Document:

Unassociated Document

     

    THE
      SHARES REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE
      ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR PURSUANT TO
      AN
      AVAILABLE EXEMPTION FORM, OR IN A TRANSACTION NOT SUBJECT TO, REGISTRATION
      UNDER
      SAID ACT

     

    
      	
              Warrant
                No. P-13

            	
              Number
                of Shares: 141,250

              (subject
                to adjustment)

            
	
              Date
                of Issuance: November 10, 2006

               

              Original
                Issue Date (as defined in subsection 

              2(a)):
                November 10, 2006

            	 

    

     

    Lumera
      Corporation

     

    Common
      Stock Purchase Warrant

     

    (Void
      after November 10, 2013)

     

    Lumera
      Corporation, a Delaware corporation (the “Company”), for value received, hereby
      certifies that Robert W. Baird & Co. Incorporated or its registered assigns
      (the “Registered Holder”), is entitled, subject to the terms and conditions set
      forth below, to purchase from the Company, at any time or from time to time
      on
      or after November 10, 2006 and on or before 5:00 p.m. (Eastern time) on November
      10, 2013 (the “Exercise Period”), 141,250 shares of Common Stock, $0.001 par
      value per share, of the Company (“Common Stock”), at a purchase price of $6.25
      per share. The shares purchasable upon exercise of this Warrant, and the
      purchase price per share, each as adjusted from time to time pursuant to the
      provisions of this Warrant, are hereinafter referred to as the “Warrant Shares”
and the “Purchase Price,” respectively. This Warrant is one of a series of
      Warrants of like tenor issued by the Company to the placement agents or its
      affiliates in connection with a private placement of the Company’s securities
      completed on the Original Issue Date, except as to the number of shares of
      Common Stock subject thereto (collectively, the “Agent Warrants”). 

     

    1.  Exercise.

     

    (a)  Exercise
      for Cash.
      The
      Registered Holder may, at its option, elect to exercise this Warrant, in whole
      or in part and at any time or from time to time during the Exercise Period,
      by
      surrendering this Warrant, with the purchase form appended hereto as
Exhibit I
      duly
      executed by or on behalf of the Registered Holder, at the principal office
      of
      the Company, or at such other office or agency as the Company may designate,
      accompanied by payment in full, in lawful money of the United States, of the
      Purchase Price payable in respect of the number of Warrant Shares purchased
      upon
      such exercise. A facsimile signature of the Registered Holder on the purchase
      form shall be sufficient for purposes of exercising this Warrant, provided
      that
      the Company receives the Registered Holder’s original signature with three (3)
      business days thereafter.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  Cashless
      Exercise.
      

     

    (i)  At
      any
      time during the Exercise Period the Registered Holder may, at its option, elect
      to exercise this Warrant, in whole or in part, on a cashless basis, by
      surrendering this Warrant, with the purchase form appended hereto as
Exhibit
      I
      duly
      executed by or on behalf of the Registered Holder, at the principal office
      of
      the Company, or at such other office or agency as the Company may designate,
      by
      canceling a portion of this Warrant in payment of the Purchase Price payable
      in
      respect of the number of Warrant Shares purchased upon such exercise. In the
      event of an exercise pursuant to this subsection 1(b), the number of Warrant
      Shares issued to the Registered Holder shall be determined according to the
      following formula: 

     

    
      	 	X =	 Y(A-B)
	 	 	
              A

            
	 	 	 
	 	 	 
	Where:	X = 	the number of Warrant Shares that shall
              be
              issued to the Registered Holder; 
	 	 	 
	 	Y =	the number of Warrant Shares for which
              this
              Warrant is being exercised (which shall include both the number of
              Warrant
              Shares issued to the Registered Holder and the number of Warrant Shares
              subject to the portion of the Warrant being cancelled in payment of
              the
              Purchase Price); 
	 	 	 
	 	A =	the Fair Market Value
              (as
              defined below) of one share of Common Stock; and
	 	 	 
	 	B =	the Purchase Price then
              in
              effect.

 

    (ii)  The
      Fair
      Market Value per share of Common Stock shall be determined as
      follows:

     

    (1) If
      the
      Common Stock is listed on a national securities exchange, the Nasdaq Select
      Global Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC
      Bulletin Board or another nationally recognized trading system as of the
      Exercise Date, the Fair Market Value per share of Common Stock shall be deemed
      to be the average of the high and low reported sale prices per share of Common
      Stock thereon on the trading day immediately preceding the Exercise Date
      (provided
      that if
      no such price is reported on such day, the Fair Market Value per share of Common
      Stock shall be determined pursuant to clause (2) below).

     

    (2) If
      the
      Common Stock is not listed on a national securities exchange, the Nasdaq Select
      Global Market, the Nasdaq Global Market, the Nasdaq Capital Market, the OTC
      Bulletin Board or another nationally recognized trading system as of the
      Exercise Date, the Fair Market Value per share of Common Stock shall be deemed
      to be the amount most recently determined by the Board of Directors of the
      Company (the “Board”) to represent the fair market value per share of the Common
      Stock (including without limitation a determination for purposes of granting
      Common Stock options or issuing Common Stock under any plan, agreement or
      arrangement with employees of the Company); and, upon request of the Registered
      Holder, the Board (or a representative thereof) shall, as promptly as reasonably
      practicable but in any event not later than 10 days after such request, notify
      the Registered Holder of the Fair Market Value per share of Common Stock and
      furnish the Registered Holder with reasonable documentation of the Board’s
      determination of such Fair Market Value. Notwithstanding the foregoing, if
      the
      Board has not made such a determination within the three-month period prior
      to
      the Exercise Date, then (A) the Board shall make, and shall provide or
      cause to be provided to the Registered Holder notice of, a determination of
      the
      Fair Market Value per share of the Common Stock within 15 days of a request
      by
      the Registered Holder that it do so, and (B) the exercise of this Warrant
      pursuant to this subsection 1(b) shall be delayed until such determination
      is
      made and notice thereof is provided to the Registered Holder.

     

    
      
        
        

      

      
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    (c)  Exercise
      Date.
      Each exercise of this Warrant shall be deemed to have been effected immediately
      prior to the close of business on the day on which this Warrant shall have
      been
      surrendered to the Company as provided in subsection 1(a) above (the “Exercise
      Date”). At such time, the person or persons in whose name or names any
      certificates for Warrant Shares shall be issuable upon such exercise as provided
      in subsection 1(c) below shall be deemed to have become the holder or holders
      of
      record of the Warrant Shares represented by such certificates.

