exv10w11



 



Exhibit 10.11




PHOTOWATT TECHNOLOGIES INC.




 





EXECUTIVE PERFORMANCE SHARE UNIT PLAN




 





November 8, 2006











 



 




	 	 	 	 	 	 	 
	1.
	 	PURPOSE	 	 	1	 
	2.
	 	PLAN DEFINITIONS AND INTERPRETATIONS	 	 	1	 
	3.
	 	GRANT OF SHARE UNITS AND TERMS	 	 	4	 
	4.
	 	ACCOUNTS AND STATEMENTS	 	 	5	 
	5.
	 	VESTING	 	 	6	 
	6.
	 	REDEMPTION OF SHARE UNITS	 	 	6	 
	7.
	 	MAXIMUM NUMBER OF SHARES TO BE ISSUED UNDER THE PLAN	 	 	7	 
	8.
	 	DEATH, TERMINATION OF EMPLOYMENT AND FORFEITURES	 	 	7	 
	9.
	 	CHANGES IN SHARE CAPITAL	 	 		 
	10.
	 	NOTICES	 	 	10	 
	11.
	 	GENERAL	 	 	10	 












 



 


PHOTOWATT TECHNOLOGIES

INC.




EXECUTIVE PERFORMANCE SHARE UNIT PLAN





	1.	 	PURPOSE
	 
	1.1	 	This Executive Performance Share Unit Plan has been established by the Company to provide
medium term incentives to certain of its executives to contribute to the success of the
Company and to build and maintain a strong spirit of performance and entrepreneurship.






	2.	 	PLAN DEFINITIONS AND INTERPRETATIONS
	 
	2.1	 	In this Plan, the following terms have the following meanings:






	 	(a)	 	“Account” has the meaning ascribed thereto in section 4.2;
	 
	 	(b)	 	“Affiliate” has the meaning ascribed to that term in the Securities Act
(Ontario);
	 
	 	(c)	 	“Associate” has the meaning ascribed to that term in the Securities Act
(Ontario);
	 
	 	(d)	 	“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;
	 
	 	(e)	 	“ATS” means ATS Automation Tooling Systems Inc.;
	 
	 	(f)	 	“Beneficiary” means any person designated by the Participant by written
instrument filed with the Company to receive any amount, securities or property payable
under the Plan in the event of a Participant’s death or, failing any such effective
designation, the Participant’s estate;
	 
	 	(g)	 	“Board” means the board of directors of Photowatt Technologies Inc.;
	 
	 	(h)	 	“Business Day” means any day other than a Saturday, a Sunday or a statutory
holiday observed in the Province of Ontario;
	 
	 	(i)	 	“Committee” means a committee, if any, created by the Board to exercise
authority under the Plan pursuant to the provisions contained herein;
	 
	 	(j)	 	“Company” means Photowatt Technologies Inc., and, where applicable, its
Affiliates and their respective successors and assigns, provided that any reference in
the Plan to action by the Company means action by or under the authority of the Board
or the Committee or any person that has been designated for that purpose by the Board
or Committee in accordance with Section 11.5;
	 
	 	(k)	 	“Consultant” means a person providing on-going services to the Company
excluding, for greater certainty, a director of the Company;










 



- 2 -


	 	(l)	 	“Continuous Service” means that the provision of services to the Company in any
capacity of employee, director, officer or Consultant is not interrupted or terminated,
whether by resignation, removal, discharge, termination of engagement or otherwise. In
the case of an employee whose employment is terminated by the Company, Continuous
Service shall be terminated on the date of notice of termination is given to the
employee. Continuous Service shall not be considered interrupted in the case of (i)
any approved leave of absence, (ii) transfers between locations of the Company or among
the Company and any of its Affiliates or any successor, in any capacity of employee,
director, officer or Consultant, or (iii) any change in status as long as the
individual remains in the service of the Company or an Affiliate in any capacity of
employee, director, officer or Consultant (except as otherwise provided in a written
agreement between the Company and the Participant). An approved leave of absence shall
include sick leave, military leave, or any other authorized personal leave.
	 
