Sample Business Contracts

        1.1.  "A123" is defined in the first paragraph

        1.2.  "A123 INDEMNITEES" is defined in Paragraph 8.1.1.

        1.3.  "AFFILIATE" means any corporation, association or other entity that directly or indirectly controls, is controlled by, or is under common control with the party in question; through stock ownership, or other equity interest, direct or indirect. As used in the preceding sentence, "control", "controlled" and "control" mean with respect to a subject entity, direct or indirect beneficial ownership of more than fifty percent (50%) of the voting or equity interest in the entity.

        1.4.  "AGREEMENT" is defined in the first paragraph.

        1.5.  "ALTERNATIVE REMEDY NOTICE" is defined in Paragraph 8.1.2.2.2.

        1.6.  "BUSINESS DAY" means any day other than Saturday, Sunday, US federal holiday, or an Ohio holiday. Any other reference to day or days will include Saturday, Sunday, US federal holiday, or an Ohio holiday.

        1.7.  "BUSINESS TRANSFER" is defined in Paragraph 15.2.

        1.8.  "BUSINESS TRANSFER CLOSING" is defined in Paragraph 15.2.1.

        1.9.  "CASH-QUANTITY-TRADE DISCOUNTS" means (A) damaged and returned merchandise payments and allowances; (B) incentive discounts for (i) ordering in quantity to receive reduced price and/or (ii) payment within a stipulated time period; (C) trade & cash discounts & allowances; (D) value added tax, other taxes or duties, (E) quantity discounts and bracket pricing, to the extent included in invoiced sales of products; (F) consumer price reductions; (G) merchandising and pricing funds provided to THIRD PARTIES including introductory merchandising funds to list new products; (H) other allowances, adjustments, reimbursements, discounts, charge backs and rebates granted to THIRD PARTIES; (I) any other discounts which reduce pricing for the customer or end consumer, including without limitation temporary price reductions, coupons, and other promotional spending with retail customers; provided that (AA) all such discounts are properly recognized according to GAAP and consistent with GILLETTE's

internal accounting for such discounts and (BB) no such discounts will be taken where discounts are contingent on a third party's marketing or merchandising efforts.

        1.10.  "CELLS" means cells with a volume up to and including the [**] cell in the marketplace today, no greater than [**] centimeters ([**]cc), in any form factor, that utilizes NANOPHOSPHATE and/or LTO, with or without other related materials.

        1.11.  [**].

        1.12.  "CONFIDENTIAL INFORMATION" is defined in Paragraph 9.1.

        1.13.  "CONFLICTING OBLIGATION" means a contractual obligation of A123 to a THIRD PARTY that does not allow A123 to include claims in FUTURE PATENTS and/or any trade secrets in the FUTURE KNOW-HOW,

        1.14.  "DISPUTE" is defined in Paragraph 14.1.

        1.15.  "EFFECTIVE DATE" is defined in the first paragraph.

        1.16.  "END USE DEVICE" means an end-use device intended for use with a LICENSED PRODUCT as its power source.

        1.17.  "EQUIPMENT KNOW-HOW" means A123's know-how regarding the identity of suppliers and design specifications for equipment used by A123's suppliers for the following processes:

        1.18.  "EXISTING KNOW-HOW" means the KNOW-HOW that exists on the EFFECTIVE DATE.

        1.19.  "EXISTING PATENTS" means those patent applications and patents set forth in Schedule 1.19 hereto, and any related continuations, continuations-in-part, divisionals, reissues, and reexaminations; and foreign counterparts and/or equivalents thereof.

        1.20.  "FIELD" means the following electronic devices:

        1.21.  "FTE" is defined in Paragraph 4.3.

        1.22.  "FUTURE KNOW-HOW" means any KNOW-HOW that is developed during the period between the EFFECTIVE DATE and the [**] year anniversary of the EFFECTIVE DATE, whether developed by A123, an AFFILIATE of A123, and/or a contractor of A123 (to the extent such contractor is willing to permit A123 to disclose such KNOW-HOW to GILLETTE in such contractor's sole discretion); provided that, such KNOW-HOW will constitute FUTURE KNOW-HOW only where A123 does not have a CONFLICTING OBLIGATION.

        1.23.  "FUTURE PATENTS" means, with respect to inventions whether developed by A123, an AFFILIATE of A123, and/or a contractor of A123 (to the extent such contractor is willing to assign such rights to A123 in such contractor's sole discretion) and where A123 does not have a CONFLICTING OBLIGATION:

        1.24.  "GAAP" means generally accepted accounting principles in the US.

        1.25.  "GILLETTE" is defined in the first paragraph.

        1.26.  "GILLETTE-IMPROVED IP" means all intellectual property in and to improvements and/or enhancements of the LICENSED KNOW-HOW first conceived and actually or constructively reduced to practice by GILLETTE or any of their AFFILIATEs during the TERM.

        1.27.  "GILLETTE INDEMNITEES" is defined in Paragraph 8.1.2.1.

        1.28.  "GROSS SALES" means the invoiced price of sales, prior to any adjustments resulting from offsets and/or deductions, of product (i.e., all merchandise items including finished products, and approved intermediates) sold to THIRD PARTIES (including distributors, customers and/or consumers by GILLETTE).

        1.29.  "INDEMNITIEES" is defined in Paragraph 8.2.

        1.30.  "INITIAL LICENSE FEES" is defined in Paragraph 5.1.1 (INITIAL LICENSE FEES).

        1.31.  "KNOW-HOW" means all of the following that A123 owns or possesses, that is not publicly known:

        1.31.2.  the EQUIPMENT KNOW-HOW.

        1.32.  "LEARNING PHASE" means the period commencing on the EFFECTIVE DATE and expiring on the [**] year anniversary of the EFFECTIVE DATE.

        1.33.  "LICENSED KNOW-HOW" means the EXISTING KNOW-HOW and the FUTURE KNOW-HOW.

