Document:

Exhibit

EXHIBIT 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY ASTERISKS ***, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

STRATEGIC SUPPLIER AGREEMENT

STRATEGIC SUPPLIER AGREEMENT

Between

KAIFA TECHNOLOGY (H.K.) LIMITED

And

MAXWELL TECHNOLOGIES, INC.

KAIFA – MAXWELL SSA        PAGE 1 OF 17

STRATEGIC SUPPLIER AGREEMENT

THE PARTIES.  Kaifa Technology (HK) Ltd, a company incorporated in Hong Kong and whose principal office is located at 2201 HK Worsted Mills Ind Bldg, 31-39 Wo Tong Tsui St., Kwai Chung, NT, Hong Kong, Hong Kong (hereinafter “KAIFA”) and Maxwell Technologies, Inc., a company incorporated in Delaware and whose principle office is located at 3888 Calle Fortunada, San Diego, California 92123, United States (hereinafter “MAXWELL”) have held discussions to form an agreement to manufacture MAXWELL’s Large Cell and Module Family of Products.

RECITALS, Whereas, KAIFA is a leading electronic manufacturing service provider.

Whereas, MAXWELL is the sole owner of certain proprietary technology including know-how, trade secrets, patents and/or patent applications related to the Products and has previously produced the Products. 

Whereas, MAXWELL and KAIFA are interested in entering this Strategic Supplier Agreement (the “Agreement”) to reflect the ongoing activities of the Parties (as defined below) and to establish a framework for the cooperation between the companies for the manufacture of the Products.

Whereas, MAXWELL wishes to have the Products manufactured and KAIFA is willing to manufacture the Products, all subject to the terms and conditions of this Agreement. 

Now, wherefore, in consideration of the covenants and promises contained herein, receipt and sufficiency of which is hereby acknowledged, MAXWELL and KAIFA agree as follows:

1.    DEFINITIONS

Large Series Cells means MAXWELL ultracapacitors 650F – 3400F range.

License shall have the meaning as set forth in Section 2.1 herein.
    
Maxwell Module Design means the design of any module utilizing Medium Series Cells and/or Large Series Cells.
    
Medium Series Cells means MAXWELL ultracapacitors 310F-400F range.

Module Products means ultracapacitor modules built by KAIFA including 16V- 160V Modules which incorporate the Medium Series Cells, Large Series Cells and the MAXWELL Module Design.

Process Improvements shall have the meaning as set forth in Section 2.4 herein.
    
Products means (a) Large Series Cells and (b) Module Products 

Parties means the parties to this Agreement.    

Technology means all information required to enable the manufacture of the Products as contemplated under this Agreement including all patented, know-how and/or trade secret 

KAIFA – MAXWELL SSA        PAGE 2 OF 17

STRATEGIC SUPPLIER AGREEMENT

technology in relation to the Products, all product designs (including the MAXWELL Module Design), a complete list of vendors, and all process instructions and test protocols.
    
Training shall have the meaning as set forth in Section 2.5 herein.

2.    RIGHTS AND OBLIGATIONS OF THE PARTIES

2.1      Licence.  Subject to the limitations outlined in this Agreement, MAXWELL grants to KAIFA for the Term of this Agreement a nonexclusive, non-transferable, non-sublicenseable, royalty free licence to use the Technology solely to manufacture the Products (the “Licence”), which shall be sold exclusively to MAXWELL.  

2.2      Use Scope.  KAIFA agrees to not manufacture or sell, either directly or indirectly, the Products to any other entity aside from MAXWELL and its successors.  

2.3      Competitor’s products.  KAIFA agrees not to use or disclose the Technology or Process Improvements (as defined below) for the purposes of the manufacture of ultracapacitor products of any other third party without the prior written consent of MAXWELL. 

2.4      Technology Transfer.  MAXWELL shall provide KAIFA with the License and a transfer of know-how to enable KAIFA to manufacture the Products and to utilize the Technology to design process improvements for the manufacture of the Products (“Process Improvements”). 

2.4.1    MAXWELL Obligations.  MAXWELL shall provide KAIFA with the following:

		
	(a)
	manufacturing documentation, specifications, drawings, equipment requirements, MAXWELL Module Design and other items that are required by KAIFA to manufacture the Products; and

		
	(b)
	electronic and physical copies of product specifications for the Products; and

		
	(c)
	assistance to KAIFA to select factory line equipment; and 

		
	(d)
	approved list of vendors and suppliers for components. 

2.5      Training and Support for KAIFA Personnel.  At the request of KAIFA, MAXWELL agrees to provide training and ongoing engineering support to KAIFA and its employees in relation to the manufacture of the Products (“Training”).  All out of pocket travel costs and expenses will be borne by the party which incurs the cost.

2.6      MAXWELL Responsibilities.  MAXWELL agrees to provide telephone, e-mail, and fax support as required by KAIFA to help KAIFA’s implementation of the aforementioned know-how, and to ensure KAIFA’S knowledge of manufacturing developments for the Products are updated for the duration of the Agreement.  As long as the Agreement is in place, MAXWELL shall disclose to KAIFA and grant KAIFA a nonexclusive, non-transferable, non-sublicenseable, royalty-free license to all subsequent improvements which are directly related to the Products and Technology and are necessary in order for KAIFA to accomplish all obligations under this Agreement.

2.7      KAIFA Responsibilities.  KAIFA shall provide, at its own expense, personnel to receive the Training from MAXWELL, all factory space, manufacturing equipment and qualified personnel.  Such qualified personnel shall include the “***” as outlined in Section 3.2.

3.    HUMAN RESOURCE REQUIREMENTS

3.1    Dedicated Management Team.    KAIFA shall designate a group of management level personnel (“Dedicated Management Team”) to manage, on an exclusive basis, the manufacturing and other services 

KAIFA – MAXWELL SSA        PAGE 3 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

STRATEGIC SUPPLIER AGREEMENT

to be performed for MAXWELL pursuant to this Agreement.  MAXWELL shall approve key members of the Dedicated Management Team. 

3.2    ***. KAIFA must offer employment to the individuals identified by MAXWELL (the “ *** ”) whom are currently or were previously employed by *** (“ *** ”) and are expected to end such employment with *** in ***. The terms of such offers of employment, including salary and benefits, must not be less than those currently granted to the  ***  who remain employed by *** until ***. After an initial six (6) month employment period, KAIFA may, in its discretion, terminate all or certain of the  *** , provided that, KAIFA replaces such terminated  ***  with equally qualified replacement employees that are approved by MAXWELL.

3.3    Incentives.  KAIFA shall use its best efforts to retain all members of the Dedicated Management Team and  *** , who are performing their duties satisfactorily, for as long as this Agreement is in effect by offering the members of the Dedicated Management Team and  ***  incentive bonuses and/or including non-competition provisions in their employment contracts (to the full extent allowable under applicable law).

3.4    Replacement Employees. In the event any member of the Dedicated Management Team *** shall cease to be an employee of KAIFA, KAIFA shall use its best efforts to replace such member of the Dedicated Management Team *** with an individual of equal skill and qualifications (“Replacement Employee”) within ninety (90) days of such employee’s termination; subject to MAXWELL’s approval rights for members of the Dedicated Management Team as outlined in Section 3.1.  

3.5    Other Personnel. KAIFA shall be responsible for providing all other qualified personnel that may be required for KAIFA to perform its obligations hereunder.

3.6    MAXWELL Employees. KAIFA shall provide living accommodations in the KAIFA Dongguan facility to MAXWELL employees that work onsite at the Dongguan site and shall provide such MAXWELL employees with transportation to and from the manufacturing facilities and housing facilities, all at KAIFA’s sole expense. 

4.    MANUFACTURING FACILITIES AND EQUIPMENT

4.1    Manufacturing Facilities.    KAIFA shall provide a secured area to MAXWELL ***, for MAXWELL’s exclusive production of the Products and shall restrict access to such production area to authorized personnel.  The lobby entrance on the *** shall have approved MAXWELL signage prominently displayed. 