     

    (d)  Issuance
      of Certificates.
      As soon as practicable after the exercise of this Warrant in whole or in part,
      and in any event within 3 trading days thereafter, the Company, at its expense,
      will cause to be issued in the name of, and delivered to, the Registered Holder,
      or as the Registered Holder (upon payment by the Registered Holder of any
      applicable transfer taxes) may direct:

     

    (i)  a
      certificate or certificates for the number of full Warrant Shares to which
      the
      Registered Holder shall be entitled upon such exercise plus, in lieu of any
      fractional share to which the Registered Holder would otherwise be entitled,
      cash in an amount determined pursuant to Section 3 hereof; and

     

    (ii)  in
      case such exercise is in part only, a new warrant or warrants (dated the date
      hereof) of like tenor, calling in the aggregate on the face or faces thereof
      for
      the number of Warrant Shares equal (without giving effect to any adjustment
      therein) to the number of such shares called for on the face of this Warrant
      minus the number of Warrant Shares for which this Warrant was so exercised
      (which, in the case of an exercise pursuant to subsection 1(b), shall include
      both the number of Warrant Shares issued to the Registered Holder pursuant
      to
      such partial exercise and the number of Warrant Shares subject to the portion
      of
      the Warrant being cancelled in payment of the Purchase Price).

     

    2.  Adjustments.
      

     

    (a)  Adjustment
      for Stock Splits and Combinations.
      If the
      Company shall at any time or from time to time after the date on which this
      Warrant was first issued (or, if this Warrant was issued upon partial exercise
      of, or in replacement of, another warrant of like tenor, then the date on which
      such original warrant was first issued) (the “Original Issue Date”) effect a
      subdivision of the outstanding Common Stock, the Purchase Price then in effect
      immediately before that subdivision shall be proportionately decreased and
      the
      number of Warrant Shares shall be proportionately increased. If the Company
      shall at any time or from time to time after the Original Issue Date combine
      the
      outstanding shares of Common Stock, the Purchase Price then in effect
      immediately before the combination shall be proportionately increased and the
      number of Warrant Shares shall be proportionately decreased. Any adjustment
      under this paragraph shall become effective at the close of business on the
      date
      the subdivision or combination becomes effective.

     

    
      
        
        

      

      
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    (b)  Adjustment
      for Certain Dividends and Distributions.
      In the
      event the Company at any time, or from time to time after the Original Issue
      Date shall make or issue, or fix a record date for the determination of holders
      of Common Stock entitled to receive, a dividend or other distribution payable
      in
      additional shares of Common Stock, then and in each such event the Purchase
      Price then in effect immediately before such event shall be decreased as of
      the
      time of such issuance or, in the event such a record date shall have been fixed,
      as of the close of business on such record date, by multiplying the Purchase
      Price then in effect by a fraction:

     

    (1)  the
      numerator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date, and

     

    (2)  the
      denominator of which shall be the total number of shares of Common Stock issued
      and outstanding immediately prior to the time of such issuance or the close
      of
      business on such record date plus the number of shares of Common Stock issuable
      in payment of such dividend or distribution; provided,
      however,
      that if
      such record date shall have been fixed and such dividend is not fully paid
      or if
      such distribution is not fully made on the date fixed therefor, the Purchase
      Price shall be recomputed accordingly as of the close of business on such record
      date and thereafter the Purchase Price shall be adjusted pursuant to this
      paragraph as of the time of actual payment of such dividends or
      distributions.

     

    (c)  Adjustments
      for Other Dividends and Distributions.
      In the
      event the Company at any time or from time to time after the Original Issue
      Date
      shall make or issue, or fix a record date for the determination of holders
      of
      Common Stock entitled to receive, a dividend or other distribution payable
      in
      securities of the Company (other than shares of Common Stock) or in cash or
      other property (other than regular cash dividends paid out of earnings or earned
      surplus, determined in accordance with generally accepted accounting
      principles), then and in each such event provision shall be made so that the
      Registered Holder shall receive upon exercise hereof, in addition to the number
      of shares of Common Stock issuable hereunder, the kind and amount of securities
      of the Company, cash or other property which the Registered Holder would have
      been entitled to receive had this Warrant been exercised on the date of such
      event and had the Registered Holder thereafter, during the period from the
      date
      of such event to and including the Exercise Date, retained any such securities
      receivable during such period, giving application to all adjustments called
      for
      during such period under this Section 2 with respect to the rights of the
      Registered Holder.

     

    (d)  Adjustment
      for Reorganization.
      If
      there shall occur any reorganization, recapitalization, reclassification,
      consolidation or merger involving the Company in which the Common Stock is
      converted into or exchanged for securities, cash or other property
      (collectively, a “Reorganization”),
      then,
      following such Reorganization, the Registered Holder shall receive upon exercise
      hereof the kind and amount of securities, cash or other property which the
      Registered Holder would have been entitled to receive pursuant to such
      Reorganization if such exercise had taken place immediately prior to such
      Reorganization. Notwithstanding the foregoing sentence, if (x) there shall
      occur any Reorganization in which the Common Stock is converted into or
      exchanged for anything other than solely equity securities, and (y) the
      common stock of the acquiring or surviving company is publicly traded, then,
      as
      part of such Reorganization, (i) the Registered Holder shall have the right
      thereafter to receive upon the exercise hereof such number of shares of common
      stock of the acquiring or surviving company as is determined by multiplying
      (A) the number of shares of Common Stock subject to this Warrant
      immediately prior to such Reorganization by (B) a fraction, the numerator
      of which is the Fair Market Value (as determined in subsection 2(e) below)
      per
      share of Common Stock as of the effective date of such Reorganization, and
      the
      denominator of which is the fair market value per share of common stock of
      the
      acquiring or surviving company as of the effective date of such transaction,
      as
      determined in good faith by the Board (using the principles set forth in
      subsection 2(e) to the extent applicable), and (ii) the exercise price
      per share of common stock of the acquiring or surviving company shall be the
      Purchase Price divided by the fraction referred to in clause (B) above. In
      any such case, appropriate adjustment (as determined in good faith by the Board)
      shall be made in the application of the provisions set forth herein with respect
      to the rights and interests thereafter of the Registered Holder, to the end
      that
      the provisions set forth in this Section 2 (including provisions with respect
      to
      changes in and other adjustments of the Purchase Price) shall thereafter be
      applicable, as nearly as reasonably may be, in relation to any securities,
      cash
      or other property thereafter deliverable upon the exercise of this Warrant.
      

     

    
      
        
        

      

      
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    (e)  The
      Fair Market Value per share of Common Stock shall be determined in accordance
      with Section 1(b)(ii) above.

