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  Exhibit 10.28    
    

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

 MASSACHUSETTS INSTITUTE OF TECHNOLOGY  

 and  

 A123 Systems, Inc.  

 EXCLUSIVE PATENT LICENSE AGREEMENT  

Offer
to continue negotiations based upon this

agreement open until December 15, 2001 

 
 TABLE OF CONTENTS  

					
	 
	 	 
	 	Page 
	

  R E C I T A L S
	
 	

1
	 1.
	 	 Definitions. 
	 	

1
	 2.
	 	 Grant of Rights. 
	 	

3
	 3.
	 	 COMPANY Diligence Obligations. 
	 	

4
	 4.
	 	 Royalties and Payment Terms. 
	 	

5
	 5.
	 	 Reports and Records. 
	 	

7
	 6.
	 	 Patent Prosecution. 
	 	

8
	 7.
	 	 Infringement. 
	 	

9
	 8.
	 	 Indemnification and Insurance
	 	

10
	 9.
	 	 No Representations or Warranties
	 	

11
	 10.
	 	 Assignment. 
	 	

11
	 11.
	 	 General Compliance with Laws
	 	

12
	 12.
	 	 Termination
	 	

12
	 13.
	 	 Dispute Resolution. 
	 	

13
	 14.
	 	 Miscellaneous. 
	 	

14
	
  APPENDIX A
	 	

16
	
  APPENDIX B
	 	

17
	
  EXHIBIT A
	 	

18
	
  EXHIBIT B
	 	

19

ii

   MASSACHUSETTS INSTITUTE OF TECHNOLOGY

EXCLUSIVE PATENT LICENSE AGREEMENT  

        This Agreement, effective as of the date set forth above the signatures of the parties below (the "EFFECTIVE DATE"), is between the
Massachusetts Institute of Technology ("M.I.T."), a Massachusetts corporation, with a principal office at 77 Massachusetts Avenue, Cambridge, MA 02139-4307 and A123 Systems, Inc.
("COMPANY"), a Massachusetts corporation, with a principal place of business at 1 Memorial Drive, 12th Floor, Cambridge, MA 02142. 

R E C I T A L S  

        WHEREAS, M.I.T. is the owner of certain PATENT RIGHTS (as later defined herein) relating to M.I.T. Case No. 8700, "Design And
Manufacturing Process For Batteries", by Yet-Ming Chiang and Benjamin Hellweg; M.I.T. Case No. 9101, "Self-assembled Electrochemical And Bipolar Electronic Devices", by
Yet-Ming Chiang and W. Douglas Moorehead and M.I.T. Case No. 9541, "Conductive Lithium Storage Electrode and Method of Making Same" by Yet-Ming Chiang,
Sung-Yoon Chung and Jason T. Bloking and has the right to grant licenses under said PATENT RIGHTS; 

        WHEREAS,
Yet Ming Chiang, an inventor of the PATENT RIGHTS and current employee of M.I.T., has or will shortly acquire equity in COMPANY, the Conflict Avoidance Statement of
Yet-Ming Chiang is attached as Exhibit A hereto; 

        WHEREAS,
Yet-Ming Chiang, an inventor of the PATENT RIGHTS, has or will shortly acquire equity in COMPANY not resulting from this Agreement, the Inventor/Author
Acknowledgment of No Equity Distribution in M.I.T.'s institutional equity share of Yet-Ming Chiang is attached as Exhibit B hereto; 

        WHEREAS,
M.I.T.'s Vice President for Research has approved that Yet-Ming Chiang, an inventor of the PATENT RIGHTS, now holds or shall shortly acquire equity in COMPANY and
that M.I.T. is accepting equity as partial consideration for the rights and licenses granted under this Agreement; 

        WHEREAS,
M.I.T. desires to have the PATENT RIGHTS developed and commercialized to benefit the public and is willing to grant a license thereunder; 

        WHEREAS,
COMPANY has represented to M.I.T., to induce M.I.T. to enter into this Agreement, that COMPANY shall commit itself to a thorough, vigorous and diligent program of exploiting the
PATENT RIGHTS so that public utilization shall result therefrom; and 

        WHEREAS,
COMPANY desires to obtain a license under the PATENT RIGHTS upon the terms and conditions hereinafter set forth. 

        NOW,
THEREFORE, M.I.T. and COMPANY hereby agree as follows: 

1. DEFINITIONS.  

        1.1   "AFFILIATE" shall mean any legal entity (such as a corporation, partnership, or limited liability company) that is
controlled by COMPANY. For the purposes of this definition, the term "control" means (i) beneficial ownership of at least fifty percent (50%) of the voting securities of a corporation or other
business organization with voting securities or (ii) a fifty percent (50%) or greater interest in the net assets or profits of a partnership or other business organization without voting
securities. 

        1.2   "EXCLUSIVE PERIOD" shall mean the period of time set forth in Section 2.2. 

        1.3   "FIELD" shall mean batteries and power supplies, and components thereof. 

        1.4   "LICENSED PRODUCT" shall mean any product or part thereof that: 

        (i)    absent
the license granted hereunder, would infringe one or more claims of the PATENT RIGHTS; or 

        (ii)   is
manufactured by using a LICENSED PROCESS or that, when used, practices a LICENSED PROCESS. 

 

        1.5   "LICENSED PROCESS" shall mean any process that, absent the license granted hereunder, would infringe one or more claims
of the PATENT RIGHTS or which uses a LICENSED PRODUCT. 

        1.6   "NET SALES" shall mean the gross amount billed by COMPANY and its AFFILIATES for LICENSED PRODUCTS and LICENSED
PROCESSES, less the following: 

        (i)    customary
trade, quantity, or cash discounts to the extent actually allowed and taken; 

        (ii)   amounts
repaid or credited by reason of rejection or return; 

        (iii)  to
the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale,
transportation, delivery, or use of a LICENSED PRODUCT or LICENSED PROCESS which is paid by or on behalf of COMPANY; and 

        (iv)  outbound
transportation costs prepaid or allowed and costs of insurance in transit. 

No
deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by COMPANY and on its payroll, or for cost of collections. NET
SALES shall occur on the date of billing for a LICENSED PRODUCT or LICENSED PROCESS. If a LICENSED PRODUCT or a LICENSED PROCESS is distributed at a discounted price that is
substantially lower than the customary price charged by COMPANY, or distributed for non-cash consideration (whether or not at a discount), NET SALES shall be calculated based on the
non-discounted amount of the LICENSED PRODUCT or LICENSED PROCESS charged to an independent third party during the same REPORTING PERIOD or, in the absence of such sales, on the fair
market value of the LICENSED PRODUCT or LICENSED PROCESS 

        Non-monetary
consideration shall not be accepted by COMPANY or any AFFILIATE, for any LICENSED PRODUCTS or LICENSED PROCESSES
without the prior written consent of M.I.T. 

        1.7   "PATENT RIGHTS" shall mean:  

        (a)   the
United States and international patents listed on Appendix A; 

        (b)   the
United States and international patent applications and/or provisional applications listed on Appendix A and
the resulting patents; 

        (c)   any
patent applications resulting from the provisional applications listed on Appendix A, and any divisionals,
continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on  Appendix A and of such
patent applications that result from the provisional applications listed on  Appendix A, to the extent the claims are directed to subject matter specifically described in the patent applications
listed on
Appendix A, and the resulting patents; 

        (d)   any
patents resulting from reissues, reexaminations, or extensions (and their relevant international equivalents) of the patents described in (a), (b), and
(c) above; and 

        (e)   international
(non-United States) patent applications and provisional applications filed after the EFFECTIVE DATE and the relevant international equivalents
to divisionals, continuations, continuation-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to
subject matter specifically described in the patents or patent applications referred to in (a), (b), (c), and (d) above, and the resulting patents. 

        (f)    for
the invention disclosure of MIT Case 9541 (a) through (e) above 

        1.8   "REPORTING PERIOD" shall begin on the first day of each calendar quarter and end on the last day of such calendar
quarter. 

2

 

        1.9   "SUBLICENSE INCOME" shall mean any payments that COMPANY or an AFFILIATE receives from a SUBLICENSEE in consideration of
the sublicense of the rights granted COMPANY and AFFILIATES under Section 2.1, including without limitation license fees, royalties, milestone payments, license maintenance fees, and other
similar payments. 

        1.10 "SUBLICENSEE" shall mean any non-AFFILIATE sublicensee of the rights granted COMPANY under
Section 2.1. 

        1.11 "TERM" shall mean the term of this Agreement, which shall commence on the EFFECTIVE DATE and shall remain in effect
until the expiration or abandonment of all issued patents and filed patent applications within the PATENT RIGHTS, unless earlier terminated in accordance with the provisions of this Agreement. 

        1.12 "TERRITORY" shall mean worldwide 

2. GRANT OF RIGHTS.  

        2.1    License Grants.    Subject to the terms of this Agreement, M.I.T. hereby grants to COMPANY and its AFFILIATES
for the TERM a royalty-bearing license under the PATENT RIGHTS to develop, make, have made, use, sell, offer to sell, lease, and import LICENSED PRODUCTS in the FIELD in the TERRITORY and to develop
and perform LICENSED PROCESSES in the FIELD in the TERRITORY. 

        2.2    Exclusivity.    In order to establish an exclusive period for COMPANY, M.I.T. agrees that it shall not grant
any other license to make, have made, use, sell, lease and import LICENSED PRODUCTS in the FIELD in the TERRITORY or to perform LICENSED PROCESSES in the FIELD in the
TERRITORY during the period of time commencing on the EFFECTIVE DATE and extending to the end of the TERM. 

        2.3    Sublicenses.    COMPANY shall have the right to grant sublicenses of its rights under Section 2.1.
COMPANY shall incorporate terms and conditions into its sublicense agreements sufficient to enable COMPANY to comply with this Agreement. COMPANY shall promptly furnish M.I.T. with a fully signed
photocopy of any sublicense agreement. Upon termination of this Agreement for any reason, any SUBLICENSEE not then in default shall have the right to seek a license from M.I.T. M.I.T. agrees to
negotiate such licenses in good faith under terms and conditions which, when taken as a whole, shall be no more onerous than the terms and conditions of this Agreement. 

        2.4    U.S. Manufacturing.    COMPANY agrees that any LICENSED PRODUCTS used or sold in the United States will be
manufactured substantially in the United States unless all required waivers are obtained by COMPANY. 

        2.5    Retained Rights.    

        (a)    M.I.T.    M.I.T. retains the right to practice under the PATENT RIGHTS for research, teaching, and educational
purposes. 

        (b)    Federal Government.    COMPANY acknowledges that the U.S. federal government retains a
royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in any PATENT RIGHTS as set forth in 35 U.S.C.
§§ 201-211, and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. 

        2.6   M.I.T.
further grants to COMPANY an option to add to the PATENT RIGHTS of this Agreement the patent rights of new inventions which: 

	(a)
	are
dominated by the PATENT RIGHTS licensed under this Agreement and listed in Appendix A as of the Effective Date of this Agreement; and

	(b)
	originated
in the M.I.T. laboratory of Prof. Yet-Ming Chiang; and 

3

 

	(c)
	are
invented within 3 years of the EFFECTIVE DATE; and

	(d)
	are
available for licensing after satisfaction of any rights granted to sponsors of the research leading to the invention. 

For
each such invention, COMPANY's option period to elect the patent rights shall begin with M.I.T. notifying COMPANY of the invention (such notification to be held in confidence), and shall expire
[**] days later unless COMPANY notifies M.I.T. in writing that it wishes to exercise its option. For each invention so elected, COMPANY shall pay a license addition fee of
$[**]dollars;) the patent rights of that invention shall then be added to the PATENT RIGHTS of this Agreement by amendment. 

        2.7    No Additional Rights.    Nothing in this Agreement shall be construed to confer any rights upon COMPANY by
implication, estoppel, or otherwise as to any technology or patent rights of M.I.T. or any other entity other than the PATENT RIGHTS, regardless of whether such technology or patent rights shall be
dominant or subordinate to any PATENT RIGHTS. 

3. COMPANY DILIGENCE OBLIGATIONS.  

        3.1    Diligence Requirements.    COMPANY shall use diligent efforts, or shall cause its AFFILIATES and SUBLICENSEES
to use diligent efforts, to develop LICENSED PRODUCTS or LICENSED PROCESSES and to introduce LICENSED PRODUCTS or LICENSED PROCESSES into the commercial market; thereafter, COMPANY or its AFFILIATES
or SUBLICENSEES shall make LICENSED PRODUCTS or LICENSED PROCESSES reasonably available to the public. Specifically, COMPANY or AFFILIATE or SUBLICENSEE shall fulfill the following obligations: 

        (a)   Within
[**] months after the EFFECTIVE DATE, COMPANY shall furnish M.I.T. with a written research and development plan describing the major tasks
to be achieved in order to bring to market a LICENSED PRODUCT or a LICENSED PROCESS, specifying the number of staff and other resources to be devoted to such commercialization effort. 