4.2    Facilities Timeline.  KAIFA shall be responsible for constructing and implementing two cell production lines and one module production line, incorporating the *** (as defined below) pursuant to the milestones/schedule in Appendix A attached hereto. 

4.3    *** Equipment.  KAIFA will purchase, at its sole expense, the manufacturing equipment and other assets as mutually agreed by MAXWELL and KAIFA (the “***”) from *** on mutually agreed timeline, such equipment costs to be amortized over the Products sold to MAXWELL during the first three (3) years of production, such cost to be agreed by both parties.  MAXWELL and KAIFA will meet regularly to identify in writing all *** that is to be purchased by KAIFA. The writing will be in the form of an asset matrix/schedule, to include: (i) asset number, (ii) asset description (both in English and Chinese), (iii) asset location, and (iv) asset cost (USD).  After all costs associated with the  ***  have been fully amortized pursuant to the terms herein, all title and ownership of such  ***  shall be transferred to MAXWELL and KAIFA agrees to execute any and all documents or agreements required to effectuate such transfer of ownership. In the event that the  ***  or any portion thereof are destroyed or otherwise damaged due to KAIFA’s negligence or willful misconduct, KAIFA shall pay MAXWELL an amount equal to the cost to repair the damaged  *** . MAXWELL shall compensate KAIFA for reasonable losses resulting from unreasonable delay in the equipment transfer timeline which is caused by MAXWELL or ***. 

KAIFA – MAXWELL SSA        PAGE 4 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

STRATEGIC SUPPLIER AGREEMENT

4.4    Other Equipment & Tooling.  KAIFA shall be responsible for obtaining and/or building, at its sole expense, all other equipment or tooling required to manufacture the Products (“Tooling”) pursuant to this Agreement. If the final Tooling cost is higher than ***, then the Parties will discuss in good faith the potential amortization of certain Tooling costs. To the extent any Tooling costs are amortized, all title and ownership of such Tooling shall be transferred to Maxwell and KAIFA agrees to execute any and all documents or agreements required to effectuate such transfer of ownership.

4.5    MAXWELL Equipment.  In the event MAXWELL provides any of its own equipment or assets to KAIFA (“MAXWELL Assets”), such MAXWELL Assets shall remain the exclusive property of MAXWELL and shall be properly labeled, inventoried and tracked by KAIFA.  KAIFA shall properly store and maintain the MAXWELL Assets at its sole expense and shall be responsible for the safekeeping thereof.  In the event the MAXWELL Assets or any portion thereof are destroyed or otherwise damaged due to KAIFA’s negligence or willful misconduct, KAIFA shall pay MAXWELL an amount equal to the book value of such damaged MAXWELL Asset.  The MAXWELL Assets shall be returned to MAXWELL upon the earlier of (i) the termination or expiration of this Agreement or (ii) MAXWELL’s request.

4.6    Maintenance and Repair. KAIFA shall be responsible for maintaining the  *** , Tooling and MAXWELL Assets (collectively, “Product Manufacturing Equipment”) to the standards as mutually agreed upon by the Parties and shall ensure that the Product Manufacturing Equipment remains in good, safe operating condition.  All maintenance, repairs and servicing of the Product Manufacturing Equipment shall be at KAIFA’s cost and expense. Maxwell shall ensure that the  ***  meets the design requirements prior to the start of production. In the event the  ***  is not in good working condition upon purchase by KAIFA, KAIFA reserves the right to request a maintenance and repair fee to the extent the initial maintenance and repair costs are higher than other comparable equipment.
 
4.7    Exclusive Use.  The  *** , MAXWELL Assets and Tooling shall be used exclusively for the manufacture of the Products for MAXWELL.  
    

5.    APPROVED VENDORS AND SUPPLIERS. KAIFA shall only utilize vendors and suppliers that are on MAXWELL’s approved vendor and supplier list for the procurement of parts, materials or suppliers related to the manufacture of the Products hereunder.     

6.       MAXWELL’S RETAINED RIGHTS. MAXWELL and/or its successor company retains all rights pertaining to the Products and Technology including, but not limited to, the right to manufacture the Products itself or have the Products manufactured by a third party and the right to sell any of the Products worldwide.  Except as provided in Section 2.1, MAXWELL does not grant and nothing herein shall be construed as granting any license to or ownership rights in the Products and Technology.

7.     KAIFA’S FIRST RIGHT OF REFUSAL. KAIFA shall have the “right of first refusal” for the future manufacture of the Products which MAXWELL would like to outsource for manufacturing. MAXWELL shall notify KAIFA in writing of any future outsourcing for manufacturing of the Products, including its quantity requirements, proposed pricing, and any other required terms and conditions. KAIFA shall then notify MAXWELL of its acceptance of the outsourcing offer within twenty (20) business days.  If KAIFA fails to reply to MAXWELL within the specified period of time or KAIFA’s response modifies the terms in MAXWELL’s notice, KAIFA will be deemed to have waived such “right of first refusal.”  Once KAIFA has accepted such offer, MAXWELL shall engage KAIFA to provide such manufacturing activities and shall not engage any third party for conducting such outsourcing activities.

8.    SUPPLY AGREEMENTS

8.1      Supply of Products to MAXWELL by KAIFA.  At the beginning of each calendar quarter during the term of this Agreement, MAXWELL agrees to provide KAIFA with a schedule covering MAXWELL’S 

KAIFA – MAXWELL SSA        PAGE 5 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

STRATEGIC SUPPLIER AGREEMENT

anticipated Product manufacturing requirements for the following three (3) month period (the current quarter) and an estimated rolling monthly forecast for the following two (2) quarters (“Product Demand Schedule” or “PDS”).

8.1.1    Binding Forecast.  The PDS shall be a “Binding Forecast” for manufacture of the Products for the current quarter.  The Binding Forecast will follow normal terms and conditions with payment made according to the pricing dictated below in Section 9.  The estimated rolling monthly forecast also set out in the PDS will be a non-binding forecast to provide KAIFA with anticipated future manufacturing requirements.

8.1.2    Flexibility.  Subject to Section 8.4, MAXWELL reserves the right to modify the Binding Forecast at no cost to MAXWELL.  MAXWELL may order Products in excess of the Binding Forecast by 20% in the first month, 50% in the second month, and 100% in the third month of the current quarter, subject only to raw material availability and maximum capacity of the production line (equipment + labor). If raw materials are not available to and cannot be reasonably secured by KAIFA to manufacture Products in excess of the Binding Forecast, KAIFA shall not be considered in breach of this Agreement by failing to fulfill MAXWELL’s order requirements. Subject to Section 8.4, MAXWELL may also order less than the Binding Forecast by 0% in the first month, 20% in the second month, and 30% in the third month.  

8.1.3      Purchase Order.  MAXWELL will place a blanket purchase order (“Blanket Purchase Order”) for each quarter and will make written request to KAIFA for shipment of the Products 

KAIFA – MAXWELL SSA        PAGE 6 OF 17

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on an as needed basis.  The minimum shipment quantity must meet MAXWELL’s optimized pallet quantity for the respective product.

8.1.4   Raw Material Buffer Stock Agreement.  KAIFA shall be required to have “On Hand” enough raw material to cover (i) the current quarter’s Binding Forecast and (ii) 4 weeks of the immediately following quarter’s non-binding forecast as stated in the PDS for Product SKUs: ***, or any other Products specifically identified by MAXWELL. 

8.2    Raw Materials. Other than Consigned Material supplied by MAXWELL pursuant to Section 8.5 below and subject to Section 5 above, KAIFA shall be responsible for procuring all raw materials required for the manufacturing of the Products.  In addition to the value-added prices appearing in Appendix B, Maxwell shall pay to Kaifa the previously agreed raw material costs for each Product delivered.  Before the conclusion of every calendar quarter, Kaifa shall deliver to Maxwell a schedule of all additional raw material and piece part costs associated with each Product for the immediately following quarter.  Maxwell shall approve or reject such raw material and piece part costs in a writing and, if approved, such amount shall be added to the value-added pricing referenced above to constitute the total purchase price of the respective Product.  The parties hereby agree that such writing shall constitute a modification of the Agreement whether or not such statement explicitly appears on such writing.  

