Common use of Calculation of the Royalty Clause in Contracts

Calculation of the Royalty. Covanta shall pay a royalty (the “Royalty”) to Global based on the amount of diesel that is sold by each Project equal to ten percent (10%) of the revenue derived from the sale of such diesel (exclusive of any taxes and any costs included in the price for the delivery of such diesel, which costs shall be separately stated in all such agreements for the sale of diesel) for a period of twenty (20) years from the date that the applicable Project achieves commercial operation. With respect to the Royalty, it is further agreed that: (a) For the avoidance of doubt, the Royalty will not apply to the tipping fees that are received by a Project on the material it accepts for conversion or to the value of any production tax credits or any other credits received by the owner of the Project or any other revenue streams other than the sale of diesel; (b) Following the termination of the License Agreement, Covanta shall not be obligated to pay the Royalty on any future Projects developed by Covanta (excluding any Projects that have placed a purchase order for one or more Systems prior to the date of termination or loss); (c) Notwithstanding anything contained herein to the contrary, Covanta shall not be obligated to pay the Royalty with respect to (i) the Demonstration Plant or (ii) any project other than a Project, including any projects initiated and developed by Trianon or Global (even if Covanta invests in any such project) except that the Royalty shall be paid on all Carve-Out Projects in which Covanta invests; (d) Notwithstanding anything contained herein to the contrary, Covanta shall not be precluded from ceasing operation of any Project if Covanta determines that the net revenues of such Project are not sufficient to meet expenses or if it operates the Project at an unacceptable level of profit, loss or risk. Once the operation of any Project has been terminated, Covanta shall not be required to pay any Royalty with respect to such Project unless and until the operation of the Project is re-commenced; and (e) If Covanta wants to develop any Project on the basis that the diesel which is produced by the Project will be given to a party involved in the Project as consideration for its involvement, the Parties shall agree on a method of valuing the diesel for purposes of determining the Royalty or adopt an alternate way of calculating the Royalty for such Project.