Sample Business Contracts

        1.1    Development    Accordingly, B&D desires that A123 develop a lithium-ion cell, which incorporates such changes in design made pursuant to the terms of this Agreement as will ensure, to the extent practicable, that the developed cell is commercially acceptable to B&D. The lithium-ion cell to be developed ("CELL PRODUCT") is described in the preliminary specification ("SPECIFICATION") attached hereto as Appendix "A" and made a part hereof. A123 shall use its commercially reasonable best efforts to design a CELL PRODUCT that meets the SPECIFICATION. The SPECIFICATION may be amended from time to time by written agreement of the Parties.

        1.2    A123 to Supply PRODUCTS—    

and B&D does decide to introduce a DEWALT branded professional power tool with a lithium-ion battery, then subject to B&D's rights not to introduce a B&D PRODUCT pursuant to Section 1.2(b) below, B&D will purchase PRODUCTS from A123 in accordance with the provisions of this Agreement.

        (b)   Notwithstanding the foregoing Section 1.2(a), B&D shall not be required to commercially introduce a B&D PRODUCT to the market, if (i) the commercial introduction of such B&D PRODUCT would be in violation of any applicable law, regulation or industry-wide guideline related to lithium-ion products or (ii) the introduction of a B&D PRODUCT by B&D is commercially unreasonable due to safety and health hazards associated with the use of CELL PRODUCT, PACK PRODUCT or B&D PRODUCT, or (iii) B&D, in its reasonable discretion determines that there are valid commercial reasons for it to not introduce the B&D PRODUCTS into the market, including but not limited to technological advances in the market that render the B&D PRODUCTS obsolete or that are substantially superior in cost or performance.

        1.3   Initial Payment—Prior to the execution of this Agreement by the Parties, B&D paid to A123 the non-refundable sum of [**] Dollars ($[**].

        1.4   Three-Phase Project—It is contemplated that the development of the PRODUCTS will be accomplished in three phases. During such phases, A123 shall use its commercially reasonable best efforts to design a battery cell that meets the SPECIFICATION. The three phases are as follow:

        1.5    Delays in Bulk Purchase    

        2.1   Definition—"Invention," as used herein, means any invention, whether product, process or equipment, technical information, data, computer program, improvement, design, copyrightable work, or know-how, whether or not patentable, which relates to battery cells, battery packs, chargers for charging battery cells and battery packs which (a) are conceived or first reduced to practice by A123 and/or B&D during the term or in anticipation of, and in connection with, this Agreement, or (b) results from work done pursuant to and during the term of this Agreement.

        2.2   B&D Improvements—Inventions solely conceived by B&D or relating to industrial design shall be solely owned by B&D ("B&D Improvements"). B&D shall grant A123 a royalty-free perpetual worldwide non-exclusive license in any B&D Improvements related to cell chemistry and the cell container (not including the battery pack).

        2.3   A123 Improvements—Inventions solely conceived by A123 and not relating to industrial design shall be solely owned by A123 ("A123 Improvements"). A123 shall grant B&D a royalty-free worldwide non-exclusive perpetual license in any A123 Improvements related to features outside of the cell chemistry and the cell container (including the battery pack).

        2.4   Joint Improvements—Inventions that are jointly conceived by A123 and B&D and not relating to industrial design shall be solely owned by B&D ("Joint Improvements"). B&D shall grant A123 a non-exclusive, worldwide, perpetual, royalty-free, license to any Joint Improvements. During the term of this Agreement, A123 can sublicense the licenses granted under this section only outside the Power Tool Field, as defined in Section 3.1(a) below.

        2.5   Assignment and Filing—A123 shall, upon request by B&D, assign all right, title and interest in the Joint Improvements and all proprietary rights therefore to B&D. A123's owners, employees and consultants will sign all applications for patents, copyrights, and other proprietary rights in and for Joint Improvements in the U.S. and foreign countries. All attorney's fees and government costs relating to said patents, copyrights or other proprietary rights shall be paid by B&D. B&D shall have the sole discretion to decide whether to file or prosecute any patent application, or to otherwise obtain, maintain, or enforce proprietary rights for the Joint Improvements.

