Common use of Annual Royalty Clause in Contracts

Annual Royalty. In consideration of the license of FCE Technology granted herein, POSCO Power agrees to pay to FCE an annual royalty of 4.1% of the Net Sales (the “Annual Royalty”) during the Initial Term, subject to the Minimum Annual Royalty (defined below) provision set forth in Section 4.2 below. The Annual Royalty payment shall be paid by POSCO Power as follows: (i) in cash equal to 2.6% of the Net Sales; and (ii) in shares of the capital stock (“NewCo Stock”) of NewCo equal to 1.5% of the Net Sales, up to 5% of the total outstanding capital stock of NewCo, in accordance with the valuation procedure set forth below; it being understood and agreed that, if the NewCo Stock received by FCE in the aggregate reaches 5% of the total outstanding capital stock of NewCo, POSCO Power may, at its sole and absolute discretion, choose to pay the amount exceeding 2.6% of the Net Sales in either cash or NewCo Stock, or any combination thereof; it being further understood and agreed that, in the event the initial public offering of the capital stock of NewCo is not completed by POSCO Power within 5 years from the Effective Date, upon a written request by FCE, any Annual Royalty payments for the subsequent years shall be made in cash, in lieu of the NewCo Stock payment.

Annual Royalty. In consideration of the license of FCE Technology granted herein, POSCO Power agrees to pay to FCE an annual royalty of 4.1% ___ of the Net Sales (the “Annual Royalty”) during the Initial Term, subject to the Minimum Annual Royalty (defined below) provision set forth in Section 4.2 below. The Annual Royalty payment shall be paid by POSCO Power as follows: (i) in cash equal to 2.6% ____ of the Net Sales; and (ii) in shares of the capital stock (“NewCo Stock”) of NewCo equal to 1.5% _____ of the Net Sales, up to 5% _____ of the total outstanding capital stock of NewCo, in accordance with the valuation procedure set forth below; it being understood and agreed that, if the NewCo Stock received by FCE in the aggregate reaches 5% _____ of the total outstanding capital stock of NewCo, POSCO Power may, at its sole and absolute discretion, choose to pay the amount exceeding 2.6% _____ of the Net Sales in either cash or NewCo Stock, or any combination thereof; it being further understood and agreed that, in the event the initial public offering of the capital stock of NewCo is not completed by POSCO Power within 5 years from the Effective Date, upon a written request by FCE, any Annual Royalty payments for the subsequent years shall be made in cash, in lieu of the NewCo Stock payment.