INDEMNIFICATION AGREEMENT
Exhibit 10.15
Agreement dated as of [•], 2006, between ATS Automation Tooling Systems Inc., a corporation
existing under the laws of Ontario (the “Company,” which for the purposes of this
Agreement shall include any Subsidiary as defined herein), and [•] ([•], together with his heirs,
executors, personal and legal representatives, referred to collectively as the
“Indemnitee”).
WHEREAS, the Company desires to attract and retain highly qualified individuals, such as the
Indemnitee, to serve the Company pending completion of a Qualified IPO or Corporate Transaction;
WHEREAS, the Indemnitee is currently providing valuable services to the Company and the
Company desires the Indemnitee to continue to do so pending completion of a Qualified IPO or
Corporate Transaction;
WHEREAS, the Company and the Indemnitee recognize the significant risk of personal liability
for Personnel (as defined herein) which arises from corporate litigation practices;
WHEREAS, the Company and the Indemnitee further recognize that liability insurance for the
Company’s Personnel, when available, is often available only at significant expense and provides
for coverage of limited scope and that competent and experienced persons are often unable or
unwilling to serve as Personnel unless they are protected by comprehensive liability insurance and
indemnification;
WHEREAS, the Indemnitee is willing to continue to serve the Company pending completion of a
Qualified IPO or Corporate Transaction, subject to certain conditions, including execution and
delivery of this Agreement by the Company in order that the Indemnitee be furnished the indemnity
provided for herein;
WHEREAS, the Company’s articles (“Articles”) and By-Laws do not prohibit or restrict
contracts between the Company and its Personnel with respect to indemnification of such Personnel;
and
WHEREAS, in view of such considerations, the Company desires to provide, independent from the
indemnification to which the Indemnitee is otherwise entitled by law and under the Company’s
Articles and By-Laws, indemnification to the Indemnitee and the Expense Advances (as defined
herein), all as set forth in this Agreement to the maximum extent permitted by law, for claims
arising prior to completion of a Qualified IPO or Corporate Transaction;
NOW, THEREFORE, to induce the Indemnitee to continue to serve the Company pending completion
of a Qualified IPO or Corporate Transaction and in consideration of these premises and the mutual
agreements set forth in this Agreement, as well as other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the Indemnitee hereby
agree as follows:
1. Definitions. For the purposes of this Agreement,
(a) “Affiliate” has the meaning ascribed to that term in the Securities Act (Ontario).
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(b) “Applicable Law” means any applicable provision of law, domestic or foreign,
including, without limitation, applicable securities legislation, together with all regulations,
rules, policy statements, rulings, notices, orders or other instruments promulgated thereunder and
Stock Exchange Rules.
(c) “Board of Directors” means the board of directors of the Company.
(d) “Change in Control” means that after the date of this Agreement any of the
following shall occur: (i) any “person” (as such term is defined in Canadian Securities
Administrators National Instrument 45-106 (the “Act”)), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned directly or indirectly by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company, becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 25% or more of the total voting
power represented by the Company’s then outstanding voting securities; (ii) during any period of
two consecutive years, individuals who at the beginning of such period constitute the Board of
Directors cease to be a majority thereof (otherwise than through death, disability or retirement in
accordance with the Company’s normal retirement policies); (iii) the shareholders of the Company
approve a merger or consolidation of the Company with any other corporation, limited liability
company, partnership, joint venture, trust or other entity other than a merger or consolidation
which would result in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 50% of the total voting power represented by the
voting securities of the Company or such surviving entity Outstanding immediately after such a
merger or consolidation; or (iv) the shareholders of the Company approve a plan of complete or
substantial liquidation of the Company or an agreement for the sale or disposition by the Company
of (in one transaction or a series of related transactions) all or substantially all of the
Company’s assets.
(e) “Claim” means any threatened, pending, continuing or completed action, suit,
proceeding, investigation (civil, criminal, regulatory, administrative, arbitral or other),
arbitration or alternative dispute resolution mechanism, or any hearing, inquiry or investigation,
whether conducted by the Company or any other party, which the Indemnitee believes in good faith
might lead to the institution of any such action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation, whether civil, criminal, administrative,
investigative or any other type whatsoever, with respect to an Indemnifiable Event.