     

    (f)  Certificate
      as to Adjustments.
      Upon the occurrence of each adjustment or readjustment of the Purchase Price
      pursuant to this Section 2, the Company at its expense shall, as promptly as
      reasonably practicable but in any event not later than 10 days thereafter,
      compute such adjustment or readjustment in accordance with the terms hereof
      and
      furnish to the Registered Holder a certificate setting forth such adjustment
      or
      readjustment (including the kind and amount of securities, cash or other
      property for which this Warrant shall be exercisable and the Purchase Price)
      and
      showing in detail the facts upon which such adjustment or readjustment is based.
      The Company shall, as promptly as reasonably practicable after the written
      request at any time of the Registered Holder (but in any event not later than
      10
      days thereafter), furnish or cause to be furnished to the Registered Holder
      a
      certificate setting forth (i) the Purchase Price then in effect and
      (ii) the number of shares of Common Stock and the amount, if any, of other
      securities, cash or property which then would be received upon the exercise
      of
      this Warrant. 

     

    3.  Fractional
      Shares.
      The Company shall not be required upon the exercise of this Warrant to issue
      any
      fractional shares, but shall pay the value thereof to the Registered Holder
      in
      cash on the basis of the Fair Market Value per share of Common Stock, as
      determined pursuant to subsection 2(d) above. 

     

    4.  Redemption.
      Notwithstanding any other provision contained herein to the contrary, in the
      event that the closing sale price of the Common Stock as reported on the Nasdaq
      Capital Market (or such other principal exchange or stock market on which the
      Common Stock may then be listed or quoted) is at least 200% of the initial
      Purchase Price (appropriately adjusted for any stock split, reverse stock split,
      stock dividend or other reclassification or combination of the Common Stock
      occurring after the date hereof) for twenty (20) consecutive trading days (the
      “Trading
      Period”),
      upon thirty (30) days prior written notice (the “Notice
      Period”)
      to the Registered Holder, the Company may repurchase this Warrant in full.
      In
      order for the Company to repurchase this Warrant, (i) the Company must give
      a
      similar notice to all holders of the Agent Warrants and repurchase all Agent
      Warrants, and (ii) the Warrant Shares must (A) have been registered pursuant
      to
      an effective Registration Statement which has not been suspended and for which
      no stop order is in effect, and pursuant to which the Registered Holder is
      able
      to sell such Warrant Shares at all times during the Notice Period or (B) no
      longer constitute Registrable Securities (as defined in the Securities Purchase
      Agreement of even date herewith, by and between the Company and the Purchasers
      noted therein). Notwithstanding any such notice by the Company, the Registered
      Holder shall have the right to exercise this Warrant prior to the end of the
      Notice Period. Upon exercise of the Company’s repurchase right set forth herein,
      the Company shall pay the Registered Holder an aggregate amount equal to $0.001
      per Warrant Share.

     

    
      
        
        

      

      
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    5.  Transfers,
      etc.

     

    (a)  Notwithstanding
      anything to the contrary contained herein, this Warrant and the Warrant Shares
      shall not be sold or transferred unless either (i) they first shall have
      been registered under the Securities Act of 1933, as amended (the “Act”),
      or (ii) such sale or transfer shall be exempt from the registration
      requirements of the Act and the Company shall have been furnished with an
      opinion of legal counsel, reasonably satisfactory to the Company, to the effect
      that such sale or transfer is exempt from the registration requirements of
      the
      Act. Notwithstanding the foregoing, no registration or opinion of counsel shall
      be required for (i) a transfer by a Registered Holder which is an entity to
      the parent or a subsidiary of such entity or to an entity under common control
      with the Registered Holder, a transfer by a Registered Holder which is a
      partnership to a partner of such partnership or a retired partner of such
      partnership or to the estate of any such partner or retired partner, or a
      transfer by a Registered Holder which is a limited liability company to a member
      of such limited liability company or a retired member or to the estate of any
      such member or retired member, provided
      that the transferee in each case agrees in writing to be subject to the terms
      of
      this Section 5, or (ii) a transfer made in accordance with
      Rule 144 under the Act.

     

    (b)  Each
      certificate representing Warrant Shares shall bear a legend substantially in
      the
      following form:

     

    “The
      securities represented hereby have not been registered under the Securities
      Act
      of 1933, as amended, or any state securities laws and neither the securities
      nor
      any interest therein may not be offered, sold, transferred, pledged or otherwise
      disposed of except pursuant to an effective registration under such act or
      an
      exemption from registration, which, in the opinion of counsel reasonably
      satisfactory to counsel for this corporation, is available.”

    

    The
      foregoing legend shall be removed from the certificates representing any Warrant
      Shares, at the request of the holder thereof, at such time as they become
      eligible for resale pursuant to Rule 144(k) under the Act (and the holder
      thereof has submitted a written request for removal of the legend indicating
      that the holder has complied with the applicable provisions of Rule 144) or
      at
      such time as the Warrant Shares are sold or transferred in accordance with
      the
      requirements of a registration statement of the Company on Form S-3, or such
      other form as may then be in effect.

     

    
      
        
        

      

      
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    (c)  The
      Company will maintain a register containing the name and address of the
      Registered Holder of this Warrant. The Registered Holder may change its address
      as shown on the warrant register by written notice to the Company requesting
      such change.

     

    (d)  Subject
      to the provisions of this Section 5 hereof, this Warrant and all rights
      hereunder are transferable, in whole or in part, upon surrender of this Warrant
      with a properly executed assignment (in the form of Exhibit II
      hereto) at the principal office of the Company (or, if another office or agency
      has been designated by the Company for such purpose, then at such other office
      or agency).

     

    5A. Restrictions
      on Transfer of Warrants.
      Notwithstanding anything to the contrary contained herein, the Registered
      Holder, by its acceptance of this Warrant, agrees that it will not, directly
      or
      indirectly, offer to sell, sell, contract to sell, grant or sell to any other
      person any option, right or warrant to purchase, lend, assign, pledge, transfer,
      hypothecate or otherwise dispose of or encumber any of the Agent Warrants,
      or
      dispose of any beneficial interest therein, except to (i) successors to the
      Registered Holder in a merger or consolidation, (ii) purchasers of all or
      substantially all of the assets of the Registered Holder, or (iii) shareholders,
      partners or affiliates of the Registered Holder. 

    

    6.  No
      Impairment.
      The Company will not, by amendment of its charter or through any reorganization,
      transfer of assets, consolidation, merger, dissolution, issue or sale of
      securities or any other voluntary action, avoid or seek to avoid the observance
      or performance of any of the terms of this Warrant, but will at all times in
      good faith assist in the carrying out of all such terms and in the taking of
      all
      such action as may be necessary or appropriate in order to protect the rights
      of
      the Registered Holder against impairment.