8.3      Cost Reduction and Volume Plans.  MAXWELL, in cooperation with KAIFA, will publish a cost reduction and volume plan that meets its specific business requirements on a semi-annual basis.

8.3.1    Proposal Consideration.  MAXWELL agrees to openly consider any cost reduction proposal provided by KAIFA, including but not limited to: material changes, process modifications, parts conditioning and test protocols.  MAXWELL will provide KAIFA with a test plan for qualifying any such changes.  However, the final decision to implement any of these suggested changes must be agreed to by both Parties after full evaluation and with confirmation in writing.

8.3.2      External Cost Reduction.  All cost reduction achieved by MAXWELL on any Products outside of the actions specified in this Agreement will be completely to the benefit of MAXWELL, financially or otherwise.

8.4      Minimum Commitments. MAXWELL shall purchase a minimum manufacturing volume of *** Large Series Cells per quarter from Kaifa.  In the event MAXWELL purchases less than *** Large Series Cells in any given quarter, the Parties shall negotiate in good faith a potential price adjustment for the reduced purchase amount. MAXWELL or its wholly owned subsidiaries retain the right to manufacture any of its own Products. 

8.5      Supply of Consigned Material. 

8.5.1      MAXWELL shall supply the electrodes to KAIFA for the manufacture of the Large Series Cells (“Consigned Electrode”).  The Consigned Electrode shall not be purchased by KAIFA, shall remain the exclusive property of MAXWELL and shall be properly labeled, inventoried and tracked by KAIFA.  KAIFA shall provide MAXWELL with periodic inventory reports.  For 

KAIFA – MAXWELL SSA        PAGE 7 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

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avoidance of doubt, the pricing of the Products as outlined in Section 8.2 above properly accounts for MAXWELL’s supply of electrode.  

8.5.2     KAIFA shall store all Consigned Electrode at its sole expense and shall be responsible for the safekeeping thereof.  In the event the Consigned Electrode or any portion thereof is destroyed or otherwise damaged due to KAIFA’s negligence or willful misconduct, KAIFA shall pay MAXWELL an amount equal to MAXWELL’s then current retail price of such Consigned Electrode.

8.5.3    If MAXWELL does not supply KAIFA with adequate Consigned Electrode for the manufacture of Products ordered by MAXWELL, KAIFA shall not be in breach of this Agreement for the failure to meet the order. 

8.5.3    MAXWELL shall the right to access any facilities in which the Consigned Electrode are stored, to observe any physical inventory counts performed by KAIFA, and to audit the inventory levels of such Consigned Electrode at any time.  

8.6      Special Terms.  KAIFA acknowledges and agrees that, from time to time, MAXWELL may submit to KAIFA special orders for Products that contain additional requirements, manufacturing, delivery and/or supply obligations contractually required of MAXWELL by third parties (“Special Terms”). MAXWELL shall identify such Special Terms in the email submission of such special orders, and copy the respective KAIFA personnel assigned for MAXWELLS account. To the extent that KAIFA accepts an order for Products containing or otherwise referencing such Special Terms, such Special Terms shall be deemed part of this Agreement and contractual obligations of KAIFA hereunder.  KAIFA shall defend, indemnify and hold harmless MAXWELL from and against all liabilities, losses, costs, damages, legal fees and claims which MAXWELL suffers from KAIFA’s breach of such Special Terms. 

 9.     FINANCIAL TERMS

9.1      Payments.  The pricing schedule for the respective Products shall be as outlined in Section 8.2 and Appendix B attached hereto, as amended from time to time. The prices are for DDP MAXWELL Selected Facility (as defined in INCOTERMS 2010) delivery terms.   

9.2      Terms.  All payments by MAXWELL shall be made in US dollars without any set off, deduction or withholding of any kind, unless required by applicable law. Payment shall be made by direct transfer to the bank account stipulated by KAIFA. MAXWELL shall bear its own bank charges. Payment is due net 30 days after the invoice date. Blanket Purchase Orders will remain valid for three (3) months from the date of issuance.   The local logistic cost for Consigned Electrode to and from KAIFA’s factory once the Consigned Electrode has been delivered to KAIFA’s Hong Kong Container terminal by Maxwell, for both receipt and delivery, is inclusive in the pricing and shall be borne by KAIFA supply chain management.  

10.     CONFIDENTIALITY

10.1      Confidential Information.  For purposes of this Agreement, confidential or proprietary information is that which the disclosing party wishes to maintain control by preventing its unauthorized use, reproduction or disclosure, except that it is expressly understood by both Parties that proprietary or confidential information does not include: (a) Information which at the time of disclosure is in the public domain; or (b) Information which, after disclosure, is published or otherwise becomes part of the public domain through no fault of the receiving party; or (c) Information which the receiving party can show was received by it after the time of disclosure hereunder from a third party who did not require the receiving party to hold it in confidence and who did not acquire it, directly or indirectly, from the disclosing party; or (d) Information which was known to the receiving party prior to the time of the disclosure; or (e) Information which is disclosed with the prior written permission of the disclosing party; or (f) Information which is independently developed by the receiving party, as evidenced by its business records.  Each party agrees to identify the information deemed 

KAIFA – MAXWELL SSA        PAGE 8 OF 17

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to be of a confidential or proprietary nature orally, visually, and in the case of physical or electronic writings with markings such as “Confidential Information”.  All oral or visual information deemed to be Confidential Information must be confirmed in writing by the disclosing party within thirty (30) days after such oral or visual disclosure.

10.2      Absolute Confidentiality.  Both Parties agree to the absolute confidentiality of all confidential information including, but not limited to, information pertaining to the manufacture of the Products.  Both MAXWELL’s intellectual property and know-how and any KAIFA generated proprietary information will be subject to the confidentiality obligations herein. It is understood and agreed by the parties that this Agreement may be publically disclosed in connection with either parties’ legal reporting and annual disclosure obligations.

10.3      Responsibility.  Each party agrees to keep in confidence and protect disclosed confidential or proprietary information using a standard of at least reasonable care for a period of five (5) years from the date of termination of this Agreement, and in no event will use a standard of care that is less than it employs with respect to its own confidential information; except, however, that in the case of confidential information that is identified by a party as a trade secret or proprietary know how, such confidential information shall be kept in confidence and protected using a standard of at least reasonable care in perpetuity, or until a disclosing party informs the receiving party that the confidential information is no longer a trade secret or proprietary know how.  In addition, each party agrees that it will not disclose to others, duplicate, or use such information for any purpose other than that for which it is intended without the prior written consent of the disclosing party.  Each party agrees that prior to disclosure to any Parties that are not employees, representatives, or subsidiaries of the receiving party, written approval from the disclosing party must be obtained.

10.4      No Reverse Engineering.  KAIFA shall not reverse engineer, disassemble or decompile the Consigned Electrode, which embodies MAXWELL’s Confidential Information and which is provided to KAIFA. Subject to the foregoing, KAIFA shall be permitted to disassemble or decompile the Products for the sole purpose of training its employees on the manufacture of the Products or to perform failure analysis support for defective Products as required under this Agreement. 

10.5    Return of Information.  Upon demand by the disclosing party, all physical or electronic confidential or proprietary information shall be permanently destroyed by the receiving party, or returned by the receiving party to the disclosing party. Such destruction or return of confidential information will be documented in a writing sent to the disclosing party. 

11.     PROPRIETARY RIGHTS

11.1      MAXWELL Indemnity.  MAXWELL agrees to indemnify and hold harmless KAIFA and/or its affiliates from and against all costs, claims, and liabilities based upon the alleged infringement by the Products or the Technology of any patent, design, copyright or other proprietary right or interest of any third party.  This indemnity will only apply if MAXWELL is notified within 10 business days  in writing of any claim or threatened claim and  KAIFA provides MAXWELL with such reasonable assistance as MAXWELL may request with respect to the defense or settlement.   Further, the indemnity will not apply to any use of the Products for which they are not intended and will not apply to any infringement of third party intellectual property rights to the extent that the infringement is caused by a modification to the Products or Technology by KAIFA which was not authorized by MAXWELL.