        3.1    Definitions    

        3.2   Right of First Refusal in Adjacent Field—During the term of this Agreement and provided that the supply relationship between A123 and B&D remains exclusive as set forth in Article IV below, A123 shall not provide a cell and/or a license thereto to others for use in an Adjacent Field without first approaching B&D pursuant to this section. Beginning on March 1, 2005 and during the term of the Agreement thereafter, A123 may approach B&D with a reasonable business proposal regarding the development or sale of cells for or into an Adjacent Field (the "Proposal"). B&D has [**] to determine if it desires to pursue the development or sale of cells for or into such Adjacent Field and to work with A123 pursuant to A123's Proposal.

        4.1   Supply During the First Year—During the first 12 months of bulk purchases of commercially acceptable PACK PRODUCTS by B&D from A123, B&D agrees to purchase at least [**] percent ([**]%) of the [**] PACK PRODUCTS required by B&D for the Power Tool Field from A123, and A123 agrees that it shall sell the PACK PRODUCTS for use in the Power Tool Field and Adjacent Fields (subject to the requirements of Article III above and Section 4.8 below) only to B&D and to no other entity, no matter where located.

        4.2   Exclusive Supply for Second Year—Subject to the provisions of Section 4.5 below, during the second 12 -month period, B&D agrees to purchase from A123 at least [**] percent ([**]%) of the PACK PRODUCTS required by B&D for the Power Tool Field. During the second 12-month period of bulk purchases of commercially acceptable PACK PRODUCTS by B&D from A123, A123 agrees that it will sell the PACK PRODUCTS only to B&D for use in the Power Tool Field and Adjacent Fields (subject to the requirements of Article III above and Section 4.8 below), so long as:

        4.3   Exclusive Supply for Third Year—Subject to the provisions of Section 4.5 below, during the third 12 -month period, B&D agrees to purchase from A123 at least [**] percent ([**]%) of the PACK PRODUCTS required by B&D for the Power Tool Field. During the third 12-month period of bulk purchases of commercially acceptable PACK PRODUCTS by B&D from A123, A123 agrees that it will sell the PACK PRODUCTS only to B&D for use in the Power Tool Field and Adjacent Fields (subject to the requirements of Article III above and Section 4.8 below) so long as:

        4.4   Exclusive Supply for Subsequent Years—B&D and A123 agree to negotiate in good faith, on a timely basis, the minimum annual requirements for maintaining the exclusivity in subsequent years.

        4.5   Non-Exclusive Supply to B&D—If B&D does not maintain the exclusivity of supply by A123 pursuant to Sections 4.1 to 4.4 above, A123 shall be free to supply any products to third parties for use in any field, and will still supply PRODUCTS to B&D pursuant to the terms of the Purchase Agreement, on a non-exclusive basis. If B&D does not maintain the exclusivity of supply by A123 pursuant to Sections 4.1 to 4.4 above, B&D may, at its option, terminate this Agreement and any Purchase Agreement between the parties, by providing eighteen (18) months written notice to A123.

        4.6   Exclusivity Fee—During the period of supply exclusivity under Sections 4.1 to 4.4 above, B&D shall pay an additional [**] ($[**]) per cell as an Exclusivity Fee. For any 12-month period of bulk production described in Sections 4.1 to 4.4 above, the Exclusivity Fee shall be lowered to [**] ($[**]) per cell for the remainder of such 12-month period after B&D has purchased [**] percent ([**]%) of its committed volume for any such 12-month period (i.e., [**]% of the minimum total annual requirements for PACK PRODUCTS).