        (b)   Within
[**] days after the end of each calendar year, COMPANY shall furnish M.I.T. with a written report (consistent with Section 5.1(a))
on the progress of its efforts during the immediately preceding calendar year to develop and commercialize LICENSED PRODUCTS or LICENSED PROCESSES. The report shall also contain a
[**] for the year in which the report is submitted. 

        (c)   COMPANY
shall raise at least $[**] Dollars ($[**]) by June 30, 2002 from the sale of Company's equity securities
for its own account. (with modified wording, can include exchange of equity for joint ventures or collaborations) 

        (d)   In
the aggregate, COMPANY shall raise at least $[**] Dollars ($[**]) by June 30, 2004 from the sale of Company's
equity securities for its own account. 

        (e)   COMPANY
shall fund no less than [**] Dollars ($[**]) of research toward the development of LICENSED PRODUCTS and/or
LICENSED PROCESSES in each calendar year (pro-rated for partial years) beginning in 2002 and ending with the first commercial sale of a LICENSED PRODUCT or a first commercial performance
of a LICENSED PROCESS. 

        In
the event that the obligations under this Section 3.1 have not been fulfilled, then M.I.T. may treat such failure as a material breach in accordance with
Section 12.3(b). 

4. ROYALTIES AND PAYMENT TERMS.  

        4.1    Consideration for Grant of Rights.    

        (a)    License Issue Fee and Patent Cost Reimbursement.    COMPANY shall pay to M.I.T. on the EFFECTIVE DATE a license
issue fee of [**] dollars ($[**]), and, in accordance with Section 6.3, 

4

 

shall
reimburse M.I.T. for its actual expenses incurred as of the EFFECTIVE DATE in connection with obtaining the PATENT RIGHTS. These payments are nonrefundable. 

        (b)    License Maintenance Fees.    COMPANY shall pay to M.I.T. the following license maintenance fees on the dates
set forth below: 

					
	 January 1, 2003
	 	$	[**]	 
	 January 1, 2004
	 	$	[**]	 
	 and each January 1 of

every year thereafter
	 	$	[**]	 

        This
annual license maintenance fee is nonrefundable; however, the license maintenance fee may be credited to running royalties subsequently due on NET SALES earned during the same
calendar year, if any. License maintenance fees paid in excess of running royalties due in such calendar year shall not be creditable to amounts due for future years. 

        (c)    Running Royalties.    COMPANY shall pay to M.I.T. a running royalty of
[**] percent ([**]%) of NET SALES by COMPANY and its AFFILIATES. Running royalties shall be payable for each REPORTING PERIOD and shall be due to
M.I.T. within [**] days of the end of each REPORTING PERIOD. For each Licensed Product sold, COMPANY shall have the right to credit against Running Royalties due to M.I.T.
[**] percent ([**]%) of the royalties paid to third parties for that Product; provided however, that the royalties paid to M.I.T. shall not be
less than [**] percent ([**]%) of the Net Sales of that Licensed Product. 

        The
foregoing notwithstanding, if, in any calendar year, the royalty proceeds to M.I.T. pursuant to this Section 4.1(c) reach the sum of [**] Dollars
($[**]), then the royalty rate that shall be applied to any additional NET SALES during that same calendar year shall be reduced to [**] of the amount
specified in the first paragraph of this Section 4.1(c). Furthermore, if, in any calendar year, the royalty proceeds to M.I.T. pursuant to this Section 4.1(c) reach the sum of
[**] Dollars ($[**]), then the royalty rate that shall be applied to any additional NET SALES during that same calendar year shall be reduced to
[**] of the amount specified in the first paragraph of this Section 4.1(c). 

        (d)    Sharing of SUBLICENSE INCOME.    COMPANY shall pay M.I.T. a total of
[**] percent ([**]%) of all SUBLICENSE INCOME received by COMPANY or AFFILIATES, excluding running royalties on NET SALES of SUBLICENSEES. Such
amount shall be payable for each REPORTING PERIOD and shall be due to M.I.T. within [**] days of the end of each REPORTING PERIOD. 

        (e)    No Multiple Royalties.    If the manufacture, use, lease, or sale of any LICENSED PRODUCT or the performance of
any LICENSED PROCESS is covered by more than one of the PATENT RIGHTS, multiple royalties shall not be due. 

        (f)    Equity.    

        (i)    Initial Grant.    COMPANY shall issue a total of Two Hundred Thousand (200,000) shares of Common Stock of
COMPANY, $.001 par value per share, (the "Shares") in the name of M.I.T. and no more that five (5) persons as M.I.T. shall direct ("M.I.T. Holder"), and each M.I.T. Holder shall receive such
number of shares as M.I.T. shall direct. 

        COMPANY
represents to M.I.T. that, as of the Effective Date, the aggregate number of Shares equals at least [**] Percent ([**]%) of the
COMPANY's issued and outstanding Common Stock calculated on a "Fully Diluted Basis." For purposes of this Section 4.1(f), "Fully Diluted Basis" shall mean that the total number of issued and
outstanding shares of the COMPANY's Common Stock shall be calculated to include conversion of all issued and outstanding securities then convertible into common stock and the exercise of all then 

5

 

outstanding
options and warrants to purchase shares of common stock, whether or not then exercisable. 

        (ii)    Participation in Future Private Equity Offerings.    M.I.T. (specifically not including M.I.T. Holders) shall
have the right to purchase, pursuant to terms and conditions at least as favorable as those granted to other offerees, a sufficient number of shares of the COMPANY's equity securities in the first
equity financing of the COMPANY after the date hereof such that immediately following such offering M.I.T. would own at least the same percentage, on a Fully Diluted Basis, of the COMPANY's issued and
outstanding Common Stock that it owned immediately prior to such offering. M.I.T. shall be considered to have waived its participation right if it fails to respond within [**]
business days following its receipt of a representative package of due diligence information and a term sheet for such an offering. In addition, whether or not M.I.T. elects to participate in such
first equity offering, M.I.T. shall have the right to become a party the investors rights agreement, or the like, among the COMPANY and the purchasers of such equity securities to the extent it
provides to M.I.T. preemptive rights to purchase a sufficient number of additional securities in future equity offerings to maintain its percentage ownership of the common stock of the COMPANY on a
Fully Diluted Basis. Until such investors rights agreement is entered into in connection with an equity financing of the COMPANY, M.I.T. shall continue to maintain its rights in subsequent offerings
to purchase a sufficient number of equity securities of the COMPANY such that immediately following such offering M.I.T. would own at least the same percentage, on a Fully Diluted Basis, of the
COMPANY's issued and outstanding Common Stock that it owned immediately prior to such offering. All rights granted to M.I.T. pursuant to this Section 4.1(f)(iii) shall terminate immediately
prior to a firm commitment underwritten public offering of the COMPANY's common stock resulting in gross proceeds to the COMPANY of at least $[**]. 

        (iii)    Adjustments for Punitive Round Financings.    After the date of the Funding Threshold (the "Funding Threshold
Date"), if, as a result of the issuance by the COMPANY of Common Stock, or any equity security exercisable for or convertible into Common Stock, the conversion rate into Common Stock of any
outstanding shares of convertible preferred stock of the COMPANY issued on or before the
Funding Threshold Date is adjusted pursuant to an antidilution adjustment included in the Certificate of Incorporation of the COMPANY, the COMPANY will issue to M.I.T. for each share of Common Stock
issued pursuant to Section 4.1(f)(i) and held by M.I.T. a share and/or fractional share of Common Stock equal to the additional share and/or fractional share of Common Stock which a holder of
such convertible preferred stock would be entitled to receive as a result of such adjustment of the conversion rate included in the COMPANY's Certificate of Incorporation as if such holder converted
his share of convertible preferred stock into Common Stock immediately after such adjustment, whether or not such conversion is actually exercised at the time of the dilutive issuance adjustment. 

        Notwithstanding
the above, if the issuance by the COMPANY of Common Stock, or any equity security exercisable for or convertible into Common Stock, would have caused an adjustment in the
conversion rate included in the COMPANY's Certificate of Incorporation but for the waiver of such adjustment by the holders of such convertible preferred stock (the "Preferred Holders") or the effect
of any so called "pay to play" provision, then upon such issuance, if M.I.T., in its own discretion, does not also waive such adjustment, the Company shall issue to M.I.T. such additional shares of
Common Stock that M.I.T. would have been issued as set forth above had the Preferred Holders not waived such adjustment or the effect of the pay to play provision had not precluded such adjustment.
Thereafter, the conversion rate of the preferred stock shall be deemed to have been adjusted notwithstanding the waiver 

6

 

or
preclusion of such adjustment for purposes of determining whether or not future issuances by the COMPANY of Common stock, or any equity security exercisable for or convertible into Common Stock,
should require the COMPANY to issue additional shares of Common Stock to M.I.T. 

        4.2    Payments.    

        (a)    Method of Payment.    All payments under this Agreement should be made payable to "Massachusetts Institute of
Technology" and sent to the address identified in Section 14.1. Each payment should reference this Agreement and identify the obligation under this Agreement that the payment satisfies. 

        (b)    Payments in U.S. Dollars.    All payments due under this Agreement shall be drawn on a United States bank and
shall be payable in United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the conversion rate existing in the United States (as reported in the  Wall Street Journal) on
the last working day of the calendar quarter of the applicable REPORTING PERIOD. Such payments shall be without deduction of
exchange, collection, or other charges, and, specifically, without deduction of withholding or similar taxes or other government imposed fees or taxes, except as permitted in the definition of NET
SALES. 

        (c)    Late Payments.    Any payments by COMPANY that are not paid on or before the date such payments are due under
this Agreement shall bear interest, to the extent permitted by law, at two percentage points above the Prime Rate of interest as reported in the Wall Street
Journal on the date payment is due. 

5. REPORTS AND RECORDS.  

        5.1    Frequency of Reports.    

        (a)    Before First Commercial Sale.    Prior to the first commercial sale of the first LICENSED PRODUCT or first
commercial performance of the first LICENSED PROCESS, COMPANY shall deliver reports to M.I.T. annually, within [**] days of the end of each calendar year, containing
information concerning the immediately preceding calendar year, as further described in Section 5.2. 

        (b)    Upon First Commercial Sale of a LICENSED PRODUCT or Commercial Performance of a LICENSED PROCESS.    COMPANY
shall report to M.I.T. the date of first commercial sale of a LICENSED PRODUCT and the date of first commercial performance of a LICENSED PROCESS within [**] days of
occurrence. 

        (c)    After First Commercial Sale.    After the first commercial sale of a LICENSED PRODUCT or first commercial
performance of a LICENSED PROCESS, COMPANY shall deliver reports to M.I.T. within [**] days of the end of each REPORTING PERIOD, containing information concerning the
immediately preceding REPORTING PERIOD, as further described in Section 5.2. 

7

 

  
        5.2    Content of Reports and Payments.    Each report delivered by COMPANY to M.I.T. shall contain at least the
following information for the immediately preceding REPORTING PERIOD: 

        (i)    the
number of LICENSED PRODUCTS sold, leased or distributed by COMPANY and its AFFILIATES to independent third parties in each country, and, if applicable, the number of
LICENSED PRODUCTS used by COMPANY and its AFFILIATES in the provision of services in each country; 

        (ii)   a
description of LICENSED PROCESSES performed by COMPANY and its AFFILIATES in each country as may be pertinent to a royalty accounting hereunder; 

        (iii)  the
gross price charged by COMPANY and its AFFILIATES for each LICENSED PRODUCT and, if applicable, the gross price charged for each LICENSED PRODUCT used to provide
services in each country; and the gross price charged for each LICENSED PROCESS performed by COMPANY and its AFFILIATES in each country; 

        (iv)  calculation
of NET SALES for the applicable REPORTING PERIOD in each country, including a listing of applicable deductions; 

        (v)   total
royalty payable on NET SALES in U.S. dollars, together with the exchange rates used for conversion; 

        (vi)  the
amount of SUBLICENSE INCOME received by COMPANY from each SUBLICENSEE and the amount due to M.I.T. from such SUBLICENSE INCOME, including an itemized breakdown of
the sources of income comprising the SUBLICENSE INCOME; and 

        (vii) the
number of sublicenses entered into for the PATENT RIGHTS. 

If
no amounts are due to M.I.T. for any REPORTING PERIOD, the report shall so state. 

        5.3    Financial Statements.    On or before the [**] day following the close of COMPANY's
fiscal year, COMPANY shall provide M.I.T. with COMPANY's financial statements for the preceding fiscal year including, at a minimum, a balance sheet and an income statement, certified by COMPANY's
treasurer or chief financial officer or by an independent auditor. M.I.T. shall maintain such financial statements as confidential information of the COMPANY. 

