SHAREHOLDER AGREEMENT between ATS AUTOMATION TOOLING SYSTEMS INC. – and – PHOTOWATT TECHNOLOGIES INC.
Exhibit 4.2
between
ATS AUTOMATION TOOLING SYSTEMS INC.
– and –
[•], 2006
ARTICLE 1 INTERPRETATION |
1 | |||
1.1 Definitions |
1 | |||
1.2 Construction |
6 | |||
1.3 Conflicts With Other Separation Agreements |
7 | |||
ARTICLE 2 GOVERNANCE |
7 | |||
2.1 Board of Directors |
7 | |||
2.2 Committees of the Board |
8 | |||
2.3 Quorum |
8 | |||
2.4 Decisions of Directors |
9 | |||
2.5 Meetings of Shareholders |
9 | |||
2.6 Casting Vote |
9 | |||
2.7 Business and Affairs of Photowatt |
9 | |||
2.8 Transactions with ATS |
9 | |||
2.9 Certain Matters Requiring Approval of ATS |
10 | |||
ARTICLE 3 FINANCIAL REPORTING AND DISCLOSURE COVENANTS |
11 | |||
3.1 Financial and Other Information |
11 | |||
3.2 Auditors and Accounting |
17 | |||
3.3 Future Financial Reporting and Disclosure |
19 | |||
ARTICLE 4 GENERAL PROVISIONS |
20 | |||
4.1 Assignment |
20 | |||
4.2 Entire Agreement |
20 | |||
4.3 Directors and Officers’ Indemnities and Insurance |
21 | |||
4.4 Term |
22 | |||
4.5 Termination Not to Affect Rights or Obligations |
22 | |||
4.6 Future Litigation and Other Proceedings |
22 | |||
4.7 Further Assurances |
22 | |||
4.8 Notices |
23 | |||
4.9 Time of Essence |
23 | |||
4.10 Governing Law |
24 | |||
4.11 Severability |
24 | |||
4.12 Force Majeure |
24 | |||
4.13 Specific Performance |
24 | |||
4.14 Currency |
25 | |||
4.15 Time Periods |
25 | |||
4.16 Amendment |
25 | |||
4.17 Counterparts |
25 | |||
4.18 Authority |
25 | |||
4.19 Jurisdiction |
25 | |||
4.20 Binding Effect |
25 | |||
4.21 Expenses |
26 | |||
4.22 Waiver |
26 | |||
4.23 Compliance With Laws |
26 |
THIS
AGREEMENT is made as of the [•] day of
[•], 2006
BETWEEN:
ATS AUTOMATION TOOLING SYSTEMS INC., a corporation incorporated
under the laws of Ontario
(“ATS”)
– and –
PHOTOWATT TECHNOLOGIES INC., a corporation incorporated under
the laws of Canada
(“Photowatt”)
WHEREAS the Parties wish to enter into this Agreement to provide for the conduct of the
business and affairs of Photowatt and to govern the relationship between Photowatt and ATS as a
shareholder of the Photowatt.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained in this
Agreement and other good and valuable consideration (the receipt and sufficiency of which are
hereby acknowledged by each of the parties), the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
INTERPRETATION
| 1.1 | Definitions | |
| In this Agreement: | ||
| “Act” means the Canada Business Corporations Act, as the same may be amended from time to time and any successor legislation thereto; | ||
| “Action” means any suit, arbitration, inquiry, proceeding or investigation by or before any court, governmental or other regulatory or administrative agency or commission or any arbitration tribunal asserted by a Person; |
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| “Affiliate” has the meaning ascribed thereto in the Securities Act; | ||
| “Agreement” means this agreement and all schedules, if any, attached to this agreement, in each case as they may be supplemented or amended from time to time, and the expressions “hereof”, “herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer to this agreement, and unless otherwise indicated, references to Articles and Sections are to the specified Articles and Sections in this agreement; | ||
| “Assets” means assets, properties and rights (including goodwill and rights arising under Contracts), wherever located (including in the possession of vendors, other Persons or elsewhere), whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of any Person; | ||
| “ATS Annual Financial Statements” means consolidated financial statements of ATS for a fiscal year, setting forth in each case in comparative form the consolidated figures (and notes thereto) for the previous fiscal year and all in reasonable detail and prepared in accordance with Canadian GAAP and all applicable Laws, as well as a discussion and analysis by management of ATS’ financial condition and results of operation for such year; | ||
| “ATS Auditors” has the meaning ascribed thereto in Section 3.2(b); | ||
| “ATS Financial Statements” means ATS Quarterly Financial Statements and ATS Annual Financial Statements; | ||
| “ATS Group” means ATS and each Person that ATS directly or indirectly controls (within the meaning of the Securities Act), other than any member of the Photowatt Group. | ||
| “ATS Public Filings” has the meaning ascribed thereto in Section 3.1(l); | ||
| “ATS Quarterly Financial Statements” means consolidated financial statements of ATS for a fiscal quarter and the period from the beginning of the then-current fiscal year to the end of the fiscal quarter, setting forth in each case in comparative form for each such fiscal quarter and period of ATS, the consolidated figures (and notes thereto) for the corresponding quarter and period of the previous fiscal year and all in reasonable detail and prepared in accordance with Canadian GAAP and all applicable Laws, as well as a discussion and analysis by management of ATS’ financial condition and results of operation for such fiscal period; | ||
| “Audit Package” means all materials prepared for and deliver to Photowatt’s audit committee relating to the approval of Photowatt Financial Statements; | ||
| “Board of Directors” or “Board” means the board of directors of Photowatt; |
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| “Business Day” means a day other than Saturday, Sunday or other day on which commercial banks in Toronto, Ontario are authorized or required by Law to close; | ||
| “Canadian GAAP” means those accounting principles which are recognized as being generally accepted in Canada from time to time as set out in the Handbook published by the Canadian Institute of Chartered Accountants, applied on a consistent basis; | ||
| “Canadian Securities Laws” means the securities statutes of each of the Provinces and Territories of Canada and all regulations, rules, policy statements, notices and blanket orders or rulings thereunder; | ||
| “Canadian Securities Regulatory Authorities” means the securities regulatory authorities in each of the Provinces and Territories of Canada; | ||
| “Common Shares” means the common shares in the capital of Photowatt at the date hereof and includes any shares or securities into which such common shares may be converted or changed or which result from a consolidation, subdivision, reclassification, stock split, stock dividend, recapitalization or redesignation of the common shares of Photowatt, any shares or securities of Photowatt which are received as a stock dividend or distribution in respect of such common shares, any common shares of Photowatt received on the exercise of any option, warrant or other similar right and any shares or securities which may be received by the holders of common shares of Photowatt as a result of an amalgamation, merger, arrangement or other reorganization of or including Photowatt; | ||
| “Consents” means the consents of Persons referred to in the disclosure letter of even date delivered by ATS to Photowatt and initialed by the Parties. | ||
| “Contract” means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment that is binding on any Person or any part of its property under applicable Law; | ||
| “Convertible Security” means any security that is convertible into, exchangeable for, or exercisable to acquire Common Shares; | ||
| “Effective Date” means the date hereof; | ||
| “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended; | ||
| “Governmental Authority” means any Canadian federal, provincial or local or any foreign government, supranational, regulatory or administrative authority, instrumentality, agency or commission, political subdivision, self-regulatory organization or any court, tribunal or judicial or arbitral body or other governmental authority; | ||
| “Independent” means independent as determined pursuant to National Policy 58-201 — Corporate Governance Guidelines of the Canadian Securities Administrators, as amended from time to time; |
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| “initial directors meeting” has the meaning ascribed thereto in Section 2.3; | ||
| “Law” means any law (statutory, common or otherwise), constitution, ordinance, code, rule, regulation, executive order or other similar authority enacted, adopted, promulgated or applied by any Governmental Authority, each as amended; | ||
