Common use of Phase 2 Clause in Contracts

Phase 2. 2.1 Description & Scope In this phase, POSCO Power/POSCO Affiliate and FCE will jointly develop the next-generation BOP for one of the DFC products, either sub-MW or MW-class, as determined jointly by FCE and POSCO Power/POSCO Affiliate. Technology, information, and know-how related to the BOP for DFC products which are actively being developed under this phase, as well as those which are not actively being developed will be made available as set forth below. Considering resource constraints of both parties and market demands, FCE and POSCO Power/POSCO Affiliate shall determine the scope of their co-development efforts by mutual agreement. This phase work will be aimed at the co-development of a new BOP design which is intended to meet or exceed the FCE cost, performance and quality targets for the next generation of DFC products. 2.1.1. During this phase, FCE agrees to do the followings: (i) to purchase BOP manufactured by POSCO Power/POSCO Affiliate during Phase 2 for sale to FCE’s customers in North America; provided that, FCE’s cost targets, commercial performance levels, and quality standards are met, which shall be communicated to POSCO Power/POSCO Affiliate in advance. The determination whether to procure BOP from POSCO Power/POSCO Affiliate for sale to FCE’s customers shall be made at the sole discretion of FCE. 2.1.2. During this phase, POSCO Power/POSCO Affiliate agree to do the followings: (i) build the necessary expertise and capability to contribute to this effort during the preceding phase of work between the two companies. A detailed breakdown showing the division of scope and responsibility between POSCO Power and FCE during this phase is provided in Attachment 4. The division of scope and responsibility between POSCO Power and FCE shall be changed, if needed, by mutual agreement. 2.2 Technology to be Transferred in Phase 2 FCE shall transfer to POSCO Power the technology, information, and know-how described in Section 1.2 of the TTP. 2.3 Schedule for ▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇ is anticipated to begin as early as March 1 2008, and FCE agrees to support the achievement of such schedule as set forth herein. The actual commencement date for Phase 2 shall be determined by POSCO Power/POSCO Affiliate’s readiness to commence the Phase 2 activities. Additionally, in phase 2 FCE shall provide training regarding POSCO Power/POSCO Affiliate’s independently performing BOP system design starting in phase 3. Commencement of Phase 3 activity shall also be determined by the completion status of the Phase 2 training activity. In order to support FCE’s resource planning efforts, POSCO Power/POSCO Affiliate and FCE will mutually agree on or before September 1, 2007, which product the parties shall jointly develop under Phase 2. An example schedule showing key milestones under the Phase 2 development program is provided as Attachment 5.