        5.4    Records.    COMPANY shall maintain, and shall cause its AFFILIATES and SUBLICENSEES to maintain, complete and
accurate records relating to the rights and obligations under this Agreement and any amounts payable to M.I.T. in relation to this Agreement, which records shall contain sufficient information to
permit M.I.T. to confirm the accuracy of any reports delivered to M.I.T. and compliance in other respects with this Agreement. The relevant party shall retain such records for at least
[**] years following the end of the calendar year to which they pertain, during which time M.I.T., or M.I.T.'s appointed agents, shall have the right, at M.I.T.'s expense, to
inspect such records during normal business hours to verify any reports and payments made or compliance in other respects under this Agreement. In the event that any audit performed under this Section
reveals an underpayment in excess of five percent (5%), COMPANY shall bear the full cost of such audit and shall remit any amounts due to M.I.T. within [**] days of receiving
notice thereof from M.I.T. 

6. PATENT PROSECUTION.  

        6.1    Responsibility for PATENT RIGHTS.    COMPANY shall assume responsibility for preparation, filing, prosecution
and maintenance of all of the PATENT RIGHTS in M.I.T.'s name using attorneys acceptable to M.I.T. Such activities shall be conducted in M.I.T.'s best interest and COMPANY shall not abandon any
substantive claim of the PATENT RIGHTS without permission from M.I.T. M.I.T. shall be copied on all correspondence regarding patent filing, prosecution and maintenance and shall 

8

 

have
reasonable opportunities to advise COMPANY and shall cooperate with COMPANY in such filing, prosecution and maintenance. 

        6.2    International (non-United States)
Filings.    Appendix B is a list of countries in which patent applications corresponding to the United States
patent applications listed in Appendix A shall be filed, prosecuted, and maintained.  Appendix B may be amended by mutual agreement of COMPANY and
M.I.T. 

        6.3    Payment of Expenses.    Payment of all fees and costs, including attorneys fees, relating to the filing,
prosecution and maintenance of the PATENT RIGHTS shall be the responsibility of COMPANY, whether such amounts were incurred before or after the EFFECTIVE DATE. COMPANY shall reimburse all amounts
incurred by M.I.T. within [**] days of invoicing; late payments shall accrue interest pursuant to Section 4.2(c). 

7. INFRINGEMENT.  

        7.1    Notification of Infringement.    Each party agrees to provide written notice to the other party promptly after
becoming aware of any infringement of the PATENT RIGHTS. 

        7.2    Right to Prosecute Infringements.    

        (a)    COMPANY Right to Prosecute.    So long as COMPANY remains the exclusive licensee of the PATENT RIGHTS in the
FIELD in the TERRITORY, COMPANY, to the extent permitted by law, shall have the right, under its own control and at its own expense, to prosecute any third party infringement of the PATENT RIGHTS in
the FIELD in the TERRITORY, subject to Sections 7.4 and 7.5. If required by law, M.I.T. shall permit any action under this Section to be brought in its name, including being joined as a
party-plaintiff, provided that COMPANY shall hold M.I.T. harmless from, and indemnify M.I.T. against, any costs, expenses, or liability that M.I.T. incurs in connection with such action. 

        Prior
to commencing any such action, COMPANY shall consult with M.I.T. and shall consider the views of M.I.T. regarding the advisability of the proposed action and its effect on the
public interest. COMPANY shall not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Section without the prior written consent of
M.I.T. 

        (b)    M.I.T. Right to Prosecute.    In the event that COMPANY is unsuccessful in persuading the alleged infringer to
desist or fails to have initiated an infringement action within a reasonable time after COMPANY first becomes aware of the basis for such action, M.I.T. shall have the right, at its sole discretion,
to prosecute such infringement under its sole control and at its sole expense, and any recovery obtained shall belong to M.I.T. 

        7.3    Declaratory Judgment Actions.    In the event that a declaratory judgment action is brought against M.I.T. or
COMPANY by a third party alleging invalidity, unenforceability, or non-infringement of the PATENT RIGHTS, M.I.T., at its option, shall have the right within [**]
days after commencement of such action to take over the sole defense of the action at its own expense. If M.I.T. does not exercise this right, COMPANY may take over the sole defense of the action at
COMPANY's sole expense, subject to Sections 7.4 and 7.5. 

        7.4    Offsets.    COMPANY may offset a total of [**] percent
([**]%) of any expenses incurred under Sections 7.2 and 7.3 against any payments due to M.I.T. under Article 4, provided that in no event shall such payments
under Article 4, when aggregated with any other offsets and credits allowed under this Agreement, be reduced by more than [**] percent
([**]%) in any REPORTING PERIOD. 

        7.5    Recovery.    Any recovery obtained in an action brought by COMPANY under Sections 7.2 or 7.3 shall be
distributed as follows: (i) each party shall be reimbursed for any expenses incurred in the 

9

 

action
(including the amount of any royalty or other payments withheld from M.I.T. as described in Section 7.4), (ii) as to ordinary damages, COMPANY shall receive an amount equal to its
lost profits or a reasonable royalty on the infringing sales, or whichever measure of damages the court shall have applied, and COMPANY shall pay to M.I.T. based upon such amount a reasonable
approximation of the royalties and other amounts that COMPANY would have paid to M.I.T. if COMPANY had sold the infringing products, processes and services rather than the infringer or had entered
into a sublicense agreement with the infringer, and (iii) as to special or punitive damages, the parties shall share equally in any award. 

        7.6    Cooperation.    Each party agrees to cooperate in any action under this Article which is controlled by the
other party, provided that the controlling party reimburses the cooperating party promptly for any costs and expenses incurred by the cooperating party in connection with providing such assistance. 

        7.7    Right to Sublicense.    So long as COMPANY remains the exclusive licensee of the PATENT RIGHTS in the FIELD in
the TERRITORY, COMPANY shall have the sole right to sublicense any alleged infringer in the FIELD in the TERRITORY for future use of the PATENT RIGHTS in accordance with the terms and conditions of
this Agreement relating to sublicenses. Any revenues to COMPANY pursuant to such sublicense shall be treated as set forth in Section 4.1(d). 

8. INDEMNIFICATION AND INSURANCE  

        8.1    Indemnification.    

        (a)    Indemnity.    COMPANY shall indemnify, defend, and hold harmless M.I.T. and its trustees, officers, faculty,
students, employees, and agents and their respective successors, heirs and assigns (the "Indemnitees"), against any liability, damage, loss, or expense (including reasonable attorneys fees and
expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, actions, demands or judgments arising out of any theory of liability (including without limitation
actions in the form of tort, warranty, or strict liability and regardless of whether such action has any factual basis) concerning any product, process, or service that is made, used, sold, imported,
or performed pursuant to any right or license granted under this Agreement. 

        (b)    Procedures.    The Indemnitees agree to provide COMPANY with prompt written notice of any claim, suit, action,
demand, or judgment for which indemnification is sought under this Agreement. COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to M.I.T. to defend against any such claim.
The Indemnitees shall cooperate fully with COMPANY in such defense and will permit COMPANY to conduct and control such defense and the disposition of such claim, suit, or action (including all
decisions relative to litigation, appeal, and settlement); provided, however, that any Indemnitee shall have the right to retain its own counsel, at the expense of COMPANY, if representation of such
Indemnitee by the counsel retained by COMPANY would be inappropriate because of actual or potential differences in the interests of such Indemnitee and any other party represented by such counsel.
COMPANY agrees to keep M.I.T. informed of the progress in the defense and disposition of such claim and to consult with M.I.T. with regard to any proposed settlement. 

        8.2    Insurance.    COMPANY shall obtain and carry in full force and effect commercial general liability insurance,
including product liability and errors and omissions insurance which shall protect COMPANY and Indemnitees with respect to events covered by Section 8.1(a) above. Such insurance
(i) shall be issued by an insurer licensed to practice in the Commonwealth of Massachusetts or an insurer pre-approved by M.I.T., such approval not to be unreasonably withheld,
(ii) shall list M.I.T. as an additional insured thereunder, (iii) shall be endorsed to include product liability coverage, and (iv) shall require thirty (30) days written
notice to be given to M.I.T. prior to any cancellation or 

10

 

material
change thereof. The limits of such insurance shall not be less than One Million Dollars ($1,000,000) per occurrence with an aggregate of Three Million Dollars ($3,000,000) for bodily injury
including death; One Million Dollars ($1,000,000) per occurrence with an aggregate of Three Million Dollars ($3,000,000) for property damage; and One Million Dollars ($1,000,000) per occurrence with
an aggregate of Three Million Dollars ($3,000,000) for errors and omissions. In the alternative, COMPANY may self-insure subject to prior approval of M.I.T. COMPANY shall provide M.I.T.
with Certificates of Insurance evidencing compliance with this Section. COMPANY shall continue to maintain such insurance or self-insurance after the expiration or termination of this
Agreement during any period in which COMPANY or any AFFILIATE or SUBLICENSEE continues (i) to make, use, or sell a product that was a LICENSED PRODUCT under this Agreement or (ii) to
perform a service that was a LICENSED PROCESS under this Agreement, and thereafter for a period of five (5) years. 

9. NO REPRESENTATIONS OR WARRANTIES  

        EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T. MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING
THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED
OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. Specifically, and not to limit the foregoing, M.I.T. makes no warranty or representation (i) regarding the
validity or scope of the PATENT RIGHTS, and (ii) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT or LICENSED PROCESS will not infringe any patents or other intellectual
property rights of M.I.T. or of a third party. 

        IN
NO EVENT SHALL M.I.T., ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES OR COMPANY, ITS DIRECTORS, OFFICERS, ADVISORS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER ANY SUCH ENTITY OR PERSON SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW,
OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING. 

10. ASSIGNMENT.  

        This Agreement is personal to COMPANY and no rights or obligations may be assigned by COMPANY without the prior written consent of
M.I.T. Notwithstanding the foregoing, COMPANY may assign this Agreement in connection with the sale or transfer of all or substantially all of COMPANY's business relating to the LICENSED PRODUCTS and
LICENSED PROCESSES, whether by merger, consolidation, sale of assets or otherwise; provided that (a) the assignee shall agree in writing to be bound by the terms and conditions hereof prior to
such assignment and (b) the total valuation of the COMPANY is at least [**] Dollars ($[**]). In the event that the total valuation of the COMPANY
is less than $[**], then the assignment may be made only with M.I.T.'s written permission. Failure of such assignee to so agree to be bound by the terms and conditions hereof
shall be grounds for termination by M.I.T. under Section 12.3. 

11

 

 11. GENERAL COMPLIANCE WITH LAWS  

        11.1    Compliance with Laws.    COMPANY shall use reasonable commercial efforts to comply with all commercially
material local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of LICENSED PRODUCTS and LICENSED PROCESSES. 

        11.2    Export Control.    COMPANY and its AFFILIATES and SUBLICENSEES shall comply with all United States laws and
regulations controlling the export of certain commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce. Among
other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries. COMPANY hereby gives written assurance
that it will comply with, and will cause its AFFILIATES and SUBLICENSEES to comply with, all United States export control laws and regulations, that it bears sole responsibility for any violation of
such laws and regulations by itself or its AFFILIATES or SUBLICENSEES, and that it will indemnify, defend, and hold M.I.T. harmless (in accordance with Section 8.1) for the consequences of any
such violation. 

        11.3    Non-Use of M.I.T. Name.    COMPANY and its AFFILIATES and SUBLICENSEES shall not use the name of
"Massachusetts Institute of Technology," "Lincoln Laboratory" or any variation, adaptation, or abbreviation thereof, or of any of its trustees, officers, faculty, students, employees, or agents, or
any trademark owned by M.I.T., or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of M.I.T. The foregoing
notwithstanding, without the consent of M.I.T., COMPANY may state that it is licensed by M.I.T. under one or more of the patents and/or patent applications comprising the PATENT RIGHTS. 

        11.4    Marking of LICENSED PRODUCTS.    To the extent commercially feasible and consistent with prevailing business
practices, COMPANY shall mark, and shall cause its AFFILIATES and SUBLICENSEES to mark, all LICENSED PRODUCTS that are manufactured or sold under this Agreement with the number of each issued patent
under the PATENT RIGHTS that applies to such LICENSED PRODUCT. 

12. TERMINATION  

        12.1    Voluntary Termination by COMPANY.    COMPANY shall have the right to terminate this Agreement, for any reason,
(i) upon at least six (6) months prior written notice to M.I.T., such notice to state the date at least six (6) months in the future upon which termination is to be effective, and
(ii) upon payment of all amounts due to M.I.T. through such termination effective date. 

        12.2    Cessation of Business.    If COMPANY ceases to carry on its business related to this Agreement, M.I.T. shall
have the right to terminate this Agreement immediately upon written notice to COMPANY. 

        12.3    Termination for Default.    

        (a)    Nonpayment.    In the event COMPANY fails to pay any amounts due and payable to M.I.T. hereunder, and fails to
make such payments within thirty (30) days after receiving written notice of such failure, M.I.T. may terminate this Agreement immediately upon written notice to COMPANY. 