11.1.1     New License or Design Modification.  In the event that an intellectual property infringement suit is threatened or commenced against KAIFA in concert with its fulfilling its production obligation to MAXWELL, MAXWELL shall either procure for KAIFA the right to use the challenged Technology or change the design of the Products so as to eliminate the infringing characteristics or properties.

KAIFA – MAXWELL SSA        PAGE 9 OF 17

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11.1.2     No Further Warranty.  The foregoing states the entire liability of MAXWELL with respect to patent infringement.

11.2      KAIFA Indemnity.  KAIFA agrees to indemnify and hold harmless MAXWELL based on any claim that any manufacturing processes developed or provided by KAIFA, including any Process Improvements, under this Agreement infringe or violate any patent, copyright, trademark, trade secret or other proprietary right of the third party. This indemnity will only apply if KAIFA is notified within 10 business days in writing of any claim or threatened claim and MAXWELL provides KAIFA with such reasonable assistance as KAIFA may request with respect to the defense or settlement.   Further, the indemnity will not apply to any use of the Products for which they are not intended and will not apply to any infringement of third party intellectual property rights to the extent that the infringement is caused by a modification to the Products or Technology by MAXWELL.

11.3      Intellectual Property.  KAIFA shall retain ownership of all its intellectual property owned by it prior to this Agreement and shall be the legal owner of those intellectual property generated solely by KAIFA, excluding the Process Improvements described in Section 2 above.  All Process Improvements, including the underlying intellectual property therein, shall be considered “work-made-for-hire” for MAXWELL, and therefore, MAXWELL shall be the owner thereof for all purposes throughout the world.  If for any reason any of the foregoing Process Improvements are not deemed a work-made-for-hire, then KAIFA hereby grants and irrevocably assigns to MAXWELL all such rights, title and interest to the Process Improvements. During the term of this Agreement, MAXWELL agrees to and hereby does grant to KAIFA an irrevocable, non-exclusive, non-transferable, royalty-free license to use any Process Improvement.  MAXWELL also agrees to and hereby does grant to KAIFA an irrevocable, non-exclusive, non-transferable, royalty-free license to reproduce, translate, and use any copyrighted or copyrightable material relating to the Process Improvement including without limitation, any reports, drawings, blueprints, data, software and technical information, for use during the term of this Agreement.

12.     DISCLAIMERS; LIMITATION OF LIABILITIES

12.1  WITH RESPECT TO ANY MATERIALS, INFORMATION, TECHNOLOGY OR SERVICES PROVIDED BY MAXWELL, MAXWELL EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT.

KAIFA – MAXWELL SSA        PAGE 10 OF 17

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12.2    MAXWELL shall defend, indemnify and hold KAIFA harmless from and against all liabilities, losses, costs, damages, legal fees and claims which KAIFA suffers in respect of physical injury, death and/or physical damages to any person or property whatsoever that may arise out of or in consequence of the usage of properly manufactured, non-defective Products.  MAXWELL WILL NOT BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER UNDER THIS AGREEMENT FOR: (I) ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OR FOR ANY LOSS OF BUSINESS, LOSS OF REVENUE OR LOSS OF PROFIT WHETHER SOUNDING IN CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY OR FOR (II) ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE AMOUNTS PAYABLE TO KAIFA HEREUNDER DURING THE TWELVE (12) MONTH PERIOD PRIOR TO THE DATE THE CAUSE OF ACTION AROSE.

12.3    KAIFA shall defend, indemnify and hold MAXWELL harmless from and against all liabilities, losses, costs, damages, legal fees and claims which MAXWELL suffers in respect of injury, death and/or physical damages to any person or property whatsoever that may arise out of or in consequence of the usage of improperly manufactured or defective Products. KAIFA WILL NOT BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER UNDER THIS AGREEMENT FOR: (I) ANY INDIRECT, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OR FOR ANY LOSS OF BUSINESS, LOSS OF REVENUE OR LOSS OF PROFIT WHETHER SOUNDING IN CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY OR FOR (II) ANY AMOUNTS IN EXCESS IN THE AGGREGATE OF THE AMOUNTS PAYABLE TO KAIFA HEREUNDER DURING THE TWELVE (12) MONTH PERIOD PRIOR TO THE DATE THE CAUSE OF ACTION AROSE.

13.     TERM AND TERMINATION OF AGREEMENT

13.1      Term.  This Agreement shall remain in effect for three (3) years following the date of the later of the two signatures at the bottom of this Agreement.

13.2      Renewal.  This Agreement shall automatically be renewed thereafter on a yearly basis until it is terminated by either party under the termination clauses as referenced below.

13.3      Termination for Cause.  Both Parties have the right to terminate this Agreement immediately if the other party is in material breach of this Agreement and the party has failed to cure the breach within sixty (60) days after receiving written notice of said breach.

13.4      Termination for Convenience.  Either Party may terminate this Agreement without cause by giving the other party twelve (12) months written notice. If Maxwell terminates the agreement without cause before the  ***  costs are fully amortized pursuant to Section 4.3, MAXWELL shall compensate KAIFA for the remaining un-amortized cost.  

13.5      Post-Termination Activity.  In the case of termination for convenience, both Parties agree to fulfill whatever outstanding activities exist or will exist within the termination notice period.  No payments under this Agreement will be refunded upon said termination.  All outstanding orders, deliveries, and invoices and other amounts due between the Parties upon termination will be honored and paid.

13.6      Superseding Agreement.  This Agreement will be terminated if it is superseded by a new agreement executed by both Parties covered under this Agreement.

14.     OTHER PROVISIONS

14.1      Assignment.  Subject to the terms hereof, this Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the Parties hereto, but it shall not be assigned in whole or in part by KAIFA without the prior written consent of the other party. KAIFA shall not have the right to subcontract 

KAIFA – MAXWELL SSA        PAGE 11 OF 17

STRATEGIC SUPPLIER AGREEMENT

any of its obligations under this Agreement to any third party nor to assign all or any portion of its rights under this Agreement to any of its affiliates, other than Dongguan Kaifa Technology Co., Ltd, without the prior express written consent of MAXWELL. Further, KAIFA shall not novate its rights and obligations under this Agreement without the prior express written consent of MAXWELL. Maxwell shall be entitled to assign this Agreement in whole or in part without the consent of KAIFA, provided that KAIFA shall be entitled to adjust payment terms in good faith based on assignee’s credit worthiness and financial standing.

14.2      Amendments and Notices.  This Agreement may only be changed by a written amendment signed by both Parties.  All notices, requests, consents and other communication required or permitted under this Agreement shall be in writing and shall be sent by registered mail, facsimile, or e-mail accompanied with a signed original sent by registered mail) to the following addresses:

To KAIFA:    Kaifa Technology (HK) Ltd
2201 HK Worsted Mills IndBldg, 
31-39 Wo Tong Tsui St., 
Kwai Chung, NT, Hong Kong, Hong Kong 
Fax: 86-755-8327 5054
Attn.: Diana Cao 
E-mail: JingCao@kaifa.cn

To MAXWELL:    Maxwell Technologies, Inc.
3888 Calle Fortunada
San Diego, California, USA 92109
Fax: +1-858-503-3341
Attn.: Emily Lough
E-mail: elough@Maxwell.com

Either party may change their above address by written notice to the other party.

14.3     Warranty.  

10.3.1     KAIFA represents and warrants that: (1) all Products delivered pursuant to this Agreement will be new, unless otherwise specified; (2) all Products will strictly conform to applicable specifications, drawings, and *** notified in writing by MAXWELL, and all items will be free from material defects in manufacture and ***; and (3) that any services performed hereunder shall be performed in accordance with the reasonable instructions of MAXWELL, and with the skill and judgment exercised by provider of services of a similar nature.  Remedies under this warranty shall be limited to ***.  

