Exhibit 10.4


 


FIFTH LOAN MODIFICATION AGREEMENT


 


This Fifth Loan Modification
Agreement (this “Loan Modification Agreement”) is entered into as of September
24 2010, by and among (a) SILICON VALLEY BANK,
a California corporation, with its principal place of business as 3003 Tasman
Drive, Santa Clara, California 95054 (“SVB”), as agent (“Agent”), and the other
Lenders that are now or hereafter become a “Lender” under the Loan Agreement
(as hereinafter defined), including without limitation, SVB and GOLD HILL VENTURE LENDING 03, L.P. (“Gold Hill”) and (b) A123 SYSTEMS, INC., a Delaware corporation with its chief
executive office located at 321 Arsenal Street, Watertown, MA 02472 (“Borrower”).


 


1.             DESCRIPTION
OF EXISTING INDEBTEDNESS AND OBLIGATIONS.  Among other indebtedness and obligations
which may be owing by Borrower to the Lenders, Borrower is indebted to the
Lenders pursuant to a loan arrangement dated as of August 2, 2006, evidenced
by, among other documents, a certain Term Loan and Security Agreement dated as
of August 2, 2006, between Borrower and the Lenders, as amended by a certain
First Loan Modification Agreement dated as of July 10, 2007, between Borrower
and the Lenders, as further amended by a certain Section Loan Modification
dated as of September 24, 2008, between Borrower and the Lenders (the “Second
Amendment”), as amended by a certain Third Loan Modification dated as of March
16, 2009, between Borrower and the Lenders (the “Third Amendment”), and as
further amended by a certain Fourth Loan Modification Agreement dated as of
March 31, 2009 (as amended, the “Loan Agreement”).  Capitalized terms used but not otherwise
defined herein shall have the same meaning as in the Loan Agreement.


 


2.             DESCRIPTION
OF COLLATERAL.  Repayment of the Obligations is secured by
the Collateral as described in the Loan Agreement (together with any other
collateral security granted to Agent, for the ratable benefit of the Lenders,
the “Security Documents”).  Hereinafter,
the Security Documents, together with all other documents evidencing or
securing the Obligations shall be referred to as the “Existing Loan Documents”.


 


3.             DESCRIPTION
OF CHANGE IN TERMS.


 


A.            Modifications
to Loan Agreement.


 


1.                                       The Loan Agreement shall be amended by deleting the
following provision appearing as Section 2.6 thereof:


 


“2.6        Overadvances. 
If, at any time, the sum of
(a) the outstanding principal amount of any Revolving Advances (including any
amounts used for Cash Management Services), plus (b) the face amount of any
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit and any Letters of Credit Reserve), plus (c) the FX Reduction Amount
exceeds the lesser of either the Revolving Line of the Borrowing Base, Borrower
shall immediately pay to SVB in cash such excess.”


 


and inserting in lieu thereof the
following:


 


“2.6        Overadvances.  If, at any time, the sum of (a) the
outstanding principal amount of any Revolving Advances (including any amounts
used for Cash Management Services), plus (b) the face amount of any outstanding
Letters of Credit (including drawn but unreimbursed Letters of Credit and any
Letter of 


 


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Credit Reserve), plus (c) the FX
Reduction Amount exceeds the lesser of either (i) the Revolving Line or (ii)
the aggregate of (x) the Borrowing Base, plus (y) the Permitted Overadvance,
Borrower shall immediately pay to SVB in cash such excess.”


 


2.                                             The Loan Agreement shall be amended by deleting the
following definition, appearing in Section 13.1 thereof:


 


“                  “Availability Amount” is (a) the lesser of (i) the Revolving
Line or  (ii) the amount available under
the Borrowing Base minus (b) the amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit) plus an amount equal to
any Letter of Credit Reserve, minus (c) any FX Reduction Amount, minus (d) any
unreimbursed amounts used for Cash Management Services, and minus (e) the
outstanding principal balances of any Revolving Advances


 


“                  “Revolving Line Maturity Date” is September 24, 2010.”


