ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the “ Agreement ”) is entered into as of August ____, 2008, by and among:   Porous Power Technologies, LLC , a Colorado limited liability company (“ Purchaser ”) and Lithium Technology Corporation , a Delaware corporation (“ Seller ”).  Certain capitalized terms used in this Agreement are defined on Exhibit A .

1.             Sale Of Assets; Related Transactions .

1.1             Sale of Assets.  Contemporaneously with the execution and delivery of this Agreement, Seller shall cause to be sold, assigned, transferred, conveyed and delivered to Purchaser good and valid title to the Assets (as defined below), free of any Encumbrances, on the terms and subject to the conditions set forth in this Agreement.  As used in this Agreement, “ Assets ” shall mean:

(a)            all equipment, furniture and other tangible assets of Seller used in the conduct of the Business, including all of the equipment, furniture and other tangible assets of Seller identified on Part 1.1(a) of the Disclosure Schedule;

(b)            Seller’s rights under all Assumed Contracts, all of which are set forth on Part 1.1(b) of the Disclosure Schedule; and

(c)            all customers lists, books, records, files, data, inventories and work-in-progress of Seller associated with the Assumed Contracts.

1.2             Excluded Assets.   Purchaser shall not acquire, and there shall be excluded from the Assets (collectively, the “ Excluded Assets ”):

(a)            Seller’s interest in (i) cash on hand or in banks and cash equivalents of Seller; (ii) all rights to collect from customers (and to retain) all fees and other amounts payable, or that may become payable, to Seller with respect to services performed on behalf of Seller on or prior to the Closing Date; and (iii) all accounts receivable, notes receivable and other receivables of Seller;

(b)             all Proprietary Assets owned, licensed or held by Seller and used in the Business, all associated goodwill, rights, privileges, claims, past, present and future causes of action and options relating to such Proprietary Assets, including, but not limited to, all of the Proprietary Assets;

(c)            all Governmental Authorizations utilized in the conduct of the Business; and

(d)            all books, records, files and data of Seller related to the Business not described in Section 1.1(c) above.

1.3             Licenses to Seller Proprietary Assets. Seller hereby grants Purchaser a nonexclusive, irrevocable, worldwide, royalty-free, fully paid license, with the right to grant sublicenses through multiple tiers, under the Seller Proprietary Assets for 10 years after the Closing Date to (a) use and practice such Seller Proprietary Assets including, without limitation, to make, use, have made, sell, offer to sell, import or otherwise exploit any product, method, process, or service of Purchaser and  (b) to use, modify, reproduce, distribute, publicly perform, publicly display, and create derivative works of any Seller Proprietary Assets in order to exercise its rights granted under subsection (a) (the “ License ”).

1.4             Purchase Price .  As consideration for the sale of Assets to Purchaser and the grant of the License:

(a)            Purchaser shall pay Seller US$1.00 in cash (the “ Purchase Price ”); and

(b)            At the Closing, Purchaser shall assume the Assumed Liabilities (as defined in Section 1.6 below).

1.6             No other Liabilities or Obligations Assumed. Purchaser shall not assume any Liability of Seller, other than the Assumed Liabilities.  Without limiting the generality of the foregoing, nothing contained herein shall cause Purchaser to assume (a) any Liabilities arising out of the conduct of the Business prior to the Closing, whether known or unknown on the Closing Date, other than the Assumed Liabilities; (b) any Taxes:  (i) payable with respect to the business, assets, properties or operations of Seller relating to the Business with respect to periods or portions thereof ending on or prior to the Closing Date or (ii) incident to or arising as a consequence of the negotiation or consummation by Seller of this Agreement and the Transactions; (c) any Liability arising prior to or as a result of the Closing to any employees, agents or independent contractors of Seller, or under any benefit arrangement with respect thereto; provided that Purchaser shall be liable for any such Liabilities resulting from Purchaser’s employment of Seller’s employees after the Closing Date; (d) any Liability arising prior to, as a result of or after the Closing from any Seller Contract that is not an Assumed Contract; and (e) any Liability of Seller arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the Transactions and fees and expenses of Seller’s counsel, accountants and other experts .  Purchaser does assume and agree to discharge, when due, the Assumed Liabilities.  For purposes of this Agreement, “ Assumed Liabilities ” shall mean only the following Liabilities of Seller: the obligations of Seller under the Assumed Contracts, but only to the extent such obligations (w) arise after the Closing Date; (x) do not arise from or relate to any breach by Seller of any provision of any of such Assumed Contracts that, with notice or lapse of time, would constitute or result in a breach of any of such Assumed Contracts; (y) do not arise from any event, circumstance or condition occurring or existing on or prior to the Closing Date; and (z) are ascertainable (in nature and amount) by reference to the express terms of the Assumed Contracts.