KAIFA – MAXWELL SSA        PAGE 12 OF 17

STRATEGIC SUPPLIER AGREEMENT

The foregoing warranties shall survive any delivery, inspection, acceptance or payment by MAXWELL.  The warranty shall be provided for ***.

10.3.2    If, however, the Products and related processes fail to meet either Maxwell’s written specifications for quality and reliability as agreed to and/or accepted in writing by KAIFA, or any standards established under VDA 6.3 Quality Audits and/or TS 16949 Quality Audits and as a result of the actions or inactions, in whole or in part, on behalf of KAIFA, then KAIFA shall take all necessary actions to regain compliance with all quality and performance standards.  Further, if during a future audit KAIFA is issued an official audit action item which results in a downgrade of KAIFA’s supplier status to any level below an “A” Quality Supplier or equivalent, according to MAXWELL’s customer standards, and such downgrade is caused, in whole or in part, as a result of KAIFA’s actions or inactions, then KAIFA shall remedy any issues causing the action item before the next audit cycle, typically ninety (90) days.  If KAIFA fails to take the corrective actions identified above within ninety (90) days, then MAXWELL shall have the right to terminate this Agreement for material breach by KAIFA.  Such termination shall be immediate as of the respective dates listed above and without the need for notice as provided under Section 13.3.  Such termination shall also be without penalty to MAXWELL.

10.3.3     MAXWELL represents and warrants that: (1) the Technology is owned by MAXWELL and it has the right to license the Technology to KAIFA on the terms set out in this Agreement; (2) it has not entered into any agreement, arrangement or understanding which restricts or otherwise inhabits KAIFA’s right to use the Technology as contemplated in this Agreement; and (3) the use of the Technology by KAIFA will not require a license from a third party or infringe the rights of a third party.

14.4      Quality Management.   MAXWELL and KAIFA shall enter into a Supplier Quality Management Agreement that establishes guidelines for effective company-to-company supplier quality management.

14.5    Headings.  The headings and titles to the Articles and Sections of this Agreement are inserted for convenience only and will not be deemed a part of this Agreement or affect the construction of any provision of this Agreement.

14.6      Entire Agreement.  This Agreement is the formal written agreement of the Parties and constitutes the entire agreement and understanding between the Parties concerning the subject matter hereof and supersedes all prior writing or understanding of the Parties regarding the manufacture in China of the Products.

14.7      Waiver.  The failure by either party to enforce at any time any of the provisions of this Agreement, or to exercise any election or option provided herein, shall in no way be construed as a waiver of such provisions or options, nor in any way to affect the validity of this Agreement or any part thereof, or the right of either party thereafter to enforce each and every such provision.

14.8      Remedies.  Unless otherwise expressly provided in this Agreement, the rights and remedies set forth in this Agreement are in addition to, and not in limitation of, other rights and remedies under this Agreement, at law or in equity, and the exercise of one right or remedy will not be deemed a waiver of any other right or remedy.

14.9      Force Majeure.  Neither party shall be held responsible for failure or delay to perform all of any part of this Agreement due to flood, fire, earthquake, draught, war or any other event which could not be predicted, controlled, avoided or overcome by the relative party.  However, the party affected by the event of Force Majeure shall inform the other party of the occurrence in writing as soon as possible and thereafter send a certificate of the event issued by the relevant authorities to the other party within 15 days after the occurrence.  In the event that a condition of Force Majeure shall continue for a period of three (3) months such that this Agreement shall become commercially impracticable, MAXWELL and KAIFA shall each have the right to cancel this Agreement.

KAIFA – MAXWELL SSA        PAGE 13 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

STRATEGIC SUPPLIER AGREEMENT

14.10     Dispute Resolution.  If any dispute arises, both Parties will try to resolve the dispute by negotiation.  If the dispute is not resolved by negotiation, the dispute will be settled by arbitration using this English version of the Agreement.  If either party requests arbitration, it will be held in San Diego, California, USA, in accordance with the rules of the American Arbitration Association.  The arbitration award will be final and each party will pay its own arbitration expenses.

14.11      Governing Law.  This Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

[SIGNATURE PAGE FOLLOWS]

KAIFA – MAXWELL SSA        PAGE 14 OF 17

STRATEGIC SUPPLIER AGREEMENT

This Agreement has been duly authorized by both KAIFA and MAXWELL and has been signed by both Parties.

MAXWELL TECHNOLOGIES, INC.                   KAIFA TECHNOLOGY (HK) LTD

/s/ Earl Wiggins            
Earl Wiggins
Vice President, Operations

Date  May 7, 2018            

 

/s/ Hao Zhou            
Hao Zhou 
General Manager of Commercial and Industrial Business Unit

Date  May 4, 2018        

KAIFA – MAXWELL SSA        PAGE 15 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

STRATEGIC SUPPLIER AGREEMENT

Appendix A
 Facilities Timeline

***

KAIFA – MAXWELL SSA        PAGE 16 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

STRATEGIC SUPPLIER AGREEMENT

Appendix B
Products and Pricing

***

KAIFA – MAXWELL SSA        PAGE 17 OF 17

*** Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.Exhibit 10.1

 

AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”)
is made as of this 7th day of May, 2018, by and between OLD LINE BANK, a Maryland-chartered trust company exercising
the powers of a commercial bank (the “Bank” or “Employer”), and Mark A. Semanie, a resident of the State
of Maryland (the “Employee”).

 

WHEREAS on May 13, 2013, the Employer and the Employee entered into
an Executive Employment Agreement, as amended by the Fourth Amendment to Executive Employment Agreement by and between the Bank
and the Employee dated as of February 23, 2017 (together, the “Original Agreement”); and

 

WHEREAS the Employer and the Employee desire to amend and restate
the Original Agreement as provided herein.

 

NOW THEREFORE, in consideration of the premises, the benefits provided
to each party hereunder and the mutual promises made herein, the adequacy and sufficiency of such consideration being hereby acknowledged
by the parties, the parties agree as follows:

 

1.       Employment. The
Bank hereby employs the Employee as an Executive Vice President and agrees to continue to employ the Employee in that position
(or in any other position approved by the Bank) during the term of this Agreement, except as otherwise provided below.

 

2.       Term. The initial
term and any extensions thereof are referred to herein as the “Term.” The initial Term of this Agreement expires on
March 31, 2020. The Term of this Agreement is two years. On September 30, 2018 and on each succeeding consecutive March 31st and
September 30th (each an “Anniversary Date”) while this Agreement is in effect, the Term shall be automatically extended
for a period of six months unless the Employer or the Employee informs the other at least 60 days prior to such Anniversary Date
of their decision to not renew.

 

3.       Compensation.
The Employee’s salary under this Agreement shall be $330,750.00 per annum, payable on a bi-weekly basis (“Base Salary”).
The Employee’s Base Salary will be reviewed by the Board of Directors annually, and the Employee will be entitled to receive
annually an increase in such amount, if any, as may be determined by the Board of Directors.

 

4.       Duties.

 

A.       During the term of this
Agreement, the Employee shall serve as an Executive Vice President. He shall have such powers and shall perform such duties that
are incident and customary to this office, and as granted and assigned to him by the Chief Executive Officer (“CEO”)
and/or the Board of Directors.

 

     

    

    

 

B.       The Employee shall devote
his full time, attention, skill, and energy to the performance of his duties under this Agreement, and shall comply with all reasonable
professional requests of the Bank; provided, however, that the Employee will be permitted to engage in and manage personal investments
and to participate in community and charitable affairs, so long as such activities in the judgment of the Bank’s CEO do not
create a conflict of interest or interfere with the performance of his duties under this Agreement. In furtherance of this commitment,
the Employee shall disclose all positions he holds with other organizations and any ownership interests he has in other business
entities where he may influence or control management decisions. Such disclosures shall be made at the commencement of the Employee’s
employment and from time-to-time throughout his employment where his circumstances have changed to make such a disclosure appropriate.