        (b)    Material Breach.    In the event COMPANY commits a material breach of its obligations under this Agreement,
except for breach as described in Section 12.3(a), and fails to cure that breach within [**] days after receiving written notice thereof, M.I.T. may terminate this
Agreement immediately upon written notice to COMPANY. 

12

 

        12.4    Effect of Termination.    

        (a)    Survival.    The following provisions shall survive the expiration or termination of this Agreement:
Articles 1, 8, 9, 13 and 14, and Sections 4.1(f), 5.2 (obligation to provide final report and payment), 5.4, 11.1, 11.2 and 12.4. 

        (b)    Inventory.    Upon the early termination of this Agreement, COMPANY and its AFFILIATES and SUBLICENSEES may
complete and sell any work-in-progress and inventory of LICENSED PRODUCTS that exist as of the effective date of termination, provided that (i) COMPANY pays M.I.T. the
applicable running royalty or other amounts due on such sales of LICENSED PRODUCTS in accordance with the terms and conditions of this Agreement, and (ii) COMPANY and its AFFILIATES and
SUBLICENSEES shall complete and sell all work-in-progress and inventory of LICENSED PRODUCTS within [**] months after the effective date of termination. 

        (c)    Pre-termination Obligations.    In no event shall termination of this Agreement release COMPANY,
AFFILIATES, or SUBLICENSEES from the obligation to pay any amounts that became due on or before the effective date of termination. 

13. DISPUTE RESOLUTION.  

        13.1    Mandatory Procedures.    The parties agree that any dispute arising out of or relating to this Agreement shall
be resolved solely by means of the procedures set forth in this Article, and that such procedures constitute legally binding obligations that are an essential provision of this Agreement. If either
party fails to observe the procedures of this Article, as may be modified by their written agreement, the other party may bring an action for specific performance of these procedures in any court of
competent jurisdiction. 

        13.2    Equitable Remedies.    Although the procedures specified in this Article are the sole and exclusive procedures
for the resolution of disputes arising out of or relating to this Agreement, either party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, such
action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement. 

        13.3    Dispute Resolution Procedures.    

        (a)    Mediation.    In the event any dispute arising out of or relating to this Agreement remains unresolved within
[**] days from the date the affected party informed the other party of such dispute, either party may initiate mediation upon written notice to the other party ("Notice Date"),
whereupon both parties shall be obligated to engage in a mediation proceeding under
the then current Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes (http://www.cpradr.org), except that specific provisions of this Article shall override
inconsistent provisions of the CPR Model Procedure. The mediator will be selected from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a mediator within
[**] business days after the Notice Date, then upon the request of either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through
mediation until the first of the following occurs: (i) the parties reach a written settlement; (ii) the mediator notifies the parties in writing that they have reached an impasse;
(iii) the parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a settlement within [**] days after the Notice Date. 

        (b)    Trial Without Jury.    If the parties fail to resolve the dispute through mediation, or if neither party elects
to initiate mediation, each party shall have the right to pursue any other remedies legally available to resolve the dispute, provided, however, that the parties expressly waive any right to a jury
trial in any legal proceeding under this Article. 

13

 

        13.4    Performance to Continue.    Each party shall continue to perform its undisputed obligations under this
Agreement pending final resolution of any dispute arising out of or relating to this Agreement; provided, however, that a party may suspend performance of its undisputed obligations during any period
in which the other party fails or refuses to perform its undisputed obligations. Nothing in this Article is intended to relieve COMPANY from its obligation to make undisputed payments pursuant to
Articles 4 and 6 of this Agreement. 

        13.5    Statute of Limitations.    The parties agree that all applicable statutes of limitation and
time-based defenses (such as estoppel and laches) shall be tolled while the procedures set forth in Sections 13.3(a) are pending. The parties shall cooperate in taking any actions
necessary to achieve this result. 

14. MISCELLANEOUS.  

        14.1    Notice.    Any notices required or permitted under this Agreement shall be in writing, shall specifically
refer to this Agreement, and shall be sent by hand, recognized national overnight courier, confirmed
facsimile transmission, confirmed electronic mail, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile numbers of the parties: 

        If
to M.I.T., all matters relating to the license: 

Technology
Licensing Office, Room NE25-230

Massachusetts Institute of Technology

77 Massachusetts Avenue

Cambridge, MA 02139-4307

Attention: Director

Tel: 617-253-6966

Fax: 617-258-6790 

        If
to M.I.T., relating to any equity action after the initial issuance of shares: 

Massachusetts
Institute of Technology

Treasurer's Office

238 Main Street

Cambridge, MA 02142

Attention: Phillips B. Moore

Tel: 617-253-5422

Fax: 617-258-6676 

        If
to COMPANY: 

A123
Systems, Inc

1 Memorial Drive, 12th Floor

Cambridge, MA 02142

Attention: Ric Fulop

Tel: 617-250-0565

Fax: 

        All
notices under this Agreement shall be deemed effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner
provided in this Section. 

        14.2    Governing Law.    This Agreement and all disputes arising out of or related to this Agreement, or the
performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth of
Massachusetts, U.S.A., without regard to conflict of laws principles, except that 

14

 

questions
affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. 

        14.3    Force Majeure.    Neither party will be responsible for delays resulting from causes beyond the reasonable
control of such party, including without limitation fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove such
causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed. 

        14.4    Amendment and Waiver.    This Agreement may be amended, supplemented, or otherwise modified only by means of a
written instrument signed by both parties. Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any
rights or fail to act in any other instance, whether or not similar. 

        14.5    Severability.    In the event that any provision of this Agreement shall be held invalid or unenforceable for
any reason, such invalidity or unenforceability shall not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent
possible) their original intent. If the parties fail to reach a modified agreement within thirty (30) days after the relevant provision is held invalid or unenforceable, then the dispute shall
be resolved in accordance with the procedures set forth in Article 13. While the dispute is pending resolution, this Agreement shall be construed as if such provision were deleted by agreement
of the parties. 

        14.6    Binding Effect.    This Agreement shall be binding upon and inure to the benefit of the parties and their
respective permitted successors and assigns. 

        14.7    Headings.    All headings are for convenience only and shall not affect the meaning of any provision of this
Agreement. 

        14.8    Entire Agreement.    This Agreement constitutes the entire agreement between the parties with respect to its
subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter. 

        IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. 

The EFFECTIVE DATE of this Agreement is December 4, 2001.  

							
	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	A123 SYSTEMS, INC
	

By:	
 	

/s/ John H. Turner, Jr.

	
 	

By:	
 	

/s/ Ric Fulop

	Name:	 	John H. Turner, Jr.

	 	Name:	 	Ric Fulop

	Title:	 	Associate Director Technology Licensing Office

	 	Title:	 	President

	

MASSACHUSETTS INSTITUTE OF TECHNOLOGY	
 	

 	
 	

 
	

By:	
 	

/s/ J. David Lister

	
 	

 	
 	

 
	Name:	 	J. David Lister, Ph.D.

	 	 	 	 
	Title:	 	Vice President for Research

	 	 	 	 

15

 

APPENDIX A

List of Patent Applications, Patents and Invention Disclosure for MIT Case 9264  

	I.
	United States Patents and Applications

MIT
Case 8700, USA Patent Application Serial No. 60/242124, Filed October 20, 2000, Entitled "Microstructural Modeling Of Lithium Battery Electrodes". 

MIT
Case 9101, USA Patent Application Serial No. APPL. FILED, Filed July 27, 2001, Entitled "Self-organizing Structures And Associated Methods".  

	II.
	International (non-U.S.) Patents and Applications

	III.
	Invention Disclosure  

M.I.T.
Case No. 9541, "Conductive Lithium Storage Electrode and Method of Making Same", by Yet-Ming Chiang, Sung-Yoon Chung and Jason T. Bloking 

16

 

APPENDIX B

List of Countries (excluding United States) for which

PATENT RIGHTS Applications Will Be Filed, Prosecuted and Maintained  

17

 
EXHIBIT A  

 CONFLICT AVOIDANCE STATEMENT  

Name:
Yet-Ming Chiang

Dept. or Lab.: Materials Science and Engineering

Company: A123 Systems, Inc.

Address: One Memorial Drive, 12th Floor 

Licensed
Technology: M.I.T. Case No. 8700, "Design And Manufacturing Process For Batteries", by Yet-Ming Chiang and Benjamin Hellweg; M.I.T. Case No. 9101,
"Self-assembled Electrochemical And Bipolar Electronic Devices", by Yet-Ming Chiang and W. Douglas Moorehead and M.I.T. Case No. 9541, Conductive Lithium Storage
Electrode and Method of Making Same" by Yet-Ming Chiang, Sung-Yoon Chung and Jason T. Bloking 

Because
of the M.I.T. license granted to the above company and my equity* position and continuing relationship with this company, I acknowledge the
potential for a possible conflict of interest between the performance of research at M.I.T. and my contractual or other obligations to this company. Therefore, I will not: 

	1)
	use
students at M.I.T. for research and development projects for the company;

	2)
	restrict
or delay access to information from my M.I.T. research;

	3)
	take
direct or indirect research support from the company in order to support my activities at M.I.T.; or

	4)
	employ
students at the company, except in accordance with Section 4.5.2, "Faculty and Students," in the Policies and Procedures Guide. 

In
addition, in order to avoid the appearance of a conflict, I will attempt to differentiate clearly between the intellectual directions of my M.I.T. research and my contributions to the company. To
that end, I will expressly inform my department head/laboratory director annually of the general nature of my activities on behalf of the company. 

							
	 	 	 	 	Signed:	 	 
	 	 	 	 	 	 	

 
	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	

 
	Approved by:	 	 	 	 	 	 
	 	 	

 	 	 	 	 
	Name (print):	 	 	 	 	 	 
	 	 	

 	 	 	 	 
	(Dept. Head or Lab Dir)

	 	 	 	 

	*
	"Equity"
includes stock, options, warrants or other financial instruments convertible into stock, which are directly or indirectly controlled by the inventor. 

18

 
EXHIBIT B  

 INVENTOR/AUTHOR ACKNOWLEDGMENT

OF NO EQUITY DISTRIBUTION
  Form Version 8/22/01  

        In
partial reliance on the undersigned's execution of this Acknowledgment, M.I.T. has entered into the license agreement to which this Acknowledgment is attached (the "LICENSE") in which
COMPANY received certain licenses to the technology listed below, on some or all of which the undersigned is a listed inventor or author. The undersigned, independently of the LICENSE, has received or
will soon acquire equity in A123 Systems, Inc. ("COMPANY"), and, in accordance with M.I.T.'s licensing policies contained in M.I.T.'s Guide to the Ownership,
Distribution and Commercial Development of M.I.T. Technology, as that policy may be amended from time to time (specifically §4.2.5 as of this Form Version date),
the undersigned, on his/her own behalf and on behalf of his/her heirs and assigns, acknowledges and agrees that he/she has no right to receive any share of equity income received by M.I.T. in
consideration for the LICENSE. 

        Technology
Licensed as of the EFFECTIVE DATE of the LICENSE: 

        M.I.T.
Case No. 8700, "Design And Manufacturing Process For Batteries", by Yet-ming Chiang And Benjamin Hellweg; 

        M.I.T.
Case No. 9101, "Self-assembled Electrochemical And Bipolar Electronic Devices", by Yet-Ming Chiang and W. Douglas Moorehead 

        M.I.T.
Case No.9541, Conductive Lithium Storage Electrode and Method of Making Same" by Yet-Ming Chiang, Sung-Yoon Chung and Jason T. Bloking 

							
	Witness:	 	 	 	Signed:	 	 
	 	 	

 	 	 	 	

 
	 	 	 	 	Print Name: Yet-Ming Chiang
	 	 	 	 	Date:	 	 
	 	 	 	 	 	 	

 

19

 
 FIRST AMENDMENT  

        This First Amendment is made as of the date set forth above the signatures of the parties below, by and between the Massachusetts
Institute of Technology ("M.I.T."), a Massachusetts corporation, with a principal office at 77 Massachusetts Avenue, Cambridge, MA 02139-4307 and AI23 Systems, Inc. ("COMPANY"), a
Massachusetts corporation, with a principal place of business at 1 Memorial Drive, 12th Floor, Cambridge, MA 02421-1313. 

        WHEREAS,
on December 4, 2001, M.I.T. and COMPANY executed an Exclusive Patent License Agreement ("LICENSE AGREEMENT") relating to: M.I.T. Case
No. 8700, "Design And Manufacturing Process For Batteries", by Yet-Ming Chiang and Benjamin Hellweg; M.I.T. Case
No. 9101, "Self-assembled Electrochemical And Bipolar Electronic Devices", by Yet-Ming Chiang and W. Douglas Moorehead and  M.I.T. Case No. 9541, "Conductive Lithium
Storage Electrode and Method of Making Same" by Yet-Ming Chiang, Sung-Yoon
Chung and Jason T. Bloking (collectively the "PATENT RIGHTS"); and 

        WHEREAS,
M.I.T. and COMPANY now wish to modify, without changing the original intent of, the LICENSE AGREEMENT; 

        NOW,
THEREFORE, in consideration of the promises and mutual covenants contained herein, and for other good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereby agree as follows: 

        1.     The
phrase "excluding running royalties on NET SALES of SUBLICENCEES" shall be stricken from Section 4.1(d) of the LICENSE AGREEMENT. Therefore,
Section 4.1(d) shall now read as follows: 

        (d)   Sharing of SUBLICENSE INCOME.    COMPANY shall pay M.I.T. a total of
[**] percent ([**]%) of all SUBLICENSE INCOME received by COMPANY or AFFILIATES. Such amount shall be payable for each REPORTING PERIOD and shall
be due to M.I.T. within [**] days of the end of each REPORTING PERIOD. 

