Diligent Operations; Minimum Royalty Sample Clauses
The 'Diligent Operations; Minimum Royalty' clause requires a licensee or operator to actively and consistently pursue the development, production, or commercialization of a licensed product or technology, while also mandating the payment of a minimum royalty regardless of actual sales or use. In practice, this means the licensee must meet certain operational benchmarks, such as maintaining a specified level of activity or investment, and must pay a set minimum amount in royalties each period even if sales are low or nonexistent. This clause ensures that the licensor receives a guaranteed income and that the licensee cannot simply hold the rights without making genuine efforts to commercialize the asset, thereby preventing underutilization and protecting the licensor’s interests.
Diligent Operations; Minimum Royalty. In the absence of actual production in commercial quantities as set forth in paragraph 3.2, Extension Beyond Secondary Term, this Lease shall remain in effect beyond the primary term only if the Lessee is engaged in diligent operations, exploration, or development activity (which development activity shall include, but not be limited to, pursuit of required permits and approvals) which in Lessor’s reasonable discretion is calculated to advance development or production of coal from the Leased Premises or lands constituting an approved mining unit which includes the Leased Premises, and Lessee pays an annual minimum royalty in advance on or before the anniversary date of the Effective Date. The minimum royalty shall be calculated by determining the production royalty that would be payable upon production of one per cent (1%) of the recoverable coal reserves within the Leased Premises, as such recoverable coal reserves are determined by Lessor after consultation with Lessee, subject to adjustment from time to time based upon reasonable justification from the Lessee. The unit value of the recoverable coal reserves for purposes of determining the minimum royalty shall be determined by Lessor using the methodology set forth in 43 Code of Federal Regulations 3483.4(c)(l)-(3) (1998). Minimum royalties paid by Lessee pursuant to this paragraph may be credited against production royalties accruing during the term of this Lease.