        4.7   Escrowed Information—A123 shall have a second qualified manufacturing source of the PRODUCTS in place by January 1, 2006. A123 shall provide B&D on or prior to March 1, 2005 a contingency plan for the manufacture of the cell powder materials, including placing information sufficient for B&D to manufacture the cells and cell powder materials in escrow ("the Escrowed Information"). The Escrowed Information shall be reviewed by an independent firm chosen by B&D and approved by A123 (who shall not unreasonably withhold such approval) to confirm that the Escrowed Information is sufficient to manufacture the cells and cell powder materials. Such independent firm shall not disclose any of the Escrowed Information to B&D and shall only report to B&D whether the Escrowed Information is sufficient to manufacture the cells and cell powder materials. In the event the Escrowed Information is insufficient to manufacture the cells and cell powder materials, A123 shall supplement the Escrowed Information as necessary. A123 shall maintain the Escrowed Information up to date. The Escrowed Information (and a license to use such information) will be made available to B&D during the term of this Agreement and any Purchase Agreements entered into by the Parties in the event that A123 ceases operations, is unable to supply B&D with the required number of cells meeting B&D's delivery or quality requirements as set forth in the Purchase Agreement(s) between the parties, or is unwilling to meet its obligations hereunder. To the extent that A123 is unable to meet its obligations under this Agreement, A123 will actively cooperate with B&D to remedy such shortfalls. B&D's license to make or have made cells and cell powder materials according to the Escrowed Information will expire within [**] from receipt of a notification from A123 that A123 is able to supply B&D with the required number of cells meeting B&D's delivery and quality requirements, as set forth in the Purchase Agreement(s) between the parties. Such [**] period is intended to allow the phase-out of

the B&D or third party manufacture and the phase-in of A123 manufacture. The parties shall negotiate in good faith any extensions of the phase-out/phase-in period due to B&D's commercial necessities. B&D shall pay to A123 $[**] per cell manufactured by B&D or a third party designated by B&D under this Section.

        4.8   Possible Supply in Adjacent Fields—B&D agrees to coordinate with A123 in connection with the deployment of A123's lithium battery technologies to maximize sales opportunities in the Adjacent Fields, and as such will offer new lithium-ion application opportunities in these fields first to A123.

        5.1   Definition—INFORMATION, as used herein, means any business or technical information, including without limitation any drawing, disclosure, design, data, report, calculation, computer programs, model, component part, patent application, or the like of the disclosing party which the receiving party develops, learns, or gains access to during the course of and as a result of work performed pursuant to the terms of this Agreement, excluding any information or object: (a) which is publicly known as of the EFFECTIVE DATE, (b) which becomes publicly available subsequent to the EFFECTIVE DATE through no fault of the receiving party, (c) which is known or possessed by the receiving party before receipt from the disclosing party, (d) which is disclosed at any time to the receiving party by a third party not under binder of confidentiality to the disclosing party, or (e) becomes subject to legal process or applicable law that requires disclosure of any INFORMATION, in which case the Party subject to such legal process shall notify the other Party of such required disclosure as promptly as possible (and prior to disclosure, if permissible) and shall take all actions as may be reasonably necessary to keep the INFORMATION confidential, including all actions that such Party takes to preserve the confidentiality of its own INFORMATION. INFORMATION shall also include the existence and/or subject matter of this Agreement and relationship between the Parties.

        5.2   Confidentiality—Each Party will maintain in confidence all INFORMATION disclosed to it by the other Party and will not use or disclose the INFORMATION to a third party (a) except in connection with the performance of its obligations hereunder or when necessary to contract for services needed to perform this Agreement, (b) except pursuant to a license granted under this Agreement or as permitted by Section 4.7, or (c) unless authorized in writing by the disclosing party. The obligations of non-disclosure and non-use under this Agreement shall not apply to any information unless, if tangible, such INFORMATION is labeled or tagged "CONFIDENTIAL" at the time of disclosure, or if intangible, is noted as Confidential at the time of disclosure and reduced to a writing labeled "CONFIDENTIAL" and sent to the receiving party within thirty 30) days of its disclosure to the receiving party by the disclosing party.

        5.3   Confidentiality Term—All obligations of the Parties pursuant to Section 5.2 above shall survive any termination or expiration of this Agreement and shall expire [**] from the termination of this Agreement.

        6.1   Term—This Agreement shall commence on the date the last Party to execute signs the Agreement ("Effective Date") and continues for up to three (3) years after commencement of bulk production of commercially acceptable PRODUCTS. Such period may be extended as necessary by approval of both Parties.

        6.2   Termination for Breach—This Agreement may be terminated upon written notice by either Party (the "non-defaulting Party") if the other Party materially fails to perform any material

obligation imposed on it by this Agreement, provided that if such breach is by its nature curable, the non-defaulting Party shall have previously given the other Party not less than [**] calendar days advance written notice of intent to terminate, stating with particularity the breach and the steps required to cure such breach, and provided further that the other Party has failed to cure the specified breach within such [**] day period.