	 	(m)	 	“Corporate Transaction” means a Sale Transaction resulting in a Change of
Control (as defined below). A “Change of Control” shall occur in the event of either
(A) an acquisition of voting securities of Photowatt Technologies Inc. to which are
attached in excess of 50% of the votes attaching to all outstanding voting securities
of the Company or (B) if Photowatt Technologies Inc. is not the surviving corporation
following completion of a Corporate Transaction, a transaction whereby the shareholders
of Photowatt Technologies Inc. immediately before the transaction hold less than 50% of
the shares of the surviving corporate entity or purchaser.
	 
	 	(n)	 	“Date of Grant” of a Share Unit means the date a Share Unit is granted to a
Participant under the Plan;
	 
	 	(o)	 	“Effective Date” means the 8th day of November, 2006;
	 
	 	(p)	 	“Expiry Date” means, in respect of a Share Unit, the latest date, as set out
in the applicable Grant Agreement, on which the Share Unit may be redeemed, provided
that if at any time the date should be determined to occur either during a period in
which the Participant is restricted from trading in securities of Photowatt
Technologies Inc. under its insider trading policy or other policy or within ten
Business Days following such a period, such date shall be deemed to be the date that is
the tenth Business Day following the date of expiry of such period;
	 
	 	(q)	 	“Fair Market Value” as at any date means the closing price for a Share on the
day immediately prior to such date on the stock exchange on which the highest aggregate
volume of Shares have traded on such date. In the event that the Shares are not listed
and posted for trading on any stock exchange, the Fair Market Value shall be the fair
market value of a Share as determined by the Board in its sole discretion, acting
reasonably and in good faith;
	 
	 	(r)	 	“Grant Agreement” means an agreement between the Company and a Participant
under which a Share Unit is granted, together with such amendments, deletions or
changes thereto as are permitted under the Plan;
	 
	 	(s)	 	“including” means including without limitation;










 




- 3 -


	 	(t)	 	“Insider” means: (i) an insider as defined in the Securities Act (Ontario),
other than a person who falls within that definition solely by virtue of being a
director or senior officer of a subsidiary of Photowatt Technologies Inc.; and (ii) an
Associate of any person who is an insider by virtue of (i), above;
	 
	 	(u)	 	“Liquid Securities” means securities of an issuer that are listed for trading
on one or more of the TSX, the Nasdaq Global Market, the New York Stock Exchange or a
stock exchange or quotation system of similar stature, that have a market
capitalization of at least $200 million, and that are not subject to any restriction on
sale, pursuant to Applicable Law or otherwise;
	 
	 	(v)	 	“Outstanding Issue” means the aggregate number of Shares that are outstanding
immediately prior to the Share issuance in question, excluding Shares which have been
issued pursuant to Share Compensation Arrangements within the preceding one year
period;
	 
	 	(w)	 	“Non-Executive Director” means any director of the Company who is not an
employee or officer of the Company or any Affiliate;
	 
	 	(x)	 	“Participant” means a permanent employee of the Company, who has been
designated by the Company for participation in the Plan and who has agreed to
participate in the Plan on such terms as the Company may specify;
	 
	 	(y)	 	“Plan” means this Executive Performance Share Unit Plan, as amended and
restated from time to time;
	 
	 	(z)	 	“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 TSX, the Nasdaq Global 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;
	 
	 	(aa)	 	“Redemption Date” means the date determined, in accordance with section 6, for
the redemption of a Participant’s Share Units;
	 
	 	(bb)	 	“Sale Transaction” means any merger, amalgamation or plan of arrangement
involving Photowatt Technologies Inc., acquisition or take-over bid for the Shares of
Photowatt Technologies Inc., or similar transaction, or series of transactions, or the
sale of all or substantially all of the assets of Photowatt Technologies Inc.
excluding any asset sale transaction in connection with which all holders of Shares
are not entitled to receive cash or Liquid Securities in consideration of their Shares,
provided that a Sale Transaction shall exclude: (i) any share transfer, reorganization,
asset transfer, or similar transaction, undertaken in one or a series of transactions,
involving Photowatt Technologies Inc. and/or any of its present or future affiliates;
(ii) the completion of a treasury offering of securities of Photowatt Technologies Inc.
or an affiliate of Photowatt Technologies Inc.; or (iii) the public offering or the
dividend or other distribution by ATS or one of its Affiliates of shares in the capital
of Photowatt Technologies Inc.;
	 