        1.34.  "LICENSED PRODUCT" means any CELL or [**] that:

        1.35.  "LICENSED TECHNOLOGY" means the PATENT RIGHTS and LICENSED KNOW-HOW.

        1.36.  "LTO" means lithium titanates for use as an electrode active material.

        1.37.  "MATERIAL ADVERSE EFFECT" means any material adverse change, event, circumstance or development with respect to, or material adverse effect on, the ability of GILLETTE or any AFFILIATE of GILLETTE to exercise its license rights hereunder in the FIELD, including GILLETTE's or any AFFILIATE of GILLETTE's ability to commercialize the technology licensed hereunder in the FIELD.

        1.38.  [**].

        1.39.  "MONTH" means each calendar month.

        1.40.  "NANOPHOSPHATE" means A123's proprietary formulation of a nanoscale lithium transition metal phosphate.

        1.41.  "NET SALES" and "NOS" means GILLETTE's, GILLETTE's AFFILIATEs', and permitted SUBLICENSEE(s)', if any, GROSS SALES to a THIRD PARTY of LICENSED PRODUCT less the total of the following: CASH-QUANTITY-TRADE DISCOUNTS and Value Added Taxes (VAT). Any of the deductions listed above which involve a payment by GILLETTE will be taken as a deduction against aggregate sales for the QUARTER in which the expense is accrued by GILLETTE. For purposes of determining NOS, product will be deemed to be sold when shipped to a THIRD PARTY customer of GILLETTE. Sales between or among GILLETTE or its SUBLICENSEE(s) will be excluded from the computation of NOS, but sales by GILLETTE or its SUBLICENSEE(S) to their THIRD PARTY customers will be included in the computation of NOS. NOS will be translated into US dollars on a QUARTERly basis using the average of the exchange rates on the first and last working days of each MONTH as published in the Wall Street Journal. If LICENSED PRODUCT is sold to an AFFILIATE of GILLETTE, then NET SALES for such LICENSED PRODUCT will be calculated based on the average price of the LICENSED PRODUCT charged to an independent THIRD PARTY during the same reporting period or, in the absence of such sales, on the fair market value of the LICENSED PRODUCT. Where LICENSED PRODUCT is OTHERWISE DISTRIBUTED, the NOS of the LICENSED PRODUCT will be the average of the NOS of the LICENSED PRODUCT that was sold to THIRD PARTIES during the most recent QUARTER; and in the event there have been no previous sales of the LICENSED PRODUCT, then the NOS of such LICENSED PRODUCT will be the average selling price at which products of similar kind and quality, sold in similar quantities, are then currently being offered for sale by other manufacturers.

        1.42.  "OTHERWISE DISTRIBUTED" means the transfer of LICENSED PRODUCT by the licensee to a THIRD PARTY for less than fair market value, other than for purposes of scrapping or donations to charitable institutions.

        1.43.  "PARTY" means A123 or GILLETTE and "PARTIES" means A123 and GILLETTE collectively.

        1.44.  "PATENT RIGHTS" means the EXISTING PATENTS and the FUTURE PATENTS.

        1.45.  "PATENT TERM" means the period commencing on the EFFECTIVE DATE and ending on the expiration, invalidation or abandonment of all issued patents and filed patent applications within the PATENT RIGHTS.

        1.46.  "PERMITTED ASSIGNEE OF GILLETTE" means:

        1.47.  "PERMITTED ASSIGNEE OF A123" means any THIRD PARTY that, at the time of the applicable assignment, enters into a binding written agreement having terms substantially similar in scope to those set forth in Schedule 1.47.

        1.48.  "PERMITTED SUBLICENSEE" means any THIRD PARTY that (i) is not involved in the [**], and (ii) does not derive more than [**] Dollars ($[**]) in revenue annually from providing [**] to any other THIRD PARTY that derives revenue from the CELLS or [**] in the market segments listed in Paragraph 1.20.15 (Exclusions to FIELD), and (iii) does not perform [**] for itself or any other person or entity; provided that such THIRD PARTY agrees with GILLETTE to a binding written agreement that requires terms substantially equivalent to the following:

        1.49.  "PROPOSED SETTLEMENT" is defined in Paragraph 7.3.2.

        1.50.  "QUARTER" means any three (3) month period beginning on any January 1 and ending on the next March 31, beginning on any April 1 and ending on the next June 30, beginning on any July 1 and ending on the next September 30, beginning on any October 1 and ending on the next December 31, provided however that the first QUARTER for the purposes of this AGREEMENT begins on the EFFECTIVE DATE and ends on the earliest of the next March 31, June 30, September 30 or December 31.

        1.51.  "REVIEW PERIOD" is defined in Paragraph 3.3.1.

        1.52.  "ROFO TECHNOLOGIES" is defined in Paragraph 2.4.

        1.53.  "ROYALTIES" is defined in Paragraph 5.1.3 (ROYALTIES).

        1.54.  "ROYALTY-BEARING PRODUCT" means a LICENSED PRODUCT that,

        1.55.  "SUBLICENSEE" means the beneficiary of a sublicense of the LICENSED TECHNOLOGY from GILLETTE in conformance with Paragraphs 2.1 (LICENSED TECHNOLOGY), 2.2 (Sublicenses), and/or 3.1 (TRADEMARK), and their subparagraphs.

        1.56.  "SUBSEQUENT CONTRACT" means a written binding contract entered into by A123 on or after the EFFECTIVE DATE, such as a license agreement, supply agreement, services agreement, settlement agreement, reseller agreement or other agreement; provided that, for the avoidance of doubt, SUBSEQUENT CONTRACTS do not include any written terms imposed by or otherwise required by any final unappealable adjudication.

        1.57.  "SUBSEQUENT CONTRACT TERMINATION NOTICE" is defined in Paragraph 11.4.2.

        1.58.  "SUBSIDIARY" of a PARTY means a wholly-owned subsidiary of such PARTY.

