Document:

Exhibit 10.2

 

A123 SYSTEMS, INC.

 

Restricted Stock Unit Agreement

 

1.                                       Grant of RSUs.

 

This Agreement evidences the
grant by A123 Systems, Inc., a Delaware corporation (the “Company”), on
           ,
20      (the “Grant
Date”) to  [                  ]
(the “Participant”) of restricted stock units (“RSUs”) providing the Participant with
the right to receive [      ] shares of common
stock (“Common Stock”), $.001 par value, of the Company (the “Shares”).  The grant is subject to the terms and
conditions set forth in this Agreement and in the Company’s 2009 Stock
Incentive Plan, as amended (the “Plan”).

 

2.                                       Vesting and Forfeiture.

 

(a)                                  While the
Participant remains an employee or officer of, or consultant or advisor to, the
Company or any parent or subsidiary of the Company as defined in Section 424(e) or
(f) of the Code (an “Eligible Participant”), except as provided in Section 2(c) and
2(d) below, the RSUs will vest in accordance with the following vesting
schedule:  25% of the original number of
Shares shall vest on the first anniversary of the Grant Date and an additional
6.25% of the original number of Shares shall vest at the end of each successive  three-month  period
following the first anniversary of the Grant Date until the fourth anniversary
of the Grant Date, at which time all remaining unvested Shares shall vest.  The number of Shares that vest on any date
shall be rounded down to the nearest whole number of Shares.

 

(b)                                 If the Participant
ceases to be an Eligible Participant for any reason or no reason, then the
Participant will immediately and automatically forfeit all rights to any of the
RSUs that otherwise would vest after the date the Participant’s employment or
other service providing relationship ends.

 

(c)                                  Immediately before a
Change in Control (as defined below), 50% of the number of unvested RSUs shall
vest and the remaining unvested RSUs will continue to vest in accordance with
the vesting schedule set forth in Section 2(a) (subject to Section 2(d)),
except that the number of Shares vesting on each subsequent vesting date shall
be reduced by 50%.  A “Change in Control”
means the sale of all or substantially
all of the capital stock, assets or business of the Company, by merger,
consolidation, sale of assets or otherwise (other than a transaction in which
all or substantially all of the individuals and entities who were beneficial
owners of the Common Stock immediately prior to such transaction beneficially
own, directly or indirectly, more than 50% of the outstanding securities
entitled to vote generally in the election of directors of the resulting,
surviving or acquiring corporation in such transaction).

 

(d)                                 If within 24 months
following the Change in Control, the Participant’s employment with the Company
is terminated (i) by the Company for any reason other than Cause, death or
disability or (ii) by the Participant for Good Reason, then all unvested
RSUs shall become vested in full on the date of such termination of employment
or other service providing relationship.

 

 

(i)                                     “Cause” means (a) a good
faith finding by a majority of the Board of Directors (the “Board”) (excluding
the vote of the Participant, if then a member of the Board) that (1) the
Participant has failed to perform his or her reasonably assigned material
duties for the Company; (2) the Participant has engaged in gross
negligence or willful misconduct, which has or is expected to have a material
detrimental effect on the Company, (3) the Participant has engaged in
fraud, embezzlement or other material dishonesty, (4) the Participant has
engaged in any conduct which would constitute grounds for termination for
violation of the Company’s policies in effect at that time; or (5) the
Participant has breached any material provision of any nondisclosure, invention
assignment, non-competition or other similar agreement between the Participant
and the Company and, if amenable to cure, has not cured such breach after
reasonable notice from the Company; or (b) the
conviction by the Participant of,
or the entry of a pleading of guilty or nolo
contendere by the Participant to, any crime involving moral turpitude or any felony.

 

(ii)                                  “Good Reason” means the
occurrence, without the Participant’s written consent, of any of the events or
circumstances set forth in clauses (a) through (d) below.

 

(a)                                  the assignment to the Participant of duties that involve materially less
authority and responsibility for the Participant and are materially
inconsistent with the Participant’s position, authority or responsibilities in
effect immediately prior to the earliest to occur of (i) the Change in
Control, (ii) the date of the execution by the Company of the initial
written agreement or instrument providing for the Change in Control or
(iii) the date of the adoption by the Board of a resolution providing for
the Change in Control;

 

(b)                                 the relocation of the Participant’s primary place of business to a
location that results in an increase in the Participant’s daily one way commute
of at least 30 miles;

 

(c)                                  the material reduction of the Participant’s annual base salary without
the Participant’s prior consent (other than in connection with, and
substantially proportionate to, reductions by the Company of the annual base
salary of more than 75% of its employees); or

 

(d)                                 the failure of the Company to obtain the agreement from any successor to
the Company to assume and agree to perform the Participant’s Retention
Agreement, if required by such Retention Agreement.

 

Notwithstanding
the occurrence of any of the foregoing events or circumstances, such occurrence
shall not be deemed to constitute Good Reason unless (x) the Participant
gives the Company a notice of termination no more than 90 days after the
initial existence of such event or circumstance and (y) such event or
circumstance has not been fully corrected and the Participant has not been
reasonably compensated for any losses or damages resulting therefrom within 30
days of the Company’s receipt of the notice of termination.

 

2

 

3.                                       Issuance of Shares.

 

Subject to the terms and
conditions of this Agreement (including any withholding tax obligations),
within 30 days after any date on which RSUs vests, the Company will issue to
the Participant or his or her estate, if applicable, one or more certificates
representing the Shares underlying such vested RSUs; provided that if the
delivery of the Shares is subject to the execution of a release under Section 4.6
of the Participant’s Retention Agreement, the Shares will be delivered within 5
day of the effectiveness of the release. 
Until the RSUs vest, the Participant shall have no rights to any Shares
or any rights associated with such Shares, including without limitation
dividend or voting rights.

 

4.                                       Transferability.

 

The
RSUs and Shares they represent may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of (whether by operation of law or
otherwise) (collectively, a “transfer”), except that this Agreement may be transferred by the
laws of descent and distribution or as otherwise permitted under the Plan.  The Participant may only transfer the Shares
that have vested under the terms of this Agreement.

 

5.                                       Withholding Taxes.

 

The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state,
local or other taxes of any kind required by law to be withheld with respect to
the vesting of the RSUs in the manner permitted under Section 10(e) of
the Plan.

 

6.                                       Consequences of Reorganization Events.

 

(a)                                  In connection with a
Reorganization Event (as defined in Section 9(b)(1) of the Plan), the
Board may take any one or more of the actions described in Section 9(b)(2) of
the Plan with respect to the RSUs granted under this Agreement and Section 9(b)(3) shall
not apply.

 

(b)                                 For purposes of Section 9(b)(2)(i),
an RSU shall be considered assumed if, following consummation of the
Reorganization Event, such RSU confers the right to receive pursuant to the
terms of such RSU, for each share of Common Stock subject to the RSU immediately
prior to the consummation of the Reorganization Event, the consideration
(whether cash, securities or other property) received as a result of the
Reorganization Event by holders of Common Stock for each share of Common Stock
held immediately prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares of Common Stock);
provided, however, that if the consideration received as a result of the
Reorganization Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the consent of the
acquiring or succeeding corporation, provide for the consideration to be
received upon the settlement of the RSU to consist solely of such number of
shares of common stock of the acquiring or succeeding corporation (or an
affiliate thereof) that the Board determined to be equivalent in value (as of
the date of such determination or another date specified by the Board) to the
per share consideration received by holders of outstanding shares of Common
Stock as a result of the Reorganization Event.