	 	(cc)	 	“Shares” means common shares of Photowatt Technologies Inc., and include any
shares of Photowatt Technologies Inc. into which such shares may be converted,
reclassified,










 



- 4 -


	 	 	 	subdivided, consolidated, exchanged or otherwise changed, whether pursuant to a
reorganization, amalgamation, merger, arrangement or other form of reorganization;
	 
	 	(dd)	 	“Share Compensation Arrangement” means the Plan, a stock option, stock option
plan, stock purchase plan where the issuer provides financial assistance or matches the
whole or a portion of the purchase price of the securities being purchased, stock
appreciation rights involving the issuance of securities from treasury, or any other
compensation or incentive mechanism involving the issuance or potential issuance of
securities to one or more of an employee, Insider or Consultant of the Company or any
Affiliate, including a share purchase from treasury which is financially assisted by
the Company by way of a loan, guaranty or otherwise;
	 
	 	(ee)	 	“Share Unit” means a unit credited by means of an entry on books of the Company
to a Participant pursuant to the Plan, representing the right to receive for each
Vested Share Unit one Share or cash payment equal to the Fair Market Value thereof, at
the time, in the manner, and subject to the terms, set forth in the Plan and the
applicable Grant Agreement;
	 
	 	(ff)	 	“Stock Exchange Rules” means the applicable rules of any stock exchange or
quotation system upon which shares of Photowatt Technologies Inc. are listed or quoted,
as applicable;
	 
	 	(gg)	 	“TSX” means the Toronto Stock Exchange;
	 
	 	(hh)	 	“Vested Share Units” means Share Units which have vested in accordance with
section 5 and the terms of the applicable Grant Agreement;
	 
	 	(ii)	 	“Vesting Date” has the meaning ascribed thereto in section 5; and
	 
	 	(jj)	 	“Vesting Rights” refers to the terms on which the Share Unit may be redeemed.






	2.2	 	In this Plan, unless the context requires otherwise, references to the male gender include
the female gender, words importing the singular number may be construed to extend to and
include the plural number, and words importing the plural number may be construed to extend to
and include the singular number.
	 
	3.	 	GRANT OF SHARE UNITS AND TERMS
	 
	3.1	 	The Board or the Committee may grant Share Units to such Participant or Participants in such
number and at such times as the Company may, in its sole discretion, determine, as a bonus or
similar payment.
	 
	3.2	 	Each Share Unit will give the Participant the right to receive, with respect to each such
Share Unit which has become a Vested Share Unit pursuant to the provisions of the Plan and in
accordance with the terms of the Grant Agreement relating to such Share Unit, one Share or
where the applicable Grant Agreement so provides, the Fair Market Value.
	 
	3.3	 	Subject to the terms of the Plan, the Company may determine other terms or conditions of any
Share Units, including










 



- 5 -








	 	(a)	 	any additional conditions to be met to establish Vesting Rights attaching to
Share Units, which may include






	 	(i)	 	the market price of the Shares;
	 
	 	(ii)	 	the return to holders of Shares, with or without reference to
other comparable companies;
	 
	 	(iii)	 	the financial performance or results of the Company or
business unit thereof;
	 
	 	(iv)	 	other performance criteria relating to the Company or business
unit thereof;
	 
	 	(v)	 	ownership of Shares by a Participant; and
	 
	 	(vi)	 	any other terms and conditions the Company may in its
discretion determine with respect to vesting;






	 	(b)	 	restrictions on the resale of Shares including escrow arrangements; and
	 
	 	(c)	 	any other terms and conditions the Company may in its discretion determine;






	 	 	which shall be set out in the Grant Agreement.
	 
	 	 	The conditions may relate to all or a portion of the Share Units in a grant and may be
graduated such that different percentages (which may be greater or lesser than 100%) of the
Share Units in a grant will become vested depending on the extent of satisfaction of one or
more such conditions.
	 
	 	 	The Company may, in its discretion, subsequent to the Date of Grant of a Share Unit, waive
any such term or condition or determine that it has been satisfied.
	 
