Exhibit 10.2

 

[FORM OF SERIES A & SERIES B WARRANT]

 

A123 SYSTEMS, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:

Date of Issuance:  July 10, 2012 (“Issuance Date”)

 

A123 Systems, Inc. a Delaware corporation (the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged,                          , the registered holder hereof
or its permitted assigns (the “Holder”), is entitled, subject to the terms set
forth below, to purchase from the Company, at the Exercise Price (as defined
below) then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or
replacement hereof, the “Warrant”), at any time or times on or after the
Subscription Date, but not after 11:59 p.m., New York time, on the Expiration
Date (as defined below), a number of shares of Common Stock equal to the Maximum
Eligibility Number (the “Warrant Shares”).  For purposes of clarity, the maximum
number of shares of Common Stock issuable under this Warrant, subject to the
Maximum Eligibility Number, is [          ](1) less any shares of Common Stock
issued to the Holder upon exercise of any other Warrants (as defined below) held
by such Holder.  Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 16.  This Warrant is one of
the Series A and Series B Warrants to purchase Common Stock (the “Warrants”)
issued pursuant to (i) the Company’s prospectus supplement dated as of July 5,
2012 and (ii) the Company’s Registration Statement on Form S-3 (File number
333-173122) (the “Registration Statement”).

 

1.             EXERCISE OF WARRANT.

 

(a)           Mechanics of Exercise.  Subject to the terms and conditions hereof
(including, without limitation, the limitations set forth in Section 1(f)), this
Warrant may be exercised by the Holder on any day prior to the Expiration Date,
in whole or in part, by delivery (or deemed delivery) of a written notice, in
the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s
election to exercise this Warrant.  Pursuant to an Exercise Notice (or deemed
delivery therof), the Holder shall make payment to the Company of an amount
equal to the applicable Exercise Price (as defined in Section 1(b)) multiplied
by the number of Warrant Shares as to which this Warrant is being exercised (the
“Aggregate Exercise Price”) pursuant to a Cashless Exercise (as defined in
Section 1(d)).  The Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder.  Execution and delivery of the
Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as

 

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(1)  Insert number of shares of Common Stock equal to the Holder’s pro rata
portion of the difference between (i) 19.99% of the number of issued and
outstanding shares of Common Stock immediately prior to execution of the
Subscription Agreement less (ii) the sum of (x) the number of Common Shares
issued on the Issuance Date pursuant to the Registration Statement and (y) 12.5
million shares.

 

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cancellation of the original Warrant and issuance of a new Warrant evidencing
the right to purchase the remaining number of Warrant Shares.  Execution and
delivery (or deemed delivery) of an Exercise Notice for all of the
then-remaining Warrant Shares shall have the same effect as cancellation of the
original of this Warrant after delivery of the Warrant Shares and the
satisfaction of all other than existing obligations in accordance with the terms
hereof.  On or before the first (1st) Trading Day following the date on which
the Company has received the Exercise Notice (or the date an Exercise Notice is
deemed delivered), the Company shall transmit by facsimile an acknowledgment of
confirmation of receipt of the Exercise Notice to the Holder and the Company’s
transfer agent (the “Transfer Agent”).  On or before July [SERIES A: 12][SERIES
B: 30], 2012 (the “Share Delivery Date”), the Company shall credit such
aggregate number of shares of Common Stock to which the Holder is entitled
pursuant to such exercise to the Holder’s or its designee’s balance account with
The Depository Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian
system.  The Company shall be responsible for all fees and expenses of the
Transfer Agent and all fees and expenses with respect to the issuance of Warrant
Shares via DTC, if any.  Upon delivery of the Exercise Notice, the Holder shall
be deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised,
irrespective of the date such Warrant Shares are credited to the Holder’s DTC
account or the date of delivery of the certificates evidencing such Warrant
Shares, as the case may be.  No fractional shares of Common Stock are to be
issued upon the exercise of this Warrant, but rather the number of shares of
Common Stock to be issued shall be rounded to the nearest whole number.  The
Company shall pay any and all taxes which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this Warrant. 
Notwithstanding any provision of this Warrant to the contrary, the Holder shall
be deemed to have exercised this Warrant for the Maximum Eligibility Number on a
Cashless Exercise basis pursuant to Section 1(d) hereof without the requirement
to deliver an Exercise Notice, and the Company shall be unconditionally
obligated to deliver any Warrant Shares issuable upon such deemed exercise on or
prior to July [SERIES A: 12][SERIES B: 30], 2012, which shall be deemed for all
purposes of this Warrant to be the Share Delivery Date.  In the event the Holder
is deemed to have exercised the Warrant pursuant to the preceding sentence, the
Holder will be deemed to have made the representation set forth in paragraph 3
of the Exercise Notice.  The Company agrees that time is of the essence with
respect to the Company’s obligation to timely delivery the Warrant Shares
hereunder by such date.  NOTWITHSTANDING ANY PROVISION OF THIS WARRANT TO THE
CONTRARY, NO MORE THAN THE MAXIMUM ELIGIBILITY NUMBER OF WARRANT SHARES SHALL BE
EXERCISABLE HEREUNDER.

