Exhibit 10.46
 
 
Certain portions of this exhibit have been omitted pursuant to Rule 24b-2 and
are subject to a confidential treatment request. Copies of this exhibit
containing the omitted information have been filed separately with the
Securities and Exchange Commission. The omitted portions of this document are
marked with a ***.

CONTRACT No.

On the one hand [NAME], of legal age, of Salvadoran nationality with Degree in
[ABC], Sole Identity Document number __________ with domicile in [DOMICILE], who
appears in his capacity of Legal Representative, acting on behalf of INVERSIONES
ENERGÉTICAS, SOCIEDAD ANÓNIMA DE CAPITAL VARIABLE, that can be abbreviated as
INE, S. A. DE C. V., of this domicile, with Fiscal Identification Number________
who hereinafter will be called “INE”, who has been duly authorized to enter into
this Contract in accordance with [ABC];

and on the other hand, JOSE MIGUEL APARICIO, of legal age, of US nationality,
Executive, with domicile in Nashville, Tennessee, United States of America, who
appears in his capacity of Special Representative of Altairnano, Inc., a Nevada
corporation with domicile in Reno, Nevada, United States of America, constituted
and existing in accordance with the laws of the State of Nevada, United States
of America, which will be hereinafter called the “Contractor”, hereby agree to
enter into the present Contract, which will be ruled by the following sections:

SECTION 1. OBJECT OF THE CONTRACT

This present Contract is under the turnkey mode for installation of an energy
storage system, which enables fast response frequency regulation, at the
Talnique Power Station.

SECTION 2. SCOPE

Based on the above section Contractor is bound to supply, as established in
Exhibit A,  detailed design and engineering services, manufacture,
transportation and assembly of equipment, construction of civil and
electromechanical works, supply of necessary equipment, and commercial
commissioning of all the required equipment, for ten (10) Energy Storage Units
of 1MW each, with a total capacity of 10MW, in the Talnique Power Station, El
Salvador, and integrate the system with the existing control room. Additional
equipment will also be integrated in the medium voltage room, the low voltage
room or the control room and others that will be required for their operation;
all according to what Section 4 of the Contractual Documents for this Contract
establishes.

SECTION 3. DEFINITIONS

For the purpose of this Contract, the following terms will have the meaning
assigned below:

“Document of Final Acceptance”: means the internal document of INE issued by the
Project Director for INE Management, certifying that the Contractor has
completely moved out of the site, that all work in the Punch List has been
completed, that INE has received the drawings according to the works and that it
states that the Power Storage System has been satisfactorily completed.

“INE Deliverables”: means those items identified in Section 7.

“Final Completion Certificate”: means the format of certificate attached hereto
as Exhibit M, which when issued by INE will mean that the Contractor has
completely moved out of the site, that all items in the Punch List have been
completed, that INE has the drawings in accordance with the Works and that it
declares that the Power Storage System is satisfactorily completed and
Contractor is released from any additional performance and obligation, except
for those established in the Warrantee and any indemnifications specifically
established which will survive the termination of this Contract.
 
 
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“Electrical-Mechanical Completion Certificate”: means the format of certificate
attached hereto as Exhibit K, which when issued will mean that the Contractor is
ready to start the Performance Test Procedure, according to all the necessary
installation and electrical work tests that have been completed.

“Commercial Operation Certificate”: means the certificate attached hereto as
Exhibit J and, when issued, will mean that the Power Storage System is ready to
begin Commercial Operations.

“Performance Test Certificate”: means the format of certificate attached hereto
as Exhibit H and that, when issued, will mean that the tests have been
successfully completed by Contractor and the Power Storage System is ready for
Commercial Operations.

“Turnkey Contract”: Means the present instrument signed between ALTAIRNANO and
INE, its exhibits and modifications in case of force majeure or Act of God, as
established in Section 13.

“Contracting Party”: means INE, S. A. DE C. V., a corporation constituted and
existing under the laws of the Republic of El Salvador.

“Contractor”: means Altairnano, Inc., a corporation constituted and existing
under the laws of the State of Nevada, United States of America.

“Days”: means calendar days.

“Business Days”: means Mondays through Fridays, excluding any national or state
holiday of El Salvador or of the United States of America, which is applicable
to the place where INE has its corporate office and where Contractor has its
corporate office or assembly installations.

“Project Director”: means the person appointed by INE to coordinate the
verification, and acceptance or rejection, total or partial, of the works; the
Project Director will be directly responsible to INE for adequate performance of
the work.

“Dollars”: means dollars of the United States of America.

“Assembly of the Battery Module”: means the assembly process of battery cells in
the battery modules to be used under this Contract.

“Performance Bond”: means a warranty in the format attached in Exhibit “O”.

“Warranty Work Bond”: means a warranty in the format attached in Exhibit “P”.

“Effective Date”: means the date this Contract is awarded.

“Project Manager”: means that person appointed by Contractor to coordinate the
performance and verification of the works of the Energy Storage System, and to
whom all matters and questions must be directed during the Term of commissioning
of the Energy Storage System.
 
 
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“DDU INCOTERMS Definition 2011”: means “Delivered Duties Unpaid” (…agreed
destination location). The seller makes delivery of the merchandise to the
buyer, not dispatched from customs for import and not unloaded from the means of
transportation, at its arrival at the agreed destination. The seller must assume
all costs and risks contracted to bring the merchandise to that location,
different from, when pertinent, to any “duty” (term that includes the
responsibility and the risks of performing customs procedures and paying for
such procedures, customs duties, taxes and other charges) required for
importation into the country of destination. This “duty” will be the
responsibility of the buyer, as well as any other costs and risks resulting from
untimely shipment of the merchandise for importation.

“Site Civil Works”: means the civil works to be performed at the site of
installation of the equipment.

“Commercial Operation”: means the date on which Contractor has issued the
Commercial Operation Certificate to INE, which will occur only after the
Performance Test Procedure has been completed and the Operation Test Certificate
and the Electrical-Mechanical Completion Certificate have been issued. When INE
has signed the Commercial Operation Certificate ownership and operation of
ALTI-ESS will be transferred to INE, and INE from that date forward will be
responsible for all the items, matters and liabilities associated to it,
including insurance coverage, but without including the items in the Punch List.

“Operation Test Procedure”: means the Operation Test Procedure described in
Section 32 and attached hereto as Exhibit F.

“Milestone Schedule”: means the delivery dates for the main components of the
works as per this contract, and the dates the works are started and completed.

“Acceptance Test”: means the ALTI-ESS is operating as of completion of the
installation substantially in accordance with the Operation Test Procedure,
Exhibit F.

“Punch List”: means a document agreed to by both parties, listing the minor
works that do not comply with the specifications of the Contract, and which do
not affect the functions or operation of the system and are pending correction
or completion.

“Storage System”: is the set of energy storage equipment “ALTI-ESS” and all of
the ancillary equipment.

“Site Supervisor”: means the person identified and authorized by the Contractor
to supervise Site Civil Works, the installation work at the site and the
necessary inspections that may be performed by the Contractor.

SECTION 4. CONTRACTUAL DOCUMENTS

In case of discrepancy, the following documents will prevail in accordance with
the order established below:

Exhibit A. Project Scope of Supply
Exhibit B. Mayor System Hardware
Exhibit C. Milestone Schedule
Exhibit D. Insurance Coverage
 
 
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Exhibit E. Warranty Certificate
Exhibit F. Performance Test Procedure
Exhibit G. System Operating Parameters
Exhibit H. Performance Test Minutes
Exhibit J.  Minutes of Provisional Acceptance
Exhibit K. Electrical-Mechanical Completion Minutes
Exhibit L. Letter of Order to Proceed
Exhibit M. Final Completion Certificate
Exhibit N. Contractor Firm Quoted for INE 10MW Project, Document No. 3331765R1
dated February 3, 2010
Exhibit O. Performance Bond
Exhibit P. Warranty Work Bond

SECTION 5. TEMPORARY IMPORTATION OF CONTRACTOR’S MACHINERY

1.
Importation procedures for any machinery and equipment that could be needed
temporarily to perform installation of the ALTI-ESS shall be for the account of
the Contractor.