        2.     The
remaining terms and conditions of the LICENSEE AGREEMENT remain in effect. 

        IN
WITNESS WHEREOF, the parties have caused this First Amendment to be executed under seal by their duly authorized representatives. 

The Effective Date of this First Amendment is February 1, 2003.  

							
	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	A123 SYSTEMS, INC
	

By:	
 	

/s/ John H. Turner, Jr.

	
 	

By:	
 	

/s/ Bart Riley

	Name:	 	John H. Turner, Jr.

	 	Name:	 	Bart Riley

	Title:	 	Associate Director,

Technology Licensing Office

	 	Title:	 	Vice President, Research & Development

20

 
 
 

SECOND AMENDMENT    
    

        This Second Amendment is entered into this 25th day of July, 2008 (the "Effective Date") and amends the Exclusive Patent License
Agreement dated December 4, 2001 (the "2001 License Agreement") by and between the Massachusetts Institute of Technology, a corporation duly organized and existing under the laws of the
Commonwealth of Massachusetts and having its principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts 02139, U.S.A. ("M.I.T."), and A123 Systems, Inc., a Delaware corporation
having its principal office at 321 Arsenal Street, Watertown, MA 02472 ("COMPANY"). 

        WHEREAS,
M.I.T. and COMPANY wish to amend the 2001 License Agreement in order to redefine the royalty terms; 

        NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree to amend the 2001 License Agreement as follows: 

1.     Establish a new definition as follows and add as a new Section 1.13:  

1.13
"ROYALTY BASE" shall mean the total manufacturing cost, as determined by Generally Accepted Accounting Principles (GAAP), of all battery cathode powder material produced or acquired by COMPANY
and/or AFFILIATES where such battery cathode powder material is used in a battery electrode that is a LICENSED PRODUCT. 

2.     The present Section 4.1(c) shall be deleted in its entirety and replaced with the following new Section 4.1(c):

(c)    Running Royalties.    (i) Commencing as of the Effective Date, for any LICENSED PRODUCTS that include battery cathode powder
material produced or acquired by COMPANY and/or AFFILIATES, COMPANY shall pay to M.I.T. a running royalty of [**] percent ([**]%) of the ROYALTY BASE.
No other running royalties shall be due MIT with respect to such LICENSED PRODUCTS. Running royalties shall be payable for each REPORTING PERIOD and shall be due to M.I.T. within
[**] days of the end of each REPORTING PERIOD. During each such REPORTING PERIOD, COMPANY shall have the right to credit against Running Royalties due to M.I.T.
[**] percent ([**]%) of any other royalty COMPANY is required to pay for the same battery cathode powder material to (i) M.I.T. pursuant to
another license agreement and/or (ii) a third party; provided that under no circumstance shall the royalty due to M.I.T. under this Section 4.1(c) be less that
[**] percent ([**]%) of the ROYALTY BASE. 

(ii)    Should
the COMPANY and its AFFILIATES have NET SALES of LICENSED PRODUCTS that do not contain battery cathode powder material produced or acquired by COMPANY and/or AFFILIATES and
used in a battery electrode and for which the ROYALTY BASE is therefore not applicable, then the COMPANY and M.I.T. shall meet in good faith to revise and expand the definition of the ROYALTY BASE and
the terms of this Section 4.1(c) to include such LICENSED PRODUCTS under mutually agreeable terms, provided that any running royalty applicable to such LICENSED
PRODUCTS shall not exceed [**] percent ([**]%) of NET SALES. 

21

 

3.     The present Section 5.2 shall be deleted and replaced with the following new Section 5.2:

        5.2   Content of Reports and Payments.    Each report delivered by COMPANY to M.I.T. shall contain at least the
following information for the immediately preceding REPORTING PERIOD, only to the extent that such information may be applicable to such REPORTING PERIOD: 

        (i)    the
number of LICENSED PRODUCTS sold, leased or distributed by COMPANY and its AFFILIATES to independent third parties in each country, and, if applicable, the number of
LICENSED PRODUCTS used by COMPANY and its AFFILIATES in the provision of services in each country; 

        (ii)   a
description of LICENSED PROCESSES performed by COMPANY and its AFFILIATES in each country as may be pertinent to a royalty accounting hereunder; 

        (iii)  calculation
of the ROYALTY BASE for the applicable REPORTING PERIOD; 

        (iv)  calculation
of NET SALES for the applicable REPORTING PERIOD in each country, including a listing of applicable deductions; 

        (v)   total
royalty payable on the ROYALTY BASE in U.S. dollars, together with the exchange rates used for conversion; 

        (vi)  the
amount of SUBLICENSE INCOME received by COMPANY and AFFILIATES from each SUBLICENSEE and the amount due to M.I.T. from such SUBLICENSE INCOME, including an itemized
breakdown of the sources of income comprising the SUBLICENSE INCOME; and 

        (vii) the
number of sublicenses entered into for the PATENT RIGHTS. 

        If
no amounts are due to M.I.T. for any REPORTING PERIOD, the report shall so state. 

        Such
report shall only include the information set forth in subparagraphs (i), (ii) and (iv) above if the running royalties are calculated in accordance with
Section 4.1 (c) (ii) above. 

4.    COMPANY'S notice address in the present Section 14.1 shall be deleted in its entirety and replaced with the following: 

A123
Systems, Inc. 321 Arsenal Street, Watertown, MA 02472 Attention: General Counsel

Tel: (617) 778- 5700 

5. On or before [**], COMPANY shall make a [**] payment of [**] Dollars
($[**]) to M.I.T. in consideration of redefining the royalty terms under this Second Amendment. 

6.    The remaining terms and conditions of the 2001 License Agreement remain in effect.

22

 

IN
WITNESS WHEREOF, the parties have duly executed this Amendment the day and year set forth below. 

							
	MASSACHUSETTS INSTITUTE OF TECHNOLOGY	 	A123 SYSTEMS, INC
	

By	
 	

/s/ John H. Turner, Jr.

	
 	

By	
 	

/s/ Michael Rubino

	Name	 	John H. Turner, Jr.

	 	Name	 	Michael Rubino

	Title	 	Associate Director

Technology Licensing Office

	 	Title	 	CFO

	Date	 	July 28, 2008

	 	Date	 	July 25, 2008

23

QuickLinks

Exhibit 10.28

SECOND AMENDMENTQuickLinks
 -- Click here to rapidly navigate through this document
 

 
 

  Exhibit 10.29    
    

Confidential
Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions. 

			
	 USABC
	 	NUMBER:                06-2032
	 UNITED STATES ADVANCED BATTERY CONSORTIUM
	 	

DATE OF ORDER:        November 27, 2006
	 PURCHASE ORDER
	 	 

 

					
	 VENDOR:

Attn: [**]

N/A

A123 Systems

A123 Systems

Arsenal on The Charles

One Kingsbury Avenue

Watertown, MA 02472

USA

Tel: 617-778-5712

Fax: 617-778-5149
	 	PROJECT: DE-FC26-05NT42403

DELIVERY: October 19, 2009

PAYMENT: Net 30th Prox

Delivery:

Type & Place:

    FOB Destination

Payment for Transportation:

    Prepaid

Routing:

    Buyer's traffic	 	 SHIP TO:

[**]

DaimlerChrysler,

Hybrid Development Ctr

1960 Research Drive, Bldg C

Troy, MI 48083

Tel: 248-733-5118

 

										
	QTY

 
	 	DESCRIPTION OF SUPPLIES OR SERVICES 	 	UNIT PRICE 	 	TOTAL PRICE 	 
	1	 	This program involves a [**] year development of A123 [**] technology towards a [**] HEV application with the focus on closing the critical technology gaps, primarily in the area of [**], in order to meet the USABC
requirements.	 	$	15,000,000.00	 	$	15,000,000.00	 
	 	 	 	 	 	 	 	 	 
	 	 	Gross purchase order:	 	 	 	 	$	15,000,000.00	 
	 	 	Less supplier cost share @50%:	 	 	 	 	$	(7,500,000.00	)
	 	 	 	 	 	 	 	 	 
	 	 	 Net purchase not to exceed:	 	 	 	 	 $	7,500,000.00	 
	 	 	 	 	 	 	 	 	 
	

 	
 	

The USABC terms and conditions contained in this purchase order are the only terms and conditions applicable to this order. Any additional or different terms and conditions of seller referenced in any attachments to this purchase order, or any other
documentation, are rejected by USABC and are deleted in their entirety.	
 	
 	

 	
 	
 	

 	
 

 

					
	REQUESTOR:

    [**]

    DaimlerChrysler

    DaimlerChrysler,

    Hybrid Development Ctr.

    1960 Research Drive, Bldg C

    Troy, MI 48083

    USA

    Tel: 248-733-5118	 	INVOICE TO:

United States Advanced Battery Consortium

c/o Bucciero and Associates

1050 Wilshire Ste. 115

Troy, MI 48084	 	APPROVED:

    November 27, 2006

1

 

			
	USABC	 	NUMBER:                06-2032
	

PURCHASE ORDER Terms and Conditions	
 	

 

1.    OFFER,
ACCEPTANCE AND MODIFICATION—This order is an offer to Seller by Buyer to enter into the agreement it describes and it shall be the complete and exclusive statement
of such agreement. Seller shall accept the offer in writing or by beginning work hereunder. Modifications proposed by Seller are not part of the agreement in the absence of Buyer's written acceptance. 

2.    CHANGES—Buyer
at any time by written order may change the work of this order, including the specifications, statement of work, number and design of prototypes and delivery
dates. If any such change affects cost or timing, Buyer shall adjust price and delivery schedules equitably. Seller shall not make any change in the work of this order without the written approval of
Buyer. 

3.    SUBCONTRACTING—Seller
shall not subcontract any of its substantive obligations under this order without the prior consent of Buyer. In each subcontract of work hereunder,
Seller shall obtain from the subcontractor the same obligations and rights and licenses for Buyer and Buyer's Partners and Partner Associated Companies as are provided by Seller under
Section 9. A Partner Associated Company is any entity or division of a Partner present or future (except those that manufacture batteries), in which one of Buyer's Partner's owns fifty percent
or more of its voting stock or equity. 

4.    TITLE
AND BAILED PROPERTY—(a) The documents and articles produced or acquired and required to be delivered by Seller under this order shall become the property of Buyer
immediately upon production or acquisition. (b) Unless otherwise specified, Seller bears all responsibility for loss and damage to all documents and articles owned by Buyer and possessed by
Seller, including responsibility for loss and damage which occur despite Seller's exercise of reasonable care, but excluding normal wear and tear. Seller shall (1) properly house and maintain
such documents and articles on Seller's premises, (2) mark them "Property of USABC," (3) refrain from commingling them with the property of Seller or with that of a third party, and
(4) maintain them as personal property. Buyer shall have the right to enter Seller's premises at reasonable time to inspect the documents and articles and pertinent records. Upon completion of
the work of this order, Seller shall advise Buyer of those documents and articles produced or acquired hereunder which remain in Seller's possession. (c) At Buyer's request Seller immediately
shall deliver the documents and articles to Buyer or a carrier selected by Buyer, at Buyer's option F.O.B. carrier Seller's facility or F.O.B. Buyer's facility freight collect, properly packed and
marked in accordance with the requirements of the carrier and Buyer. In the event that Buyer requests scrapping of the documents or articles, Seller shall destroy the specified documents and articles
or mutilate them to the point of usefulness only as raw materials. Seller may sell the materials resulting from such mutilation only to another who agrees to use them only as raw materials. Seller may
delegate to a responsible third party its duties regarding the destruction or mutilation of such documents and articles, but delegation does not relieve Seller from responsibility for such duties and
Seller must monitor the performance of the third party. 

5.    BLANKET
ORDER RELEASES—If this purchase order specifies that the services to be performed shall be designated by release, Seller shall perform services only as authorized
in releases issued to Seller by Buyer. Any specific requirements concerning scheduled milestones, delivery dates or progress reporting must be met by Seller prior to payment by Buyer, including
progress payments. 

6.    INVOICES
AND PAYMENT—(a) If applicable to Seller, each Invoice shall contain the following assurance: "Seller represents that it has complied with the Fair labor Standards
Act of 1938, as amended, in producing the supplies or performing the services covered by this invoice." (b) If this order specifies prices on an other-than-fixed price
basis, Buyer's payment obligation shall be calculated only from the direct labor and direct materials expended by Seller on the work hereof at rates specified in this order. Such rates shall be deemed
to include adequate allowances for all other costs and charges. Work shall be at straight-time rates unless Buyer approves higher rates in writing in advance. 