 

(b)           Exercise Price.  For purposes of this Warrant, “Exercise Price”
means $0.001, subject to adjustment as provided herein.

 

(c)           Company’s Failure to Timely Deliver Securities.  If the Company
shall fail for any reason or for no reason to issue to the Holder by
July [SERIES A: 12][SERIES B: 30], 2012, by credit to the Holder’s balance
account with DTC for such number of shares of Common Stock to which the Holder
is entitled upon the Holder’s exercise (or deemed exercise) of this Warrant, and
if on or after such Trading Day the Holder purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Holder of shares of Common Stock issuable upon such exercise that
the Holder anticipated receiving from the Company (a “Buy-In”), then the Company
shall, within three (3) Trading

 

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Days after the Holder’s request and in the Holder’s discretion, either (i) pay
cash to the Holder in an amount equal to the Holder’s total purchase price
(including brokerage commissions and other out of pocket expenses, if any) for
the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to issue such shares of Common Stock shall terminate, or
(ii) promptly honor its obligation to electronically deliver such shares of
Common Stock and pay cash to the Holder in an amount equal to the excess (if
any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock, times (B) the Closing Sale Price on the date of exercise.  Nothing shall
limit the Holder’s right to pursue any other remedies available to it hereunder,
at law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver shares of Common Stock upon the exercise (or deemed exercise) of
this Warrant as required pursuant to the terms hereof.

 

(d)           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary, in lieu of making any cash payment upon an exercise (or deemed
exercise) of this Warrant, the Holder shall instead receive upon such exercise,
subject to the limitations in Section 1(f), the “Net Number” of shares of Common
Stock determined according to the following formula (a “Cashless Exercise”):

 

Net Number = (A x B) - (A x C)

  B

 

For purposes of the foregoing formula:

 

A=

the total number of shares with respect to which this Warrant is then being
exercised, which for a deemed exercise shall be the Maximum Eligibility Number.

 

 

B=

the arithmetic average of the Closing Sale Prices of the shares of Common Stock
for the five (5) consecutive Trading Days ending on the date immediately
preceding the date of the Exercise Notice (or deemed delivery of the Exercise
Notice).

 

 

C=

the Exercise Price then in effect for the applicable Warrant Shares at the time
of such exercise.

 

(e)           Disputes.  In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the number of Warrant Shares to
be issued pursuant to the terms hereof, the Company shall promptly issue to the
Holder the number of Warrant Shares that are not disputed and resolve such
dispute in accordance with Section 13.

 

(f)            (i) Beneficial Ownership Limitation.  The Company shall not
effect the exercise of this Warrant, and the Holder shall not have the right to
exercise this Warrant, to the extent that after giving effect to such exercise,
such Person (together with such Person’s affiliates) would beneficially own in
excess of 9.99% (the “Maximum Percentage”) of the shares of Common Stock
outstanding immediately after giving effect to such exercise. For purposes of
the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by such Person and its affiliates shall include the number of
shares of

 

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Common Stock issuable upon exercise of this Warrant with respect to which the
determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable upon (i) exercise of the remaining, unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted portion of any
other securities of the Company beneficially owned by such Person and its
affiliates (including, without limitation, any convertible notes or convertible
preferred stock or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. For purposes of this Warrant, in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (1) the Company’s most recent
Form 10-K, Form 10-Q, Current Report on Form 8-K or other public filing with the
Securities and Exchange Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or the
Transfer Agent setting forth the number of shares of Common Stock outstanding.
For any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the
Holder the number of shares of Common Stock then outstanding. In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including the
Warrants, by the Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.  By written notice to
the Company, the Holder may from time to time increase or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% specified in such
notice; provided that (i) any such increase will not be effective until the
sixty-first (61st) day after such notice is delivered to the Company, and
(ii) any such increase or decrease will apply only to the Holder and not to any
other holder of the Warrants.  The provisions of this paragraph shall be
construed and implemented in a manner other than in strict conformity with the
terms of this Section 1(f)(1) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation.