        1.59.  "SUPPLY AGREEMENT" is defined in the first paragraph.

        1.60.  "SUPPORT" is defined in Paragraph 4.1.

        1.61.  "TECHNOLOGY APPLICATION" is defined in Paragraph 8.1.2.1.

        1.62.  "TERM" is defined in Paragraph 13.1.

        1.63.  "THIRD PARTY" means any person or entity that is not A123, GILLETTE or one of their AFFILIATEs.

        1.64.  "TRADEMARK" means A123's trademark "NANOPHOSPHATE™".

        1.65.  "US" means the United States of America.

        1.66.  [**].

        1.67.  [**].

        2.1.  LICENSED TECHNOLOGY. Subject to the terms of this AGREEMENT, A123 hereby grants to GILLETTE and AFFILIATEs of GILLETTE an exclusive (except as provided in Paragraphs 2.1.1 (Rights Retained) or 2.1.4 (Exclusivity), and their subparagraphs), worldwide, royalty-bearing license under the LICENSED TECHNOLOGY to develop, make, have made, use, sell, offer to sell, lease, and import LICENSED PRODUCTs and END-USE DEVICEs for use in the FIELD during the TERM. The license includes the limited right to sublicense certain THIRD PARTIES set forth in Paragraph 2.2 (Sublicenses) and its subparagraphs.

        2.2.  Sublicenses.

        2.3.  Non-exclusive Licenses in Other Fields. Upon request by GILLETTE, A123 will reasonably consider in good faith on a case-by-case basis, amending the licenses granted under Paragraph 2.1 (LICENSED TECHNOLOGY) and its subparagraphs to include non-exclusive licenses in certain fields outside of the FIELD, in A123's sole discretion and subject to mutually agreed terms, fees and conditions. For the avoidance of doubt, except as expressly provided in Paragraph 2.4 (Right of First Offer) and its subparagraphs, A123 is under no obligation to notify GILLETTE or to grant GILLETTE a right of first offer or any other right to bid on such licenses prior to granting such rights to a THIRD PARTY.

        2.4.  Right of First Offer. A123 hereby grants to GILLETTE a right of first offer to a license solely in the FIELD, under patents and know-how, not already licensed under Paragraph 2.1 (LICENSED TECHNOLOGY) and its subparagraphs relating to lithium-ion technologies developed by A123 which may be pertinent to CELLS, including but not limited to: [**] or other relevant developments, if A123 is willing to license such technologies to any THIRD PARTY (the "ROFO TECHNOLOGIES").

        2.5.  Non-exclusive GILLETTE IMPROVED IP License. GILLETTE hereby grants to A123 and its SUBSIDIARIES a non-exclusive, irrevocable, royalty-free, worldwide, license under the GILLETTE IMPROVED IP to develop, make, have made, use, sell, offer to sell, lease, and import any products outside the FIELD that incorporate the LICENSED TECHNOLOGY or any GILLETTE IMPROVED IP to the extent GILLETTE has the right to grant such rights to A123. GILLETTE will use good faith efforts to secure the right to grant such rights to A123 but will not be required to refuse to receive GILLETTE IMPROVED IP from SUBLICENSEES that otherwise are in conformance with the terms and conditions of this Agreement. Notwithstanding the foregoing, GILLETTE will be under no obligation to disclose any GILLETTE IMPROVED IP to A123.

        2.6.  Retained Federal Government Rights. GILLETTE acknowledges that the U.S. federal government retains a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in any PATENT RIGHTS as set forth in 35 U.S.C. §§ 201-211, and the regulations promulgated thereunder, as amended, or any successor statutes or regulations. A123 represents and warrants that such US Government rights will not result in GILLETTE or any AFFILIATEs of GILLETTE being required to obtain US government approval to manufacture CELLS and/or [**] outside of the US under the intellectual property rights licensed under this AGREEMENT.

        2.7.  Ownership of LICENSED TECHNOLOGY, No Additional Rights. As between GILLETTE and A123, A123 is the sole and exclusive owner of all the LICENSED TECHNOLOGY. Nothing in this AGREEMENT will be construed to confer any rights upon GILLETTE by implication, estoppel, or otherwise as to any technology or patent rights of A123 or any other entity other than the LICENSED TECHNOLOGY, FUTURE PATENTS, and FUTURE KNOW-HOW regardless of whether such technology or patent rights will be dominant or subordinate to any LICENSED TECHNOLOGY.

        3.1.  TRADEMARK. A123 hereby grants to GILLETTE and AFFILIATEs of GILLETTE an exclusive worldwide, royalty-free, non-transferable, non-sublicensable license to use the TRADEMARK during the TERM on and in connection with the manufacture, display, advertising, promotion, labeling, sale, marketing, and distribution of LICENSED PRODUCTs in the FIELD. The license does not include the right to sublicense.

        3.2.  Quality Control. A123 will have the right to monitor and observe the manufacture, processing, packaging and sale of all LICENSED PRODUCTs intended to be marked with the TRADEMARK and to examine all finished LICENSED PRODUCTs intended to be marked with the TRADEMARK for the purpose of protecting and maintaining the standards of quality established by A123 for products sold under the TRADEMARK, subject to the confidentiality obligations under Article 9 (Confidentiality). GILLETTE will permit A123's authorized personnel to enter GILLETTE's and its SUBLICENSEEs' premises at all reasonable times, with at least [**] advance written notice, to inspect manufacturing, processing and packaging facilities and operations where the LICENSED PRODUCTS intended to be marked with the TRADEMARK are being manufactured or stored, and to inspect and test all products produced for sale under the TRADEMARK. Such inspection will be limited to a maximum of [**] per QUARTER, and a reasonable number of lots of product inspected per inspection. A123 will be responsible for all A123's costs associated with such inspection. If A123 at any time finds that any of such marked products are not being manufactured, processed, packaged or sold in accordance with standards of quality acceptable to A123 or have been packaged in a misleading or deceptive manner, or otherwise have been prepared, packaged, advertised or sold in a manner in violation of this AGREEMENT, A123 may notify GILLETTE in writing of such deficiencies, and if GILLETTE fails to correct such deficiencies within [**] after receipt of such notice, A123 may, at its election, terminate this Article 3 (Grant of Rights to TRADEMARKS) effective immediately.

