Meeting in Schalksmühle April 19th 2010

1. Meeting in Schalksmühle April 19th 2010 ATX / EGS - HEP

2. ATX / EGS – HEP attendees • HEP Taiwan : • Mike Hung : President • Abel Hung : Sales VP • HEP Germany : • Klauss. Esser CEO • Michael Winkel : Director of Engineering • Miguel Barena : Sales Director • EGS USA: •  Steve Call - EGS Director of Strategic Sourcing • ATX : France / Europe: • Yves Hofs- President and CEO ATX, Director of European Operations • Eric Thickett - ATX General Manager • Emmanuel Lefranc - ATX Laboratory / Certification & Quality Manager • Vilian Rus - ATX Director of Engineering ( excused) • Jean-Francois Monteil - ATX Technical support (previous Director of Engineering) 

3. Meeting Objectives • 1) Review state of the business • 2) Review the history of the 3 in 1 – and future plans • Review past issues with launch / product design • Review and confirm Specifications • Confirm launch plan • 3) Review open Warranty Issues • 4) Review and update contract to cover all products

4. Meeting Output • 1) Confirmation that – ATX and HEP agreement to continue to be partners in the development and production of electrical ballasts • 2) Re-confirmation of the Specifications for the 3 in 1 ballast • 3) Agreed to timing for the launch of the 3 in 1 • 4) Finalized of a new supply agreement • 5) Agreement to the financial responsibility of past and future Warranty issues

5. State of the Business History • In 2005, after visiting HEP Taiwan and China, ATX decided to switch from our previous supplier to HEP to ATX’s complete range of electronic ballasts • HEP successfully customized their products to achieve ATX requests, as for the PCB 2X18; 2X36 and 2X58W • After qualifying the standard ballasts, ATX started to buy from HEP standard ballasts and inverters to be able to manufacture Emergency lighting fixtures • In 2006 ATX asked HEP to realize a PCB version of the above solution ( 2 ballasts + 1 inverter). The name of 3 in 1 has been given to this product

6. During the past 5 years the standard PCB have been working quite well, we don’t experienced major issues on these products (excepted unvarnished PCBs) • Quality and deliveries of standard PCB have been globally satisfactory . Most of the troubles came from Emergency ballasts • HEP reacted efficiently when the standards changed and made compulsory the EOL (End Of Life) certification • HEP Engineering always bring efficient support when we got troubles from customers HEP Sales Est. (ATX Fiscal Year) 2007 776K€ 2008 1,438K € 2009 781K € 2010 825K €

7. “3 in 1” Launch Process 1) Initial schedule for 3 in 1 launch has been June 07 For various reasons – prioritization etc. launch delayed. 2) Seeing the project in late ,In October 07 with M.Hung and A. Hung, agreed to new schedule( see paper board) The meeting has been fair and constructive everybody agreed on a launch of mass production in April 08 Unfortunately 2 years after the 3 in 1 is still not available

8. “3 In 1” Detailed Timeline The long walk of the “3 in 1” 1) First expected launch Jun 07 2) Meeting on October 07 new target launch Apr 08 3) Qualification of “3 in1” PCBs Jul 08 4) “3 in 1” first generation , first luminaries equipped Nov 08 5) Progressive change of bill of material and sales 1Q 09 6) Official Notice from HEP: “3 in 1” could load batteries in reversing polarity which is forbidden by ATEX Jul 09 7) Stop of manufacturing in ATX , change back of BOM Aug 09 8) Test in ATX lab, wrong charging is confirmed Nov 09 9) ATX Stop launch of new catalogue and change data Dec 09 10) ATX set the procedure of Market recall and initiate it Dec 09 11) ATX received invoice regarding 3 in 1 design Dec 09 12) ATX informed HEP about the market recall Jan 10

9. Why the 3 in 1 is the key of quality improvement, competitiveness and sales growth… Current solution 3 Products: 2 ballasts + 1 inverter + 1 PCB for connector and wiring + Time to make connections Risk of miss wiring and failures Time to realize and connect the complete set 10 minutes 3 in 1 PCB: Self explanatory Time 5 seconds

10. Why the 3 in 1 is the key of quality improvement, competitiveness and sales growth… Closing and sealing with resin Filling with sand Encapsulated ballast : ATEX Simple fast and reliable with the 3 in 1 VERY difficult operation With 3 products and wiring

11. Why the 3 in 1 is the key of quality improvement, competitiveness and sales growth… • Faster to produce • More reliable • Cost effective • Interchangeable with previous design • Autotest and leds feed back improved • Intelligent charging management “recovery charging” • Expanded application planed to zone 2 locations (light casing) • Solution for customers who need high lumen output in Emergency mode • Capability to work with 7 Amp.h batteries with choice between long autonomy or high output: previously in our catalogue and deleted • Each unit delay hurts our competitiveness by 15 euro/unit

12. “3 in 1” Open Issues • Confirmation of previously agreed to specification • Review of New Timeline • Recertification • Production / launch – Sept 10?