2.
The Contractor shall be responsible, at its own account, for the obtainment and
maintenance in effect of any permit that may be required for importation of such
machinery.

SECTION 6. TERM FOR EXECUTION OF THE WORKS

The Term for Execution of the works to achieve Commercial Operation will be
within the 425 days from the date the initiation order is issued.

The initiation order will be issued by INE, when the following conditions have
been met:

-  Acceptance on the part of INE of the performance bond, and
-  Compliance with the conditions contained in Section 46 herein; that is,
authorization from the competent authority

If at any time the Contractor is delayed with regard to the Performance Schedule
for the Energy Storage System Project, INE’s Project Director and/or Supervisor
may require that it increase its personnel and equipment, or that its operations
be accelerated to comply with the times established. The Contractor must
establish defined procedures to recover lost time. Procedures proposed will be
subject to the approval of the Project Director and/or the Supervisor.

INE will not be responsible for assignment of Contractor’s personnel and
equipment or for obtainment of materials, supplies or any other service.

SECTION 7.  SPECIAL PROHIBITION

Because of the nature of this Contract, it is expressly forbidden:

a)
To introduce change orders,

b)
To adjust contracted prices, and

c)
To modify the performance term, except in case of Act of God or force majeure.

Because of the above, both parties declare that the price indicated in Section
OBLIGATION TO PAY, of this Contract, includes and covers any type of unforeseen
expenses related to the execution of this Contract, of the works defined in the
offer and other components, and assumes that any work done by the Contractor,
even when it represents additional work due to technical, administrative or
legal aspects, will not imply additional costs or increase the contractual term.
 
 
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SECTION 8.   INE’S RESPONSIBILITIES

INE will be responsible for:

(a)           Supplying electricity and potable water at the facility site.
Delivery will be at a set point so that the Contractor may perform the
installations needed at its own expense.

(b)           Delivering to the Contractor, within fifteen (15) after issuing
the initiation order, all necessary documents and drawings, provided that,
however they are available to INE, so the Contractor may obtain all the ***.

(c)           Timely revision and approval of the list of items to be tested for
Electrical-Mechanical verification by the Contractor to be used during
commissioning of the system; this approval cannot be denied or delayed by INE,
provided that, however the Contractor complies with the norm for each specific
use and has the updated calibration certificates.

SECTION 9.  PAYMENT OBLIGATION

The total amount of the Contract is seventeen million nine hundred and sixty
seven thousand nine hundred and eighty five 00/100 US$ ($17,967,985.00) (the
“Amount of the Contract”). All the prices in this Contract are stipulated in
Dollars of the United States of America (“US$”).

This amount does not include taxes applicable in the Republic of El Salvador,
which must be covered by INE, also it does not include Customs Duties on Imports
– DAI, which INE must reimburse to the Contractor thirty (30) days after the
corresponding invoice is received for payment. The Contractor must provide the
reimbursement receipt to INE’s Treasury Department, attaching a copy of the
documents of proof of payment of that tax.

SECTION 10. FORM AND CONDITIONS OF PAYMENT

I) Form of payment

INE will deliver to the Contractor an irrevocable letter of credit confirmed by
a bank acceptable to the Contractor, at its sole discretion, within a maximum
period of 30 days from the date this contract is signed. The amount of the
letter of credit will be the total amount of the contract. With this letter of
credit, INE will pay the Contractor the entire amount of the Contract.  All
banking expenses resulting from opening and confirming the letter of credit or
wire transfer will be for INE’S account.

Expenses that are due to causes attributable to the Contractor, such as:
additional commissions, payment authorizations due to discrepancies, extensions
and amendments to the letter of credit will be covered by the Contractor.

Contractor must provide INE, within a maximum period of five (5) days after the
Contract is signed, the information needed to open the letter of credit, which
is detailed below:
 
 
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·
Name, address, e-mail address, telephone number, fax number and account number
of the beneficiary

·
Name, address, swift, e-mail address, telephone number and fax number of the
correspondent bank

·
Port and/or airport of destination; shipments must be consigned to the Bank that
issues the Letter of Credit and shipped addressed to the Contractor, to the
following address: Inversiones Energéticas, S. A. de C. V., Central Eléctrica
Talnique, Calle Antigua a Jayaque y Calle a Cantón Los Sitios, Cantón El
Tránsito, Municipio de Talnique, La Libertad, El Salvador, Centroamérica.

INE undertakes to open the letter of credit within the term established in this
Contract, provided, however, that the Contractor has delivered all the
documentation and information detailed above.

2) Payment Conditions

The Contractor will present for collection documents corresponding to one
hundred percent (100%) of the value of the Contract.

INE undertakes to review and approve the corresponding documents presented for
payment by the Contractor, within five (5) business days after their
presentation.

INE will pay the Contractor one hundred percent (100%) of the contractual
amount, equivalent to SEVENTEEN MILLION NINE HUNDRED AND SIXTY SEVEN THOUSAND
NINE HUNDRED AND EIGHTY FIVE DOLLARS OF THE UNITED STATES OF AMERICA
(US$17,967,985.00), as follows:

 
I.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices authorized by INE, together with one (1) copy
of the shipping documents from the warehouse of the Contractor or any other
storage facility, for the *** kilogram cells of “Lithium Titanate Oxide”
material, signed by INE representatives and the Contractor.

 
II.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices authorized by INE, together with one (1) copy
of the acceptance certificate for *** cells in the inventory of the Contractor
at its location in Anderson, Indiana, United States of North America, signed by
INE representatives and the Contractor.

 
III.
***prorated after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices authorized by INE, together with one (1) copy
of proof of acceptance of manufacture for each ALTI-ESS unit (module one to
module six), signed by INE representatives and the Contractor.

 
IV.
***prorated after the presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices authorized by INE, together with one (1) copy
of proof of acceptance of manufacture for each ALTI-ESS unit (module seven to
module ten), signed by INE representatives and the Contractor.

 
V.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices, authorized by INE, together with one (1) copy
of the  Civil Works Completion Certificate, signed by INE representatives and
the Contractor.

 
 
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VI.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices, authorized by INE, together with one (1) copy
of the acceptance certificate at the site of the first six (6) ALTI-ESS modules,
signed by INE representatives and the Contractor.

 
 
VII.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices, authorized by INE, together with one (1) copy
of the acceptance certificate at the site of the second four (4) ALTI-ESS
modules, signed by INE representatives and the Contractor.

 
 
VIII.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices, authorized by INE, together with one (1) copy
of the Electrical-Mechanical Completion Certificate, signed by INE
representatives and the Contractor.

 
 
IX.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices, authorized by INE, together with one (1) copy
of the Commercial Operation Certificate, signed by INE representatives and the
Contractor.

 
X.
***after presentation of one (1) original and two (2) copies of the
corresponding pro forma invoices, authorized by INE, together with one (1) copy
of the Final Acceptance Certificate, issued by INE.

In case of discrepancies for which INE’s representative refuses to sign the
certificates mentioned in paragraphs from I) through X), the parties by common
agreement will appoint an independent qualified engineer paid in equal parts by
INE and the Contractor, who will give a third opinion on whether the Contractor
complied or not with the conditions that support payment; the parties will
submit to the opinion issued by the independent engineer. In case no agreement
is reached on the appointment of the Engineer, the parties will submit to what
Sections 42 and 43 of the present contract establish.