 

3

 

7.                                       Acceleration/ Deferral.

 

(a)                                  Acceleration.  In no event may the Company deliver the
Shares to the Participant earlier than the date specified in Section 3 of
this Agreement, unless specifically permitted or required by Section 409A
of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

(b)                                 Deferral.  In no event may the Company or the
Participant defer the delivery of the Shares beyond the date specified in Section 3
of this Agreement, unless such deferral complies in all respects with Section 409A.

 

8.                                       Provisions of the Plan.

 

This
Agreement is subject to the provisions of the Plan, a copy of which is
furnished to you with this Agreement. 
Any capitalized terms used in this Agreement but not defined in the
Agreement shall have the same meaning as in the Plan.

 

9.                                       Section 409A.

 

(a)                                  This Agreement and
the RSUs granted hereunder are intended to comply with the short-term deferral rule set
forth in Treasury Regulation Section 1.409A-1(b)(4) and accordingly
be exempt from Section 409A and shall be construed consistently therewith.

 

(b)                                 Each RSU granted
under this Agreement shall be represented by a separate payment for one share
for purposes of Section 409A.

 

(c)                                  Notwithstanding Section 9(a),
if any portion of the RSUs granted under this Agreement is not exempt from Section 409A,
any payment provided to the Participant in connection with his or her
termination of employment is determined to constitute “nonqualified deferred
compensation” (within the meaning of Section 409A), and the Participant is
a “specified employee” (within the meaning of Section 409A), as determined
by the Company in accordance with its procedures, then any payment that would
otherwise be made upon the date of the Participant’s “separation from service”
(as determined under Section 409A) or within the first six months
thereafter will not be made on the originally scheduled date(s) and will
instead be paid in a lump sum on the date that is six months and one day
after the date of the separation from service, with the balance of the payment
thereafter in accordance with the original schedule.

 

(d)                                 The Company makes no
representations or warranty and will have no liability to the Participant or
any other person, other than with respect to payments made by the Company in
violation of the provisions of this Agreement, if any provisions of or payments
under this Agreement are determined to constitute deferred compensation subject
to Section 409A but not to satisfy the conditions of that section.

 

10.                                 Miscellaneous.

 

(a)                                  No Rights to
Continued Service Relationship.  The Participant acknowledges and agrees that
the vesting of the RSUs pursuant to Section 2 hereof is earned only by
continuing service at the will of the Company (not through the act of being
hired or 

 

4

 

acquiring shares hereunder).  The
Participant further acknowledges and agrees that the transactions contemplated
hereunder and the vesting schedule set forth herein do not constitute an
express or implied promise of continued engagement with the Company for the
vesting period, for any period, or at all. 
The Participant acknowledges that for all purposes of the Plan his
service to the Company will cease on his last day of active relationship with
the Company which shall not include any period of statutory or reasonable
notice or any period of deemed service or salary continuation.

 

(b)                                 Governing Law.  This Agreement shall be construed,
interpreted and enforced in accordance with the internal laws of the State of
Delaware without regard to any applicable conflicts of laws.

 

(c)                                  Participant’s
Acknowledgments.  The
Participant acknowledges that he or she has read this Agreement, has received
and read the Plan, and understands the terms and conditions of this Agreement
and Plan.  The Participant further
acknowledges that the law firm of WilmerHale is acting as counsel to the
Company in connection with this Agreement and not as counsel to the
Participant.

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

	
   

  	
  A123
  Systems, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

5

 

PARTICIPANT’S ACCEPTANCE

 

The Participant
hereby accepts the foregoing grant and agree to the terms and conditions
thereof and acknowledge receipt of a copy of the Company’s 2009 Stock Incentive
Plan, as amended.

 

	
   

  	
  PARTICIPANT:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

6Exhibit 10.3

 

Confidential
Materials omitted and filed separately with the

Securities
and Exchange Commission. Asterisks denote omissions.

 

CPREMETM 
- A123 SYSTEMS SALES AGREEMENT

 

 

This Sales Agreement (“Agreement”)
is made and entered into between ConocoPhillips
Specialty Products Inc., a Delaware corporation with an office at
600 North Dairy Ashford, Houston, Texas 77079 (“Seller”) and A123
Systems, Inc., a Delaware corporation, with an office at Arsenal on the
Charles, 321 Arsenal Street, Watertown, Massachusetts 02472 (“Buyer”).

 

WHEREAS, Seller is a
manufacturer of graphite powder; and

 

WHEREAS, Buyer desires to
purchase graphite powder from Seller to be used solely for manufacture of
Li-ion cells and batteries in Buyer’s facilities and approved subcontractors,
upon the terms and conditions set forth herein;

 

NOW, THEREFORE, the parties
agree as follows:

 

1.             Product.

 

Product (“Product”) is
defined as CPREME Graphite Powder. 
Seller shall provide to Buyer all material safety data sheets (MSDS)
applicable to the Product purchased at or before the time of the initial
shipment.  All updates to such MSDS shall
be provided to Buyer with the first shipment after updating.  The Product will conform to the
specifications attached in Exhibit 2.

 

2.             Forecast, Quantity and Lead
Times.

 

(a)           Forecasts:  It is agreed that Buyer will  provide Seller upon request, a rolling six
(6) month forecast for the Product ( “Forecast”).  No Forecast shall be considered in any manner
or to any extent to be a binding commitment to purchase Products on the part of
Buyer.  Seller shall utilize the Forecast
solely for planning and inventory purposes.

 

(b)           Notwithstanding
the forgoing Seller  shall be capable of
providing Buyer with a minimum of [**] per month in January, 2010 ramping to
[**] per month by [**] and [**] per month by [**] (collectively “Minimum
Capacity”).  Seller will immediately
notify Buyer in the event Seller has reason to believe Seller will not be able
to supply Buyer with the amount of Product required under the Forecast.

 

(c)           Subject to
Buyer’s right under this Agreement to make “Variance Payments” (as hereinafter
defined) in lieu of purchases, Buyer agrees to purchase annual volumes of
Product (the “Annual Minimum Purchase)as follows:

 

a.     2010 - [**];

b.     2011 – [**];

c.     2012 – [**];

d.     2013 – [**].

 

 

(d)           If Seller fails to meet
product specifications or is unable to produce the Annual  Minimum Purchase volume, Buyer will be
relieved of the obligation to purchase the Annual Minimum Purchase by the
amount of the shortfall.

 

(e)           If the Annual
Minimum Purchase has not been purchased by Buyer by the applicable year end,
Buyer agrees to pay a fee equal to $[**] for the difference between the amount
actually purchased in that calendar year and the Annual Minimum Purchase (“Variance
Payment”).  Buyer agrees to pay the
Variance Payment within [**] after date of Seller’s invoice.

 

(f)            Buyer shall
receive credit for any Variance Payment in the following year at a rate of
$[**].  This credit shall reduce the
price of ongoing purchases of Product until the prior year’s variance payment
has been re-claimed in its entirety and the prior year’s Annual Minimum
Purchase has been satisfied.  Once the
prior year’s annual minimum purchase has been satisfied, subsequent purchases
begin to count towards the current year’s Annual Minimum Purchase.