(f) “Corporate Transaction” means any merger, amalgamation or plan of arrangement
involving Photowatt, acquisition or take-over bid for the Shares of Photowatt, or similar
transaction, or the sale of all or substantially all of the assets of Photowatt, each completed
prior to the completion of a Qualified IPO and each resulting in a either (A) an acquisition of
voting securities of Photowatt to which are attached in excess of 50% of the votes attaching to all
outstanding voting securities of Photowatt or (B) if Photowatt is not the surviving corporation
following completion of a Corporate Transaction, a transaction whereby the shareholders of
Photowatt immediately before the transaction hold less than 50% of the shares of the surviving
corporate entity or purchaser; provided that a Corporate Transaction shall exclude: (i) any share
transfer, reorganization, asset transfer, or similar transaction, undertaken in one or a series of
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transactions, involving Photowatt and/or any of its present or future Affiliates; (ii) the
completion of a treasury offering of securities of Photowatt or an Affiliate of Photowatt; or (iii)
the public offering or the dividend or other distribution by the Company or one of its Affiliates
of shares in the capital of Photowatt.
(g) “Entity” means any individual or entity, including any partnership, limited
liability company, joint venture, corporation, trust, unincorporated organization, government
(including any department or agency thereof).
(h) “Expenses” means all costs, charges, expenses and liabilities of any type or
nature whatsoever (including, without limitation, all attorneys’ fees, retainers and related
disbursements and other out-of-pocket costs, judgments, awards, fines, penalties and amounts paid
in settlements) paid or incurred by or imposed upon the Indemnitee in the investigation, defence,
settlement or appeal of, or otherwise in connection with, a Claim (including, without limitation,
being a witness) or in establishing or enforcing a right to indemnification under this Agreement,
the Company’s Articles or By-Laws, applicable provisions of the Business Corporations Act (Ontario)
or otherwise, and any federal, provincial, state, local or foreign taxes imposed on the Indemnitee
as a result of the actual or deemed receipt of any payments under this Agreement. Expenses shall
also include a per diem for each day spent by the Indemnitee in dealing with, responding to or
assisting the Company with the resolution of any Claim relating to the Indemnitee together with any
out-pocket-costs incurred by the Indemnitee in that regard. [Directors: The per diem shall be in
an amount equal to the greater of $1,500 per day or the per diem amount payable to directors for
directors’ meetings, as set by the Board of Directors and in place at the time the Expense is
incurred. OR Officers: The per diem shall be zero if the Indemnitee is still employed by the
Company at the time the particular Expense is incurred. If the Indemnitee is not employed by the
Company at the time the particular Expense is incurred, the per diem shall be in an amount equal
to: [1/240] x [the Indemnitee’s salary and bonus earned in the most recently completed fiscal year
during which the Indemnitee was employed by the Company].] The amount of the per diem shall be pro
rated for any part-day spent (based on a 8 hour day), and, in the event the Indemnitee is a
director of the Company, shall not be paid in respect of meetings of the Board of Directors or a
committee thereof attended by the Indemnitee for which the Indemnitee is otherwise compensated by
the Company.
(i) “Expense Advance” means a payment to the Indemnitee of Expenses in advance of the
settlement of or final judgment or award on any Claim.
(j) “Indemnifiable Event” means any event or occurrence occurring prior to the earlier
of (i) the completion of a Qualified IPO and (ii) the completion of a Corporate Transaction, in
either case related to the fact that the Indemnitee is, or was, a Personnel, or by reason of
anything done or not done, or allegedly done or not done, by the Indemnitee in the Indemnitee’s
capacity as a Personnel.
(k) “Independent Legal Counsel” means an attorney or firm of attorneys, selected in
accordance with the provisions of Section 8(a), whether or not in the event of a Change in Control.
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(l) “Personnel” means any person who (i) is or was a director, officer, employee,
trustee or other Personnel or fiduciary of the Company; (ii) is or was serving at the request, for
the convenience, or to represent the interests, of the Company or a Company employee benefit plan,
its participants or its beneficiaries, as a director, officer, employee, trustee or other Personnel
or fiduciary of another corporation, limited liability company, partnership, joint venture, trust
or other entity (including, without limitation, any employee benefit plan); or (iii) was a
director, officer, employee, trustee or other Personnel or fiduciary of a corporation, limited
liability company, partnership, joint venture, trust or other entity which was a predecessor of the
Company, or was a director, officer, employee, trustee or other Personnel or fiduciary of any other
such entity at the request of such predecessor. The use of the term “Personnel” shall not be
construed to alter the legal relationship between a Personnel, as defined herein, and the Company.
(m) “Photowatt” means Photowatt Technologies Inc. and each Entity that Photowatt
directly or indirectly controls (within the meaning of the Securities Act (Ontario)).
(n) “Potential Change in Control” means that after the date of this Agreement any of
the following shall occur: (i) any person or entity publicly announces an intention to take or to
consider taking actions which if consummated might result in a Change in Control; or (ii) the Board
of Directors adopts a resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.
(o) “Qualified IPO” means an underwritten public offering of Shares in which
immediately following the closing, the Shares are listed for trading on one or more of the Toronto
Stock Exchange, the Nasdaq National Market, the New York Stock Exchange or a stock exchange or
quotation system of similar stature and have a market capitalization of at least $200 million.