     

    7.  Notices
      of Record Date, etc.
      In the event:

     

    (a)  the
      Company shall take a record of the holders of its Common Stock (or other stock
      or securities at the time deliverable upon the exercise of this Warrant) for
      the
      purpose of entitling or enabling them to receive any dividend or other
      distribution, or to receive any right to subscribe for or purchase any shares
      of
      stock of any class or any other securities, or to receive any other right;
      or

     

    (b)  of
      any capital reorganization of the Company, any reclassification of the Common
      Stock of the Company, any consolidation or merger of the Company with or into
      another corporation, or any transfer of all or substantially all of the assets
      of the Company; or

     

    (c)  of
      the voluntary or involuntary dissolution, liquidation or winding-up of the
      Company, then, and in each such case, the Company will send or cause to be
      sent
      to the Registered Holder a notice specifying, as the case may be, (i) the record
      date for such dividend, distribution or right, and the amount and character
      of
      such dividend, distribution or right, or (ii) the effective date on which such
      reorganization, reclassification, consolidation, merger, transfer, dissolution,
      liquidation or winding-up is to take place, and the time, if any is to be fixed,
      as of which the holders of record of Common Stock (or such other stock or
      securities at the time deliverable upon the exercise of this Warrant) shall
      be
      entitled to exchange their shares of Common Stock (or such other stock or
      securities) for securities or other property deliverable upon such
      reorganization, reclassification, consolidation, merger, transfer, dissolution,
      liquidation or winding-up. Such notice shall be sent at least 10 days prior
      to
      the record date or effective date for the event specified in such
      notice.

     

    
      
        
        

      

      
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    8.  Reservation
      of Stock.
      The Company will at all times reserve and keep available, solely for issuance
      and delivery upon the exercise of this Warrant, such number of Warrant Shares
      and other securities, cash and/or property, as from time to time shall be
      issuable upon the exercise of this Warrant.

     

    9.  Exchange
      or Replacement of Warrants. 

     

    (a)  Upon
      the surrender by the Registered Holder, properly endorsed, to the Company at
      the
      principal office of the Company, the Company will, subject to the provisions
      of
      Section 5 hereof, issue and deliver to or upon the order of the Registered
      Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in
      the name of the Registered Holder or as the Registered Holder (upon payment
      by
      the Registered Holder of any applicable transfer taxes) may direct, calling
      in
      the aggregate on the face or faces thereof for the number of shares of Common
      Stock (or other securities, cash and/or property) then issuable upon exercise
      of
      this Warrant.

     

    (b)  Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and (in the case of loss, theft or
      destruction) upon delivery of an indemnity agreement (with surety if reasonably
      required) in an amount reasonably satisfactory to the Company, or (in the case
      of mutilation) upon surrender and cancellation of this Warrant, the Company
      will
      issue, in lieu thereof, a new Warrant of like tenor.

     

    10.  Notices.
      All notices and other communications from the Company to the Registered Holder
      in connection herewith shall be mailed by certified or registered mail, postage
      prepaid, or sent via a reputable nationwide overnight courier service
      guaranteeing next business day delivery, to the address last furnished to the
      Company in writing by the Registered Holder. All notices and other
      communications from the Registered Holder to the Company in connection herewith
      shall be mailed by certified or registered mail, postage prepaid, or sent via
      a
      reputable nationwide overnight courier service guaranteeing next business day
      delivery, to the Company at its principal office set forth below. If the Company
      should at any time change the location of its principal office to a place other
      than as set forth below, it shall give prompt written notice to the Registered
      Holder and thereafter all references in this Warrant to the location of its
      principal office at the particular time shall be as so specified in such notice.
      All such notices and communications shall be deemed delivered one business
      day
      after being sent via a reputable international overnight courier service
      guaranteeing next business day delivery. 

     

    11.  No
      Rights as Stockholder.
      Until the exercise of this Warrant, the Registered Holder shall not have or
      exercise any rights by virtue hereof as a stockholder of the Company.
      Notwithstanding the foregoing, in the event (i) the Company effects a split
      of the Common Stock by means of a stock dividend and the Purchase Price of
      and
      the number of Warrant Shares are adjusted as of the date of the distribution
      of
      the dividend (rather than as of the record date for such dividend), and
      (ii) the Registered Holder exercises this Warrant between the record date
      and the distribution date for such stock dividend, the Registered Holder shall
      be entitled to receive, on the distribution date, the stock dividend with
      respect to the shares of Common Stock acquired upon such exercise,
      notwithstanding the fact that such shares were not outstanding as of the close
      of business on the record date for such stock dividend.

     

    
      
        
        

      

      
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    12.  Registration
      Rights.
      The
      Registered Holder shall be entitled to registration rights with respect to
      the
      Warrant Shares to the same extent and on the same terms as those provided to
      investors pursuant to Section E of that certain Securities Purchase Agreement
      dated November 7, 2006 (the “Purchase Agreement”), among the Company and certain
“Purchasers” identified therein; provided,
      however,
      that in
      no event shall the Company have any obligation to the Registered Holder to
      pay
      any liquidated damages pursuant to Section E(2)(d) of the Purchase Agreement.
      By
      acceptance of this Warrant the Registered Holder agrees to comply with
      provisions of Section E of the Purchase Agreement to the same extent as if
      it
      were a party to such agreement. 

     

    13.  Amendment
      or Waiver.
      Any term of this Warrant may be amended or waived (either generally or in a
      particular instance and either retroactively or prospectively) with the written
      consent of the Company and the holders of Agent Warrants representing at least
      a
      majority of the number of shares of Common Stock then subject to outstanding
      Agent Warrants.

     

    14.  Section
      Headings.
      The section headings in this Warrant are for the convenience of the parties
      and
      in no way alter, modify, amend, limit or restrict the contractual obligations
      of
      the parties.

     

    15.  Governing
      Law.
      This Warrant will be governed by and construed in accordance with the internal
      laws of the State of New York (without reference to the conflicts of law
      provisions thereof).

     

    16.  Facsimile
      Signatures.
      This
      Warrant may be executed by facsimile signature.

     

    

     

    *
      * * * * * *

     

    
      
        
        

      

      
        -
          9
          -

        
          

        

      

      
        
        

      

    

    EXECUTED
      as of the Date of Issuance indicated above.