 

C.       The Employee shall immediately
notify the Company of (i) his own illness and consequent absence from work or (ii) any intended significant change in his plans
to work for the Company.

 

5.       Vacation, Sick and
Personal Leave.

 

A.        The Employee shall be
entitled to a total of 20 days of paid vacation each calendar year, which he may use in accordance with the Bank’s announced
policy that is in effect from time-to-time. The Employee may take his vacation at such times that do not interfere with the performance
of his duties under this Agreement.

 

B.       The Employee shall be entitled
to paid sick leave and paid personal leave as is provided in the Employer’s policies then in effect.

 

6.       Expenses. The
Bank shall reimburse the Employee for all reasonable expenses incurred in connection with his duties on behalf of the Bank, provided
that the Employee shall keep and present to the Bank records and receipts relating to reimbursable expenses incurred by him. Such
records and receipts shall be maintained and presented in a format, and with such regularity, as the Bank reasonably may require
in order to substantiate the Bank’s right to claim income tax deductions for such expenses. For any expenditure in excess
of $500.00, the Employee must obtain written approval from the CEO if he is to be reimbursed for the expense. Without limiting
the generality of the foregoing, the Employee shall be entitled to reimbursement for any business-related travel, business-related
entertainment and other costs and expenses reasonably incident to the performance of his duties on behalf of the Bank.

 

7.       Fringe Benefits.

 

A.       Insurance. The Employee
shall receive health insurance, consistent with the terms set forth in the plan established by the Bank for its employees. The
Bank shall also pay the premiums for Employee to receive the following insurance, consistent with the terms set forth in the plans
established by the Bank for its employees: dental; life; short-term disability; and long-term disability.

 

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B.       Banking. The Bank
shall not charge the Employee for use of a savings account, checking account or debit card issued by the Bank. The Employee is
eligible to have his paychecks deposited directly in any account he has with the Bank or elsewhere.

 

8.       Termination of Employment.

 

A.       This Agreement shall terminate
prior to the expiration of its Term only upon and on the occurrence of the following:

 

(i)       on the death of
the Employee in which event all unvested stock options previously granted to the Employee shall immediately vest and the Employer
shall have no further obligation to the Employee other than payment of any unpaid salary and any contractually committed obligations
to provide the Employee with vested benefits pursuant to a salary continuation agreement, supplemental life insurance agreement,
or other form of retirement plan (“Retirement Benefits”) in effect as of the date of death;

 

(ii)       on the date the
Employee becomes physically or mentally incapacitated to the extent he has been unable to perform his duties under this Agreement
for a period of 60 consecutive days and, in order to assist the Bank in making such determination, the Employee agrees to make
himself available for medical examination by one or more physicians chosen by the Bank and grants to the Bank and such physicians
access to all relevant medical information, including copies of the Employee’s medical records and access to the Employee’s
own physicians, in which event Employer will have no further obligation to the Employee other than payment of any unpaid salary
and Retirement Benefits as of the date of disability;

 

(iii)       on the effective
date of the Employee’s voluntary resignation for Good Reason (which for purposes of this Agreement is defined as “a
change in location of the Employer’s principal office that results in the Employee’s commuting distance being at least
50 miles greater than the Employee’s commuting distance on the date of this Agreement” and which shall not occur unless
(a) Employee notified the Employer of such condition within 90 days of its occurrence, (b) the Employer did not remedy such condition
within 30 days, and (c) Employee resigned for Good Reason within 12 months of the condition) in which event (a) the Employer shall
pay to the Employee a lump sum payment equal to the Employee’s salary (at the amount of such salary on the date of resignation)
over the remaining Term, and the Employer shall pay such lump sum payment within ten business days of the effective date of termination
of the Employee’s employment, (b) all unvested stock options previously granted to the Employee shall immediately vest, and
(c) the Employee shall be entitled to payment of any unpaid salary and Retirement Benefits as of the effective date of termination
of the Employee’s employment pursuant to such resignation;

 

(iv)       on the effective
date of the Employee’s voluntary resignation without Good Reason in which event the Employer will have no further obligation
to the Employee other than payment of any unpaid salary and Retirement Benefits as of the date of voluntary resignation;

 

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(v)       on the date the
Employer terminates the Employee for “cause” as defined below in which event the Employee will have no further obligation
to the Employee other than payment of any unpaid salary and Retirement Benefits as of the date of termination; or

 

(vi)       on the date
the Employer terminates the Employee other than for cause in which event (a) the Employer shall pay to the Employee a lump sum
payment equal to the Employee’s salary (at the amount of such salary on the date of termination) over the remaining Term,
and the Employer shall pay such lump sum payment within ten business days of the effective date of termination of the Employee’s
employment, (b) all unvested stock options previously granted to the Employee shall immediately vest, and (c) the Employee shall
be entitled to payment of any unpaid salary and Retirement Benefits as of the effective date of termination of the Employee’s
employment.

 

B.       Termination for Cause.
Notwithstanding the provisions of Section 2 above, the Employee’s employment (and all of his rights and benefits under this
Agreement) shall terminate immediately after written notice upon the happening of any one or more of the following events, which
constitute “cause”: (i) the Employee has breached, in any material respect, a provision of this Agreement; (ii) the
Employee refuses to perform the duties of his employment under this Agreement in any material respect; (iii) the Employee has committed
any act or omission materially and adversely affecting his reputation or that of the Bank or any of its affiliates or materially
and adversely affecting any product, policy, program or service offered through or developed by the Bank or any of its affiliates;
(iv) the Employee is convicted of or pleads guilty to a charge of any felony or of any lesser crime involving fraud or moral turpitude
or directed against the Bank, its affiliates or any of their shareholders, employees, agents or contractors; (v) the Employee commits
any other act which is inconsistent with the good faith fulfillment of his responsibilities as an employee of the Bank or is done
with the intent to harm the Bank, its affiliates or any of their shareholders, employees, agents or contractors; (vi) the Employee
violates any material statute, rule or regulation of any federal, state or local governmental authority pertaining to the marketing,
sale, solicitation or offer of any product, policy or program of the Bank or its affiliates; and (vii) the Employee commits any
other act or omission which an arbitrator or a court of competent jurisdiction justifies as grounds for dismissal for cause.

 

C.       Unused Vacation, Sick
and Personal Leave. The Employee shall be eligible to receive the remaining balance of his unused vacation and personal leave
at the termination of his employment only if he is not terminated for “cause” as defined above and he returns all Bank
property to the Bank prior to his final day of employment. Employee shall have no right to receive any unused sick leave. If the
Employee fails to return any Bank property prior to his last day of employment, the Employee authorizes the Bank to deduct from
his final paycheck the reasonable cost (not value) of that item. In the event that the Employee elects to terminate his employment,
he must provide the Company with 60 days’ notice as provided above in order to receive the remaining balance of his unused
vacation and personal leave.

 

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9.       Non-Competition Agreement.

 

A.       The Employee agrees that,
for one year following termination from the Bank, regardless of reason, he will not, as an individual, stockholder, officer, director,
partner, agent, employee, consultant, or representative, act for or on behalf of or have any interest, direct or indirect, in any
business similar to or competitive with the Bank’s business within a 25-mile radius of the main office of the Bank exclusive
of the State of Virginia or Washington, D.C.

 

B.       The Employee agrees, during
the period of employment and for one year following the termination of employment, not to solicit or sell or attempt to solicit
or sell, for his own account or on behalf of any person or corporation other than the Bank, services or products that are competitive
with the services or products of the Bank to any customer or client to which the Employee (or employees under her managerial control)
has solicited or sold any services or products on behalf of the Bank during any part of the two years immediately preceding the
termination of his employment. This restriction shall, in the case of a multi-location customer or client, apply to the location
or locations where the Employee (or employees under his managerial control) solicited or sold services or products, as well as
any offices of that customer or client within a 25-mile radius of the main office of the Bank.