 

(ii)           Principal Market Regulation.  The Company shall not be obligated
to issue any shares of Common Stock upon exercise of this Warrant and the Holder
shall not have the right to receive upon exercise of this Warrant any shares of
Common Stock if the issuance of such shares of Common Stock would exceed that
number of shares of Common Stock which the Company may issue upon exercise of
the Warrants (after taking into account the issuance of the Common Shares and
the Warrants issued pursuant to the Registration Statement and 12,500,000 shares
of Common Stock previously issued by the Company on January 25, 2012) without
breaching the Company’s obligations under the rules or regulations of the
Principal Market, whether or not the Common Stock is listed on the Principal
Market (the “Exchange Cap”), except that such limitation shall not apply in the
event that the Company obtains the approval of its stockholders as required by
the applicable rules of the Principal Market for issuances of shares of Common
Stock in excess of such amount.  Until such approval or written opinion is
obtained, no Holder of any Warrants shall be issued in the aggregate, upon
exercise of the Warrants, shares of Common Stock in an amount greater than the
product of the Exchange Cap multiplied by a fraction, the numerator of which is
the total number of shares of Common Stock underlying the Warrants issued to
such Holder pursuant to the Registration

 

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Statement on the Issuance Date and the denominator of which is the aggregate
number of shares of Common Stock underlying the Warrants issued pursuant to the
Registration Statement on the Issuance Date (with respect to each holder, the
“Exchange Cap Allocation”).  In the event that any holder shall sell or
otherwise transfer any of such holder’s Warrants, the transferee shall be
allocated a pro rata portion of such holder’s Exchange Cap Allocation, and the
restrictions of the prior sentence shall apply to such transferee with respect
to the portion of the Exchange Cap Allocation allocated to such transferee.  In
the event that any holder of Warrants shall exercise all of such holder’s
Warrants into a number of shares of Common Stock which, in the aggregate, is
less than such holder’s Exchange Cap Allocation, then the difference between
such holder’s Exchange Cap Allocation and the number of shares of Common Stock
actually issued to such holder shall be allocated to the respective Exchange Cap
Allocations of the remaining holders of Warrants on a pro rata basis in
proportion to the shares of Common Stock underlying the Warrants then held by
each such holder.  In the event that the Company is prohibited from issuing any
Warrant Shares for which an Exercise Notice has been received (or deemed
delivered) as a result of the operation of this Section 1(f), the Company shall
pay to the Holder within three (3) Trading Days of the applicable exercise (or
deemed exercise), cash by wire transfer of immediately available funds in
exchange for cancellation of such Warrant Shares, at a price per Warrant Share
equal to the difference between the Cash Reset Price and the then existing
Exercise Price.

 

(g)           Insufficient Authorized Shares.  If at any time while this Warrant
remains outstanding the Company does not have a sufficient number of authorized
and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon exercise of this Warrant at least a number of shares of Common
Stock equal to 100% of the number of shares of Common Stock (the “Required
Reserve Amount”) as shall from time to time be necessary to effect the exercise
of all of this Warrant then outstanding (an “Authorized Share Failure”), then
the Company shall as soon as practicable take all action reasonably necessary to
increase the Company’s authorized shares of Common Stock to an amount sufficient
to allow the Company to reserve the Required Reserve Amount for this Warrant
then outstanding.  Without limiting the generality of the foregoing sentence, as
soon as practicable after the date of the occurrence of an Authorized Share
Failure, but in no event later than sixty (60) days after the occurrence of such
Authorized Share Failure, the Company shall hold a meeting of its stockholders
for the approval of an increase in the number of authorized shares of Common
Stock.  In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its reasonable best efforts to
solicit its stockholders’ approval of such increase in authorized shares of
Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.  Notwithstanding the foregoing, if
any such time of an Authorized Share Failure, the Company is able to obtain the
written consent of a majority of the shares of its issued and outstanding Common
Stock to approve the increase in the number of authorized shares of Common
Stock, the Company may satisfy this obligation by obtaining such consent and
submitting for filing with the SEC an Information Statement on Schedule 14C.  In
the event that upon any exercise of this Warrant, the Company does not have
sufficient authorized shares to deliver in satisfaction of such exercise, then
unless the Holder elects to void such exercise (or deemed exercise), the Holder
may require the Company to pay to the Holder within three (3) Trading Days of
the applicable exercise, cash by wire transfer of immediately available funds in
an amount equal to the product of (i) the number of Warrant Shares that the
Company is unable to deliver pursuant hereto and (ii) the Black Scholes Value;
provided, that (x) references to “the day immediately following the public
announcement of the applicable Fundamental Transaction” in