     

    
      	 	 	 
	 	LUMERA
              CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      I

     

    PURCHASE
      FORM

     

    To:
      Lumera CorporationDated:____________

     

    

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No. ___), hereby elects to purchase (check
      applicable box):

     

    □ ____
      shares of the Common Stock of Lumera Corporation covered by such Warrant;
      or 

     

    □ ____
      the
      maximum number of shares of Common Stock covered by such Warrant pursuant to
      the
      cashless exercise procedure set forth in subsection 1(b).

     

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant. Such payment takes the form
      of
(check
      applicable box or boxes):

     

    □ $______
      in lawful money of the United States; and/or

     

    □ the
      cancellation of such portion of the attached Warrant as is exercisable for
      a
      total of _____ Warrant Shares (using a Fair Market Value of $_____ per share
      for
      purposes of this calculation) ; and/or

     

    □ the
      cancellation of such number of Warrant Shares as is necessary, in accordance
      with the formula set forth in subsection 1(b), to exercise this Warrant
      with respect to the maximum number of Warrant Shares purchasable pursuant to
      the
      cashless exercise procedure set forth in subsection 1(b).

     

    The
      undersigned hereby represents and warrants as follows:

     

    (a)
      the
      undersigned is acquiring such shares of Common Stock for its own account for
      investment and not for resale or with a view to distribution thereof in
      violation of the Securities Act of 1933, as amended, and the regulations
      promulgated thereunder (the "Securities Act"); and

     

    (b)
      the
      undersigned is an "accredited investor" as defined in Rule 501of Regulation
      D
      promulgated under the Securities Act and was not organized for the purposes
      of
      acquiring the Warrant or such shares of Common Stock. The undersigned's
      financial condition is such that it is able to bear the risk of holding such
      securities for an indefinite period of time and the risk of loss of its entire
      investment. The undersigned has sufficient knowledge and experience in investing
      in companies similar to the Company so as to be able to evaluate the risks
      and
      merits of investment in the Company. 

     

    
      	 	Signature:	 
	 	Address:	 
	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      II

     

    ASSIGNMENT
      FORM

     

    FOR
      VALUE
      RECEIVED, ______________________________________ hereby sells, assigns and
      transfers all of the rights of the undersigned under the attached Warrant (No.
      ____) with respect to the number of shares of Common Stock of Lumera Corporation
      covered thereby set forth below, unto:

     

    
      	
              Name
                of Assignee

            	
              Address

            	
              No.
                of Shares

            
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    

    

     

    The
      undersigned hereby agrees that it will not sell, assign or transfer the right,
      title and interest in and to the Warrant unless applicable federal and state
      securities laws have been complied with.

     

    Dated:_____________________

     

    Signature:________________________________

     

    Signature
      Guaranteed:

     

    By:
      _______________________

     

    The
      signature should be guaranteed by an eligible guarantor institution (banks,
      stockbrokers, savings and loan associations and credit unions with membership
      in
      an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
      under the Securities Exchange Act of 1934, as amended.EXHIBIT 10.1

Exhibit 10.1

EXECUTION COPY

JOINT VENTURE AGREEMENT

Dated as of November 9, 2006

Among

INTERNATIONAL POWER GROUP, LTD.,

SISTEMAS ECOLOGICOS PARA LA PROTECCION AMBIENTAL S.A. DE C.V.

AND

MARIO SALGUERO ROSSAINZZ

Table of Contents

CHAPTER I.  DEFINITION OF TERMS

- 1 -

CHAPTER II.  OBLIGATIONS OF THE PARTIES; CONDITIONS

- 3 -

This Chapter II sets forth certain obligations of the Parties with respect to the Project.  These obligations are subject to the express conditions set forth herein as applicable pursuant to the terms and conditions of this Agreement.  - 3 -

2.1

JOINT VENTURE MILESTONES

- 3 -

2.2

WASTE HANDLING AGREEMENT

- 3 -

2.3

LEASE AGREEMENT

- 4 -

2.4

PERMITS TO BUILD AND OPERATE THE PLANT

- 5 -

2.5

SEPA TO PROVIDE THEIR CONTACTS AND RELATIONS WITH AUTHORITIES AND LOCAL BUSINESS COMMUNITY  - 5 -

2.6

EXPERTISE STUDIES AND TECHNOLOGY

- 5 -

2.7

BUILDING PROCESS

- 5 -

2.8

PROJECT FINANCING

- 5 -

2.9

PROJECT INSURANCE

- 6 -

2.10

PLANT OPERATION

- 6 -

2.11

PLANT INDUSTRIAL RESIDUES PROVIDERS

- 6 -

2.12

TEMPORARY INDUSTRIAL RESIDUES STORAGE

- 6 -

2.13

NON-COMPETITION

- 6 -

CHAPTER III.  ORGANIZATION AND BUSINESS OF THE JOINT VENTURE

- 6 -

3.1

BUSINESS PURPOSES

- 6 -

3.2

CHARTER AND BY-LAWS

- 7 -

3.3

EQUITY STRUCTURE

- 7 -

3.4

LIMITED LIABILITY

- 7 -

CHAPTER IV.  GENERAL MEETING

- 7 -

4.1

GENERAL EQUITY HOLDER’S MEETINGS

- 7 -

4.2

QUORUM

- 7 -

4.3

RESOLUTION

- 8 -

4.4

IMPORTANT MATTERS

- 8 -

CHAPTER V.  DIRECTORS AND OFFICERS

- 8 -

5.1

ELECTION OF DIRECTORS

- 8 -

5.2

QUORUM AND RESOLUTION

- 8 -

5.3

OFFICERS

- 9 -

5.4

OTHER POSTS

- 9 -

5.5

DEADLOCK RESOLUTION

- 9 -

5.6

OCCURRENCE OF DEADLOCK

- 9 -

5.7

MEDIATION

- 10 -

5.8

OFFER AND SALE OF EQUITY INTERESTS

- 11 -

CHAPTER VI.  AUDITORS

- 12 -

6.1

AUDITOR

- 12 -

CHAPTER VII.  ACCOUNTING

- 12 -

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7.1

ACCOUNTING PERIOD

- 12 -

7.2

INSPECTION OF ACCOUNTING RECORDS AND BOOKS

- 12 -

CHAPTER VIII.  INCREASE OF CAPITAL

- 12 -

8.1

CAPITAL CALLS

- 12 -

CHAPTER IX.  TRANSFER OF EQUITY INTERESTS

- 13 -

9.1

DISPOSAL OF EQUITY INTERESTS

- 13 -

9.2

EFFECT OF TRANSFER

- 14 -

9.3

INSOLVENCY

- 14 -

9.4

CHANGE IN CONTROL

- 15 -

9.5

RIGHT TO PURCHASE EQUITY INTERESTS IN JV

- 15 -

CHAPTER X.  [RESERVED]

