Common use of Royalties and Payments Clause in Contracts

Royalties and Payments. 3.1 Subject to all other terms and conditions of this Agreement, Licensee will pay to Licensor: (a) subject to Section 3.4 below and during the Tax Credit Term, a royalty (the “Refined Coal Royalty”) of * on the per-ton, pre-tax margin of Refined Coal that (a) is produced pursuant to the Technology License or any Technology Sublicense, and (b) produces a valid and verifiable Section 45 Tax Credit; provided, however, that such per-ton, pre-tax margin of Refined Coal shall (i) be net of all directly allocable operating expenses and all utility payments incurred by Licensee or a Sublicensee, as applicable, in connection with the production and sale of the Refined Coal, and (ii) exclude any and all closing payments of cash or prepayments of applicable lease rents and any associated non-cash amortization thereof (or similar payments under non-lease structures). For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(a) is included in Schedule 3.1(a) hereto. (b) subject to Section 3.4 below and during the Tax Credit Term, in the event that Licensee (or a Licensee Affiliate) does not monetize a Facility with a third party and instead opts to retain the Section 45 Tax Credits from that Facility for Licensee’s (or Licensee Affiliate’s) own benefit, such that there is no per-ton, pre-tax margin for the Refined Coal produced by such Facility, the Refined Coal Royalty for the Refined Coal produced by such Facility will be * of the Section 45 Tax Credits claimed by Licensee (or a Licensee Affiliate), or their respective owners, on the Refined Coal produced by such Facility net of all directly allocable operating expenses and all utility payments incurred by Licensee (or a Licensee Affiliate) in connection with the production and sale of such Refined Coal. For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(b) is included as part of Schedule 3.1(a) hereto. (c) during the Term of this Agreement, a royalty (the “Mercury Control Royalty”) of * of the revenue, net of all direct expenses, received by Licensee as a direct result of Licensee’s exercise of the license specified in Section 2.1(b) above. For the avoidance of doubt, an example of how the Mercury Control Royalty would be calculated in accordance with Section 3.1(c) is included in Schedule 3.1(c) hereto. 3.2 Subject to Sections 3.3 and 3.4 below, Licensee will pay to Licensor the Refined Coal Royalty (each, a “Refined Coal Royalty Payment”) on a quarterly basis during the Tax Credit Term within sixty (60) days of the end of each quarter of a calendar year commencing with the calendar quarter ending June 30, 2012 (each such period, a “Refined Coal Royalty Period”) on Refined Coal with respect to which a Refined Coal Royalty Payment obligation has accrued during the immediately preceding Refined Coal Royalty Period. During the Term of this Agreement, Licensee will pay to Licensor the Mercury Control Royalty (each, a “Mercury Control Royalty Payment”) on a quarterly basis within sixty (60) days of the end of each quarter of a calendar year (each period, a “Mercury Control Royalty Period”) with respect to Licensee’s exercise of the license specified in Section 2.1(b) and for which a Mercury Control Royalty Payment obligation has accrued during the immediately preceding Mercury Control Royalty Period. Each Refined Coal Royalty Payment and Mercury Control Royalty Payment will be accompanied by a report identifying in reasonable detail the calculation of the royalty due for the relevant royalty period. Notwithstanding any provision to the contrary herein, Licensee has the right to offset any amounts that Licensee has the right to recover pursuant to this Agreement against any Refined Coal Royalty Payments and/or Mercury Control Royalty Payments due and owing under this Agreement, the application of which shall be determined by Licensee in its sole discretion.