1.7             Sales Taxes.   Seller shall bear and pay, and shall reimburse Purchaser and its respective affiliates for, any sales Taxes, use Taxes, transfer Taxes, documentary charges, recording fees or similar Taxes, charges, fees or expenses that may become payable in connection with the sale of the Assets to Purchaser or in connection with any of the other Transactions.

1.8             Allocation.   Within 60 days following the Closing, Purchaser shall deliver to Seller a statement setting forth Purchaser’s good faith determination of the manner in which the Purchase Price is to be allocated among the Assets.  Except as required by law, the allocation prescribed by such statement shall be conclusive and binding upon Seller and Purchaser for all purposes and Seller and Purchaser shall not file any Tax Return or other document with, or make any statement or declaration to, any Governmental Body that is inconsistent with such allocation.

1.9             Closing.   The closing of the sale of the Assets to Purchaser (the “ Closing ”) shall take place at 10:00 a.m. at the offices of Cooley Godward Kronish llp, 380 Interlocken Crescent, Suite 900, Broomfield, Colorado 80021 on the date hereof, or at such other time or place as the parties may mutually agree.  The date on which the Closing takes place shall be referred to as the “ Closing Date ”.

1.10             Further Assurances.   From and after the Closing Date, the Seller shall cooperate with the Purchaser and the Purchaser’s affiliates and Representatives, and shall execute and deliver such documents and take such other actions as the Purchaser may reasonably request, for the purpose of evidencing the Transactions and putting the Purchaser in possession and control of all of the Assets.  The Seller hereby irrevocably nominates, constitutes and appoints the Purchaser as the true and lawful attorney-in-fact of the Seller (with full power of substitution) effective as of the Closing Date, and hereby authorizes the Purchaser, in the name of and on behalf of the Seller, to execute, deliver, acknowledge, certify, file and record any document, to institute and prosecute any Proceeding and to take any other action (on or at any time after the Closing Date) that the Purchaser may deem appropriate for the purpose of (i) collecting, asserting, enforcing or perfecting any claim, right or interest of any kind that is included in or relates to any of the Assets, (ii) defending or compromising any claim or Proceeding relating to any of the Assets; provided that Purchaser shall obtain Seller’s consent, not to be unreasonably withheld, prior to compromising any such Proceeding, or (iii) otherwise carrying out or facilitating any of the Transactions.  The power of attorney referred to in the preceding sentence is and shall be coupled with an interest and shall be irrevocable, and shall survive the dissolution or insolvency of the Seller.

2.           Representations And Warranties Of Seller

Except as set forth in the Disclosure Schedule, Seller hereby represents and warrants to Purchaser as follows as of the Closing Date:

2.1             Due Organization.  The Seller is a corporation duly organized, validly existing and in good standing under the laws of Delaware.

2.2             Assets.

(a)            Seller is the sole owner of the Assets and Seller Proprietary Assets and has full and exclusive right to assign the rights assigned herein;

(b)            all of the Assets (including the Seller Proprietary Assets) are free and clear of all Encumbrances;

(c)            the Assets and Seller Proprietary Assets constitute all the Assets necessary to enable the Seller to conduct the Business in the manner in which such Business is being conducted;

(d)            none of the Seller Proprietary Assets infringe, conflict with or violate any Proprietary Assets of any third party;

(e)            Seller has maintained the Assets and Seller Proprietary Assets in confidence and has not granted, directly or indirectly, any rights or interest whatsoever in the Assets or Acquired Proprietary Assets to any third party;

(f)            all employees, agents, consultants, or contractors of Seller who have contributed to, participated in the development of or have access to any of the Assets or Seller Proprietary Assets either (1) is a party to a “work-for-hire” agreement under which the Seller (or any predecessor in interest, if applicable) is deemed to be the original owner/author of all property rights therein; or (2) has executed an assignment or an agreement to assign in favor of the Seller (or any predecessor in interest, if applicable) all right, title and interest in such material; and

(g)            all Seller Proprietary Assets which are patents, trademarks, service marks and copyrights that are registered with any Governmental Body are valid and subsisting, and all documents, instruments, and fees necessary to establish, perfect, and maintain the rights of the Seller in the Seller Proprietary Assets have been and will be in the future validly executed, delivered, and filed in a timely manner with the appropriate Governmental Body.  Each of the Assets that is registered is and at all times has been in compliance with all legal requirements and all filings, payments, and other actions required to be made or taken to maintain such Asset in full force and effect have been made by the applicable deadline.