 


and inserting in lieu thereof the
following:


 


“                  “Availability Amount” is (a) the lesser of (i) the Revolving
Line of (ii) the aggregate amount of (x) the amount available under the
Borrowing Base, plus (y) the Permitted Overadvance, minus (b) the amount of all
outstanding Letters of Credit (including drawn but unreimbursed Letters of
Credit) plus an amount equal to any Letter of Credit Reserve, minus (c) any FX
Reduction Amount, minus (d) any unreimbursed amounts used for Cash Management Services,
and minus (e) the outstanding principal balance of any Revolving Advances


 


“                  “Revolving Line Maturity Date” is December 23, 2010.”


 


3.                                             The Loan Agreement shall be amended by inserting the
following new definitions to appear alphabetically in Section 13.1 thereof:


 


“                  “2010 Effective Date” is September 24, 2010.”


 


“                  “Permitted Overadvance” is an Advance of Advances under the
Revolving Line up to (i) Four Million Dollars ($4,000,000.00) from the 2010
Effective Date through and including the Revolving Line Maturity Date.”


 


4.             FEES.  Borrower shall pay
to SVB a modification fee equal to Five Thousand Dollars ($5,000.00), which fee
shall be due and payable on the date hereof and shall be deemed fully earned as
of the date hereof.  Borrower shall also
reimburse SVB and Lenders for all legal fees and expenses incurred in
connection with this amendment to the Existing Loan Documents.


 


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5.             CONSISTENT
CHANGES.  The Existing Loan Documents are hereby
amended wherever necessary to reflect the changes described above.


 


6.             RATIFICATION
OF LOAN DOCUMENTS.  Borrower hereby ratifies, confirms, and
reaffirms all terms and conditions of all security or other collateral granted
to the Agent, for the ratable benefit of the Lenders, and confirms that the
indebtedness secured thereby includes, without limitation, the Obligations.


 


7.             NO
DEFENSES OF BORROWER.  Borrower hereby acknowledges and agrees that,
as of the Effective Date, Borrower has no offsets, defenses, claims, or
counterclaims against Agent or Lenders with respect to the Obligations, or
otherwise, and that if Borrower now has, or ever did have, any offsets,
defenses, claims or counterclaims against Agent or Lenders, whether known or
unknown, at law or in equity, all of them are hereby expressly WAIVED and
Borrower hereby RELEASES Agent and Lenders from any liability thereunder.


 


8.             CONTINUING
VALIDITY.  Borrower understands and agrees that in
modifying the existing Obligations, Agent and Lenders are relying upon Borrower’s
representations, warranties, and agreements, as set forth in the Existing Loan
Documents.  Except as expressly modified
pursuant to this Loan Modification Agreement, the terms of the Existing Loan
Documents remain unchanged and in full force and effect.  Lenders’ agreement to modifications to the
existing Obligations pursuant to this Loan Modification Agreement in no way
shall obligate any Lender to make any future modification to the
Obligations.  Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Obligations.  It is the intention of Lenders and Borrower
to retain as liable parties all makers of Existing Loan Documents, unless the
party is expressly released by Agent in writing.  No maker will be released by virtue of this
Loan Modification Agreement.


 


9.             COUNTERSIGNATURE.  This Loan
Modification Agreement shall become effective only when it shall have been
executed by Borrower, Agent and Lenders.


 


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This Loan Modification Agreement is
executed as a sealed instrument under the laws of the Commonwealth of
Massachusetts as of the date first written above.


 


 


	
  BORROWER:

  	
   

  	
  LENDERS:

  
	
   

  	
   

  	
   

  
	
  A123 SYSTEMS, INC.

  	
   

  	
  SILICON
  VALLEY BANK, as Agent and Lender

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/  Michael Rubino

  	
   

  	
  By:   /s/ 
  Robin Gil

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
  Michael
  Rubino

  	
   

  	
  Name:  Robin Gill

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
  Title:  VP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  GOLD
  HILL VENTURE LENDING 03, L.P., as Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:   /s/ 
  David Fischer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:  David Fischer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:  Manager

  



 


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