        3.3.  Advertising & Packaging. All packages, labels, designs, descriptive materials and advertising of every type to be used by GILLETTE in connection with LICENSED PRODUCTs bearing the TRADEMARK will be subject to A123's prior written approval per the approval process set forth in Paragraph 3.3.1 (Approval Process), which will not be unreasonably withheld. GILLETTE will cause to appear on all materials on or in connection with which the TRADEMARK is used such legends, markings and notices as A123 may reasonably request.

        3.4.  Modification or Changes to TRADEMARKS by A123. If A123 modifies any TRADEMARK, then A123 will notify GILLETTE about the modification and will allow GILLETTE a reasonable time to change the TRADEMARK on the LICENSED PRODUCT, packaging and any advertising materials for the LICENSED PRODUCT. Should A123 require that the change be implemented within [**] or less from the date of A123's notification, and should there be any cost or expense involved in making A123's desired changes, or such timing, over and above the costs incurred for packaging changes in the normal course of business, or if the change affects existing inventory, GILLETTE will notify A123 of the incremental cost and/or expense, and in the event A123 elects to proceed with requiring GILLETTE to make such change to the TRADEMARK used on the LICENSED PRODUCT, A123 will pay the additional cost or expense within [**] of receipt of an invoice from GILLETTE.

        3.5.  TRADEMARK Matters.

        3.6.  Indemnification. A123 will indemnify, defend and hold GILLETTE and its AFFILIATEs harmless from and against any and all liability resulting from any claim of infringement of trademarks arising out of or related to the use of the TRADEMARK by GILLETTE and/or its AFFILIATEs in a manner authorized by this AGREEMENT. The obligation of A123 to GILLETTE and its AFFILIATEs for such infringement or claims of infringement, will be conditioned on GILLETTE giving A123 reasonably prompt notice of any such claim or claims for infringement, and giving A123 the authority to conduct the defense of any such action for infringement, with the understanding, however, that GILLETTE and/or its AFFILIATEs may retain additional counsel at its expense and participate in any such litigation.

        4.1.  Learning Support. During the LEARNING PHASE, A123 will provide GILLETTE and its AFFILIATEs with necessary support of designated company expert resources as may be reasonably required to enable GILLETTE and its AFFILIATEs to practice A123's technology (the "SUPPORT"), including:

        4.2.  Support Structure. SUPPORT will be provided and scheduled in a reasonable manner, providing A123 with reasonable time to provide appropriate resources without significant disruption to A123's business.

        4.3.  Level of Support. The PARTIES anticipate that the SUPPORT can be sufficiently provided by approximately between [**] and [**] full-time-equivalent A123 employees ("FTEs") during the LEARNING PHASE. A123 will not be obligated to provide SUPPORT that requires more than [**] FTEs without additional charges. If the efforts of [**] FTEs do not result in a degree of SUPPORT satisfactory to GILLETTE, then the PARTIES will negotiate in good faith additional FTEs and applicable charges for those FTEs. For the avoidance of doubt, A123 will not be in material breach of this Section 4.3 due merely to GILLETTE seeking support that requires more than [**] FTEs or such higher number of FTEs as agreed by the PARTIES from time to time.

        4.4.  Expenses. GILLETTE will pay to A123 all reasonable expenses (i.e., travel expenses consistent with GILLETTE's travel policy, and related out-of-pocket expenses) incurred in connection with the provision of SUPPORT hereunder. Such expenses will be paid by GILLETTE within [**] after GILLETTE's receipt of A123's complete and correct invoice, which will include a statement fully itemizing expenses incurred.

        4.5.  Failure to Provide Support. A123's material failure to provide SUPPORT as required in Article 4 (Learning Support) will be deemed a material breach under Paragraph 13.2.2 (Material Breach), subject, without limitation, to the resource constraints identified in this Section 4. Notwithstanding anything to the contrary in this AGREEMENT, if A123 fails to cure such breach per Paragraph 13.2.2 (Material Breach) and GILLETTE exercises its right to terminate under Paragraph 13.2.2 (Material Breach) within [**] after the expiration of the LEARNING PHASE, then A123 will refund to GILLETTE all fees and ROYALTIES under Paragraphs 5.1 (Consideration for Grant of Rights) and 5.2 (Consideration for Support) and their subparagraphs, paid by GILLETTE from the EFFECTIVE DATE to GILLETTE's notice of termination. Such refund will be made within [**] of the GILLETTE notice of termination. Notwithstanding the foregoing, if there is a dispute between the PARTIES as to whether or not A123 in fact materially failed to provide support as required in Article 4 (Learning Support), then the dispute will be resolved in accordance with the procedures set forth in Article 14 (Dispute Resolution). GILLETTE will use good faith efforts to notify A123 promptly of any dissatisfaction of GILLETTE with A123's provision of SUPPORT.

        5.1.  Consideration for Grant of Rights.

        5.2.  Consideration for Support. GILLETTE will pay to A123 a support fee of TWO MILLION FIVE HUNDRED THOUSAND U.S. DOLLARS ($2,500,000) promptly after the EFFECTIVE DATE, which payment will be received by A123 no more than [**] after the EFFECTIVE DATE.