SECTION 11. WARRANTIES

Contractor must provide at its own expense, in favor of INE and issued by a
bank, insurance company or other financial entity with legal domicile in El
Salvador and authorized by the Superintendent of the Financial System of El
Salvador, the following warranties in Dollars of the United States of America.

(i) Performance Bond

The performance bond will be in the amount of ***equivalent to ***percent (***%)
of the amount of the contract, and must be presented to INE within fifteen days
after the date of effectiveness of the present contract and be in effect until
one month after the Certificate of Provisional Acceptance is issued, as
established in Section 28 herein.

This warranty will serve to secure due compliance with all the sections
established in the contract and the contractual documents and that the works
will be delivered and accepted to INE’s entire satisfaction.

(ii) Warranty Work Bond:
 
 
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Contractor must provide at its own expense, a Warranty Work Bond in favor of
INE, in the amount of***, equivalent to ***percent ***of the amount of the
contract, which must be presented to INE within ten days after the Commercial
Operation Certificate is issued and must be in effect for the period of
***months from the date it is issued, which must be extended in case of there
are claims on warranties in progress.

Claims that arise during the term of the warranty must be covered by an
additional warranty of one year from the date that the problem has been solved.

This warranty will serve to ensure that the Contractor will respond for
breakdowns and damages that are attributable to it during the period of warranty
of the Contract.

The aforementioned bonds must be submitted for approval at INE’s administrative
offices, addressed to the Project Director.

SECTION 12. SOCIAL BENEFITS AND THIRD PARTY INDEMNIFICATIONS

Payments of Social Security premiums for all its employees in the Works,
indemnifications in case of work accidents, dismissal and other labor benefits
established by law will be for the account of the Contractor.

Contractor will be responsible for any claims for personal damages, including
death, which could occur with regard to the contract.

SECTION 13.  FORCE MAJEURE OR ACT OF GOD

For the purpose of this Contract, “Force Majeure” will be understood to mean, in
addition to cases established in Salvadoran legislation, any event that is
outside the reasonable control of INE or the Contractor, as the case may be, and
that is inevitable despite the care that, within reasonable limits, the party
affected may take. The term Force Majeure includes, but is not limited to:
disturbances, civil uprisings, terrorist acts, strikes, work stoppage or labor
disturbances other than those that occur among the employees of the Contractor,
shortage of raw materials, acts of nature, acts of war, declared or undeclared,
revolution, insurrection or hostilities, earthquakes, floods, storms or other
natural disasters or epidemics, which occur in El Salvador or abroad, as long as
they directly affect the performance of the work object of this Contract. If one
of the parties is prevented, hindered or delayed from complying with any of its
obligations established in the Contract, due to a force majeure event, it will
give written notice of the event to the other party within seven (7) days after
it occurs, giving the circumstances of the event and providing evidence of its
nature and origin; and in a similar manner it will notify the other party as
soon as possible after the situation is back to normal, within a period not
above three (3) days starting on the day the situation is again normal. The
party that makes such notification will be excused from complying or complying
in time with its obligations as per the Contract during the time the pertinent
force majeure event continues and in the measure in which compliance with the
obligations of that party is prevented, hindered or delayed.

SECTION 14. ASSIGNMENT

Contractor may not assign the Contract, nor can it grant to any other person its
participation in it, or assign the right to collect any amount of money to which
it is, or could be, entitled with regard to the Contract, without prior written
approval from INE. In case this approval is granted, the assignment of the
Contract will not release the Contractor from its total responsibility to comply
with the obligations of the Contract.
 
 
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SECTION 15. ADDITIONAL OBLIGATIONS

(i)           Civil Works in Situ: Contractor shall be responsible for
performance of the Civil Works at INE’s facility in Talnique. Contractor shall
be responsible for the procurement of the corresponding local construction
permits.

(ii)           INE will have the right to review and approve all the engineering
drawings of the Contractor. INE will have ten days after receiving any
engineering drawings for revision and reject or accept those engineering
drawings; otherwise, it shall be deemed that INE’s approval to those engineering
drawings has been granted.

The approval of the drawings on the part of INE does not release the Contractor
from its responsibility for the design of the Works.

(iii)           Training on System

Contractor will provide INE system operation and maintenance instruction and
training for up to ten (10) persons during two weeks. Training will include a
single session of five consecutive days and will take place at Contractor’s
facility in Anderson, Indiana, United States of America, followed by a single
session of five (5) consecutive days to take place at Contractor’s facility in
Talnique. Training on the system includes travel allowance and lodging, airplane
tickets and local transportation for INE’s employees receiving training.
Likewise, all expenses related to the presence of INE personnel during
certification of factory tests. Training will cover:

 
·
Energy Storage Introductory Course

 
·
ALTI-ESS Ancillary Systems

 
·
ALTI-ESS Operation

 
·
ALTI-ESS Maintenance

 
·
ALTI-ESS Control System

(iv) System Commissioning

Contractor will provide the technical personnel required to commission each
block of the *** system, partial commissioning in situ, and total commissioning
in situ, including commissioning of communications, network protection controls,
SDC system, installation of electrical cables, connection in low voltage room,
installation of medium voltage switch, receptacles, civil works and electrical
work to accommodate any interconnection required. The commissioning procedure
will verify the condition of the energy module, the electricity control system
and the system as a whole, including communications signals and compliance with
IEEE 1547. Contractor will supply the spare parts for commissioning at the
Facility and initiation of Performance Tests.  All the spare parts supplied by
the Contractor as per this Section which are not used to commission the Facility
and operations of the Functioning Test will remain property of INE.

INE shall provide temporary electricity and water during the construction phase
and the energy to activate the system; INE will cover the cost of the
electricity used during testing and commissioning of the system; INE will be
responsible for providing and covering the cost of internet connection for the
data transmission system to monitor the system; INE will provide the necessary
access to employees of the Contractor and Subcontractor for installation in
situ; INE will provide information on the safety of the facility and Industrial
Safety at Talnique for Contractor’s and Subcontractor’s appointed personnel.
 
 
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(v)           Shipment. Shipment will be DDU DEFINITION 2011 Incoterms 2000
(delivery duties unpaid) at the Talnique Power Station, El Salvador. Contractor
must pay all freight and insurance costs. INE must certify that the ultimate
destination of the shipment is the Republic of El Salvador and that it will not
be reshipped to any other destination in the list of the US Treasury Office of
Foreign Assets Control Specially Designated Nationals and List of Sanctioned
Countries.

INE will provide Contractor the information for labeling and identifying goods
for importation.

SECTION 16. SUBCONTRACTORS

Contractor may enter into subcontracts for execution of any part of the civil,
electro-mechanical and associated works, giving prior notice to INE. This notice
must include name of the proposed Subcontractor, the portion of the works to be
subcontracted and include information regarding years of experience of the
Subcontractor, a detail of the works Subcontractor has performed that are
similar to those that it will be assigned and a brief description of the
specific work to be subcontracted. If during the execution of the work it is
found that any subcontractor is incompetent, INE shall notify the Contractor,
who will take measures to cancel the subcontract.

None of the provisions of the Contract will result in a contractual relationship
between Subcontractors and INE, therefore, INE will never respond for pending
payments or other charges related to them. Contractor is legally liable for
damages caused by its Subcontractors, as if they had been caused by it.

The Contractor must make sure that subcontractors comply with INE’s Industrial
Safety Regulations and general regulations adopted by INE which involve
subcontractors.

