Document:

PHOTOWATT

 

Exhibit
10.1

MASTER SEPARATION AGREEMENT

between

ATS AUTOMATION TOOLING SYSTEMS INC.

– and –

PHOTOWATT TECHNOLOGIES INC.

[     ],
2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE 1	 	DEFINITIONS
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	1.1	 	 	Defined Terms
	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	1.2	 	 	Construction
	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	 	1.3	 	 	Conflicts With Other Separation Agreements
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 2	 	PHOTOWATT ASSETS AND LIABILITIES
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	2.1	 	 	Transfer of Photowatt Assets
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	2.2	 	 	Non-Transferred Assets
	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	2.3	 	 	No Representations or Warranties
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	2.4	 	 	Assumption of Photowatt Liabilities
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 3	 	THE OFFERING
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	3.1	 	 	Proceeds of the Offering
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 4	 	MATTERS RELATING TO A SPIN-OFF
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	4.1	 	 	Spin-Off
	 	 	11	 
	 	 	 	 	 
	 	 	 	 
	 	4.2	 	 	Actions Prior to a Spin-Off
	 	 	12	 
	 	 	 	 	 
	 	 	 	 
	 	4.3	 	 	Stockholder-Related Matters Regarding a Spin-Off
	 	 	13	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 5	 	EMPLOYEE MATTERS AND NON-COMPETITION
	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	5.1	 	 	Employee Matters
	 	 	14	 
	 	 	 	 	 
	 	 	 	 
	 	5.2	 	 	Non-Competition
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 6	 	ACCESS TO AND DISCLOSURE OF INFORMATION
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	 	6.1	 	 	Restrictions on Disclosure of Information
	 	 	15	 
	 	 	 	 	 
	 	 	 	 
	 	6.2	 	 	Legally Required Disclosure of Information
	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	6.3	 	 	Access to Information
	 	 	17	 
	 	 	 	 	 
	 	 	 	 
	 	6.4	 	 	Record Retention
	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	6.5	 	 	Production of Witnesses
	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	6.6	 	 	Reimbursement
	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	6.7	 	 	Other Agreements Regarding Access to Information
	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	 	6.8	 	 	Acquisition of Photowatt by Another Person
	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 7	 	ADDITIONAL COVENANTS
	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	 	7.1	 	 	Further Assurances
	 	 	19	 

- i -

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	7.2	 	 	Performance
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	7.3	 	 	ATS Guarantees
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	7.4	 	 	TPC Contribution Agreement
	 	 	20	 
	 	 	 	 	 
	 	 	 	 
	 	7.5	 	 	Original Corporate Records
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	7.6	 	 	License of ATS Solar Automation Know-How
	 	 	21	 
	 	 	 	 	 
	 	 	 	 
	 	7.7	 	 	Legal and Regulatory Matters
	 	 	23	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 8	 	MUTUAL RELEASES; INDEMNIFICATION
	 	 	24	 
	 	 	 	 	 
	 	 	 	 
	 	8.1	 	 	Release of Pre-Closing Claims
	 	 	24	 
	 	 	 	 	 
	 	 	 	 
	 	8.2	 	 	Indemnification by Photowatt
	 	 	25	 
	 	 	 	 	 
	 	 	 	 
	 	8.3	 	 	Indemnification by ATS
	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	8.4	 	 	Claim Procedure
	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	8.5	 	 	Survival; Limitations
	 	 	28	 
	 	 	 	 	 
	 	 	 	 
	 	8.6	 	 	Production of Witnesses and Documents
	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE 9	 	MISCELLANEOUS
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	9.1	 	 	Assignment
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	9.2	 	 	Entire Agreement
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	9.3	 	 	No Agency
	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	9.4	 	 	Future Litigation and Other Proceedings
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	9.5	 	 	Further Assurances
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	9.6	 	 	Notices
	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	9.7	 	 	Time of Essence
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	9.8	 	 	Governing Law
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	9.9	 	 	Severability
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	9.10	 	 	Force Majeure
	 	 	33	 
	 	 	 	 	 
	 	 	 	 
	 	9.11	 	 	Publicity
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.12	 	 	Specific Performance
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.13	 	 	Currency
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.14	 	 	Time Periods
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.15	 	 	Amendment
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.16	 	 	Counterparts
	 	 	34	 

- ii -

 

TABLE OF CONTENTS
(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 	9.17	 	 	Authority
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.18	 	 	Jurisdiction
	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	9.19	 	 	Dispute Resolution
	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	9.20	 	 	Binding Effect
	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	9.21	 	 	Expenses
	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	9.22	 	 	Waiver
	 	 	38	 
	 	 	 	 	 
	 	 	 	 
	 	9.23	 	 	Compliance With Laws
	 	 	38	 

- iii -

 

MASTER SEPARATION AGREEMENT

     This
Master Separation Agreement (this “Agreement”) is
made and entered into as of [     ],
2007, by and between ATS Automation Tooling Systems Inc., a corporation governed by the laws of
Ontario (“ATS”), and Photowatt Technologies Inc., a corporation governed by the laws of Canada
(“Photowatt”). ATS and Photowatt are sometimes referred to herein separately as a “Party” and
together as the “Parties.”

RECITALS

	A.	 	[ATS owns, directly or indirectly, 100% of the issued and outstanding common shares of
Photowatt.]
	 

	B.	 	Photowatt is undertaking an initial public offering (the “Offering”) of its common shares
pursuant to a registration statement on Form F-1 under the U.S. Securities Act of 1933 and a
prospectus filed with Canadian Securities Regulatory Authorities (as defined below).

	 
	C.	 	Immediately prior to the completion of the Offering, ATS and Photowatt intend to enter into a
Master Separation Agreement (the “Master Separation Agreement”), containing the key provisions
relating to the separation of ATS and Photowatt, and the other Separation Agreements (as
defined in the Master Separation Agreement).

	 
	D.	 	Immediately following completion of the Offering, ATS will own, directly or indirectly
approximately [     ]% of the outstanding Photowatt Common Shares (as defined below).

	 
	E.	 	ATS and Photowatt desire to maintain the ability of ATS (if so determined by the ATS board of
directors) to distribute to holders of ATS Common Shares (as defined below) all or a portion
of the outstanding Photowatt common shares then owned by ATS (a “Spin-Off”).
	 
	F.	 	The Parties intend in this Agreement and the other Separation Agreements to set forth the
principal arrangements between them regarding the Offering and their operations thereafter.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements set
forth below, and other good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereby agree as follows:

ARTICLE 1

DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms shall have the following
meanings:

“ATS” is defined in the preamble to this Agreement.

- 1 -

 

“ATS Assets” means any and all Assets of the ATS Group or Photowatt Group as of the Separation Time
other than the Photowatt Assets.

“ATS Business” means the businesses or operations of the ATS Group excluding the Existing Photowatt
Business.

“ATS Common Shares” means the common shares in the capital of ATS.

“ATS Disclosure Portions” means all material set forth in the Registration Statement, the
Prospectus and the final Preliminary Prospectus to the extent relating exclusively to (i) the ATS
Group, excluding Automation Tooling Systems Enterprises, Inc. and Matrix Solar Technologies, Inc.
to the extent that the material relates to the Existing Photowatt Business or (ii) the ATS
Business.

“ATS Group” means ATS and each Person that ATS directly or indirectly controls (within the meaning
of the Ontario Securities Act), other than any member of the Photowatt Group.

“ATS Indemnified Persons” means each member of the ATS Group and its respective Representatives.

“ATS Liabilities” means the Liabilities of the ATS Group (but excludes all Photowatt Liabilities).

“ATS Products” means all products of the ATS Business.

“ATS Solar Automation Know-How” means all information, whether written or unwritten, existing as of
execution of this Agreement, relating to the Field of Use, that is: (i) known to ATS; or (ii)
intellectual property rights owned by ATS, but excluding any intellectual property rights owned by
ATS solely to the extent covered by any patent or application therefor owned by ATS as at the
Separation Time.

“Action” means any suit, arbitration, inquiry, proceeding or investigation by or before any court,
Governmental Authority or any arbitration tribunal asserted by a Person.

“Affiliate” of any specified Person means any other Person directly or indirectly “controlling,”
“controlled by” or “under common control with” (within the meaning of the Ontario Securities Act),
such specified Person; provided, however, that for purposes of the Separation
Agreements, except to the extent expressly provided otherwise, the determination of whether a
Person is an Affiliate of another Person shall be made assuming that no member of the ATS Group is
an Affiliate of any member of the Photowatt Group and vice versa.

“Agreement” is defined in the preamble to this Agreement.

“Amalco” is defined in Section 4.1(a).

“Annual Financial Statements” means (i) the consolidated annual financial statements of the
Photowatt Group (and notes thereto), including in comparative form the consolidated figures (and
notes thereto) for the previous fiscal year, all in reasonable detail and prepared in

- 2 -

 

accordance with Regulation S-X, Canadian Securities Laws, Canadian GAAP and all other applicable
Laws and in accordance with any similar or successor rule or Laws, and (ii) a discussion and
analysis by management of the Photowatt Group’s financial condition and results of operations for
such year, including an explanation of any material period-to-period change and any off-balance
sheet transactions, all in reasonable detail and prepared in accordance with Item 303(a) of
Regulation S-K and Canadian Securities Laws and in accordance with any similar or successor rule or
laws.

“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.

“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.

“Business Guarantees” is defined in Section 7.3.

“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 securities legislation established in each Province and Territory
of Canada, and all regulations, rules, blanket orders and policies established thereunder or issued
by Canadian Securities Regulatory Authorities.

“Canadian Securities Regulatory Authorities” is defined in Section 4.1(a).

“Claimed Amount” is defined in Section 8.4(a).

“Claim Notice” is defined in Section 8.4(a).

“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.

“Controlling Party” is defined in Section 8.4(d)(ii).

“Designated Purposes” means the purpose or purposes for which any confidential Information or
Personal Information may be used by any Group member pursuant to this Agreement or any other
Separation Agreement and otherwise in accordance with any directions given by one Party to the
other Party in performance of services under the Transitional Services Agreement.

“Dispute” is defined in Section 9.19.

- 3 -

 

“Distribution Agent” is defined in Section 4.3(a).

“Environmental Conditions” means the presence in the environment, including the soil, subsurface
strata, groundwater, surface water or ambient air, of any Hazardous Material at a level which
exceeds any applicable standard or threshold under any Environmental Law or otherwise requires
investigation or remediation (including investigation, study, health or risk assessment,
monitoring, removal, treatment or transport) under any applicable Environmental Laws.

“Environmental Laws” means all Laws of any Governmental Authority with jurisdiction that relate to
the protection of the environment (including ambient air, surface water, ground water, land surface
or subsurface strata) including laws and regulations relating to a Hazardous Materials Release, or
otherwise relating to the import, storage, distribution, labelling, sale, use, treatment, disposal,
transport or handling of Hazardous Materials, or to the exposure of any individual to a Hazardous
Materials Release.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Excluded Assets” means the Assets referred to in Exhibit A.

“Existing Photowatt Business” means the solar and related businesses and operations conducted by
ATS prior to the Separation Time through its subsidiaries Photowatt International S.A.S.,
Automation Tooling Systems Enterprises, Inc., Matrix Solar Technologies, Inc., Photowatt
Technologies USA Inc. and Spheral Solar Power, Inc., as well as the Spheral Solar Division of ATS,
and including such businesses and operations of the Photowatt Group as described in the Prospectus.

“Field of Use” means the automation of one or more steps in the manufacturing of solar products,
including the design and manufacture of equipment used to automatically convey, grip, locate,
orient, connect, manipulate, alter, form, inspect, test or sense materials or products as part of a
manufacturing process and all processes embodied in such equipment or relating to the manufacturing
of solar products or the automation thereof.

“Financial Statements” means the Annual Financial Statements and Quarterly Financial Statements
collectively.

“Governmental Authority” means any federal, provincial, state, local or foreign government,
supranational, governmental, 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.

“Group” means either the ATS Group or the Photowatt Group, as the context requires.

“Hazardous Materials” means chemicals, pollutants, contaminants, hazardous substances, dangerous
substance, noxious substance, toxic substance, radioactive and biological materials, petroleum and
petroleum products or any fraction thereof, hazardous waste, flammable or explosive material,
radio-active material, urea formaldehyde foam insulation, asbestos, polychlorinated biphenyls,
polychlorinated biphenal waste, polychlorinated biphenal related

- 4 -

 

waste or any other substance or material now or hereafter declared, defined or deemed to be
regulated or controlled in or pursuant to Environmental Laws.

“Hazardous Materials Release” means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor
environment, including the movement of Hazardous Materials through ambient air, soil, surface
water, groundwater, wetlands, land or subsurface strata.

“Included Liabilities” means the Liabilities referred to in Exhibit B.

“Indemnified Party” is defined in Section 8.4(a).

“Indemnified Person” means, as applicable, a Photowatt Indemnified Person or an ATS Indemnified
Person.

“Indemnifying Party” is defined in Section 8.4(a).

“Information” means information, whether or not patentable or copyrightable, in written, oral,
electronic or other tangible or intangible forms, that may be stored in any medium, including
studies, reports, records, books, contracts, instruments, surveys, discoveries, ideas, concepts,
know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes,
samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other
software, marketing plans, customer names, communications by or to attorneys (including
attorney-client privileged communications), memoranda and other materials prepared by attorneys or
under their direction (including attorney work product), and other technical, financial, employee
or business information or data.

“Law” means any law (statutory, common or otherwise), constitution, ordinance, code, rule,
regulation, guideline, executive order or other similar authority enacted, adopted, promulgated or
applied by any Governmental Authority, each as amended.

“Lease Agreement” means the Lease Agreement in the form set out in Exhibit D.

“Liability” means any liability, obligation, cost or expense, whether known or unknown, asserted or
unasserted, fixed, absolute or contingent, matured or unmatured, conditional or unconditional,
latent or patent, accrued or unaccrued, liquidated or unliquidated or due or to become due,
wherever or however arising (including whether arising out of any Law, Contract or tort based on
negligence or strict liability), including but not limited to, any tax liability.

“Losses” means all damages, losses, Liabilities, payments, amounts paid in settlement, obligations,
fines, penalties, costs of burdens associated with performing injunctive relief and other costs
(including reasonable fees and expenses of outside attorneys, accountants and other professional
advisors, and of expert witnesses and other costs (excluding the allocable portion of the relevant
Person’s internal costs) of investigation, preparation and litigation in connection with any
action, appeal, petition, plea, charge, complaint, claim, suit, demand, litigation, arbitration,
mediation, hearing, inquiry, investigation or similar matter or proceeding) of any kind or nature
whatsoever, whether known or unknown, contingent or vested, or matured or unmatured.

- 5 -

 

“Master Supply Agreement” means the Master Supply Agreement in the form set out in Exhibit
E.

“Non-Controlling Party” is defined in Section 8.4(d)(ii).

“Non-Transferred Asset” is defined in Section 2.2(a).

“Offering” is defined in the recitals to this Agreement.

“Ontario Securities Act” means the Securities Act (Ontario).

“Owning Party” is defined in Section 6.2.

“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 representative or Governmental
Authority however designated or constituted.

“Personal Information” means any information about an identifiable individual that is provided to
or obtained by any Group member on behalf of the other Party or any of its respective Group
members.

“Photowatt” is defined in the preamble to this Agreement.

“Photowatt Assets” means any and all Assets that are used exclusively or held for use exclusively
in the Existing Photowatt Business excluding the Excluded Assets.

“Photowatt Business” means the businesses and operations conducted by the Photowatt Group at the
relevant time.

“Photowatt Common Shares” means the common shares in the capital of Photowatt, and include (i) 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, and (ii) any securities of Photowatt
convertible into, exchangeable for or otherwise exercisable to acquire such shares.

“Photowatt Facilities” means the facilities located at each of 25 Reuter Drive, Cambridge, Ontario,
N3E 1A9; 33, rue Saint-Honore, Z.1 Champfleuri 38300 Bourgoin-Jallieu, France; 540 Silver Creek
Road N.W., Suite A, Albuquerque, New Mexico; and such other facilities, offices and locations from
which the business or operations of the Photowatt Business are conducted.

“Photowatt Group” means Photowatt and each Person that Photowatt directly or indirectly controls
(within the meaning of the Ontario Securities Act).

“Photowatt Indemnified Persons” means each member of the Photowatt Group and its respective
Representatives.