        5.3.  Payments.

        5.4.  Taxes. All federal, state, municipal, and other governmental excise, sales, use, customs, value added, or other taxes, fees or duties incurred in connection with this AGREEMENT will be paid by the PARTY incurring such costs. If any taxes are owed by A123 and are required to be withheld on any payment under this AGREEMENT, then GILLETTE will:

        6.1.  Frequency of Reports. GILLETTE will deliver reports to A123 within [**] of the end of each QUARTER, containing information concerning the immediately preceding QUARTER, as further described in Paragraph 6.2 (Content of Reports & Payments) and its subparagraphs.

        6.2.  Content of Reports & Payments. Each report delivered by GILLETTE to A123 will contain at least the following information for the immediately preceding QUARTER:

        6.3.  Records. GILLETTE will maintain complete and accurate records relating to the rights and obligations under this AGREEMENT and any amounts payable to A123 in relation to this AGREEMENT, which records will contain sufficient information to permit A123 to confirm the accuracy of any reports delivered to A123 and compliance in other respects with this AGREEMENT. GILLETTE will retain such records for at least [**] years following the end of the GILLETTE fiscal year to which they pertain, during which time A123 will have the right to engage an independent certified public accountant, at A123's expense, to inspect such records during normal business hours to verify any reports and payments made or compliance in other respects under this AGREEMENT; provided that A123 will give GILLETTE at least [**] advance notice of its intention to conduct such an inspection of records. In the event that any audit performed under this Paragraph 6.3 reveals an underpayment in excess of five percent (5%), GILLETTE will bear the full cost of such audit and will remit any amounts due to A123 within [**] of receiving notice thereof from A123.

        7.1.  Responsibility for PATENT RIGHTS. A123 will prepare, file, prosecute, and maintain all of the PATENT RIGHTS. During the TERM, A123 will not abandon or fail to maintain the EXISTING PATENTS without the prior approval of GILLETTE.

        7.2.  Notification of Infringement. Each PARTY will provide written notice to the other PARTY promptly after becoming aware of any THIRD PARTY infringement of the PATENT RIGHTS; provided that A123 will provide such notice to GILLETTE only where the THIRD PARTY infringement arises in the FIELD.

        7.3.  Right to Prosecute Infringements.

        7.4.  Declaratory Judgment Actions. In the event that a declaratory judgment action is brought against A123 or GILLETTE by a THIRD PARTY alleging invalidity, unenforceability, or non-infringement of the PATENT RIGHTS, A123, at its option, will have the right within [**] after commencement of such action to take over the sole defense of the action at its own expense. If A123 does not exercise this right, GILLETTE may take over the sole defense of the action at GILLETTE's sole expense, subject to Paragraph 7.5 (Recovery) and its subparagraphs.

        7.5.  Recovery. Any recovery obtained in an action brought by GILLETTE under Paragraphs 7.3.1 (GILLETTE Right to Prosecute) or 7.4 (Declaratory Judgment Actions) will be distributed as follows:

        7.6.  Cooperation. Each PARTY will use reasonable efforts to cooperate in any action under Article 7 (Patent Prosecution & Infringement) which is controlled by the other PARTY.

        8.1.  Indemnification.

        8.1.2.  A123 IP Indemnities.

        8.1.2.2.  Remedies. If in A123's and/or GILLETTE's opinion any TECHNOLOGY APPLICATION may become, or in fact does become, the subject of a reasonable claim of patent infringement by a THIRD PARTY (excluding for the avoidance of doubt [**]), then A123 will, at its election or at GILLETTE's request, either (i) obtain the right for GILLETTE and its AFFILIATEs to continue using the applicable TECHNOLOGY APPLICATION under the THIRD PARTY's patent rights; or (ii) replace or modify the applicable LICENSED TECHNOLOGY with non-infringing technology with substantially the same functionality and performance acceptable to GILLETTE (GILLETTE's acceptance not to be unreasonably withheld); or (iii) if neither (i) nor (ii) are reasonably practicable in A123's sole discretion, A123 will offer to terminate the license(s) to the extent specifically related to the subject TECHNOLOGY APPLICATION, by withdrawing the TECHNOLOGY APPLICATION from the scope of LICENSED TECHNOLOGY. If GILLETTE accepts A123's offer to terminate, then either Paragraphs 8.1.2.2.1 (Applicable Licenses Terminated) or 8.1.2.2.2 (Alternative Remedy) and their subparagraphs will apply:

        8.2.  Procedures. The A123 INDEMNITEES and GILLETTE INDEMNITEES (as applicable, the "INDEMNITEES") will provide the indemnifying PARTY with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under this AGREEMENT. The indemnifying PARTY will, at its own expense, provide attorneys reasonably acceptable to the other PARTY to defend against any such claim. The INDEMNITEES will cooperate fully with the indemnifying PARTY in such defense and will permit the indemnifying PARTY to conduct and control such defense and the disposition of such claim, suit, or action (including all decisions relative to litigation, appeal, and settlement). The indemnifying PARTY will keep the INDEMNITEES informed of the progress in the defense and disposition of such claim and to consult with the INDEMNITEES with regard to any proposed settlement. Notwithstanding anything to the contrary in this Paragraph 8.2, the indemnifying PARTY will have sole control of the settlement, compromise, negotiation and defense of any such claim, suit, action, demand or judgment.

        8.3.  Limitations. Subject to Paragraph 8.3.1 (Clarification of Limitations), A123's obligations under Paragraphs 8.1.2.1 (Intellectual Property Infringement), 8.1.2.2 (Remedies), 8.1.2.3 (Sole Remedy), and their subparagraphs will be subject in all respects to the limitations of Article 11 (Limitations on Liability). Subject to Paragraph 8.3.1 (Clarification of Limitations), aggregate amounts payable to GILLETTE or any THIRD PARTY by A123 under Paragraph 8.1.2 (A123 IP Indemnities) and its subparagraphs will be subject to the maximum obligations set forth in Paragraph 11.2 (Limitation on Liability) and its subparagraphs, regardless of whether the amounts due from A123 under Paragraphs 8.1.2.1 (Intellectual Property Infringement), 8.1.2.2 (Remedies), 8.1.2.3 (Sole Remedy), and their subparagraphs would exceed the maximums set forth in Paragraph 11.2 (Limitations on Liability) and its subparagraphs. All other obligations of the PARTIES under Article 8 (Indemnification) will not be limited by Article 11 (Limitations on Liability).