(p) “Reviewing Party” means the person or body appointed by the Board of Directors
pursuant to Section 12(c) and in accordance with applicable law, which person or body shall be
either (i) members of the Board of Directors who are not interested in the particular Claim; or
(ii) Independent Legal Counsel. If there has been a Change in Control or Potential Change in
Control, the Reviewing Party shall be Independent Legal Counsel.
(q) “Shares” means common shares of Photowatt, and include any shares of Photowatt
into which such shares may be converted, reclassified, subdivided, consolidated, exchanged or
otherwise changed, whether pursuant to a reorganization, amalgamation, merger, arrangement or other
form of reorganization.
(r) “Stock Exchange Rules” means the applicable rules of any stock exchange or
quotation system upon which shares of Photowatt are listed or quoted, as applicable.
(s) “Subsidiary” means each Entity that the Company directly or indirectly controls
(within the meaning of the Securities Act (Ontario)), other than, upon completion of a Qualified
IPO or Corporate Transaction, Photowatt.
Unless the context otherwise requires, words importing the singular include the plural and vice
versa and words importing gender include all genders.
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2. Agreement to Serve. The Indemnitee agrees to continue to serve the Company as a
Personnel pending completion of a Qualified IPO or Corporate Transaction, at its will (or under
separate agreement, if such agreement exists), in the capacity in which the Indemnitee currently
serves as such Personnel, or such other capacity as the Indemnitee is appointed or elected to from
time to time, so long as the Indemnitee is duly appointed or elected and qualified in accordance
with the Articles and By-Laws of the Company, or until such time as the Indemnitee tenders the
Indemnitee’s resignation in writing; provided, however, that nothing contained in
this Agreement is intended to create any right to continued service by the Indemnitee.
3. Basic Indemnification. Subject to the terms of this Agreement:
(a) Claims Other than Derivative Claims on Behalf of and in Favour of the Company.
Subject to subsection 3(b), as to all Claims other than derivative Claims on behalf of and in
favour of the Company, the Company shall indemnify the Indemnitee against all Expenses.
(b) Derivative Claims on Behalf of and in Favour of the Company. As to all derivative
Claims on behalf of and in favour of the Company, the Company shall indemnify the Indemnitee
against all Expenses, provided that no indemnification shall be made as to such derivative Claim if
the Indemnitee has been finally adjudged to be liable to the Company in connection with such Claim
or any claim, issue or matter therein, unless and only to the extent that the court in which the
Claim was brought shall determine that, despite the adjudication of liability but in view of all
the circumstances, the Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
which such court shall deem proper.
(c) Standard of Conduct Required for Entitlement to Basic Indemnification. The
Indemnitee shall be entitled to indemnification under Sections 3(a) and (b) above if the Indemnitee
(i) acted honestly and in good faith with a view to the best interests of the Company or, as the
case may be, to the best interests of the other entity for which the Indemnitee acted as Personnel
at the Company’s request; and (ii) in the case of a criminal or administrative action or proceeding
that is enforced by a monetary penalty, the Indemnitee had reasonable grounds for believing that
the Indemnitee’s conduct was lawful and, in the case of Section 3(b), subject to the exclusion set
forth therein. The termination of any Claim by judgment, award, order, settlement (whether with or
without court approval), conviction or upon a plea of nolo contendere or its equivalent shall not,
of itself, create a presumption that (i) the Indemnitee did not act honestly and in good faith with
a view to the best interests of the Company or, as applicable, such other entity, (ii) the
Indemnitee did not have reasonable grounds to believe that the Indemnitee’s conduct was lawful or
(iii) a court determined that indemnification is not permitted by applicable law or pursuant to
Section 3(b). In addition, neither the failure of any Reviewing Party to have made a determination
as to whether the Indemnitee has met the standard of conduct set forth in this Section 3(c) or had
any particular belief, nor an actual determination by any Reviewing Party that the Indemnitee has
not met such standard of conduct or did not have such belief, shall be a defence to the
Indemnitee’s right to indemnification or create a presumption that the Indemnitee did not meet any
particular standard of conduct or did not have any particular belief. If the Indemnitee acted
honestly and in good faith with a view to the best interests of the participants and beneficiaries
of an employee benefit plan, the Indemnitee shall be deemed to have acted with a view to the best
interests of the Company.
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(d) Success on the Merits. To the extent that the Indemnitee has been successful on
the merits or otherwise (including, without limitation, dismissal or withdrawal of a Claim with or
without prejudice) in defence of any Claim or in defence of any claim, issue or matter therein, the
Company shall indemnify the Indemnitee against Expenses in connection therewith.