	3.4	 	Each grant of a Share Unit will be set forth in a Grant Agreement containing terms and
conditions required under the Plan and such other terms and conditions not inconsistent
herewith as the Company may, in its sole discretion, deem appropriate.
	 
	3.5	 	No certificates shall be issued with respect to Share Units.
	 
	3.6	 	Participation in the Plan shall be entirely voluntary and any decision not to participate
shall not affect the employment or engagement of any person with the Company.
	 
	4.	 	ACCOUNTS AND STATEMENTS
	 
	4.1	 	The Company shall keep or cause to be kept such records and accounts as may be necessary or
appropriate in connection with the administration of the Plan and the discharge of its duties,
which records shall, absent manifest error, be considered conclusively determinative of all
information contained therein. At such times as the Company shall determine, the Company
shall furnish the Participant with a statement setting forth the details of his or her Share
Units including the Date of Grant and the Vested and unvested Share Units held by each
Participant. Such statement shall be deemed to have been accepted by the Participant as
correct unless written notice to the contrary is given to the Company within 30 days after
such statement is provided to the Participant. For greater certainty, in the event of any
discrepancy between the records of the










 



- 6 -


	 	 	Company and any statement provided to a Participant pursuant to this section 4.1, the
records of the Company shall govern and the rights and obligations of the Company and the
Participant shall be determined on the basis of such records.
	 
	4.2	 	The Company shall maintain an Account for each Participant to record Share Units granted to
such Participant hereunder.
	 
	4.3	 	On the Date of Grant, the Account will be credited with the Share Units granted to a
Participant on that date.
	 
	4.4	 	A Participant’s Account shall, unless otherwise determined by the Company, from time to time
until the Vesting Date, be credited with additional Share Units, the number of which shall be
the quotient determined by dividing: one hundred per cent (100%) of the dividends declared and
that would have been paid to the Participant if the Share Units in his or her Account on the
relevant record date for dividends on the Shares had been Shares (excluding stock dividends
but including dividends which may be paid in cash or shares at the option of the shareholder)
by the Fair Market Value on the dividend payment date, with fractions computed to three
decimal places.
	 
	5.	 	VESTING 
	 
	5.1	 	Subject to sections 8.1 and 8.2, Share Units shall vest in accordance with the terms of the
applicable Grant Agreement and this section 5, and each date on which Share Units shall vest
shall be referred to as the “Vesting Date” in respect of such Share Units.
	 
	5.2	 	Notwithstanding any other provision of this Plan or any provision contained in any applicable
Grant Agreement or other agreement in respect of any Share Units, in the event of a Corporate
Transaction, each Share Unit will be deemed terminated immediately prior to the specified
effective date of the Corporate Transaction, unless either the Share Unit is assumed by the
successor corporation or parent thereof in connection with the Corporate Transaction or the
Board determines otherwise. Upon Board approval of a Sale Transaction, the Company may give
notice to each Participant which will set forth requirements in respect of outstanding Share
Units or any Shares acquired through the redemption of Share Units following the date of such
notice that must be complied with as a condition to each Participant’s participation in the
Sale Transaction.
	 
	5.3	 	The Board or the Committee, as the case may be, may, in its sole discretion and subject to
such conditions as the Board or Committee considers appropriate, at any time after the Date of
Grant of a Share Unit, determine the acceleration, if any, of the vesting provisions for any
Share Unit, in which event all such unvested Share Units then outstanding and granted to a
Participant shall be deemed to be Vested Share Units and shall be immediately redeemable in
accordance with Section 6.
	 
	6.	 	REDEMPTION OF SHARE UNITS
	 
	6.1	 	The Participant shall be entitled to receive, and the Company shall issue to the Participant,
one Share for each Vested Share Unit then credited to the Participant. Any such Shares shall
be issued to the Participant as soon as practicable following the applicable Vesting Date.
	 
	6.2	 	Notwithstanding section 6.1, the Company may in its sole discretion provide in a Grant
Agreement or, subject only to section 11.1(a), amend a Grant Agreement to provide that upon
redemption of Vested Share Units a Participant shall receive a cash payment equal to the Fair










 



- 7 -


	 	 	Market Value on the Vesting Date multiplied by the number of Vested Share Units then
credited to the Participant, less any applicable tax withholdings, in full satisfaction of
such Participant’s rights with respect to such Vested Share Units.
	 