| “Lease Agreement” means the Lease Agreement dated as of the date hereof between Photowatt and ATS; | ||
| “Master Separation Agreement” means the Master Separation Agreement dated as of the date hereof between Photowatt and ATS; | ||
| “Master Supply Agreement” means the Master Supply Agreement dated as of the date hereof between Photowatt and ATS; | ||
| “Material Intellectual Property Assets” means intellectual property rights, including any patents of the Photowatt Group, comprising Assets of the Photowatt Group that are material to the Photowatt Group or the Photowatt Business; | ||
| “Meeting Schedule” means the schedule of quarterly and annual meetings of the Board and audit committee of the Board for each of Photowatt and ATS during fiscal 2006, 2007 and 2008 which has been agreed to by both Photowatt and ATS prior to the Effective Date; | ||
| “Obligations” means all obligations, contractual or otherwise, including all liabilities and indebtedness, whether known or unknown, asserted or unasserted, absolute or contingent, matured or unmatured, conditional or unconditional, latent or patent, accrued or unaccrued, liquidated or unliquidated, or due or to become due; | ||
| “Offering” means an initial public offering by Photowatt, consummated promptly following the execution of this Agreement; | ||
| “OSC” means the Ontario Securities Commission; | ||
| “Parties” means ATS and Photowatt and their respective successors and permitted assigns, and “Party” means any one of them; | ||
| “Percentage of Outstanding Common Shares” means the percentage equivalent to the quotient obtained when (i) the number of Common Shares directly beneficially owned at the time of the calculation by ATS and its Affiliates, is divided by (ii) the total number of Common Shares outstanding at the time of calculation, all quantities being on a non-diluted basis; | ||
| “Person” means any individual, partnership, limited partnership, limited or unlimited liability company, joint venture, syndicate, sole proprietorship, company or corporation with or without share capital, unincorporated association, unincorporated syndicate, unincorporated organization, trust, trustee, executor, administrator or other legal personal |
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| representative, regulatory body or agency, government or governmental agency, authority or entity however designated or constituted; | ||
| “Photowatt Annual Financial Statements” means consolidated financial statements of the Photowatt Group for a fiscal year, setting forth in each case in comparative form the consolidated figures (and notes thereto) for the previous fiscal year and all in reasonable detail and prepared in accordance with Canadian GAAP and all applicable Laws, as well as a discussion and analysis by management of the Photowatt Group’s financial condition and results of operation for such year; | ||
| “Photowatt Auditors” has the meaning ascribed thereto in Section 3.2(a); | ||
| “Photowatt Business” means the businesses undertaken by Photowatt, including, but not limited to the design, manufacture and sale of photovoltaic products and related products and services; | ||
| “Photowatt Financial Statements” means Photowatt Quarterly Financial Statements and Photowatt Annual Financial Statements; | ||
| “Photowatt Group” means Photowatt and each Person that Photowatt directly or indirectly controls (within the meaning of the Securities Act); | ||
| “Photowatt Public Documents” has the meaning ascribed thereto in Section 3.1(h)(i); | ||
| “Photowatt Quarterly Financial Statements” means consolidated financial statements of the Photowatt Group for a fiscal quarter and the period from the beginning of the then-current fiscal year to the end of the fiscal quarter, setting forth in each case in comparative form for each such fiscal quarter and period of Photowatt, the consolidated figures (and notes thereto) for the corresponding quarter and period of the previous fiscal year and all in reasonable detail and prepared in accordance with Canadian GAAP and all applicable Laws, as well as a discussion and analysis by management of the Photowatt Group’s financial condition and results of operation for such fiscal period; | ||
| “Prospectus” means the final prospectus of Photowatt dated [•], 2006 in respect of the Offering; | ||
| “Registration Rights Agreement” means the Registration Rights Agreement dated as of the date hereof between Photowatt and ATS; | ||
| “Representatives” means with respect to any Person, any of such Person’s directors, officers, members, managers and employees; | ||
| “SEC” means the U.S. Securities and Exchange Commission; | ||
| “Securities Act” means the Securities Act (Ontario); |
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| “Securities Regulator” means a Canadian Securities Regulatory Authority, the SEC or any stock exchange or quotation; | ||
| “Separation Agreements” means this Agreement, the Master Separation Agreement, the Transfer Agreement, the Lease Agreement, the Registration Rights Agreement, the Master Supply Agreement and the Transitional Services Agreement; | ||
| “Shareholder” means each of ATS and such other Persons as may become a holder of Common Shares from time to time in accordance with the provisions hereof; | ||
| “Standard Financial Report” means a consolidated balance sheet, income statement and statement of cash flows, and other management information, detailed in a form consistent with the reporting template currently used by ATS for such financial information; | ||
| “subsequent directors meeting” has the meaning ascribed thereto in Section 2.3; | ||
| “Subsidiary” has the meaning ascribed thereto in the Securities Act; | ||
| “Transfer” includes any sale, exchange, assignment, gift, bequest, disposition, mortgage, charge, pledge, encumbrance, grant of security interest or other arrangement by which possession, legal title or beneficial ownership passes from one Person to another, or to the same Person in a different capacity, whether or not voluntary and whether or not for value, and any agreement to effect any of the foregoing; and the words “Transferred”, “Transferring” and similar words have corresponding meanings; | ||
| “Transfer Agreement” means the Transfer Agreement dated as of the date hereof between Photowatt and ATS; and | ||
| “Transitional Services Agreement” means the Transitional Services Agreement dated as of the date hereof between Photowatt and ATS. | ||
| 1.2 | Construction |
The Parties have participated jointly in the negotiation and drafting of this Agreement. If an
ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or
disfavouring any Party because of the authorship of any provision of this Agreement. Any reference
to any federal, state, provincial, local or foreign law shall be deemed also to refer to such law
as amended and all rules and regulations promulgated thereunder, unless the context requires
otherwise. Any reference to any Contract (including schedules, exhibits and other attachments
thereto), including this Agreement, shall be deemed also to refer to such Contract as amended,
restated or otherwise modified, unless the context requires otherwise. The words “include,”
“includes” and “including” shall be deemed to be followed by “without limitation.” Pronouns in
masculine, feminine and neuter genders shall be construed to include any other gender, and words in
the singular form shall be construed to include the plural and vice versa,
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unless the context requires otherwise. The words “this Agreement,” “herein,” “hereof,” “hereby,”
“hereunder” and words of similar import refer to this Agreement as a whole and not to any
particular subdivision unless expressly so limited. Where this Agreement states that a Party “will”
or “shall” perform in some manner or otherwise act or omit to act, it means that such Party is
legally obligated to do so in accordance with this Agreement. The word “or” shall not be exclusive.
The captions, titles and headings included in this Agreement are for convenience only and do not
affect this Agreement’s construction or interpretation. Any reference to an Article, Section or
Schedule in this Agreement shall refer to an Article or Section of, or Schedule to, this Agreement,
unless the context otherwise requires.
| 1.3 | Conflicts With Other Separation Agreements |
To the extent any portion of this Agreement conflicts with the Master Separation Agreement,
the Master Separation Agreement shall control.
