Common use of Royalty Amount and Adjustment Clause in Contracts

Royalty Amount and Adjustment. (i) The amount of the Royalty due and owing as of the Closing Date shall be $0.50 per ton of all Fee Coal and Leased Coal sold from coal production in the State of Indiana, Illinois, Ohio or California, and shall be $0.35 per ton of all Fee Coal and Leased Coal sold from coal production in the State of West Virginia, Kentucky or Tennessee (such per ton amounts, the "Base Royalty"). Tonnage shall be determined by use of certified scales, or if certified scales are not utilized or otherwise available, then by procedures standard in the coal industry and mutually agreed to by Seller and Purchaser. If Coal Components are produced and sold, then the Royalty due and owing on all such Coal Components shall be two percent (2.0%) of the gross proceeds received from the sale thereof. Gross proceeds shall include any cash consideration, as well as the value of any non-cash consideration received, without allowance for any deductions of any kind or character. The two percent (2%) Royalty on Coal Components shall not be adjusted and shall remain fixed. (ii) Beginning on June 1, 1999, and on each June 1 thereafter, for so long as any Royalty may be due under this Subsection 5.10.1 on any Fee Coal or Leased Coal, the Royalty shall be adjusted up or down, but never below the initial Base Royalty set forth in clause (i) above. This annual adjustment shall be made starting June 1, 1999, notwithstanding the fact that the Royalty is not payable except on the production from and sale of Coal Reserves from and after June 1, 2002. Calculation of the adjustment shall be made during May 1999, and during each May thereafter, to be effective for all production of Fee Coal and Leased Coal from and after the immediately following June 1. The Royalty shall be adjusted by multiplying the Base Royalty by a fraction. The denominator of the fraction shall always be the Consumer Price Index for All Urban Consumers (reference base 1982-84=100), unadjusted index, all items, as first published by the United States Department of Labor, Bureau of Labor Statistics ("CPI-U") for the month of March 1998. The numerator of the fraction shall be the CPI-U for March of the year in which the adjustment is being made. (iii) In the event of any dispute regarding the calculation of the adjustment to the Royalty as provided in subclause (ii) above, Purchaser shall continue to pay the Royalty at the previous rate, and after the dispute is finally resolved refunds to Purchaser, or additional Royalty to Seller, as the case may be, shall be paid promptly, together with interest on the amount due at the Interest Rate, compounded monthly. In the event the reference base of the CPI-U is rebased, the CPI-U shall continue to be used by the parties as rebased. If during any May when the Royalty is being adjusted the CPI-U for the preceding March is no longer published or issued by a governmental authority, then Seller and Purchaser shall use such other index as is then generally recognized and utilized for similar determinations of purchasing power. If there is a failure to agree on the replacement index, then the parties hereto authorize a court sitting in equity to select the replacement index, and the provisions in this subclause (iii) regarding payment of the Royalty pending resolution of a dispute shall apply.

Royalty Amount and Adjustment. (i) The amount of the Royalty due and owing as of the Closing Date shall be $0.50 per ton of all Fee Coal and Leased Coal sold from coal production in the State of Indiana, Illinois, Ohio or California, and shall be $0.35 per ton of all Fee Coal and Leased Coal sold from coal production in the State of West Virginia, Kentucky or Tennessee (such per ton amounts, the "Base Royalty"). , Tonnage shall be determined by use of certified scales, or if certified scales are not utilized or otherwise available, then by procedures standard in the coal industry and mutually agreed to by Seller and Purchaser. If Coal Components are produced and sold, then the Royalty due and owing on all such Coal Components shall be two percent (2.0%) of the gross proceeds received from the sale thereof. Gross proceeds shall include any cash consideration, as well as the value of any non-cash consideration received, without allowance for any deductions of any kind or character. The two percent (2%) Royalty on Coal Components shall not be adjusted and shall remain fixed. (ii) Beginning on June 1, 1999, and on each June 1 thereafter, for so long as any Royalty may be due under this Subsection 5.10.1 on any Fee Coal or Leased Coal, the Royalty shall be adjusted up or down, but never below the initial Base Royalty set forth in clause (i) above. This annual adjustment shall be made starting June 1, 1999, notwithstanding the fact that the Royalty is not payable except on the production from and sale of Coal Reserves from and after June 1, 2002. Calculation of the adjustment shall be made during May 1999, and during each May thereafter, to be effective for all production of Fee Coal and Leased Coal from and after the immediately following June 1. The Royalty shall be adjusted by multiplying the Base Royalty by a fraction. The denominator of the fraction shall always be the Consumer Price Index for All Urban Consumers (reference base 1982-84=100), unadjusted index, all items, as first published by the United States Department of Labor, Bureau of Labor Statistics ("CPI-UCPIU") for the month of March 1998. The numerator of the fraction shall be the CPI-U for March of the year in which the adjustment is being made. (iii) In the event of any dispute regarding the calculation of the adjustment to the Royalty as provided in subclause (ii) above, Purchaser shall continue to pay the Royalty at the previous rate, and after the dispute is finally resolved refunds to Purchaser, or additional Royalty to Seller, as the case may be, shall be paid promptly, together with interest on the amount due at the Interest Rate, compounded monthly. In the event the reference base of the CPI-U is rebased, the CPI-U shall continue to be used by the parties as rebased. If during any May when the Royalty is being adjusted the CPI-U CPIU for the preceding March is no longer published or issued by a governmental authority, then Seller and Purchaser shall use such other index as is then generally recognized and utilized for similar determinations of purchasing power. If there is a failure to agree on the replacement index, then the parties hereto authorize a court sitting in equity to select the replacement index, and the provisions in this subclause (iii) regarding payment of the Royalty pending resolution of a dispute shall apply.