	7.	 	MAXIMUM NUMBER OF SHARES TO BE ISSUED UNDER THE PLAN
	 
	7.1	 	The maximum number of Shares which may be issued by the Company to Participants pursuant to
Share Units granted and outstanding under this Plan and other Share Compensation Arrangements
the greater of 4,000,000 and 10% of the number of the Outstanding Issue immediately following
completion of a Qualified IPO.
	 
	7.2	 	Following completion of a Qualified IPO, no Share Unit shall be granted to any Participant if
the total number of Shares issuable to such Participant under this Plan, together with any
Shares reserved for issuance to such Participant under options for services or any other stock
option plans, would exceed 5% of the issued and outstanding Shares.
	 
	7.3	 	Notwithstanding any of the other provisions of this Plan, following completion of a Qualified
IPO, no Share Units shall be granted to any Participant if such grant could result, at any
time, in:






	 	(i)	 	the aggregate number of Shares issuable to Insiders at any time
and issued to Insiders within the one-year period prior to such time pursuant
to Share Units or other Share Compensation Arrangements exceeding 10% of the
issued and outstanding Shares;
	 
	 	(ii)	 	the aggregate number of Shares reserved for issuance pursuant
to Share Units granted under this Plan or any stock option plan to
Non-Executive Directors exceeding 0.5% of the issued and outstanding Shares;
and
	 
	 	(iii)	 	the issuance to any one Insider and such Insider’s Associates,
within a one-year period, pursuant to Share Units or other Share Compensation
Arrangements of an aggregate number of Shares exceeding 5% of the issued and
outstanding Shares.






	 	7.4	 	If any Share Unit is terminated, cancelled or has expired without being fully redeemed, any
unissued Shares which have been reserved to be issued upon the redemption of the Share Unit
shall become available to be issued upon the redemption of Share Units subsequently granted
under the Plan, provided that any such termination or cancellation of Share Units shall be
conducted in accordance with the applicable rules of any stock exchange upon which the Shares
of the Company are listed
	 
	 	8.	 	DEATH, TERMINATION OF EMPLOYMENT AND FORFEITURES
	 
	 	8.1	 	If a Participant should die and the circumstances specified in Section 8.2 had not occurred
in relation to such Participant and such Participant, at the time of his or her death, held
Share Units in respect of which the Expiry Date had not then occurred:






	 	(i)	 	in the case of Vested Share Units so held by the deceased
Participant which had not yet been redeemed pursuant to Section 6 as at the
date of the death of the deceased Participant, the Company shall provide to the
Participant’s Beneficiary the Shares or payment to which the Participant was
entitled in accordance with Section 6 and the applicable Grant Agreement.










 



- 8 -


	 	(ii)	 	in the case of Share Units so held by the deceased Participant
which were not Vested Share Units as of the date of death of the deceased
Participant, such Share Units may, at the Company’s sole and arbitrary
discretion, be redeemed in such number as the Company may determine. Where the
Company elects to redeem unvested Share Units held by a deceased Participant
the Company shall provide to the Participant’s Beneficiary the Shares or
payment to which the Participant would have been entitled in accordance with
Section 6 and the applicable Grant Agreement if the Share Units that the
Company elects to redeem had become Vested Share Units on the date of death of
deceased Participant.






	 	8.2	 	(a) Except as otherwise provided in Section 8.1 or subsection 8.2(b) or in a written
agreement with the Company and approved by the Board, if a Participant’s Continuous Service
shall terminate then (A) any Share Unit granted to such Participant under the Plan that has
not vested shall in all respects terminate and be of no further force or effect immediately
after such termination of Continuous Service (and without the requirement for any further act
or formality including, without limitation, the giving of any notices) and (B) as soon as
practicable after the date of the occurrence of any such resignation, discharge, removal or
termination other than by reason of death as contemplated in Section 8.1 and prior to the
Expiry Date the Company shall, in accordance with Section 6 and the applicable Grant
Agreement, redeem any Share Units which are Vested Share Units on such date.
	 
