Exhibit 10.12


 


Leasing Contract of Workshop


 


 


Contract Number: ZX HE -015


 


 


Party A: JIANGSU DAGANG. Co., Ltd.


 


Party B: A123 Systems (Zhenjiang) Co, Ltd.


 


 


The Leased
Workshop: Floor1-2 of the standard workshop No.1, in the south of the
processing zone.


 


 


Time
of Contract: December 2008


 

















 


Pursuit to the PRC
Contract Law and other related rules and regulations, and in the spirit of
equality and free will, Party A and Party B have hereby reached an agreement
with regard to lease of Workshop to conclude the following contract:


 


Article 1. Party A guarantees, that the leased workshop
is consonant with the related national regulations on lease of workshops.


 


Article 2. Workshop


 


1.                                           Location: Floor 1-2 of the Standard workshop
No.1, in the south of the Zhenjiang Export Processing Zone;


Address: No.7 DAGANG
TONGGANG road, Zhenjiang, Jiangsu.


2.                                           Construction Area of Floor 1-2: 6,694 square
meters.


 


Article 3. Party A shall provide its business license and a
valid certificate for its rental rights; and Party B shall provide required
identification papers. After a proper verification, each party may photocopy
the certificates and identifications of the other party. All such photocopies
shall be used for this lease contract only.


 


Article 4. Lease term; Use


 


1.                                        Lease term of floor 1-2: 12 months, from January 1st 2009 to December 31st 2009.


2.                                        Party B promises that the leased workshop will
be used for industrial production and handling official business only.


3.                                        Party B shall return the workshop at the
termination of the lease.


4.                                        Party B may require an extension of the lease
term to the oncoming of expiration day of this lease contract, by necessarily
sending a written notice to Party A three (3) months before the expiration
day of this lease contract. Both parties shall re-sign this contract or sign a
new lease contract for the extension of the lease term.


 


Article 5. Rent and payment


 


1.               The rent will be RMB 8 per square meter per
month.


From January 1st 2009 to December 31st 2009,
Party B shall pay RMB8 per square meter * 6,694 square meters=RMB 53,552 per
month.


2.               The rent of the 630KVA*2 transformer will be
RMB4,000 per month (from January 1st 2009 to December 31st 2009)


3.               The rent shall be paid at the beginning of each
quarter. Party A shall provide Party B with valid invoices upon receiving the
payment.


 


Article 6. Related expanses and
taxes during the lease term


 


1.               Party A shall bear the following expenses:


During the lease term,
Party A shall pay the real property acquisition taxes for the workshop and the
land.


 


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2.               Party B shall beat the following expenses:


Party B shall pay the
rents on time, and shall also bear other expenses including water, electricity
and property management fees alone.


 


Article 7. Use and maintenance of
workshop


 


1.               Party A shall guarantee the security of use of
the leased workshop, and shall be responsible for common repair and management
of the parts of the workshop and facilities invested and constructed by Party
A; and Party B shall be responsible for the rest.


 


Before repairing the
workshop, Party A shall send a written notice to Party B 10 days in advance;
Party B, in return, shall cooperate with Party A actively.


 


Party A shall provide
aforesaid maintenance services in time once Party B makes the requirements.


 


Party A is not
responsible for the maintenance of the decorations made by Party B.


 


2.               Party B shall use the leased workshop and
facilities reasonably and shall be responsible for any repair work or economic
losses induced by its misuse and therefore damage to the property.


 


In case Party B intends
to change the inner structure of workshop, decorate the workshop or set
facilities that will affect the structure of the workshop, the project shall
not be started until the proposed design scale, scope of project, techniques
and materials, etc., are approved by Party A in writing. When the lease term
expires or if the lease contract terminates in advance due to Party B’s breach
of contract or other reasons, unless otherwise agreed by both parties, Party A
may choose one of the following rights:


 


a)                  the decorations attached to the workshop belongs
to Party A;


 


b)                 require Party B to restore the workshop to the
original state;


 


c)                  require Party B to pay the actual expenses
occurred in the restore project.


 


Article 8. Sublease, transfer or
under-lease of the workshop


 


1.               Party B shall not sublease or under-lease the
workshop without the consent of Party A.


2.               In case Party A intends to sell the workshop, it
shall send a written notice to Party B one month in advance. Under the same
conditions, Party B will have pre-emptive right to purchase and shall inform
Party A in writing if it intends to exercise said pre-emptive right.


 


Article 9. Modification,
cancellation and termination of contract


 


1.               The parties may modify or terminate the contract
through consultation.


 


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2.               Party B may cancel the contract under any of the
following circumstances:


 


a)                  Party A refuses to deliver the workshop or the workshop
Party A delivered fails to comply with the agreed conditions and therefore
affects the use of the workshop seriously;


 


b)                 Party A fails to perform its duty of maintenance
and therefore affects the use of the workshop seriously.