        6.3   Termination for Insolvency—This Agreement may be terminated by a Party without penalty immediately upon giving notice, if proceedings under any bankruptcy, insolvency or similar legislation are instituted (and not withdrawn or terminated within 60 days) by or against the non-terminating Party, or the non-terminating Party makes an assignment for the benefit of creditors, or a receiver is appointed for all or a substantial part of the non-terminating Party's assets.

        6.4   Termination for Delivery Delay—This Agreement may be terminated immediately by B&D at B&D's option if A123 fails to deliver by December 15, 2005, the Aluminum Prototype PRODUCTS and the Pilot Cell Samples called for in Section 1.4(a)(1) that meet the SPECIFICATION. This Agreement may be terminated immediately by B&D at B&D's option if A123 fails to deliver by May 15, 2006, the Battery Pack Samples called for in Section 1.4(a)(2) that meet the SPECIFICATION.

        6.5   Termination in the Event of Loss of Exclusivity—This Agreement may be terminated in accordance with the provisions of Section 4.5.

        6.6   Termination for Other Reasons—This Agreement may be terminated in accordance with the provisions of Section 1.2.

        6.7    Effect of Termination—    

        7.1   Governing Law—This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland, without regard to its conflicts of law principles.

        7.2   Assignability—Neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party hereto, except that B&D may assign this Agreement to an affiliate without the prior written consent of A123.

        7.3   Entire Agreement; Modification—This Agreement together with the Exhibits attached hereto which are incorporated into said Agreement and become a part thereof, This Agreement together with the Exhibits sets forth the entire agreement between the Parties relating to the subject matter hereunder and any representation, promise, agreement or condition therewith not incorporated herein shall not be binding upon either Party. No change, modification, extension or renewal of this Agreement shall be binding unless made in writing and signed by authorized representatives of both Parties.

        7.4   Public Announcement—The Parties shall not disclose, advertise or publish the terms and conditions of this Agreement without the prior written consent of the other Party. Each Party shall consult with the other Party before issuing any press releases or other public statements regarding the existence or nature of this Agreement, or regarding the Parties' execution, performance or benefit hereunder.

        7.5   Nature of Relationship—For the purposes of this Agreement, the Parties are deemed to be independent contractors. It is expressly agreed that this Agreement and the relationship between the Parties hereby established do not constitute a partnership, joint venture, agency or contract of employment. No Party shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, except as authorized in writing by the Party to be bound. No Party shall bind nor attempt to bind the other to any contract or to the performance of any obligation, nor represent to third parties that it has any right to enter into any obligation on the other's behalf.

        7.6   Partial Invalidity—If and to the extent that any court of competent jurisdiction or arbitrator holds any provision (or part thereof) of this Agreement to be invalid, illegal, or unenforceable, that provision shall, if possible, be construed as though more narrowly drawn, if a narrower construction would avoid such invalidity, illegality, or unenforceability or, if that is not possible, such provision (or part thereof) shall be severed, and the remaining provisions of this Agreement shall remain in effect.

        7.7   Waiver—ailure of either Party to enforce any provision of this Agreement shall not be deemed a waiver of future enforcement of that or of any other provision.

        7.8   Counterparts—This Agreement and any related amendments or other documents or instruments between or among the Parties may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

        7.9   Notice—Any notice required or permitted hereunder must be in writing and be either (i) personally delivered; (ii) delivered by courier, overnight delivery, facsimile or similar means providing for proof of service; or (iii) sent by mail, postage prepaid (which shall be registered or certified mail, return receipt requested); properly addressed to the Party entitled to receive such notice or communication at the address for such Party set forth below or at such other address as the intended recipient shall have previously designated by written notice to the sender. Notice shall be effective on the date that it is delivered or, if mailed as provided above, three (3) days after the date of mailing.

        a.     Beginning [**] after A123's receipt of written authorization from B&D to initiate bulk production of the PRODUCTS, A123 promises to pay to B&D the Loan Amount, as described below:

        b.     B&D's "Average Run Rate" shall mean, for periods beginning [**] after the initiation of bulk purchases by B&D, B&D's average of the [**] purchases of PRODUCTS over the previous [**] and the forecasted purchases for the upcoming [**].