Royalties and Payments. 3.1 Subject 5.1 The royalty rate for the license that is the subject of this Agreement shall be in accordance with this Article 5. 5.2 Royalties and fees due hereunder shall accrue and be paid to Licensor according to this Article 5 and the attached Exhibit B, which is incorporated herein. 5.3 Except where Licensed Products are given to a prospective customer as an inducement to subsequently purchase and use Licensed Products, where Licensed Products are not sold, but are otherwise disposed of or used, the Net Revenue of such products and/or processes for the purposes of computing-royalties shall be the selling price at which products of similar kind and quality are sold in similar quantities or are currently being offered for sale by the Licensee and in no event shall Net Revenue be less than $1.50 per unit. Where power charges are given to customers in conjunction with a sale of a suture removal kit, no royalties shall be due on said power chargers. Where, however, the power charger is sold or otherwise disposed of in any fashion other than as an inducement to a customer to purchase the suture removal kit, then royalties as set forth herein shall be payable on such sale or disposition or use of the power chargers and Net Revenue for the power charger shall in no event be less than $1.50 per unit. In no event shall Bovie bundle Licensed Products with non-EMI products if to do so would cause the Net Revenue of Licensed Products to decrease. 5.4 Under this Agreement, Licensed Products shall be considered to be sold when payment is received, or if not sold, when delivered for use or lease to a third party or affiliate or used by Licensee in a manner not excluded above. 5.5 The Licensee shall pay to Licensor an earned royalty, as defined in the attached Exhibit B, on all other terms and conditions Licensed Products made, sold leased or used by the Licensee. 5.6 Earned royalties for Licensed Products sold under this Agreement in the Territory shall accrue to Licensor for the duration of this Agreement. 5.7 Earned royalties accruing to Licensor shall be paid to Licensor by February 15, Licensee will pay to Licensor: (a) subject to Section 3.4 below and during the Tax Credit TermMay 15, a royalty (the “Refined Coal Royalty”) of * on the per-ton, pre-tax margin of Refined Coal that (a) is produced pursuant to the Technology License or any Technology SublicenseAugust 15, and (b) produces a valid and verifiable Section 45 Tax Credit; provided, however, that such per-ton, pre-tax margin of Refined Coal shall (i) November 15. Each payment to Licensor will be net of all directly allocable operating expenses and all utility payments incurred by Licensee or a Sublicensee, as applicable, in connection with the production and sale of the Refined Coal, and (ii) exclude for any and all closing payments of cash or prepayments of applicable lease rents and any associated non-cash amortization thereof (or similar payments under non-lease structures). For royalties which accrued to Licensor within the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(a) is included in Schedule 3.1(a) heretomost recently completed calendar quarter. (b) subject to Section 3.4 below and during 5.8 All monies due Licensor shall be payable in United States funds. When Licensed Products are sold for monies other than United States dollars, the Tax Credit Term, earned royalties will first be determined in the event that Licensee (or a Licensee Affiliate) does not monetize a Facility with a third party foreign currency of the country in which Licensed Products were sold and instead opts to retain the Section 45 Tax Credits from that Facility for Licensee’s (or Licensee Affiliate’s) own benefit, such that there is no per-ton, pre-tax margin for the Refined Coal produced by such Facility, the Refined Coal Royalty for the Refined Coal produced by such Facility then converted into equivalent United States Funds. The exchange rate will be * that established by the Bank of the Section 45 Tax Credits claimed by Licensee (or a Licensee Affiliate)America in New York, or their respective ownersNew York, on the Refined Coal produced by such Facility net of all directly allocable operating expenses and all utility payments incurred by Licensee (or a Licensee Affiliate) in connection with the production and sale of such Refined Coal. For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(b) is included as part of Schedule 3.1(a) hereto. (c) during the Term of this Agreement, a royalty (the “Mercury Control Royalty”) of * last business day of the revenue, net of all direct expenses, received by Licensee as a direct result of Licensee’s exercise of the license specified in Section 2.1(b) above. For the avoidance of doubt, an example of how the Mercury Control Royalty would be calculated in accordance with Section 3.1(c) is included in Schedule 3.1(c) heretoreporting period. 3.2 Subject to Sections 3.3 and 3.4 below, Licensee will pay to Licensor the Refined Coal Royalty (each, a “Refined Coal Royalty Payment”) on a quarterly basis during the Tax Credit Term within sixty (60) days of the end of each quarter of a calendar year commencing with the calendar quarter ending June 30, 2012 (each such period, a “Refined Coal Royalty Period”) on Refined Coal with respect to which a Refined Coal Royalty Payment obligation has accrued during the immediately preceding Refined Coal Royalty Period. During the Term of this Agreement, Licensee will pay to Licensor the Mercury Control Royalty (each, a “Mercury Control Royalty Payment”) on a quarterly basis within sixty (60) days of the end of each quarter of a calendar year (each period, a “Mercury Control Royalty Period”) with respect to Licensee’s exercise of the license specified in Section 2.1(b) and for which a Mercury Control Royalty Payment obligation has accrued during the immediately preceding Mercury Control Royalty Period. Each Refined Coal Royalty Payment and Mercury Control Royalty Payment will be accompanied by a report identifying in reasonable detail the calculation of the royalty due for the relevant royalty period. Notwithstanding any provision to the contrary herein, Licensee has the right to offset any amounts that Licensee has the right to recover pursuant to this Agreement against any Refined Coal Royalty Payments and/or Mercury Control Royalty Payments due and owing under this Agreement, the application of which shall be determined by Licensee in its sole discretion.