SECTION 17. SPECIFIC RESPONSIBILITIES OF THE CONTRACTOR

During execution of the work Contractor must:

a)
Provide and maintain at the site, adequate first aid instruments and medications
to treat cases of common illness or accidents. These instruments and medications
will be, at least, the same that are required by Salvadoran laws, regulations
and ordinances on the subject.

b)
Carry out importation procedures for any machinery and equipment, whether
temporary or permanent, under its responsibility.

c)
Obtain and maintain in effect, at its cost, any permit required for execution of
the works.

d)
Take the necessary sanitary measures to maintain and protect the workplace as
well as the workers and public and private property, in accordance with
requirements and regulations of the competent authorities and what the
contractual documents establish.

e)
At all times keep the work and storage areas free of waste, accumulated
materials or trash. Before final inspection all excess materials, temporary
structures and rubble must be removed or disposed of satisfactorily and the site
must be left in conditions of cleanliness to INE’s satisfaction.

 
 
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f)
Accesses to the work site must be made adequate and maintained in good
condition. Expenses incurred by the Contractor for this purpose will be for its
account.

g)
Contractor will be responsible for the safety and protection of its personnel
and of the persons who have access to the work site and will use all the
necessary means to reach that level of safety that will ensure continuity of the
service systems found. These means shall include, but will not be limited to:
placing signs, supplying barriers, warning notices and prevention of access
without authorization to areas of the system which are in service, dangerous
areas or where work is being performed.

h)
Provide the necessary information and technical assistance at the request of INE
to obtain the permits from the competent authorities for commercial operation of
the system.

i)
Require that Subcontractors provide: Evidence of payment of premiums for the
Salvadoran Social Security Institute (ISSS), General Internal Tax Agency of the
Ministry of Finance, Pension Fund Administrators (AFP), Armed Forces Social
Provision Institute (IPSFA) and municipal Mayor’s offices involved.

SECTION 18.WORK CORRECTIONS

During the effectiveness of the contract until completion of the warranty of the
contract, Contractor must promptly repair and/or remove and replace without cost
to INE, any work and/or equipment that appears defective, is inadequate or is
not in accordance with the contract.

If within fifteen (15) days after the Contractor has been notified it refuses or
neglects to make the necessary corrections to comply with contract obligations,
INE may make such corrections making the necessary payments, deducting them from
payments owed to the Contractor and making them effective through the
Performance Bond or Warranty Work Bond. Contractor shall guarantee that the work
will be of the best quality and satisfactory in all aspects to INE interests.

SECTION 19.  DELAYS

The performance term may not be modified, except in the case of Act of God or
force majeure, legally proven.

SECTION 20.   WORK SAFETY

Contractor will take all the necessary precautions for the safety of persons and
property and will comply with all the applicable requirements in Salvadoran
legislation related to work safety and other labor laws and construction
regulations of El Salvador.

In an emergency that affects the safety of persons or property or that endangers
the neighboring properties, the Contractor, without having to receive special
instructions or authorization from the Supervisor, will proceed at its
discretion to take the pertinent measures to prevent the threat of loss or
damage.

Contractor and Subcontractors must provide to each of their workers all the
personal protection equipment, such as helmets, goggles, masks, adequate
footwear, ladders, etc. and all safety devices and everything else needed for
their safety. If the Contractor does not provide these items, INE may suspend
performance of the contracted services without any liability to it, and without
prejudice of the corresponding legal and contractual sanctions.  In cases of
damages caused to any person or third-party property Contractor will be directly
responsible.
 
 
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SECTION 21.  PRESERVATION OF PROPERTY

Contractor shall protect INE’s property from any damage, as well as property of
third parties that is close to the area of the Project, or that is in any other
way affected by it.

Properties that suffer damages due to the activities of the Contractor will be
rebuilt without delay without cost to INE, leaving them in similar condition to
the one they had before the damage was caused; otherwise, the Contractor shall
adequately indemnify the party affected by the damage.

SECTION 22.  LAWS, REGULATIONS AND TAXES

Contractor must obtain information on all the laws, regulations, and treaties on
taxes applicable in El Salvador for signing and performing contracts, and abide
by them. Prices in the offer do not include the Value Added Tax (VAT).

INE considers that the offer presented and the prices proposed include the
provisions for compliance with all applicable fiscal obligations. In any case
the Contractor is the only one responsible for verification and application of
the tax laws on all the items in its offer.

SECTION 23.  CONTRACTOR’S PERSONNEL

The Contractor must provide INE its organization chart during the first work
meeting before starting the work, and include the curriculum vitae and work
experience for all members of its team.

INE at any time may request the replacement of any of the workers proposed or
that are already working for the Project, if in INE’s opinion they are
undesirable.

Some of the reasons for a person to be undesirable are listed below:

a)
Repeated negligence of the worker.

b)
Immoral acts performed either inside or outside the site.

c)
Committing acts that disrupt the development of activities or alter the normal
progression of the work.

d)
Causing, through malice or negligence, material damages to buildings, machinery,
raw materials, works, installations and other objects related to the work; or
for damaging intentionally or through negligence, any other property or economic
interests of INE or of the Contractor.

e)
Endangering, through malice or negligence, the safety of another person at the
site of the Project.

f)
Overtly and repeatedly disregarding the preventive measures and procedures to
avoid risks in the workplace.

 
 
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g)
Ingesting alcoholic drinks or using narcotics or drugs in the workplace, or
coming to work or performing his duties drunk or under the influence of
narcotics or drugs.

INE’s Project Director may request that the Contractor fill the vacancies left
by any member of its staff, in case of death or resignation. When substitution
of personnel is necessary, Contractor must present INE’s Project Director, for
approval, the curriculum of at least three professionals with equal
qualifications to the persons to be substituted.

SECTION 24.  DOCUMENTS AND REPORTS

DOCUMENTS
The Contractor must deliver to INE’s Project Director when the work is finished
four (4) printed copies of the following documents; I) “As built” drawings, II)
Three (3) copies in Spanish and one in English of the operations and maintenance
Manuals, including for civil works.

ADVANCE REPORT ON THE WORK
The Contractor must deliver to INE’s Project Director a monthly advance report
on the work as agreed in the Procedures Manual.

During the first meeting at the start of the work, the parties will agree which
format will be used for presentation of the advance report on the work.

SECTION 25.  INDEMNIFICATIONS

Contractor shall indemnify for damages and hold INE and its employees,
executives, advisors, and consultants harmless, against any and all actions,
complaints, demands, claims, losses, costs, damages, procedures, taxes, fines or
expenses, including attorney’s fees and court costs, that arise or are related
to any of the previously indicated cases.

Contractor’s liability for the aforementioned damages shall be in accordance
with what ordinary law establishes in accordance with articles 1791 and 2254,
paragraph 1, of the Civil Code. The term of Contractor’s liability will extend
up to the date of final acceptance.

The Contractor shall indemnify and hold harmless INE and its employees,
consultants, agents, successors and assignees, from any action, complaint,
claim, request, loss, cost, damage, process, procedure, tax or expense,
including reasonable lawyer’s fees which could be presented against them or
could arise with regard to any of the following:

a.
Any damage or injuries to any person or to any property that may arise as a
consequence of the execution and operation of the ALTI-ESS facility, such as
those derived from work defects, under the understanding that the Contractor’s
liability in accordance with this item (a), shall be limited to the amounts of
the insurance policies that the Contractor shall keep in accordance with the
Liability Insurance immediately preceding.

b.
Any breach to any permit, license, trademark, or any other right that may be
used with regard to the construction, ownership or operation of the Station or
units caused by the Contractor or its Subcontractors.

c.
Any failure to comply with any provision of any applicable laws by Contractor,
its agents, or any subcontractor, or supplier.

 
 
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d.
Any claim for damages to highways, roads, bridges, or any other transportation
road or facilities that may be caused during transportation of personnel or
materials, or from keeping them in the facility site by the Contractor or its
Subcontractors.

