Common use of Tax Reduction Clause in Contracts

Tax Reduction. In the event that either the Montana state severance tax or gross proceeds tax should be repealed or reduced below its current level, then amounts paid by Lessee under Section 8.2 shall be reduced accordingly. Further, an adjustment to royalty will be made in accord with Article 7. In addition, the parties shall have the rights provided herein below: (1) Lessor may require Lessee to negotiate with Lessor on the amount of severance and/or gross proceeds taxes, if any, which Lessee will pay to the Lessor by giving Lessee notice of an intent to renegotiate this provision with respect to a severance tax and/or gross proceeds tax within ninety (90) days (unless otherwise agreed) after the effective date of the act of the Montana legislature or after action of any Montana political subdivision effecting such reduction. (2) Unless otherwise agreed, negotiations shall commence within thirty (30) days after Lessee’s receipt of the Lessor’s notice of intent to renegotiate. (3) Lessee’s obligation to pay a severance and/or a gross proceeds tax to Lessor under this Coal Lease shall be suspended during the period of renegotiation from the last day of the month in which the intent to renegotiate is received by Lessor. If tax rates are established by agreement as a result of renegotiation, then Lessee shall pay Lessor a tax or taxes based on those rates retroactive to the time of suspension of payment under this Coal Lease.