        9.1.  Disclosure of CONFIDENTIAL INFORMATION. During the course of this AGREEMENT, it may be necessary for a PARTY to disclose to the other PARTY, orally or in writing, proprietary information and/or materials regarding the disclosing PARTY's technology, products, business information, and/or business objectives which the DISCLOSER considers highly confidential ("CONFIDENTIAL INFORMATION"). In addition, this AGREEMENT will be considered CONFIDENTIAL INFORMATION.

        9.2.  Obligation of Confidentiality. Subject to Paragraph 9.3 (Form of Disclosure) and its subparagraphs, all CONFIDENTIAL INFORMATION disclosed by a PARTY to the other PARTY during the term of this AGREEMENT will not be used by the receiving PARTY except in connection with the activities contemplated by this AGREEMENT, will be maintained in confidence by the receiving PARTY, and will not otherwise be disclosed by the receiving PARTY to any other person, firm, or agency, governmental or private, without the prior written consent of the disclosing PARTY, except to the extent that the CONFIDENTIAL INFORMATION (as determined by competent documentation):

        9.3.  Form of Disclosure. The obligations of the receiving PARTY under Paragraph 9.2 (Obligation of Confidentiality) and its subparagraphs will only extend to CONFIDENTIAL INFORMATION which is disclosed to the receiving PARTY by the disclosing PARTY:

        9.4.  Employee & Advisor Obligations. Each PARTY will provide CONFIDENTIAL INFORMATION received from the other PARTY only to their respective employees, consultants, advisors AFFILIATEs and SUBLICENSEEs, and to the employees, consultants and advisors of such PARTY's AFFILIATEs and SUBLICENSEEs, who have a need to know and have an obligation to treat such information and materials as confidential.

        9.5.  Contract Manufacturers. Subject to Paragraph 2.3 (Non-exclusive Licenses in Other Fields), GILLETTE and its AFFILIATEs may share A123 CONFIDENTIAL INFORMATION with THIRD PARTY manufacturers who have a need to know for purposes of supplying GILLETTE and/or its AFFILIATEs, who are under an obligation of confidentiality at least as stringent as set forth in Article 9 (Confidentiality). Notwithstanding the foregoing or anything to the contrary in this AGREEMENT, in no event will GILLETTE nor any of its AFFILIATEs share CONFIDENTIAL INFORMATION on NANOPHOSPHATE with a THIRD PARTY manufacturer, without the prior written consent of A123.

        9.6.  Terms of AGREEMENT are Confidential. Except as permitted in Paragraph 9.2.5, neither the actual terms of this AGREEMENT nor the AGREEMENT itself will be disclosed by either PARTY to a THIRD PARTY, without the prior written consent of the other PARTY; other than to:

        9.7.  TERM. All obligations of confidentiality imposed under Article 9 (Confidentiality) will expire [**] years following termination or expiration of this AGREEMENT, or upon written release of such obligations by the disclosing PARTY, whichever is earlier.

        10.1.  No Conflict. A123 represents and warrants that all CONFLICTING OBLIGATIONs existing as of the EFFECTIVE DATE are listed on Schedule 10.1 hereto.

        10.2.  SUPPORT. A123 represents and warrants that it will perform the SUPPORT in a professional and workmanlike manner.

        10.3.  NO OTHER WARRANTIES.    EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, A123 MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE LICENSED TECHNOLOGY, TRADEMARKS, OR SUPPORT EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT AND VALIDITY OF PATENT CLAIMS. SPECIFICALLY, AND NOT TO LIMIT THE FOREGOING, A123 MAKES NO WARRANTY OR REPRESENTATION (I) REGARDING THE VALIDITY OR SCOPE OF THE PATENT RIGHTS, AND (II) THAT THE EXPLOITATION OF THE PATENT RIGHTS OR ANY LICENSED PRODUCT, LICENSED PROCESS, OR LICENSED SERVICE WILL NOT INFRINGE ANY PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A123 OR OF A THIRD PARTY.

        11.   Limitations on Liability

        11.1.  DISCLAIMER OF INCIDENTAL / CONSEQUENTIAL DAMAGES.    IN NO EVENT WILL EITHER PARTY, ITS DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH THIS AGREEMENT, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER ANY SUCH ENTITY OR PERSON WILL BE ADVISED, WILL HAVE OTHER REASON TO KNOW, OR IN FACT WILL KNOW OF THE POSSIBILITY OF THE FOREGOING.

        11.2.  Limitation of Liability.

        11.3.  Exceptions. Article 11 (Limitations on Liability) will not limit either PARTY's liability for any claims arising from:

        11.4.  SUBSEQUENT CONTRACTS. Notwithstanding anything to the contrary in Paragraphs 8 (Indemnification) or Sections 11.1 (Disclaimer of Incidental / Consequential Damages), 11.2 (Limitation of Liability), 11.3 (Exceptions) and their respective subparagraphs, A123 will provide to GILLETTE a right to a refund in connection with specific circumstances created by a SUBSEQUENT CONTRACT, as set forth in the subparagraphs to this Paragraph 11.4. This

Section 11.4 and its subparagraphs shall expire on the earlier of (i) the end of the TERM and (ii) the [**] anniversary of the EFFECTIVE DATE.