- 15 -

CHAPTER XI [RESERVED]

- 15 -

CHAPTER XiI.  GOVERNMENT APPROVALS AND PROTECTIVE MEASURES

- 15 -

12.1

APPLICATION

- 15 -

CHAPTER XIII.  PAYMENTS AND BEARING OF COST AND EXPENSES

- 15 -

13.1

DISTRIBUTIONS

- 15 -

13.2

COSTS AND EXPENSES

- 16 -

CHAPTER XIV.  NON-DISCLOSURE PROVISION

- 16 -

14.1

CONFIDENTIALITY

- 16 -

CHAPTER XV.  OBLIGATIONS, REPRESENTATIONS AND WARRANTIES

- 16 -

15.1

OBLIGATIONS OF THE EQUITY HOLDERS

- 16 -

15.2

REPRESENTATIONS AND WARRANTIES

- 17 -

CHAPTER XVI.  COMPLIANCE

- 19 -

16.1

COMPLIANCE WITH LAWS AND STANDARDS OF CONDUCT

- 19 -

CHAPTER XVII.  INDEMNIFICATION

- 20 -

17.1

INDEMNIFICATION

- 20 -

CHAPTER XVIII.  GENERAL PROVISIONS

- 20 -

18.1

DEFAULT

- 20 -

18.2

TERMINATION

- 21 -

18.3

FORCE MAJEURE

- 22 -

18.4

NOTICE

- 22 -

18.5

NO WAIVER

- 23 -

18.6

DIVISIBILITY OF PROVISIONS

- 23 -

18.7

ASSIGNMENT

- 23 -

18.8

ARBITRATION

- 23 -

18.9

GOVERNING LAW

- 24 -

18.10

ENTIRE AGREEMENT

- 24 -

18.11

HEADINGS

- 24 -

18.12

CUMULATIVE REMEDIES

- 24 -

18.13

NO GUARANTEES OF SUCCESS

- 25 -

18.14

LANGUAGE

- 25 -

18.15

COUNTERPARTS

- 25 -

18.16

PRECEDENCE OF AGREEMENT

- 25 -

18.17

RELATIONSHIP OF THE PARTIES

- 25 -

18.18

NO PUBLICITY

- 25 -

18.19

SURVIVAL

- 25 -

18.20

LABOR MATTERS

- 26 -

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EXECUTION COPY

JOINT VENTURE AGREEMENT

This Joint Venture Agreement (the “Agreement”) is made and entered into on this 9th day of November, 2006 (the “Effective Date”) by and between INTERNATIONAL POWER GROUP LTD., a corporation duly organized and existing under the laws of the State of Delaware, United States of America, and having its principal place of business at 950 Celebration Boulevard Suite A, Celebration, Florida 34347, USA (“IPWG”), SISTEMAS ECOLOGICOS PARA LA PROTECCION AMBIENTAL S.A. DE C.V., a corporation duly organized and existing under the laws of the Mexican Republic, and having its principal place of business at Calle Juan Ugarte No. 11062-4, Fraccionamiento Garita de Otay, Tijuana, North Baja California, Z.C. 22440, Mexico (“SEPA”), and Mr. Mario Salguero Rossainzz, a citizen of Mexico and the General Director of SEPA, with an address of Calle Juan Ugarte no. 11062-4, Fraccionamiento garita de Otay, Tijuana, North Baja California, Z.C. 22440, Mexico (“Salguero”).  IPWG, SEPA and Salguero are alternatively referred to herein as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, IPWG is marketing and plans to build and operate waste-to-energy facilities to process solid and hazardous wastes by incineration, which facilities would produce marketable electricity, drinking water and ash for use in construction materials including cement and road beds;

WHEREAS, SEPA is engaged in, among other things, the business of transporting hazardous and non-hazardous industrial residues to temporary storage facilities and transporting such residues for final disposal, and is engaged in the collection and transportation of burn oil, flammable liquids and corrosive liquids, as well as waste water, to storage facilities;

WHEREAS, Salguero is the General Director of SEPA;

WHEREAS, the Parties have decided to form a joint venture in order to build, fuel and operate a waste-to-energy facility in Mexicali, North Baja California, Mexico; and

WHEREAS, IPWG and SEPA desire to enter into this Agreement to set out certain terms and conditions relating to the establishment and management of such joint venture entity and the construction, fuel and operation of such waste-to-energy facility, all subject to certain terms and conditions as set forth herein.

NOW, THEREFORE, in consideration of the above recitals and the promises, covenants and warranties set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which the Parties acknowledge, the Parties agree as follows:

CHAPTER I.  DEFINITION OF TERMS

1.1

In this Agreement and in the recitals hereto:

(a)

“Affiliate” means any entity that controls, is controlled by, or is under common control with an entity.  For purposes of this definition, “control” means:  (i) ownership of more than 50% of the voting ownership interests of an entity; and/or (ii) the right under contract to select a majority of the members of the board of directors or other governing body of an entity, or similarly to control and direct the management of the entity.

(b)

“Appraised Value” means the fair market value of one hundred percent (100%) of the Equity Interests of JV as a going concern without any minority discount or control premium.  The Appraised Value of any particular Percentage Interest shall mean the 

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Appraised Value of JV times such Percentage Interest, reduced by an appropriate minority discount or increased by any premium appropriate in the event the Percentage Interest represents a controlling interest in the JV.

(c)

“Equity Holder” means any entity that holds an Equity Interest in JV.

(d)

“Equity Interest” means a unit of capital in JV.

(e)

“Financial Close Date” means the date on which JV and Project Company have entered binding, irrevocable commitments with third-party lenders and investors to provide financing for the construction of the JV Facility, the lease of the Premises, and the operation of the JV Facility in accordance with the financing plan to be developed by IPWG in its sole discretion on behalf of JV. 

(f)

“Industrial Residues” means waste of a kind and nature described in Exhibit A to this Agreement, and does not include Municipal Waste.

(g)

“JV Facility” means a WTE Plant to be built and operated by the Project Company as contemplated by this Agreement.

(h)

“Lease Agreement” means a contract between SEPA and the Project Company for the lease of the Premises.

(i)

“Municipal Waste” means waste under the control of local authorities or agents acting on their behalf, but not including Industrial Residues. Examples of Municipal Waste include household waste, street litter, waste delivered to recycling points, municipal parks and garden wastes, and commercial waste from small commercial enterprises where local authority waste collection agreements are in place.

(j)

“Non-Recourse Project Financing” means financing arrangements that provide a lender or investor with recourse, if any, only against assets and capital stock of JV and/or the Project Company.