ARTICLE 2
GOVERNANCE
GOVERNANCE
| 2.1 | Board of Directors |
The Board will be comprised of three to fifteen members, initially being comprised of nine
members, not less than 25% of whom shall be “resident Canadian” as defined in the Act. ATS shall
initially elect three members of the Board.
Following the date of this Agreement, ATS shall have the following rights of nomination:
| (a) | as long as the Percentage of Outstanding Common Shares is not less than 40%, ATS shall have the right to nominate for election to the Board a number of directors of the Board representing 25% of the directors of the Board rounded down to the nearest whole number, provided that, if the Board is to consist of at least six directors, the number of ATS nominees shall be rounded up to the nearest whole number; and | ||
| (b) | as long as the Percentage of Outstanding Common Shares is 10% or more, but less than 40%, ATS shall have the right to designate one nominee for election as a director of the Board. |
Photowatt shall nominate for election to the Board the balance of the number of directors to
be elected after establishing the number of directors ATS determines to nominate in accordance with
the foregoing. Photowatt shall solicit proxies in favour of the election of ATS’ nominees and
exercise such proxies and otherwise use its commercial reasonable efforts to secure the election of
ATS’ nominees as members of the Board.
Upon the Percentage of Outstanding Common Shares falling below 40% but not less than 10%, all
of the nominees of ATS to the Board except for one shall resign within 90 days or at
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such earlier date as a meeting of the Shareholders is convened by Photowatt to elect
directors. Upon the Percentage of Outstanding Common Shares falling below 10%, the nominee of ATS
to the Board shall resign within 90 days or at such earlier date as a meeting of the Shareholders
is convened by Photowatt to elect directors.
ATS will be entitled at any time and in its sole discretion, subject to applicable Law and
this section, by direction in writing to remove any one or more of its nominees and, so long as it
and/or its Affiliates hold the requisite Percentage of Outstanding Common Shares, nominate a
successor who will, promptly upon the resignation of the existing director, be appointed by the
Board as a director to replace the individual previously nominated. If a director nominated by ATS
ceases to be a director for any reason (other than ATS and its Affiliates ceasing to hold the
requisite Percentage of Outstanding Common Shares), ATS will nominate a successor to fill the
resulting vacancy as soon as practicable thereafter (so long as ATS and/or its Affiliates continue
to hold the requisite Percentage of Outstanding Common Shares). If ATS fails for any reason to
nominate a successor to fill a vacancy within 30 days after the vacancy arises, the Board will
appoint an individual to fill the vacancy, who shall undertake to Photowatt and ATS to serve as a
director until a successor is nominated by ATS, at which point such individual shall resign and the
nominee of ATS shall be appointed by the Board as a director.
In the event of the proposed removal of any director nominated by ATS other than a removal
proposed by ATS in accordance with the provisions of this Agreement, Photowatt agrees to solicit
proxies against the removal of such ATS nominee and exercise such proxies and otherwise use its
commercial reasonable efforts to defeat such proposed removal.
The provisions of this Agreement shall not limit the right attaching to the Common Shares
beneficially owned or controlled by ATS or any of its Affiliates or the exercise thereof.
| 2.2 | Committees of the Board |
The Board will have (a) an audit committee; (b) a compensation and governance committee; and
(c) such other committees, if any, as determined from time to time by the Board. Each committee
will consist of three to five members. Initially the audit committee will consist of three members
and the compensation and governance committee will consist of four members.
Each director is entitled to receive notice of each Board committee meeting, concurrent with
that received by the members of such committees; to attend and fully participate but not to vote at
each Board committee meeting; to receive all information delivered to Board committee members,
concurrent with the delivery thereof to such members; and to receive, upon request to Photowatt,
all information to which any Board committee member, is entitled.
| 2.3 | Quorum | |
| A quorum for a meeting of the Board shall require: |
| (a) | a majority of the number of directors, subject to the Canadian residency requirements of the Act; and |
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| (b) | so long as the Percentage of Outstanding Common Shares is not less than 40%, at least one of the nominees of ATS. |
In the event that a quorum is not achieved or maintained for a meeting of the Board (an
“initial directors meeting”), any two directors may call a meeting of the Board by proper notice to
be held on a date no earlier than the fifth Business Day following the initial directors meeting
solely to address the business proposed at the initial directors meeting. A quorum for such
further meeting of the Board (a “subsequent directors meeting”) shall exclude the requirements of
Section 2.3(b) of this Agreement.
A quorum for a meeting of any committee of the Board shall require a majority of the committee
members, subject to the Canadian residency requirements of the Act.
| 2.4 | Decisions of Directors |
In order to be effective, a decision of the Board must be approved either by a resolution
passed by the affirmative vote of a majority of the directors present and entitled to vote thereon
at a meeting of directors duly called and at which a quorum of directors are present, or by an
instrument signed by all the directors.
| 2.5 | Meetings of Shareholders |
A meeting of Shareholders shall be called by Photowatt upon written request by any two
directors of the Board within 30 days of receipt of any such request.
| 2.6 | Casting Vote |
The chair of any meeting of the Board, committee of the Board or Shareholders will not have a
casting vote.
| 2.7 | Business and Affairs of Photowatt |
Each of the Parties to this Agreement will do everything in its power to cause such meetings
to be held, votes to be cast, resolutions to be passed, by-laws to be made and confirmed, documents
to be executed and all other things and acts to be done to ensure that, at all times, to the extent
permitted by Law, the composition and operation of the Board and the operation of the business and
affairs of Photowatt comply with the terms of this Article 2 and with the entirety of this
Agreement.
| 2.8 | Transactions with ATS |
Any material commercial transaction that Photowatt proposes to enter into after the Effective
Date with ATS or any of its Affiliates that is not contemplated by the Separation Agreements must
be considered and approved by the Independent directors of Photowatt who are not nominees of ATS..
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| 2.9 | Certain Matters Requiring Approval of ATS |
For so long as the Percentage of Outstanding Common Shares is not less than 50%, Photowatt
shall not, and shall not permit any member of the Photowatt Group to, without the affirmative vote
of a majority of the Board and the written consent of ATS as a Shareholder (which ATS may withhold
in its sole and absolute discretion):
| (a) | enter into any merger, amalgamation, plan of arrangement, consolidation, business combination, joint venture or other material corporate transaction, including the acquisition of any business or securities of any other Person (other than a wholly-owned Subsidiary of Photowatt) or acquisition, license, lease, exchange of Assets (other than inventory items acquired in the ordinary course of business in connection with the Photowatt Business) or assume any Obligations of any Person, in each case with an aggregate fair market value in excess of $50 million; | ||
| (b) | sell, lease, exchange, license on an exclusive basis or otherwise dispose of, whether pursuant to a single transaction or a series of transactions, Assets of the Photowatt Group with an aggregate fair market value in excess of $50 million (other than the sale or disposition of inventory in the ordinary course of business in connection with the Photowatt Business) and/or any Material Intellectual Property Assets; | ||
| (c) | adopt any plan or proposal for a complete or partial liquidation or dissolution or any reorganization or commence any case, proceeding or action seeking relief under any existing laws or future laws relating to bankruptcy or insolvency; | ||
| (d) | take any action that could reasonably be expected to lead to or result in a material change in the nature of the Photowatt Business, including directly or indirectly participate in any business other than the Photowatt Business; | ||
| (e) | other than pursuant to share compensation arrangements in respect of employees, officers, consultants, or directors of Photowatt or any member of the Photowatt Group approved by the Board and Shareholders, enter into any agreement or make any offer or grant any right capable of becoming an agreement to allot or issue a number of Common Shares or Convertible Securities where the aggregate number of Common Shares to be issued or allotted exceeds 5% of the total number of Common Shares then outstanding on a non-diluted basis; | ||
| (f) | take, or cause to be taken, directly or indirectly, any action (including the making or failing to make any election under a Law) that has the effect, directly or indirectly, of restricting or limiting the ability of ATS or any of its Affiliates to freely Transfer Common Shares or would restrict or limit the rights of any transferee of ATS or any of its Affiliates as a holder of Common Shares and, without limiting the generality of the foregoing, Photowatt shall not take any action, or recommend to its shareholders any action, which would limit the legal |
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| rights of, or deny any benefit to, ATS or any of its Affiliates as a holder of Common Shares either (i) solely as a result of the amount of Common Shares owned by ATS or any of its Affiliates or (ii) in a manner not applicable to holders of Common Shares generally; | |||
| (g) | enter into a partnership or any arrangement for the sharing of profits, union of interests, joint venture or reciprocal concession with any Person if the aggregate fair market value of the assets contributed and liabilities assumed by the Photowatt Group in connection therewith either exceeds on formation or at any time in the future could reasonably be expected to exceed $50 million; or | ||
| (h) | make any commitment or agreement to do any of the foregoing. |
Each of the above matters must be presented to the Board of Directors for decision, and may
not be delegated to any committee of the Board of Directors or to the management of Photowatt or
any Subsidiary.