- 6 -

 

“Photowatt Liabilities” means the following:

	 	(i)	 	any and all Liabilities to the extent arising out of or relating to the
Existing Photowatt Business, the Photowatt Business or the Photowatt Assets, in each
case whether such Liabilities arise or accrue prior to, on or after the Separation
Time including:

	 	(A)	 	any and all Liabilities of any member of the Photowatt Group
owed to the ATS Group pursuant to valid intercompany accounts as of the
Separation Time and/or reflected in the financial statements contained in the
Prospectus or in any Annual Financial Statements or Quarterly Financial
Statements prepared after the Separation Time;
	 
	 	(B)	 	any and all Liabilities arising from or related to
Environmental Conditions (x) existing on, under, about or in the vicinity of
any of the Photowatt Facilities whether prior to or after the Separation Time,
or (y) arising out of operations occurring at any time prior to or after the
Separation Time of the Existing Photowatt Business, the Photowatt Business or
the Photowatt Assets, or at any of the Photowatt Facilities;
	 
	 	(C)	 	any and all employment-related Liabilities related to past or
present employees
of the Existing Photowatt Business and the Photowatt Business;
	 
	 	(D)	 	any and all Liabilities relating to, arising out of or
resulting from any act or failure to act by any Representative of any member of
the ATS Group, including Photowatt (whether or not such act or failure to act
is or was within such Person’s authority); and
	 
	 	(E)	 	any and all tax Liabilities relating to, arising out of or
resulting from the Existing Photowatt Business and the Photowatt Business;

	 	(ii)	 	any and all Liabilities to the extent arising out of or relating to the
operation of any business conducted by any member of the Photowatt Group at any time
after the Separation Time;
	 
	 	(iii)	 	any and all Liabilities that are expressly listed, scheduled or
otherwise clearly described in any other Separation Agreement as Liabilities for
which Photowatt or any member of the Photowatt Group is to be responsible, including
but not limited to, any Liabilities set out in Exhibit B as “Included
Liabilities”;
	 
	 	(iv)	 	any and all Business Guarantees that are not replaced with Substitute
Guarantees, or with respect to which ATS or any member of the ATS Group has any
liability or obligation after the Closing Date; and
	 
	 	(v)	 	any and all obligations of the Photowatt Group under or pursuant to this
Agreement, any Separation Agreement or any other instrument entered into in
connection herewith or therewith.

- 7 -

 

“Photowatt Transfer Agent” means the transfer agent and registrar for the Photowatt Common Shares.

“Possessor” is defined in Section 6.3.

“Preliminary Prospectus” means any preliminary prospectus filed with the SEC and deemed to be part
of the Registration Statement and filed with Canadian Securities Regulatory Authorities pursuant to
Canadian Securities Laws.

“Prospectus” means the final prospectus filed with the SEC and deemed to be part of the
Registration Statement and filed with Canadian Securities Regulatory Authorities pursuant to
Canadian Securities Laws.

“Quarterly Financial Statements” means (i) the consolidated quarterly financial statements of the
Photowatt Group (and notes thereto), including in comparative form the consolidated figures (and
notes thereto) for the corresponding quarter and periods of the previous fiscal year, all in
reasonable detail and prepared in accordance with Article 10 of Regulation S-X, Canadian Securities
Laws, Canadian GAAP and all other applicable Laws and in accordance with any similar or successor
rule or laws, and (ii) a discussion and analysis by management of the Photowatt Group’s financial
condition and results of operations for such fiscal period, including an explanation of any
material period-to-period change and any off-balance sheet transactions, all in reasonable detail
and prepared in accordance with Item 303(b) of Regulation S-K and Canadian Securities Laws and in
accordance with any similar or successor rule or laws.

“Record Date” means the close of business on the date to be determined by ATS board of directors as
the record date for determining the shareholders of ATS entitled to receive Photowatt Common Shares
pursuant to a Spin-Off.

“Registration Rights Agreement” means the Registration Rights Agreement in the form set out in
Exhibit F.

“Registration Statement” means the registration statement on Form F-1 (SEC File No. 333-137044) as
filed by Photowatt with the SEC in connection with the Offering, together with all amendments and
supplements thereto.

“Regulation S-K” means Regulation S-K of the General Rules and Regulations promulgated by the SEC
pursuant to the U.S. Securities Act.

“Regulation S-X” means Regulation S-X of the General Rules and Regulations promulgated by the SEC
pursuant to the U.S. Securities Act.

“Representatives” means, with respect to any Person, any of such Person’s directors, officers,
employees, consultants, advisers and agents.

“Requestor” is defined in Section 6.3.

“Retention Period” is defined in Section 6.4.

- 8 -

 

“SEC” means the United States Securities and Exchange Commission or any successor agency.

“Separation Agreements” means this Agreement, the Transfer Agreements, the Lease Agreement, the
Registration Rights Agreement, the Shareholder Agreement, the Master Supply Agreement and the
Transitional Services Agreement.

“Separation Time” means the time concurrent with the time of closing of the Offering and following
the delivery by ATS to Photowatt of a certificate of two officers of Photowatt that all conditions
precedent to completion of the Offering, other than the completion of the transactions contemplated
by the Separation Agreements to be completed on or prior to the Separation Time, have been
satisfied or waived.

“Shareholder Agreement” means the Shareholder Agreement in the form set out in Exhibit G.

“Substitute Guarantees” is defined in Section 7.3.

“Spin-Off” is defined in the recitals to this Agreement.

“Spin-Off Date” means the date, if any, on which a Spin-Off in respect of all Photowatt Common
Shares then held by ATS occurs or ATS is otherwise no longer required to consolidate, or account on
an equity basis for, the results of operations and financial position of Photowatt or any other
member of the Photowatt Group (determined in accordance with GAAP and consistent with SEC reporting
requirements and Canadian Securities Laws).

“Tax Benefit” means any deduction, amortization, exclusion from income or other allowance that
actually reduces in cash the amount of tax Photowatt or its respective Affiliates (as applicable)
would have been required to pay (or actually increases in cash the amount of tax refund to which
Photowatt or its respective Affiliates (as applicable) would have been entitled) in the absence of
the item giving rise to the indemnity claim.

“Third Party Claim” is defined in Section 8.4(d)(i).

“TPC Contribution Agreement” means TPC Agreement No. 731-477798 dated March 28, 2002, as amended by
an amendment agreement dated September 17, 2004, each between Her Majesty The Queen In Right Of
Canada, as represented by the Minister of Industry, and ATS.

“Transfer Agreements” means the Transfer Agreements in the form set out in Exhibit H.

“Transitional Services Agreement” means the Transitional Services Agreement in the form set out in
Exhibit I.

“U.S. Securities Act” means the U.S. Securities Act of 1933, as amended.

1.2 Construction. 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

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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, 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 any other Separation Agreement, this Agreement shall control.

ARTICLE 2

PHOTOWATT ASSETS AND LIABILITIES

2.1 Transfer of Photowatt Assets. In order to effect the transfer of the Photowatt Assets
by the ATS Group to the Photowatt Group on the terms contemplated by the Separation Agreements,
which transfers are to occur prior to or concurrent with completion of the Offering as contemplated
by the Separation Agreements, each Party will enter into the Separation Agreements other than this
Agreement at the Separation Time.

2.2 Non-Transferred Assets.

	 	(a)	 	If any Party discovers after the Separation Time that a member of the ATS Group
has title to, or an interest in, a Photowatt Asset or a member of the Photowatt Group
has title to, or an interest in, an ATS Asset (in either case, a “Non-Transferred
Asset”), each Party shall (and shall cause the applicable member(s) of its Group to)
cooperate and use commercially reasonable efforts to promptly transfer such title or
interest to the appropriate Party (or another member of its Group designated by it),
including obtaining any necessary consents or approvals or taking any other actions
necessary to effect such transfers.
	 
	 	(b)	 	If an attempted assignment of a Non-Transferred Asset would be ineffective or
would impair the rights of the Party entitled to such asset with respect to such
Non-Transferred Asset so that such Party (or its applicable Group Member) would not
receive all such rights, then the Parties shall use commercially reasonable efforts to
provide to, or cause to be provided to, such Party (or its applicable Group Member), to
the extent permitted by Law, rights related to such Non-Transferred Asset and take such
other actions as may reasonably be requested by such Party in order to place it,
insofar as reasonably possible, in the

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	 	 	 	same position as if such Non-Transferred Asset had been transferred as contemplated
hereby. In connection therewith, (i) the Party with title to or an interest in such
asset (or its applicable Group Member) shall promptly pass along to the Party
entitled to such asset (or its applicable Group Member) when received all benefits
derived with respect to any such Non-Transferred Asset, and (ii) the Party entitled
to such asset (or its applicable Group Member) shall pay, perform and discharge on
behalf of the other Party (or its applicable Group Member) all of the obligations
with respect to any such Non-Transferred Asset in a timely manner and in accordance
with the terms thereof. If and when such transfer may be effected without impairing
the rights of the Party entitled to such asset, the Parties shall take appropriate
steps to effect transfer of such Non-Transferred Asset.

2.3 No Representations or Warranties. Photowatt (on behalf of itself and each member of
the Photowatt Group) acknowledges and agrees that, except as expressly set forth in the Separation
Agreements, (a) no member of the ATS Group is making any representations or warranties, express or
implied, as to the condition, quality, merchantability or fitness of any Photowatt Asset, whether a
Non-Transferred Asset or otherwise, (b) any Non-Transferred Asset shall be transferred on an “as
is,” “where is” basis, and (c) the applicable member of the Photowatt Group shall bear the economic
and legal risks that any conveyance shall prove to be insufficient to vest in such Person good and
marketable title to any Non-Transferred Asset.

2.4 Assumption of Photowatt Liabilities. In furtherance of the transfer of the Photowatt
Assets by the ATS Group to the Photowatt Group as contemplated in Section 2.1, the
Photowatt Group hereby fully and unconditionally assumes and, to the extent they become due and
payable, covenants to pay or otherwise perform or discharge when done, the Photowatt Liabilities,
to the complete exoneration of the ATS Group, which assumptions are to occur prior to or concurrent
with completion of the Offering as contemplated by the Separation Agreements.

ARTICLE 3

THE OFFERING

3.1 Proceeds of the Offering. The Offering shall consist of a primary offering of
Photowatt Common Shares, with a secondary offering of Photowatt Common Shares by ATS to the extent
that the over-allotment option to be granted by ATS to the underwriters of the Offering is
exercised. The net proceeds of the Offering to Photowatt shall be used as described in the
Prospectus in the section entitled “Use of Proceeds.”

ARTICLE 4

MATTERS RELATING TO A SPIN-OFF

4.1 Spin-Off.

	 	(a)	 	ATS has the right, but not the obligation, following the consummation of the
Offering, to effect one or more Spin-Offs. ATS shall (in its sole and absolute
discretion) determine whether to effect a Spin-Off and, if so, the date of its
consummation and all of its terms, including (a) the form, structure and terms of

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	 	 	 	any transactions(s) and/or offerings(s) to effect the Spin-Off; (b) the timing of
and conditions to the consummation of the Spin-Off; (c) the selection of any
investment banker(s) and manager(s); and (d) the selection of any financial printer,
solicitation and/or exchange agent and financial, legal, accounting and other
advisors. In addition, ATS may, at any time and from time to time until the
completion of a Spin-Off, modify or change the terms of such a Spin-Off, including
by accelerating or delaying the timing of the consummation of all or part of such a
Spin-Off. At the request of ATS, Photowatt shall cooperate with ATS in all respects
to accomplish a Spin-Off and shall, at the direction of ATS, promptly take any and
all actions necessary or desirable to effect a Spin-Off, including, to the extent
necessary: (i) all actions required to be undertaken by Photowatt in connection with
an amalgamation of Photowatt with either an Affiliate of ATS or a corporation whose
shareholders and shareholdings are the same as the shareholders and shareholdings of
ATS (in either case, an “Amalco”), that does not result in an adverse “material
change” (as defined under Canadian Securities Laws) to the Photowatt Group,
including preparing and delivering a notice of a meeting of holders of Photowatt
Shares and soliciting votes in favour of any such amalgamation, which may be
specified by ATS, on terms to be specified by ATS (acting reasonably); and (ii) the
registration under the U.S. Securities Act and the Exchange Act of the Photowatt
Common Shares distributed by ATS on an appropriate registration form or forms, the
filing of all required documents with the securities regulatory authorities in each
of the Provinces and Territories of Canada (the “Canadian Securities Regulatory
Authorities”) and the SEC, including a prospectus prepared in accordance with
Canadian Securities Laws and the U.S. Securities Act and an application for relief
from the Canadian Securities Regulatory Authorities and the SEC in respect of
prospectus or registration requirements otherwise applicable, in any case to ensure
that the Photowatt Common Shares are not subject to resale restrictions under
Canadian Securities Laws (except those restrictions which may be applicable to
control block holders) and the U.S. Securities Act. Nothing in this Agreement shall
prohibit Photowatt from engaging (at its own expense) its own financial, legal,
accounting and other advisors in connection with a Spin-Off.

	 
	 	(b)	 	ATS will not effect a Spin-Off involving an amalgamation of Photowatt with an
Amalco unless ATS has obtained an advance tax ruling from the Canada Revenue Agency
reasonably acceptable to the board of directors of ATS, to the effect that any dividend
received by the Amalco will not be deemed under 55(2) of the Income Tax Act (Canada)
not to be a dividend received by the Amalco.

4.2 Actions Prior to a Spin-Off. In connection with a Spin-Off, the Parties shall take one
or more of the applicable actions set forth in this Section 4.2.

	 	(a)	 	ATS and Photowatt shall prepare and mail, prior to the effective date of the
Spin-Off, to the holders of ATS Common Shares, such information concerning Photowatt
and the Spin-Off and such other matters as ATS reasonably determines and as may be
required by Law. The Parties shall prepare, and Photowatt shall, to the extent required
by applicable Law, file with the SEC and Canadian Securities

- 12 -

 

	 	 	 	Regulatory Authorities any such documentation that ATS determines is necessary or
desirable to effect the Spin-Off, and each Party shall use commercially reasonable
efforts to obtain all necessary approvals from the SEC and Canadian Securities
Regulatory Authorities with respect thereto as soon as practicable.

	 
	 	(b)	 	Photowatt shall use commercially reasonable efforts to take all such action as
may be necessary or desirable under applicable state securities and blue sky Laws of
the United States (and any comparable Laws under any foreign jurisdiction) in
connection with the Spin-Off.
	 
	 	(c)	 	Photowatt shall prepare, file and use commercially reasonable efforts to seek
to make effective, an application for listing of the Photowatt Common Shares to be
distributed in the Spin-Off on The Nasdaq Global Market and the Toronto Stock Exchange,
subject in each case to official notice of issuance.
	 
	 	(d)	 	Photowatt shall use commercially reasonable efforts to take all such other
actions (or refrain from any actions) reasonably requested by ATS in connection with
the Spin-Off.

4.3 Stockholder-Related Matters Regarding a Spin-Off. With respect to a Spin-Off and
subject to Section 4.3(d):

	 	(a)	 	Distribution. For the purpose of this Section 4.3, the
contemplated distribution of Photowatt Common Shares owned by ATS to record holders of
ATS Common Shares entitled to receive Photowatt Common Shares in connection with the
Spin-Off may take place directly or indirectly, by way of a single step or a series of
one or more intermediate steps, including one or more distributions of shares of one or
more Affiliates of ATS.
	 
	 	(b)	 	Distribution Agent. On or prior to the effective date of the Spin-Off,
ATS shall deliver to a distribution agent to be appointed by ATS (the “Distribution
Agent”) for the benefit of holders of record of ATS Common Shares on the Record Date,
documentation reasonably required by the Photowatt Transfer Agent, representing all of
the outstanding Photowatt Common Shares then owned by ATS to be distributed pursuant to
the Spin-Off and ATS shall instruct the Distribution Agent to deliver to the Photowatt
Transfer Agent true, correct and complete copies of the share and transfer records
reflecting the record holders of ATS Common Shares entitled to receive Photowatt Common
Shares in connection with the Spin-Off. ATS shall cause its transfer agent to instruct
the Distribution Agent to distribute on the effective date of the Spin-Off or as soon
as reasonably practicable thereafter, directly or indirectly, by way of a single step
or a series of one or more intermediate steps, the appropriate number of Photowatt
Common Shares to each such record holder or designated transferee(s) of such record
holder. ATS shall (and shall instruct the Distribution Agent to) cooperate with
Photowatt and the Photowatt Transfer Agent, and Photowatt shall (and shall instruct the
Photowatt Transfer Agent to) cooperate with ATS and the Distribution Agent, in
connection with all aspects of the Spin-Off and all other matters relating to the
issuance and

- 13 -

 

	 	 	 	delivery or certificates representing, or other evidence of ownership of, the
Photowatt Common Shares to be distributed to the holders of ATS Common Shares in
connection with the Spin-Off.
	 
	 	(c)	 	Number of Spin-Off Shares. Each record holder of ATS Common Shares on
the Record Date (or such record holder’s designated transferee(s)) shall be entitled to
receive in the Spin-Off, directly or indirectly, by way of a single step or a series of
one or more intermediate steps, a number of Photowatt Common Shares equal to the number
of ATS Common Shares held by such record holder on the Record Date, multiplied by a
fraction, (i) the numerator of which is the number of Photowatt Common Shares to be
distributed by ATS pursuant to Section 4.3(a) and (ii) the denominator of which
is the number of ATS Common Shares outstanding on the Record Date. If the Spin-Off
consists of more than one class of Photowatt Common Shares, each record holder of ATS
Common Shares shall receive Photowatt Common Shares of each class, calculated as
provided above, except that the calculation shall be performed separately for each such
class.
	 
	 	(d)	 	Rights of Holders of Spin-Off Shares. After the Spin-Off, until such
Photowatt Common Shares are duly registered in the names of the record holders of ATS
Common Shares entitled to receive Photowatt Common Shares in connection with the
Spin-Off, in accordance with applicable Law, Photowatt shall regard the Persons
entitled to receive such Photowatt Common Shares as record holders of Photowatt Common
Shares in accordance with the terms of the Spin-Off without requiring any action on the
part of such Persons. Photowatt agrees that, subject to any transfers of such Photowatt
Common Shares, (i) each such record holder shall be entitled to receive all dividends
payable on, and exercise voting rights and all other rights and privileges with respect
to, the Photowatt Common Shares then held by such record holder, and (ii) each such
record holder shall be entitled, without any action on the part of such record holder,
to receive one or more certificates representing, or other evidence of ownership of,
the Photowatt Common Shares then held by such record holder.
	 