	 	(b)	 	Except as otherwise provided in a written agreement with the Company, and
approved by the Board, if a Participant:






	 	(i)	 	is discharged or terminated as an employee or officer of the
Company for cause; or
	 
	 	(ii)	 	is removed as a director of the Company by action of the Board
or the shareholders of the Company; or
	 
	 	(iii)	 	was engaged as a Consultant and is not an employee or director
or officer of the Company, and the engagement is terminated by the Company for
cause or breach of duty,






	 	 	 	immediately upon the occurrence of any such discharge, removal or termination other
than by reason of death as contemplated in Section 8.1 (and without the requirement
of any further act or formality including, without limitation, the giving of any
notices) each and every Share Unit granted to such Participant under the Plan, which
had not been redeemed prior to such occurrence, shall in all respects immediately
terminate and be of no further force or effect as to Shares in respect of such Share
Units, regardless of whether or not such Share Unit had vested with respect to such
Shares.






	 	 	For greater certainty, the Company shall in its sole and absolute discretion determine
whether “cause” or a “breach of duty” exists with respect to a discharge or termination.
	 
	8.3	 	Subject to the requirements of Applicable Law, a Participant may designate in writing a
Beneficiary to receive any benefits that are payable under the Plan upon the death of such
Participant. The Participant may, subject to Applicable Law, change such designation from
time










 



- 9 -


	 	 	to time. Such designation or change shall be in such form and executed and filed in such
manner as the Company may from time to time determine.
	 
	8.4	 	No cash or other compensation shall at any time be paid in respect of any Share Units which
have been forfeited or terminated under this Plan or on account of damages relating to any
Share Units which have been forfeited or terminated under this Plan.
	 
	8.5	 	Notwithstanding any other provision of the Plan or a Grant Agreement, Share Units granted
hereunder shall terminate, if not redeemed or previously terminated and forfeited in
accordance with the Plan, and be of no further force and effect after the Expiry Date.
	 
	8.6	 	The Company shall have no obligation at any time after the delivery of a Grant Agreement to
the Participant to notify the Participant of the Expiry Date of any Share Unit granted
pursuant to such Grant Agreement.
	 
	9.	 	ANTI-DILUTION
	 
	9.1	 	In the event that the Shares are at any time changed or affected as a result of the
declaration of a stock dividend or other distribution thereon or their subdivision or
consolidation, the number of Shares reserved for issuance under this Plan shall be adjusted
accordingly by the Board or the Committee to such extent as they deem proper in their
discretion. In such event, the number of Shares that are then subject to Share Unit grants
and the Fair Market Value may also be adjusted by the Board or the Committee to such extent,
if any, as they deem proper in their discretion.
	 
	 	 	Subject to Section 5.2 if at any time after the grant of Share Units and prior to the
earlier of the redemption of such Share Units pursuant to Section 6 and their Expiry Date,
the Shares shall be reclassified, reorganized or otherwise changed, otherwise than as
specified in the preceding paragraph, or the Company shall merge, combine, enter into a plan
of arrangement or amalgamate with or into another corporation (the corporation resulting or
continuing from such merger, combination, plan of arrangement or amalgamation being herein
called the “Successor Corporation”), the Participant shall be entitled to receive upon the
subsequent redemption of his or her Share Units in accordance with the terms hereof and
shall accept in lieu of the number of Shares to which he or she was theretofore entitled
upon such redemption the aggregate number of shares of the appropriate class and/or other
securities of the Company or the Successor Corporation (as the case may be) and/or other
consideration from the Company or the Successor Corporation (as the case may be) that the
Participant would have been entitled to receive as a result of such reclassification,
reorganization or other change or, of such merger, combination, arrangement or amalgamation,
if on the record date or effective date (as the case may be) of such reclassification,
reorganization or other change or such merger, combination, plan of arrangement or
amalgamation (as the case may be) he or she had been the registered holder of the number of
Shares to which he or she was theretofore entitled upon such redemption.
	 
	9.2	 	The Company shall not be required to issue fractional shares in satisfaction of its
obligations hereunder. Any fractional interest in a Share that would, except for the
provisions of this Section 9.2, be deliverable upon the redemption of any Share Unit shall be
cancelled and not be deliverable by the Company.