Royalties and Payments. 3.1 Subject to all other terms and conditions of this Agreement, Licensee will pay to Licensor: (a) subject In consideration for the license granted and to Section 3.4 below be granted and during of the Tax Credit Termassistance provided and to be provided by RADIATE to ABOND, a royalty (the “Refined Coal Royalty”) of * ABOND shall pay to RADIATE quarterly royalties on the per-ton, pre-tax margin of Refined Coal that (a) is produced pursuant to the Technology License or any Technology Sublicense, and (b) produces a valid and verifiable Section 45 Tax Credit; provided, however, that such per-ton, pre-tax margin of Refined Coal shall (i) be net Sale of all directly allocable operating expenses Heated Infant Comfort Change System and all utility payments incurred by Licensee or improvements thereof for a Sublicensee, as applicable, in connection with period of five (5) years from the production and sale commencement of this Agreement at the rate of seven (7%) percent of the Refined Coal, and (ii) exclude any and all closing payments Net Sale Price of cash or prepayments of applicable lease rents and any associated non-cash amortization thereof (or similar payments under non-lease structures). For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(a) is included in Schedule 3.1(a) heretosaid Heated Infant Comfort Change System. (b) subject to Section 3.4 below and during ABOND agrees that given that the Tax Credit Term, North American license remains in place for ABOND the total payment including royalties in the event that Licensee (or a Licensee Affiliate) does not monetize a Facility with a third party third, fourth and instead opts to retain the Section 45 Tax Credits from that Facility for Licensee’s (or Licensee Affiliate’s) own benefit, such that there is no per-ton, pre-tax margin for the Refined Coal produced by such Facility, the Refined Coal Royalty for the Refined Coal produced by such Facility will be * fifth year of the Section 45 Tax Credits claimed by Licensee agreement shall not fall below seventy-five (or a Licensee Affiliate), or their respective owners, on 75%) percent of the Refined Coal produced by such Facility net total payments including royalties of all directly allocable operating expenses and all utility payments incurred by Licensee (or a Licensee Affiliate) in connection with the production and sale of such Refined Coal. For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(b) is included as part of Schedule 3.1(a) heretoprevious year. (c) during ABOND shall keep proper records and books of account showing the Term of this Agreement, a royalty (the “Mercury Control Royalty”) of * quantity and Net Selling Price of the revenue, net Heated Infant Comfort Change System sold hereunder and such records and books of accounts shall be kept separate from any books not related solely to the Heated Infant Comfort Change System and shall be open during all direct expenses, received normal business hours to inspection by Licensee as a direct result of Licensee’s exercise of the license specified in Section 2.1(b) above. For the avoidance of doubt, an example of how the Mercury Control Royalty would be calculated in accordance with Section 3.1(c) is included in Schedule 3.1(c) heretoRADIATE or its duly authorized representatives or agents. 3.2 Subject to Sections 3.3 and 3.4 below, Licensee will pay to Licensor the Refined Coal Royalty (each, a “Refined Coal Royalty Payment”d) on a quarterly basis during the Tax Credit Term within sixty (60) days of the end of each quarter of a calendar year commencing with the calendar quarter ending June 30, 2012 (each such period, a “Refined Coal Royalty Period”) on Refined Coal with respect to which a Refined Coal Royalty Payment obligation has accrued during the immediately preceding Refined Coal Royalty Period. During the Term of this Agreement, Licensee will pay to Licensor the Mercury Control Royalty (each, a “Mercury Control Royalty Payment”) on a quarterly basis within sixty (60) days of the end of each quarter of a calendar year (each period, a “Mercury Control Royalty Period”) with respect to Licensee’s exercise of the license specified in Section 2.1(b) and for which a Mercury Control Royalty Payment obligation has accrued during the immediately preceding Mercury Control Royalty Period. Each Refined Coal Royalty Payment and Mercury Control Royalty Payment will be accompanied