        c.    All payments required to made above shall be made by A123 by check or by wire transfer of immediately available funds, to B&D at 701 E. Joppa Road, Towson, Maryland 21286, Attention:                                    or to an account designated by B&D, by the [**] in which B&D achieves the Average Run Rates set forth above.

        a.     B&D shall provide A123 with [**] days' prior written notice of such proposed removal;

        b.    in the event that B&D desires to sell such property to a third party,

1.    The Parties entered into a Cooperative Development & Supply Agreement effective as of September 15, 2004 (the "CDSA"), pursuant to which A123 developed certain CELL PRODUCTS (as defined therein) for B&D. Capitalized terms used herein and not otherwise defined shall have the meaning given to them in the CDSA.

2.    B&D currently purchases PACK PRODUCTS from A123, pursuant to the terms of the CDSA.

3.    The Parties now desire to amend the CDSA, to clarify certain provisions and to provide that A123's manufacture of 28 volt battery pack systems for B&D is included within the terms of the CDSA, on the terms and conditions set forth herein.

As of the Effective Date, BDC International Limited, with a principal office located at 4/F, 2 Dai Wang Street, Tai Po Industrial Estate, Tai Po, New Territories, Hong Kong ("BDCI"), shall (i) be added as a party to the CMA, and (ii) be entitled to purchase the A123 CELL PRODUCTS specified in Exhibit A attached hereto (and not any other Products, as defined in the CMA) in accordance with and subject to the terms and conditions of the CMA to the same extent that Black & Decker (as defined in the CMA) is entitled to purchase Products under the CMA, except as may be otherwise mutually agreed by the parties in writing or as may be specified in Exhibit A. The Parties to the CDSA acknowledge and agree to the foregoing.

1.    The Parties entered into a Cooperative Development & Supply Agreement effective as of September 15, 2004, as subsequently amended on August 18, 2005, July 1, 2006, and March 30, 2007, respectively, (collectively, the "CDSA"), pursuant to which A123 developed certain CELL PRODUCTS (as defined therein) for B&D. Capitalized terms used herein and not otherwise defined shall have the meaning given to them in the CDSA.

2.    The Parties now desire to amend and supplement the CDSA, to modify certain provisions, including without limitation, the Exclusivity provisions in Article IV that govern the calculation of B&D's purchase requirements and exclusivity payments, on the terms and conditions set forth herein.

A. Section 4.6.    Delete Section 4.6 in its entirety and replace it with the following new Section 4.6:

4.6    Exclusivity Fee—(a) During the period of supply exclusivity under Sections 4.1 to 4.4 above, B&D shall pay an additional [**] ($[**]) per 26650 CELL and [**]($[**]) per 18650 CELL as an Exclusivity Fee (subject to subparagraph (c) of this Section 4.6 below), which shall be calculated based on the applicable Cell count per PACK PRODUCT as illustrated below.

(b)    For purposes of determining if B&D has met its obligations under Sections 4.2, 4.3 and 4.4 with respect to minimum volume purchases to maintain exclusivity, credit will be given for PACK PRODUCTS being purchased based on the following: a PACK PRODUCT containing [**] 26650 Cells at $[**] each or $[**] total, or a PACK PRODUCT containing [**] 18650 Cells at $[**] each or $[**] total, will each be equal to one unit. The following examples are provided for purposes of illustrating how the foregoing calculation metric will be applied:

(c)    The parties agree that as of the Effective Date, B&D may determine whether or not it will pay the Exclusivity Fee on the Cells it purchases from A123 for certain applications provided that B&D shall promptly notify A123 in writing of such determination. If B&D determines that it will not pay the Exclusivity Fee for Cell purchases for such specific applications, then no credit toward PACK PRODUCT units purchased for purposes of maintaining exclusivity will be given to B&D for the Cells purchased for that application. An example is the current [**] program whereby B&D does not to pay the $[**] exclusivity fee on the Cells for that application. Therefore, the [**] will be excluded from counting towards PACK PRODUCT exclusivity volume requirements. The foregoing shall not change, and shall have no impact on, the existing applications for which B&D currently pays the non-refundable Exclusivity Fee or the definition of the Fields in which B&D maintains exclusivity under Article IV.