 


3.               Party A may cancel the contract and retract the
leased workshop under any of the following circumstances:


 


a)                  Party B subleases or under-leases the workshop
without the written consent of Party A;


 


b)                 Party B changes or modifies the structure of the
workshop without the written consent of Party A;


 


c)                  Party B damages the workshop and fails to repair
it during a reasonable time limitation stipulated by Party A;


 


d)                 Party B changes the use of the workshop without
the written consent of Party A;


 


e)                  Party B stores hazardous substance or conducts
illegal activities in the leased workshop;


 


f)                    Party B fails to pay any overdue fees and
expenses and therefore has caused serious damage to Party A;


 


g)                 Party B has been behind with rent for over 4
months accumulatively.


 


4.               If Party B intends to extend the lease contract
before the expiration date, it shall send a written notice to Party A 3 months
before the expiration. In case Party A intends to rent out the workshop after
the expiration, Party B has the pre-emptive right to rent under same
conditions.


5.               The contract will terminate naturally upon the
expiration.


6.               The contract will terminate if performance of
the contract becomes impossible due to force majeure.


 


Article 10. Check and acceptance
at the delivery and retract.


 


1.               Party A guarantees that the leased workshop and
facilities and equipments are in good condition and suitable for normal use.


2.               Both parties shall participate in the check and
acceptance. Any questions regarding the facilities and equipments shall be
raised on the spot; for those cannot be checked and decided on spot, any
questions should be raised within 10 days.


3.               After the expiration of the lease contract,
Party B shall return the workshop, facilities and equipment to Party A.


4.               Party B shall return the workshop, facilities
and equipment in good condition; Party B shall not leave articles behind or
affect later normal use of the workshop. Party A has the right to dispose any
articles left by Party B.


 


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Article 11. Liability (Party A)


 


1.               In case the contract is cancelled due to Party A’s
failure to deliver the workshop under the contract, Party A shall pay Party B
an amount equal to 1% of the total rent as fine. Beside, Party A is liable for
any losses occurred which exceed the fine amount.


2.               In case Party A fails to perform its duty of
maintenance or an urgent situation presents, Party A shall pay Party B the
maintenance expenses occurred in the repair work carried out by Party B or
deduct such expenses from the rent, provided Party B is able to produce valid
receipts for said expenses.


3.               Party A breaches the contract and retracts the
workshop in advance.


4.               In case the contract is rendered invalid because
that any flaws are found in Party A’s rights to the workshop or that the lease
turns out to be illegal, Party A is liable for any losses on the part of Party
B.


 


Article 12. Liability (Party B)


 


1.               During the lease term, under the following
circumstances, Party A has the right to terminate the contract in advance and
retract the workshop. Party B shall pay Party A an amount equal to 1% of the
total rent as fine. Beside, in case the stipulated fine is not an enough remedy
for all of Party A’s losses, Party B shall make further compensation till the
actual total loss is covered.


 


a)                  Party B subleases or under-leases the workshop
without the written consent of Party A;


 


b)                 Party B changes or modifies the structure of the
workshop without the written consent of Party A;


 


c)                  Party B changes the use of the workshop or
conducts illegal activities in the leased workshop;


 


d)                 Party B has been behind with rent for over 4
months accumulatively.


 


2.               During the lease terms, Party B delays any
payment of expenses that it is responsible under the contract.


3.               Party B quits the lease contract in advance
without Party A’s consent.


4.               Party B shall return the workshop to Party A at
the expiration of the lease contract. In case Party B delays the hand-back, for
each day of delay it shall pay Party A an amount five times as much the rent
per day as late fee. Party B is liable for any losses on the part of Party A
caused by such delay as well.


 


Article 13. Escape clause


 


1.               In the event of force majeure, if the continuous
performance of the contract becomes impossible or any loss is resulted there
from, neither party shall be held liable.


2.               If the contract is terminated for the reason
stated above, the rent shall be calculated in accordance with the actual time
of use. In case the time in question is less than a month, the rent shall be
calculated in the number of days. Refund


 


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will be made for
any overpayment, or a supplemental payment will be made for any deficiency.


3.               Force majeure refers to “objective conditions
that are unforeseeable, inevitable and insuperable”.


 


Article 14.
Any matter not
mentioned herein shall be resolved through amicable consultation by both
parties. Supplementary clauses may be concluded. Any supplementary clauses
shall be deemed as an indivisible part of this contract and will be of the same
effect as this contract.


 


Article 15.
Settlement of dispute


 


Any dispute arising out
of this lease contract shall be resolved by amicable consultation. If any
dispute cannot be resolved through consultation, either party shall bring the
dispute before the Arbitration Committee of Zhenjiang.


 


Article 16.
This contract
will come into effect once signed or sealed by both parties.


 


Article 17.
This contract
together with attachment A is written in 4 originals, two for each party.


 


Party A: JIANGSU DAGANG. Co., Ltd.


(sealed)


Legal representative: (Signature)


(or Authorized agent)


 


Party B: A123 Systems (Zhenjiang) Co,
Ltd.


(sealed)


Legal representative: (Signature)


(or Authorized agent)


 


Time of Contract: December 2008


 


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