by a report identifying in reasonable detail the calculation of the royalty due for the relevant royalty period. Notwithstanding any provision to the contrary herein, Licensee has RADIATE shall have the right to offset buy back the all rights granted to ABOND for the lessor of $500,000 or four (4) times the cumulative payments previously made by ABOND to RADIATE at any amounts that Licensee has time during the right term of this agreement (e) In respect to recover pursuant any sale of the Heated Infant Comfort Change System by ABOND to this Agreement against a Subsidiary or Holding Company or to a Fellow Subsidiary or to any Refined Coal Royalty Payments and/or Mercury Control Royalty Payments due and owing under this Agreement, third party which is otherwise associated with or acting in concert with ABOND the application of which royalty payment to RADIATE shall be determined that which would be paid on a sale at full market value payable by Licensee a purchaser at arm's length. (f) ABOND shall by January 31st each year send to RADIATE a statement showing the quantity and Net Selling Price of the Heated Infant Comfort Change System sold by ABOND during the previous year ending on the 31st of December and showing the amount of royalty due hereunder in its sole discretionrespect thereof. With each such statement ABOND shall send a remittance to RADIATE for the amount of royalty due hereunder. ABOND shall bear the interest on a day-to-day basis of overdue payments at a rate equal to 5% in excess of the Base Rate of the Royal Bank from time to time.

Royalties and Payments. 3.1 Subject 4.1 The license-issue fee and royalty rate for the license that is the subject of this Agreement shall be in accordance with this Article 4. 4.2 Royalties and fees due hereunder shall accrue and be paid to all THE REGENTS according to this Article 4 and the attached Exhibit B which is incorporated herein as if fully set forth. 4.3 Where Licensed Products are not sold, but are otherwise disposed of or used, the Net Selling Price of such products and/or processes for the purposes of computing royalties shall be the selling price at which products of similar kind and quality, sold in similar quantities, are currently being offered for sale by the LICENSEE. Where such products are not currently being offered for sale by the LICENSEE, the Net Selling Price of products otherwise disposed of or used, for the purpose of computing royalties, shall be the average selling price at which products of similar kind and quality, sold in similar quantities, are then currently being offered for sale by other terms manufacturers. Where such products are not currently sold or offered for sale by others, then the Net Selling Price, for the purpose of computing royalties, shall be the LICENSEE's cost of manufacture determined by the LICENSEE's customary accounting procedures, plus the LICENSEE's standard xxxx-up. Nothing in this paragraph shall require licensee to keep track of or account for Licensed Products used internally by LICENSEE for process development, test, demonstration, prototype samples for the purpose of creating customer interest or acceptance, or Licensed Products manufactured but unsold and conditions of unused. 4.4 Under this Agreement, Licensee will Licensed Products shall be considered to be sold when invoiced, or if not invoiced, when delivered for use or lease to a third party, except that upon expiration of any patent covering such Licensed Products, or upon any termination of license, all shipments made on or prior to the day of such expiration or termination which have not been billed out prior thereto shall be considered as sold (and therefore subject to royalty). Royalties paid on Licensed Products which are not accepted or paid by the customer shall be credited to the LICENSEE. 4.5 The LICENSEE shall pay to Licensor:THE REGENTS a minimum annual royalty as defined in Exhibit B. This minimum annual royalty shall be paid to THE REGENTS by January 1 of each year and shall be credited against the earned royalty due and owing for that calendar year. (a) subject 4.6 The LICENSEE shall pay THE REGENTS an earned royalty, as defined in the attached Exhibit B, which is incorporated herein as if fully set forth, on all Licensed Products sold or used by Licensee and any sublicensee. 