2

 

For
these purposes, direct labor consists of actual hours spent pursuant to this order by qualified persons whose classifications are listed in this order and who are not otherwise compensated for
such hours, and direct materials are those items that become part of the supplies delivered to Buyer. (c) Each invoice of an other-than-fixed price order shall specify
the amount of direct labor for each rate, the amount of direct materials, and other appropriate data requested by Buyer. (d) Seller shall establish an accounting system that enables ready
identification of the foregoing data. Buyer may audit Seller's records at any time prior to two years after final payment under an other-than-fixed price order to verify
Buyer's payment obligation to Seller. Seller shall provide written notice to Buyer when work performed reaches eighty percent of the maximum price, if any, specified in this purchase order.
(e) Before payment of final invoice by Buyer, Seller, unless otherwise directed by Buyer, shall provide the items necessary for contract closeout, including, but not limited to a final
technical report, Property Certification, Patent Certification, Summary Settlement Statement, and Subcontractor's Final Release and Assignment and Certification Respecting Refunds, Rebates, Credits
and Other Amounts. 

7.    WARRANTY—Seller
expressly warrants that all goods or services covered by this order will conform to the specifications furnished to or by Buyer, and will be merchantable,
of good material and workmanship and free from defect. In addition, Seller acknowledges that Seller knows of Buyer's intended use or expressly warrants that all goods covered by this order which have
been selected, designed, manufactured, or assembled by Seller, based upon Buyer's stated use, will be fit and sufficient for the particular purposes intended by Buyer. This provision is not applicable
for research and development work. 

8.    INFRINGEMENT—Seller
at its expense shall investigate and defend or otherwise handle, or at Buyer's option provide all reasonable assistance to Buyer in Buyer's
investigation, defense or handling of, every claim that may be brought against Buyer, its Partners and Partner Associated Companies, or others that use the documents and articles on behalf of any of
them, for any alleged infringement of any present or future patent, copyright, industrial design right or other proprietary right based on Seller's work hereunder or the sale or use of the documents
or articles (1) alone, (2) in combination by reason of their content, design or structure, or (3) in combination in accordance with Seller's recommendations. Seller's obligations
shall apply even though Buyer furnishes all or any portion of the design and specifies all or any portion of the processing. Seller shall pay all expenses and damages that Buyer, its partners or
Partner Associated Companies and others using the documents or articles on behalf of Buyer may sustain by reason of each such claim. 

9.    INFORMATION
DATA—(a) Seller shall furnish to Buyer or another party designated by Buyer, without restrictions of use or disclosure, all information and data developed in
the performance of work and required to be delivered hereunder. (b)All designs, inventions, and improvements which Seller makes in the course of Seller's activities hereunder and any patents and/or
copyrights received by Seller thereon shall be the property of Seller provided that Seller agrees to contribute at least fifty percent (50%) of the total cost of the work hereunder; otherwise all such
designs, inventions and improvements which Seller makes, solely or jointly with Buyer, in the course of Seller's activities hereunder and any patents or copyrights received by Seller, solely or
jointly, thereon shall be the property of Buyer and, in such case, Seller shall execute or have executed any papers and provide assistance as may be necessary to perfect ownership thereof in Buyer. In
addition, if Seller fails to contribute at least fifty percent (50%) of the total cost of the work hereunder, (1) at Buyer's request Seller shall furnish to Buyer, on reasonable terms and
conditions, all other information and data of Seller which Buyer deems necessary to understand and apply the information and data of the above Section 9(a), and (2) Seller hereby grants
to Buyer, its Partners and Partner Associated Companies designated by Buyer, a nonexclusive, paid-up, worldwide, irrevocable license to make, have made, use, have used, sell, offer to sell
and import under, and to copy, modify, use, distribute, and prepare derivative works under, any intellectual property rights owned or controlled by Seller which cover any application of the technology
embodied in the information or data Seller acquires or develops in the 

3

 

course
of Seller's activities hereunder, (c) In the event that Seller is unwilling or unable to manufacture the product substantially developed in the course of Seller's activities hereunder,
at Buyer's request, Seller shall negotiate in good faith with manufacturers that are designated by the Buyer in collaboration with the Seller for issuance of one or more royalty-bearing licenses under
Seller's intellectual property rights for the purpose of commercialization in all automotive applications of such product. Such license shall be granted by the Seller upon terms that are reasonable
under the circumstances. (d) For a period of five (5) years from the date hereof, Seller shall use reasonable care to prevent disclosing to others and shall not use on behalf of others
(1) the technical information and data furnished by Buyer or developed by Seller in the performance of work hereunder, and (2) information relating to any portion of Buyer's business
that Seller may acquire in the course of Seller's activities hereunder. This obligation shall not apply to information that is or becomes publicly known through no fault of Seller. (e) Seller
agrees not to assert any claim other than a claim (subject to any applicable license under Sections (b) and/or 9(c) above) for patent infringement against Buyer, its Partners and Partner
Associated Companies with respect to any technical information which Seller shall have disclosed to or may hereafter disclose to Buyer in connection with the goods or services covered by this purchase
order. 

10.    ENGINEERING
DRAWINGS—Any engineering drawings Seller is required to prepare and furnish to Buyer shall conform with standards to be provided by Buyer. 

11.    INDEMNITY—Seller
shall hold harmless Buyer, its Partners and Partner Associated Companies, and the directors and employees of all of them, from all claims, liabilities,
losses, damages or other expenses, including legal fees, which arise from Seller's performance of work in connection with this order or use of Buyer's property on or off Buyer's premises and which are
for actual or alleged (a) injury to any person, (b) damage to any property, (c) economic loss, or (d) violation of any
law, ordinance, or regulation, except when (a) injury to any person, (b) damage to any property, (c) economic loss, or (d) violation of any law, ordinance, or regulation,
except when such expenses are attributable to the sole negligence or sole and willful misconduct of Buyer, its Partners and Partner Associated Companies, or the directors and employees of any of them. 

12.    TERMINATION
AT OPTION OF BUYER—(a) Buyer may terminate its purchase obligations hereunder, in whole or in part, at any time, by a written notice of termination to Seller.
Buyer shall have such right of termination notwithstanding the existence of an excusable delay of Section 14. (b) Upon receipt of the notice of termination, Seller unless otherwise
directed by Buyer shall (1) terminate promptly all work under this order, (2) transfer title and deliver to Buyer the finished work, the work in process and the parts and materials which
Seller produced or acquired in accordance with this purchase order and which Seller cannot use in producing goods for itself or for others, (3) settle all claims by subcontractors (if any) for
actual costs that are rendered unrecoverable by such termination, and (4) take actions reasonably necessary to protect property in Seller's possession in which Buyer has an interest.
(c) Upon termination by Buyer under this Section, Buyer's obligation to Seller shall be: (1) the purchase order price for all finished work and completed services which conform to the
requirements of the order, (2) Seller's reasonable actual cost of the work in process and parts and materials transferred to Buyer in accordance with subsection (b)(2) hereof,
(3) Seller's reasonable actual cost of settling the claims by subcontractors of subsection b)(3) hereof but not in excess of the obligation Seller would have had to the subcontractor in
the absence of termination, and (4) Seller's reasonable actual cost of carrying out its obligations of subsection (b)(4) hereof. Buyer's obligations upon termination under this Section
shall not exceed the obligation Buyer would have had to Seller in the absence of termination. (d) Within two months after the date of termination, Seller shall furnish to Buyer its termination
claim which shall consist exclusively of the items of Buyer's obligation to Seller that are listed in subsection (c) hereof. Buyer may audit Seller's records, before or after payment, to verify
amounts requested in Seller's termination claim. (e) Buyer shall have no obligation to Seller if Buyer terminates its purchase obligations of this purchase order because of default by Seller. 

4

 

13.    COMPLIANCE
WITH LAW—Seller shall comply with federal, state and local laws, rules, regulations, ordinances and executive orders applicable to Seller's performance of its
obligations under this order. Contract clauses required by the Government in such circumstances are incorporated herein by reference. 

14.    EXCUSABLE
DELAYS—Neither Buyer nor Seller shall be liable for a failure to perform that arises from causes or events beyond its reasonable control and without its fault or
negligence, including labor disputes of any kinds. Seller's delivery obligations of Section 4 are not impaired by an excusable delay of this Section. 

15.    APPLICABLE
LAW—This order shall be governed by the laws of the State of Michigan, and litigation on contractual causes arising from the order shall be brought only in a
federal District Court located in Michigan or in a court of the State of Michigan. 

16.    MOST
FAVORED CUSTOMER—If Seller and Buyer complete the work ordered hereunder and if Buyer, or its Partners or Partner Associated Companies designated by Buyer, elect to
purchase from the Seller any item substantially developed hereunder, Seller shall sell such item to Buyer, or its Partners or Partner Associated Companies at prices that are no less favorable to the
purchaser than those then currently given to any other customer for essentially a similar product in similar quantities and under essentially similar terms and conditions. If Seller later reduces the
price to other customers for essentially the similar product in similar quantities and under essentially similar terms and conditions, Seller will reduce correspondingly the price to Buyer, its
Partners and Partner Associated Companies. 

OTHER
TERMS 

17.    This
purchase order is issued subject to Department of Energy Cooperative Agreement number DE-FC26-05NT42403 ("Cooperative Agreement"). In the event of
a conflict between the terms of this purchase order and the Cooperative Agreement, the Cooperative Agreement controls. The Office of Management and Budget ("OMB") Circular A-110 applies to
Seller. If Seller is a non-profit organization (other than an educational institution), OMB Circular A-122 applies to Seller. If Seller is an educational institution, OBM
Circular A-21 applies to Seller. If the amount of this purchase order exceeds $25,000, then Seller must comply with Department of Energy regulations located at 10 CFR Part 1036. If
the amount of this purchase order exceeds $100,000, this purchase order and Seller are subject to Department of Energy regulations located at 10 CFR Part 601, regarding restrictions on
lobbying. Seller must submit to buyer a completed "Disclosure of Lobbying Activities" form, Appendix B to 10 CFR Part 601, within 15 days following the end of any calendar quarter
in which an event occurs that must be disclosed. Seller will require any subcontractor under this purchase order to comply with this provision. Seller must provide copies to Buyer of any disclosures
received from Sellers subcontractors. Seller must allow Buyer or anyone with rights through Buyer to audit Seller's records with respect to this purchase order. Seller must retain those records for
3 years following final payment under this purchase order. 

18.    The
Seller shall perform the tasks and provide deliverables on the schedule specified in the SOW contained in Appendix A and agrees to use its best efforts to meet and attempt
to exceed the technical goals of the program. 

19.    This
purchase order is governed in declining order of precedence by: 1) the terms listed on the front page of the Purchase Order and on any continuation page thereof,
2) the Intellectual Property terms of Section II of the Cooperative Agreement, 3) the terms on the back page of the Purchase Order, and 4) the Statement of Work in
Appendix A. 

20.    This
is a cost sharing Purchase Order. USABC shall reimburse seller no more than fifty (50%) percent of the allowable costs for performing the work under this Purchase Order. The
remaining percent of the allowable costs shall constitute the Sellers share, for which it will not be reimbursed by 

5

 

USABC.
Each month the Seller shall submit to USABC an invoice reflecting the total allowable costs incurred by the Seller during the previous month, less the seller's cost share of such costs. USABC
shall pay the seller within (60) days of receipt of each invoice, subject to seller providing a report outlining the work accomplished in sufficient detail to justify the funds seller expended
during the month. Along with the monthly invoice, seller shall supply USABC with an estimate of the next month's cost. Seller shall advise USABC immediately when the percent of work accomplished is
inconsistent with the agreed upon funding expenditure schedule such that insufficient funds remain to complete the program as planned within the total costs outlined herein. This Purchase Order will
enter into effect only after review and approval by DOE of Seller's financial submissions. Paragraph 6(b) on the back page of the Purchase Order is deleted. This Purchase Order is issued on an
allowable cost basis, without fee or profit. Allowable costs shall be identified in accordance with Generally Accepted Accounting Principles, and are defined in the Federal Acquisition Regulation (FAR
Part 31.2; 48 CFR 31.2) and 10 CFR 600.127. Invoices will be submitted on Standard Form 270, Request for Advance or Reimbursement, with content acceptable to DOE. A Final Cost report
will be submitted within 90 days of completion of the work, in the same format as the approved budget for the program, comparing the amounts allocated in the award budget to the amounts
expended for each budget element, and identifying any unobligated balance which should be refunded to USABC and DOE. Paragraph 6(d) on the back page of the Purchase Order is modified to extend
USABC audit rights to any period during which the US Government may audit the USABC expenditures on this Purchase Order (ref. 10 CFR 600.25 and 600.126(d)). Seller is expected to bring the work to
conclusion within the funding limits of the approved financial submissions. There is no commitment by DOE or USABC to provide additional funds and Seller is not authorized to incur costs under this
Purchase Order beyond the amounts on the face hereof. Failure of the DOE to provide funding for this Purchase Order, or cancellation by DOE of such funding, may result in termination at the option of
the USABC under the provisions of Paragraph 12. 