 

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the definition of “Black Scholes Value” shall instead refer to “the date the
Holder exercises this Warrant and the Company cannot deliver the required number
of Warrant Shares because of an Authorized Share Failure” and (y) clause
(iii) of the definition of “Black Scholes Value” shall instead refer to “the
underlying price per share used in such calculation shall be the highest
Weighted Average Price during the period beginning on the date of the applicable
date of exercise and the date that the Company makes the applicable cash
payment.”

 

2.             ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The
Exercise Price and the number of Warrant Shares shall be adjusted from time to
time as follows:

 

(a)           Stock Events. The Company shall not be permitted to effect any
Stock Event at any time prior to the Expiration Date.

 

(b)           Calculations. All calculations under this Section 2 shall be made
by rounding to the nearest cent or the nearest 1/100th of a share, as
applicable. The number of shares of Common Stock outstanding at any given time
shall not include shares owned or held by or for the account of the Company, and
the disposition of any such shares shall be considered an issue or sale of
Common Stock.

 

3.             RIGHTS UPON DISTRIBUTION OF ASSETS.  In addition to any
adjustments pursuant to Section 2 above, if the Company shall declare or make
any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or
securities (other than stock or securities for which the Holder has elected to
receive, in lieu of the distribution contemplated by this Section 3, an
adjustment pursuant to Section 2(a)), property or options by way of a dividend,
spin off, reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any time after the
Subscription Date, then, in each such case, the Holder shall be entitled to
participate in such Distribution to the same extent that the Holder would have
participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including, without limitation, the Maximum
Percentage) immediately before the date on which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder’s right to
participate in any such Distributions would result in the Holder exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such
Distribution to such extent (or the beneficial ownership of any such shares of
Common Stock as a result of such Distribution to such extent) and such
Distribution to such extent shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not result in the
Holder exceeding the Maximum Percentage, at which time the Holder shall be
granted such right to the same extent as if there had been no such limitation).

 

4.             PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)           Purchase Rights.  In addition to any adjustments pursuant to
Section 2 above, if at any time after the Subscription Date the Company grants,
issues or sells any Options,

 

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Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on exercise hereof, including, without limitation, the
Maximum Percentage) immediately before the date on which a record is taken for
the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights (provided,
however, to the extent that the Holder’s right to participate in any such
Purchase Right would result in the Holder exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a result of
such Purchase Right to such extent) and such Purchase Right to such extent shall
be held in abeyance for the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Maximum Percentage, at
which time the Holder shall be granted such right to the same extent as if there
had been no such limitation).

 

(b)        Fundamental Transactions.    The Company shall not enter into or be
party to a Fundamental Transaction unless the Successor Entity assumes in
writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 4(b), including agreements to deliver to the
Holder in exchange for this Warrant a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to this
Warrant, including, without limitation, an adjusted exercise price equal to the
value for the shares of Common Stock reflected by the terms of such Fundamental
Transaction, and exercisable for a corresponding number of shares of capital
stock equivalent to the shares of Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an exercise price
which applies the exercise price hereunder to such shares of capital stock (but
taking into account the relative value of the shares of Common Stock pursuant to
such Fundamental Transaction and the value of such shares of capital stock, such
adjustments to the number of shares of capital stock and such exercise price
being for the purpose of protecting the economic value of this Warrant
immediately prior to the consummation of such Fundamental Transaction). Upon the
consummation of each Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of the applicable
Fundamental Transaction, the provisions of this Warrant referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein. Upon consummation of each Fundamental
Transaction, the Successor Entity shall deliver to the Holder confirmation that
there shall be issued upon exercise of this Warrant at any time after the
consummation of the applicable Fundamental Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property (except such
items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to the
applicable Fundamental Transaction, such shares of publicly traded common stock
(or its equivalent) of the Successor Entity (including its Parent Entity) which
the Holder would have been entitled to receive upon the happening of the
applicable Fundamental Transaction had this Warrant been