13. Warranty Issues • Unvarnished PCBs (236): ATX discovered the problem, bought electronic Varnish, hired temporary people in both Amiens and Romania, applied varnish and cured PCBs in ovens Warranty Cost: 8K€ • Functional problems due to inverter 26R, to be replaced by SW : Big issues in Brasil, Argentina (Delga = 21K€), UK, Luxembourg (Dupont de Nemours = 9K€) Warranty Cost: 35K€ • Orders cancelled and Sales lost during 6 month when SW(230V) replaced 26R (multitape), we lost all 110V market : UK and North see offshore market with huge claims from customers ATX 200 K€ in Sales • Qatar issue :recharging of 6000 batteries on site and in warehouse travel on site: Cost paid 32K€ + Pending invoices 78 K€ - Warranty Cost 110K€ • Market recall (308) due to risk of dangerous battery charging on first generation of 3 in 1: stock blocked: 20K€, cost of Recall Estimated warranty Cost 30 K€ • Various Day to dayafter sales, listwillbeforwardedincluding ballasts replacement, transport cost, reworkcost … , Warrenty Costs15K€ • TOTAL at201 K €

14. Warranty Issue #1: Unvarnished PCBs • Circuitry did not have protective varnish coating • Total Units – 236 Pieces from customer, 4,000 pieces received at ATX • ATX discovered the problem early, bought electronic Varnish, hired temporary people in both Amiens and Romania, applied varnish and cured PCBs in ovens Warranty Cost: 8K€ • Good job to discover early – could have been a major recall • To follow up – what corrective action did HEP put in place to prevent future issues? • Audit Review? • Testing – check off? • What corrective action did ATX put into place?

15. Warranty Issue #2: Inverter Issue (2+1) • Originally – the “26R” inverter was qualified for the multi-tap 100V-254V units. Issue lead to premature aging and failure of the florescent emergency tube after only 2 or 3 days. • Original design - Inverter is putting two different current across the lights Light #1 – Std Lamp – sees 280 mA Light #2 – Emergency Lamp – 330 m • ATX has had to replace customer units due to premature aging. Total Warranty cost of Brazil, Argentina (Delga = 21K€), UK, Luxembourg (DuPont de Nemours = 9K€) Total Warranty Cost: 35K€ • Short term Corrective Action – ATX had to use the “SW” inverter (qualified for only 220V) for 6 months. After effect – ATX has been restricted from selling to the UK and the Brazilian markets for at least 6 months – ATX PERMENTLY LOST estimated 200K€ in sales • HEP has redesigned and supplied a new inverter to correct this issue • Corrective action?

16. Warranty Issue #3: “3 in 1” Reverse Polarity • Original 3 in 1 design did not fully protect the circuit from charging the batteries with reverse polarity per ATEX requirements 60079-7 • The circuit is connected to 5 cell battery at 1.2V per cell. Total voltage of the battery is 6V. The Ballast design to prevent the reverse polarity requires the Ballast from charging if less than 4.8V is seen across the battery. • This issue could cause the battery to release Hydrogen and Oxygen gases • 308 units have been recalled from customers Total Warranty Cost: 21K€ • Excessive stock at ATX Total Cost: 20K€ • ATX has continued to use the 2 ballast design / 1 Inverter design while issue is being resolved • Corrective action?

17. Warranty Issue #4: Failure to Charge (2+1) • New standard – 2+1 ballasts has a no charge function for low battery voltage • In Qatar – ATX has gone through recharging 6,000 ballasts • Current design Ballast sees insufficient voltage across the battery and will not charge Batteries have aged in warehouse • Corrective action • Ballast logic will be been modified in the new 3 in 1 “recovering process” to allow for charging for a period of 10 minutes at an “undercharged” situation. If the battery does not reach the required 4.2V, the Ballast will shut down. If the battery sees over 4.2V condition, the ballast will continue to function properly. • Cost paid 32K€ + Pending invoices 78 K€ - Warranty Cost 110K€

18. Quality Issue #5: LED Lighting • LED signal Light Design • By Design • Green Blink Charging • Green Solid Fully Charged • OFF Emergency Mode • Red Blink Battery Problem • Current • Blinking back and forth between Green and Red • HEP Engineering • States ATX needs to charge and discharge Battery and issue will be fixed • ATX Engineering • Taken samples – discharged 10 times still blinking back and forth between green and red

19. Total Warranty Costs taken by ATX to date

20. Conclusion