 

(g)           Product
purchased by Buyer in 2010 prior to the Effective Date of this Agreement will
be applied towards the 2010 Annual Minimum Purchase.

 

(h)           If Buyer is
required to pay a Variance Payment for 2012 or 2013, Buyer will have until
April 1, 2015, to continue to purchase Product and re-claim the 2012 or
2013 Variance Payment provided that after April 1, 2014, no more that
[**], may be applied to re-claim the Variance Payment.  The price charged for Product purchased to
re-claim the Variance Payment will be equal to the 2013 contract price with a
price adjustment to be negotiated for reasonable storage charges.

 

(i)            Purchase
Orders.  Seller agrees to sell to Buyer,
and Buyer agrees to purchase from Seller the amount of Buyer’s requirements
specified in the applicable purchase orders issued to Seller for anode material
in Buyer’s  manufacturing facilities or
A123 Systems approved subcontractors’ manufacturing facility.

 

(j)            Long Lead Time
Items.   Seller  shall notify Buyer  in writing if any of the components,
materials or supplies  have a lead time
of greater than 90 days.   Buyer  may authorize Seller  in writing to purchase, in amounts beyond the
amount necessary to fill accepted Purchase Orders, the components, materials,
and supplies with lead times greater than ninety (90) days at the time the
order is placed (“Long Lead Time Components”) plus 30 days to account for the
order, shipment, receipt and manufacturing time. Subject to Buyers’ approval,
Seller  may purchase Long Lead Time
Components sufficient to meet all deliveries under the Purchase Orders and
Product Forecast in effect at the time the order with the supplier is placed.

 

(k)           The quantity of
Product delivered shall be determined based upon bill of lading weights.

 

 

3.             Price.

 

The price for Product is set
forth in Exhibit #1. Freight will be Ex-Works in accordance with Incoterms
2000.

 

4.             Payment Terms.

 

For Products shipped to
[**], Buyer shall pay the invoices [**] after date of Seller’s invoice. For
Product shipped to [**], Buyer shall pay invoices [**] after date of invoice.

 

5.             Term and Termination; End of
Life.

 

(a)           This Agreement
shall be for a term commencing on the Effective Date and ending on
December 31, 2014, (the “Initial Term”) and from day to day thereafter,
provided however, that Buyer may terminate this Agreement upon not less than
one year’s written notice  and Seller may
terminate this Agreement upon not less than two year’s written notice.  For avoidance of doubt, and notwithstanding
the foregoing, no termination may be effective prior to the expiration of the
Initial Term. Without limiting the foregoing, after December 31, 2013,
(i) unless the Parties agree otherwise, Buyer may, but is not required to,
purchase a volume of Product consistent with its Forecast up to [**]/calendar
year, and (ii) unless the Parties agree otherwise, the price of Product
shall be the same as that during 2013.

 

(b)           End of
Life/Changes to material process or equipment.  If any of the component parts of any Product
that Seller purchases from some other source ceases being produced for any
reason, Seller  will notify Buyer as soon
as it learns of the planned discontinuance and will, at Seller’s sole cost
purchase enough of the components to meet its obligations under this Agreement
until another source is identified and qualified to meet the product
specification and such qualification to be at Seller’s sole cost.  In the event that a last time buy of a
component is required, Seller and Buyer 
will mutually agree as to the total quantity of that component that must
be purchased by Seller  to meet
requirements under this Agreement.  In
case of a capacity constraint or limited availability of raw materials,
Seller  reserves the right to allocate
Product to customers based on historic purchases over the previous 12-months
provided however that in no event shall such allocation relieve Seller of it
obligation to provide the Minimum Capacity set forth in Section 2.   Seller shall not ship any product to Buyer
with any material changes to current formulation, equipment, process, raw
materials or manufacturing location without Buyers approval in writing. Seller
shall in writing provide reasonable notice to Buyer prior to any planned
changes. Buyer’s approval will not be unreasonably withheld.

 

(c)           Discontinuance
of Product[**].  Seller
may discontinue manufacture and supply of Product only upon termination of this
Agreement by either Party.  [**] of this
Agreement.

 

 

6.             Default.

 

(a)         Any credit
Seller may elect to extend to Buyer shall be upon Seller’s credit terms.

 

(b)         Seller shall
have the right to change the terms of such credit at any time if Seller
determines, in its reasonable discretion, that the financial condition of Buyer
warrants such a change.

 

(c)         Notwithstanding
any other provision, if: (a) Buyer fails to make any payment within
payment terms, then Seller shall have the right to issue a written payment
demand notice to Buyer.  If Buyer fails
to make payment within a period of [**] from the written notice thereof
provided such notice is sent by overnight courier or (b) Buyer’s financial
condition does become impaired or unsatisfactory to Seller, in Seller’s
reasonable discretion, then Seller may suspend deliveries to Buyer until such
time as satisfactory credit arrangements are made with Seller, including
payment of past due invoices and which may include providing an irrevocable
letter of credit in a form and substance specified by Seller, issued and
confirmed (if required) by a bank acceptable to Seller and in an amount
sufficient to cover the estimated credit exposure to Seller, or Seller may
require Buyer to pay by cash in advance. 
Buyer’s failure to cure any default within the [**] cure period or meet
any obligation under this section shall give Seller the right to seek payment
of the amounts due and  immediately
suspend further shipments  as it’s
exclusive non-judicial remedy.

 

7.             Title and Risk of Loss;
Delivery.

 

Title and risk of loss to
the Product shall pass to Buyer in accordance with Ex Works  Seller’s dock.

 

Except as provided elsewhere
in this Agreement, Buyer will have no responsibility or liability on account of
anything that may be done, happen or arise with respect to Product before risk
of loss has passed to Buyer, and Seller will have no responsibility or
liability on account of anything that may be done, happen or arise with respect
to Product after risk of loss has passed to Buyer.

 

8.             Product Management and Duty
to Warn.

 

Guidelines for managing
Product are attached hereto and made a part of this Agreement as
Exhibit 3, attached hereto and incorporated herein.  Buyer agrees to follow the Product Management
Guidelines as the same may be amended from time to time by the mutual agreement
of the parties.

 

Buyer acknowledges that it
is familiar with, and will take all reasonable steps necessary to inform, warn,
and familiarize its employees, agents, customers, and contractors who may
handle the Product, of all hazards pertaining to and proper procedures for safe
use of the Product and of the containers or equipment in which the Product may
be handled, shipped, or stored.  Buyer
also undertakes to label as appropriate any materials which it makes or resells
that include Product.

 

BUYER SHALL
INDEMNIFY AND DEFEND THE SELLER AND ITS AFFILIATED ENTITIES FROM AND AGAINST
ANY THIRD PARTY CLAIM,

 

 

LIABILITY
OR EXPENSE INCLUDING INJURY OR DEATH EXCEPT TO THE EXTENT THAT THE CLAIM,
LIABILITY OR EXPENSE IS CAUSED BY SELLER’S NEGLIGENCE, PRODUCT DEFECTS
ATTRIBUTABLE TO SELLER’S NEGLIGENCE OR THE FAILURE OF THE PRODUCT TO MEET THE
SPECIFICATIONS CONTAINED IN ATTACHED EXHIBIT A WHEN DELIVERED TO
BUYER.  EXPENSE AS USED HEREIN SHALL
INCLUDE REASONABLE ATTORNEYS FEES.