 

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exercised immediately prior to the applicable Fundamental Transaction (without
regard to any limitations on the exercise of this Warrant), as adjusted in
accordance with the provisions of this Warrant. Notwithstanding the foregoing,
the Holder may elect, at its sole option, by delivery of written notice to the
Company to waive this Section 4(b) to permit the Fundamental Transaction without
the assumption of this Warrant.  In addition to and not in substitution for any
other rights hereunder, prior to the consummation of each Fundamental
Transaction pursuant to which holders of shares of Common Stock are entitled to
receive securities or other assets with respect to or in exchange for shares of
Common Stock (a “Corporate Event”), the Company shall make appropriate provision
to insure that the Holder will thereafter have the right to receive upon an
exercise of this Warrant at any time after the consummation of the applicable
Fundamental Transaction but prior to the Expiration Date, in lieu of the shares
of the Common Stock (or other securities, cash, assets or other property (except
such items still issuable under Sections 3 and 4(a) above, which shall continue
to be receivable thereafter)) issuable upon the exercise of the Warrant prior to
such Fundamental Transaction (without regard to any limitations on the exercise
of this Warrant), such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription
rights) which the Holder would have been entitled to receive upon the happening
of the applicable Fundamental Transaction had this Warrant been exercised
immediately prior to the applicable Fundamental Transaction (without regard to
any limitations on the exercise of this Warrant).

 

(c)           Application. The provisions of this Section 4 shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied as if this Warrant (and any such subsequent
warrants) were fully exercisable and without regard to any limitations on the
exercise of this Warrant.

 

5.             NONCIRCUMVENTION.  The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of Incorporation, Bylaws
or through any reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, and will at all times in good faith carry out all the
provisions of this Warrant and take all action as may be required to protect the
rights of the Holder.  Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the Exercise Price then in
effect, (ii) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this Warrant, and
(iii) shall, so long as this Warrant is outstanding, take all action necessary
to reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the exercise of this Warrant
(without regard to any limitations on exercise), the Required Reserve Amount.

 

6.             WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise
specifically provided herein, the Holder, solely in such Person’s capacity as a
holder of this Warrant, shall not be entitled to vote or receive dividends or be
deemed the holder of share capital of the Company for any purpose, nor shall
anything contained in this Warrant be construed to confer upon the Holder,
solely in such Person’s capacity as the Holder of this Warrant, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of

 

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stock, consolidation, merger, conveyance or otherwise), receive notice of
meetings, receive dividends or subscription rights, or otherwise, prior to the
issuance to the Holder of the Warrant Shares which such Person is then entitled
to receive upon the due exercise of this Warrant.  In addition, nothing
contained in this Warrant shall be construed as imposing any liabilities on the
Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

 

7.             REISSUANCE OF WARRANTS.

 

(a)           Transfer of Warrant.  If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less than the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the number
of Warrant Shares not being transferred.

 

(b)           Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary and
reasonable form and, in the case of mutilation, upon surrender and cancellation
of this Warrant, the Company shall execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

 

(c)           Exchangeable for Multiple Warrants.  This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants (in accordance with Section 7(d)) representing in
the aggregate the right to purchase the number of Warrant Shares then underlying
this Warrant, and each such new Warrant will represent the right to purchase
such portion of such Warrant Shares as is designated by the Holder at the time
of such surrender; provided, however, that no Warrants for fractional shares of
Common Stock shall be given.

 

(d)           Issuance of New Warrants.  Whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated
on the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.

 

9

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8.             NOTICES.  Whenever notice is required to be given under this
Warrant, unless otherwise provided herein, such notice shall be given in
accordance with the provisions of the Subscription Agreement executed between
the Company and the Holder with respect to the issuance of this Warrant.  The
Company shall provide the Holder with prompt written notice of all actions taken
pursuant to this Warrant, including in reasonable detail a description of such
action and the reason therefor.  Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon each adjustment of the Exercise Price and the number of Warrant Shares,
setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the
Company closes its books or takes a record (A) with respect to any dividend or
distribution upon the shares of Common Stock, (B) with respect to any grants,
issuances or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental
Transaction, dissolution or liquidation, provided in each case that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder and (iii) at least ten (10) Trading
Days prior to the consummation of any Fundamental Transaction.  To the extent
that any notice provided hereunder constitutes, or contains, material,
non-public information regarding the Company or any of its Subsidiaries, the
Company shall simultaneously file such notice with the Securities and Exchange
Commission (the “SEC”)  pursuant to a Current Report on Form 8-K. It is
expressly understood and agreed that the time of execution specified by the
Holder in each Exercise Notice shall be definitive and may not be disputed or
challenged by the Company.