(k)

“Percentage Interest” means all of an Equity Holder’s Equity Interests in JV, expressed as a percentage of the aggregate of 100% of the outstanding Equity Interests of JV.

(l)

“Premises” means that certain eighteen (20) Hectare parcel of real property described further in Exhibit B.

(m)

“Project” means the construction and operation of the JV Facility on the Premises.  

(n)

“Project Company” means the entity that builds and operates the JV Facility.  The “Project Company” will be organized and existing under the laws of Mexico and may be the JV or may be a direct or indirect subsidiary of JV.

(o)

“Transaction Documents” means those agreements referenced herein to be entered by one or more of the Parties and JV or the Project Company after the Effective Date, including the Lease Agreement and the Waste Handling Agreement.

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(p)

“Waste-to-Energy Plant” or “WTE Plant” means a facility that incinerates solid waste and from such operations generates electricity, drinking water and ash for use in construction materials including cement and road beds.

1.2

Any reference in this Agreement to a “Clause” or “Schedule” is a reference to a clause hereof or a schedule hereto.

1.3

In this Agreement:

(a)

 “Hectare(s)” denotes 10,000 m2. or 2.471053 acres.

(b)

 “Ton(s)” denotes a metric ton.

CHAPTER II.  OBLIGATIONS OF THE PARTIES; CONDITIONS

This Chapter II sets forth certain obligations of the Parties with respect to the Project.  These obligations are subject to the express conditions set forth herein as applicable pursuant to the terms and conditions of this Agreement.

2.1

JOINT VENTURE MILESTONES

Each Party shall use commercially reasonable efforts to support the operations of JV and Project Company and to achieve the milestones set forth in Exhibit C (Joint Venture Milestones) by the corresponding milestone dates set forth in Exhibit C.

2.2

WASTE HANDLING AGREEMENT

On or before November 15, 2006, SEPA and IPWG shall have agreed to the terms of a Waste Handling Agreement (the “Waste Handling Agreement”), to be entered by SEPA and the Project Company subsequent to the formation of the Project Company and prior to the Financial Close Date, that is consistent with the terms and conditions of this Agreement including the following: 

(a)

SEPA INDUSTRIAL RESIDUES PROGRAM COMMITMENT.  SEPA shall provide and pay Project Company to process at least 450 Tons per day of Industrial Residues, which amount may increase over time.  SEPA will adhere to an Industrial Residues Program Schedule that provides the schedule for SEPA to achieve its commitment under this Section 2.2(a), a copy of which is attached as Exhibit D. 

(b)

SEPA INDUSTRIAL RESIDUES DELIVERY TO THE PLANT.  SEPA shall deliver the Industrial Residues directly to the JV Facility at its sole expense, using its own transportation or hiring outsourced transportation or other means.  SEPA will be responsible for the transportation of the Industrial Residues to the JV Facility and Project Company will be in charge of the final disposal and will use commercially reasonable efforts to obtain a “Destruction Certificate” for such Industrial Residues if necessary to comply with applicable law.

(c)

PRICES.  The prices to be paid by SEPA to the Project Company for the Project Company’s services with respect to Industrial Residues under the Waste Handling Agreement are set forth in Exhibit E.  The prices in Exhibit E are in consideration of market prices, volumes and qualities of the Industrial Residues, and other relevant technical and operational factors, and are subject to increase on a calendar yearly basis as a result of increases in the cost of supplies and labor and other reasonable business factors.  The prices are in US Dollars and will apply to SEPA and other 

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Industrial Residue customers of the Project Company, subject to the requirements of applicable law; provided, however, that the Project Company may enter into agreements with municipalities for the processing of Municipal Waste at pricing that is different than the pricing set forth in Exhibit E.

(d)

THIRD PARTY CUSTOMERS.  Project Company will negotiate waste handling agreements and tipping fees for Industrial Residues or Municipal Waste with other customers including municipalities to the extent commercially reasonable.  Exhibit F contains a list of current SEPA customers and prospective customers for use of the services of the Project Company.  SEPA undertakes to notify the Project Company from time-to-time of other prospective Project Company customers that SEPA identifies. 

2.3

LEASE AGREEMENT

On or before December 15, 2006, SEPA and IPWG shall have agreed to the terms of the Lease Agreement to be entered by SEPA and the Project Company, which Lease Agreement shall be consistent with the terms and conditions of this Agreement including the following: 

(a)

SEPA, as a contribution to the JV, shall lease the Premises at a rate below fair market value for the entire term of the Lease Agreement.  The Lease Agreement shall have a term of thirty (30) years or the maximum period permitted by law, if less.  SEPA represents and warrants to IPWG that SEPA has or prior to entry into the Lease Agreement will have the necessary power and authority to enter into the Lease Agreement in accordance with the terms and conditions of this Agreement.

(b)

Neither the Project Company nor its Affiliates (including IPWG or JV) shall have any obligation to enter the Lease Agreement unless and until: (i) SEPA and Project Company have negotiated the terms and conditions of The Lease Agreement which are consistent with this Section 2.3 (Lease Agreement) and are otherwise to the satisfaction of IPWG and the Project Company in their sole discretion; and (ii) IPWG and the Project Company are satisfied in their sole discretion with the results of their due diligence investigation of the Premises which may include, without limitation, an investigation to determine whether in the sole discretion of IPWG and the Project Company: (A) the accesses are adequate; (B) the Tons of Industrial Residues produced in the vicinity of the JV Facility are adequate; (C) the Premises may be connected through reasonable efforts to the electrical, sewage, and other public utility grid, and (D) the Premises will have access to sufficient water.

(c)

SEPA shall cooperate with Project Company’s and its Affiliates’ due diligence investigation of the Premises and will provide and ensure that Project Company and its Affiliates have sufficient access to the Premises to perform such tests and examinations of the Premises that Project Company and its Affiliates deem advisable in their sole discretion.

(d)

Upon satisfactory completion of its due diligence investigation, the Project Company will notify SEPA and SEPA, in coordination with IPWG will petition the Comisión Federal de Electricidad (“CFE”) and the Comisión Nacional del Agua (“CNA”) for approval of the proposed construction and operation of the JV Facility; and, notwithstanding anything to the contrary in the Lease Agreement to be entered by SEPA and the Project Company, the Project Company shall have no obligation to make payments under the Lease Agreement unless and until such condition is satisfied among such other customary and reasonable conditions to be agreed by the Parties.