In turn, INE shall be liable before the Contractor in the cases mentioned above
only on account of its own negligence, and it shall indemnify the Contractor in
the same manner.

It is understood by the parties that, in no case will the combined total amount
of the damages and injuries under this Contract which either party may claim
from the other, exceed 10% of the Amount of the Contract.

SECTION 26.  CONFIDENTIALITY

Each party agrees to keep this Contract, including all its clauses, in strict
confidentiality and not disclose or cause to be disclosed to any third party
without the written consent of the other; however, disclosure will be permitted
in case it is indispensable to comply with the obligations hereunder or in the
following cases: a) A court or authority that has jurisdiction on the subject
requires the party to disclose it; b) If the disclosure is required by law,
regulation or by administrative order; and c) If the disclosure is made to an
affiliate company, counsel of the contracting parties, banking or credit
institution involved in the negotiations or purchases of one of the parties, its
shares or goods, and only in case that those entities agree to keep the
information under strict confidentiality.

SECTION 27.  MINUTES OF PARTIAL ACCEPTANCE OF THE WORKS

As one phase of the work reaches completion, the Contractor shall provide INE
the corresponding partial acceptance certificate. INE must make a thorough
inspection in order to verify that the work has been performed in accordance
with the corresponding design and specifications. The inspection will be carried
out in the presence of the Contractor, or of one of its representatives
appointed to that effect; likewise, the Project Director or the person
authorized on the part of INE will prepare and sign the corresponding partial
acceptance certificate, notifying the Contractor that the work has been
performed or rejected within the following five (5) business days. In case the
partial acceptance certificate is not issued within the term established, it
will be understood that the work has been accepted by INE. INE will not delay or
retain without reason the acceptance of such certificate. In case of rejection
of the work, INE shall notify the Contractor, indicating the defects found so
that they can be corrected.

SECTION 28.  PROVISIONAL ACCEPTANCE OF THE WORKS

For the Commercial Operation Certificate, as indicated in Exhibit J, INE must
verify the completion of the work and, after having verified that all the
specifications included in the Contract have been complied with, must sign and
return the Commercial Operation Certificate within a maximum period of ten (10)
business days after the Contractor has presented the certificate.

For the Contractor to be able to request that the Commercial Operation
Certificate be issued, it must present the following documents:

a)
Warranty Certificate, Exhibit E;

b)
Performance Test Certificate, Exhibit H;

 
 
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c)
Electrical-Mechanical Completion Certificate, Exhibit K.

After the request has been received together with the mentioned documents, INE
must issue the Commercial Operation Certificate and the Punch List, within a
period of ten (10) days after receiving the aforementioned request. In case
defects or minor irregularities are present that do not prevent the commercial
operation of the system, they will be included in a Punch List for correction by
the Contractor within a maximum period of sixty (60) days, starting on the date
the commercial operation certificate is issued. If the Contractor does not
correct the defects within the established period, INE may correct the defects
through a third party or other means, charging the cost to the Contractor and
deducting it from any amount owed to the Contractor.

After the Commercial Operation Certificate is issued it will be understood that
the Energy Storage System has been temporarily accepted by INE.

SECTION 29.  FINAL ACCEPTANCE OF THE WORKS

For the Final Acceptance Certificate to be issued Contractor must have
delivered, or deliver at that time, the following documents:

a)
Certificate from the Supervisor that the work specified in them has been
satisfactorily performed.

b)
Detail of the fixed assets resulting from the Project.

After the request together with the above mentioned documents has been received
from the Contractor, INE shall proceed to issue the Final Works Acceptance
Certificate, in accordance with Exhibit I, within a maximum term of fifteen (15)
days after the Minutes of Final Acceptance has been issued by the Project
Director.

After the Final Works Acceptance Certificate is issued it shall be understood
that the Energy Storage System has been accepted to INE’s satisfaction.

SECTION 30.  WARRANTY

Contractor shall warrant the Energy Storage System and the construction in situ
works and installation described herein, as indicated below, for a period of one
(1) year after the Commercial Operation Certificate is issued.

Facility Equipment. Contractor warrants that for a one (1) year period after the
Minutes of Provisional Acceptance is issued (the “Warranty Period”) the
Contractor’s workmanship and materials shall be free from material defects in
design, materials or workmanship and the ALTI-ESS units provided to INE shall
perform substantially in accordance with the ALTI ESS Specifications and as
measured by the Contractor Warranty Performance Test.  Contractor shall transfer
to INE all the commercial warranties for the items purchased. Components
replaced in the Facility Equipment may include components that are equivalent to
new ones which comply with the original specifications.

Site Civil Works. Contractor warrants that the installation Site Civil Works
shall be free from material defects in design, materials or workmanship for a
one (1) year period following issuance of the Minutes of Provisional Acceptance.
 
 
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Repair Services.  Contractor warrants that all such Services shall be free from
material defects in design, materials or are in conformance with the
specifications in the applicable documentation.  If Contractor breaches this
warranty, Contractor’s sole and exclusive obligation, and INE’s sole and
exclusive remedy under this warranty, is to repeat the Services for or on behalf
of the Contractor, for the account of the Contractor.

Notification and Warranty Procedure.  If INE determines there is a breach of
this Contractor warranty, INE shall promptly notify Contractor in writing of the
specific nature of the defect, providing examples of the defect and exact error
messages being received, if it applies.  INE shall provide continuous
independent remote access for Contractor data collection of operating and
performance data from the Power Module units and energy control system to
analyze and determine system operation parameters and performance.  Failure to
provide this access will void said warranty as to the Facility Equipment.  If
the Site Civil Works is covered under the warranties provided in this document,
Contractor will promptly communicate remediation information and arrange for
correction of a claim covered by the warranty.  If the Facility Equipment or
Services are covered under the warranties provided in this document, Contractor
will promptly send remediation and/or shipping instructions to INE. Facility
Equipment components will be returned, or made available to
Contractor.  Contractor shall examine the Facility Equipment components or
Services and repair them without charge, subject to what such examination
discloses, in Contractor’s ad INE’s reasonable opinion, that it is in fact
defective under this warranty.  Should examination reveal that the Facility
Equipment or Services are not defective or that they have become defective
because of some cause that invalidates the warranty, Contractor will notify INE
and request shipping instructions for the return or disposal of the Facility
Equipment component.  In this event, Contractor will be due all shipping or
travel charges it has incurred, as well as a reasonable charge for
examination.  In the event the examination reveals that the Facility Equipment
component or Services are defective, but for any reason it is not covered under
the warranty as provided in this document, Contractor will prepare a Failure
Analysis Report, and a quotation of the cost of repair or replacement, and
communicate this information to INE.  INE may then either authorize repair of
the Facility Equipment component or Services, or direct that the defective
Facility Equipment component be returned to INE.  In this last event, Contractor
will be owed all shipping or travel expenses it has incurred, as well as a
reasonable charge for examination of the Facility Equipment component or
Services.  Contractor, at its option, may elect to correct any warranty defects
by sending its Field Engineering representatives to INE’s site to make on-site
corrections.  INE shall bear the risk of damage and loss for all Facility
Equipment components from or to Contractor’s designated service
location.   Facility Equipment components damaged in transit to or from
Contractor’s designated service location will be billed based on time and
material.  For any Facility Equipment component which proved to be defective and
is covered under the warranties in this document, Contractor will repair or
replace and ship at Contractor’s expense and reimburse INE for its initial
shipping costs. Replaced components may include products that are equivalent to
new ones which comply with original specifications. Contractor and INE shall
agree in writing regarding any repair efforts by employees or contractors of INE
that are authorized by Contractor.  In cases where removal of an entire
Contractor Facility Equipment component for shipping to Contractor for repair is
necessary, but the cost is prohibitive to INE, INE may request that the
evaluation of defective parts be performed in their premises with the travel and
expenses portion of the Field Engineer’s time to inspect the damaged Facility
Equipment component paid by INE as such expense is not covered under this
warranty.  On-site Field Engineering time spent on the evaluation and potential
repair of the Facility Equipment components will be covered under warranty if it
meets the requirements defined in this Warranty document.  If the Field Engineer
determines that the reported defect is not covered by this Warranty document,
then INE will be charged for the full price of the field dispatch (Labor,
Materials, & Travel Expenses) and subsequent repair work.
 