 

C.       The Employee agrees, during
the period of employment and for one year following termination, not to perform or render services or attempt to perform or render
services, for his own account or on behalf of any person or corporation other than the Bank, for any customer or client of the
Bank for which the Employee (or employees under his managerial control) has performed any services, during any part of the two
years immediately preceding the termination of his employment. This restriction shall, in the case of a multi-location customer
or client, apply to the location or locations where the Employee (or employees under her managerial control) performed or rendered
services, as well as any offices of that customer or client within a 25-mile radius of the main office of the Bank.

 

D.       The Employee agrees, during
the period of employment and for one year following termination, not to solicit or hire, either directly or indirectly, any current
employee of the Bank to work or perform services for his own account or on behalf of any person or corporation other than the Bank,
or attempt to induce any employee to leave the employ of the Bank to work for the Employee or any other person, firm or corporation.

 

E.        The Employee acknowledges
that any breach of these provisions will cause irreparable harm to the Bank and entitle the Bank to injunctive or other equitable
relief, as well as damages. In the event of a breach of Paragraphs A through C of this Section, the Employee shall pay to the Bank
liquidated damages equal to any money received by the Employee due to violation of these Paragraphs, as well as court costs and
reasonable attorneys’ fees incurred by the Bank to enforce this Agreement. In the event of a breach of Paragraph D of this
Section, the Employee shall pay to the Bank liquidated damages equal to any money received by the Employee due to violation of
this Paragraph or the equivalent of the most recent one year’s salary (at the company) of the hired solicited employee, whichever
is greater. Additionally, the Employee agrees to pay the Bank court costs and reasonable attorneys’ fees incurred by the
Bank to enforce this Agreement.

 

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10.       Trade Secrets, Confidential
Information and Intellectual Property. The Employee acknowledges that and as a result of his employment with the Bank, the
Employee has, is and will be making use of, acquiring, and adding to information of a special and unique nature and value relating
to the Bank’s intellectual property, trade secrets and other confidential information. In that regard, the Employee agrees
to the following:

 

A.       The Employee shall not,
at any time during or following his employment with the Bank, divulge or disclose, or employ for any purpose whatsoever, any of
the Bank’s trade secrets or other confidential information that have been obtained by or disclosed to the Employee as a result
of the Employee’s employment by the Bank. For purposes of this Agreement, “trade secrets or other confidential information”
shall mean all information which is used in the Bank’s business and which gives the Bank the opportunity to obtain advantage
over its competitors who do not know or use such information, regardless of whether written or otherwise, including, but not limited
to, trade secrets, business methods, business plans, financial data, customer lists and contracts, pricing plans, marketing plans
or strategies, security devices, product information, billing procedures, employee lists, salaries and other personnel information,
and other business arrangements. The term “trade secrets or other confidential information” is not meant to include
any information which, at the time of disclosure, is generally known by the public or any competitors of the Bank. If the Employee
has any questions regarding the confidential status of information, he should contact the CEO.

 

B.       All notes, data, reference
items, sketches, drawings, memoranda, records, and other materials in any way relating to any of the information referred to in
the Paragraph above or to the Bank’s business shall belong exclusively to the Bank and the Employee agrees to turn over to
the Bank all copies of such materials in the Employee’s possession or control (whether hard copy or electronic) at the Bank’s
request or upon the termination of the Employee’s employment.

 

C.       All intellectual property,
including, but not limited to, all software (including, without limitation, computer programs, object code, source code, documentation,
notes, records, work papers, and all other materials associated therewith), and all copyrights, trademarks, patents, trade secrets
and other proprietary rights related thereto shall be deemed (i) the sole and exclusive property of the Bank (and/or the Bank’s
clients or customers if the Bank so determines), and (ii) “trade secrets or other confidential information.” The Employee
also agrees that any work prepared for the Bank or its customers or clients that are susceptible of copyright protection shall
be a work-made-for-hire for the Bank. If any such work is deemed for any reason not to be a work-made-for-hire, the Employee hereby
agrees to irrevocably assign to the Bank all of the Employee’s right, title and interest in and to the copyright in such
work and the Employee further agrees to execute all such documents and assurances, and to take all such action, as the Bank shall
request, in order to cause the rights assigned hereby fully to vest in the Bank. The Employee hereby waives all so-called “moral
rights” relating to all work developed or produced by the Employee hereunder, including, without limitation, any and all
rights of attribution, rights of approval, restriction or limitation of use or subsequent modifications. In furtherance of the
foregoing, and not in limitation thereof, the Employee agrees to assign the Bank all of the Employee’s right, title and interest
in and to any and all ideas, concepts, know-how, techniques, processes, methods, inventions, discoveries, developments, innovations
and improvements conceived or made by the Employee, whether alone or with others, during the Employee’s employment with the
Bank, and which either (i) involve or are reasonably related to the Bank’s business or (ii) incorporate or are based on,
in whole or in part, any of the Bank’s trade secrets or other confidential information. (all of the aforesaid sometimes referred
to herein as the “Inventions”). The Employee agrees to disclose all Inventions to the Bank promptly, and to provide
all assistance reasonably requested by the Bank in the preservation of the Bank’s interest in the Inventions, such as by
executing documents, testifying and the like, which assistance shall be provided at the Bank’s expense but without any additional
compensation to the Employee. The Employee shall, at the Bank’s expense, assist the Bank or its nominee to obtain patent
protection for such Inventions in any countries the Bank may elect in its sole discretion throughout the world. All Inventions
shall be the property of the Bank or its nominees, whether patentable or not. The Employee hereby assigns and agrees to assign
to the Bank, all of the Employee’s right title and interest in and to all patent applications, patents and reissues related
to any Inventions. The Employee agrees to execute, acknowledge and deliver all documents, and to provide other assistance, at the
Bank’s request and expense, during and subsequent to the Employee’s employment by the Bank, confirming the complete
ownership by the Bank of any and all Inventions, enabling the Bank or its nominees to apply for and maintain patent protection
(if applicable), and/or any other legal protection that may then be available for the Inventions.

 

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D.        The Employee acknowledges
that any breach of this Section will cause irreparable harm to the Bank and entitle the Bank to injunctive or other equitable relief,
as well as damages. Damages shall include, but are not limited to, the Employee’s payment of the court costs and reasonable
attorneys’ fees incurred by the Bank to enforce this Agreement.

 

E.       Protected Rights.
The Employee understands that nothing contained in this Agreement limits the Employee’s ability to file a charge or complaint
with the Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Securities and Exchange
Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). The Employee
further understands that this Agreement does not limit the Employee’s ability to communicate with any Government Agencies
or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing
documents or other information, without notice to the Company. This Agreement does not limit the Employee’s right to receive
an award for information provided to any Government Agencies.

 

11.       Code Section 409A
Exemption. It is the parties’ intent that to the maximum extent possible, the payments contemplated under Sections 8(A)(iii)
and (vi) be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) under the “short-term
deferral” exemption as described under Treas. Reg. § 1.409A-1(b)(4) and/or the “separation pay” exemption
under Treas. Reg. §1.409-1(b)(9) such that the payments shall not be deemed “deferred compensation” within the
meaning of Code Section 409A. To the extent that any amount payable under this Agreement shall not fall within an exception but
shall instead be “deferred compensation” subject to Code Section 409A, the following terms shall apply.

 

    	7

    

    

 

A.       Termination of Employment.
Any payments due under this Agreement that are contingent upon the Employee’s “termination of employment” will
not be paid unless and until the Employee incurs a “separation from service” as set forth under Code Section 409A and
the regulations promulgated thereunder.

 

B.       Restriction on Timing
of Distributions. Notwithstanding any provision of this Agreement to the contrary, if the Employee is considered a Specified
Employee at termination of employment under such procedures as established by the Employer in accordance with Section 409A of the
Code, distributions of “deferred compensation” that are made upon termination of employment may not commence earlier
than six months after the date of such termination. Therefore, in the event this Subsection (B) is applicable to the Employee,
any distribution of deferred compensation that would otherwise be paid to the Employee within the first six months following the
termination of employment shall be accumulated and paid to the Employee in a lump sum on the first day of the seventh month following
the termination. All subsequent distributions shall be paid in the manner specified. “Specified Employee” shall mean
a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Employer if any stock of
the Employer is publicly traded on an established securities market or otherwise.