	 	(e)	 	Other Transactions. If ATS determines (in its sole discretion) to
effect the separation or other disposition of the Photowatt Common Shares held by it
through a transaction other than a Spin-Off (whether by means of a plan of arrangement,
split off, a share exchange or otherwise), Photowatt shall use commercially reasonable
efforts to take all actions (or refrain from any actions) reasonably requested by ATS
in connection therewith.

ARTICLE 5

EMPLOYEE MATTERS AND NON-COMPETITION

5.1 Employee Matters

	 	(a)	 	Without the prior written consent of ATS, Photowatt shall not (and shall cause
its Affiliates not to) for a period of five years from the date hereof, directly or
indirectly, either for itself or another Person, (i) hire, employ, retain or Contract

- 14 -

 

	 	 	 	for service, or offer to hire, employ, retain or Contract for service, as a
director, officer, employee, partner, consultant, independent contractor or
otherwise, any individual employed by ATS or any of its Affiliates including any
such individual seconded by any member of the ATS Group to any member of the
Photowatt Group, or (ii) solicit for employment, solicit for hire, Contract for the
services of, or encourage any individual to terminate his or her employment with ATS
or any of its Affiliates, other than in publications of a general nature and not
specifically directed at any employee or employees of ATS or any of its Affiliates,
unless in either case, (A) ATS (and/or its applicable Affiliate) has terminated the
employment of such individual or (B) at least two years have elapsed since such
individual has voluntarily terminated his or her employment with ATS (and/or its
applicable Affiliate).
	 
	 	(b)	 	Without the prior written consent of Photowatt, ATS shall not (and shall cause
its Affiliates not to) for a period of five years from the date hereof, directly or
indirectly, either for itself or another Person, (i) hire, employ, retain or Contract
for service, or offer to hire, employ, retain or Contract for service, as a director,
officer, employee, partner, consultant, independent contractor or otherwise, any
individual employed by Photowatt or any of its Affiliates including any such individual
seconded by any member of the Photowatt Group to any member of the ATS Group, or (ii)
solicit for employment, solicit for hire, Contract for the services of, or encourage
any individual to terminate his or her employment with Photowatt or any of its
Affiliates, other than in publications of a general nature and not specifically
directed at any employee or employees of Photowatt or any of its Affiliates, unless in
either case, (A) Photowatt (and/or its applicable Affiliate) has terminated the
employment of such individual or (B) at least two years have elapsed since such
individual has voluntarily terminated his or her employment with Photowatt (and/or its
applicable Affiliate).

5.2 Non-Competition. For a period of three years from the date hereof, Photowatt shall
not, and shall cause the members of the Photowatt Group not to, directly or indirectly, engage in
any development, production, manufacture, marketing, distribution, promotion or sale of products
competitive with ATS Products in any country in the world in which ATS conducts its business.

ARTICLE 6

ACCESS TO AND DISCLOSURE OF INFORMATION

6.1 Restrictions on Disclosure of Information.

	 	(a)	 	Generally. Without limiting any rights or obligations under any other
existing or future agreement between the Parties and/or any other members of their
respective Group relating to confidentiality, each Party shall, and each Party shall
cause its respective Group members and its Representatives to, hold in strict
confidence, with at least the same degree of care that applies to ATS confidential and
proprietary Information pursuant to policies in effect as of the Separation Time, and
use only for the Designated Purposes, all confidential and proprietary

- 15 -

 

	 	 	 	Information concerning the other Group that is either in its possession as of the
Separation Time or furnished by the other Group or its respective Representatives at
any time pursuant to this Agreement, any other Separation Agreement or the
transactions contemplated hereby or thereby (including Information relating to
employee benefit or compensation plans, proprietary software and computer programs,
and business records). Notwithstanding the foregoing, each Party, its respective
Group members and each of their respective Representatives may disclose such
Information to the extent that such Person can demonstrate that such Information is
or was (i) in the public domain other than by the breach of this Agreement or by
breach of any other agreement between or among the Parties and/or any of their
respective Group members relating to confidentiality, or (ii) lawfully acquired from
a third Person on a non-confidential basis or independently developed by, or on
behalf of, such Person by Persons who do not have use of any such Information. Each
Party shall maintain, and shall cause its respective Group members and
Representatives to maintain, policies and procedures, and develop such further
policies and procedures as shall from time to time become necessary or appropriate,
to ensure compliance with this Section 6.1.
	 
	 	(b)	 	Non-Disclosure of Third Person Information by Photowatt. Photowatt
acknowledges that it and other members of the Photowatt Group may have in its or their
possession confidential or proprietary Information of third Persons that was received
under a confidentiality or non-disclosure agreement between a member of the ATS Group
and such third Person prior to the Separation Time. Photowatt shall (and shall cause
its respective Group members and Representatives to) hold in strict confidence and
restrict the use of the confidential and proprietary Information of third Persons to
which any member of the Photowatt Group has access, in accordance with the terms of any
agreements entered into prior to the Separation Time between members of the ATS Group
(whether acting through, on behalf of, or in connection with, the Photowatt Business or
otherwise) and such third Persons.
	 
	 	(c)	 	Non-Disclosure of Third Person Information by ATS. ATS acknowledges
that it and other members of the ATS Group may have in its or their possession
confidential or proprietary Information of third Persons that was received under a
confidentiality or non-disclosure agreement between a member of the Photowatt Group and
such third Person prior to the Separation Time. ATS shall (and shall cause its
respective Group members and Representatives to) hold in strict confidence and restrict
the use of the confidential and proprietary Information of third Persons to which any
member of the ATS Group has access, in accordance with the terms of any agreements
entered into prior to the Separation Time between members of the Photowatt Group and
such third Persons.
	 
	 	(d)	 	Disclosure of Confidential Information with a Group. Once confidential
Information has been disclosed to a Group, the members of such Group may disclose it to
their individual employees who are engaged directly in the Designated Purposes. Such
Group members may also disclose such confidential Information to its Representatives.
Such Group members shall advise each

- 16 -

 

	 	 	 	recipient of the confidential nature of such confidential Information, and shall
instruct each such recipient to comply with the confidentiality obligations
contained herein; and the Party responsible for such Group member shall be
responsible for the failure of any such recipient to do so. Upon a Party’s request,
the Party receiving confidential Information shall require its recipients of such
Information to sign an agreement of confidentiality and nondisclosure satisfactory
to the requesting Party. The obligations of the receiving Party with respect to such
recipient apply regardless of whether such recipient is an employee of such Party.

6.2 Legally Required Disclosure of Information. If either Party or any of its respective
Group members or Representatives becomes legally required to disclose any Information (the
“Disclosing Party”) that it is otherwise obligated to hold in strict confidence pursuant to
Section 6.1, such Party shall promptly notify the Person that owns or has a duty not to
disclose the Information (the “Owning Party”) and shall use all commercially reasonable efforts to
cooperate with the Owning Party so that the Owning Party may seek a protective order or other
appropriate remedy and/or waive compliance with this Section 6.2. All expenses reasonably
incurred by the Disclosing Party in seeking a protective order or other remedy shall be borne by
the Owning Party. If such protective order or other remedy is not obtained, or if the Owning Party
waives compliance with this Section 6.2, the Disclosing Party shall (a) disclose only that
portion of the Information that its legal counsel advises it is compelled to disclose or otherwise
stand liable for contempt or suffer other similar significant corporate censure or penalty, (b) use
all commercially reasonable efforts to obtain reliable assurance requested by the Owning Party that
confidential treatment shall be accorded such Information, and (c) promptly provide the Owning
Party with a copy of the Information so disclosed, in the same form and format so disclosed,
together with a list of all Persons to whom such Information was disclosed.

6.3 Access to Information. During the Retention Period, each Party shall (and shall cause
its respective Group members and Representatives to) cooperate with and afford to the other Party
reasonable access upon reasonable advance written request to all Information (other than
Information that is (a) protected from disclosure by the attorney-client privilege or work product
doctrine, (b) business sensitive from the perspective of any aspect of the Photowatt Business that
is competitive in a material respect with one or more aspects of the ATS Business, (c) the subject
of a confidentiality agreement between such Party and a third Person that prohibits disclosure to
the other Party, or (d) prohibited from disclosure under applicable Law) owned by such Party or one
of its Group members or within such Party’s or any of its respective Group member’s or
Representative’s possession that is created prior to the Spin-Off Date and that relates to the
business, assets or liabilities of the requesting Party (the “Requestor”), and such access is
reasonably required by the Requestor (i) to comply with requirements imposed on the Requestor by
any Governmental Authority, (ii) for use in any proceeding (except for a litigation matter between
the Parties or any of their respective Group members), (iii) to satisfy audit, accounting, Tax or
similar requirements, (iv) to obtain insurance, or (v) to comply with the Requestor’s obligations
under this Agreement or any other Separation Agreement. As used in this Agreement, “access” shall
mean the obligation of a Party in possession of Information (the “Possessor”) requested by the
Requestor to exert its commercially reasonable efforts to locate all requested Information that is
owned and/or possessed by Possessor or any of its respective Group members or Representatives. The
Possessor, at its own expense, shall conduct a diligent search designed to identify all requested
Information and shall collect all such Information for

- 17 -

 

inspection by the Requestor during normal business hours at the Possessor’s place of business.
Subject to such confidentiality and/or security obligations as the Possessor may reasonably deem
necessary, the Requestor may have all requested Information duplicated at Requestor’s expense.
Alternatively, the Possessor may choose to deliver, at the Requestor’s expense, all requested
Information to the Requestor in the form requested by the Requestor. The Possessor shall notify the
Requestor in writing at the time of delivery if such Information is to be returned to the
Possessor. In such case, the Requestor shall return such Information when no longer needed to the
Possessor at the Possessor’s expense. In connection with providing Information pursuant to this
Section 6.3, each Party shall, upon the request of the other Party and upon reasonable
advance notice, make available during normal business hours its respective employees (and those
employees of its respective Group members and Representatives, as applicable) to the extent that
they are reasonably necessary to discuss and explain all requested Information with and to the
Requestor.

6.4 Record Retention. Photowatt shall (and shall cause each of its other Group members to)
adopt and comply with a prudent record retention policy with respect to Information owned by or in
the possession of the Photowatt Group and created prior to the Spin-Off Date that is no less
stringent than the ATS record retention policy in effect as of the Separation Time or as ATS may
modify such policy between the Separation Time and the Spin-Off Date, provided that ATS notifies
Photowatt of any such modifications. In any event, such record retention policy will require
Photowatt to retain Information owned by or in the possession of the Photowatt Group and created
prior to the Spin-Off Date for a period of not less than seven years. Each Party shall, at its sole
cost and expense, preserve and retain all Information in its respective possession or control that
the other Party has the right to access pursuant to Section 6.3 or that it is required to
preserve and retain in accordance with such record retention policy or for any longer period as may
be required by (a) any Governmental Authority, (b) any litigation matter, (c) applicable Law, or
(d) any Separation Agreement (as applicable, the “Retention Period”). If either Party wishes to
dispose of any Information that it is obligated to retain under this Section 6.4 prior to
the expiration of the Retention Period, then that Party shall first provide 45 days’ written notice
to the other Party, and the other Party shall have the right, at its option but at the expense of
the Party that desires to dispose of such Information, upon prior written notice within such 45-day
period, to take possession of such Information within 90 days after the date of the notice provided
pursuant to this Section 6.4. Written notice of intent to dispose of such Information shall
include a description of the Information in detail sufficient to allow the other Party to
reasonably assess its potential need to retain such materials.

6.5 Production of Witnesses. For seven years after the Separation Time, each Party shall
(and shall cause each of its respective Group members to) use commercially reasonable efforts to
make available to each other, upon written request, its past and present Representatives as
witnesses to the extent that any such Representatives may reasonably be required (giving
consideration to the business demands upon such Representatives) in connection with any legal,
administrative or other proceedings in which the requesting Party may from time to time be
involved.

6.6 Reimbursement. Unless otherwise provided in this Article 6, each Party
providing access to Information or witnesses to the other Party pursuant to Sections 6.3,
6.4 or 6.5 shall be entitled to receive from the receiving Party, upon the
presentation of invoices

- 18 -

 

therefor, payment for all reasonable, out-of-pocket costs and expenses (excluding allocated
compensation, salary and overhead expenses) as may be reasonably incurred in providing such
Information or witnesses.

6.7 Other Agreements Regarding Access to Information. The rights and obligations of the
Parties under this Article 6 are subject to any specific limitations, qualifications or
additional provisions on the sharing, exchange or confidential treatment of Information set forth
in this Agreement or any other Separation Agreement.

6.8 Acquisition of Photowatt by Another Person. If Photowatt enters into an agreement with
a third Person to directly or indirectly sell all or any portion of the Photowatt Business (other
than in the ordinary course of business consistent with past practice), together with the
Information related thereto, whether pursuant to a share or asset sale, merger or otherwise, ATS
shall have the right to duplicate any Information held by Photowatt that relates to (a) the
Photowatt Business as conducted through the Spin-Off Date (or the date of the disposition to such
third Person if a Spin-Off has not occurred), (b) the transactions contemplated by this Agreement
and the other Separation Agreements, and (c) the Financial Statements and any Information relating
thereto included in financial statements of ATS. Photowatt shall, in connection with any such
disposition (x) provide ATS not less than 20 days’ written notice prior to the consummation of such
disposition, and (y) not disclose any Information of ATS or relating to the ATS Business to such
third Person without the express written consent of ATS (which may be withheld in its absolute and
sole discretion). In addition, ATS shall have the right, in its sole discretion, to require
Photowatt to destroy or return to ATS all or any portion of such Information of or relating to the
ATS Business prior to such disposition. If ATS enters into an agreement with a third Person to sell
all or any portion of the ATS Business, ATS shall not in connection with any such disposition
disclose any Information of Photowatt or relating to the Photowatt Business to such third Person
without the express written consent of Photowatt (which may be withheld in its absolute and sole
discretion).

ARTICLE 7

ADDITIONAL COVENANTS

7.1 Further Assurances. The Parties shall (or shall cause their appropriate Group members
or Representatives, as appropriate, to) execute and deliver such other agreements, instruments and
documents as may be necessary or desirable in order to effect the transactions contemplated by this
Agreement and the other Separation Agreements. At the request of Photowatt, ATS shall (and shall
cause applicable members of the ATS Group to) execute and deliver to Photowatt and/or applicable
members of the Photowatt Group such other instruments of transfer, conveyance, assignment,
substitution and confirmation and take such other actions as Photowatt may reasonably deem
necessary or desirable in order (a) to transfer, convey and assign to Photowatt and the other
members of the Photowatt Group, as applicable, the Photowatt Assets, (b) to put Photowatt and the
other members of the Photowatt Group, as applicable, in actual possession and operating control
thereof, and (c) to permit Photowatt and the other members of the Photowatt Group, as applicable,
to exercise all rights with respect thereto. At the request of ATS, Photowatt shall (and shall
cause applicable members of the Photowatt Group to) execute and deliver to ATS and/or applicable
members of the ATS Group all instruments, assumptions, novations, undertakings, substitutions or
other documents and take such other

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action as ATS may reasonably deem necessary or desirable in order to ensure that Photowatt and the
other members of the Photowatt Group fully and unconditionally assume and discharge the Photowatt
Liabilities as contemplated under this Agreement, the other Separation Agreements or any document
in connection herewith or therewith, and relieve the ATS Group of any Liability with respect
thereto and evidence the same to third Persons. Except as otherwise expressly provided in this
Agreement or any other Separation Agreement, no member of the ATS Group shall be obligated to incur
any out-of-pocket costs, expenses and fees in connection with its obligations under this
Section 7.1, including any attorneys’ fees, recording, assignment or other similar fees.

7.2 Performance. ATS shall cause to be performed, and hereby guarantees the performance
of, all actions, agreements and obligations set forth in this Agreement or in any Separation
Agreement to be performed by any member of the ATS Group. Photowatt shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and obligations set forth in this
Agreement or in any Separation Agreement to be performed by any member of the Photowatt Group. Each
Party further agrees that it shall cause its other Group members not to take any action or fail to
take any action inconsistent with such Party’s obligations under this Agreement, any other
Separation Agreement or the transactions contemplated hereby or thereby.

7.3 ATS Guarantees. Photowatt acknowledges that members of the ATS Group have entered
into various arrangements in which one or more members of the ATS Group issued or made available
guarantees, sureties, bonds, letters of credit or similar instruments or are the primary obligors
on other agreements, in any such case to support or facilitate the Existing Photowatt Business or
the Photowatt Business (the “Business Guarantees”). It is understood that none of such Business
Guarantees shall continue after the Separation Time. On or as promptly as practicable following
the date hereof, but in no event later than the Separation Time, Photowatt shall obtain
replacements for such Business Guarantees or will either terminate the business transactions or
programs of the member of the Photowatt Group supported or facilitated by such Business Guarantees
or arrange for itself or one of its Affiliates to be substituted as the primary obligor thereto
(collectively, the “Substitute Guarantees”).

7.4 TPC Contribution Agreement.

	 	(a)	 	Assumption. Photowatt covenants and agrees to observe, perform and
fulfill each and every Liability, covenant, term and condition of ATS in, to and under
the TPC Contribution Agreement from and including the date of assignment of the TPC
Contribution Agreement to Photowatt, to the same extent as if Photowatt had been
originally named as a party to the TPC Contribution Agreement together with ATS,
collectively as “the Proponent” as such term is used in the TPC Contribution Agreement.
	 