 



- 10 -


	10.	 	NOTICES
	 
	10.1	 	Any payment, notice, statement, certificate or other instrument required or permitted to be
given to a Participant or any person claiming or deriving any rights through him or her shall
be given by:






	 	(a)	 	delivering it personally to the Participant or to the person claiming or
deriving rights through him or her, as the case may be; or
	 
	 	(b)	 	mailing it postage paid (provided that the postal service is then in operation)
or delivering it to the address which is maintained for the Participant in the
Company’s records.






	10.2	 	Any payment, notice, statement, certificate or other instrument required or permitted to be
given to the Company shall be given by mailing it postage prepaid (provided that the postal
service is then in operation), or delivering it to the Company at the following address:




Photowatt Technologies Inc.

25 Reuter Drive

Cambridge, Ontario N3E 1A9

Attention: President and Chief Executive Officer

Fax No.: (519) 650-6535





	10.3	 	Any payment, notice, statement, certificate or other instrument referred to in section 10.1
or 10.2 hereof, if delivered, shall be deemed to have been given or delivered on the date on
which it was delivered, or if mailed (provided that the postal service is then in operation),
shall be deemed to have been given or delivered on the second Business Day following the date
on which it was mailed.
	 
	11.	 	GENERAL
	 
	11.1	 	The Company shall have the power to, at any time and from time to time either prospectively
or retrospectively, amend, suspend or terminate the Plan or any Share Unit granted under the
Plan (or the Grant Agreement in respect thereof); provided, however, that:






	 	(a)	 	any such amendment, suspension or termination is subject to any approvals
required under Applicable Law;
	 
	 	(b)	 	no such amendment, suspension or termination shall be made at any time to the
extent such action would materially adversely affect the existing rights of a
Participant with respect to any then outstanding Share Unit, as determined by the Board
acting in good faith, without his or her consent in writing, except to the extent
required by Applicable Law and subject to section 11.1(d); and
	 
	 	(c)	 	following completion of a Qualified IPO, any such amendment in respect of the
following shall become effective only upon shareholder approval thereof:






	 	(i)	 	any amendment to the maximum number of Shares specified in
section 7.1 in respect of which Share Units may be granted under this Plan
(other than pursuant to Article 9);










 



- 11 -


	 	(ii)	 	any amendment that would increase any of the percentage limits
in sections 7.2 and 7.3;
	 
	 	(iii)	 	any amendment to the reference in the definition of Expiry
Date in section 2.1(p) to “the date that is seven years after the Date of
Grant”;
	 
	 	(iv)	 	any amendment that would extend the term of any outstanding
Share Unit granted to an Insider to a date beyond the Expiry Date;
	 
	 	(v)	 	any amendment that would permit assignments to persons not
currently permitted under the Plan; and
	 
	 	(vi)	 	any amendment to the definition of “Participant” or any defined
term used therein that would expand the scope of the term “Participant”.






	 	(d)	 	If any provision of the Plan contravenes any regulations or Treasury guidance
promulgated under Section 409A of the Code or would cause the Share Units to be subject
to the interest and penalties under Section 409A of the Code such provision of the Plan
shall, to the extent that it applies to US Taxpayers, be modified, without the consent
of any Participant, to maintain, to the maximum extent practicable, the original intent
of the applicable provision without violating the provisions of Section 409A of the
Code.






	11.2	 	Upon the termination of the Plan, in whole or in part, the Company may, in its discretion,
determine whether the outstanding Share Units (including Vested and unvested Share Units) or a
portion thereof credited to a Participant affected by the termination shall be automatically
redeemed and paid out in a lump sum cash payment net of any applicable withholdings or held
for the credit of the Participant and redeemed and paid out at a later date in accordance with
the terms of the Plan in effect immediately prior to the termination of the Plan.






	11.3	 	The Plan shall be administered by the Company in accordance with its provisions. All costs
and expenses of administering the Plan will be paid by the Company. The Company shall have
the power to make such rules and regulations for the administration of this Plan, and to
interpret the provisions hereof and of such rules and regulations, as it shall in its sole
discretion determine to be appropriate.






	11.4	 	The determination by the Company of any question which may arise as to the interpretation or
implementation of the Plan or any of the Share Units granted hereunder shall be final and
binding on all Participants and other persons claiming or deriving rights through any of them.






