Common use of Severance Tax Adjustment Clause in Contracts

Severance Tax Adjustment. As the West Kentucky Base Price is adjusted under provisions of this Confirmation, it also will be adjusted to reflect application of Kentucky severance tax on the severance, mining or sale of the coal, hereinafter referred to as “severance tax,” to the adjusted West Kentucky Base Price. The initial Kentucky net effective severance tax rate is ****%. Such severance tax rate shall be adjusted to reflect credit for transportation cost, as long as such credit is allowed by the State of Kentucky, to reflect the equivalent Kentucky severance tax cost paid by Seller, using the mechanism and procedure as shown in the attached Schedule 2A. For severance tax verification purposes, Buyer shall have the right to review all of Seller’s severance tax filings, governmental audit results and any records or other data necessary to verify the same. The Parties acknowledge and agree that the equivalent Kentucky severance tax cost as of January 1, 2013 shall not be included in the definition of Governmental Adjustment as provided for in Section 4.1.4.5. If any modifications to the net effective severance tax rate result in an incremental change to the severance tax, or if any other similar new governmental tax is established, after the Confirmation Effective Date, then such incremental change or new tax shall be included as an Additional Governmental Adjustment Cost as described in Section 4.1.4.5.2 and shall be included as an AQR Additional Adjustment Cost as described in Section 4.2.5.