4.7 Earned royalties for Licensed Products sold under this Agreement in any country outside the United States shall accrue to Section 3.4 below and during THE REGENTS for the Tax Credit Termduration of THE REGENTS' patent rights in that country. 4.8 Earned royalties accruing to THE REGENTS shall be paid to THE REGENTS by February 28, a royalty (the “Refined Coal Royalty”) of * on the per-tonMay 31, pre-tax margin of Refined Coal that (a) is produced pursuant to the Technology License or any Technology SublicenseAugust 31, and (b) produces a valid and verifiable Section 45 Tax Credit; provided, however, that November 30. Each such per-ton, pre-tax margin of Refined Coal shall (i) payment to THE REGENTS will be net of all directly allocable operating expenses and all utility payments incurred by Licensee or a Sublicensee, as applicable, in connection with the production and sale of the Refined Coal, and (ii) exclude for any and all closing payments of cash or prepayments of applicable lease rents and royalties which accrued to THE REGENTS within the most recently completed calendar quarter, less any associated non-cash amortization thereof (or similar payments under non-lease structures). For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(a) is included in Schedule 3.1(a) heretocredits for minimum royalties paid per Article 4.5 above. (b) subject to Section 3.4 below and during the Tax Credit Term, in the event that Licensee (or a Licensee Affiliate) does not monetize a Facility with a third party and instead opts to retain the Section 45 Tax Credits from that Facility for Licensee’s (or Licensee Affiliate’s) own benefit, such that there is no per-ton, pre-tax margin for the Refined Coal produced by such Facility, the Refined Coal Royalty for the Refined Coal produced by such Facility will be * of the Section 45 Tax Credits claimed by Licensee (or a Licensee Affiliate), or their respective owners, on the Refined Coal produced by such Facility net of all directly allocable operating expenses and all utility payments incurred by Licensee (or a Licensee Affiliate) in connection with the production and sale of such Refined Coal. For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(b) is included as part of Schedule 3.1(a) hereto. (c) during the Term of this Agreement, a royalty (the “Mercury Control Royalty”) of * of the revenue, net of all direct expenses, received by Licensee as a direct result of Licensee’s exercise of the license specified in Section 2.1(b) above. For the avoidance of doubt, an example of how the Mercury Control Royalty would be calculated in accordance with Section 3.1(c) is included in Schedule 3.1(c) hereto. 3.2 Subject to Sections 3.3 and 3.4 below, Licensee will pay to Licensor the Refined Coal Royalty (each, a “Refined Coal Royalty Payment”) on a quarterly basis during the Tax Credit Term within sixty (60) days of the end of each quarter of a calendar year commencing with the calendar quarter ending June 30, 2012 (each such period, a “Refined Coal Royalty Period”) on Refined Coal with respect to which a Refined Coal Royalty Payment obligation has accrued during the immediately preceding Refined Coal Royalty Period. During the Term of this Agreement, Licensee will pay to Licensor the Mercury Control Royalty (each, a “Mercury Control Royalty Payment”) on a quarterly basis within sixty (60) days of the end of each quarter of a calendar year (each period, a “Mercury Control Royalty Period”) with respect to Licensee’s exercise of the license specified in Section 2.1(b) and for which a Mercury Control Royalty Payment obligation has accrued during the immediately preceding Mercury Control Royalty Period. Each Refined Coal Royalty Payment and Mercury Control Royalty Payment will be accompanied by a report identifying in reasonable detail the calculation of the royalty 4.9 All monies due for the relevant royalty period. Notwithstanding any provision to the contrary herein, Licensee has the right to offset any amounts that Licensee has the right to recover pursuant to this Agreement against any Refined Coal Royalty Payments and/or Mercury Control Royalty Payments due and owing under this Agreement, the application of which THE REGENTS shall be determined by Licensee payable in its sole discretion.United States funds collectible at par in San Francisco, California. When