        11.4.1.  Freedom to Practice for GILLETTE / No Up-front Payments. A123 will not enter into any SUBSEQUENT CONTRACT that restricts GILLETTE's license rights under Paragraph 2.1 (LICENSED TECHNOLOGY) and its subparagraphs under the LICENSED PATENTS (via, for example, by sublicense from A123, or direct license from the patent owner); including the freedom-to-practice NANOPHOSPHATE powder under such patents only to the extent such rights are granted by A123 to GILLETTE in this AGREEMENT. Additionally, if any SUBSEQUENT CONTRACT expressly requires any upfront or other lump sum payments by A123 or any sublicensee of A123, then A123 will be solely responsible for such payments to the extent necessary to enable GILLETTE to continue to practice the rights granted by A123 to GILLETTE in this AGREEMENT.

        11.4.2.  MATERIAL ADVERSE EFFECT. During the TERM, in negotiating a SUBSEQUENT CONTRACT, A123 will make a good faith attempt to avoid entering into any SUBSEQUENT CONTRACT that has a MATERIAL ADVERSE EFFECT. In the event a SUBSEQUENT CONTRACT nonetheless results in a MATERIAL ADVERSE EFFECT, GILLETTE may provide written notice to A123 (the "SUBSEQUENT CONTRACT TERMINATION NOTICE") of GILLETTE's desire to terminate this AGREEMENT, so long as such SUBSEQUENT CONTRACT TERMINATION NOTICE is delivered to A123 no more than [**] after GILLETTE receives written notice from A123 of the SUBSEQUENT CONTRACT; provided that, [**] SUBSEQUENT CONTRACT TERMINATION NOTICE may be provided to A123 hereunder regardless of the number of SUBSEQUENT CONTRACTS entered into by A123 that would otherwise be subject to this Section 11.4. Upon A123's receipt of the SUBSEQUENT CONTRACT TERMINATION NOTICE, the following will apply:

        11.4.2.3.  Increase in Running Royalty Obligations. If the SUBSEQUENT CONTRACT results in GILLETTE having to pay an aggregate running royalty to A123 and/or a counterparty to such SUBSEQUENT CONTRACT or its AFFILIATE (including GILLETTE's obligations under Paragraph 8.1.2.5 (Cap on GILLETTE Royalties to Practice LICENSED TECHNOLOGY)) equivalent to greater than [**] of NANOPHOSPHATE and/or LFP employed in LICENSED PRODUCTS, then A123 will refund to P&G the following amounts within [**] of GILLETTE's notice to terminate under Paragraph 11.4.2 (MATERIAL ADVERSE EFFECT):

        11.4.2.4.  Substantially Similar/Functional Tech In Lieu of Above. In lieu of the above remedies under Paragraphs 11.4.2.1 (P&G Loses Freedom to Practice) through 11.4.2.3 (Increase in Running Royalty Obligation) and their subparagraphs, A123 at its election will replace or modify the applicable LICENSED TECHNOLOGY with non-infringing technology with substantially the same functionality and performance acceptable to GILLETTE (GILLETTE's acceptance not to be unreasonably withheld).

        11.4.2.5.  Prevention of Multiple Claims under Section 11.4. GILLETTE may only select a remedy pursuant to Sections 11.4.2 (MATERIAL ADVERSE EFFECT), 11.4.2.4 (Substantially Similar/Functional Tech In Lieu of Above) and their subparagraphs, and not under more than one of such subparagraphs. This Section 11.4 and its subparagraphs set forth GILLETE's sole and exclusive remedy with respect to the SUBSEQUENT CONTRACT where P&G chooses to exercise its rights under the SUBSEQUENT CONTRACT TERMINATION NOTICE. Any other claims regarding any other SUBSEQUENT CONTRACT are subject to the other terms and conditions of this AGREEMENT, as applicable.

        12.1.  Compliance with Laws. GILLETTE will use reasonable commercial efforts to comply with all commercially material local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of LICENSED PRODUCTs.

        12.2.  Export Control. GILLETTE and SUBLICENSEEs will comply with all US laws and regulations controlling the export of certain commodities and technical data, including without limitation all Export Administration Regulations of the US Department of Commerce. Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries. GILLETTE hereby gives written assurance that it will comply with, and will cause its SUBLICENSEEs to comply with, all US export control laws and regulations, that it bears sole responsibility for any violation of such laws and regulations by itself, and that it will indemnify, defend, and hold A123 harmless (in accordance with Article 8.1 (Indemnification) and its subparagraphs) for the consequences of any such violation.

        12.3.  Marking of LICENSED PRODUCTs. Solely with respect to applicable LICENSED PRODUCT sold in the US, to the extent commercially feasible and consistent with prevailing business practices, GILLETTE will mark, and will cause its SUBLICENSEEs to mark, all LICENSED PRODUCTs that are manufactured or sold under this AGREEMENT with the number of each issued patent under the PATENT RIGHTS that applies to such LICENSED PRODUCT.

        13.1.  TERM. The AGREEMENT will continue in effect from the EFFECTIVE DATE until the end of the PATENT TERM, unless sooner terminated pursuant to this Paragraph 12.3 (Marking of LICENSED PRODUCTS) or Paragraph 8.1.2.2.2 (Alternative Remedy) ("TERM").

        13.2.  Termination for Default.

        13.3.  Effect of Termination.

        13.3.2.  Effects of Other Terminations. Upon the early termination of this AGREEMENT for any reason, GILLETTE and its SUBLICENSEEs may complete and sell any work-in-progress and inventory of LICENSED PRODUCTs that exist as of the effective date of termination, provided that:

        13.3.3.  Pre-termination Obligations. In no event will termination of this AGREEMENT release GILLETTE or SUBLICENSEEs from the obligation to pay any amounts that became due on or before the effective date of termination.