 

9.             AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the Holder.  No
waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party.

 

10.          SEVERABILITY.  If any provision of this Warrant is prohibited by
law or otherwise determined to be invalid or unenforceable by a court of
competent jurisdiction, the provision that would otherwise be prohibited,
invalid or unenforceable shall be deemed amended to apply to the broadest extent
that it would be valid and enforceable, and the invalidity or unenforceability
of such provision shall not affect the validity of the remaining provisions of
this Warrant so long as this Warrant as so modified continues to express,
without material change, the original intentions of the parties as to the
subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

11.          GOVERNING LAW. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Warrant shall be governed by,
the internal laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule

 

10

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(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in The City of New York, Borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address it set forth on the signature page hereto and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Nothing contained herein shall
be deemed or operate to preclude the Holder from bringing suit or taking other
legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Holder or to enforce a judgment or other court
ruling in favor of the Holder.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.

 

12.          CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
Person as the drafter hereof.  The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant.

 

13.          DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price, the Closing Sale Price, the Weighted
Average Price or fair market value or the arithmetic calculation of the Warrant
Shares (as the case may be), the Company or the Holder (as the case may be)
shall submit the disputed determinations or arithmetic calculations (as the case
may be) via facsimile (i) within two (2) Business Days after receipt of the
applicable notice giving rise to such dispute to the Company or the Holder (as
the case may be) or (ii) if no notice gave rise to such dispute, at any time
after the Holder learned of the circumstances giving rise to such dispute. If
the Holder and the Company are unable to agree upon such determination or
calculation (as the case may be) of the Exercise Price, the Closing Sale Price,
the Weighted Average Price or fair market value or the number of Warrant Shares
(as the case may be) within three (3) Business Days of such disputed
determination or arithmetic calculation being submitted to the Company or the
Holder (as the case may be), then the Company shall, within two (2) Business
Days submit via facsimile (a) the disputed determination of the Exercise Price,
the Closing Sale Price, the Weighted Average Price or fair market value (as the
case may be) to an independent, reputable investment bank jointly selected by
the Company and the Holder or (b) the disputed arithmetic calculation of the
Warrant Shares to the Company’s independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant (as the case
may be) to perform the determinations or calculations (as the case may be) and
notify the Company and the Holder of the results no later than ten (10) Business
Days from the time it receives such disputed determinations or calculations (as
the case may be). Such investment

 

11

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bank’s or accountant’s determination or calculation (as the case may be) shall
be binding upon all parties absent demonstrable error.

 

14.          REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Warrant shall be cumulative and
in addition to all other remedies available under this Warrant, at law or in
equity (including a decree of specific performance and/or other injunctive
relief), and nothing herein shall limit the right of the Holder to pursue actual
damages for any failure by the Company to comply with the terms of this Warrant.
The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set
forth or provided for herein with respect to payments, exercises and the like
(and the computation thereof) shall be the amounts to be received by the Holder
and shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company acknowledges
that a breach by it of its obligations hereunder will cause irreparable harm to
the Holder and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holder of this Warrant shall be entitled, in addition to all other
available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required. The Company shall provide all information and documentation to the
Holder that is requested by the Holder to enable the Holder to confirm the
Company’s compliance with the terms and conditions of this Warrant (including,
without limitation, compliance with Section 2 hereof). The issuance of shares
and certificates for shares as contemplated hereby upon the exercise of this
Warrant shall be made without charge to the Holder or such shares for any
issuance tax or other costs in respect thereof, provided that the Company shall
not be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
the Holder or its agent on its behalf.

