 s-729 P-150 01/14/1997 01:56P PO 2 oe 6