        14.1.  Binding Arbitration of Disputes. Any controversy or dispute arising out of or in connection with this AGREEMENT its interpretation, performance, or termination, but not including validity or enforceability of patents licensed herein, ("DISPUTE") that the PARTIES are unable to resolve within [**] after written notice by one PARTY to the other of the existence of such DISPUTE, will be submitted to arbitration. The arbitration will be conducted in Delaware, US except as may otherwise be agreed by the PARTIES, in accordance with the Commercial Arbitration Rules of the American Arbitration Association then in effect. Each DISPUTE will be submitted to a panel of three (3) impartial arbitrators with each PARTY selecting one (1) arbitrator within [**] after the commencement of the arbitration period and the two (2) selected arbitrators selecting a third arbitrator within [**] after the commencement of the arbitration period. Any arbitration hereunder will commence within [**] after appointment of the third arbitrator. No discovery by either PARTY will be permitted unless the arbitrators determine that the PARTY requesting such discovery has a substantial, demonstrable need. The arbitrators will make final determinations as to any discovery disputes and all other procedural matters. If any PARTY fails to comply with the procedures in any arbitration in a manner deemed material by the arbitrators, then the arbitrators will fix a reasonable time for compliance, and if the PARTY does not comply within such period, then a remedy deemed just by the arbitrators, including an award of default, may be imposed. The decision of the arbitrators will be rendered no later than [**] after commencement of the arbitration period. The final decision of the arbitrators with respect to the DISPUTE, will be limited to a finding fully in favor of one PARTY's position, and no compromise or split decisions will be allowed; and any award of the arbitrators in favor of a PARTY against the other PARTY may not exceed the limitations on liability set forth in this AGREEMENT. Other than attorney's fees and expenses, the costs of arbitration will be born by the PARTY against whom the arbitral decision is made. Any judgment or decision rendered by the panel will be binding upon the PARTIES and will be enforceable by any court of competent jurisdiction. For the avoidance of doubt, the arbitrators will be subject in all respects to the terms and conditions of this AGREEMENT, including without limitation the limitations on liability set forth in Section 11 (Limitations on Liability).

        15.1.  Governing Law. This AGREEMENT and all disputes arising out of or related to this AGREEMENT, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, will be construed, governed, interpreted and applied in accordance with the laws of the State of New York applicable to contracts made and performed entirely in such state,

without regard to any principle of conflict or choice of laws that would cause the application of the laws of any other jurisdiction, except that questions affecting the construction and effect of any patent will be determined by the law of the country in which the patent will have been granted.

        15.2.  Assignment. In the event a PARTY transfers ownership of all or substantially all of its business in the LICENSED PRODUCTS and/or in the event A123 transfers ownership of all or substantially all of the PATENT RIGHTS (collectively, "BUSINESS TRANSFER"), that PARTY would be free to assign this AGREEMENT and the SUPPLY AGREEMENT, together in whole but not in part, to the new owner of such business; provided that (i) GILLETTE will not have the right to assign this AGREEMENT or the SUPPLY AGREEMENT to any THIRD PARTY that is not a PERMITTED ASSIGNEE OF GILLETTE, and (ii) A123 will not have the right to assign this AGREEMENT or the SUPPLY AGREEMENT to any THIRD PARTY that is not a PERMITTED ASSIGNEE OF A123. Except as expressly provided in this Paragraph 15.2 and its subparagraphs, neither PARTY may assign this AGREEMENT, the SUPPLY AGREEMENT or any portion thereof to a THIRD PARTY without the prior written consent of the other PARTY.

        15.3.  Notice. Any notices required or permitted under this AGREEMENT will be in writing, will specifically refer to this AGREEMENT, and will be sent by hand, recognized national overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile numbers of the PARTIES. All notices under this AGREEMENT will be deemed effective upon receipt. A PARTY may change its contact information immediately upon written notice to the other PARTY in the manner provided in this Paragraph 15.3 and its subparagraphs.

        15.4.  Press Releases. Neither PARTY will issue a press release regarding any aspect of this AGREEMENT, including any general statements as to the existence of a relationship between the PARTIES, without the prior written consent of the other PARTY, unless otherwise required by law or regulation, in which case, the issuing PARTY will provide the other PARTY reasonable prior written notice of the required disclosure.

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

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

        15.7.  Severability. In the event that any provision of this AGREEMENT will be held invalid or unenforceable for any reason, such invalidity or unenforceability will not affect any other provision of this AGREEMENT, and the PARTIES will negotiate in good faith to modify the AGREEMENT to preserve (to the extent possible) their original intent. If the PARTIES fail to reach a modified agreement within thirty (30) days after the relevant provision is held invalid or unenforceable, then the dispute will be resolved in accordance with the procedures set forth in Article 14 (Dispute Resolution). While the dispute is pending resolution, this AGREEMENT will be construed as if such provision were deleted by agreement of the PARTIES.

        15.8.  Counterparts. This AGREEMENT may be executed in one or more counterparts, each of which when executed will be deemed to be an original but all of which taken together will constitute one and the same agreement. A facsimile or .pdf copy of a signature of a PARTY will have the same effect and validity as an original signature.

        15.9.  Binding Effect. This AGREEMENT will be binding upon and inure to the benefit of the PARTIES and their respective permitted successors and assigns.

        15.10.  Headings. All headings are for convenience only and will not affect the meaning of any provision of this AGREEMENT.

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

        15.12.  Construction. Except where the context otherwise requires, wherever used, the singular will include the plural, the plural the singular, the use of any gender will be applicable to all genders and the word "or" is used in the inclusive sense (i.e., and/or). The words "hereof," "herein" and "hereunder" and words of similar import when used in this AGREEMENT will refer to this AGREEMENT as a whole and not to any particular provision of this AGREEMENT. Article, paragraph and subparagraph references are to this AGREEMENT, unless otherwise specified. The term "including" as used herein will mean including, without limiting the generality of any description preceding such term. The language of this AGREEMENT will be deemed to be the language mutually chosen by the PARTIES and no rule of strict construction will be applied against either PARTY hereto.

        15.13.  No Construction Against Drafter. Each PARTY acknowledges that it has been advised to, and has had the opportunity to consult with its personal attorney prior to entering into this AGREEMENT. No law or rule relating to the construction or interpretation of contracts against the drafter of any particular clause will be applied with respect to this AGREEMENT.