	 	(b)	 	No Amendment, Termination or Waiver. During such period of time as ATS
remains a party to and bound by the TPC Contribution Agreement, Photowatt covenants and
agrees: (i) not to amend or assign the TPC Contribution Agreement, or to seek the
consent of any other party to the TPC Contribution Agreement to the waiver of any
provisions thereof, without ATS’ prior written

- 20 -

 

	 	 	 	consent and (ii) not to terminate or breach the TPC Contribution Agreement or, for
greater clarity, effect a material change in the total scope or nature of any
element of the “Project” as such term is used in the TPC Contribution Agreement,
without prior consultation with ATS, such consultation to be conducted in good faith
and for a reasonable duration.
	 
	 	(c)	 	Further Assurances. For greater clarity, if ATS determines (in its
sole discretion) to seek any further consent or consents with respect to the assignment
of the TPC Contribution Agreement, the assignment of Assets subject to the TPC
Contribution Agreement, or the release of ATS from any or all Liabilities, covenants,
terms or conditions under TPC Contribution Agreement, Photowatt covenants and agrees to
take all actions (or refrain from any actions) reasonably requested by ATS in
connection therewith.

7.5 Original Corporate Records.

	 	(a)	 	If any member of the ATS Group has possession of original corporate records of
the Photowatt Group, ATS will cause such member to promptly deliver such original
corporate records to the Photowatt Group upon request.
	 
	 	(b)	 	If any member of the Photowatt Group has possession of original corporate
records of the ATS Group, Photowatt will cause such member to promptly deliver such
original corporate records to the ATS Group upon request.

7.6 License of ATS Automation Solar Know-How.

	 	(a)	 	License. Subject to the terms and conditions of this Agreement,
including Section 5.2, ATS hereby grants to Photowatt an irrevocable, personal,
non-exclusive, worldwide, royalty-free, perpetual right and license to use the ATS
Solar Automation Know-How now in Photowatt’s possession, solely for Photowatt’s
internal use in conducting Photowatt’s business including the right to make, have made,
and use, but excluding the right to market and sell manufacturing equipment embodying
such ATS Solar Automation Know-How.
	 
	 	(b)	 	Sub-Licensing. The license granted in Section 7.6(a) is
personal and non-transferable and may not be sub-licensed without the express written
consent of ATS, except to a wholly-owned Subsidiary of Photowatt and then only so long
as it remains a wholly-owned Subsidiary of Photowatt.
	 
	 	(c)	 	Restrictions. For greater certainty, nothing in the license granted in
Section 7.6(a):

	 	(i)	 	entitles Photowatt to use the ATS Solar Automation
Know-How for the benefit of a competitor of ATS other than may be
incidental to the manufacturing of equipment for Photowatt;

- 21 -

 

	 	(ii)	 	grants Photowatt any rights in respect of any patent
or application therefor, trade-mark or copyright owned by the ATS Group or
any intellectual property rights owned by any third party;
	 
	 	(iii)	 	grants Photowatt any rights in respect of know-how
arising after the date of execution of this agreement;
	 
	 	(iv)	 	prevents any member of the ATS Group from continuing
to manufacture equipment or offering services in respect of the Field of
Use for the solar industry or using the ATS Solar Automation Know-How in
any way; nor
	 
	 	(v)	 	prevents either Party from using know-how, technology
or information generally known within the applicable industry.

	 	(d)	 	Acknowledgment. Photowatt acknowledges that the purpose of this
Agreement is to facilitate Photowatt in continuing to conduct its business by providing
for the continued use of ATS Solar Automation Know-How now in its possession.
Photowatt also acknowledges that, as of the execution of this Agreement, it is in
possession of all ATS Solar Automation Know-How licensed hereunder and that ATS has no
affirmative obligation hereunder to actively disclose, transmit or deliver to Photowatt
in any manner any ATS Solar Automation Know-How.
	 
	 	(e)	 	No Ongoing Assistance. ATS shall have no ongoing obligation to provide
further information or assistance to Photowatt, to provide technical advice, to send
personnel to Photowatt’s facilities or to train Photowatt’s personnel, except as ATS
and Photowatt may specifically agree.
	 
	 	(f)	 	No Rights to Improvements. ATS shall have no obligation to provide
Photowatt with updates or improvements to the ATS Solar Automation Know-How or to
know-how developed after the date of execution of this Agreement and neither Party
shall have any obligation to disclose to the other improvements to the ATS Solar
Automation Know-How developed or acquired by that Party.
	 
	 	(g)	 	No Warranties. ATS does not warrant the quality, utility,
merchantability, or any other characteristic of the ATS Solar Automation Know-How or of
any product made, used or sold under the license granted in Section 7.6(a).
ATS shall not be liable or responsible in any way (including incidental or
consequential damages) for any use which Photowatt or any customer of Photowatt makes
of any product manufactured, used or sold which incorporates the ATS Solar Automation
Know-How licensed under this Agreement. Nothing herein shall be construed as a
representation or warranty by ATS (i) as to the results to be attained by the
utilization of the rights granted under this agreement; or (ii) that there is any
warranty other than as expressly described herein.
	 
	 	(h)	 	Confidentiality. The Parties acknowledge that the ATS Solar Automation
Know-How, whether written or unwritten, is considered secret, confidential and
proprietary to ATS and as such, shall be deemed to be confidential whether or not such
information, in written form or not, is so identified by ATS as being

- 22 -

 

	 	confidential. Specific ATS Solar Automation Know-How disclosed by ATS to Photowatt
shall not be deemed to be in the public domain merely because it is addressed in a
general manner as part of information in the public domain, provided that the
specific information is not public. Photowatt shall not disclose, for a period of
ten years from the date first written above, any and all such confidential ATS Solar
Automation Know-How, provided, however, that such obligations of secrecy shall not
include information that:

	 	(i)	 	is at the time of disclosure generally available to the public, or
	 
	 	(ii)	 	becomes after disclosure generally available to the
public through no fault of the Photowatt, or
	 
	 	(iii)	 	is received by Photowatt from third parties and
such third party is not prohibited from disclosing the information to
Photowatt.

	 	 	 	During such period, Photowatt shall ensure that no such part of the ATS Solar
Automation Know-How that is confidential shall be disclosed except to responsible
Representatives who require such information during the course of their duties, and
then only in accordance with Section 7.6(j).
	 
	 	(i)	 	Further Covenants. Photowatt shall not use, disclose or allow access
to the ATS Solar Automation Know-How for any purpose other than the purposes permitted
by the license granted to it in Section 7.6(a) and in any event in any way that
is, directly or indirectly, detrimental to ATS or its Affiliates. Photowatt shall keep
the ATS Solar Automation Know-How strictly confidential and treat the ATS Solar
Automation Know-How as proprietary to ATS. Photowatt shall not divulge to, or cause or
permit to be divulged to, any third party other than Representatives, in any manner
whatsoever, the ATS Solar Automation Know-How.
	 
	 	(j)	 	Disclosure to Representatives. Photowatt may disclose ATS Solar
Automation Know-How to only those of its Representatives as is necessary for the
purposes permitted by the license granted to it in Section 7.6(a). Photowatt
shall inform such Representatives of the confidential nature of the ATS Solar
Automation Know-How and cause such Representatives to agree to treat such ATS Solar
Automation Know-How confidentially in accordance with this Agreement and not to use,
disclose or allow access to such ATS Solar Automation Know-How except as permitted
herein. Photowatt shall be responsible for any breach of this Agreement by any of its
Representatives. Photowatt shall take all reasonable measures, including court
proceedings, at Photowatt’s sole expense, to restrain its Representatives from making
unauthorized use or disclosure of the ATS Solar Automation Know-How.

7.7 Legal and Regulatory Matters. Until ATS and its Affiliates cease to hold in aggregate
less than 50% of the outstanding Photowatt Common Shares, Photowatt shall not adopt policies or
directives relating to legal or regulatory compliance that are inconsistent in any material respect
with the policies and directives identified by ATS as critical to legal and

- 23 -

 

regulatory compliance; provided, however, that nothing contained herein shall
prevent adoption of policies or directives that, in the opinion of counsel to Photowatt, are
necessary or desirable to comply with then applicable Law.

ARTICLE 8

MUTUAL RELEASES; INDEMNIFICATION

8.1 Release of Pre-Closing Claims.

	 	(a)	 	Photowatt Release. Except as provided in Section 8.1(d) to
this Agreement, effective as of the Separation Time, Photowatt does hereby, for itself
and as agent for each member of the Photowatt Group, remise, release and forever
discharge the ATS Indemnified Persons from any and all Liabilities whatsoever, whether
at law or in equity (including any right of contribution), existing or arising from any
acts or events occurring or failing to occur or alleged to have occurred or to have
failed to occur or any conditions existing or alleged to have existed on or before the
Separation Time, including in connection with the transactions and all other activities
to implement any of the Offering or the transactions contemplated by this Agreement or
any of the Separation Agreements.
	 
	 	(b)	 	ATS Release. Except as provided in Section 8.1(d), effective
as of the Separation Time, ATS does hereby, for itself and as agent for each member of
the ATS Group, remise, release and forever discharge the Photowatt Indemnified Persons
from any and all Liabilities whatsoever, whether at law or in equity (including any
right of contribution), existing or arising from any acts or events occurring or
failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed on or before the Separation Time,
including in connection with the transactions and all other activities to implement any
of the Offering or the transactions contemplated in this Agreement or any of the
Separation Agreements.
	 
	 	(c)	 	Release and Waiver of Unknown Claims. Photowatt, for itself and as
agent for each member of the Photowatt Group, and ATS, for itself and as agent for each
member of the ATS Group, do hereby agree, represent, and warrant that the matters
released herein are not limited to matters which are known or disclosed. Photowatt,
for itself and as agent for each member of the Photowatt Group, and ATS, for itself and
as agent for each member of the ATS Group, may hereafter discover facts in addition to
or different from those which it now knows or believes to be true with respect to the
subject matter of this release, but each shall be deemed to have, finally, and forever
settled and released any and all claims, known or unknown, suspected or unsuspected,
contingent or non-contingent, whether or not concealed or hidden, which now exist, or
heretofore have existed upon any theory of law or equity now existing or coming into
existence in the future, including but not limited to, conduct which is negligent,
intentional, with or without malice, or a breach of any duty, law or rule, without
regard to the subsequent discovery or existence of such different or additional facts.

- 24 -

 

	 	(d)	 	No Impairment. Nothing contained in Section 8.1(a),
Section 8.1(b) or Section 8.1(c) shall impair any right of any Person
to enforce this Agreement or any other Separation Agreement or other agreement in force
and effect between Photowatt and ATS as of the Separation Time, in each case in
accordance with its terms, including the provisions of Section 8.2, Section
8.3 and Section 8.4.
	 
	 	(e)	 	No Actions as to Released Claims. Photowatt agrees, for itself and as
agent for each member of the Photowatt Group, not to make any claim or demand, or
commence any Action asserting any claim or demand, including any claim of contribution
or any indemnification, against ATS or any member of the ATS Group, or any other Person
released pursuant to Section 8.1(a), with respect to any Liabilities released
pursuant to Section 8.1(a). ATS agrees, for itself and as agent for each member
of the ATS Group, not to make any claim or demand, or commence any Action asserting any
claim or demand, including any claim of contribution or any indemnification, against
Photowatt or any member of the Photowatt Group, or any other Person released pursuant
to Section 8.1(b), with respect to any Liabilities released pursuant to
Section 8.1(b).
	 
	 	(f)	 	Further Instruments. At any time, at the request of the other Party,
each Party shall cause each member of its respective Group to execute and deliver
releases reflecting the provisions hereof and such other documents as are necessary to
effect the purposes hereof.

8.2 Indemnification by Photowatt. Subject to Section 8.5, Photowatt shall
indemnify and hold harmless each ATS Indemnified Person from and against any and all Losses
relating to, arising out of or in connection with the following, whether such Losses arise or
accrue prior to, on or following the Separation Time:

	 	(a)	 	The failure of Photowatt or any other member of the Photowatt Group or any
other Person to pay, perform or otherwise properly discharge any of the Photowatt
Liabilities in accordance with their respective terms;
	 
	 	(b)	 	The Existing Photowatt Business, the Photowatt Business or any Photowatt
Liability (including any Photowatt Liability guaranteed by a member of the ATS Group);
	 
	 	(c)	 	Any breach by Photowatt or any member of the Photowatt Group of this Agreement
or any Separation Agreement;
	 
	 	(d)	 	With respect to all information contained in the Registration Statement, the
Prospectus, the Preliminary Prospectus or any other materials (excluding in the case of
such other materials any other materials distributed solely by or on behalf of ATS)
distributed in connection with the Offering or the transactions contemplated in the
Separation Agreements, any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements

- 25 -

 

	 	 	 	therein not misleading, other than with respect to the ATS Disclosure Portions; and
	 
	 	(e)	 	Any Liability, covenant, term and condition of ATS in, to and under the TPC
Contribution Agreement.

8.3 Indemnification by ATS. Subject to Section 8.5, ATS shall indemnify and hold
harmless each Photowatt Indemnified Person from and against any and all Losses incurred by such
Photowatt Indemnified Person arising out of or in connection with the following, whether such
Losses arise or accrue prior to, on or following the Separation Time:

	 	(a)	 	The failure of ATS or any other member of the ATS Group or any other Person to
pay, perform or otherwise properly discharge any of the ATS Liabilities in accordance
with their respective terms;
	 
	 	(b)	 	The ATS Business or any ATS Liability, excluding any ATS Liability with respect
to the TPC Contribution Agreement;
	 
	 	(c)	 	Any breach by ATS or any member of the ATS Group of this Agreement or any
Separation Agreement; and
	 
	 	(d)	 	With respect to all information contained in the ATS Disclosure Portions, any
untrue statement or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact required to be stated therein or necessary to make
the statements therein not misleading.

8.4 Claim Procedure.

	 	(a)	 	Claim Notice. A Party that seeks indemnity under this Article 8 or
under any other Separation Agreement (an “Indemnified Party”) shall give written notice
(a “Claim Notice”) to the Party from whom indemnification is sought (an “Indemnifying
Party”) in respect of Losses arising from any matter other than Third Party Claims. The
Claim Notice must contain (i) a description and, if known, estimated amount (the
“Claimed Amount”) of any Losses incurred or reasonably expected to be incurred by the
Indemnified Party, (ii) a reasonable explanation of the basis for the Claim Notice to
the extent of facts then known by the Indemnified Party, and (iii) a demand for payment
of those Losses. No failure or delay or deficiency on the part of the Indemnified Party
to so notify the Indemnifying Party shall relieve the Indemnifying Party of any
Liability or obligation hereunder except to the extent of any Losses caused by or
arising out of such failure, delay or deficiency.
	 
	 	(b)	 	Response to Notice of Claim. Within 30 days after delivery of a Claim
Notice, the Indemnifying Party shall deliver to the Indemnified Party a written
response in which the Indemnifying Party shall either: (i) agree that the Indemnified
Party is entitled to receive all of the Claimed Amount and, in which case, the
Indemnifying Party shall pay the Claimed Amount using a payment method

- 26 -

 

	 	 	 	reasonably acceptable to the Indemnified Party; or (ii) dispute that the Indemnified
Party is entitled to receive all or any portion of the Claimed Amount, in which
case, the Parties shall resort to the dispute resolution procedures set forth in
Section 9.19.
	 
	 	(c)	 	Contested Claims. If the Indemnifying Party disputes that the
Indemnified Party is entitled to receive all or any portion of the Claimed Amount, as
soon as practicable but in no event later than 10 Business Days after the receipt of
the notice referenced in Section 8.4(b), the Parties shall begin the process to
resolve the matter in accordance with the dispute resolution provisions of Section
9.19 hereof. Upon ultimate resolution thereof, the Parties shall take such actions
as are reasonably necessary to comply with such resolution.
	 
	 	(d)	 	Third Party Claims.

	 	(i)	 	If the Indemnified Party receives notice or otherwise
learns of the assertion by a Person who is not a member of either Group of
any claim or the commencement of any Action (in each case, a “Third Party
Claim”) with respect to which the Indemnifying Party may be obligated to
provide indemnification under this Article 8, the Indemnified
Party shall give written notification to the Indemnifying Party of the
Third Party Claim. Such notification shall be given within five Business
Days after receipt by the Indemnified Party of notice of such Third Party
Claim, shall be accompanied by reasonable supporting documentation
submitted by such third party (to the extent then in the possession of the
Indemnified Party) and shall describe in reasonable detail (to the extent
known by the Indemnified Party) the facts constituting the basis for such
Third Party Claim and the amount of the claimed Losses; provided,
however, that no delay or deficiency on the part of the
Indemnified Party in so notifying the Indemnifying Party shall relieve the
Indemnifying Party of any Liability or obligation hereunder except to the
extent of any Losses caused by or arising out of such failure. Within 20
days after delivery of such notification, the Indemnifying Party may, upon
written notice thereof to the Indemnified Party, assume control of the
defense of such Third Party Claim with counsel reasonably satisfactory to
the Indemnified Party. During any period in which the Indemnifying Party
has not so assumed control of such defense, the Indemnified Party shall
control such defense.
	 