 
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System Operational and Storage Requirements. To comply with the warranty, INE
must provide Contractor continuous access to an internet connection (via the
SDC), including access through any firewall, to monitor the overall system
performance.  INE must also ensure the system adheres to the environmental
parameters established by Contractor to ensure optimal system performance and
maintain warranty.

Authorization to Return Material. INE shall not return any Facility Equipment
component claimed as defective without first receiving a Return Material
Authorization (“RMA”) from Contractor. Contractor reserves the right to refuse
to accept any rejected or defective Facility Equipment component not bearing an
RMA number on the outside of the carton and/or documentation accompanying the
shipment, such as packing slips.

Timing for Reporting Warranty Claims.  Any claims covered by Contractor’s
warranty should be promptly reported by INE to Contractor’s Support Group (CSG),
but in no case later than ten (10) Days after discovery of the defect by
INE.  INE must file a notice of breach of warranty to Contractor within this
period to avail itself the use of this warranty.

Contractor Warranty Performance Test. The Altairnano Warranty Performance Test
should be used as the  basis for the warranty claims on any of the Power
Modules. It consists of the following:

***
 
Limited Warranty.  Contractor has no obligation under the warranties provided in
this Section to make the repairs in the following cases: a) if INE should modify
operations algorithms of ALTI-ESS; and b) if INE makes corrections to the BMS
system that modify the performance and operation of the ALTI-ESS in accordance
with the technical specifications defined in this contract and verified under
Test Protocol Number ***dated July 21, 2008. Contractor is not responsible in
any way for loss of INE data.  In addition, neither the Facilities Equipment or
Site Civil Works shall be covered under the warranties provided in this Section
when the defect is due to (a) abuse, misuse, vandalism, or abnormal conditions
of operation outside the operating conditions set forth in ALTI-ESS
Specification, (b) any damage to INE’s equipment or the Facility Equipment as a
result of INE connecting components which have not been purchased from
Contractor and/or inspected or approved by Contractor for connection to the
Facility Equipment, (c) unauthorized attempts by other than Contractor personnel
or agents to install, repair, or modify Facility Equipment, and (d) external
causes to the Facility Equipment, such as lightning strikes, abnormal
environmental conditions such as high salt concentrations or corrosive
environments, or Force Majeure Events, or (e) where the equipment Service Tags
or serial numbers have been removed or altered.

SECTION 31.  LIMITED WARRANTY

The Contractor will warrant, for a period of two (2) years following the
issuance of the Final Acceptance of the Works Certificate, the units known as
“Line Replacement Units” (LRU) and the units known as “Battery Management
System” (BMS), which are components of the modules of the ALTI-ESS Energy
Storage System, that such units will not present defects in their design,
materials or workmanship and that the units will operate in accordance with
ALTI-ESS Specifications. This is the only and exclusive obligation of the
Contractor, and the only and exclusive remedy of INE under this warranty, and is
limited to the Contractor making reasonable commercial efforts to identify and
correct any defects or malfunction in these units. Any claim covered by this
limited warranty must be immediately reported by INE to the Contractor’s Support
Group (GSC), within the following ten (10) Days from the discovery of the defect
on the part of INE. This notification must be in writing, describing the effect
of the defect, including examples of the effect of the defect and the error
reports issued by the monitoring and control system of the ALTI-ESS Energy
Storage System. INE will allow remote access to the ALTI-ESS Energy Storage
System so the Contractor may obtain operation and functioning data of the LRU
and/or BMS units, to verify the operation and functioning parameters of the
units in order to determine the cause of the defect.  Based on the information
gathered, Contractor will proceed to prepare a defect report under the warranty,
which will be provided to INE. Failure to provide this remote access will void
the warranty. Once the malfunction of the unit has been determined, Contractor
will proceed to remedy, repair or replace any defective unit at the sole
discretion and cost of the Contractor. The Contractor will bear the costs of
transportation to the site of the units which have to be replaced. If Contractor
determines the need to replace the LRU, Contractor will issue instructions to
INE to sent the defective unit to the Contractor within thirty days after the
notification of the claim to the warranty issued by INE and the defect report
under the warranty issued by the Contractor. The components replaced may include
new components or equivalents that meet the original specifications.
 
 
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SECTION 32. COMMISSIONING TESTS

1)           COMMISSIONING TEST PROCEDURE

Commissioning tests or trials will be performed by Contractor as established in
Exhibit F, and will cover verification of all the permanent items of the
project, including civil works and electrical-mechanical equipment.

Contractor must use all the equipment, documents and other information,
consumables, instruments, workmanship, materials and personnel adequately
qualified and with experience, necessary to carry out specific tests
efficiently.

Contractor must prepare a Detailed Schedule of the commissioning tests that it
must perform, indicating the dates foreseen for initiating and finishing them,
the means it intends to use and the specific procedures for each test, with
indication of the specific standards or norms that must be observed.

Both parties by mutual agreement may modify the details of the proposed
schedule.

2)           RESULTS OF THE COMMISSIONING TESTS

When the Contractor has concluded the commissioning tests to INE’s satisfaction,
it will present the corresponding reports to INE not later than fourteen (14)
business days after the tests have been performed, one copy in Spanish and one
copy in English, with all the data and documents that supports them.

INE will have fourteen (14) business days to review the reports with the results
of the commissioning tests and may approve or reject them, in which case it will
indicate the reasons for the rejection.

3)           DELAYS IN PERFORMANCE OF COMMISSIONING TESTS

If Contractor unduly delays the commissioning tests as per the approved Detailed
Schedule, INE may notify it to perform the delayed tests on dates determined by
INE within a term of twenty one (21) business days after issuance of that
notification.
 
 
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4)           REJECTION OF COMMISSIONING TESTS

If the works or any of the permanent items of the project do not surpass any of
the commissioning tests INE may order that the failed tests be repeated in the
same terms and conditions than the original ones. In this case, all additional
expenses that the Contractor might have will be borne by it and the Contractor
will not be entitled to make any modifications in the term and on any other of
its contractual responsibilities.

If after the originally failed tests for the Energy Storage System does not
surpass any of the commissioning tests, INE will be entitled to:

a)
Order new repetitions of the commissioning tests in case the conditions shown in
the schedule apply;

b)
Apply the clause of Section 35 for Penalties for Delays and Other Penalties.

SECTION 33.  LIQUIDATION OF CONTRACT

After the warranty period has elapsed, as provided in Section 30 of this
contract and if there are no claims pending, within a maximum period of thirty
(30) days INE will consider the contract liquidated and will return the bonds
that are in its possession.

SECTION 34.  END OF LIFE DISPOSAL.

Upon the battery modules of the ALTI-ESS reaching the end of their useful life
INE shall have the option to, at INE’s sole cost and expense, ship such modules
for recycling as per Contractor’s instructions. The cost of such recycling,
other than costs of shipment to the recycling location, shall be borne by
Contractor.