21.    Publication
by Seller of information developed under this Purchase Order will be governed by Article 10 and the patent and Protected Information provisions of the Cooperative
Agreement. Any publication which is approved by the Buyer will contain the acknowledgement and disclaimer statements set forth in the aforementioned Article 10. 

22.    During
the term of this Purchase Order, Seller agrees to secure pre-publication approval from USABC of proposed publications and USABC agrees to give Seller a copy of
proposed publications at least thirty (30) days prior to publication. 

Any
news release, public announcement, advertisement, or publicity released by either party concerning this Purchase Order and work done pursuant to this Purchase Order will give full consideration
and
credit to the roles and contributions of both parties and DOE and further shall be subject to (a) all restrictions regarding publicity imposed by DOE and (b) prior mutual approval by
both parties hereto. Any public statements, press releases, RFP, or other documents describing this program funded in part with Federal money must clearly state (1) the percentage of the total
cost of the program funded by the US Government, (2) the dollar amount of Federal contribution being described, and (3) the percentage and dollar amount of the total costs of the program
that will be funded by non-Federal sources. 

Seller
shall not, for a period of sixty (60) days from the effective date of this Purchase Order, without first obtaining the written consent of USABC, in any manner advertise or publish the
fact that the parties have entered into this Purchase Order or that Seller has contracted to perform research and development work for USABC as described in the Statement of Work. Furthermore, Seller
shall not use any trademarks or trade names of USABC in Sellers advertising or promotional materials except as required by federal, state and local laws, executive orders, rules, regulations,
ordinances, governmental authorities and agencies. 

6

 

23.    Seller
is advised that the conditions under which the DOE has agreed to fund this USABC program include substantial involvement by the DOE, to include technical direction for the
program and program elements. Seller agrees that USABC and DOE may make visits at reasonable times and frequencies to review program accomplishments and management control systems, and provide
technical assistance. 

24.    Paragraph 13
is amended to refer specifically to DOE regulations regarding Nondiscrimination in Federally Assisted Programs (ref. 10 CFR 1040). Seller is hereby notified of the
following provision of Public Law 103-316. The Energy and Water Development Appropriations Act, FY 1995): 

"It
is the sense of Congress that to the greatest extent practicable, all equipment and products purchased with funds made available by PL 103-316 which are provided under this award
should be American-made." 

25.    Title
to nonexpendable personal property acquired shall vest in Seller subject to USABC approval and subject to DOE rights to transfer title in accordance with the requirements of OMB
Circular A-110, or to abandon such property in place. None of the funds contributed by the parties pursuant to this Purchase Order may be expended for buying real estate. 

26.    Seller
agrees to perform any and all testing of batteries and ultracapacitors and the resultant reporting in accordance with the structure and standards outlined in the USABC Battery
and Ultracapacitor Test Procedures Manuals. 

END
OF TERMS 

7

 

 

					
	 USABC
	 	NUMBER:	 	 08-2045
	
	 	Show this number on all shipping and billing documents
	 UNITED STATES ADVANCED BATTERY CONSORTIUM
	 	 DATE OF ORDER:	 	 March 6, 2008
	 PURCHASE ORDER [COPY]
	 	 	 	 

 

					
	 VENDOR:

Attn: [**]

N/A

A123 Systems

A123 Systems

Arsenal on The Charles

One Kingsbury Avenue

Watertown, MA 02472

USA

Tel: 617-778-5712

Fax: 17-778-5749

(Seller) will sell and deliver the supplies and services specified herein in accordance with the terms and conditions hereof.
	 	PROJECT: DE-FC26-05NT42403

DELIVERY: March 03, 2011 PAYMENT: Net 30th Prox

DELIVERY:

Type & Place:

    FOB Destination

Payment for Transportation:

    Collect

Routing:

    Seller's traffic	 	 SHIP TO:

  

[**]

Chrysler

1960 Technology Dr

Bldg A

Cube 3025

Troy, MI 48083

USA

Tel: 248-733-5409

 

							
	QTY

 
	 	DESCRIPTION OF SUPPLIES OR SERVICES 	 	UNIT PRICE 	 	TOTAL PRICE 
	1	 	A123 proposes to [**] to meet the [**] requirement and develop a prismatic cell to meet the[**] requirement over the next [**] years. Initially the development program will focus on [**]); with other [**] improvements
accounting for another [**] improvement of the [**]. This activity will be mostly for the [**] design. The key program objectives for this design are: (1) Improve [**], (2) Reduce [**], (3) Validate [**], and (4) retain or improve
[**].	 	$[**]	 	$[**]
	1	 	In [**] year of the [**] activity, work will begin on the [**] design for the [**] requirement. The lessons learned from the earlier [**] work [**] and a better understanding of [**] will be used to develop other [**]
materials [**] for use	 	$[**]	 	$[**]
	 	 	continued...	 	 	 	 
	 	 	The USABC terms and conditions contained in this purchase order are the only terms and conditions applicable to this order. Any additional or different terms and conditions of seller referenced in any attachments to this
purchase order, or any other documentation, are rejected by USABC and are deleted in their entirety.	 	 	 	 

 

					
	 REQUESTOR:

[**]

Chrysler

1960 Technology Dr

Bldg A

Cube 3025

Troy, MI 48083

USA

Tel: 248-733-5409
	 	INVOICE TO:

United States Advanced Battery Consortium

c/o Bucciero and Associates

1050 Wilshire Ste. 115

Troy, MI 48084	 	 APPROVED:

March 06, 2008

 

									
	QTY

 
	 	DESCRIPTION OF SUPPLIES OR SERVICES 	 	UNIT PRICE 	 	TOTAL PRICE 	 
	 	 	...continued	 	 	 	 	 	 
	1	 	as [**]. The key program objectives for this design are: (1) Develop [**], (2) Reduce [**], (3) Validate [**], and (4) Validate [**].	 	 	 	 	 	 
	1	 	Program Management Costs for this program	 	$[**]	 	$	[**]	 
	 	 	 	 	 	 	 	 
	 	 	Gross purchase order:	 	 	 	$	12,500,000.00	 
	 	 	Less supplier cost share @50%:	 	 	 	$	(6,250,000.00	)
	 	 	 	 	 	 	 	 
	 	 	 Net purchase not to exceed:	 	 	 	 $	6,250,000.00	 
	 	 	 	 	 	 	 	 

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1.    OFFER,
ACCEPTANCE AND MODIFICATION—This order is an offer to Seller by Buyer to enter into the agreement it describes and it shall be the complete and exclusive statement
of such agreement. Seller shall accept the offer in writing or by beginning work hereunder. Modifications proposed by Seller are not part of the agreement in the absence of Buyer's written acceptance. 

2.    CHANGES—Buyer
at any time by written order may change the work of this order, including the specifications, statement of work, number and design of prototypes and delivery
dates. If any such change affects cost or timing, Buyer shall adjust price and delivery schedules equitably. Seller shall not make any change in the work of this order without the written approval of
Buyer. 

3.    SUBCONTRACTING—Seller
shall not subcontract any of its substantive obligations under this order without the prior consent of Buyer. In each subcontract of work hereunder,
Seller shall obtain from the subcontractor the same obligations and rights and licenses for Buyer and Buyer's Partners and Partner Associated Companies as are provided by Seller under
Section 9. A Partner Associated Company is any entity or division of a Partner, present or future (except those that manufacture batteries), in which one of Buyer's Partner's owns fifty percent
or more of its voting stock or equity. 

4.    TITLE
AND BAILED PROPERTY—(a) The documents and articles produced or acquired and required to be delivered by Seller under this order shall become the property of Buyer
immediately upon production or acquisition. (b) Unless otherwise specified, Seller bears all responsibility for loss and damage to all documents and articles owned by Buyer and possessed by
Seller, including responsibility for loss and damage which occur despite Seller's exercise of reasonable care, but excluding normal wear and tear. Seller shall (1) properly house and maintain
such documents and articles on Seller's premises, (2) mark them "Property of USABC", (3) refrain from commingling them with the property of Seller or with that of a third party, and
(4) maintain them as personal property. Buyer shall have the right to enter Seller's premises at reasonable time to inspect the documents and articles and pertinent records. Upon completion of
the work of this order, Seller shall advise Buyer of those documents and articles produced or acquired hereunder which remain in Seller's possession. (c) At Buyer's request, Seller immediately
shall deliver the documents and articles to Buyer or a carrier selected by Buyer, at Buyer's option F.O.B. carrier Seller's facility or F.O.B. Buyer's facility freight collect, properly packed and
marked in accordance with the requirements of the carrier and Buyer. In the event that Buyer requests scrapping of the documents or articles, Seller shall destroy the specified documents and articles
or mutilate them to the point of usefulness only as raw materials. Seller may sell the materials resulting from such mutilation only to another who agrees to use them only as raw materials. Seller may
delegate to a responsible third party its duties regarding the destruction or mutilation of such documents and articles, but delegation does not relieve Seller from responsibility for such duties and
Seller must monitor the performance of the third party. 

5.    BLANKET
ORDER RELEASES—If this purchase order specifies that the services to be performed shall be designated by release, Seller shall perform services only as authorized
in releases issued to Seller by Buyer. Any specific requirements concerning scheduled milestones, delivery dates or progress reporting must be met by Seller prior to payment by Buyer, including
progress payments. 

6.    INVOICES
AND PAYMENT—(a) If applicable to Seller, each invoice shall contain the following assurance: Seller represents that it has complied with the Fair Labor Standards
Act of 1938, as amended, in producing the supplies or performing the services covered by this invoice." (b) If this order specifies prices on an other-than-fixed price
basis, Buyer's payment obligation shall be calculated only from the direct labor and direct materials expended by Seller on the work hereof at rates specified in this order. Such rates shall be deemed
to include adequate allowances for all other costs and charges. Work shall be at straight-time rates unless Buyer approves higher rates in writing in advance. For these purposes, direct
labor consists of actual hours spent pursuant to this order by qualified persons whose classifications are listed in this order and who are not otherwise compensated for such hours, and direct
materials are those items that become part of the supplies delivered to Buyer. 

9

 

(c) Each
invoice of an other-than-fixed price order shall specify the amount of direct labor for each rate, the amount of direct materials, and other appropriate data
requested by Buyer. (d) Seller shall establish an accounting system that enables ready identification of the foregoing data. Buyer may audit Seller's records at any time prior to two years
after final payment under an other-than-fixed price order to verify Buyer's payment obligation to Seller. Seller shall provide written notice to Buyer when work performed
reaches eighty percent of the maximum price, if any, specified in this purchase order. (e) Before payment of final invoice by Buyer, Seller, unless otherwise directed by Buyer, shall provide
the items necessary for contract closeout, including, but not limited to a final technical report, Property Certification, Patent Certification, Summary Settlement Statement, and Subcontractor's Final
Release and Assignment and Certification Respecting Refunds, Rebates, Credits and Other Amounts. 

7.    WARRANTY—Seller
expressly warrants that all goods or services covered by this order will conform to the specifications furnished to or by Buyer, and will be merchantable,
of good material and workmanship and free from defect. In addition, Seller acknowledges that Seller knows of Buyer's intended use or expressly warrants that all goods covered by this order which have
been selected, designed, manufactured, or assembled by Seller, based upon Buyer's stated use will be fit and sufficient for the particular purposes intended by Buyer. This provision is not applicable
for research and development work. 

8.    INFRINGEMENT—Seller
at its expense shall investigate and defend or otherwise handle, or at Buyer's option provide all reasonable assistance to Buyer in Buyer's
investigation, defense or handling of, every claim that may be brought against Buyer, its Partners and Partner Associated Companies, or others that use the documents and articles on behalf of any of
them, for any alleged infringement of any present or future patent, copyright, industrial design right or other proprietary right based on Seller's work hereunder or the sale or use of the documents
or articles (1) alone, (2) in combination by reason of their content, design or structure, or (3) in combination in accordance with Seller's recommendations. Seller's obligations
shall apply even though Buyer furnishes all or any portion of the design and specifies all or any portion of the processing. Seller shall pay all expenses and damages that Buyer, its Partners or
Partner Associated Companies and others using the documents or articles on behalf of Buyer may sustain by reason of each such claim. 