 

C.       Non-Transferability.
The Employee may not sell, assign, or transfer any deferred compensation or any of the benefits hereunder, and the deferred compensation
shall not be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment by
the Employee’s creditors.

 

D.       Change in Form or Timing
of Payments. All changes in the form or timing of payments hereunder must comply with the following requirements. The changes:

 

i.       may not accelerate
the time or schedule of any payment, except as provided in Section 409A of the Code and the regulations thereunder;

 

ii.       must be made
at least 12 months prior to the termination of employment;

 

iii.       must delay
the commencement of payment for a minimum of five years from the date the first payment was originally scheduled to be made; and

 

iv.       must take effect
not less than 12 months after the election is made.

 

E.        Compliance with Section
409A. This Agreement shall at all times be administered and the provisions of this Section 11 shall be interpreted consistent
with the requirements of Section 409A of the Code and any and all regulations thereunder, including such regulations as may be
promulgated after the effective date of this Agreement.

 

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12.       Code Section 280G.

 

A. Notwithstanding any other provision of this Agreement or any other
plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Bank or its
affiliates to the Employee or for the Employee’s benefit pursuant to the terms of this Agreement or otherwise (“Covered
Payments”) constitute parachute payments (“Parachute Payments”) within the meaning of Section 280G of the Code
and would, but for this Section 12, be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision
thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively,
the “Excise Tax”), then prior to making the Covered Payments, a calculation shall be made comparing (i) the Net Benefit
(as defined below) to the Employee of the Covered Payments after payment of the Excise Tax to (ii) the Net Benefit payable to the
Employee if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount
calculated under (i) above is less than the amount under (ii) above will the Covered Payments be reduced to the minimum extent
necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax (that amount, the “Reduced Amount”).
“Net Benefit” shall mean the present value of the Covered Payments net of all federal, state, local, foreign income,
employment and excise taxes.

 

B. The Covered Payments shall be reduced in a manner that maximizes
the Employee’s economic position. In applying this principle, the reduction shall be made in a manner consistent with the
requirements of Section 409A of the Code, and where two economically equivalent amounts are subject to reduction but payable at
different times, such amounts shall be reduced on a pro rata basis but not below zero.

 

C. Any determination required under this Section 12, including whether
any payments or benefits are parachute payments, shall be made by the Bank in its sole discretion. The Employee shall provide the
Bank with such information and documents as the Bank may reasonably request in order to make a determination under this Section
12. The Bank’s determination shall be final and binding on the Employee.

 

D. It is possible that after the determinations and selections made
pursuant to this Section 12 the Employee will receive Covered Payments that are in the aggregate more than the amount provided
under this Section 12 (“Overpayment”) or less than the amount provided under this Section 12 (“Underpayment”).

 

i.       In the event
that it is established pursuant to a final determination of a court or an Internal Revenue Service proceeding that has been finally
and conclusively resolved that an Overpayment has been made, then the Employee shall pay any such Overpayment to the Bank together
with interest at the applicable federal rate (as defined in Section 7872(f)(2)(A) of the Code) from the date of the Employee’s
receipt of the Overpayment until the date of repayment.

 

ii.       In the event
that a court of competent jurisdiction determines that an Underpayment has occurred, any such Underpayment will be paid promptly
by the Bank to or for the benefit of the Employee together with interest at the applicable federal rate (as defined in Section
7872(f)(2)(A) of the Code) from the date the amount would have otherwise been paid to the Employee until the payment date.

 

    	9

    

    

 

13.       Withholding.
The Employer may withhold from any amounts payable hereunder such Federal, state, local or foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.

 

14.       Applicable
Law. This Agreement will be construed and enforced under and in accordance with the laws of the State of Maryland. The parties
agree that any appropriate state court located in Prince George’s County, Maryland, will have jurisdiction of any case or
controversy arising under or in connection with this Agreement and will be a proper forum in which to adjudicate such case or controversy.
The parties consent to the jurisdiction of such courts.

 

15.       Entire
Agreement. This Agreement embodies the entire and final agreement of the parties on the subject matter stated in the Agreement.
No amendment or modification of this Agreement will be valid or binding upon the Employer or the Employee unless made in writing
and signed by both parties. All prior understandings and agreements relating to the subject matter of this Agreement are hereby
expressly terminated.

 

16.       Severability.
The parties agree that each of the provisions included in this Agreement is separate, distinct and severable from the other provisions
of this Agreement and that the invalidity or unenforceability of any Agreement provision will not affect the validity or enforceability
of any other provision of this Agreement. Further, if any provision of this Agreement is ruled invalid or unenforceable by a court
of competent jurisdiction because of a conflict between the provision and any applicable law or public policy, the provision will
be redrawn to make the provision consistent with and valid and enforceable under the law or public policy.

 

17.       No
Set-off by the Employee. The existence of any claim, demand, action or cause of action by the Employee against the Employer,
or any affiliate of the Employer, whether predicated upon this Agreement or otherwise, will not constitute a defense to the enforcement
by the Employer of any of its rights hereunder.

 

18.       Notice.
All notices and other communications required or permitted under this Agreement will be in writing and, if mailed by prepaid first-class
mail or certified mail, return receipt requested, will be deemed to have been received on the earlier of the date shown on the
receipt or three business days after the postmarked date thereof. In addition, notices hereunder may be delivered by hand, facsimile
transmission or overnight courier, in which event the notice will be deemed effective when delivered or transmitted. All notices
and other communications under this Agreement must be given to the parties hereto at the following addresses:

 

    	10

    

    

 

 

	 	(i)	If to the Employer, to it at:
	 	 	 
	 	 	1525 Pointer Ridge Road
	 	 	Bowie, Maryland 20716
	 	 	Attn: President
	 	 	 
	 	 	 
	 	(ii)	If to the Employee, to the Employee at:
	 	 	 
	 	 	1200 Corinthian Court
	 	 	Bel Air, Maryland 21014

 

19.       Assignment.
Neither party hereto may assign or delegate this Agreement or any of its rights and obligations hereunder without the written consent
of the other party hereto.

 

20.       Waiver.
A waiver by the Employer of any breach of this Agreement by the Employee will not be effective unless in writing, and no waiver
will operate or be construed as a waiver of the same or another breach on a subsequent occasion. 

 

21.       Interpretation.
Words importing the singular form shall include the plural and vice versa. The terms “herein,” “hereunder,”
“hereby,” “hereto,” “hereof” and any similar terms refer to this Agreement. Any captions, titles
or headings preceding the text of any article, section or subsection herein are solely for convenience of reference and will not
constitute part of this Agreement or affect its meaning, construction or effect.

 

22.       Rights
of Third Parties. Nothing herein expressed is intended to or will be construed to confer upon or give to any person, firm or
other entity, other than the parties hereto and their permitted assigns, any rights or remedies under or by reason of this Agreement.

 

23.       Survival.
The obligations of the Employee pursuant to Sections 5, 6, 7, 8 and 9 will survive the termination of the employment of the Employee
hereunder for the period designated under each of those respective sections.

 

24.       This Agreement shall extend to, and be binding
upon the Employee, and upon the Bank and its successors and assigns and the term “Bank” as used herein shall include
its successors and assigns whether by merger, consolidation, combination or otherwise.

 

[signatures appear on following page]

 

 

 

    	11

    

    

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
to be executed as of the date first set forth above.

 

 

	WITNESS/ATTEST:	 	THE EMPLOYER:
	 	 	OLD LINE BANK
	 	 	 
	 	 	By:  	 
	Name:	 	Name: 	James W. Cornelsen
	 	 	Title:	President and Chief Executive Officer
	 	 	 
	 	 	 
	WITNESS:	 	THE EMPLOYEE:
	 	 	 
	 	 	 
	Name:	 	Mark A. Semanie

  

 

 

 

12

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