	 	(ii)	 	The Party not controlling such defense (the
“Non-Controlling Party”) may participate therein at its own expense;
provided, however, that if the Indemnifying Party assumes
control of such defense and the Indemnified Party concludes, upon the
written opinion of counsel, that the Indemnifying Party and the
Indemnified Party have conflicting interests or different defenses
available with respect to such Third Party Claim, the reasonable fees and
expenses of separate counsel to the Indemnified Party shall be considered
“Losses” for purposes of this Agreement;

- 27 -

 

	 	 	 	provided, further, that the Indemnifying Party shall not be
responsible for the fees or expenses of more than one legal firm in any
single jurisdiction for all of the Indemnified Parties; provided,
however, that in the event that such legal firm is conflicted
amongst the Indemnified Parties, then the Indemnifying Party shall be
responsible for the fees or expenses of up to two legal firms in any single
jurisdiction for all of the Indemnified Parties. The Party controlling such
defense (the “Controlling Party”) shall keep the Non-Controlling Party
reasonably advised of the status of such Third Party Claim and the defense
thereof and shall consider in good faith recommendations made by the
Non-Controlling Party with respect thereto. The Non-Controlling Party shall
furnish the Controlling Party with such Information as it may have with
respect to such Third Party Claim (including copies of any summons,
complaint or other pleading that may have been served on such Party and any
written claim, demand, invoice, billing or other document evidencing or
asserting the same) and shall otherwise cooperate with and assist the
Controlling Party in the defense of such Third Party Claim.
	 
	 	(iii)	 	The Indemnifying Party shall not agree to any
settlement of, or the entry of any judgment arising from, any such Third
Party Claim without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld or delayed;
provided, however, that the consent of the Indemnified
Party shall not be required if (A) the Indemnifying Party agrees in
writing to pay any amounts payable pursuant to such settlement or
judgment, (B) such settlement or judgment includes a full, complete and
unconditional release of the Indemnified Party from further Liability and
(C) such settlement does not create any financial or other obligation on
the part of the Indemnified Party. The Indemnified Party shall not agree
to any settlement of, or the entry of any judgment arising from, any such
Third Party Claim without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed.

8.5 Survival; Limitations.

	 	(a)	 	Except to the extent expressly set forth in this Agreement or any other
Separation Agreement, all covenants and agreements of the Parties contained in the
Separation Agreements shall survive each of the Offering and a Spin-Off. The
limitation period applicable to any proceeding in respect of such covenants and
agreements shall be as prescribed by applicable Law. To the extent the limitation
period applicable to any proceeding in respect of such covenants and agreements is
governed by the Laws of the Province of Ontario, the limitation period shall be solely
as prescribed in sections 15-17 of the Limitations Act, 2002 and any other limitation
period in respect of such proceeding (including that provided for in section 4 of the
Limitations Act, 2002) is extended accordingly. The rights and obligations of ATS,
Photowatt and each of their respective Indemnified Persons

- 28 -

 

	 	 	 	under this Agreement shall survive the direct or indirect sale, assignment or other
transfer by any Party of any Assets or Liabilities.
	 
	 	(b)	 	The amount of any Losses for which indemnification is provided under this
Agreement shall be net of any Tax Benefit and any amounts actually recovered by the
Indemnified Party from any third Person (including amounts actually recovered under
insurance policies) with respect to such Losses. Any Indemnifying Party hereunder shall
be subrogated to the rights of the Indemnified Party upon payment in full of the amount
of the relevant indemnifiable Losses. An insurer who would otherwise be obligated to
pay any claim shall not be relieved of the responsibility with respect thereto or,
solely by virtue of the indemnification provision hereof, have any subrogation rights
with respect thereto. If any Indemnified Party recovers an amount from a third Person
in respect of Losses for which indemnification is provided in this Agreement after the
full amount of such indemnifiable Losses has been paid by an Indemnifying Party or
after an Indemnifying Party has made a partial payment of such indemnifiable Losses and
the amount received from the third Person exceeds the remaining unpaid balance of such
indemnifiable Losses, then the Indemnified Party shall promptly remit to the
Indemnifying Party the excess, if any, of (X) the sum of the amount theretofore paid by
such Indemnifying Party in respect of such indemnifiable Losses plus the amount
received from the third Person in respect thereof, over (Y) the full amount of such
indemnifiable Losses.
	 
	 	(c)	 	Notwithstanding anything to the contrary in this Article 8, the initial
presumption shall be that there is no insurance coverage for any such Losses, and the
Indemnifying Party shall, upon request by the Indemnified Party, fully indemnify and
hold harmless the Indemnified Party from and against any and all such Losses. Once the
Indemnifying Party has discharged this obligation to the Indemnified Party, the
Indemnifying Party may request that the Indemnified Party pursue insurance coverage
from one or more insurers in connection with such Losses. If so requested, the
Indemnified Party shall pursue insurance coverage, including, if necessary, the filing
of coverage litigation, all of which shall be at the Indemnifying Party’s sole cost and
expense. The Indemnifying Party shall pay directly or promptly reimburse the
Indemnified Party for all such costs and expenses, as directed by the Indemnified
Party. The Indemnified Party shall retain full and exclusive control of all such
matters (including the settlement of underlying covered claims and/or coverage claims
against insurers), and the Indemnified Party shall have the right to select counsel
with the concurrence of Indemnifying Party, which concurrence shall not be withheld
unreasonably. The net proceeds of any insurance recovery (after deducting any costs and
expenses that have not yet been paid or reimbursed by the Indemnifying Party) shall be
paid to the Indemnifying Party. At all times, the Indemnifying Party shall cooperate
with the Indemnified Party’s insurers and/or with the Indemnified Party in the pursuit
of insurance coverage, as and when reasonably requested to do so by the Indemnified
Party. It is not the intent of this Section 8.5(c) to absolve the Indemnifying
Party of any responsibility to the Indemnified Party for those Losses in connection
with which the Indemnified Party actually secures insurance

- 29 -

 

	 	 	 	coverage, but to allocate the costs of pursuing such coverage to the Indemnifying
Party and to provide the Indemnified Party with a full, interim indemnity from the
Indemnifying Party until such time as the extent of insurance coverage is determined
and is obtained. Notwithstanding anything to the contrary in this Section
8.5(c), if the Indemnified Party (in its absolute and sole discretion)
determines that it is necessary to do so, the Indemnified Party may pursue insurance
coverage for the benefit of the Indemnified Party before the Indemnifying Party has
fully discharged its obligations to the Indemnified Party under this Agreement. In
such event, the Indemnified Party may unilaterally take any steps it determines are
necessary to preserve such insurance coverage, including tendering the defense of
any claim or suit to an insurer or insurers of the Indemnified Party if the
Indemnified Party concludes that such action may be required by the relevant
insurance policy or policies. Any such actions by the Indemnified Party shall not
relieve the Indemnifying Party of any of its obligations to the Indemnified Party
under this Agreement, including the Indemnifying Party’s obligation to pay directly
or reimburse the Indemnified Party for costs and expenses.
	 
	 	(d)	 	Any indemnification payment made under this Agreement shall be characterized
for Tax purposes as a contribution or distribution or payment of an assumed or retained
liability, as applicable.
	 
	 	(e)	 	ATS’ and Photowatt’s indemnity obligations under Sections 8.2 and
8.3 shall be reduced to reflect any Tax Benefit realized, in the year in which
the indemnity payment is required to be made or in any prior year, by the Indemnified
Party or any of its Affiliates. To the extent that the claim with respect to which an
indemnity obligation arises has not given rise to a Tax Benefit in prior year or in the
year in which the indemnity payment is to be made, but gives rise to a Tax Benefit in a
later year, the Indemnified Party shall pay to the Indemnifying Party the amount of
such Tax Benefit. For purposes of determining the amount of any payment due to an
Indemnified Party pursuant to this Section 8.5(e), ATS and Photowatt and their
respective Affiliates shall be deemed to use all other deductions, amortizations,
exclusions from income or other allowances (to the extent that such deductions,
amortizations, exclusions from income or other allowances are entitled to be used under
applicable tax law) prior to the use of any Tax Benefits in respect of which the
Indemnifying Party is obligated to pay the Indemnified Party hereunder.
	 
	 	(f)	 	Notwithstanding anything in this Agreement or any other Separation Agreement to
the contrary, in no event shall any Party or any of its Group members be liable to the
other Party or any other Person under this Agreement or any other Separation Agreement
for, and each Party (on behalf of itself, its Affiliates and other Indemnified Persons)
hereby releases the other Party from all claims for, special, collateral, indirect,
consequential, incidental or punitive damages (including lost profits or savings),
however caused and on any theory of liability (including negligence), even if advised
of their possible existence; provided, however, that the foregoing
limitations

- 30 -

 

	 	 	 	shall not limit either Party’s indemnification obligations as set forth in
Article 8 hereof in respect of any Third Party Claim.

8.6 Production of Witnesses and Documents. If an Indemnifying Party chooses to defend or
to seek to compromise or settle any Third-Party Claim, the other Party shall use its commercially
reasonable efforts to make available to such Indemnifying Party, upon written request, the former,
current and future directors, officers, employees, other personnel and agents of the members of its
respective Group as witnesses and any books, records or other documents within its control or which
it otherwise has the ability to make available, to the extent that any such person (giving
consideration to business demands of such directors, officers, employees, other personnel and
agents) or books, records or other documents may reasonably be required in connection with such
defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be,
and shall otherwise cooperate in such defense, settlement or compromise, or such prosecution,
evaluation or pursuit, as the case may be.

ARTICLE 9

MISCELLANEOUS

9.1 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;
provided, however, that notwithstanding the foregoing, 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. Any attempted
transfer, assignment or alienation in violation of this Section 9.1 shall be invalid and
ineffective ab initio.

9.2 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, assessed in relation to any such warranty, representation, opinion, advice or
assertion of fact, except to the extent contemplated above.

9.3 No Agency. Nothing in this Agreement or any other Separation Agreement shall
constitute or be deemed to constitute a partnership or joint venture between the Parties or, except

- 31 -

 

to the extent provided in Section 4.02 of the Transitional Services Agreement, constitute or be
deemed to constitute any Party the agent or employee of the other Party for any purpose whatsoever,
and neither Party shall have authority or power to bind the other Party or to contract in the name
of, or create a liability against, the other Party in any way or for any purpose.

9.4 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 Separation Time 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).

9.5 Further Assurances. On and after the Separation Time, 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 and the Separation Agreements, in order to
effectuate the provisions and purposes of this Agreement and the Separation Agreements and the
other transactions contemplated hereby and thereby.

9.6 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):

- 32 -

 

	 	(a)	 	if to ATS, to:

ATS Automation Tooling Systems Inc.

250 Royal Oak Road

Cambridge, Ontario N3H 4R6

Attention: General Counsel

Fax No.: (519) 650-6520

	 	(b)	 	if to Photowatt, to:

Photowatt Technologies, Inc.

25 Reuter Drive

Cambridge, Ontario N3E 1A9

Attention: President and Chief Executive Officer

Fax No.: (519) 650-6535

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.

9.7 Time of Essence. Time is of the essence of this Agreement and the other Separation
Agreements.

9.8 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.

9.9 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.

9.10 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,

- 33 -

 

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.

9.11 Publicity. Prior to the Separation Time, each of the Parties shall consult with each
other prior to issuing any press releases or otherwise making public statements with respect to the
Offering or any of the other transactions contemplated hereby and prior to making any filings with
any Governmental Authority with respect thereto.

9.12 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 or any other Separation
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 or
such Separation 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.

9.13 Currency. Except as expressly provided in this Agreement, all amounts in this
Agreement are stated and will be paid in Canadian currency.

9.14 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.

9.15 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.

9.16 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.

9.17 Authority. Each Party represents to the other Party that (a) it has the corporate
power and authority to execute, deliver and perform this Agreement and the other Separation
Agreements, (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 the other Separation Agreements and (d) this Agreement and each of the
Separation Agreements is legal, valid and binding obligation, enforceable against it in

- 34 -

 

accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors’ rights generally and general equitable principles.

9.18 Jurisdiction. If any Dispute arises out of or in connection with this Agreement or
any other Separation Agreement, except as expressly contemplated by another provision of this
Agreement or any Separation 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.

9.19 Dispute Resolution. Any controversy or claim, whether based on Contract, tort, Law or
other legal or equitable theory (including any claim of fraud, misrepresentation or fraudulent
inducement or any question of validity or effect of this Agreement or any other Separation
Agreement, including this Section 9.19) (in each such case, a “Dispute”) arising out of or
related to this Agreement or any other Separation Agreement, or the breach or termination thereof,
shall be submitted in good faith to negotiations and, if necessary, mediation in accordance with
the terms below before any Action is commenced.

	 	(a)	 	Direct Negotiation. If either Party considers that any Dispute has
arisen under or in connection with this Agreement, then such Party may first deliver a
notice to the other Party describing the nature and the particulars of such Dispute.
Second, within 10 Business Days following delivery of such notice to the other Party,
or the expiry of the time for delivery of response to the Claim Notice under
Section 8.4(b) hereof, whichever occurs first, the Parties shall meet (whether
by phone or in person) in a good faith attempt to resolve the Dispute. Third, if the
Dispute is still unresolved after 10 Business Days following the commencement of such
good faith attempt, then the chief financial officer (or another designee with full
authority to resolve such dispute) of each Party shall meet (whether by phone or in
person) in a good faith attempt to resolve the Dispute, such meeting to be held within
20 days of the first meeting referred to above. Fourth, if the Dispute is still
unresolved after 10 Business Days following the commencement of such second
negotiations, then such Dispute shall be submitted to mediation in accordance with
Section 9.19(b).
	 
	 	(b)	 	Mediation. If the Dispute is to be submitted to mediation in
accordance with Section 9.19(a), the mediator will be selected by mutual
agreement of the Parties, which agreement shall be reached in good faith and on a
timely basis. If they are unable to agree on a mediator, each Party will select one
third party representative, each of whom shall be an independent experienced
professional mediator practicing in Ontario, which two representatives shall mutually
select a mediator for such Dispute with the same qualifications referred to above (and
each Party shall in good faith instruct its representative to work in good faith with
the other Party’s representative to promptly select such mediator).

- 35 -

 

	 	(i)	 	Mediation Procedure. The mediation will be
conducted pursuant to the rules generally used by the mediator in the
mediator’s practice, subject to the following:

	 	(A)	 	The mediator will act as an advocate for
resolution and will use his or her best efforts to assist the Parties
in reaching a mutually acceptable settlement. The mediator may suggest
ways of resolving the Dispute, but may not impose his or her own
judgment on the issues or that of the Parties. The mediator will not
have the authority to decide any issue for the Parties, but will
attempt to facilitate the voluntary resolution of the Dispute by the
Parties.
	 
	 	(B)	 	Each Person participating in the mediation
will have authority to settle, and all Persons necessary to the
decision to settle will be present during the entire mediation session
or sessions.
	 
	 	(C)	 	The mediation will take place at a time and
convenient location agreeable to the mediator and the Parties, as the
mediator will determine, but such mediation will take place no later
than 20 Business Days after the commencement of the second
negotiations under Section 9.19(a) and will take place over
two consecutive days.
	 
	 	(D)	 	Mediation sessions will be private, and only
the Parties and their representatives may attend the mediation
sessions. Other Persons may attend the mediation sessions only with
the written permissions of the Parties and with the consent of the
mediator.
	 
	 	(E)	 	There will be no stenographic record of the
mediation process, and no Person will tape record any portion of the
mediation sessions.
	 
	 	(F)	 	No subpoenas, summons, complaints, citations,
writs, or other process may be served at or away from the site of any
mediation session upon any Person who then is entering, on the way to,
in attendance or leaving the session.
	 
	 	(G)	 	The Parties will participate in the mediation
proceeding in good faith with the intention to settle.
	 
	 	(H)	 	No later than five days prior to the
mediation, each Party will deliver to the mediator all information
reasonably required for the mediator to understand the issues
presented and a confidential memorandum (not to exceed five pages with
normal type size and margins) setting forth the following:

	 	i.	 	identification of the matters
in dispute;

- 36 -

 

	 	ii.	 	concise statement of points
(factual, legal, practical) that such Party believes enhances
its chance of achieving a favourable outcome of the Dispute;
and
	 
	 	iii.	 	history of settlement
discussions and outstanding offers of settlement.

	 	(I)	 	The above rules may be modified or amended
with the Parties’ written consent.

	 	(ii)	 	Release. The mediator will not be a
necessary or proper party in any Action relating to the mediation. Neither
the mediator, the Person employing the mediator, nor the Person providing
the mediator will be liable to any Party for any acts or omissions in
connection with any mediation conducted pursuant to this Section
9.19.
	 
	 	(iii)	 	Compromise Negotiation. The mediation is a
compromise negotiation for purposes of the applicable rules of evidence
and is an alternative dispute resolution procedure subject to Law chosen
to govern this Agreement. The entire procedure is and will be
confidential. All conduct, statements, promises, offers, views and
opinions, whether oral or written, made in the course of the mediation by
any of the Parties, their agents, employees or other representatives and
by the mediator, who is the Parties’ joint agent for purposes of these
compromise negotiations, are confidential and will, in addition where
appropriate, be deemed to be work product and privileged. Such conduct,
statements, promises, offers, views and opinions will not be discoverable
or admissible for any purposes, including impeachment, if any litigation
or other proceedings involve the Parties and will not be disclosed to
anyone not an agent, employee, expert or other representative for any of
the Parties. Evidence otherwise discoverable or admissible is not excluded
from discovery or admission as a result of its use in the mediation.
Confidential Information disclosed to the mediator by the Parties or by
witnesses in the course of the mediation will not be divulged by the
mediator. All records, reports or other documents received by the mediator
while serving in that capacity will be confidential. The mediator will not
be compelled to divulge such records or to testify with regard to the
mediation in any adversary proceeding or judicial forum.
	 