 

SELLER
SHALL INDEMNIFY AND DEFEND THE BUYER AND ITS AFFILIATED ENTITIES FROM AND
AGAINST ANY THIRD PARTY CLAIM, LIABILITY OR EXPENSE INCLUDING INJURY OR DEATH
EXCEPT TO THE EXTENT THAT THE CLAIM, LIABILITY OR EXPENSE IS CAUSED BY BUYER’S
NEGLIGENCE OR PRODUCT DEFECTS ATTRIBUTABLE TO BUYER’S NEGLIGENCE. EXPENSE AS
USED HEREIN SHALL INCLUDE REASONABLE ATTORNEYS FEES.

 

9.             Limited Warranty.

 

Seller warrants that the
Product sold under this Agreement  will
be free from defects in materials  and
workmanship and shall meet the mutually agreed upon  specifications for a period of [**] from receipt
of shipment.  This warranty does not
cover any Product which (a) has been used in a manner not authorized by
the specifications; or (b) has not been stored and handled in accordance
with Product Storage Instructions set forth 
in Exhibit 4 provided that the failure of the Product is directly
attributable to the improper storage of the Product or the use of the Product
in a manner not authorized by the specifications.

 

OTHER THAN
THE WARRANTY SPECIFIED IN THIS SECTION 9,  SELLER DOES NOT MAKE AND EXPRESSLY DISCLAIMS, AND BUYER EXPRESSLY
WAIVES, ANY OTHER WARRANTIES INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, REGARDLESS OF WHETHER ORAL
OR WRITTEN, EXPRESS OR IMPLIED, OR ALLEGEDLY ARISING FROM ANY USAGE OF ANY
TRADE OR FROM ANY COURSE OF DEALING.

 

10.           Warranty Remedy and
Limitation of Liability.

 

Seller’s liability for
breach of warranty  shall be limited to
replacement of non-conforming  Product or
refund of the purchase price thereof, at Seller’s option, and any loss, damage
or cost for which Seller is obligated to indemnify Buyer pursuant to the terms
of this Agreement.

 

EXCEPT FOR
CLAIMS ARISING UNDER SECTION 13 AND 24, OR FROM SELLER’S GROSS NEGLIGENCE
AND WILLFUL MISCONDUCT, BUYERS TOTAL LIABILITY ARISING FROM THIS AGREEMENT FOR
ANY CLAIMS OF ANY NATURE WHETHER BASED IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), INDEMNITY, CONTRIBUTION, STRICT LIABILITY OR OTHERWISE, WILL NOT
EXCEED THE SUM OF $[**]  AND SELLER’S

 

 

TOTAL
LIABILITY WILL NOT EXCEED THE SUM OF $[**] THIS CONSTITUTES A PARTY’S MAXIMUM
LIABILITY EVEN IF THE PRODUCT HAS BEEN MIXED WITH OTHER MATERIALS OR USED IN
SPECIALIZED EQUIPMENT.  EXCEPT FOR CLAIMS
ARISING UNDER SECTION 13 OR SECTION 24 OR EITHER PARTY’S WILLFUL
MISCONDUCT, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR
ANY LOST PROFITS OR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL,
CONTINGENT, EXEMPLARY OR PUNITIVE DAMAGES INCURRED BY BUYER OR RESULTING FROM
OR ARISING OUT OF THIS AGREEMENT INCLUDING, WITHOUT LIMITATION, LOSS OF USE,
LOSS OF PROFIT, OR BUSINESS INTERRUPTION, HOWEVER SAME MAY BE CAUSED AND
REGARDLESS OF A PARTY’S SOLE OR CONCURRENT NEGLIGENCE.

 

12.           Taxes.

 

In addition to the price
provided herein, Buyer will pay Seller an amount equal to any Tax related to
sales made pursuant to this Agreement, or to the transportation, production, or
use of the Product, and assessed on Seller by any governmental authority or
that Seller is required to collect from Buyer under applicable law.  For purposes of the foregoing sentence, the
term “Tax” shall include, without limitation, sales, use and excise taxes,
duties (including dumping duties), or other assessments or charges (including
Superfund/environmental levies, Goods & Services Taxes, or the like),
but such term shall not include any income or franchise tax measured by Seller’s
net income or margin, or any gross receipts tax imposed by any jurisdiction on
Seller for the privilege of Seller doing business in that jurisdiction  Any personal property taxes assessed upon the
value of the Product will be paid by the party having title thereto at the time
such taxes are assessed. If Buyer is exempt from the payment of any Tax, Buyer
will furnish to Seller proper exemption certificates, taxpayer identification
number, or other documentation acceptable to Seller to cover the Product
purchased hereunder.

 

13.           Patent Defense and
Indemnification.

 

Seller shall indemnify and
hold Buyer harmless in connection with any suit, claim or demand that:

 

(a)           alleges that
the Product (as used in this Section, the term “Product” includes the
ingredients thereof taken both singularly and collectively) purchased hereunder
or its method of manufacture infringes a claim of any Patent or other third
party intellectual property right or involves the misappropriation of a trade
secret by Seller; or

 

(b)           alleges that
the use or application of the Product purchased hereunder for using as an anode
material in a Lithium—ion battery infringes a claim of any Patent or other
third party intellectual property right.

 

Seller shall not be
obligated in any way under this Section to defend, indemnify and hold
Buyer harmless for any suit, claim or demand alleging infringement of a claim
of any

 

 

Patent or other third party
intellectual property right which is based on Buyer (x) using the Product
purchased hereunder for any purpose other than an anode material in a
Lithium-ion battery, or (y) combining the Product purchased hereunder with
any other material if the Product alone is not infringing, or (z) which is
based on an improper or unauthorized way that Buyer handles or introduces the
Product purchased hereunder into the Buyer’s product if not in accordance with
Seller’s written instructions.  Seller’s
obligations set forth herein shall be conditioned on Buyer promptly advising
Seller in writing of any suit, claim or demand for which Seller is obligated
under this Section, and on Seller having sole charge and direction of the
defense and/or settlement of any such suit, claim or demand.  Buyer shall have the right to be represented
by advisory counsel of its selection at its own expense.

 

14.           Contingencies.

 

(a)           Neither party
will be in breach of its obligations hereunder to the extent that performance
is prevented or delayed as a result of any of the following contingencies:
(a) any cause beyond the reasonable control of the party concerned;
(b) labor disturbance, whether or not involving the employees of the party
concerned or otherwise, and whether or not the disturbance could be settled by
acceding to the demands of a labor group; or (c) compliance with a request
or order of a person purporting to act on behalf of any government or
governmental department or agency (including but not limited to EPA and OSHA);
or shortage in raw material, transportation, power, manufacturing capacity
(except as Seller’s capacity made available to Buyer and Buyer’s obligation to
purchase [**] of Product as described in Section 2) or product itself from
a party’s then contemplated source of supply, unless such shortage could have been
avoided by Seller by purchasing Long Lead Time items in accordance with
Section 2(c.).  Seller  reserves the right to allocate Product to
customers based on historic purchases over the previous 12-months provided
however, that nothing in this Section 14 shall relieve Seller of its
obligation to provide the Minimum Capacity set forth in Section 2.

 

(b)           Quantities not
purchased or sold due to the provisions of this Section need not be made
up later.