2.3             No Conflicts.   No claim, whether or not embodied in an action past or present, of any infringement, of any conflict with, or of any violation of any Proprietary Asset, has been made or is pending or threatened against Seller relative to the Assets.  Seller agrees to promptly inform the Purchaser of any such claim arising or threatened in the future with respect to the Assets or any part thereof.

2.4             Contracts.   Except as set forth in Part 2.4 of the Disclosure Schedule, there are no Seller Contracts: (i) for or in any way relating to the sale, license, purchase, development or support of any Asset or any Seller Proprietary Assets); (ii) restricting the operation of the Seller’s business with respect to, or its right to use, any of the Assets or any Seller Proprietary Assets); or (iii) that are otherwise material to the operation of the Business or use of the Assets.  

2.5             Compliance with Legal Requirements.   Except as set forth in   Part 2.5 of the Disclosure Schedule: (a) the Seller is, and has been, in material compliance with each Legal Requirement that is or was applicable to it or to the conduct of the Business or the ownership or use of any of its Assets; and (b) no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) constitute or result directly or indirectly in a violation by the Seller of, or a failure on the part of the Seller to materially comply with, any Legal Requirement.

2.6             Governmental Authorizations.   The Governmental Authorizations held by the Seller constitute all of the Governmental Authorizations necessary to permit the Seller to own and use the Assets in the manner in which they are currently owned and used and in the manner in which they are proposed to be owned and used.  Each such Governmental Authorization is valid and in full force and effect and the Seller is and has at all times been in material compliance with all of the terms and requirements of each such Governmental Authorization.

2.7             Environmental and Safety Laws .  The Seller is not in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to its Knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation.  

2.8             Proceedings; Orders; Litigation.   There is no pending action, suit, Proceeding or investigation, and no Person has threatened to commence any Proceeding, that involves Seller or that otherwise relates to or might affect the Assumed Contracts, the Seller Proprietary Assets or any of the Assets (whether or not Seller is named as a party thereto), and no event has occurred that could reasonably be expected to give rise to or serve as a basis for the commencement of any such Proceeding.  The foregoing includes, without limitation, actions, suits, Proceedings or investigations pending or threatened involving the prior employment of any of Seller’s employees, their use in connection with Seller’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers.  There is no Order to which Seller, or any of the Assets, are subject; and no Related Party of Seller is subject to any Order that relates to the Business or to any of the Assets or Seller Proprietary Assets.  There is no proposed Order that, if issued or otherwise put into effect, may have an adverse effect on the Business, the Assets or the Seller Proprietary Assets.  There is no action, suit, Proceeding or investigation by Seller currently pending or that Seller intends to initiate.

2.9             Authority; Binding Nature of Agreements.   Seller has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and each of the Transaction Agreements; and the execution, delivery and performance by the Seller of this Agreement and each of the Transaction Agreements has been duly authorized by all necessary action on the part of the Seller and its stockholders, board of directors and officers.  This Agreement and each of the Transaction Agreements (assuming that each such agreement has been duly and validly authorized, executed and delivered by Purchaser) each constitute the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with their terms, except as the enforceability hereof or thereof may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally or (ii) applicable equitable principles (whether considered in a proceeding at law or in equity).  

2.10             Non-Contravention; Consents.   Except as set forth in Part 2.10 of the Disclosure Schedule, neither the execution and delivery of this Agreement, nor the consummation or performance of any of the Transactions, will directly or indirectly (with or without notice or lapse of time):

(a)            contravene, conflict with or result in a violation of, or give any Governmental Body or other Person the right to challenge any of the Transactions or to exercise any remedy or obtain any relief under, any Legal Requirement or any Order to which the Seller, or any of the Assets, is subject;

(b)            cause the Purchaser or any affiliate of the Purchaser to become subject to, or to become liable for the payment of, any Tax;

(c)            cause any of the Assets to be reassessed or revalued by any taxing authority or other Governmental Body;

(d)            contravene, conflict with or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is to be included in the Assets or is held by the Seller or any employee of the Seller;

(e)            contravene, conflict with or result in a violation or breach of, or result in a default under, any provision of any Seller Contract;

(f)            conflict or violate Seller’s Certificate of Incorporation or bylaws;   or

(g)            result in the imposition or creation of any Encumbrance upon or with respect to any of the Assets.