	 	(iv)	 	Costs of Mediation. The Parties will bear
their respective costs incurred in connection with the mediation described
in this Section 9.19, except that the Parties will share equally
the fees and expenses of the mediator, the costs of obtaining the facility
for the mediation, and the fees and expenses of any experts employed at
the mediator’s request.
	 
	 	(v)	 	Termination of Mediation. The mediation will
be terminated upon the first to occur of the following:

- 37 -

 

	 	(A)	 	by the execution of a settlement agreement
resolving the dispute by the Parties;
	 
	 	(B)	 	by a written declaration of the mediator to
the effect that further efforts at mediation are no longer worthwhile;
or
	 
	 	(C)	 	after the completion of two full days of
mediation sessions, by written declaration of a Party or Parties to
the effect that mediation proceedings are terminated.

	 	(c)	 	Litigation. Neither Party may bring (or have brought) any Action in
any forum with respect to any Dispute arising out of or related to this Agreement or
any other Separation Agreement, or the breach or termination thereof, until such Party
has fully complied with Sections 9.19(a) and (b) with respect to such Dispute.

9.20 Binding Effect. This Agreement and each other Separation 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 8, ATS Indemnified Persons and
Photowatt Indemnified Persons) 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.

9.21 Expenses. Except as otherwise provided in this Agreement or a Separation Agreement,
each Party shall be responsible for its own fees, costs and expenses incurred in connection with
the matters contemplated by this Agreement and the Separation Agreement; provided, however
Photowatt shall be responsible for the payment of all costs, fees and expenses relating to the
Offering and each Party shall be responsible for the payment of all of its costs, fees and expenses
relating to a Spin-Off (or any other divestiture transaction employed by ATS).

9.22 Waiver. A provision of this Agreement or any other Separation 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 or any other Separation 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.

9.23 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

- 38 -

 

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.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 39 -

 

     IN WITNESS WHEREOF, the Parties have caused this Master Separation Agreement to be signed by
their duly authorized representatives.

	 	 	 	 	 
	 	AUTOMATION TOOLING SYSTEMS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	PHOTOWATT TECHNOLOGIES INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

- 40 -

 

	 	 	 	 	 

EXHIBIT A

Excluded Assets

	1.	 	the premises and building that are the subject of the Lease Agreement.
	 
	2.	 	the investment of ATS in securities of Canadian Solar Inc.
	 
	3.	 	the ATS Solar Automation Know-How.
	 
	4.	 	any tax loss carryforwards, Canadian tax credits or related valuation allowances.
	 
	5.	 	any and all Assets of Matrix Solar Technologies, Inc. not sold, transferred, assigned or
conveyed to Photowatt Technologies USA Inc. pursuant to an asset transfer agreement as between
Matrix Solar Technologies, Inc. and Photowatt Technologies USA Inc. effected prior to the
Separation Time.

- 41 -

 

EXHIBIT B

Included Liabilities

	1.	 	tax liabilities of Matrix Solar Technologies, Inc. in relation to transfer of common shares
in the capital stock of Spheral Solar Power, Inc.
	 
	2.	 	product warranty obligations related to the Existing Photowatt Business or the Photowatt
Business, including warranties related to solar cells and solar modules.

- 42 -PHOTOWATT

 

Exhibit 10.3

TRANSITIONAL SERVICES AGREEMENT

between

ATS AUTOMATION TOOLING SYSTEMS INC.

– and –

PHOTOWATT TECHNOLOGIES INC.

[     ],
2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	ARTICLE I DEFINITIONS AND INTERPRETATION	 	 	 	 
	Section 1.01	 	Definitions
	 	 	1	 
	Section 1.02	 	Construction
	 	 	3	 
	Section 1.03	 	Conflicts With Other Separation Agreements
	 	 	3	 
	 	 	 
	 	 	 	 
	ARTICLE II SERVICES	 	 	 	 
	Section 2.01	 	Services
	 	 	3	 
	 	 	 
	 	 	 	 
	ARTICLE III SERVICE COSTS; OTHER CHARGES	 	 	 	 
	Section 3.01	 	Service Costs Generally
	 	 	4	 
	Section 3.02	 	Fixed-Price Billing
	 	 	4	 
	Section 3.03	 	Fixed-Rate Billing
	 	 	4	 
	Section 3.04	 	Pass-Through Billing
	 	 	4	 
	Section 3.05	 	Benefit Billing
	 	 	5	 
	Section 3.06	 	Invoicing and Settlement of Costs
	 	 	5	 
	 	 	 
	 	 	 	 
	ARTICLE IV STANDARD OF PERFORMANCE AND INDEMNIFICATION	 	 	 	 
	Section 4.01	 	General Standard of Service
	 	 	6	 
	Section 4.02	 	Delegation
	 	 	6	 
	Section 4.03	 	Limitation of Liability
	 	 	7	 
	Section 4.04	 	Indemnification
	 	 	7	 
	Section 4.05	 	Claim Procedure
	 	 	8	 
	 	 	 
	 	 	 	 
	ARTICLE V TERM AND TERMINATION	 	 	 	 
	Section 5.01	 	Term
	 	 	8	 
	Section 5.02	 	Termination
	 	 	8	 
	Section 5.03	 	Effect of Termination
	 	 	9	 
	Section 5.04	 	Turnover
	 	 	9	 
	 	 	 
	 	 	 	 
	ARTICLE VI INSURANCE MATTERS	 	 	 	 
	Section 6.01	 	Photowatt Insurance Coverage During Insurance Transition Period
	 	 	10	 

-i-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 6.02	 	Cooperation; Payment of Insurance Proceeds to Photowatt; Agreement Not
to Release Carriers
	 	 	10	 
	Section 6.03	 	Photowatt Insurance Coverage After the Insurance Transition Period
	 	 	11	 
	Section 6.04	 	Deductibles and Self-Insured Obligations
	 	 	11	 
	Section 6.05	 	Procedures with Respect to Insured Photowatt Liabilities
	 	 	11	 
	Section 6.06	 	Insufficient Limits of Liability for
ATS Liabilities and Photowatt
Liabilities
	 	 	11	 
	Section 6.07	 	Cooperation
	 	 	12	 
	Section 6.08	 	No Assignment or Waiver
	 	 	12	 
	Section 6.09	 	No Liability
	 	 	12	 
	Section 6.10	 	Additional or Alternate Insurance
	 	 	12	 
	Section 6.11	 	Forbearance and Prior Insurance Coverage
	 	 	12	 
	Section 6.12	 	Further Agreements
	 	 	13	 
	 	 	 
	 	 	 	 
	ARTICLE VII MISCELLANEOUS	 	 	 	 
	Section 7.01	 	Assignment
	 	 	13	 
	Section 7.02	 	No Agency
	 	 	13	 
	Section 7.03	 	Subcontractors
	 	 	13	 
	Section 7.04	 	Entire Agreement
	 	 	13	 
	Section 7.05	 	Future Litigation and Other Proceedings
	 	 	14	 
	Section 7.06	 	Further Assurances
	 	 	14	 
	Section 7.07	 	Notices
	 	 	14	 
	Section 7.08	 	Time of Essence
	 	 	15	 
	Section 7.09	 	Governing Law
	 	 	15	 
	Section 7.10	 	Severability
	 	 	15	 
	Section 7.11	 	Force Majeure
	 	 	15	 
	Section 7.12	 	Specific Performance
	 	 	16	 
	Section 7.13	 	Currency
	 	 	16	 
	Section 7.14	 	Time Periods
	 	 	16	 
	Section 7.15	 	Amendment
	 	 	16	 
	Section 7.16	 	Counterparts
	 	 	16	 

-ii-

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	Section 7.17	 	Authority
	 	 	16	 
	Section 7.18	 	Jurisdiction
	 	 	17	 
	Section 7.19	 	Dispute Resolution
	 	 	17	 
	Section 7.20	 	Binding Effect
	 	 	20	 
	Section 7.21	 	Expenses
	 	 	20	 
	Section 7.22	 	Waiver
	 	 	20	 
	Section 7.23	 	Audits
	 	 	20	 
	Section 7.24	 	Compliance With Laws
	 	 	20	 

-iii-

 

TRANSITIONAL SERVICES AGREEMENT

     This
Transitional Services Agreement is dated as of
[     ], 2007 by and between ATS AUTOMATION
TOOLING SYSTEMS INC. (“ATS”) and PHOTOWATT TECHNOLOGIES INC. (“Photowatt”).

RECITALS

	 	A.	 	Photowatt is undertaking an initial public offering (the “Offering”) of its
common shares pursuant to a registration statement on Form F-1 under the U.S.
Securities Act of 1933 and a prospectus filed with Canadian provincial and territorial
securities regulatory authorities.
	 
	 	B.	 	Immediately prior to the completion of the Offering, ATS and Photowatt intend
to enter into a Master Separation Agreement (the “Master Separation Agreement”),
containing the key provisions relating to the separation of ATS and Photowatt, and the
other Separation Agreements (as defined in the Master Separation Agreement).
	 
	 	C.	 	Pursuant to Separation Agreements, the ATS Group has transferred to the
Photowatt Group the Photowatt Assets on the terms contemplated by the Separation
Agreements.
	 
	 	D.	 	Beginning on the Effective Date, Photowatt will carry on the Photowatt
Business.
	 
	 	E.	 	Following completion of the Offering, ATS has agreed to provide the Services to
Photowatt on and subject to the terms and conditions of this Agreement.
	 
	 	F.	 	The Parties intend in this Agreement and the other Separation Agreements to set
forth the principal arrangements between them regarding the Offering and their
operations thereafter.

          For good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby covenant and agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

     Section 1.01 Definitions.

     (a) Any capitalized term used in this Agreement but not defined in this Agreement shall have
the definition given such term in the Master Separation Agreement.

     (b) In this Agreement:

     “Agreement” means this Transitional Services Agreement, together with the Schedules attached
hereto.

 

 

     “Applicable Insurance” has the meaning set out in Section 6.11(a).

     “ATS Insurance Policies” has the meaning set out in Section 6.01(a).

     “ATS Plans” has the meaning set out in Section 3.05.

     “Benefit Services” means Services relating to the administration of employee plans and benefit
arrangements.

     “Effective
Date” means •, 2007.

     “Employee Welfare Plans” has the meaning set out in Section 4.02.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Fixed-Price Billing” has the meaning set out in Section 3.02.

     “Fixed-Rate Billing” has the meaning set out in Section 3.03.

     “Force Majeure” means an event beyond the control of the Party claiming Force Majeure that by
its nature could not have been foreseen by such Party, or, if it could have been foreseen, was
unavoidable, including acts of God, storms, floods, riots, fires, sabotage, civil commotion or
civil unrest, interference by civil or military authorities, acts of war (declared or undeclared)
and failure of energy sources.

     “Insurance Policies” means insurance policies pursuant to which a Person makes a
true risk transfer to an insurer.

     “Insurance Proceeds” means those monies (a) received by an insured from an insurance carrier,
or (b) paid by an insurance carrier on behalf of the insured.

     “Insurance Transition Period” has the meaning set out in Section 6.01(a).

     “Insured Photowatt Liability” means any Photowatt Liability to the extent it is covered under
the terms of the ATS Insurance Policies in effect prior to the end of the Insurance Transition
Period.

     “Master Separation Agreement” has the meaning set out in the recitals of this Agreement.

     “Offering” has the meaning set out in the recitals of this Agreement.

     “Party” means a party to this Agreement and its successors and permitted assigns and “Parties”
means every Party.

     “Pass-Through Billing” has the meaning set out in Section 3.04.

     “Payment Date” has the meaning set out in Section 3.06(b).

2

 

     “Photowatt Covered Parties” has the meaning set out in Section 6.01(a).

     “Prime Rate” means the rate of interest per annum quoted by Bank of Nova Scotia from time to
time as its reference rate for Canadian Dollar demand loans made to its commercial customers in
Canada and which it refers to as its “prime rate”, as such rate may be changed by it from time to
time.

     “Receiving Party” has the meaning set out in Section 3.02.

     “Service Costs” means the amounts to be paid by Photowatt to ATS for Services under this
Agreement. For clarity, Service Costs shall not include the amounts paid to employees of the
Photowatt Group for payroll.

     “Services” means the services to be provided by ATS or its agents or subcontractors under this
Agreement, as more fully described in Schedule I attached hereto.

     Section 1.02 Construction. 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, 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.

     Section 1.03 Conflicts With Other Separation Agreements. To the extent any portion of
this Agreement conflicts with the Master Separation Agreement, the Master Agreement shall control.

ARTICLE II

SERVICES

     Section 2.01 Services.

     (a) Subject to the terms and conditions of this Agreement, ATS agrees to provide (or cause to
be provided) the Services to the Photowatt Group. Unless otherwise specifically set

3

 

forth in Schedule I or agreed in writing by the Parties, the Services provided shall
be substantially similar in scope, quality and nature to those customarily provided by ATS prior to
the Effective Date. Unless otherwise specifically set forth in Schedule I or agreed in
writing by the Parties, it is the intention of the Parties that the use by the Photowatt Group of
the Services shall not be substantially greater than the level of use by the Photowatt Business
prior to the Effective Date.

     (b) To the extent requested by Photowatt, any Services to be provided hereunder shall be
provided directly to any member of the Photowatt Group. ATS may satisfy its obligation to provide
any of the Services hereunder by causing one or more members of the ATS Group to provide such
Service; provided; however, that the foregoing shall not relieve ATS of its
obligations to provide Services hereunder, nor shall it relieve Photowatt of its obligation to pay
ATS for such Services hereunder.

     (c) In addition to the Services described in Schedules I, if requested by Photowatt,
and to the extent the Parties mutually agree, ATS shall provide (or cause to be provided)
additional services to Photowatt. The scope of any such additional services, as well as the costs
and other terms and conditions applicable to such services, shall be as mutually agreed by the
Parties, and the Parties shall amend Schedule I appropriately in connection therewith.

ARTICLE III

SERVICE COSTS; OTHER CHARGES

     Section 3.01 Service Costs Generally. The Schedules hereto indicate the methods by
which Service Costs to be charged for specific Services are to be determined. Photowatt shall pay
to ATS the Service Costs in accordance with Section 3.06.

     Section 3.02 Fixed-Price Billing. The “Fixed-Price Billing” method means ATS shall
charge the member of the Photowatt Group receiving (directly or indirectly) a Service (the
“Receiving Party”) the amounts set forth on the relevant Schedule for such Service, at the times
set forth on such Schedule.

     Section 3.03 Fixed-Rate Billing. The “Fixed-Rate Billing” method means ATS shall
charge the Receiving Party an amount determined according to the fixed hourly rate set forth on the
relevant Schedule for such Service, at the times set forth on such Schedule.

     Section 3.04 Pass-Through Billing. The “Pass-Through Billing” method means the
aggregate amount of third-party, out-of-pocket costs and expenses incurred by ATS on behalf of a
Receiving Party for Services provided by such third parties and (to the extent the performance of
any such Service by any such third party is not substantially similar to Services provided by such
third party or a substantially similar third party prior to the Effective Date) approved by such
Receiving Party, which approval shall not be unreasonably withheld. Said costs shall include the
costs incurred in connection with obtaining the consent of any party to an agreement to which ATS
is a party where such consent is related to and reasonably required for the provision of such
Service. Services provided by third parties will be billed by the third party to ATS and ATS will
invoice the Receiving Party for such invoiced amounts pursuant to Section 3.06. If ATS
incurs any such costs or expenses on behalf of any Receiving Party bundled

4

 

together with costs incurred by ATS or its subsidiaries, ATS shall allocate any such costs or
expenses in good faith as set forth on any applicable Schedule hereto or, if not set forth on a
Schedule, then as ATS shall determine in the exercise of ATS’s reasonable judgment. ATS shall make
such allocations reasonably and in good faith, and ATS or its agents shall keep and maintain such
books and records as may be reasonably necessary to make such allocations. ATS shall make copies
of such books and records available to the Receiving Party upon request and with reasonable notice.

     Section 3.05 Benefit Billing. Prior to the Effective Date, certain employees of the
Photowatt Group participated in certain benefit plans sponsored by ATS (“ATS Plans”).

     (i) On and after the Effective Date, such employees shall continue to be eligible to
participate in the ATS Plans, subject to the terms of the governing plan documents as
interpreted by the appropriate plan fiduciaries. On and after the Effective Date, subject
to regulatory requirements and the provisions of Section 4.01, ATS shall continue to
provide Benefit Services to and in respect of such employees with reference to ATS Plans as
administered by ATS prior to the Effective Date.

     (ii) The costs payable by a Receiving Party for Services related to the ATS Plans,
which are included in Schedule I, shall be determined and billed as set forth in
Schedule I. The Parties acknowledge and agree that some of the costs associated
with certain ATS Plans will be paid principally through Photowatt employee payroll
deductions for such plans as specified in Schedule I.

     (iii) Each Party may request changes in the applicable terms and provisions of any of
the Benefit Services relating to the ATS Plans, approval of which shall not be unreasonably
withheld by the other Party; provided, however, that changes in the terms
and provisions of any of the ATS Plans shall be in the sole discretion of ATS, and ATS may
(in its sole discretion) terminate or otherwise modify, in any manner, any ATS Plan at any
time and from time to time. The Parties agree to cooperate fully with each other in the
administration and coordination of regulatory and administrative requirements associated
with ATS Plans.