ARTICLE 3
FINANCIAL REPORTING AND DISCLOSURE COVENANTS
FINANCIAL REPORTING AND DISCLOSURE COVENANTS
| 3.1 | Financial and Other Information |
Photowatt agrees that, for so long as ATS is required to consolidate the results of operations
and financial position of any member of the Photowatt Group (determined in accordance with Canadian
GAAP and applicable Laws, and consistent with Canadian Securities Regulatory Authorities and SEC
reporting requirements), and for a further 12 months after the date on which ATS ceases to be
required to do so:
| (a) | Financial Controls |
Photowatt shall (and shall cause each other member of the Photowatt Group to) maintain
effective disclosure controls and procedures and internal control over financial reporting
as defined in Exchange Act Rule 13a-15 promulgated under the Exchange Act and in any similar
or successor rule, and as required under Canadian Securities Laws or other applicable
securities Laws.
Photowatt shall cause each of its principal executive and principal financial officers
to (i) sign and deliver certifications to its periodic reports and shall include the
certifications in its periodic reports, as and when required pursuant to Exchange Act Rule
13a-14 and Item 601 of Regulation S-K and in any similar or successor rule, and as required
under Canadian Securities Laws and other applicable securities Laws and (ii) sign and
deliver to ATS certification and representation documents, and orally discuss related
matters, with respect to its periodic reports, in a manner substantially similar to the
Parties’ practice in the periods prior to the Effective Date.
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Photowatt shall cause its management to evaluate its disclosure controls and procedures
and internal control over financial reporting (including any change in internal control over
financial reporting) as and when required pursuant to Exchange Act Rule 13a-15 and in any
similar or successor rule, and as required under Canadian Securities Laws and other
applicable securities Laws.
Photowatt shall disclose in its periodic reports filed with the SEC and Canadian
Securities Regulatory Authorities information concerning its management’s responsibilities
for and evaluation of its disclosure controls and procedures and internal control over
financial reporting (including the annual management report and attestation report of its
independent auditors relating to internal control over financial reporting) as and when
required under Items 307 and 308 of Regulation S-K and other applicable SEC rules, and as
required under Canadian Securities Laws and other applicable securities Laws.
Without limiting the general application of the foregoing, Photowatt shall (and shall
cause each other member of the Photowatt Group to) maintain internal systems and procedures
which provide reasonable assurance that (1) the Photowatt Financial Statements are reliable
and timely prepared in accordance with Canadian GAAP and applicable Law, (2) all
transactions of members of the Photowatt Group are recorded as necessary to permit the
preparation of the Photowatt Financial Statements, (3) the receipts and expenditures of
members of the Photowatt Group are authorized at the appropriate level within Photowatt, and
(4) unauthorized use or disposition of the assets of any member of the Photowatt Group that
could have material effect on the Photowatt Financial Statements is prevented or detected in
a timely manner.
| (b) | Fiscal Year |
Photowatt shall (and shall cause each member of the Photowatt Group to) maintain a
fiscal year that commences and ends on the same calendar days as the fiscal year of ATS
commences and ends, and to maintain monthly account periods that commence and end on the
same calendar days as the monthly account periods of ATS commence and end.
| (c) | Monthly Financial Reports |
No later than ten Business Days after the end of each of Photowatt’s monthly accounting
periods following the Effective Date, Photowatt shall deliver to ATS a Standard Financial
Report for Photowatt for such period and for each of its Affiliates that is included in the
consolidated Photowatt Financial Statements, as the case may be, and any adjusting journal
entries, in such format and details as ATS may reasonably request.
| (d) | Quarterly Financial Reports |
In connection with each meeting of the Board and audit committee of the Board indicated
on the Meeting Schedule, Photowatt will provide ATS with (i) drafts of
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Photowatt’s Audit Package relating to Photowatt Quarterly Financial Statements as
reasonably requested by ATS, (ii) Photowatt’s Audit Package relating to Photowatt Quarterly
Financial Statements when such package is delivered to Photowatt’s audit committee, and
(iii) the version of the Photowatt Quarterly Financial Statements that are approved by
Photowatt’s audit committee; provided, however, that Photowatt may continue to
revise such Photowatt Quarterly Financial Statements prior to the filing thereof in order to
make corrections and non-substantive changes, which corrections and changes shall be
delivered by Photowatt to ATS as soon as practicable, and in any event within eight hours
thereafter; provided further, that ATS and Photowatt financial Representatives shall
actively consult with each other regarding any changes (whether or not substantive) that
Photowatt may consider making to Photowatt Quarterly Financial Statements and related
disclosure during the two calendar days immediately prior to any anticipated filing with the
Securities Regulator, with particular focus on any changes that would have an effect upon
the financial statements or related disclosure of ATS.
In addition to the foregoing and subject to applicable Law, no Photowatt Quarterly
Financial Statement or any other document that refers to or contains information not
previously publicly disclosed in respect of ATS, including, but not limited to the ownership
of Photowatt by ATS, the Separation Agreements, or the separation of Photowatt and ATS,
shall be filed with the Securities Regulator under applicable securities Laws or otherwise
made public by any Photowatt Group member without the prior written consent of ATS.
Notwithstanding anything to the contrary herein, Photowatt shall file Photowatt Quarterly
Financial Statements with the Securities Regulator on the same date that ATS files ATS
Quarterly Financial Statements with the Securities Regulator.
| (e) | Annual Financial Reports |
In connection with each meeting of the Board and audit committee of the Board indicated
on the Meeting Schedule, Photowatt will provide ATS with (i) drafts of Photowatt’s Audit
Package relating to Photowatt Annual Financial Statements as reasonably requested by ATS,
(ii) Photowatt’s Audit Package relating to Photowatt Annual Financial Statements when such
package is delivered to Photowatt’s audit committee, and (iii) the version of the Photowatt
Annual Financial Statements that are approved by Photowatt’s audit committee;
provided, however, that Photowatt may continue to revise such Photowatt Annual
Financial Statements prior to the filing thereof in order to make corrections and
non-substantive changes, which corrections and changes shall be delivered by Photowatt to
ATS as soon as practicable, and in any event within eight hours thereafter; provided
further, that ATS and Photowatt financial Representatives shall actively consult with each
other regarding any changes (whether or not substantive) that Photowatt may consider making
to Photowatt Annual Financial Statements and related disclosure during the three calendar
days immediately prior to any anticipated filing with the Securities Regulator, with
particular focus on any changes that would have an effect upon the financial statements or
related disclosure of ATS.