Royalties and Payments. 3.1 Subject 4.1 The license issue fee and royalty rate for the license that is the subject of this Agreement shall be in accordance with this Article 4. 4.2 Royalties and fees due hereunder shall accrue and be paid to THE REGENTS according to this Article 4 and the attached Exhibit B (LICENSE FEES AND ROYALTY RATE), which is incorporated herein. 4.3 Where Licensed Product(s) are not sold, but are otherwise disposed of or used, the Net Selling Price of such products and/or processes for the purposes of computing royalties shall be the selling price at which products of similar kind and quality, sold in similar quantities, are currently being offered for sale by the LICENSEE. Where such products are not currently being offered for sale by the LICENSEE, the Net Selling Price of products otherwise disposed of or used, for the purpose of computing royalties, shall be the average selling price at which products of similar kind and quality, sold in similar ------------------------------------------------------------------------------- 6 quantities, are then currently being offered for sale by other manufacturers. Where such products are not currently sold or offered for sale by others, then the Net Selling Price, for the purpose of computing royalties, shall be the LICENSEE's cost of manufacture determined by LICENSEE's customary accounting procedures, plus the LICENSEE's standard xxxx-up. The LICENSEE shall keep track of Licensed Product(s) used internally by the LICENSEE for process development, test, demonstration, prototype samples for the purpose of creating customer interest or acceptance, or Licensed Product(s) manufactured but unsold and unused but these shall not be subject to royalty payments until otherwise used. 4.4 Under this Agreement, Licensed Product(s) shall be considered to be sold when invoiced, or if not invoiced, when delivered for use or lease to a third party or use by LICENSEE not excluded above, except that upon expiration of all Licensed Patents covering such Licensed Product(s), or upon any termination of license, all shipments made on or prior to the day of such expiration or termination which have not been billed out prior thereto shall be considered as sold (and therefore subject to royalty). Royalties paid on Licensed Product(s) which are not accepted by the LICENSEE's customer shall be credited to the LICENSEE. 4.5 The LICENSEE shall pay to THE REGENTS a minimum annual royalty as defined in Exhibit B (LICENSE FEE AND ROYALTY RATE). This minimum annual royalty shall be paid to THE REGENTS by January 1 of each year and shall be credited against the earned royalty due and owing for that calendar year. ------------------------------------------------------------------------------- 7 4.6 The LICENSEE shall pay to THE REGENTS an earned royalty, as defined in the attached Exhibit B (LICENSE FEE AND ROYALTY RATE), on all Licensed Product(s) sold or used by the LICENSEE. 4.7 Earned royalties for Licensed Product(s) sold under this Agreement in any country in the Territory shall accrue to THE REGENTS for the duration of THE REGENTS' Licensed Patent(s) in the United States. 4.8 Earned royalties accruing to THE REGENTS shall be paid to THE REGENTS by February 28, May 31, August 31, and November 30. Each payment to THE REGENTS will be for any and all royalties which accrued to THE REGENTS within the most recently completed calendar quarter, less any credits for minimum royalties paid per Article 4.5 above. 4.9 All monies due THE REGENTS shall be payable in United States funds collectible at par in San Francisco, California. When Licensed Product(s) are sold for monies other than United States dollars, the earned royalties will first be determined in the foreign currency of the country in which Licensed Product(s) were sold and then converted into equivalent United States Funds. The exchange rate will be that established by the Bank of America in New York, New York on the last business day of the reporting period and will be quoted in the Continental terms methods of quoting exchange rates (local currency per U.S. dollar). The LICENSEE shall be responsible for all bank transfer charges. 4.10 If at any time legal restrictions prevent the prompt remittance by the LICENSEE of part or all royalties due with respect to any country outside the United States where a ------------------------------------------------------------------------------- 8 Licensed Product is sold, the LICENSEE shall have the right and conditions option to make such payments by depositing the amount thereof in local currency to THE REGENTS' account in a bank or other depository in such country. 