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Requested By: sib 03! 2812008 <br />Instrus"t Boob! Page <br />200800696948 OR 1075 1939 <br />total gross proceeds for the following items to the extent included in such total <br />gross proceeds: (i) transportation or delivery costs incurred by Lessee in <br />transporting such coal from the Division of Reclamation Mining & Safety <br />( " permit boundary to point of sale; and (ii) any direct costs actually <br />incurred in washing the coal, not to exceed $2.50 per ton (such last deduction <br />hereinafter called the " Washing L Deduction '). <br />C. At any time during the term of this Lease, Lessor shall have the right to provide <br />Lessee written notice that Lessor wishes to renegotiate the Washing Deduction. <br />As soon as is reasonably practicable after Lessee's receipt of such notice, the <br />parties in good faith shall renegotiate the Washing Deduction to reflect a <br />deduction that is mutually acceptable to Lessor and Lessee. In the event Lessor <br />and Lessee are unable to renegotiate the Washing Deduction, Lessor shall have <br />the right to require the elimination of the Washing Deduction in the calculation of <br />the Average Gross Sales Price. <br />D. Lessee shall furnish proof of price received for all coal sold. The Production <br />Royalty shall be due and payable to the Lessor on or before the last day of each <br />calendar month during the term of this Lease for coal mined, removed, and sold <br />by Lessee during the preceding calendar month, subject to reduction for the <br />Annual Advance Minimum Royalty previously paid. <br />4. HAULAGE ROYALTY Lessee agrees to pay a Haulage Royalty of five cents 0.05 <br />for every ton of coal removed through the Leased Premises from any lands located <br />adjacent to or in the vicinity of the Leased Premises. Haulage Royalty shall be due and <br />payable to the Lessor quarterly, on or before 60 days following the last day of each <br />calendar quarter during which coal from lands other than the Leased Premises is removed <br />through the Leased Premises. No Haulage Royalty shall apply to coal mined from the <br />Leased Premises for which a Production Royalty is paid. At the end of each 5 -year <br />period, commencing from the Effective Date, Lessor may reasonably change the rate or <br />amount of the Haulage Royalty to be paid by Lessee; provided that any increase in the <br />rate or amount of the Haulage Royalty shall not be greater than the increase, if any, in the <br />average annual percentage change, taken over the preceding 5 -year period, in the <br />Producer Price Index, Table 5, Coal Mining, as first published by US. Department of <br />Labor Bureau of Labor Statistics. Once paid, all Haulage Royalty shall be retained by <br />Lessor and shall not be repaid to Lessee under any circumstance. Moreover, Haulage <br />Royalty shall not be credited against the Annual Advance Minimum Royalty. <br />WEIGHT OF COAL It is agreed that all coal mined and taken from the Leased <br />Premises shall be weighed and the weight thereof shall be entered in due form in weight <br />records kept for such purposes by Lessee. It is agreed that the term "ton" as used herein <br />means 2000 pounds of merchantable coal as shown by miners' payroll check numbers or <br />official railroad scale tickets, or by weight determined at the mine tipple, or by state <br />certified scales; provided that if it is not possible to determine accurately the weight by <br />such means Lessor may, by its duly authorized agent or agents, elect to compute a ton of <br />coal at 27 cubic feet of coal in the solid or by the measurements of the space from which <br />Page 5 of 17. <br />