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In addition to the foregoing and subject to applicable Law, no Photowatt Annual
Financial Statement or any other document that refers to or contains information not
previously publicly disclosed in respect of ATS, including, but not limited to the ownership
of Photowatt by ATS, the Separation Agreements, or the separation of Photowatt and ATS,
shall be filed with the Securities Regulator under applicable securities Laws or otherwise
made public by any Photowatt Group member without the prior written consent of ATS.
Notwithstanding anything to the contrary herein, Photowatt shall file Photowatt Annual
Financial Statements with the Securities Regulator on the same date that ATS files ATS
Annual Financial Statements with the Securities Regulator.
| (f) | Affiliate Financial Reports |
Photowatt shall deliver to ATS all quarterly and annual financial statements of each
Affiliate of Photowatt that is itself required to file financial statements with any
Securities Regulator under applicable securities Laws or otherwise make such financial
statements publicly available, with such financial statements to be provided in the same
manner, detail and timeliness as those financial statements of Photowatt required to be
delivered to ATS pursuant to this Agreement.
| (g) | Conformance with ATS’ Financial Presentation |
All financial information to be provided by any Photowatt Group member to ATS pursuant
to this Agreement shall be prepared in accordance with Canadian GAAP, and where practicable,
consistent in terms of format and detail and otherwise with the policies of ATS with respect
to the application of Canadian GAAP and practices with respect to the provisions of such
financial information by such Photowatt Group member to ATS (and, where appropriate, as
presently presented in financial reports to ATS’ board of directors), with such changes
therein as may be requested by ATS from time to time consistent with changes in such
accounting policies, principles and practices; provided, however, that the Parties
acknowledge that Photowatt shall report its results in U.S. dollars and shall include in the
notes to its financial statements a reconciliation quantifying all material differences
between its financial statements as presented and its financial statements as they would be
presented if they had been prepared in accordance with United States generally accepted
accounting principles.
All financial information to be filed with the Securities Regulator by any Photowatt
Group member shall, to the extent prepared in accordance with generally accepted accounting
principles other than Canadian GAAP, be prepared on the same basis and in the same form as
the financial information as set forth in the preceding paragraph with such modifications as
necessary to the extent of any differences between such generally accepted accounting
principles and Canadian GAAP, any such modifications to be reviewed by the Photowatt Group
member with ATS and approved by ATS not later than the required time of delivery of such
financial information to ATS in accordance with this Agreement.
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| (h) | Photowatt Reports Generally |
Each Photowatt Group member that files information with a Securities Regulator shall
deliver to ATS:
| (i) | preliminary and substantially final drafts, as soon as the same are prepared, of (x) all reports, notices and proxy and information statements to be sent or made available by such Photowatt Group member to its respective securityholders, (y) all other reports, whether regular, periodic or otherwise, to be filed or furnished to the Securities Regulator under applicable securities Laws ((x) and (y) collectively, the “Photowatt Public Documents”); and | ||
| (ii) | as soon as practicable, but in no event later than four Business Days (other than with respect to material change reports) prior to the earliest of the dates on which the same are printed, sent or filed, current drafts of all such Photowatt Public Documents and, with respect to material change reports, as soon as practicable but in no event later than two Business Days prior to the earliest of the dates on which the same are printed, sent or filed in the case of planned material change reports and as soon as practicable, but in no event less than four hours (or, for material change reports to filed before noon, in no event later than 5 p.m. Toronto time on the previous Business Day) in the case of unplanned material change reports; |
provided, however, that Photowatt may continue to revise such Photowatt Public
Documents prior to the filing thereof in order to make corrections and non-substantive
change, which corrections and changes shall be delivered by Photowatt to ATS as soon as
practicable, and in any event within eight hours thereafter; provided further, that
ATS and Photowatt financial and/or legal Representatives shall actively consult with each
other regarding changes (whether or not substantive) Photowatt may consider making to any of
its Photowatt Public Documents and related disclosures prior to any anticipated filing with
the Securities Regulator, with particular focus on any changes that would have an effect
upon the financial statements or related disclosures of ATS. In additional to the foregoing
and subject to applicable Law, no Photowatt Public Documents or any other document that
refers to or contains information not previously publicly disclosed in respect of ATS,
including, but not limited to the ownership of Photowatt by ATS, the Separation Agreements,
or the separation of Photowatt and ATS, shall be filed with the Securities Regulator or
otherwise made public by any Photowatt Group member without the prior written consent of
ATS.
| (i) | Budgets and Financial Projections |
Photowatt shall, as promptly as practicable, deliver to ATS copies of all annual and
monthly budgets, and two- and three-year annual budgets and financial projections
(consistent in terms of detail and as otherwise reasonably required by ATS) relating to
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Photowatt on a consolidated basis and shall provide ATS an opportunity to meet with
management of Photowatt to discuss such budgets and projections.
| (j) | Other Information |
With reasonable promptness, Photowatt shall deliver to ATS such additional financial
and other information and data with respect to the members of the Photowatt Group and their
respective business, properties, financial positions, results of operations and prospects as
from time to time may be reasonably requested by ATS.
| (k) | Press Releases and Similar Information |
Photowatt shall release its annual and quarterly earnings releases on the same day or
the following day after such release is reviewed by the Board according to the Meeting
Schedule and shall give ATS the opportunity to review the information therein relating to
the Photowatt Group and to comment thereon. Photowatt and ATS shall consult each other as
to the timing of any financial guidance for a current or future period and shall give each
other the opportunity to review the information therein relating to the Photowatt Group and
to comment thereon. Photowatt shall issue its annual and quarterly earnings releases prior
to ATS issuing its respective annual and quarterly earnings releases. No later than eight
hours prior to the time and date (or, if the same will be published before noon, no later
than 5 p.m. Xxxxxxx, Xxxxxxx, time on the previous Business Day) at which Photowatt intends
to publish its regular annual or quarterly earnings release or any financial guidance for a
current or future period, Photowatt shall deliver to ATS copies of substantially final
drafts of all press releases and other statements to be made available by any Affiliate of
Photowatt to employees of any Affiliate of Photowatt or to the public concerning any matters
that could be reasonably likely to have a material financial impact on the earnings, results
of operations, financial condition or prospects of any Photowatt Group member. In addition,
prior to the issuance of any such press release or public statement that meets the criteria
set forth in the preceding sentences, Photowatt shall consult with ATS regarding changes
(other than typographical or other similar minor changes) to such substantially final
drafts. Immediately following the issuance thereof, Photowatt shall deliver to ATS copies
of final drafts of all press releases and other public statements.
| (l) | Cooperation on ATS’ Filings |
Photowatt shall cooperate fully, and shall use commercially reasonable efforts to cause
Photowatt’s auditors to cooperate fully, with ATS to the extent reasonably requested by ATS
in the preparation of any filings made by ATS with a Securities Regulator pursuant to
applicable securities Laws, or otherwise made publicly available by or on behalf of ATS
(collectively, the “ATS Public Filings”).
Photowatt shall provide to ATS all information ATS reasonably requests in connection
with any ATS Public Filings or that, in the judgment of legal advisors to ATS, is required
to be disclosed or incorporated by reference therein under applicable Law.