     Section 3.06 Invoicing and Settlement of Costs.

     (a) ATS shall invoice the applicable Receiving Party in advance of each calendar month for
the estimated Service Costs to be incurred by the applicable Receiving Party and attributable to
the following month. Such estimate will be arrived at by ATS in the exercise of ATS’s reasonable
judgment, based on known Fixed-Price Billing amounts and known or estimated Pass-Through Billing
and Fixed-Rate Billing amounts for the month in question. All Pass-Through Billing amounts are to
be invoiced when ATS is invoiced for same regardless of the period covered by the related Services.
In connection with the invoicing described in this Section 3.06(a), ATS shall provide to
the applicable Receiving Party the same billing data and level of detail and such other related
data as may be reasonably requested by the applicable Receiving Party. Each monthly invoice will
provide for any necessary adjustment so that actual Service Costs incurred in the most recently
completed month match the total dollar amount collected with respect to that month.

5

 

     (b) Each Receiving Party shall pay to ATS, on or before the beginning of each calendar
month(each, a “Payment Date”), by wire transfer of immediately available funds payable to the order
of ATS, all amounts properly invoiced by ATS pursuant to Section 3.06(a) for such month.
If any Receiving Party fails to pay any monthly payment within 30 days of the relevant Payment
Date, such Receiving Party shall be obligated to pay, in addition to the amount due on such Payment
Date, interest on such amount at the Prime Rate plus 2%, compounded monthly from the relevant
Payment Date through the date all such due amounts are paid. Offsetting is not permitted.

ARTICLE IV

STANDARD OF PERFORMANCE AND INDEMNIFICATION

     Section 4.01 General Standard of Service.

     (a) Subject to the limitations on liability set forth in Section 4.03, ATS will use
commercially reasonable efforts to deliver the applicable Services to Photowatt at the same levels
as such Services are or have customarily been provided in the past. In addition, ATS shall use
commercially reasonable efforts to ensure that the nature and quality of Benefit Services provided
to the Persons described in Section 3.05(i) under ATS Plans, either by ATS directly or
through administrators under contract, shall be substantially the same as, or consistent with, the
same services provided to or on behalf of ATS employees under ATS Plans.

     (b) Information technology Services shall continue to be provided by ATS during the term of
this Agreement at the same service levels provided prior to the date of this Agreement, provided
that ATS is able to obtain the necessary licenses from software and other providers (which both
Parties shall use commercially reasonable efforts to obtain). Additional license or other fees, if
any, that are charged by software or other providers necessary for ATS to provide information
technology Services will be paid by Photowatt. Photowatt acknowledges and agrees that ATS is not
in the business of providing information technology services to third parties, but has agreed to
provide such services solely to assist Photowatt establish itself as an independent operating
company.

     Section 4.02 Delegation. Subject to Section 4.01 above, Photowatt hereby
delegates to ATS final, binding and exclusive authority, responsibility and discretion to interpret
and construe the provisions of employee welfare benefit plans in which the Persons described in
Section 3.05 have elected to participate and that are administered by ATS under this
Agreement (collectively, “Employee Welfare Plans”). ATS may further delegate such authority to
other Persons to:

     (i) provide administrative and other services;

     (ii) reach factually supported conclusions consistent with the terms of the respective
Employee Welfare Plans;

     (iii) make such other decisions and take such other actions as are permitted to be
delegated under the terms of the respective Employee Welfare Plans;

     (iv) make a full and fair review of each claim denial and decision related to the
provision of benefits provided or arranged for under the Employee Welfare Plans

6

 

pursuant to
applicable law and any other applicable requirements, if a claimant timely requests in
writing a review for reconsideration of such decisions (the party adjudicating the claim
shall notify the claimant in writing of its decision on review and such notice shall satisfy
applicable laws and any other applicable requirements relating thereto); and

     (v) notify the claimant in writing of its decision on review.

     Section 4.03 Limitation of Liability.

     (a) Photowatt acknowledges and agrees that (i) ATS is not in the business of providing
services such as the Services to third parties, (ii) ATS has agreed to provide the Services as an
accommodation to Photowatt and (iii) ATS makes no representations or warranties whatsoever, whether
express or implied by statute or otherwise, regarding the Services or any other matters relating to
or arising out of this Agreement.

     (b) ATS shall not have any Liability to Photowatt or any other Person under this Agreement or
for any actions or inactions by any member of the ATS Group or its representatives, except for
Losses resulting from the gross negligence or willful misconduct of such member of the ATS Group or
its representatives; provided, however, that the foregoing shall not limit the
remedies of Photowatt against a provider of any Service other than any member of the ATS Group.

     (c) Photowatt shall in all circumstances use commercially reasonable efforts to mitigate and
otherwise minimize Losses to the Photowatt Group, individually and collectively, whether direct or
indirect, due to, resulting from or arising in connection with any failure by ATS to comply fully
with ATS’s obligations under this Agreement.

     (d) Notwithstanding anything in this Agreement to the contrary, in no event shall ATS be
liable to Photowatt or any other Person for, and Photowatt (on behalf of itself, its Affiliates and
other Indemnified Persons) hereby releases ATS from all claims for, special, indirect,
consequential, incidental or punitive damages (including lost profits or savings), even if advised
of their possible existence, except that a Party may recover from the other Party special,
indirect, consequential, incidental or punitive damages owed to a third party in settlement or
satisfaction of claims for which such Party has a right to recover from such other Party under this
Agreement.

     (e) Each Party agrees that this Section 4.03 is commercially conspicuous.

     Section 4.04 Indemnification.

     (a) Subject to Section 4.03, Photowatt shall indemnify and hold harmless each ATS
Indemnified Person from and against any and all Losses incurred by such ATS Indemnified Person
relating to, arising out of or in connection with the Services rendered or to be rendered by any
ATS Indemnified Person pursuant to this Agreement or any ATS Indemnified Person’s actions or
inactions in connection with any such Services, except to the extent resulting from such ATS
Indemnified Person’s gross negligence or willful misconduct.

7

 

     (b) Subject to Section 4.03, ATS shall indemnify and hold harmless each Photowatt
Indemnified Person from and against any and all Losses incurred by such Photowatt Indemnified
Person to the extent relating to, arising out of or in connection with the gross negligence or
willful misconduct of any ATS Indemnified Person in connection with the Services rendered or to be
rendered pursuant to this Agreement.

     (c) To the extent any other Person has agreed to indemnify any ATS Indemnified Person or to
hold an ATS Indemnified Person harmless and such Person provides services to any member of the ATS
Group relating directly or indirectly to any employee plan or benefit arrangement for which
Services are provided under this Agreement, ATS will exercise reasonable efforts (i) to make such
agreement applicable to each Photowatt Indemnified Person so that such Photowatt Indemnified Person
is held harmless or indemnified to the same extent as any ATS Indemnified Person and (ii) to make
available to each Photowatt Indemnified Person the benefits of such agreement.

     Section 4.05 Claim Procedure. The claim procedures set forth in Section 8.3
of the Master Separation Agreement shall apply to indemnification claims under this Agreement.

ARTICLE V

TERM AND TERMINATION

     Section 5.01 Term. Except as otherwise provided in this Article V, or in
Section 7.10 or as otherwise agreed in writing by the Parties, (a) all provisions of this
Agreement shall automatically terminate on the date which is 12 months following the date of this
Agreement and (b) a Party’s obligation to provide or to cause to be provided, and the other Party’s
obligation to pay for, a Service shall cease as of such date or such earlier date determined in
accordance with Section 5.02.

     Section 5.02 Termination.

     (a) The Parties may by mutual agreement terminate this Agreement with respect to one or more
of the Services, in whole or in part, in accordance with this Section 5.02(a). The Parties
shall meet at least quarterly to consider in good faith whether any Service (or its pricing) should
be modified or terminated, taking into account the impact of such Service’s modification or
termination on both Parties. To the extent that, in any such meeting, the Parties in good faith
agree that any Service (or its pricing) should be modified or terminated, the Parties shall work
together in good faith to determine a reasonable and appropriate schedule therefor.

     (b) Photowatt may terminate this Agreement or any individual Service for convenience by giving
30 days written notice to ATS. In the event of such termination, Photowatt shall pay ATS for any
and all costs incurred by ATS in connection with such termination including third party termination
charges and penalties and costs of obtaining consents to the early termination of third party
contracts and any committed costs with respect to which ATS is unable to obtain a refund.

     (c) Photowatt may terminate any individual Service at any time if ATS shall have failed to
perform any of its material obligations under this Agreement relating to such Service, Photowatt
shall have notified ATS in writing of such failure and such failure shall have

8

 

continued unremedied for a period of at least 30 days after receipt by ATS of written notice
of such failure from Photowatt. ATS may terminate this Agreement at any time if Photowatt shall
have failed to perform any of its material obligations under this Agreement, ATS shall have
notified Photowatt in writing of such failure and such failure shall have continued unremedied for
a period of at least 30 days after receipt by Photowatt of written notice of such failure from ATS.

     (d) ATS may terminate any individual Service that it or its representative or subcontractor is
performing, upon at least 30 days written notice, if the continued performance of such Service
becomes commercially impracticable, including a prohibition against continued performance in any
contract with a third party providing the Service in question.

     Section 5.03 Effect of Termination.

     (a) Other than as required by law, upon termination of any Service pursuant to Section
5.02, or upon termination of this Agreement in accordance with its terms, ATS shall have no
further obligation to provide the terminated Service (or any Service, in the case of termination of
this Agreement) and Photowatt shall have no obligation to pay any Service Costs relating to such
terminated Services or to make any other payments hereunder; provided, however,
that, notwithstanding such termination: (i) Photowatt shall remain liable to ATS for Service Costs
owed and payable in respect of Services provided prior to the effective date of such termination;
(ii) ATS shall continue to charge Photowatt for administrative and program costs relating to
benefits paid after but incurred prior to the termination of any Service and other services
required to be provided after the termination of such Service, and Photowatt shall be obligated to
pay such Service Costs in accordance with the terms of this Agreement; and (iii) the provisions of
Articles IV, V and VII and Section 6.06 shall survive any such
termination. All program and administrative costs attributable to the persons described in
Section 3.05(i), under ATS Plans that relate to any period after the effective date of any
such termination shall be for the account of and paid by Photowatt.

     (b) Following termination of this Agreement, with respect to any Service provided or procured
by ATS, the Parties agree to cooperate with each other in providing for an orderly transition of
such Service to Photowatt or to a successor service provider as designated by Photowatt. Without
limiting the foregoing, ATS agrees to (i) provide to Photowatt, within 30 days of the termination
of any Service relating to employee benefits, in a usable format designated by ATS, copies of all
records relating directly or indirectly to benefit determinations with respect to any and all the
Persons described in Section 3.05, including compensation and service records,
correspondence, plan interpretive policies, plan procedures, administration guidelines, minutes,
and any data or records required to be maintained by law and (ii) cooperate with Photowatt in
developing a transition schedule with respect to such terminated Service.

     Section 5.04 Turnover. At or before the termination of this Agreement or of any
Service provided hereunder, to expedite and facilitate the turnover, and provide for a smooth
transition, of the applicable function(s), ATS will provide any cooperation or information
reasonably requested by the applicable Receiving Party in connection with the applicable Receiving
Party’s assumption of such function(s).

9

 

ARTICLE VI

INSURANCE MATTERS

     Section 6.01 Photowatt Insurance Coverage During Insurance Transition Period.

     (a) Throughout the period beginning on the Effective Date and ending upon the earlier of (i)
termination of the Service provided pursuant to this Article VI or (ii) termination or
expiration of this Agreement in accordance with its terms (the “Insurance Transition Period”), ATS
shall, subject to insurance market conditions and other factors beyond its control, maintain
Insurance Policies (the “ATS Insurance Policies”) covering and for the benefit of the Photowatt
Group and their respective directors, officers and employees (collectively, the “Photowatt Covered
Parties”) comparable to those maintained generally by ATS covering the Photowatt Covered Parties
prior to the Effective Date except that no directors and officers insurance shall be maintained for
the Photowatt Covered Parties; provided, however, that if ATS determines that (i)
the amount or scope of such insurance coverage will be reduced to a level materially inferior to
the level of insurance coverage in existence immediately prior to the Insurance Transition Period
or (ii) the retention or deductible level applicable to such insurance coverage, if any, will be
increased to a level materially greater than the levels in existence immediately prior to the
Insurance Transition Period, in each case other than solely as a result of the Offering, ATS shall
give Photowatt notice of such determination as promptly as practicable. Upon notice of such
determination, Photowatt shall be entitled to 60 days to evaluate Photowatt’s options regarding
continuance of insurance coverage under said Insurance Policies and Photowatt may cancel
Photowatt’s interest in all or any portion of such insurance coverage as of any day within such 60
day period provided that ATS is able to obtain any required consents of its insurers to such
cancellation. The ATS Insurance Policies shall contain a waiver of
subrogation in respect of any amounts paid thereunder in respect of
claims or demands made against any Photowatt Covered Parties.

     (b) Photowatt shall promptly pay to ATS all amounts for premium expenses, deductibles or
retention amounts, and any other costs and expenses that ATS may incur in connection with the
insurance coverages maintained pursuant to this Section 6.01. Similarly, ATS shall
promptly reimburse Photowatt for any applicable credits received by ATS. In addition, Photowatt
may purchase insurance coverage as an alternative to that described in Schedule I, from any
insurance carrier approved by ATS (which approval shall not be unreasonably withheld), and, in such
case, subject to Section 5.03(a), Photowatt may terminate the insurance Services provided
hereunder by ATS in whole or in part after giving reasonable notice thereof to ATS provided that
ATS is able to obtain any required consents of its insurers to such cancellation.

     Section 6.02 Cooperation; Payment of Insurance Proceeds to Photowatt; Agreement Not to
Release Carriers. Each Party shall share such information, including claims data, as is
reasonably necessary to permit the other Party to manage and conduct its insurance matters in an
orderly fashion. ATS, at the request of Photowatt, shall cooperate with and use commercially
reasonable efforts to assist Photowatt in recovering Insurance Proceeds under the ATS Insurance
Policies for claims relating to the Photowatt Business or the Photowatt Covered Parties, whether
such claims arise under any agreement, by operation of law or otherwise, existing or arising from
any past acts or events occurring or failing to occur or alleged to have occurred or to have failed
to occur or any conditions existing or alleged to have existed before
the Effective Date, on the Effective Date or during the Insurance Transition Period, and ATS
shall promptly pay any such

10

 

recovered Insurance Proceeds to Photowatt (to the extent that the right
to such proceeds has not already been satisfied, whether by direct payment by the insurer or
administrator, intercompany entry or otherwise). ATS and Photowatt shall not, and ATS will cause
its Group members not to, take any action that would intentionally jeopardize or otherwise
interfere with the other Party’s ability to collect any proceeds payable pursuant to any Insurance
Policy. Except as otherwise contemplated by this Agreement, after the Effective Date, neither
Party shall (nor permit any of its respective Group members to), without the consent of the other
Party, provide any insurance carrier with a release, or amend, modify or waive any rights under any
such policy or agreement, if such release, amendment, modification or waiver would adversely affect
any rights or potential rights of such other Party (or its Group members) thereunder. However,
nothing in this Section 6.02 shall (a) preclude any Group member from presenting any claim
or from exhausting any policy limit, (b) require any Group member to pay any premium or other
amount or to incur any Liability, or (c) require any Group member to renew, extend or continue any
policy in force.

     Section 6.03 Photowatt Insurance Coverage After the Insurance Transition Period.
From and after expiration of the Insurance Transition Period, Photowatt shall be responsible for
obtaining and maintaining insurance programs for the Photowatt Group’s risk of loss and such
insurance arrangements shall be separate and apart from the insurance programs of ATS.

     Section 6.04 Deductibles and Self-Insured Obligations. Photowatt shall be responsible
on or after the Effective Date for payment of self-insured retentions, deductibles and other
amounts not covered by insurance policies pertaining to the Photowatt Business. For all claims
incurred on or after the Effective Date (but not for any claims incurred prior to such date),
Photowatt shall reimburse ATS for all amounts necessary to exhaust or otherwise satisfy all
applicable self-insured retentions, deductibles and other amounts not covered by Insurance Policies
in connection with Photowatt Liabilities and Insured Photowatt Liabilities to the extent ATS is
required to pay any such amounts.

     Section 6.05 Procedures with Respect to Insured Photowatt Liabilities.

     (a) Photowatt shall reimburse ATS for all Losses incurred to pursue insurance recoveries from
Insurance Policies for Insured Photowatt Liabilities.

     (b) The defense of claims, suits or actions giving rise to potential or actual Insured
Photowatt Liabilities shall be managed (in conjunction with its insurers, as appropriate) by ATS.

     Section 6.06 Insufficient Limits of Liability for ATS Liabilities and Photowatt
Liabilities. If there are Liabilities in excess of coverage limits available under ATS’s
Insurance Policies so that ATS’s Insurance Policies will not cover the Liabilities of ATS and/or
Photowatt that would otherwise be covered by such Insurance Policies, then to the extent other
insurance is not available to ATS and/or Photowatt for such Liabilities, the Parties will work
together in good faith to determine a reasonable and equitable allocation of the proceeds of the
ATS Insurance Policies between such Parties. This Section 6.06 shall terminate 10 years
following the end of the Insurance Transition Period.