SECTION 35.  PENALTY FOR DELAYS AND OTHER PENALTIES

1.       Penalty for delay

If Commercial Operation of the works does not occur before 425 days following
INE’s compliance with Section 6 of the Contract, the Contractor must pay INE, as
conventional penalty for such delay, the amount that may result from the
calculation of the amounts indicated below per day attributed to the delayed
works, during the term of this Contract.

a)
For each of the first thirty (30) Days of delay in reaching Commercial
Operation, Contractor shall pay INE an amount equivalent to ***% of the Contract
Amount per day.

b)
For each subsequent thirty (30) Days of delay in reaching Commercial Operation,
Contractor shall pay INE an amount equivalent to ***% of the Contract Amount per
day.

c)
For each subsequent day of delay in reaching Commercial Operation, Contractor
shall pay INE an amount equivalent to ***% of the Contract Amount per day.

2.       Penalty Related to Performance Levels of the ALTI-ESS
 
 
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All below performance tests and liquidated damages are only applicable to final
test results when the applicable tests are run prior to release of the Project
to INE for commercial operation.

If the power performance test shows power performance test results less than ***
the amount of power performance liquidated damages to be assessed against
Contractor shall be calculated at the rate of **** for each kW by which the
power performance test result is less than ***.  INE will not accept the
ALTI-ESS units that do not achieve power performance test of at least *** of the
guarantee power performance test.  The Contractor will perform, at its cost, the
modifications, corrections or changes required to achieve the minimum guarantee
power performance.

If the round trip efficiency performance test shows round trip efficiency test
results of less than ***, the amount of round trip efficiency liquidated damages
to be assessed against the Contractor shall be calculated at the rate of *** for
each one tenth of one percent that the round trip efficiency performance is less
than *** INE will not accept the ALTI-ESS units that do not achieve power
performance test of at least *** of the guarantee round trip efficiency
performance test.  The Contractor will perform, at its cost, the modifications,
corrections or changes required to achieve the minimum guarantee round trip
efficiency.

If the energy capacity performance test result shows less than *** the amount of
energy capacity liquidated damages to be assessed against Contractor shall be
calculated at the rate of *** for each kWh by which the energy capacity is below
***. 

If the maximum auxiliary load performance test result is greater than *** the
amount of maximum auxiliary load liquidated damages to be assessed against
Contractor shall be calculated at the rate of *** for each kW by which the
Maximum Auxiliary Load is greater than ***.

SECTION 36.  DISCLAIMER

(a)
Limitation.  The warranty provided under Section 30 is granted only to INE and
will not be granted, nor may it be assigned to, any subsequent purchaser without
the written consent of Contractor.

(b) 
The operating parameters of the ALTI-ESS are identified in Exhibit G within the
System Operating Parameters and are hereby incorporated by reference. Without
limiting the foregoing, in no event shall any ALTI-ESS component or lot of
ALTI-ESS components that substantially conform to their initial operating
parameters will be considered defective or otherwise not in compliance with the
terms and conditions of this Contract.

(c)
Limitation of Liability. Contractor shall not be liable to INE or any third
party for the cost of supplies of substitutes of ALTI-ESS or services, except
for the liabilities of the warranty.

SECTION 37.  INSURANCE

During the execution phase of the Contract, Contractor will keep in full force
all the insurance policy coverage specified in Exhibit D. In addition,
Contractor shall verify that the Subcontractors are duly insured at all times.
Failure of the Contractor to maintain the corresponding coverage will not
release it from any obligation or liability.
 
 
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SECTION 38.  INTELLECTUAL PROPERTY INFRINGEMENT INDEMNIFICATION

Contractor will defend or settle out of court, at its own expense, any claim,
suit or proceeding brought against INE to the extent it is based upon a claim
that the ALTI-ESS sold under normal use pursuant to this Contract infringes any
U.S. patent or copyright issued as of the date hereof, or misappropriates any
trade secret of a third party. As a condition precedent to such obligation, INE
agrees that it shall promptly notify Contractor in writing of any such claim or
action and give Contractor full information and assistance in connection
therewith. Contractor shall have the sole right to control the defense of any
such claim or action and the sole right to settle any such claim or action. If
INE complies with the provisions hereof, Contractor will pay all damages
(including reasonable attorneys’ fees) finally awarded to third parties in such
action.  If the ALTI-ESS is, or in Contractor's opinion might be, held to
infringe as set forth above, Contractor may, at its option replace or modify the
ALTI-ESS so as to avoid infringement, or obtain the right for INE to continue
the use of the ALTI-ESS.  If neither of such alternatives is, in Contractor's
opinion, commercially reasonable, the infringing ALTI-ESS shall be returned to
Contractor and Contractor's sole liability, in addition to its obligation to
reimburse finally awarded damages as set forth above, shall be to pay to INE
such damages, losses, costs or expenses as are incurred by INE as a result of
such infringement (including attorneys’ and consultants’ fees and costs),
including, without limitation, costs of replacement of the ALTI-ESS by a product
of equivalent or better functionality. Notwithstanding any of the foregoing,
Contractor’s total liability to INE for it shall be limited to the purchase
price paid by INE to Contractor for the specific ALTI-ESS model and version
which is the subject of such claim.

Limitations. Contractor will have no liability for any claim of infringement
arising or alleging to have arisen as a result of INE’s particular use of the
ALTI-ESS in combination with any items not supplied by Contractor or any
modification of the ALTI-ESS by INE or third parties, or the failure to use the
latest version of any software provided for the ALTI-ESS if infringement would
have been avoided with such use.

Entire Liability.   THE FOREGOING STATES DE ENTIRE LIABILITY AND OBLIGATION OF
CONTRACTOR TO INE OR ANY THIRD PARTY AND THE EXCLUSIVE REMEDY OF INE OR ANY
THIRD PARTY WITH RESPECT TO THE ALLEGED OR ACTUAL INFRINGEMENT OF INTELLECTUAL
PROPERTY RIGHTS, INCLUDING BUT NOT LIMITED TO, PATENT, COPYRIGHT AND TRADE
SECRET RIGHTS.

SECTION 39.  FORMS OF TERMINATION OF THE CONTRACT

a)
Expiration

b)
Mutual agreement

c)
Revocation

d)
Act of God or force majeure, and

e)
For other causes determined contractually

SECTION 40.  INE’S RIGHT TO TERMINATE THE CONTRACT UNILATERALLY

INE may notify the Contractor of its intention to terminate the Contract without
any liability thereto through written notice,  expressing the reasons thereof,
in the event of default by the Contractor of any of the stipulations of the
Contract, unless it were the result of a force majeure event or Act of God.

An event of default by the Contractor shall be:

 
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a)
If the Contractor stops or abandons performance or construction of the Project
for a period of over fifteen (15) business days, except if it is due to an order
or instructions issued by a duly authorized representative of INE;

 
b)
If the Contractor fails in its obligation to obtain and maintain in force the
Performance Bond and the Warranty Work Bond for the contract, as required, in
the amounts and under the terms established in Section 11 of WARRANTIES herein;

c)
It at any moment Contractor receives an order of attachment or is declared
insolvent or requests or accepts the imposition of a trustee or liquidator, or
any of them is assigned to or takes possession of the Contractor or all or a
substantial part of its assets and liabilities; if the Contractor or all or a
substantial part of its properties, goods or income were subject to an embargo
proceeding, suspension of payments, dissolution or liquidation; or if the
Contractor executes a general assignment, or an agreement to benefit its
creditors or threatens INE in writing to suspend operations or a substantial
part of them; or take any other action or an event should occur due to laws
applicable to the Contractor, that has a substantially similar effect to any of
the foregoing;

d)
If any representation made by the Contractor, or any guarantee submitted thereby
in its Offer: (i) were false or inaccurate in any substantial aspect on the date
of execution of this Contract; (ii) if it could be remedied but continued to be
false or inaccurate for a period of thirty (30) Days from the date of INE’s
notification to the Contractor to that regard; and (iii) at the moment it were
demonstrated that the representation or guarantee was false or inaccurate and it
is significantly prejudicial to INE’s interests under this Contract.