	11.5	 	The Board or Committee may from time to time delegate all or any of its powers under the Plan
to one or more directors or officers of the Company who shall thereupon exercise such of the
powers herein given to the Board or the Committee as may be delegated by it in accordance with
any express directions of the Board or Committee from time to time. The Company may also
appoint or engage a trustee, custodian or administrator to administer or implement the Plan.






	11.6	 	The Plan shall enure to the benefit of and be binding upon the Company, its successors and
assigns. The interest of any Participant under the Plan or in any Share Unit shall not be
transferable or alienable by him or her either by pledge, assignment or in any other manner
whatsoever and, during his lifetime, shall be vested only in him or her, but shall thereafter
enure










 



- 12 -


	 	 	     to the benefit of and be binding upon the legal personal representatives of the Participant
in accordance with the terms hereof.






	11.7	 	The Company’s obligation to issue Shares in accordance with the terms of this Plan and the
grant, and any right of redemption of any Share Unit hereunder, are subject to compliance with
all Applicable Laws and to receipt of any applicable approval under Applicable Laws in respect
of the grant or right of exercise or any securities filing that discloses the grant or right
of exercise . Company’s issuance of any Share Units or its obligation to make any
payments or to provide any Shares hereunder is subject to compliance with all Applicable Laws.
As a condition of participating in the Plan, each Participant agrees (for such period as the
Participant holds any Share Unit, including any period subsequent to termination of Continuous
Service of the Participant), in connection with the redemption of all Share Units held and the
sale of any Shares acquired upon the redemption of such Share Units, to comply with all
Applicable Laws as well as the restrictions respecting disclosure of information or trading in
securities of the Company established in the Company’s insider trader policy or such other
policies as are established from time to time, and to furnish to the Company all information
and undertakings as may be required to permit compliance with Applicable Laws.






	11.8	 	Each Participant is subject to all applicable tax laws in connection with the ownership and
redemption of Share Units and the acquisition and disposition of Shares underlying any Share
Units, and no representation or warranty is made by the Company respecting any tax deduction,
credit or other favourable tax treatment in connection therewith.






	11.9	 	The Company may withhold from any amount payable to a Participant, either under this Plan, or
otherwise, such amount as may be necessary so as to ensure that the Company will be able to
comply with the applicable provisions of any federal, provincial, state or local law relating
to the withholding of tax or other required deductions, including on the amount, if any,
includable in the income of a Participant.






	11.10	 	No Participant shall have any rights as a shareholder in respect of Shares subject to Share
Units until such Shares Units have been redeemed for Shares and such Shares issued.






	11.11	 	Neither designation of an employee as a Participant nor the grant of any Share Units to any
Participant entitles any Participant to the grant, or any additional grant, as the case may
be, of any Share Units under the Plan. Neither the Plan nor any action taken thereunder shall
interfere with the right of an employer of a Participant to terminate a Participant’s
employment at any time. Neither any period of notice nor any payment in lieu thereof upon
termination of employment, shall be considered as extending the period of employment for the
purposes of the Plan.






	11.12	 	The Plan shall be an unfunded obligation of the Company. Neither the establishment of the
Plan nor the grant of any Share Units or the setting aside of any funds or assets (including
Shares) by the Company (if, in its sole discretion, it chooses to do so) shall be deemed to
create a trust. Legal and equitable title to any funds set aside for the purposes of the Plan
shall remain in the Company and no Participant shall have any security or other interest in
such funds. Any funds so set aside shall remain subject to the claims of creditors of the
Company present or future. Amounts payable to any Participant under the Plan shall be a
general, unsecured obligation of the Company. The right of the Participant to receive payment
pursuant to the Plan shall be no greater than the right of other unsecured creditors of the
Company.










 



- 13 -








	11.13	 	The Board or Committee shall be entitled to make such rules, regulations and determinations
as it deems appropriate under the Plan in respect of any leave of absence or disability of any
Participant.






	11.14	 	All payments and benefits under the Plan shall be determined and paid in the lawful currency
of Canada.






	11.15	 	This Plan and any Share Units granted hereunder shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of Canada applicable
therein.






	11.16	 	This Plan is hereby instituted and in effect as of the Effective Date.