(e) Proceedings Initiated by the Indemnitee. Except as provided in Section 16 of this
Agreement, notwithstanding anything to the contrary in Sections 3 and 4, the Company shall not be
obligated to indemnify the Indemnitee in connection with a proceeding (or part thereof) initiated
by the Indemnitee (i) against the Company or a Subsidiary or other entity of which the Indemnitee
acts as a director or officer or in a similar capacity at the request of the Corporation or (ii)
unless such proceeding (or part thereof) was authorized in advance, or consented to, by the Board
of Directors.
(f) Gross-up. Should any payment made pursuant to this Agreement, including the
payment of insurance premiums or any payment made by an insurer under an insurance policy, be
deemed to constitute a taxable benefit or otherwise be or become subject to any tax or levy, then
the Company shall pay any amount as may be necessary to ensure that the amount received by or on
behalf of the Indemnitee, after the payment of or withholding for such tax, fully reimburses the
Indemnitee for the actual cost, expense or liability incurred by or on behalf of the Indemnitee.
(g) Limitation. Notwithstanding any other provisions of this Agreement, the
obligations of the Company to indemnify the Indemnitee under this Section 3 will not apply to the
extent that the Indemnitee has received payments in respect of the Indemnifiable Event pursuant to
an entitlement to indemnification or reimbursement pursuant to directors’ and officers’ liability
insurance arranged by Photowatt or an indemnity obligation of Photowatt.
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4. Additional Indemnification. The Company further agrees to indemnify the Indemnitee in
connection with any Claim and to make Expense Advances to the Indemnitee, in each case to the
fullest extent as may be provided for under the Company’s Articles, By-Laws, any vote of the
shareholders or disinterested directors and/or applicable law notwithstanding that any such
indemnification or Expense Advance is not specifically authorized by the other provisions of this
Agreement. It is the intent of the parties hereto that (i) in the event of any change, after the
date of this Agreement, in any applicable law which expands the right of a corporation organized
under the laws of Ontario to indemnify or make Expense Advances to a Personnel to a greater degree
than would be afforded currently under the Company’s Articles, By-Laws, any vote of the
shareholders or disinterested directors, applicable law and this Agreement, the Indemnitee shall
enjoy by this Agreement the greater benefits afforded by such change, and (ii) this Agreement be
interpreted and enforced so as to provide indemnification and Expense Advances under such
circumstances as set forth in this Agreement, if any, in which the providing of indemnification or
Expense Advances would otherwise be discretionary. Without limiting the generality of the
foregoing, the Company shall use its best efforts to obtain any approval required under the
Business Corporations Act (Ontario) or otherwise (including court approval) in respect of any
indemnification required, or contemplated, to be made under this Agreement.
5. Exclusions. Any other provision of this Agreement to the contrary notwithstanding, the
Company shall not be obligated to indemnify or provide Expense Advances to the Indemnitee:
(a) to the extent any such indemnification or Expense Advance would be unlawful; or
(b) to the extent that the Indemnitee actually received from any other source (including an
insurer) amounts otherwise payable hereunder;
provided that notwithstanding the foregoing provisions of this Section 5, the Indemnitee shall be
entitled under Section 6 to receive Expense Advances with respect to any Claim unless and until a
court having jurisdiction over such Claim shall have made a final determination (as to which all
rights of appeal therefrom shall have been exhausted or lapsed) that the Indemnitee is prohibited
from receiving indemnification with respect thereto.
6. Expense Advances. Within five business days of receipt by the Company of a notice (the
“Notice of Expense Advances”), substantially in the form attached hereto as Exhibit 1, by
or on behalf of the Indemnitee, the Company shall make Expense Advances to the Indemnitee. Any
amounts advanced pursuant to the Notice of Expense Advances shall be unsecured and shall bear no
interest. The Indemnitee shall repay to the Company, upon demand, Expenses Advances (a) if and to
the extent that it is determined by a court of competent jurisdiction that the Indemnitee is not
entitled to indemnification hereunder, and (b) subject to any right of counterclaim or set off in
favour of the Indemnitee.
7. Non-Exclusivity; Continuation. The indemnification and Expense Advances pursuant to
this Agreement shall not be deemed exclusive of any other rights to which the Indemnitee may be
entitled under the Company’s Articles or By-Laws, any vote of the Company’s shareholders or
disinterested directors, any other agreement, any law or otherwise,
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both as to actions in the Indemnitee’s official capacity and as to actions in another capacity
while a Personnel. All agreements and obligations of the Company contained in this Agreement shall
continue as to the Indemnitee while the Indemnitee is a Personnel and after the Indemnitee has
ceased to be a Personnel.