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Photowatt shall provide such information in a timely manner on the dates requested by
ATS to enable ATS to prepare, print and release all ATS Public Filings on dates as ATS shall
determine but in no event later than is required by applicable Law. Photowatt shall use
commercially reasonable efforts to cause its auditors to consent to any reference to them as
experts in any ATS Public Filings if required under applicable Law.
If and to the extent requested by ATS, Photowatt shall diligently and promptly review
all drafts of such ATS Public Filings and prepare in a diligent and timely fashion any
portion of such ATS Public Filings pertaining to Photowatt.
Prior to any printing or public release of any ATS Public Filings, an appropriate
executive officer of Photowatt shall, if requested by ATS, certify that the information
relating to any Photowatt Group member or the Photowatt Business in such ATS Public Filings
is accurate, true, complete and correct in all material respects.
Unless required by Law, Photowatt shall not publicly release any financial or other
information that conflicts with the information with respect to any Photowatt Group member
or the Photowatt Business that is included in any ATS Public Filings without ATS’ prior
written consent. Prior to the release or filing thereof, ATS shall provide Photowatt with a
draft portion of any ATS Public Filing containing information relating to the Photowatt
Group and shall give Photowatt an opportunity to review such information and comment
thereon; provided, however, that ATS shall determine in its sole and absolute
discretion the final form and content of all ATS Public Filings.
| 3.2 | Auditors and Accounting |
Photowatt agrees that, for so long as ATS is required to consolidate the results of operations
and financial position of any member of the Photowatt Group (determined in accordance with Canadian
GAAP and applicable Laws, and consistent with Canadian Securities Regulatory Authorities and SEC
reporting requirements), and for a further 12 months after the date on which ATS ceases to be
required to do so:
| (a) | Selection of Photowatt’s Auditors |
Unless
required by Law, or unless inconsistent with Photowatt’s audit
committee’s responsibilities under U.S. securities laws and
regulations, Photowatt shall not select a different accounting firm than
KPMG (or its affiliate accounting firms) unless so directed by ATS in accordance with a
change by ATS in its accounting firm) to serve as its (and its Affiliates’) independent
auditors (the “Photowatt Auditors”) without ATS’ prior written consent (which shall not be
unreasonably withheld).
| (b) | Audit Timing |
Photowatt shall use commercially reasonable efforts to enable the Photowatt Auditors to
complete their audit such that they may date their opinion on Photowatt Annual Financial
Statements on the same date that ATS’ independent auditors (the “ATS Auditors”) date their
opinion on ATS Annual Financial Statements, and to enable ATS to
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meet its timetable for the printing, filing and public dissemination of ATS Annual
Financial Statements, all in accordance with this Agreement and as required by applicable
Law. Photowatt shall request that the Photowatt Auditors date their opinion on Photowatt
Annual Financial Statements on the same date that the ATS Auditors date their opinion on ATS
Annual Financial Statements.
| (c) | Information Needed by ATS |
Photowatt shall provide to ATS on a timely basis all information ATS reasonably
requires to meet its schedule for the preparation, printing, filing and public dissemination
of ATS Annual Financial Statements in accordance with this Agreement and as required by
applicable Law. Without limiting the generality of the foregoing, Photowatt shall provide
all required financial information with respect to the Photowatt Group to the Photowatt
Auditors in a sufficient and reasonable time and in sufficient detail to permit the
Photowatt Auditors to take all steps and perform all reviews necessary to provide sufficient
assistance to the ATS Auditors with respect to information to be included or contained in
ATS Annual Financial Statements.
| (d) | Access to Photowatt Auditors |
Photowatt shall authorize the Photowatt Auditors to make available to the ATS Auditors
both the personnel who performed, or are performing, the annual audit of Photowatt and work
papers related to the annual audit of Photowatt, in all cases within a reasonable time prior
to the opinion date for the Photowatt Auditors, so that the ATS Auditors are able to perform
the procedures they consider necessary to take responsibility for the work of the Photowatt
Auditors as it relates to the report of the ATS Auditors on ATS Financial Statements, all
within sufficient time to enable ATS to meet the timetable for the printing, filing and
public dissemination of ATS Annual Financial Statements.
| (e) | Access to Records |
If ATS determines in good faith that there may be an inaccuracy in a Photowatt Group
member’s financial statements or deficiency in a Photowatt Group member’s internal
accounting controls or operation that could materially impact ATS Financial Statements, at
the request of ATS, Photowatt shall provide to ATS’ internal auditors access to the
Photowatt Group member’s books and records so that ATS may conduct reasonable audits
relating to the financial statements provided by Photowatt under this Agreement as well as
to the internal accounting controls and operations of the Photowatt Group.
| (f) | Notice of Changes |
Subject to sections above under the heading “Auditors and Accounting”, Photowatt shall
give ATS as much prior notice as reasonably practicable of any proposed determination of, or
significant changes in, Photowatt’s accounting estimates or accounting principles, policies
or practices from those in effect on the date of the audited
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financial statements included in the Prospectus. Photowatt shall consult with ATS and,
if requested by ATS, Photowatt (and the Photowatt Auditors, if requested) shall consult with
the ATS Auditors with respect to any such proposed determination or change. Unless
otherwise required by applicable Law, Photowatt shall not make any such determination or
changes without prior written consent of ATS if such determination or change would be
sufficiently material to be required to be disclosed in financial statements or other
disclosure documents filed by Photowatt or ATS with a Securities Regulator.
| (g) | Accounting Changes Requested by ATS |
Notwithstanding the section entitled “Notice of Changes” above, unless
prohibited by applicable Law, Photowatt shall make any changes in its accounting estimates
or accounting policies or practices that are practicable in order for Photowatt’s accounting
policies or practices to be consistent with those of ATS.
| (h) | Special Reports of Deficiencies or Violations |
Photowatt shall report in reasonable detail to ATS any of the following events or
circumstances promptly after any executive officer of Photowatt or any member of the Board
of Directors becomes aware of such matter:
| (i) | any significant deficiency or material weakness in the design or operation of internal control over financial reporting that is reasonably likely to adversely affect Photowatt’s ability to record, process, summarize and report financial information; | ||
| (ii) | any fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting to Photowatt; | ||
| (iii) | any illegal act within the meaning of Section 10A(b) and (f) of the Exchange Act; and | ||
| (iv) | any report of a material violation of Law that an attorney representing any Photowatt Group member has formally made to any officers or directors of Photowatt pursuant to the SEC’s attorney conduct rules (17 C.F.R. Part 205). |
| 3.3 | Future Financial Reporting and Disclosure |
Subject to Sections 3.1 and 3.2, Photowatt agrees that for so long as ATS is required to
account for its investment in Photowatt under the equity method of accounting (determined in
accordance with Canadian GAAP and applicable Laws, and consistent with Canadian Securities
Regulatory Authorities and SEC reporting requirements), Photowatt shall provide ATS, in a timely
fashion and in any event in sufficient time to allow ATS to meet its financial and legal
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obligations (including, but not limited to, any obligations relating to disclosure control or
internal control over financial reporting that ATS deems necessary), with financial and other
information and data with respect to the members of the Photowatt Group and their respective
business, properties, financial positions, results of operations and prospects, and otherwise
comply with the requirements of Section 3.1(a) through (l) and Section 3.2(a) through (h) to the
extent reasonably requested by ATS, having regard to ATS’ financial and legal obligations, the
minimization of efforts by ATS that are duplicative with those of Photowatt’s and resulting
additional expense to ATS in fulfilling those obligations, and any other considerations relevant in
the circumstances.