 

(c)           Nothing in this
Section will excuse Buyer from its obligations to make payments when due.

 

15.           Representations,
Warranties, and Covenants.

 

(a)           Buyer hereby
represents and warrants to Seller that:

 

(i)    Buyer is a company of good
standing established according to the laws of the State of Delaware and has its
principal place of business in Arsenal on the Charles, 321 Arsenal Street,
Watertown, Massachusetts 02472.  Its
officers, directors, employees, agents, and shareholders are neither officials,
employees, or representatives of any government or of any department, agency,
or

 

 

instrumentality of any
government nor officials, representatives, agents or candidates of any
political party and shall not become such while this Agreement remains in
effect.

 

(ii)   The execution, delivery, and
performance by Buyer of this Agreement does not and shall not violate any laws
or regulations presently binding on Buyer or Seller (including without
limitation the United States export control laws and regulations).

 

(b)           Seller hereby
represents and warrants to Buyer that:

 

(i)    Seller is a company of good
standing established according to the laws of the State of Delaware and has its
principal place of business in 600 North Dairy Ashford, Houston, Texas
77079.  Its officers, directors, employees,
agents, and shareholders are neither officials, employees, or representatives
of any government or of any department, agency, or instrumentality of any
government nor officials, representatives, agents or candidates of any
political party and shall not become such while this Agreement remains in
effect.

 

(ii)   The execution, delivery, and
performance by Seller of this Agreement does not and shall not violate any laws
or regulations presently binding on Buyer or Seller (including without
limitation the United States export control laws and regulations).

 

16.           Ethics;
Conflicts of Interest.

 

Buyer
shall not pay any salaries, commissions, or fees, or make any payments or grant
any rebates to any employee or officer of Seller, or to any designee of any
Seller’s employee or officer, or favor any employee or officer of Seller, or
any designee of any Seller employee or officer, with gifts or entertainment of
significant cost or value, or enter into any business arrangements with any
employee or officer of Seller other than as a representative of Seller.

 

17.           Technical
Assistance.

 

ANY
TECHNICAL ADVICE, ASSISTANCE OR TESTING FURNISHED BY SELLER TO BUYER WITH
RESPECT TO THE SELECTION OR USE OF THE PRODUCT DELIVERED TO BUYER HEREUNDER
WILL BE GIVEN AND ACCEPTED AT BUYER’S SOLE RISK, AND EXCEPT FOR  GROSS
NEGIGENCE OR WILLFUL MISCONDUCT SELLER WILL HAVE NO LIABILITY WHATSOEVER FOR
THE USE OF, OR RESULTS OBTAINED FROM, SUCH ADVICE, ASSISTANCE OR TESTING.

 

18.           Compliance with Laws.

 

This Agreement is made
specifically subject to, and Buyer expressly agrees that Buyer shall comply
with and abide by, all applicable laws, rules, regulations, orders and
ordinances (now existing or that may be hereafter enacted or promulgated),
including, but

 

 

not limited to U.S. export
control and economic sanctions laws, and Buyer will not export, re-export or
otherwise transfer the Product, or any technical information disclosed to Buyer
concerning the Product, in violation of such laws.

 

19.           Notices.

 

All notices required under
this Agreement shall be given in writing by letter, facsimile or overnight mail
addressed to the parties at the addresses below or such other address as the
party may designate:

 

ConocoPhillips Specialty
Products Inc.

600 N. Dairy Ashford Rd

Houston, Texas
77079-1175,  USA

Attn: Manager, Composite Graphite

Facsimile:  (+1) 832-486-2881

 

A123
Systems, Inc.

Arsenal
on the Charles, 321 Arsenal Street

Watertown,
Massachusetts 02472

Attention:  General
Counsel

Facsimile:  617-778-5749

 

20.           Assignment.

 

Neither party shall assign
or transfer its rights and obligations under this Agreement without the prior
written consent of the other party, such consent not to be unreasonably
withheld.

 

21.           Waiver of Breach.

 

Either party may waive the
breach of any part of this Agreement by the other party;  however, any such waiver shall not be a
waiver of any other part of this Agreement or of any subsequent breach of the
same part.

 

22.           Governing Law.

 

THIS AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED ACCORDING TO THE LAWS OF STATE OF TEXAS WITHOUT
REGARD TO ITS CONFLICT OF LAWS RULES.

 

23.           Dispute Resolution.

 

The parties shall attempt to
resolve any disputes by negotiation.  Any
dispute under this Agreement, which cannot be settled amicably, shall be
finally settled by arbitration in accordance with the Rules of Arbitration
of the International Chamber of Commerce by the arbitrators; one selected by
Buyer, one by Seller, and one by the first two arbitrators.  The arbitration shall be held in Houston,
Texas, if brought by Buyer and Boston,

 

 

Massachusetts if brought by
Seller  and conducted in the English
language.  The decision of the
arbitrators shall be final, binding, and enforceable on the parties.

 

24.           Confidentiality.

 

Each party agrees that it
will keep, and cause its employees to keep, confidential the terms and
conditions of this Agreement, including but not limited to pricing, and any
know-how and technical, business, or other information disclosed to it during
the performance of this Agreement until such time as the same has become
available to the general public through no fault of such party.  The obligations of confidentiality herein
contained shall continue to be observed, notwithstanding the expiration or
earlier termination of this Agreement. 
Buyer agrees to make no effort, either directly or indirectly, nor
enable any third party, to analyze or in any way attempt to determine the
physical or chemical property or composition of Product without Seller’s prior
written consent.

 

25.           Entire Agreement;
Interpretation.

 

This Agreement is executed
in two originals in the English language or may be executed in multiple
counterparts and each counterpart shall represent a fully executed original as
if signed by each Party.  This Agreement
and its exhibits replaces and supersedes any prior agreements and constitutes
the entire Agreement between Seller and Buyer as to the subject matter set
forth herein; there are no promises, representations or warranties other than
as set forth in this Agreement.   This
Agreement may be modified only by instrument in writing specifically stating
that it is an amendment to this Agreement and executed by both parties hereto
but no modification hereof shall be effected by the acknowledgment or
acceptance of purchase orders or printed forms containing different or
additional terms and conditions.  The
provisions of this Agreement will take precedence over, govern and control any
purchase order, sales acknowledgement, invoice or other writing between the
Seller and Buyer despite subsequent issuance, it being agreed and understood,
without limitation, that any pre-printed terms and conditions appearing on any
other writing, communication or transmittal between Seller and Buyer pertaining
to the subject matter of this Agreement will be null and void and have no force
or effect.

 

THE
WARRANTIES, OBLIGATIONS, LIABILITIES AND REMEDIES OF THE PARTIES, AS PROVIDED
HEREIN, ARE EXCLUSIVE AND IN LIEU OF ANY OTHERS AVAILABLE AT LAW OR IN EQUITY.

 

The parties acknowledge and
agree the terms and conditions of this Agreement, including but not limited to those
relating to allocations of, releases from, exclusions against and limitations
of liability, have been freely and fairly negotiated.  Each party acknowledges that in executing
this Agreement they have relied solely on their own judgment, belief, and knowledge,
and such advice as they may have received from their own counsel, and they have
not been influenced by any representation or statements made by any other party
or its counsel.  No provision in this
Agreement is to be interpreted for or against any party because that party or
its counsel drafted such provision.  In
the event that any

 

 

portion or all of this
Agreement is held to be void or unenforceable, the parties agree to negotiate
in good faith to amend the commercial and other terms of the Agreement in order
to affect the intent of the parties as set forth in this Agreement.