8. Change in Control; Potential Change in Control.
(a) The Company agrees that if there is a Change in Control, then with respect to all matters
concerning the rights of the Indemnitee to indemnification and Expense Advances under this
Agreement, the Company’s Articles or By-Laws, any vote of the Company’s shareholders or
disinterested directors, any other agreement, any law or otherwise, the Company shall seek legal
advice only from Independent Legal Counsel. Such Independent Legal Counsel shall be such person or
firm selected by the Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld) which has not otherwise performed material services for the Company or the
Indemnitee within the prior three years (other than in connection with such matters). The
Independent Legal Counsel shall, among other things, render its written opinion to the Company and
the Indemnitee as to whether and to what extent the Indemnitee is permitted to be indemnified and
receive Expense Advances. The Company agrees to pay the fees and expenses of the Independent Legal
Counsel relating to its engagement pursuant to this Agreement.
(b) In the event of a Potential Change in Control, the Company may, at its sole discretion,
create a trust for the benefit of the Indemnitee and from time to time fund such trust in such
amounts as the Board of Directors may, at its sole discretion, determine to satisfy Expenses
reasonably anticipated or proposed to be incurred or paid from time to time in connection with any
Claims. The terms of any trust established pursuant hereto shall provide that upon a Change in
Control (i) the trust shall not be revoked or the principal thereof encroached upon, without the
written consent of the Indemnitee, (ii) the trustee shall advance (solely to the extent of trust
assets), within two business days of a request by the Indemnitee and upon receipt of a Notice of
Expense Advances by or on behalf of the Indemnitee, all Expenses to the Indemnitee (and the
Indemnitee hereby agrees to reimburse the trust under the circumstances under which the Indemnitee
would be required to reimburse the Company under Section 6), (iii) the trustee shall promptly pay
(solely to the extent of trust assets) to the Indemnitee all amounts for which the Indemnitee shall
be entitled to indemnification pursuant to this Agreement or otherwise, and (iv) all unexpended
funds in such trust shall revert to the Company upon a final determination by the Reviewing Party
or a court of competent jurisdiction, as the case may be, that the Indemnitee has been fully
indemnified (or is not entitled to be indemnified) under the terms of this Agreement as to all
Claims. The trustee shall be a person or entity reasonably satisfactory to the Indemnitee. Nothing
in this Section 8(b) shall relieve the Company of any of its obligations under any other provision
of this Agreement.
9. Partial Indemnification. If the Indemnitee is entitled under any provision of this
Agreement or otherwise to indemnification or Expense Advances by the Company for a portion, but not
all, of any Expenses incurred by the Indemnitee, the Company shall indemnify or provide Expense
Advances to the Indemnitee (as the case may be) for the portion thereof to which the Indemnitee is
entitled.
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10. Contribution. If indemnification is unavailable by reason of a court decision
described in Section 12(d) based on grounds other than that set forth in Section 5(a), then in
respect of any Claim in which the Company is jointly liable with the Indemnitee (or would be if
joined in such Claim), the Company shall contribute to the amount of the Indemnitee’s Expenses in
such proportion as is appropriate to reflect (i) the relative benefits received by the Company and
by the Indemnitee, respectively, from the transaction from which such Claim arose, and (ii) the
relative fault of the Company and of the Indemnitee in connection with the events which resulted in
such Claim and/or Expenses, as well as any other relevant equitable considerations. The relative
fault of the Company and of the Indemnitee shall be determined by reference to, among other things,
the parties’ relative intent, knowledge, access to information and opportunity to correct or
prevent the circumstances resulting in such Claim and/or Expenses. The Company agrees that it would
not be just and equitable if contribution pursuant to this Section 10 were determined by pro rata
allocation or any other method of allocation which does not take account of the foregoing equitable
considerations.
11. Insurance. The Company confirms that it has purchased directors’ and officers’
liability insurance as approved by the Board of Directors covering its directors and officers. The
Company shall promptly notify the Indemnitee if the insurer cancels or refuses to renew such
coverage (or any part of such insurance), and the Company shall not do any act or thing (including
changing insurers), or fail to do any act or thing, that could cause or result in a denial of
insurance coverage or of any claim under such insurance. Subject only to the provisions of this
Section 11, the Company agrees for so long as an Indemnitee shall have consented to serve or shall
continue to serve as a director or officer of the Company and also for the period which is seven
(7) years following the date the Indemnitee ceases to serve as a director or officer of the Company
(such Indemnitee, a “Departing Indemnitee”), the Company shall maintain in effect
for the benefit of the Indemnitee or the Departing Indemnitee, as the case may be, one or more
valid, binding and enforceable policies of directors’ and officers’ liability insurance providing,
in all material respects, coverage both in scope and amount which is no less favourable than that
provided as of the date hereof.