4.11 No royalties shall be collected or paid hereunder on Licensed Product(s) distributed to or used by the United States Government, including any agency thereof and the amount charged for such sales to the United States Government will be reduced by an amount equal to the royalty otherwise due THE REGENTS. 4.12 Notwithstanding any other provision of this Agreement, Licensee will pay to Licensor: (ano royalty payments are due or payable on any products not covered by outstanding patent filing(s) subject to Section 3.4 below and during the Tax Credit Term, a royalty (the “Refined Coal Royalty”) of * on the per-ton, pre-tax margin of Refined Coal that (a) is produced pursuant to the Technology License or any Technology Sublicense, and (b) produces a then currently valid and verifiable Section 45 Tax Credit; provided, however, that such per-ton, pre-tax margin of Refined Coal shall (i) be net of all directly allocable operating expenses and all utility payments incurred by Licensee or a Sublicensee, as applicable, in connection with the production and sale of the Refined Coal, and (ii) exclude any and all closing payments of cash or prepayments of applicable lease rents and any associated non-cash amortization thereof (or similar payments under non-lease structuresLicensed Patent(s). For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(a) is included in Schedule 3.1(a) hereto. (b) subject to Section 3.4 below and during the Tax Credit Term, in the event that Licensee (or a Licensee Affiliate) does not monetize a Facility with a third party and instead opts to retain the Section 45 Tax Credits from that Facility for Licensee’s (or Licensee Affiliate’s) own benefit, such that there is no per-ton, pre-tax margin for the Refined Coal produced by such Facility, the Refined Coal Royalty for the Refined Coal produced by such Facility will be * of the Section 45 Tax Credits claimed by Licensee (or a Licensee Affiliate), or their respective owners, on the Refined Coal produced by such Facility net of all directly allocable operating expenses and all utility payments incurred by Licensee (or a Licensee Affiliate) in connection with the production and sale of such Refined Coal. For the avoidance of doubt, an example of how the Refined Coal Royalty would be calculated in accordance with Section 3.1(b) is included as part of Schedule 3.1(a) hereto. (c) during the Term of this Agreement, a royalty (the “Mercury Control Royalty”) of * of the revenue, net of all direct expenses, received by Licensee as a direct result of Licensee’s exercise of the license specified in Section 2.1(b) above. For the avoidance of doubt, an example of how the Mercury Control Royalty would be calculated in accordance with Section 3.1(c) is included in Schedule 3.1(c) hereto. 3.2 Subject to Sections 3.3 and 3.4 below, Licensee will pay to Licensor the Refined Coal Royalty (each, a “Refined Coal Royalty Payment”) on a quarterly basis during the Tax Credit Term within sixty (60) days of the end of each quarter of a calendar year commencing with the calendar quarter ending June 30, 2012 (each such period, a “Refined Coal Royalty Period”) on Refined Coal with respect to which a Refined Coal Royalty Payment obligation has accrued during the immediately preceding Refined Coal Royalty Period. During the Term of this Agreement, Licensee will pay to Licensor the Mercury Control Royalty (each, a “Mercury Control Royalty Payment”) on a quarterly basis within sixty (60) days of the end of each quarter of a calendar year (each period, a “Mercury Control Royalty Period”) with respect to Licensee’s exercise of the license specified in Section 2.1(b) and for which a Mercury Control Royalty Payment obligation has accrued during the immediately preceding Mercury Control Royalty Period. Each Refined Coal Royalty Payment and Mercury Control Royalty Payment will be accompanied by a report identifying in reasonable detail the calculation of the royalty due for the relevant royalty period. Notwithstanding any provision to the contrary herein, Licensee has the right to offset any amounts that Licensee has the right to recover pursuant to this Agreement against any Refined Coal Royalty Payments and/or Mercury Control Royalty Payments due and owing under this Agreement, the application of which shall be determined by Licensee in its sole discretion.