e)
If the Contractor fails to obtain or maintain in force the insurance coverage to
which it is bound according to Section 37 INSURANCE herein, or does not extend
the bonds that are requested.

f)
If Contractor fails to obtain any permit required from any government and/or
municipal authority within twenty (20) days following the one on which it had
the obligation to obtain such permit, provided that, however, the situation
causes a significant delay in the advancement of the works;

g)
If the Contractor without reasonable grounds fails to initiate, due to causes
attributable to it, performance of the Contract within fifteen (15) days after
the date indicated in the initiation order;

h)
If the Contractor fails to allow INE or the duly empowered agencies, reasonable
access to the facilities and data necessary for inspection, monitoring, and
supervision of the materials and works employed and executed in the work.

i)
If the Contractor invokes the protection of its Government with regard to the
contract;

j)
If the Contractor subcontracts part of the works object of the Contract without
having written authorization from INE;

k)
If the Contractor fails to comply with another substantial obligation under this
Contract, and such default continues for a period of thirty (30) days from the
date of reception of INE’s notification to the Contractor regarding such
default.

 
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SECTION 41.  EARLY TERMINATION

INE may decide on early termination of the Contract herein due to the
inconvenience thereof by serving a written notice to the Contractor at least
thirty (30) Days in advance of the early termination date.

Upon the early termination of the Contract, INE, together with the Contractor,
shall prepare minutes specifying the following:

1.
The value of the works performed as of the early termination date.

2.
The value of the equipment and materials purchased by the Contractor before the
early termination date, and which could not be economically and timely reused by
the Contractor in any other Contract.

3.
Transportation and storage costs incurred for the protection of the equipment
and materials that the Contractor could economically reuse in another Contract,
within a maximum term of six (6) months.

4.
The reasonable implicit cost of removing the equipment by the Contractor before
the early termination date.

5.
The implicit cost of return travel expenses of the Contractor’s personnel that
was exclusively employed in the works.

6.
The costs incurred by the Contractor in order to protect the works.

7.
The costs to cancel any subcontract related to the execution of the works.

8.
Costs of Contractor personnel directly responsible for carrying out early
termination activities

The amounts already paid to the Contractor and the advance payments pending
amortization upon the early termination date shall be deducted from the amount
arising from the calculation detailed in items 1 to 7.

SECTION 42.  POSSESSION OF THE WORKS

INE shall not take possession of the works before the Minutes of Provisional
Acceptance are signed by both Parties; such signing by INE cannot be
unreasonable withheld or delayed.

If the contract is terminated unilaterally or early, INE will take possession of
the work in the condition it is at that time.

SECTION 43.  DIRECT SETTLEMENT

When one of the parties requests direct settlement, such party shall serve a
written notice to the other, specifying the differences, and shall request that
the place, date and time for discussion thereof be established. The issue must
be determined within fifteen (15) days after receipt of the request.
 
 
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Once the communication for direct settlement has been received, the party
requesting it shall be asked in writing to set the place, date and time referred
to above, and the other party may introduce the items that it deems convenient

Once the direct settlement procedure has been exhausted, if the dispute or
controversy persists, the parties shall proceed in accordance with the
provisions of Section 43, JURISDICTION, COMPETENCE AND APPLICABLE LAWS, to
resolve the controversy that has arisen.

SECTION 44.  JURISDICTION, COMPETENCE AND APPLICABLE LAWS

All discrepancies, disagreement, difference, conflict, controversy or dispute
arising between the parties in connection with this Contract relative to its
application, execution, interpretation, validity, failure to comply or any other
issue, must be amicably settled between them directly or, if the parties by
common agreement so decide, through mediation or any other alternative means of
solution of differences to which the “Law of Mediation, Conciliation and
Arbitration” refers, within a maximum term of fifteen days from the day
following the one on which the difference arose. If an agreement is not reached
within the term indicated, such controversies will be presented for arbitration
in the city of San Salvador, Republic of El Salvador and before the Center for
Arbitration and Mediation of the Chamber of Commerce and Industry of El
Salvador, in accordance with its Regulations.  The language of the arbitration
shall be Spanish. In the absence of express procedural rules, the parties
delegate their establishment to an arbitration panel. The arbitration panel
shall be composed by three attorneys authorized in the Republic of El Salvador,
freely practicing their profession, appointed one by each of the parties and a
third appointed by these two in accordance with the Regulations of the Center
for Mediation and Arbitration of the Chamber of Commerce and Industry of El
Salvador.  If the arbitrators appointed by the parties or by the Center in their
absence, do not agree on the appointment of the third arbitrator within a term
of five (5) days after the acceptance of the last arbitrator appointed by them,
the parties shall delegate to the Center for Mediation and Arbitration of the
Chamber of Commerce and Industry of El Salvador the appointment of the third
arbitrator in the same terms established for this case in paragraph five of
article twenty five of the Regulations. The arbitrators must issue their award
no later than ninety (90) days after their appointment.

This arbitration clause of the contract shall subsist even if its nullification
is challenged, partially or totally, therefore in any case the exception of
incompetence may not be invoked if one of the parties intends to promote any
action before ordinary judges and/or tribunals. Without prejudice to the above,
the parties indicate as special domicile the city of San Salvador in the
Republic of El Salvador.

SECTION 45.  PUBLICITY

Except as required by law, regulation or as reasonably required to assert its
rights hereunder, neither Party shall disclose the specific terms of this
Contract without the prior written consent of the other Party. Notwithstanding
the foregoing, the Parties acknowledge that each Party may desire to use the
other Party’s name in press releases, product brochures and financial reports
indicating the Parties’ relationship as seller and customer, and the Parties
agree that each Party may use the other Party’s name in such a manner.

 
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SECTION 46.  NOTICES.

All notices required hereunder shall be in writing and shall be deemed
sufficiently given and received (i) upon delivery, if delivered personally, (ii)
upon confirmed facsimile transmission, if sent by facsimile, (iii) upon
confirmation of delivery, if delivered by a specialized commercial courier
service (such as, but not limited to, Federal Express or DHL), addressed in each
instance to the parties at the domiciles set forth below (or at such other
domiciles as shall be given by the Parties in accordance with this section) or
 (iv) if by email, upon response from the party to whom it was addressed
indicating delivery has been made.

If to Contractor:
Name: Chris Coley - VP and General Counsel
Domicile: 204 Edison Way
Domicile (2)
City: Reno
State/Code: NV
Country: USA
Phone: 775-858-3742
Fax: 775-858-3731
Email: CColey@altairnano.com

If to INE:
Name:
Domicile:
Domicile (2):
City:
State/Code:
Country:
Phone:
Fax:
Email:
 
 
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SECTION 47.  EFFECTIVENESS OF THE CONTRACT

Herein, notwithstanding the contract is signed on this date, it will entered
into force when the competent authority authorizes the participation in the
Market of the proposed energy storage system, in the commercial conditions in
existence at the signing of the contract. As a result of the foregoing, rights
and obligations, guarantees and payments, as well as the issuance of the order
to proceed of the present contract, will take effect from the communication of
the competent authority to INE of its approval.

INVERSIONES ENERGÉTICAS

/s/_____________________

ALTAIRNANO, INC

/s/ JOSE MIGUEL
APARICIO                                                                           
Special Representative

[NOTE: EXHIBITS OTHER THAN EXHIBIT G ARE NOT INCORPORATED INTO THE CONTRACT]
 
 
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EXHIBIT G
SYSTEM OPERATING PARAMETERS

***
 
 
 
 
 
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