 

The provisions of this
Agreement which by their nature are intended to survive the termination,
cancellation, completion or expiration of the Agreement, including but not
limited to any expressed limitations of or releases from liability, shall
continue as valid and enforceable obligations of the parties notwithstanding
any such termination, cancellation, completion or expiration.

 

IN WITNESS WHEREOF, this
Agreement is executed as of the date first above written.

 

	
  CONOCOPHILLIPS SPECIALTY

  	
   

  	
  A123
  SYSTEMS, INC.

  
	
  PRODUCTS INC.

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael W. Brown

  	
   

  	
  By:

  	
  /s/ Michael Rubino

  
	
  Name:

  	
  Michael W. Brown

  	
   

  	
  Name:

  	
  Michael Rubino

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  Chief Financial Officer
  and

  
	
   

  	
   

  	
   

  	
  VP of Finance and
  Administration

  

 

 

 

Exhibit 1

Form of
Product Schedule

 

Product
Schedule No. 1

 

Dated        

 

This PRODUCT SCHEDULE NO.1
TO MANUFACTURE AND SUPPLY AGREEMENT (this “Schedule No. [ 1]”) is made by
and between A123 Systems, Inc. (“A123”), and Conoco Phillips (“SUPPLIER”),
pursuant to the Manufacture and Supply Agreement between A123 and SUPPLIER
dated
                  .

 

NOW, THEREFORE, in
consideration of the foregoing recitals and the mutual promises, covenants and
agreements hereinafter set forth the parties hereto agree as follows:

 

Specifications attached in
Exhibit 2

 

Manufacturing Location
Requirements.  Ponca City,
Oklahoma: Batesville, Arkansas; Sanborn, NY or as mutually agreed

 

Pricing — Pricing will
be in US Dollars.

 

Effective Date through
December 31, 2010: $[**]

 

January 1, 2011 through
April 1, 2014: $[**]

 

Note: Seller agrees to make
available [**] of the Product to Buyer during 2010. Buyer agrees to place a
purchase order upon execution of this Agreement for  [**] at a price of $[**]. Buyer agrees to
take delivery of the [**] no later than April 1, 2011. This quantity will
be applied against the total committed quantity of [**] of the Products defined
in paragraph 2 of this Agreement.

 

Both Parties are in
agreement that the lithium ion battery market is extremely competitive and will
work together to further reduce cost, beyond what is listed above. This may be
through qualification of alternative materials, new designs or technologies.

 

Seller agrees make a
reasonable best effort to stock one month’s worth of Product for Buyer, based
on current forecast.

 

Pricing will include the
following:

 

a.               Material cost

b.              Labor

c.               Test

d.              Mark-Up

e.               Lead time of quoted assembly

f.                 Lead time of all components
in the quoted assembly

Project Schedule — Deliveries
will be made per A123 Purchase Order.

 

Markings —Products will
include barcodes per the Specification.

 

IN WITNESS WHEREOF, the
Parties hereto have caused this Project Schedule No. 1 to Manufacture and
Supply Agreement to be executed in their names by their properly and duly
authorized officers or representatives as of the date first above written.

 

	
  CONOCO SPECIALITY
  PRODUCTS, INC.

  	
   

  	
  A123SYSTEMS, INC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ M.W. Brown

  	
   

  	
  By:

  	
  /s/ Michael Rubino

  
	
  Name:

  	
  M.W. Brown

  	
   

  	
  Name:

  	
  Michael Rubino

  
	
  Title:

  	
  President

  	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6/21/10

  	
   

  	
   

  

 

 

CPREME® – Al23 SYSTEMS SALES AGREEMENT

 

EXHIBIT 2

 

 

[**]

A
total of 18 pages were omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential treatment.

 

 

CPREME® – Al23 SYSTEMS SALES AGREEMENT

 

EXHIBIT 3

 

 

	
  

  	
  CPreme® Graphites, Anode Powder (All Grades)

  
	
   

  
	
  Material Safety Data Sheet

  

 

1.  Product and Company
Identification

 

	
  Product
  Name:

  	
  CPreme®
  Graphites Anode Powder (All Grades)

  
	
   

  	
   

  
	
  MSDS
  Number:

  	
  801538

  
	
   

  	
   

  
	
  Intended
  Use:

  	
  Substrate
  for secondary lithium ion battery anodes and other applications

  
	
   

  	
   

  
	
  Manufacturer/Supplier:

  	
  ConocoPhillips

  
	
   

  	
  600
  N. Dairy Ashford

  
	
   

  	
  Houston,
  Texas 77079-1175

  
	
   

  	
   

  
	
  Emergency
  Health and Safety Number:

  	
  Chemtrec:
  800-424-9300 (24 Hours)

  
	
   

  	
   

  
	
  MSDS
  Information:

  	
  Phone:
  800-762-0942

  
	
   

  	
  Email:
  MSDS@conocophillips.com

  
	
   

  	
  Internet: http://w3.conocophillips.com/NetMSDS/

  

 

2.  Hazards
Identification

 

	
  Emergency Overview

  	
  NFPA

  
	
   

  	
   

  
	
  This material is not considered hazardous according to OSHA criteria.

  	
  

  

 

Appearance:
Dark gray or black

Physical
Form:  Solid

Odor: No distinct
odor

 

Potential Health Effects

Eye: Dusts may be
abrasive and irritating to the eyes and cause stinging, watering, and redness.

 

Skin: Prolonged or
repeated contact with dusts may be abrasive and mildly irritating to the skin.
Skin absorption is unlikely.

 

Inhalation
(Breathing): Low degree of toxicity by inhalation.

 

Ingestion
(Swallowing): No harmful effects expected from ingestion.

 

Signs
and Symptoms: Repeated overexposures to dusts may result in irritation
of the respiratory tract, pneumoconiosis (dust congested lungs), pneumonitis
(lung inflammation), coughing, and shortness of breath.

 

See
Section 11 for additional
Toxicity Information.

 

3.  Composition / Information on Ingredients

 

	
  Component

  	
   

  	
  CASRN

  	
   

  	
  Concentration*

  
	
  Graphite,
  Synthetic

  	
   

  	
  7782-42-5

  	
   

  	
  100

  

 

*
All concentrations are percent by weight unless ingredient is a gas. Gas
concentrations are in percent by volume.

 

	
  801538
  - CPreme® Graphites, Anode Powder (All Grades)

  Date of Issue:

  	
   

  Status: Final

  

 

1

 

	
  801538
  - CPreme® Graphites, Anode Powder (All Grades)

  Date of Issue: 26-Sep-2008

  	
   

  Status: Final

  

 

4.  First Aid Measures

 

Eye
Contact: If irritation or redness develops from exposure,
flush eyes with clean water. If symptoms persist, seek medical attention.

 

Skin
Contact: First aid is not normally required. However, it is
good practice to wash any chemical from the skin.

 

Inhalation
(Breathing): First aid is not normally required. If breathing
difficulties develop, move victim away from source of exposure and into fresh
air in a position comfortable for breathing. Seek immediate medical attention.