 

15.          TRANSFER. This Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Company.

 

16.          CERTAIN DEFINITIONS.  For purposes of this Warrant, the following
terms shall have the following meanings:

 

(a)           “Black Scholes Value” means the value of the unexercised portion
of this Warrant remaining on the date of the Holder’s request, which value is
calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to, in
the event of an Authorized Share Failure, the VWAP on the exercise date, or, in
the event of a Fundamental Transaction, the VWAP on the Trading Day immediately
preceding the consummation of the applicable Fundamental Transaction, (ii) a
strike price equal to the Exercise Price in effect on the date of the Holder’s
request, (iii) a risk-free interest rate corresponding to the U.S. Treasury rate
for a period equal to the greater of (1) the remaining term of this Warrant as
of the date of the Holder’s request and (2) the remaining term of this Warrant
as of the date of consummation of the applicable Fundamental Transaction or as
of the date of the Holder’s request pursuant to Section 4(b) if such request is
prior to the date of the consummation of the applicable Fundamental Transaction,
(iv) an expected volatility equal to 80% and (v) a 0% cost of borrow.

 

12

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(b)           “Bloomberg” means Bloomberg, L.P.

 

(c)           “Business Day” means any day other than Saturday, Sunday or other
day on which commercial banks in The City of New York are authorized or required
by law to remain closed.

 

(d)           “Cash Reset Price” means the lower of (x) the arithmetic average
of the Weighted Average Prices of the Common Stock on each of [SERIES A: July 9,
2012, July 10, 2012 and July 11, 2012] [SERIES B: July 25, 2012, July 26, 2012
and July 27, 2012] and (y) the Weighted Average Price of the Common Stock on
July [SERIES A: 11] [SERIES B: 27], 2012.

 

(e)           “Closing Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or the last trade price,
respectively, of such security prior to 4:00:00 p.m., New York time, as reported
by Bloomberg, or, if the Principal Market is not the principal securities
exchange or trading market for such security, the last closing bid price or last
trade price, respectively, of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if
no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the OTC Link
or “pink sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.).  If
the Closing Bid Price or the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price or the Closing Sale Price, as the case may be, of such security on such
date shall be the fair market value as mutually determined by the Company and
the Holder.  If the Company and the Holder are unable to agree upon the fair
market value of such security, then such dispute shall be resolved pursuant to
Section 13.  All such determinations to be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other similar
transaction during the applicable calculation period.

 

(f)            “Common Shares” shall mean the shares of Common Stock issued
pursuant to the Registration Statement on the Issuance Date.

 

(g)           “Common Stock” means (i) the Company’s shares of common stock, par
value $0.001 per share, and (ii) any capital stock into which such common stock
shall have been changed or any share capital resulting from a reclassification
of such common stock.

 

(h)           “Convertible Securities” means any stock or other security (other
than Options) that is at any time and under any circumstances, directly or
indirectly, convertible into, exercisable or exchangeable for, or which
otherwise entitles the holder thereof to acquire, any shares of Common Stock.

 

(i)            “Eligible Market” means The New York Stock Exchange, the NYSE
MKT, The NASDAQ Global Market, The NASDAQ Capital Market or the Principal
Market.

 

(j)            “Expiration Date” means July [SERIES A: 12][SERIES B: 30], 2012.

 

13

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(k)           “Fundamental Transaction” means that (i) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions,
(1) consolidate or merge with or into (whether or not the Company or any of its
Subsidiaries is the surviving corporation) any other Person, or (2) sell, lease,
license, assign, transfer, convey or otherwise dispose of all or substantially
all of its respective properties or assets to any other Person, or (3) allow any
other Person to make a purchase, tender or exchange offer that is accepted by
the holders of more than 50% of the outstanding shares of Voting Stock of the
Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the
Persons making or party to, such purchase, tender or exchange offer), or (4)
consummate a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with any other Person whereby such other Person acquires
more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock or share purchase agreement or other
business combination), or (5) reorganize, recapitalize or reclassify the Common
Stock, or (ii) any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the 1934 Act and the rules and regulations
promulgated thereunder) is or shall become the “beneficial owner” (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of either (x) 50% of the
aggregate ordinary voting power represented by issued and outstanding shares of
Common Stock or (y) 50% or more of the shares of Voting Stock of the Company not
held by such Person or Persons as of the date hereof.

 

(l)            “Maximum Eligibility Number” means initially zero and such number
shall be increased (but not decreased) on July [SERIES A: 12][SERIES B: 30],
2012 (the “Reset Date”) to equal the number of shares, if greater than zero,
obtained by subtracting (I) [           ](2) from (II) the number of shares of
Common Stock calculated by dividing (x) $[      ](3) by (y) the Reset Price.

 

(m)          “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

(n)           “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.

 

(o)           “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency
thereof.

 

--------------------------------------------------------------------------------

(2)  Insert 50% of the number of Common Shares issued to the Holder on the
Issuance Date pursuant to the Registration Statement.