12. Procedures.
(a) Notice. Promptly after receipt by the Indemnitee of notice of the commencement, or
the threat of commencement, of any Claim, the Indemnitee shall, if the Indemnitee believes that
indemnification or Expense Advances with respect thereto may be sought from the Company by the
Indemnitee pursuant to this Agreement, notify the Company of the commencement or threat of
commencement thereof; the Indemnitee’s notice to the Company may, but need not, be substantially in
the form attached hereto as Exhibit 2. Any failure of the Indemnitee to provide such notice to the
Company shall not, however, relieve the Company of any liability which it may have to the
Indemnitee unless and to the extent such failure causes a material adverse impact upon the
interests of the Company. If, at the time it receives such notice from the Indemnitee, the Company
has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of
the commencement, or the threat of commencement, of such Claim to the insurers in accordance with
the procedures set forth in the respective applicable insurance policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the
Indemnitee, all amounts payable as a result of such Claim in respect of indemnifiable Expenses in
accordance with the terms of such policies;
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provided, that no such payments by such insurers shall relieve the Company of any
liability or obligation which it may have to the Indemnitee, except as and to the extent expressly
provided under this Agreement.
(b) Assumption of Defence. If the Company shall be obligated to pay Expenses arising
in connection with any Claim against the Indemnitee, the Company shall be entitled to assume the
defence of such Claim, with counsel reasonably satisfactory to the Indemnitee, upon the delivery to
the Indemnitee of notice of its election to do so. After delivery of such notice, satisfaction with
such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will
not be liable to the Indemnitee under this Agreement for any fees and expenses of counsel
subsequently incurred by the Indemnitee with respect to the same Claim, provided that (i) the
Indemnitee shall have the right to employ the Indemnitee’s own counsel in connection with any Claim
at the Indemnitee’s expense; (ii) if (A) the employment of counsel by the Indemnitee shall have
been previously authorized by the Company, or (B) the Indemnitee shall have reasonably concluded
that there may be a conflict of interest between the Company and the Indemnitee in the conduct of
such defence, and the Indemnitee shall have employed counsel to assume the defence of such Claim,
in each such case the fees and expenses of the Indemnitee’s counsel shall be paid by the Company;
and (iii) the Company shall not settle any Claim in any manner which would impose any penalty,
limitation or unindemnified Expense on the Indemnitee, or which would reasonably be expected to
result in a material loss or diminishment of the Indemnitee’s reputation, without the Indemnitee’s
consent (which consent shall not be unreasonably withheld) or delayed and further provided that the
Company shall not be responsible for the fees or expenses of more than one legal firm acting on
behalf of the Indemnitee in any single jurisdiction. The Company shall not be liable for any
settlement of any Claim effected without its prior written consent (which consent shall not be
unreasonably withheld or delayed).
(c) Determination of Entitlement to Indemnification. In the event of any demand by
the Indemnitee for indemnification under this Agreement or otherwise, the Board of Directors shall
promptly designate a Reviewing Party. The Reviewing Party shall determine that indemnification is
proper if it finds that the Indemnitee has met the required standard of conduct set forth in
Section 3(c) and that indemnification is not prohibited pursuant to Section 5. If the Reviewing
Party is a body consisting of members of the Board of Directors, it shall act by a majority vote.
If the Reviewing Party is Independent Legal Counsel, the determination of the Reviewing Party shall
be rendered in the form of a written legal opinion. Subject to Sections 12(d) and 13, any
indemnification under Sections 3 and 4 (unless ordered by a court or pursuant to Section 3(d))
shall be made by the Company only as authorized in the specific case and upon the determination of
the Reviewing Party that the Indemnitee is entitled to indemnification in the circumstances because
the Indemnitee has met the standard of conduct set forth in Section 3(c) and that indemnification
is not prohibited pursuant to Section 5. The Indemnitee’s demand for indemnification shall create a
presumption that the Indemnitee is entitled to indemnification and the Reviewing Party shall have
30 days from the date of receipt of the Indemnitee’s demand in which to render in writing and
deliver to the Indemnitee its determination. If the Reviewing Party makes no timely determination,
the Reviewing Party shall be deemed to have determined that the Indemnitee is entitled to the
indemnification demanded. If the Reviewing Party determines, which determination shall be based
upon clear and convincing evidence sufficient to rebut the aforesaid presumption of entitlement,
that the Indemnitee is not entitled to indemnification, in
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whole or in part, in the circumstances because the Indemnitee has not met the standard of
conduct set forth in Section 3(c) or because the indemnification is prohibited pursuant to Section
5, the Indemnitee shall (i) be entitled to obtain a favourable determination or to appeal such
negative determination in the manner provided in Sections 12(d) and 13, and (ii) not be required to
reimburse the Company for any Expense Advances or Expenses theretofore paid to or on behalf of the
Indemnitee until a final determination has been made with respect to the Indemnitee’s legal
entitlement to indemnification (as to which all rights of appeal therefrom shall have been
exhausted or shall have lapsed).