 

Ingestion
(Swallowing): First aid is not normally required; however, if
swallowed and symptoms develop, seek medical attention.

 

5.  Fire-Fighting Measures

 

NFPA
704 Hazard Class

 

	
  Health: 0

  	
  Flammability: 0

  	
  Instability: 0

  	
  (0-Minimal,
  1-Slight, 2-Moderate, 3-Serious, 4-Severe)

  

 

Unusual
Fire & Explosion Hazards: No unusual fire or
explosion hazards are expected.

 

Extinguishing
Media: Use extinguishing agent suitable for type of surrounding fire.

 

Fire
Fighting Instructions: For fires beyond the incipient stage, emergency responders in the
immediate hazard area should wear bunker gear. When  the potential chemical hazard is unknown, in enclosed or
confined spaces, a self contained breathing apparatus should be  worn. In addition, wear other appropriate
protective equipment as conditions warrant (see Section 8).

 

Isolate
immediate hazard area and keep unauthorized personnel out. Contain spill if it
can be done safely. Move undamaged containers from immediate hazard area if it
can be done safely. Cool equipment exposed to fire with water, if it can be done safely.

 

See
Section 9 for Flammable Properties Including Flash Point and Flammable
(Explosive) Limits

 

6.  Accidental Release Measures

 

Personal
Precautions: Stay upwind and away from spill/release. Notify
persons down wind of the spill/release, isolate immediate hazard area and keep
unauthorized personnel out. Wear appropriate protective equipment, including
respiratory protection, as conditions warrant (see Section 8). See Sections 2
and 7 for additional information on hazards and precautionary measures.

 

Environmental
Precautions: Contain spill if it can be done safely. Prevent
spilled material from entering sewers, storm drains, other unauthorized
drainage systems, and natural waterways. Use water sparingly to minimize
environmental contamination and reduce disposal requirements.

 

Methods
for Containment and Clean-Up: Notify appropriate federal,
state, and local agencies. Carefully shovel or sweep up spilled material and
place in a suitable container. Minimize dust generation.

 

7.  Handling and
Storage

 

Precautions
for safe handling: Wash thoroughly after handling. Use good personal
hygiene practices and wear appropriate personal protective equipment.

 

Do
not wear contaminated clothing or shoes.

 

Conditions
for safe storage: Keep container(s) tightly closed. Use and store
this material in cool, dry, well-ventilated areas. Store only in approved
containers. Keep away from any incompatible material (see Section 10). Protect
container(s) against physical damage.

 

8.  Exposure Controls /
Personal Protection

 

	
  Component

  	
   

  	
  US-ACGIH

  	
   

  	
  OSHA

  	
   

  	
  Other

  
	
  Graphite, Synthetic

  	
   

  	
  TWA: 2 mg/m3

  	
   

  	
  —

  	
   

  	
  —

  

 

Note:
State, local or other agencies or advisory groups may have established more
stringent limits. Consult an industrial hygienist or similar professional, or
your local agencies, for further information.

 

Eye/Face
Protection: The use of eye/face protection is not normally
required; however, good industrial hygiene practice suggests the use of eye
protection that meets or exceeds ANSI Z.87.1 whenever working with chemicals.

 

2

 

Skin/Hand
Protection: The use of skin protection is not normally required;
however, good industrial hygiene practice suggests the use of gloves or other
appropriate skin protection whenever working with chemicals.

 

Respiratory
Protection: Where there is potential for airborne exposure above the exposure limit a NIOSH certified
air purifying respirator equipped with N95 filters may be used.

 

A
respiratory protection program that meets or is equivalent to OSHA 29 CFR 1910.134
and ANSI Z88.2 should be followed whenever workplace conditions warrant a
respirator’s use. Air purifying respirators provide limited protection and
cannot be used in atmospheres that exceed the maximum use concentration (as
directed by regulation or the manufacturer’s instructions), in oxygen deficient
(less than 19.5 percent oxygen) situations, or under conditions that are
immediately dangerous to life and health (IDLH).

 

Suggestions
provided in this section for exposure control and specific types of protective
equipment are based on readily available Information. Users should consult with
the specific manufacturer to confirm the performance of their protective
equipment. Specific situations may require consultation with industrial
hygiene, safety, or engineering professionals.

 

9.  Physical and
Chemical Properties

 

Note: Unless
otherwise stated, values are determined at 20°C (68°F) and 700 mm Hg (1 atm). Data
represent typical values and are not intended to be specifications.

 

	
  Appearance:

  	
  Dark
  gray or black

  
	
  Physical Form:

  	
  Solid

  
	
  Odor:

  	
  No
  distinct odor

  
	
  Odor Threshold:

  	
  No
  data

  
	
  pH:

  	
  Not
  applicable

  
	
  Vapor Pressure:

  	
  Not
  applicable

  
	
  Vapor Density (air=1):

  	
  Not
  applicable

  
	
  Boiling Point/Range:

  	
  No
  data

  
	
  Melting/Freezing Point:

  	
  No
  data

  
	
  Solubility in Water:

  	
  Insoluble

  
	
  Partition Coefficient (n-octanol/water)
  (Kow):

  	
  No
  data

  
	
  Specific Gravity:

  	
  2.24
  @ 68°F (20°C)

  
	
  Bulk Density:

  	
  0.5-1.1
  g/cc

  
	
  Percent Volatile:

  	
  Not
  applicable

  
	
  Evaporation Rate (nBuAc=1):

  	
  No
  data

  
	
  Flash Point:

  	
  N/A

  
	
  Test Method:

  	
  Not
  applicable

  
	
  LEL (vol % in air):

  	
  No
  data

  
	
  UEL (vol % in air):

  	
  No
  data

  
	
  Autoignition Temperature:

  	
  No
  data

  

 

10.  Stability
and Reactivity

 

Stability:
Stable under normal ambient and anticipated conditions of use.

 

Conditions
to Avoid: None known.

 

Materials
to Avoid (Incompatible Materials): Avoid contact with strong
oxidizing agents and strong reducing agents. 

 

Hazardous
Decomposition Products: Not anticipated under normal conditions of
use.

 

Hazardous Polymerization: Not known to occur.

 

11.  Toxicological Information 

 

Chronic
Data:

 

Graphite,
Synthetic

Target Organs: Chronic lung irritation
(pneumoconiosis) due to deposition of
dust particles in the lungs, has been reported among workers exposed to
carbon or graphite-containing dusts. The amount of silica in the dust is
considered important in determining whether fibrosis can result from long term
exposure to the dust. Since synthetic graphite is derived only from petroleum (and not coal) feedstocks, no
crystalline silica should be present.

 

3

 

Graphite, Synthetic

 

Acute Data:

 

	
  Component

  	
   

  	
  Oral LD50

  	
   

  	
  Dermal LD50

  	
   

  	
  Inhalation LC50

  
	
  Graphite, Synthetic

  	
   

  	
  >
  5 g/kg (estimated)

  	
   

  	
  >
  2 g/kg (estimated)

  	
   

  	
  No
  information available

  

 

12.  Ecological Information

 

Ecological Information: No adverse environmental or
ecological effects are expected.

 

13.  Disposal Considerations

 

The generator of a waste is always responsible for making proper
hazardous waste determinations
and needs to consider state and local
requirements in addition to federal regulations.