9.    INFORMATION
DATA—(a) Seller shall furnish to Buyer or another party designated by Buyer, without restrictions of use or disclosure, all information and data developed in
the performance of work and required to be delivered hereunder. (b) All designs, inventions, and improvements which Seller makes in the course of Seller's activities hereunder and any patents
and/or copyrights received by Seller thereon shall be the property of Seller provided that Seller agrees to contribute at least fifty percent (50%) of the total cost of the work hereunder; otherwise
all such designs, inventions and improvements which Seller makes, solely or jointly with Buyer, in the course of Seller's activities hereunder and any patents or copyrights received by Seller, solely
or jointly, thereon shall be the property of Buyer and, in such case, Seller shall execute or have executed any papers and provide assistance as maybe necessary to perfect ownership thereof in Buyer.
In addition, if Seller fails to contribute at least fifty percent (50%) of the total cost of the work hereunder, (1) at Buyer's request Seller shall furnish to Buyer, on reasonable terms and
conditions, all other information and data of Seller which Buyer deems necessary to understand and apply the information and data of the above Section 9(a), and (2) Seller hereby grants
to Buyer, its Partners and Partner Associated Companies designated by Buyer, a nonexclusive, paid-up, worldwide, irrevocable license to make, have made, use, have used, sell, offer to sell
and import under, and to copy, modify, use, distribute, and prepare derivative works under, any intellectual property rights owned or controlled by Seller which cover any application of the technology
embodied in the information or data Seller acquires or develops in the course of Seller's activities hereunder, (c) In the event that Seller is unwilling or unable to manufacture the product
substantially developed in the course of Seller's activities hereunder, at Buyer's request, Seller shall negotiate in good faith with manufacturers that are designated by the Buyer in 

10

 

collaboration
with the Seller for issuance of one or more royalty-bearing licenses under Seller's intellectual property rights for the purpose of commercialization in all automotive applications of
such product. Such license shall be granted by the Seller upon terms that are reasonable under the circumstances. (d) For a period of five (5) years from the date hereof, Seller shall
use reasonable care to prevent disclosing to others and shall not use on behalf of others (1) the technical information and data furnished by Buyer or developed by Seller in the performance of
work hereunder, and (2) information relating to any portion of Buyer's business that Seller may acquire in the course of Seller's activities hereunder. This obligation shall not apply to
information that is or becomes publicly known through no fault of Seller. (e) Seller agrees not to assert any claim other than a claim (subject to any applicable license under
Sections (b) and/or 9(c) above) for patent infringement against Buyer, its Partners and Partner Associated Companies with respect to any technical information which Seller shall have disclosed
to or may hereafter disclose to Buyer in connection with the goods or services covered by this purchase order. 

10.    ENGINEERING
DRAWINGS—Any engineering drawings Seller is required to prepare and furnish to Buyer shall conform with standards to be provided by Buyer. 

11.    INDEMNITY—Seller
shall hold harmless Buyer, its Partners and Partner Associated Companies, and the directors and employees of all of them, from all claims, liabilities,
losses, damages or other expenses, including legal fees, which arise from Seller's performance of work in connection with this order or use of Buyer's property on or off Buyer's premises and which are
for actual or alleged (a) injury to any person, (b) damage to any property, (c) economic loss, or (d) violation of any law, ordinance, or regulation, except when
(a) injury to any person, (b) damage to any property,
(c) economic loss, or (d) violation of any law, ordinance, or regulation, except when such expenses are attributable to the sole negligence or sole and willful misconduct of Buyer, its
Partners and Partner Associated Companies, or the directors and employees of any of them. 

12.    TERMINATION
AT OPTION OF BUYER—(a) Buyer may terminate its purchase obligations hereunder, in whole or in part, at any time, by a written notice of termination to Seller.
Buyer shall have such right of termination notwithstanding the existence of an excusable delay of Section 14. (b) Upon receipt of the notice of termination, Seller unless otherwise
directed by Buyer shall (1) terminate promptly all work under this order, (2) transfer title and deliver to Buyer the finished work, the work in process and the parts and materials which
Seller produced or acquired in accordance with this purchase order and which Seller cannot use in producing goods for itself or for others, (3) settle all claims by subcontractors (if any) for
actual costs that are rendered unrecoverable by such termination, and (4) take actions reasonably necessary to protect property in Seller's possession in which Buyer has an interest.
(c) Upon termination by Buyer under this Section, Buyer's obligation to Seller shall be: (1) the purchase order price for all finished work and completed services which conform to the
requirements of the order, (2) Seller's reasonable actual cost of the work in process and parts and materials transferred to Buyer in accordance with subsection (b)(2) hereof,
(3) Seller's reasonable actual cost of settling the claims by subcontractors of subsection (b)(3) hereof but not in excess of the obligation Seller would have had to the subcontractor in
the absence of termination, and (4) Seller's reasonable actual cost of carrying out its obligations of subsection (b)(4) hereof. Buyer's obligations upon termination under this Section
shall not exceed the obligation Buyer would have had to Seller in the absence of termination. (d) Within two months after the date of termination, Seller shall furnish to Buyer its termination
claim which shall consist exclusively of the items of Buyer's obligation to Seller that are listed in subsection (c) hereof. Buyer may audit Seller's records, before or after payment, to verify
amounts requested in Seller's termination claim. (e) Buyer shall have no obligation to Seller if Buyer terminates its purchase obligations of this purchase order because of default by Seller. 

13.    COMPLIANCE
WITH LAW—Seller shall comply with federal, state and local laws, rules, regulations, ordinances and executive orders applicable to Seller's performance of its
obligations under 

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this
order. Contract clauses required by the Government in such circumstances are incorporated herein by reference. 

14.    EXCUSABLE
DELAYS—Neither Buyer nor Seller shall be liable for a failure to perform that arises from causes or events beyond its reasonable control and without its fault or
negligence, including labor disputes of any kind. Seller's delivery obligations of Section 4 are not impaired by an excusable delay of this Section. 

15.    APPLICABLE
LAW—This order shall be governed by the laws of the State of Michigan, and litigation on contractual causes arising from the order shall be brought only in a
federal District Court located in Michigan or in a court of the State of Michigan. 

16.    MOST
FAVORED CUSTOMER—If Seller and Buyer complete the work ordered hereunder and if Buyer, or its Partners or Partner Associated Companies designated by Buyer, elect to
purchase from the Seller any item substantially developed hereunder, Seller shall sell such item to Buyer, or its Partners or Partner Associated Companies at prices that are no less favorable to the
purchaser than those then currently given to any other customer for essentially a similar product in similar quantities and under essentially similar terms and conditions. If Seller later reduces the
price to other customers for essentially the similar product in similar quantities and under essentially similar terms and conditions, Seller will reduce correspondingly the price to Buyer, its
Partners and Partner Associated Companies. 

OTHER
TERMS 

17.    This
purchase order is issued subject to Department of Energy Cooperative Agreement number DE-FC26-05NT42403 ("Cooperative Agreement"). In the event of
a conflict between the terms of this purchase order and the Cooperative Agreement, the Cooperative Agreement controls. The Office of Management and Budget ("OMB") Circular A-110 applies to
Seller. If Seller is a non-profit organization (other than an educational institutions), OMB Circular A-122 applies to Seller. If Seller is an educational institution, OMB
Circular A-21 applies to Seller. If the amount of this purchase order exceeds $25,000, then Seller must comply with Department of Energy regulations located at 10 CFR Part 1036. If
the amount of this purchase order exceeds $100,000, this purchase order and Seller are subject to Department of Energy regulations located at 10 CFR Part 601, regarding restrictions on
lobbying. Seller must submit to Buyer a completed "Disclosure of Lobbying Activities" form, Appendix B to 10 CFR Part 601, within 15 days following the end of any calendar quarter
in which an event occurs that must be disclosed. Seller will require any subcontractor under this purchase order to comply with this provision. Seller must provide copies to Buyer of any disclosures
received from Sellers subcontractors. Seller must allow Buyer or anyone with rights through Buyer to audit Seller's records with respect to this purchase order. Seller must retain those records for
3 years following final payment under this purchase order. 

18.    The
Seller shall perform the tasks and provide deliverables on the schedule specified in the SOW contained in Appendix A and agrees to use its best efforts to meet and attempt
to exceed the technical goals of the program. 

19.    This
purchase order is governed in declining order of precedence by: 1) the terms listed on the front page of the Purchase Order and on any continuation page thereof,
2) the Intellectual Property terms of Section II of the Cooperative Agreement, 3) the terms on the back page of the Purchase Order, and 4) the Statement of Work in
Appendix A. 

20.    This
is a cost sharing Purchase Order. Buyer shall reimburse Seller no more than fifty (50%) percent of the allowable costs for performing the work under this Purchase Order. The
remaining percent of the allowable costs shall constitute the Sellers share, for which it will not be reimbursed by Buyer. Each month the Seller shall submit to Buyer an invoice reflecting the total
allowable costs incurred by the Seller during the previous month, less the Seller's cost share of such costs. Buyer shall 

12

 

pay
the Seller within (60) days of receipt of each invoice, subject to seller providing a report outlining the work accomplished in sufficient detail to justify the funds Seller expended during
the month. Along with the monthly invoice, Seller shall supply Buyer with an estimate of the next month's cost. Seller shall advise Buyer immediately when the percent of work accomplished is
inconsistent with the agreed upon funding expenditure schedule such that insufficient funds remain to complete the program as planned within the total costs outlined herein. This Purchase Order will
enter into effect only after review and approval by DOE of Seller's financial submissions. Section 6(b) on the back page of the Purchase Order is deleted. This Purchase Order is issued on an
allowable cost basis, without fee or profit. Allowable costs shall be identified in accordance with Generally Accepted Accounting Principles, and are defined in the Federal Acquisition Regulation (FAR
Part 31.2; 48 CFR 31.2) and 10 CFR 600.127. Invoices will be submitted on Standard Form 270, Request for Advance or Reimbursement, with content acceptable to DOE. A Final Cost report
will be submitted within 90 days of completion of the work, in the same format as the approved budget for the program, comparing the amounts allocated in the award budget to the amounts
expended for each budget element, and identifying any unobligated balance which should be refunded to Buyer and DOE. Section 6(d) on the back page of the Purchase Order is modified to extend
Buyer audit rights to any period during which the US Government may audit the USABC expenditures on this Purchase Order (ref. 10 CFR 600.25 and 600.126(d)). Seller is expected to bring the work to
conclusion within the funding limits of the approved financial submissions. There is no commitment by DOE or Buyer to provide additional funds and Seller is not authorized to incur costs under this
Purchase Order beyond the amounts on the face hereof. Failure of the DOE to provide funding for this Purchase Order, or cancellation by DOE of such funding, may result in termination at the option of
the Buyer under the provisions of Section 12. 

21.    Publication
by Seller of information developed under this Purchase Order will be governed by Article 11 and the patent and Protected Information provisions of the Cooperative
Agreement. Any publication which is approved by the Buyer will contain the acknowledgement and disclaimer statements set forth in the aforementioned Article 11. 

22.    During
the term of this Purchase Order, Seller agrees to secure pre-publication approval from Buyer of proposed publications and Buyer agrees to give Seller a copy of
proposed publications at least thirty (30) days prior to publication. 

Any
news release, public announcement, advertisement, or publicity released by either party concerning this Purchase Order and work done pursuant to this Purchase Order will give full consideration
and credit to the roles and contributions of both parties and DOE and further shall be subject to (a) all restrictions regarding publicity imposed by DOE and (b) prior mutual approval by
both parties hereto. 

Seller
shall not, for a period of sixty (60) days from the effective date of this Purchase Order, without first obtaining the written consent of Buyer, in any manner advertise or publish the
fact that the parties have entered into this Purchase Order or that Seller has contracted to perform research and development work for Buyer as described in the Statement of Work. Furthermore, Seller
shall not use any trademarks or trade names of Buyer in Seller's advertising or promotional materials except as required by federal, state and local laws, executive orders, rules, regulations,
ordinances, governmental authorities and agencies. 

23.    Seller
is advised that the conditions under which the DOE has agreed to fund this Buyer program include substantial involvement by the DOE, to include technical direction for the
program and program elements. Seller agrees that Buyer and DOE may make visits at reasonable times and frequencies to review program accomplishments and management control systems, and provide
technical assistance. 

13

 

24.    Paragraph 13
is amended to refer specifically to DOE regulations regarding Nondiscrimination in Federally Assisted Programs (ref. 10 CFR 1040). Seller is hereby notified of the
following provision of Public Law 103-316. The Energy and Water Development Appropriations Act, FY 1995): 

"It
is the sense of Congress that to the greatest extent practicable, all equipment and products purchased with funds made available by PL 103-316 which are provided under this award
should be American made." 

25.    Title
to nonexpendable personal property acquired shall vest in Seller subject to Buyer approval and subject to DOE rights to transfer title in accordance with the requirements of
10CFR 600.324, or to abandon such property in place. None of the funds contributed by the parties pursuant to this Purchase Order may be expended for buying real estate. 

26.    Seller
agrees to perform any and all testing of batteries and ultracapacitors and the resultant reporting in accordance with the structure and standards outlined in the USABC Battery
and Ultracapacitor Test Procedures Manuals and in the USABC Cost Model Manual. 

END
OF TERMS 

14

QuickLinks

Exhibit 10.29

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