ARTICLE 4
GENERAL PROVISIONS
GENERAL PROVISIONS
| 4.1 | Assignment |
Neither Party shall assign, transfer or otherwise alienate any or all of its rights or
interest under this Agreement without the express prior written consent of the other Party, which
in the case of the consent of ATS, may be granted or withheld in ATS’ sole discretion, and in the
case of the consent of Photowatt, shall not be unreasonably withheld or delayed unless the proposed assignee is a Person
that is directly or indirectly engaged in any development, production, manufacture, marketing, distribution, promotion or
sale of products competitive with the products of the Photowatt Group in any country in the world in which any member of the
Photowatt Group conducts its business and the sale of such competitive products exceeds 20% of Photowatt’s consolidated
revenues in its most recently completed financial year preceding the proposed date of assignment, transfer or alienation,
as the case may be, in which case the consent of Photowatt may be
granted or withheld in Photowatt’s sole discretion; provided,
however, that ATS may assign any or all of its rights or
interest under this Agreement to any Affiliate of ATS without the consent of Photowatt. This
Agreement shall be binding upon and inure to the benefit of the parties hereto and thereto,
respectively, and their respective successors and permitted assigns, and any permitted assignee
shall agree to perform the obligations of the assignor of this Agreement. In the event that the
rights of ATS referred to under Section 2.9 are transferred, assigned or alienated, such
rights shall expire on the 90th day following the date of such transfer, assignment or
alienation. Any attempted transfer, assignment or alienation in violation of this Section
4.1 shall be invalid and ineffective ab initio.
| 4.2 | Entire Agreement |
This Agreement and the other Separation Agreements constitute the entire agreement between the
Parties with respect to the subject matter hereof and thereof and supersede (a) all prior oral or
written proposals or agreements, (b) all contemporaneous oral proposals or agreements and (c) all
previous negotiations and all other communications or understandings between the Parties, in each
case with respect to the subject matter hereof and thereof. No reliance is placed on any warranty,
representation, opinion, advice or assertion of fact made either prior to, contemporaneous with, or
after entering into this Agreement, or any amendment or supplement thereto, by any Party to this
Agreement or its directors, officers and agents, to any other Party to this Agreement or its
directors, officers and agents except to the extent that the same has been reduced to writing and
included as a term of the Separation Agreements, and none of the Parties to this Agreement has been
induced to enter into this Agreement or any amendment or supplement by reason of any such warranty,
representation, opinion, advice or assertion of fact. Accordingly, there will be no liability,
either in tort (including negligence) or in Contract,
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assessed in relation to any such warranty, representation, opinion, advice or assertion of fact,
except to the extent contemplated above.
| 4.3 | Directors and Officers’ Indemnities and Insurance |
To the fullest extent permitted by law, Photowatt will indemnify all directors, officers,
former directors and former officers of Photowatt, ATS (to the extent that ATS exercises the
rights, powers, duties and liabilities of directors of Photowatt), and their heirs and legal
representatives, against all costs, charges and expenses, including an amount paid to settle an
action or satisfy a judgment, reasonably incurred by the individual in respect of any civil,
criminal, administrative, investigative or other proceeding in which the individual is involved
because of that association with Photowatt, if such individual
| (a) | acted honestly and in good faith with a view to the best interests of Photowatt; and | ||
| (b) | in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful. |
Photowatt will advance moneys to an individual referred to in this Section 4.3 for the
costs, charges and expenses of a proceeding referred to in this Section 4.3. The individual
will repay the moneys if the individual does not fulfil the conditions of this Section 4.3.
The intention of this Section 4.3 is that all persons referred to in this Section
4.3 will have all benefits provided under the indemnification provisions of the Act to the
fullest extent permitted by law, and Photowatt will forthwith pass all resolutions and take such
other steps as may be required to give full effect to this Section 4.3.
For a period of seven years from the date ATS ceases to have the right to nominate any member
of the Board, this Agreement and the articles and by-laws of Photowatt (and its successors) will
not be modified or amended to diminish any current or past nominee’s right to indemnification and
exculpation as is currently provided. Furthermore, so long as ATS is entitled to nominate a member
of the Board and thereafter so long as any past or present ATS nominee may be subject to any
possible civil, criminal, administrative, investigative or other action or proceeding to which he
or she would be made a party by reason of being a director of Photowatt, Photowatt will use
commercially reasonable efforts to maintain in full force and effect, for directors and officers of
Photowatt, one or more policies of directors and officers’ insurance issued by a reputable insurer
or insurers having a policy limits and a retention equal to or better than the amounts of
Photowatt’s policy now in force (to the extent commercially available and at rates not
substantially in excess of current rates). Furthermore, Photowatt agrees that each ATS nominee
will be covered under such insurance policy in a manner as to provide him or her with the same
rights and benefits as are accorded Photowatt’s directors most favourably insured by the policy.
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| 4.4 | Term |
This Agreement will continue in force until the earlier of:
| (a) | the date on which this Agreement is terminated by the written agreement of the Parties; and | ||
| (b) | such time as the Percentage of Outstanding Common Shares is less than 10%. |
| 4.5 | Termination Not to Affect Rights or Obligations |
Termination of this Agreement will not affect or prejudice any rights or obligations which
have accrued or arisen under this Agreement prior to the time of termination and such rights and
obligations, including any indemnities, will survive the termination of this Agreement. For
greater certainty, no termination of this Agreement will affect the rights of any Person under
Section 4.3.
| 4.6 | Future Litigation and Other Proceedings |
If any member of the Photowatt Group (or any of its Representatives) or any member of the ATS
Group (or any of its Representatives) at any time after the Effective Date initiates or becomes
subject to any Action with respect to which the Parties have no prior agreements (as to
indemnification or otherwise), upon reasonable notice (a) the Party (and its Group members and its
and their respective Representatives) that has not initiated and is not subject to such Action
shall comply, at the other Party’s expense, with any reasonable requests by the other Party for
assistance in connection with such Action (including by way of provision of information and making
available of Representatives as witnesses) and (b) each Party (and its Representatives) shall, at
its own expense, coordinate with the other Party its strategies and actions with respect to such
Action to the extent such coordination would not be detrimental to its interests and shall comply,
at the expense of the requesting Party, with any reasonable requests of the other Party for
assistance in connection therewith (including by way of provision of information and making
available of Representatives as witnesses).
| 4.7 | Further Assurances |
On and after the Effective Date, each Party hereto shall cooperate with the other Party, and
without any further consideration, but at the expense of the requesting Party, to execute and
deliver, or use its commercially reasonable efforts to cause to be executed and delivered, all
instruments, including instruments of conveyance, assignment and transfer, and to make all filings
with, and to obtain all consents of, any Governmental Authority or any other Person under any
permit, license, agreement, indenture or other instrument (including any Consents or consents,
approvals, rulings or decisions of any Governmental Authority), and to take all such other actions
as such Party may reasonably be requested to take by any other Party hereto from time to time,
consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of
this Agreement and the other transactions contemplated hereby.