 

This material, if discarded as produced, would not be a federally
regulated RCRA “listed” hazardous waste and is not believed to exhibit
characteristics of hazardous waste. See Sections 7 and 8 for information on
handling, storage and personal protection and Section 9 for physical/chemical
properties. It is possible that the material as produced contains constituents
which are not required to be listed in the MSDS but could affect the hazardous
waste determination. Additionally, use which results in chemical or physical
change of this material could subject it to regulation as a hazardous waste.

 

Container contents should be completely used and containers should be
emptied prior to discard.

 

14.  Transportation Information

 

U.S. Department of Transportation (DOT)

	
  Shipping Description:

  	
   

  	
  Not regulated

  

 

International Maritime
Dangerous Goods (IMDG)

	
  Shipping Description:

  	
   

  	
  Not regulated

  

 

International Civil
Aviation Org. / International Air Transport Assoc. (ICAO/IATA)

	
  UN/ID #:

  	
   

  	
  Not regulated

  

 

	
   

  	
   

  	
  LTD. QTY

  	
   

  	
  Passenger Aircraft

  	
   

  	
  Cargo Aircraft Only

  	
   

  
	
  Packaging Instruction #:

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  Max. Net Qty. Per Package:

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  

 

15. Regulatory Information

 

CERCLA/SARA - Section 302 Extremely Hazardous Substances and TPQs
(in pounds):

This material does not contain any
chemicals subject to the reporting requirements of SARA 302 and 40 CFR
372.

 

CERCLA/SARA - Section 311/312 (Title III Hazard Categories)

	
  Acute
  Health:

  	
   

  	
  No

  
	
  Chronic
  Health:

  	
   

  	
  No

  
	
  Fire
  Hazard:

  	
   

  	
  No

  
	
  Pressure
  Hazard:

  	
   

  	
  No

  
	
  Reactive
  Hazard:

  	
   

  	
  No

  

 

CERCLA/SARA - Section 313
and 40 CFR 372:

This material does not contain any chemicals
subject to the reporting requirements of SARA 313 and 40 CFR 372.

 

EPA (CERCLA) Reportable Quantity (in pounds):

This material does not contain any chemicals with CERCLA Reportable
Quantities.

 

4

 

California Proposition 65:

This material does not contain any chemicals which are known to the
State of California to cause cancer, birth defects or other reproductive harm
at concentrations that trigger the warning requirements of California
Proposition 65.

 

Canadian Regulations:

This product has been classified
in accordance with the hazard criteria of the Controlled Products Regulations
(CPR) and the MSDS contains all the information required by the Regulations.

 

WHMIS Hazard Class

None

 

	
  Component

  	
   

  	
  AICS

  	
   

  	
  DSL

  	
   

  	
  NDSL

  	
   

  	
  CHINA

  	
   

  	
  ELINCS

  	
   

  	
  EINECS

  	
   

  	
  ENCS

  	
   

  	
  KOREA

  	
   

  	
  PICCS

  	
   

  	
  TSCA

  
	
  Graphite, Synthetic

  7782-42-5 

  	
   

  	
  x 

  	
   

  	
  x 

  	
   

  	
   

  	
   

  	
  x

  	
   

  	
   

  	
   

  	
  x

  	
   

  	
   

  	
   

  	
  x

  	
   

  	
  x

  	
   

  	
  x

  

 

Legend: AICS - Australia Inventory of Chemical Substances,
DSL - Domestic Substances List (Canada), NDSL - Non-Domestic Substances List
(Canada), CHINA - Inventory List, ELINCS - EU List of Notified Chemical
Substances, EINECS - European Inventory of Existing Commercial Chemical
Substances, ENCS - Japan Existing and New Chemical Substances, KOREA - Existing
and Evaluated Chemical Substances, PICCS - Philippines Inventory of Chemicals
and Chemical Substances, TSCA - United States Section 8(b) Inventory

 

U.S. Export Control Classification Number: EAR99

 

Other Regulatory lnformation

 

U.S. Export Code (Schedule B) - 380110

 

Import Harmonized Tariff Schedule (HTS) Code - 3801.10.50

 

16. Other Information

 

	
  Date of Issue:

  	
  26-Sep-2008

  
	
  Status:

  	
  Final

  
	
  Previous Issue Date:

  	
  22-Feb-2008

  
	
  Revised Sections or Basis for
  Revision:

  	
  Product Name / Synonyms (Section
  1)

  Composition (Section 3)

  Personal Protective Equipment (Section 8)

  Toxicological (Section 11)

  
	
  MSDS Number:

  	
  801538

  

 

Guide to Abbreviations:

ACGIH = American Conference of Governmental
Industrial Hygienists; CASRN = Chemical Abstracts Service Registry Number;
CEILING = Ceiling Limit (15 minutes); CERCLA = The Comprehensive Environmental
Response, Compensation, and Liability Act; EPA = Environmental Protection
Agency; IARC = International Agency for Research on Cancer; LEL = Lower
Explosive Limit; NE = Not Established; NFPA = National Fire Protection Association;
NTP = National Toxicology Program; OSHA = Occupational Safety and Health
Administration; PEL = Permissible Exposure Limit (OSHA); SARA = Superfund
Amendments and Reauthorization Act; STEL = Short Term Exposure Limit (15
minutes); TLV = Threshold Limit Value (ACGIH); TWA = Time Weighted Average (8
hours); UEL = Upper Explosive Limit; WHMIS = Worker Hazardous Materials
Information System (Canada)

 

Disclaimer of Expressed and
Implied Warranties:

The information presented in this Materiel
Safety Data Sheet is based on data believed to be accurate as of the date this
Material Safety Data Sheet was prepared. HOWEVER, NO WARRANTY OF
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, OR ANY OTHER WARRANTY IS
EXPRESSED OR IS TO BE IMPLIED REGARDING THE ACCURACY OR COMPLETENESS OF THE
INFORMATION PROVIDED ABOVE, THE RESULTS TO BE OBTAINED FROM THE USE OF THIS
INFORMATION OR THE PRODUCT, THE SAFETY OF THIS PRODUCT, OR THE HAZARDS RELATED
TO ITS USE. No responsibility is assumed for any damage or injury resulting
from abnormal use or from any failure to adhere to recommended practices. The
information provided above, and the product, are furnished on the condition
that the person receiving them shall make their own determination as to the
suitability of the product for their particular purpose and on the condition
that they assume the risk of their use. In addition, no authorization is given
nor implied to practice any patented invention without a license.

 

5

 

Exhibit 4

CPreme® Graphite Powder Storage Instructions

 

CPreme®
anode powder (“Product”) is warranted to maintain the manufacturer’s
specification for a period of 3 years from the product shipment date if stored
properly as described in this exhibit. Failure to follow these storage
instructions will void the warranty.

 

1.               Product must be
stored in the original containers and packaging with original seals and
manufacturing markings intact. Product labeling should not be removed and kept
legible throughout storage.

2.               Product must be
stored in a clean, indoor, temperature and humidity controlled space.

3.               Product shall
be kept dry, free from moisture or condensation and can not be dipped or
submerged in water or any other liquids.

4.               Product and the
packaging should be kept free of dust (blowing or settling).

5.                Product must
be stored in an insect end pest free environment.

6.               Product must be
stored and handled in conditions that do not allow contamination by any other
materials including water, solvents, dust, chemicals or solids.

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