11

 

     Section 6.07 Cooperation. ATS and Photowatt shall cooperate with each other in all
respects, and shall execute any additional documents that are reasonably necessary, to effectuate
the provisions of this Article VI.

     Section 6.08 No Assignment or Waiver. This Agreement shall not be considered as an
attempted assignment of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any member of the ATS or Photowatt Group in respect of
any Insurance Policy or any other contract or policy of insurance.

     Section 6.09 No Liability. Photowatt does hereby agree, for itself and as agent for
each other member of the Photowatt Group, that no ATS Indemnified Person shall have any Liability
whatsoever as a result of the insurance policies and practices of ATS as in effect at any time
prior to the end of the Insurance Transition Period, including as a result of the level or scope of
any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any
policy, or the adequacy or timeliness of any notice to any insurance carrier with respect to any
claim or potential claim or otherwise; provided, that the waiver in the foregoing clause
regarding adequacy or timeliness shall not apply to ATS if Photowatt has requested in writing that
ATS give a notice or otherwise make a claim to an insurance carrier and ATS fails to give such
notice or make such claim in a reasonably timely manner, with reference to the standard of
performance set forth in Section 4.01.

     Section 6.10 Additional or Alternate Insurance. Notwithstanding any other provision
of this Agreement, during the Insurance Transition Period, ATS and Photowatt shall cooperate to
evaluate insurance options and secure additional or alternate insurance for Photowatt and/or ATS if
desired by and cost effective for Photowatt and ATS. Nothing in this Agreement shall be deemed to
restrict any member of the Photowatt Group from acquiring at its own expense any other Insurance
Policy in respect of any Liabilities or covering any period.

     Section 6.11 Forbearance and Prior Insurance Coverage.

     (a) From and after the date of this Agreement, ATS shall not, and shall cause its Group not
to, take or fail to take any action if such action or inaction, as the case may be, would adversely
affect the applicability of any insurance in effect on the Effective Date (other than directors and
officers insurance) that covers all or any part of the assets, liabilities, business, directors,
officers or employees of any member of the Photowatt Group with respect to events occurring prior
to the Effective Date (“Applicable Insurance”).

     (b) ATS agrees that, from and after the Effective Date, all Applicable Insurance directly or
indirectly applicable to any assets, liabilities, business, directors, officers or employees of any
member of the Photowatt Group shall be for the benefit of such Group member, it being understood
that such Applicable Insurance shall also be for the benefit of ATS to the extent directly or
indirectly applicable to any assets, liabilities, business, directors, officers or employees of ATS
or any members of its Group. Without limiting the generality of the foregoing, upon Photowatt’
reasonable request, ATS shall use reasonable efforts to modify, amend or assign all Applicable
Insurance policies and arrangements (to the extent relating to the Photowatt Business) so that the
applicable members of the Photowatt Group are the direct beneficiaries of such Applicable Insurance
with all rights to enforce, obtain the benefit of and

12

 

take all other action in respect of such Applicable Insurance; provided,
however, that if the modifications, amendments or assignments contemplated by this
Section 6.11(b) are not permissible, ATS shall, and shall cause each of its Group members
to, use reasonable efforts to enter into such other arrangements as Photowatt may reasonably
request to ensure that the Photowatt Group is entitled to the benefit (to the fullest extent set
forth in the relevant policies and arrangements) of any Applicable Insurance.

     Section 6.12 Further Agreements. The Parties acknowledge that they intend to allocate
financial obligations without violating any laws regarding insurance, self-insurance or other
financial responsibility. If it is determined that any action undertaken pursuant to this
Agreement or any related agreement between or involving the Parties violates any insurance,
self-insurance or related financial responsibility law or regulation, the Parties agree to work
together to do whatever is necessary to comply with such law or regulation while trying to
accomplish, as much as possible, the allocation of financial obligations as intended in this
Agreement or any such related agreement.

ARTICLE VII

MISCELLANEOUS

     Section 7.01 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 may be granted or withheld in such other party’s sole discretion. This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and any permitted assignee shall agree to perform the obligations
of the assignor of this Agreement. Any attempted transfer, assignment or alienation in violation of
this Section 7.01 shall be invalid and ineffective ab initio.

     Section 7.02 No Agency. Nothing in this Agreement shall constitute or be deemed to
constitute a partnership or joint venture between the Parties or, except to the extent provided in
Section 4.02, constitute or be deemed to constitute any Party the agent or employee of the
other Party for any purpose whatsoever, and neither Party shall have authority or power to bind the
other Party or to contract in the name of, or create a liability against, the other Party in any
way or for any purpose.

     Section 7.03 Subcontractors. ATS may hire or engage one or more subcontractors to
perform all or any of its obligations under this Agreement; provided, however,
that, subject to Section 4.02, ATS shall in all cases remain primarily responsible for all
obligations undertaken by it in this Agreement with respect to the scope, quality and nature of the
Services provided to Photowatt and, provided further, that, in each case, the use
of a subcontractor to perform ATS’s obligations would not substantially increase the costs to
Photowatt.

     Section 7.04 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 

13

 

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, assessed in relation to any such warranty, representation,
opinion, advice or assertion of fact, except to the extent contemplated above.

     Section 7.05 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).

     Section 7.06 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.

     Section 7.07 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

14

 

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.

250 Royal Oak Road

Cambridge, Ontario N3H 4R6

Attention: General Counsel

Fax No.: (519) 650-6520

(b) if to Photowatt, to:

Photowatt Technologies, Inc.

25 Reuter Drive

Cambridge, Ontario N3E 1A9

Attention: President and Chief Executive Officer

Fax No.: (519) 650-6535

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.

     Section 7.08 Time of Essence. Time is of the essence of this Agreement.

     Section 7.09 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.

     Section 7.10 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.

     Section 7.11 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

15

 

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.

     Section 7.12 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.

     Section 7.13 Currency. Except as expressly provided in this Agreement, all amounts in
this Agreement are stated and will be paid in Canadian currency.

     Section 7.14 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.

     Section 7.15 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.

     Section 7.16 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.

     Section 7.17 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.

     Section 7.18 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

16

 

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.

     Section 7.19 Dispute Resolution. Any controversy or claim, whether based on Contract,
tort, Law or other legal or equitable theory (including any claim of fraud, misrepresentation or
fraudulent inducement or any question of validity or effect of this Agreement, including this
Section 7.19) (in each such case, a “Dispute”) arising out of or related to this Agreement,
or the breach or termination thereof, shall be submitted in good faith to negotiations and, if
necessary, mediation in accordance with the terms below before any Action is commenced.

     (a) Direct Negotiation. If either Party considers that any Dispute has arisen under
or in connection with this Agreement, then such Party may first deliver a notice to the other Party
describing the nature and the particulars of such Dispute. Second, within 10 Business Days
following delivery of such notice to the other Party, the Parties shall meet (whether by phone or
in person) in a good faith attempt to resolve the Dispute. Third, if the Dispute is still
unresolved after 10 Business Days following the commencement of such good faith attempt, then the
chief financial officer (or another designee with full authority to resolve such dispute) of each
Party shall meet (whether by phone or in person) in a good faith attempt to resolve the Dispute,
such meeting to be held within 20 days of the first meeting referred to above. Fourth, if the
Dispute is still unresolved after 10 Business Days following the commencement of such second
negotiations, then such Dispute shall be submitted to mediation in accordance with Section
7.19(b).

     (b) Mediation. If the Dispute is to be submitted to mediation in accordance with
Section 7.19(a), the mediator will be selected by mutual agreement of the Parties, which
agreement shall be reached in good faith and on a timely basis. If they are unable to agree on a
mediator, each Party will select one third party representative, each of whom shall be an
independent experienced professional mediator practicing in Ontario, which two representatives
shall mutually select a mediator for such Dispute with the same qualifications referred to above
(and each Party shall in good faith instruct its representative to work in good faith with the
other Party’s representative to promptly select such mediator).

	 	(i)	 	Mediation Procedure. The mediation will be conducted
pursuant to the rules generally used by the mediator in the mediator’s
practice, subject to the following:

	 	(A)	 	The mediator will act as an advocate for
resolution and will use his or her best efforts to assist the Parties
in reaching a mutually acceptable settlement. The mediator may suggest
ways of resolving the Dispute, but may not impose his or her own
judgment on the issues or that of the Parties. The mediator will not
have the
authority to decide any issue for the Parties, but will attempt to
facilitate the voluntary resolution of the Dispute by the Parties.

17

 

	 	(B)	 	Each Person participating in the mediation will
have authority to settle, and all Persons necessary to the decision to
settle will be present during the entire mediation session or sessions.
	 
	 	(C)	 	The mediation will take place at a time and
convenient location agreeable to the mediator and the Parties, as the
mediator will determine, but such mediation will take place no later
than 20 Business Days after the commencement of the second negotiations
under Section 7.19(a) and will take place over two consecutive
days.
	 
	 	(D)	 	Mediation sessions will be private, and only
the Parties and their representatives may attend the mediation
sessions. Other Persons may attend the mediation sessions only with the
written permissions of the Parties and with the consent of the
mediator.
	 
	 	(E)	 	There will be no stenographic record of the
mediation process, and no Person will tape record any portion of the
mediation sessions.
	 
	 	(F)	 	No subpoenas, summons, complaints, citations,
writs, or other process may be served at or away from the site of any
mediation session upon any Person who then is entering, on the way to,
in attendance or leaving the session.
	 
	 	(G)	 	The Parties will participate in the mediation
proceeding in good faith with the intention to settle.
	 
	 	(H)	 	No later than five days prior to the mediation,
each Party will deliver to the mediator all information reasonably
required for the mediator to understand the issues presented and a
confidential memorandum (not to exceed five pages with normal type size
and margins) setting forth the following:

	 	i.	 	identification of the matters
in dispute;
	 
	 	ii.	 	concise statement of points
(factual, legal, practical) that such Party believes enhances
its chance of achieving a favourable outcome of the Dispute;
and
	 
	 	iii.	 	history of settlement discussions and outstanding
offers of settlement.

	 	(I)	 	The above rules may be modified or amended with
the Parties’ written consent.

	 	(ii)	 	Release. The mediator will not be a necessary or
proper party in any Action relating to the mediation. Neither the mediator, the
Person employing the mediator, nor the Person providing the mediator will be

18

 

	 	 	 	liable to any Party for any acts or omissions in connection with any mediation
conducted pursuant to this Section 7.19.
	 
	 	(iii)	 	Compromise Negotiation. The mediation is a compromise
negotiation for purposes of the applicable rules of evidence and is an
alternative dispute resolution procedure subject to Law chosen to govern this
Agreement. The entire procedure is and will be confidential. All conduct,
statements, promises, offers, views and opinions, whether oral or written, made
in the course of the mediation by any of the Parties, their agents, employees
or other representatives and by the mediator, who is the Parties’ joint agent
for purposes of these compromise negotiations, are confidential and will, in
addition where appropriate, be deemed to be work product and privileged. Such
conduct, statements, promises, offers, views and opinions will not be
discoverable or admissible for any purposes, including impeachment, if any
litigation or other proceedings involve the Parties and will not be disclosed
to anyone not an agent, employee, expert or other representative for any of the
Parties. Evidence otherwise discoverable or admissible is not excluded from
discovery or admission as a result of its use in the mediation. Confidential
Information disclosed to the mediator by the Parties or by witnesses in the
course of the mediation will not be divulged by the mediator. All records,
reports or other documents received by the mediator while serving in that
capacity will be confidential. The mediator will not be compelled to divulge
such records or to testify with regard to the mediation in any adversary
proceeding or judicial forum.
	 
	 	(iv)	 	Costs of Mediation. The Parties will bear their
respective costs incurred in connection with the mediation described in this
Section 7.19, except that the Parties will share equally the fees and
expenses of the mediator, the costs of obtaining the facility for the
mediation, and the fees and expenses of any experts employed at the mediator’s
request.
	 
	 	(v)	 	Termination of Mediation. The mediation will be
terminated upon the first to occur of the following:

	 	(A)	 	by the execution of a settlement agreement
resolving the dispute by the Parties;
	 
	 	(B)	 	by a written declaration of the mediator to the
effect that further efforts at mediation are no longer worthwhile; or
	 
	 	(C)	 	after the completion of two full days of
mediation sessions, by written declaration of a Party or Parties to the
effect that mediation proceedings are terminated.

     (c) Litigation. Neither Party may bring (or have brought) any Action in any forum
with respect to any Dispute arising out of or related to this Agreement, or the breach or

19

 

termination thereof, until such Party has fully complied with Sections 7.18(a) and (b) with
respect to such Dispute.

     Section 7.20 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 Article IV, ATS Indemnified Persons and Photowatt Indemnified
Persons) 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

     Section 7.21 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.

     Section 7.22 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.

     Section 7.23 Audits. Without in any way limiting any other right that either Party
may have under this Agreement, each Party and/or its authorized representatives shall have the
right from time to time, and upon reasonable prior notice, to enter upon any premises of the other
Party during normal business hours to audit and inspect the Services provided by the other Party,
including the other Party’s adherence to the provisions of this Agreement,

     Section 7.24 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.

[The next page is the signature page.]

20

 

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their duly
authorized representatives.

	 	 	 	 	 
	 	ATS AUTOMATION TOOLING SYSTEMS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PHOTOWATT TECHNOLOGIES INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

21

 

	 	 	 	 	 

Schedule I to Transitional Services Agreement

	 	 	 	 	 
	Service (unless
otherwise provided below, the
identified service is only to
be provided to what is
currently the Spheral Solar
division of ATS

t = Service available to
Photowatt and its
subsidiaries

* = Service
available to the Spheral
Solar Division of ATS and the
employees of Photowatt
Technologies USA Inc.

	 	Billing Method
(specific dollar
amounts are
Canadian dollars)
	 	Description
	 
	 	 	 	 
	Phone Infrastructure

	 	1. Fixed-Price
Billing:
$2,497.50/month

2. Fixed-Rate
Billing: $100/hour
	 	1. Physical systems,
servers, and
connections.

2. Technical Assistance
	 
	 	 	 	 
	Phone services (including
cell phones and other
wireless devices)

	 	Pass Through
	 	Phone service, long
distance, connectivity
and other fees charged
by provider, and
maintenance services
	 
	 	 	 	 
	Network

	 	Fixed-Price
Billing: $1470/month
	 	Network and Data systems
	 
	 	 	 	 
	Computer Infrastructure

	 	Fixed-Price
Billing:
$7,770/month
	 	Physical servers,
maintenance, and ERP
technical
infrastructure support
(consulting support not
included)
	 
	 	 	 	 
	Software

	 	1. Fixed-Price
Billing:
$3,283/month

2. Pass Through in
relation to
Microsoft
	 	1. ERP software; HR
software

2. Microsoft desktop
software
	 
	 	 	 	 
	I.T. Services

	 	1. Fixed-Price
Billing: $8,000 per
month 

2. Fixed-Rate
Billing: $200 per
hour
	 	1. General
Infrastructure Support

2. Fixed Rate to apply
to any requested
services beyond
standard infrastructure
support which ATS
agrees to perform

-1-

 

	 	 	 	 	 
	Payroll

	 	1. Pass Through for
ADP

2. Fixed-Price
Billing:
$1,330/month 

3. Fixed-Rate
Billing: $100 per
hour
	 	1. ADP processing fees

2. Cambridge Systems
Group processing time
(price will be adjusted
pro-rata if # of
employees increases
more than 20% above
number as of Effective
Date)

3. Fixed Rate to apply
to any requested
services beyond current
level of processing
which ATS agrees to
perform (e.g. setting
up separate payroll)
	 
	 	 	 	 
	Human Resources

	 	Pass Through
	 	- Recruiting services

- EAP program

- ADP People @ work
	 
	 	 	 	 
	* Benefits – Group 

Insurance

	 	Pass Through
	 	Following third party
provided insurance
benefits to the extent
currently provided:

-life

-accidental death and
dismemberment

-short and long term
disability

-extended health

-dental

-health spending account
(in-house programs are
excluded: including
scholarship program,
computer purchase
program, referral
program, social club)
	 
	 	 	 	 
	* Benefits –

RRSP/401k matching

	 	Pass Through
	 	RRSP matching program
	 
	 	 	 	 
	Facilities

	 	Pass Through
	 	Landscaping, snow
removal, window
cleaning, and
irrigation maintenance
	 
	 	 	 	 
	t Tax, legal,
accounting, treasury and M&A
services as agreed upon
between the parties

	 	Fixed-Rate Billing: Hourly rates agreed
upon prior to
initiation of
service
	 	Nature of service to be
agreed upon on a
project by project
basis

-2-

 

	 	 	 	 	 
	t  Administrative Fee

	 	Fixed-Price
Billing: $10,000
per month
	 	Fee for administering
this Agreement and the
preparation of invoices
under this agreement
	 
	 	 	 	 
	t  Insurance

	 	Pass Through
	 	Continuation of the
existing coverages,
expressly excluding D&O
insurance.
Note: This is in
addition to insurance
currently held by
Photowatt International
S.A.S.
	 
	 	 	 	 
	Miscellaneous

	 	Pass Through
	 	Emergency Response
	 
	 	 	 	 
	Building Maintenance

	 	Fixed-Price
Billing: $1,392 per
month
	 	Cambridge Systems Group
maintenance staff
services (plumbing and
HVAC)

-3-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]