(d) Indemnitee’s Rights on Unfavourable Determination. Notwithstanding a
determination by a Reviewing Party or any forum listed in Section 13 that the Indemnitee is not
entitled to indemnification with respect to a specific Claim, or any claim, issue or matter
therein, the Indemnitee shall have the right to apply to any court of competent jurisdiction for
the purpose of determining and enforcing the Indemnitee’s right to indemnification pursuant to this
Agreement or otherwise and the Company hereby consents to service of process and agrees to appear
in any such proceeding. The Indemnitee shall be entitled to indemnification unless the Company
shall prove by clear and convincing evidence that (i) the Indemnitee did not meet the applicable
standard of conduct required to entitle the Indemnitee to such indemnification or that
indemnification is prohibited pursuant to Section 5, and (ii) the requirements of Section 3(d) have
not been met.
13. Appeal of a Reviewing Party’s Determination of No Right to Indemnification.
(a) The Indemnitee shall be entitled to select from the following alternatives a forum in
which the validity of a Reviewing Party’s determination that the Indemnitee is not entitled to
indemnification will be heard, which forum shall determine that the Indenmitee is entitled to such
indemnification unless such forum determines that there is clear and convincing evidence that (i)
the Indemnitee did not meet the applicable standard of conduct required to entitle the Indemnitee
to such indemnification or that indemnification is prohibited pursuant to Section 5, and (ii) the
requirements of Section 3(d) have not been met:
(A) those members of the Board of Directors who are disinterested parties with respect to the
Claim, acting by a majority vote; or
(B) Independent Legal Counsel, in a written opinion.
(b) As soon as practicable, and in no event later than 30 days after notice of the
Indemnitee’s choice of forum pursuant to Section 13(a), the Company shall, at its own expense,
submit to the selected forum in such manner as the Indemnitee or the Indemnitee’s counsel may
reasonably request, the basis for the determination that the Indemnitee is not entitled to
indemnification, and the Company shall act in good faith to assure the Indemnitee the opportunity
to defend against and appeal such determination.
14. Binding Effect; Successors and Assigns. This Agreement shall bind and inure to the
benefit of the successors, heirs, executors, personal and legal representatives and permitted
assigns of the parties hereto, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all, substantially all or a substantial part of the business or
assets of
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the Company. The Company shall require and cause any successor (whether direct or indirect, and
whether by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial
part of the business or assets of the Company, by written agreement in form and substance
reasonably satisfactory to the Indemnitee, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be required to perform if no such
succession had taken place.
15. Assignment. Subject to the requirements of Section 14 hereof, this Agreement may be
assigned by the Company to any successor (whether direct or indirect, and whether by purchase,
merger, consolidation or otherwise) to all, substantially all or a substantial part of the business
or assets of the Company. This Agreement may not be assigned by the Indemnitee.
16. Expenses and Expense Advances to Enforce the Agreement. It is the intent of the Company
that the Indemnitee shall not be required to incur any Expenses arising from any effort to enforce
the Indemnitee’s rights under this Agreement because incurring such Expenses would substantially
detract from the benefits intended to be extended to the Indemnitee hereunder. Accordingly, if it
should appear to the Indemnitee that the Company has failed to comply with any of its obligations
under this Agreement or if the Company or any other person or entity (other than a court of
competent jurisdiction in a final determination, as to which all rights of appeal therefrom shall
have been exhausted or shall have lapsed) takes any action to declare this Agreement or any
provision hereof void or unenforceable, or institutes any action, suit or proceeding designed (or
having the effect of being designed) to deny or recover from the Indemnitee the benefits intended
to be provided to the Indemnitee hereunder, the Company hereby irrevocably authorizes the
Indemnitee from time to time to retain counsel of the Indemnitee’s choice to represent the
Indemnitee in connection with the enforcement of the Indemnitee’s rights under this Agreement. If
the Indemnitee is successful in whole or in part in enforcing the Indemnitee’s rights under this
Agreement, the Company shall pay and be solely responsible for any and all reasonable and
documented costs and liabilities (including, without limitation, all attorneys’ fees and related
disbursements and other out-of-pocket costs) incurred by the Indemnitee in connection therewith.
17. Notices. All notices, requests, demands and other communications under this Agreement
shall be in writing and shall be deemed duly given (i) when delivered by hand; or (ii) if mailed by
certified or registered mail with postage prepaid, on the third business day after the mailing
date. Addresses for notice to either party shall be as shown on the signature page of this
Agreement or as subsequently modified by the addressee by such written notice.
18. Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever, (i) the validity, legality and
enforceability of the remaining provisions of the Agreement (including, without limitation, all
portions of any paragraph of this Agreement containing any such provision held to be invalid,
illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in
any way be affected or unpaired thereby, (ii) to the fullest extent possible, the provisions of
this Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable and (iii) to the fullest extent possible,
any
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such provision held to be invalid, illegal or unenforceable shall be reformed so as to be valid,
legal and enforceable and to give effect to the intent manifested by such provision.
19. Modifications, Amendments, and Waivers. No modification or amendment of this Agreement,
or waiver of any of the provisions hereof, shall be binding unless executed in writing by both of
the parties hereto, in the case of a modification or amendment, or by the waiving party, in the
case of a waiver. No waiver of any such provision shall be deemed to constitute a waiver of such
provision on any other occasion or a waiver of any other provision.
20. Consent to Jurisdiction. The Company and the Indemnitee each hereby irrevocably consent
to the non-exclusive jurisdiction of a court of competent jurisdiction in the Province of Ontario
for any purpose in connection with any action or proceeding which arises out of or relates to this
Agreement, and the parties hereto hereby attorn and submit to such non-exclusive jurisdiction.
21. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the province of Ontario and the federal laws of Canada applicable therein, as applied to
contracts between Ontario residents entered into and to be performed entirely within Ontario.
22. Subrogation. In the event of payment by the Company under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of recovery of the
Indemnitee, who agrees, at the sole expense of the Company, to execute all papers reasonably
required and to do all other acts and things that may be reasonably necessary on the part of the
Indemnitee to secure such rights, including the execution of documents necessary or desirable to
enable the Company to bring suit to enforce such rights.
23. Integration and Entire Agreement. This Agreement sets forth the entire understanding
between the parties hereto and supersedes and merges all previous written and oral negotiations,
commitments, understandings and agreements relating to the subject matter hereof.
24. Counterparts. This Agreement may be executed and delivered (including by facsimile
transmission) in one or more counterparts, each of which (including any counterpart received by
facsimile transmission) shall be deemed an original and all of which together shall constitute one
and the same instrument.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| ATS AUTOMATION TOOLING SYSTEMS INC. | ||||||
By: |
||||||
Name:
|
Xxx Xxxxxx | Indemnitee – [•] | ||||
Title:
|
President and Chief Executive Officer | |||||
Address:
|
000 Xxxxx Xxx Xxxx | |||||
| Xxxxxxxxx, XX | ||||||
| X0X 0X0 | Address: [•] | |||||
For good and valuable consideration, the sufficiency and receipt of which is hereby
acknowledged, Photowatt Technologies Inc. acknowledges and agrees that the indemnification
obligation of ATS Automation Tooling Systems Inc. pursuant to this Agreement shall be limited in
accordance with Section 3(g) to the extent that the Indemnitee has received payments in respect of
the Indemnifiable Event pursuant to an entitlement to indemnification or reimbursement pursuant to
directors’ and officers’ liability insurance arranged by Photowatt Technologies Inc. or an
indemnity obligation of Photowatt Technologies Inc.
IN WITNESS WHEREOF, Photowatt Technologies Inc. has executed this Agreement as of the date
first above written.
| PHOTOWATT TECHNOLOGIES INC. | ||||
By: |
||||
Name: |
||||
Title:
|
President and Chief Executive Officer | |||
Address:
|
000 Xxxxx Xxx Xxxx | |||
| Xxxxxxxxx, XX | ||||
| X0X 0X0 | ||||
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Exhibit 1
NOTICE OF EXPENSE ADVANCES
1. This Notice of Expense Advances is submitted pursuant to the Indemnification Agreement
dated as of [?], 2006, between ATS Automation Tooling Systems Inc., a corporation existing under
the laws of Ontario (the “Company”), and the undersigned (the “Agreement”).
Capitalized terms used but not defined herein shall have the respective meanings set forth in the
Agreement.
2. I am requesting certain Expense Advances in connection with a Claim.
3. I hereby undertake to repay such Expense Advances if it shall ultimately be determined that
I am not entitled to be indemnified by the Company therefor under the Agreement or otherwise.
4. The Expense Advances are, in general, all related to:
| Signed: | ||||||
| Dated: | ||||||
Exhibit 2
NOTICE AND DEMAND FOR INDEMNIFICATION
1. This Notice and Demand for Indemnification is submitted pursuant to the Indemnification
Agreement dated as of [•], 2006, between ATS Automation Tooling Systems Inc., a corporation
existing under the laws of Ontario (the “Company”), and the undersigned (the
“Agreement”). Capitalized terms used but not defined herein shall have the respective
meanings set forth in the Agreement.
2. I am notifying the Company as to the following Claim:
3. I am requesting indemnification and Expense Advances with respect to such Claim to the full
extent provided for in the Agreement or to which I may otherwise be entitled.
| Signed: | ||||||
| Dated: | ||||||