 

(3)  Insert 50% of the aggregate purchase price that the Holder paid for the
Common Shares issued to the Holder on the Issuance Date pursuant to the
Registration Statement.

 

14

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(p)           “Principal Market” means The NASDAQ Global Select Market.

 

(q)           “Reset Price” means eighty two percent (82%) of the lower of (x)
the arithmetic average of the Weighted Average Prices of the Common Stock on
each of [SERIES A: July 9, 2012, July 10, 2012 and July 11, 2012] [SERIES B:
July 25, 2012, July 26, 2012 and July 27, 2012] and (y) the Weighted Average
Price of the Common Stock on July [SERIES A:11][SERIES B: 27], 2012.

 

(r)            “Stock Event” means (i) a stock dividend on one or more classes
of the Company’s then outstanding shares of Common Stock or otherwise a
distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) a subdivision (by any stock split, stock dividend, recapitalization,
reclassification or otherwise) of one or more classes of the Company’s then
outstanding shares of Common Stock into a larger number of shares or (iii) a
combination (by combination, reverse stock split or otherwise) of one or more
classes of the Company’s then outstanding shares of Common Stock into a smaller
number of shares.

 

(s)            “Subscription Date” means July 5, 2012.

 

(t)            “Successor Entity” means the Person (or, if so elected by the
Holder, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Holder, the
Parent Entity) with which such Fundamental Transaction shall have been entered
into.

 

(u)           “Trading Day” means any day on which the Common Stock is traded on
the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time) unless such day is otherwise designated
as a Trading Day in writing by the Holder.

 

(v)           “Voting Stock” of a Person means capital stock of such Person of
the class or classes pursuant to which the holders thereof have the general
voting power to elect, or the general power to appoint, at least a majority of
the board of directors, managers or trustees of such Person (irrespective of
whether or not at the time capital stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).

 

(w)          “Weighted Average Price” means, for any security as of any date,
the dollar volume-weighted average price for such security on the Principal
Market (or, if the Principal Market is not the principal trading market for such
security, then on the principal securities exchange or securities market on
which such security is then traded) during the period beginning at 9:30:01 a.m.,
New York time (or such other time as the Principal Market publicly announces is
the official open of trading), and ending at 4:00:00 p.m., New York time (or
such other time as the Principal Market publicly announces is the official close
of trading), as reported

 

15

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by Bloomberg through its “Volume at Price” functions or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading) as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the OTC Link or “pink sheets” by OTC Markets Group Inc. (formerly
Pink OTC Markets Inc.).  If the Weighted Average Price cannot be calculated for
a security on a particular date on any of the foregoing bases, the Weighted
Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder.  If the Company and the
Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 13 with the term “Weighted
Average Price” being substituted for the term “Exercise Price.” All such
determinations shall be appropriately adjusted for any stock dividend, stock
split, stock combination, reclassification or other similar transaction during
the applicable calculation period.

 

[signature page follows]

 

16

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.

 

 

 

A123 SYSTEMS INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

17

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EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

A123 SYSTEMS, INC.

 

The undersigned holder hereby exercises the right to purchase the Maximum
Eligibility Number of shares of Common Stock (“Warrant Shares”) of A123 Systems,
Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant
to Purchase Common Stock (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.  Form of Exercise Price.  The Holder intends that payment of the Exercise
Price shall be made as a “Cashless Exercise” with respect to the Maximum
Eligibility Number of Warrant Shares.

 

2.  Delivery of Warrant Shares.  The Company shall deliver to the holder the
Maximum Eligibility Number of Warrant Shares in accordance with the terms of the
Warrant.

 

3.  Compliance with Maximum Percentage. By delivering this Exercise Notice, the
Holder hereby represents that, after giving effect to the exercise provided for
in this Exercise Notice, the Holder will not have direct or indirect beneficial
ownership of a number of shares of Common Stock which exceeds the Maximum
Percentage (as defined in the Warrant) as of the date of this Exercise Notice.

 

 

Date:                                             ,                    

 

 

 

Name of Registered Holder

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

Ex-A-1

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ACKNOWLEDGMENT

 

The Company hereby acknowledges this Exercise Notice and hereby directs American
Stock Transfer & Trust to issue the above indicated number of shares of Common
Stock without any restrictive legend.

 

 

A123 SYSTEMS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

Ex-A-2

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