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| 4.8 | Notices |
Any notice, instruction, direction, demand or other communication to any Party under the terms
of this Agreement shall be in writing and shall be deemed properly delivered, given and received:
(a) when delivered by hand; (b) on the day sent by facsimile provided that the sender has received
confirmation of transmission from the recipient as at or prior to 5:00 p.m. Toronto time on such
day; (c) the first Business Day after sent by facsimile (to the extent that the sender has received
confirmation of transmission from the recipient after 5:00 p.m. Toronto time on the day sent by
facsimile); or (d) the next business day after sent by registered mail (at any time other than
during a general discontinuance of postal service due to strike, lockout or otherwise) or by
courier or express delivery service, in any case to the address or facsimile telephone number set
forth beneath the name of such Party below (or to such other address or facsimile telephone number
as such Party shall have specified in a written notice given to the other Parties hereto):
| (a) | if to ATS, to: | |||||
| ATS Automation Tooling Systems Inc. | ||||||
| 000 Xxxxx Xxx Xxxx | ||||||
| Xxxxxxxxx, Xxxxxxx X0X 0X0 | ||||||
| Attention: | General Counsel | |||||
| Fax No.: | (000) 000-0000 | |||||
| (b) | if to Photowatt, to: | |||||
| Photowatt Technologies, Inc. | ||||||
| 00 Xxxxxx Xxxxx | ||||||
| Xxxxxxxxx, Xxxxxxx X0X 0X0 | ||||||
| Attention: | President and Chief Executive Officer | |||||
| Fax No.: | (000) 000-0000 | |||||
In the event of a general discontinuance of registered mail service due to strike, lock out or
otherwise, any notice, instruction, direction, demand or other communication will be delivered by
hand, courier or express delivery service or sent by facsimile and will be deemed to have been
received in accordance with this Section.
| 4.9 | Time of Essence |
Time is of the essence of this Agreement.
| 4.10 | Governing Law |
This Agreement shall be construed in accordance with and governed by the laws of the Province
of Ontario and the federal laws of Canada applicable therein.
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| 4.11 | Severability |
If any term or other provision of this Agreement shall be determined by a court,
administrative agency or arbitrator in any jurisdiction to be invalid, illegal or unenforceable,
such invalidity, illegality or unenforceability shall not render the entire Agreement invalid and
shall not affect the validity, legality or enforceability of such term or other provision in any
other jurisdiction. Rather, this Agreement shall be construed as if not containing the particular
invalid, illegal or unenforceable provision, and all other provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially adverse to either Party.
Upon such determination that any term or other provision is invalid, illegal or unenforceable, the
Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent
of the Parties as closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the fullest extent permitted under applicable Law.
| 4.12 | Force Majeure |
No Party shall be deemed in default of this Agreement to the extent that any delay or failure
in the performance of its obligations under this Agreement results from any cause beyond its
reasonable control, such as acts of God, decrees or restraints of any Governmental Authority, acts
of civil or military authority, embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, unusually severe weather conditions, strikes or other labour disturbances or
unavailability of parts, or, in the case of computer systems, any failure in electrical or air
conditioning equipment, and any other cause or causes whether similar or dissimilar to those
already specified, which cannot be controlled by such Party. In the event of any such excused
delay, the time for performance shall be extended for a period equal to the time lost by reason of
the delay; provided however that the Party seeking to excuse its performance shall promptly notify
the other Party of the cause therefor, such performance shall be so excused during the inability of
the Party to perform so caused, but for no longer period, and the cause thereof shall be remedied
as far as is commercially reasonable with all reasonable dispatch.
| 4.13 | Specific Performance |
In the event of any actual or threatened default in, or breach of, any of the terms,
conditions and provisions of this Agreement, the Party or Parties who are or are to be thereby
aggrieved shall have the right to specific performance and injunctive or other equitable relief of
its rights under this Agreement, in addition to any and all other rights and remedies at law or in
equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies
at law for any breach or threatened breach, including monetary damages, are inadequate compensation
for any loss and that any defense in any action for specific performance that a remedy at law would
be adequate is waived. Any requirements for security or posting of any bond with such remedy are
waived.
| 4.14 | Currency |
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Except as expressly provided in this Agreement, all amounts in this Agreement are stated and
will be paid in Canadian currency.
| 4.15 | Time Periods |
Unless otherwise specified, time periods within or following which any payment is to be made
or act is to be done shall be calculated by excluding the day on which the period commences and
including the day on which the period ends.
| 4.16 | Amendment |
This Agreement may only be modified, amended by, altered or supplemented by the execution and
delivery of a written agreement executed by both the Parties.
| 4.17 | Counterparts |
This Agreement may be executed in separate counterparts, each of which shall be deemed an
original and all of which, when taken together, shall constitute one and the same agreement.
| 4.18 | Authority |
Each Party represents to the other Party that (a) it has the corporate power and authority to
execute, deliver and perform this Agreement, (b) the execution, delivery and performance of this
Agreement by it have been duly authorized by all necessary corporate or other actions, (c) it has
duly and validly executed and delivered this Agreement and (d) this Agreement is legal, valid and
binding obligation, enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’
rights generally and general equitable principles.
| 4.19 | Jurisdiction |
If any Dispute arises out of or in connection with this Agreement, except as expressly
contemplated by another provision of this Agreement, the Parties irrevocably (and the Parties shall
cause each other member of their respective Group to irrevocably) (a) consent and submit to the
exclusive jurisdiction of the Courts of the Province of Ontario, (b) waive any objection to that
choice of forum based on venue or to the effect that the forum is not convenient, and (c) WAIVE TO
THE FULLEST EXTENT PERMITTED BY LAW ANY AND ALL RIGHT TO TRIAL OR ADJUDICATION BY JURY.
| 4.20 | Binding Effect |
This Agreement binds and benefits the Parties and their respective successors and permitted
assigns. This Agreement is for the sole benefit of the Parties (and, solely for purposes of
Section 4.3, the Persons indemnified thereby) and nothing in this Agreement, express or
implied, confers or intends to confer any rights or remedies of any nature whatsoever in favour of
any Person (including any employee or shareholder of ATS or Photowatt) other than the Parties.
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| 4.21 | Expenses |
Except as otherwise provided in this Agreement, each Party shall be responsible for its own
fees, costs and expenses incurred in connection with the matters contemplated by this Agreement.
| 4.22 | Waiver |
A provision of this Agreement may be waived only by a writing signed by the Party or Parties
intended to be bound by the waiver. A Party is not prevented from enforcing any right, remedy or
condition in the Party’s favour because of any failure or delay in exercising any right or remedy
or in requiring satisfaction of any condition, except to the extent that the Party specifically
waives the same in writing. No waiver of any provision of this Agreement shall constitute a waiver
of any other provision nor shall any waiver constitute a continuing waiver unless otherwise
expressly provided. Any enumeration of a Party’s rights and remedies in this Agreement is not
intended to be exclusive, and a Party’s rights and remedies are intended to be cumulative to the
extent permitted by Law and include any rights and remedies authorized in Law or in equity.
| 4.23 | Compliance With Laws |
Each Party shall comply with all applicable legal requirements (including all relevant
federal, state and provincial legislation and regulatory requirements); and without limiting the
generality of the foregoing, each Party shall comply with, and shall take all necessary measures to
ensure that (i) its actions (or lack of action) do not result in non-compliance by the other Party,
with the provisions of the Personal Information Protection and Electronic Documents Act (Canada)
and any similar federal, state or provincial legislation, including the provisions relating to the
collection, use, retention and disclosure of Personal Information and (ii) the transfer of any
information hereunder is in compliance with applicable export control or similar Laws.
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IN WITNESS WHEREOF, the parties have executed this Agreement.
| ATS AUTOMATION TOOLING SYSTEMS INC. | ||||||
| Per: | ||||||
| Name: | ||||||
| Title: | ||||||
| Per: | ||||||
| Name: | ||||||
| Title: | ||||||
| PHOTOWATT TECHNOLOGIES INC. | ||||||
| Per: | ||||||
| Name: | ||||||
| Title: | ||||||