2.11             Brokers.   The Seller has not agreed or become obligated to pay, or has taken any action that might result in any Person claiming to be entitled to receive, any brokerage commission, finder’s fee or similar commission or fee in connection with any of the Transactions.

2.12             Liabilities; Seller .

(a)            Seller is not now insolvent, nor will it be rendered insolvent by any of the Transactions.  As used in this section, “ insolvent ” means that the sum of the present fair saleable value of the assets of an Entity as a going-concern do not and will not exceed its debts and other probable Liabilities.   Immediately after giving effect to the payment of the Purchase Price to Seller:  (i) Seller will be able to pay its Liabilities (other than the Assumed Liabilities) that then exist or that become due in the usual course; and (ii) Seller will have assets that exceed its Liabilities (other than the Assumed Liabilities).  The Purchase Price constitutes fair value for the Assets and the consummation of the Transactions will not constitute a fraudulent transfer under applicable Legal Requirements relating to bankruptcy and insolvency

(b)            Seller has never (i) made a general assignment for the benefit of creditors, (ii) filed, or had filed against Seller, any bankruptcy petition or similar filing, (iii) suffered the attachment or other judicial seizure of the Assets or (iv) taken or been the subject of any action that may have an adverse effect on Seller’s ability to comply with or perform any obligations under any of the Transactional Agreements.  Seller is not subject to any Order and is not bound by any Contract that may have an adverse effect on Seller’s ability to comply with any of the Transactional Agreements, and there is no Proceeding pending, and, no Person has threatened to commence any Proceeding, that may have such effect.  No event has occurred, and no claim, dispute or other condition or circumstance exists, that would reasonably be expected to give rise to the commencement of any such Proceeding. :

2.13             Phoenix Program Product Specifications. Part 2.13 of the Disclosure Schedule lists all Product Specifications for all cells related to any Phoenix Program.

3.           Representations And Warranties Of Purchaser.

Purchaser hereby represents and warrants to Seller as follows as of the Closing Date:

3.1             Organizational Status.   The Purchaser is a limited liability company duly organized, validly existing and in good standing under the Laws of Colorado and is qualified to do business in any jurisdiction where it is required to be so qualified except where the failure to so qualify would not have a material adverse effect on the Purchaser.

3.2             Authorization.   The Purchaser has the requisite power and authority to execute and deliver this Agreement and to perform the Transactions performed or to be performed by it.  Such execution, delivery and performance by the Purchaser has been duly authorized by all necessary corporate action.  This Agreement has been duly executed and delivered by the Purchaser and constitutes a valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms, subject to applicable laws of bankruptcy, insolvency, moratorium and other laws affecting the rights of creditors generally.  The Purchaser has the requisite power and authority (i) to conduct its business in the manner in which its business is currently being conducted, and (ii) to own and use its assets in the manner in which its assets are currently owned and used.

4.           Closing Deliverables of the Parties.

4.1             Deliveries to be made by Seller.   At the Closing, Seller shall deliver the following to Purchaser:

(a)            each of the consents identified in Part 2.10 of the Disclosure Schedule;

(b)            the Sublease, executed by Seller;

(c)            a Bill of Sale and Assignment and Assumption Agreement, in the form attached hereto as Exhibit B (the “ Assignment and Assumption Agreement ”), executed by Seller; and

(d)            such other bills of sale, endorsements, assignments and other documents as may (in the reasonable judgment of Purchaser or its counsel) be reasonably necessary or appropriate to assign, convey, transfer and deliver to Purchaser good and valid title to the Assets free of any Encumbrances.

4.2             Deliveries to be made by Purchaser. At the Closing, Purchaser shall deliver the following to Seller:

(a)            the Purchase Price;

(b)            the Sublease, executed by Purchaser;

(c)            the Assignment and Assumption Agreement executed by Purchaser.

5.           Covenants and Other Agreements.

5.1             Noncompetition; Non-Solicitation.   Seller agrees that it will not, and they will cause its employees not to, directly or indirectly, whether individually or as principal, agent, officer, director, employee, consultant, partner, member or stockholder (other than as the passive holder of less than 5% of the shares of a publicly traded company) of any Entity or otherwise, alone or in association with any other individual, Entity or group:

(a)            engage in developing, offering, selling, or providing, or attempting to develop, offer, sell, or provide, directly or indirectly, to any person located anywhere in the world, any (i) products, technology, or the intellectual property rights thereto, or (ii) services (including training services), in either case, that are the same as or similar to, or otherwise compete with the Business;

(b)            make known to any person, entity, firm or corporation the names and addresses of any of the customers of Purchaser or any other information pertaining to them;

(c)         &n