(e)

The Lease Agreement shall contain representations and warranties to the satisfaction of the Project Company in its sole discretion as to the absence of environmental or hazardous substance 

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contamination of the Premises, including, without limitation, soil, substrata and acquifers underlying the Premises, and other adverse environmental conditions, and shall provide for indemnification of Project Company and its Affiliates for any losses and liabilities incurred due to any such environmental conditions.

2.4

PERMITS TO BUILD AND OPERATE THE PLANT

SEPA shall transfer and assign and contribute, at its sole expense, to the Project Company all permits, licenses and government approvals (“Permits”) that SEPA already possesses and which are necessary or helpful to the construction of the JV Facility or the operations of the Project Company on or before December 15, 2006, and will assist Project Company with securing all other Permits that are necessary or helpful to the construction of the JV Facility or the operations of the Project Company.  The costs of such new Permits (not Permits transferred and assigned by SEPA) and extensions thereof will be absorbed by the Project Company.  Exhibit G identifies the Permits to be transferred and assigned by SEPA to the Project Company, and those other Permits that will be required for the operation of Project Company.

2.5

SEPA TO PROVIDE THEIR CONTACTS AND RELATIONS WITH AUTHORITIES AND LOCAL BUSINESS COMMUNITY

SEPA shall at no expense to IPWG or JV provide strategic advisory services in connection with the establishment and operations of the Project Company, including knowledge and strategic advisory services regarding the Industrial Residues market of the locality and surrounding area, introductions to and coordination with SEPA’s contacts with government and industry authorities and representatives, assistance with applying for and securing the Permits, and assistance with the construction of The JV Facility and launch and continuing operations of the Project Company.

2.6

EXPERTISE STUDIES AND TECHNOLOGY

The JV shall be responsible for commissioning and securing all necessary and appropriate feasibility and engineering studies in connection with the construction and operation of the JV Facility, following IPWG technical, financial and operational policies.  SEPA will have the right to make suggestions based on its knowledge of the local market and technology, but the final decision will be made by the JV based on the recommendations of IPWG.  IPWG or an Affiliate of IPWG further shall license certain technology and provide certain technical assistance to the Project Company in connection with the planning, construction and operation of the JV Facility in accordance with a technology agreement to be entered between IPWG or such Affiliate of IPWG and the Project Company.

2.7

BUILDING PROCESS

Subject to the timely satisfaction of the milestones set forth in Exhibit C (Joint Venture Milestones) and the approval and issuance of all necessary Permits by government authorities for the construction and operation of the JV Facility, the Project Company will use commercially reasonable efforts to construct the JV Facility.  Subject to the conditions set forth in the preceding sentence, the Project Company will supervise the construction and operation of the JV Facility.  IPWG will develop the specifications and plans for the construction of the JV Facility in its sole discretion.

2.8

PROJECT FINANCING

Subject to the timely satisfaction of the milestones set forth in Exhibit C (Joint Venture Milestones) and the approval issuance of all necessary Permits by government authorities for the construction and operation of 

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the JV Facility, IPWG shall use commercially reasonable efforts to assist JV with obtaining Non-Recourse Project Financing for the Project.  

IPWG and JV have the right to use any method they deem reasonable or appropriate in their sole discretion to secure non-recourse Project Financing for the Project including borrowing money or selling any of IPWG’s Equity Interests in JV.

2.9

PROJECT INSURANCE

JV shall be responsible for securing reasonable and appropriate insurance coverages for the Project Company.

2.10

PLANT OPERATION

The JV Facility will be operated and managed by IPWG on behalf of the Project Company and IPWG may charge a reasonable management fee to the JV consistent with other IPWG facilities subject to any distinguishing factors from such facilities, and if no such other facilities are then in operation, IPWG may charge a reasonable fee based on relevant factors. This Section 2.10 shall be superseded by a Management Agreement to be negotiated between IPWG and JV.

2.11

PLANT INDUSTRIAL RESIDUES PROVIDERS

SEPA acknowledges that it will be a very important provider of Industrial Residues to the JV Facility.  In parallel, Project Company may have its own sales force that will promote the JV Facility services in order to acquire more customers.  The Project Company will prioritize the handling of Industrial Residues from SEPA over Industrial Residues of other customers of the Project Company, as further described in the Waste Handling Agreement to be agreed and entered by the Project Company and SEPA.  

2.12

TEMPORARY INDUSTRIAL RESIDUES STORAGE

The Project Company and SEPA agree to negotiate in good faith as part of the Waste Handling Agreement for the Project Company to provide the capabilities for six (6) months Industrial Residues temporary storage following the launch of the JV Facility and, in order for the JV Facility and Project Company to initiate income to the extent Permits allow for Industrial Residue temporary storage at the JV Facility.  SEPA will provide a Temporary Industrial Residue Storage Permit to the Project Company, which SEPA represents is valid for the Premises, and will provide the necessary Industrial Residues according to the Schedule that is attached to this Agreement as Exhibit D, in order to comply with the 450 Tons per day commitment in an agreed period.

2.13

NON-COMPETITION

As an integral part of this Agreement, on or before November 15, 2006, SEPA shall enter into a non-competition and restrictive covenant agreement with IPWG that is satisfactory to IPWG.

CHAPTER III.  ORGANIZATION AND BUSINESS OF THE JOINT VENTURE

3.1

BUSINESS PURPOSES

The business purpose of this Agreement is a joint venture by the Parties, to build and operate a WTE Plant in the City of Mexicali, North Baja California, Mexico, and for this purpose, as further described in and 

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subject to the terms and conditions of this Agreement, the Parties agree to establish the JV as a new company, in accordance with this Agreement.

3.2

CHARTER AND BY-LAWS

The Parties agree to draft the by-laws and Articles of Incorporation or other applicable organizational documents of JV (collectively, the “Charter Documents”), and to execute or cause to have executed the Charter Documents in accordance with applicable law, all on or before December 15, 2006.  In the event of any conflict between this Agreement and the Charter Documents, the terms of this Agreement shall prevail as between the Parties hereto.  The Charter Documents shall be in the English language.

3.3

EQUITY STRUCTURE

Each Party shall make an initial capital contribution to JV in the amount to be determined by the Parties and described in the Charter Documents and in exchange shall receive that number of units of Equity Interests in JV that correspond to its Percentage Interest set forth in this Section 3.3 below.  The initial Percentage Interest of each Party in exchange for its initial capital contribution to JV shall be as follows:

(a)

IPWG:  90.0%.

(b)

SEPA:  5.0%.

(c)

SALGUERO:

5.0%

3.4

LIMITED LIABILITY

JV shall be organized in the form of a limited liability organization under applicable law with enterprise legal person status.  The liability of each Party for the debts, liabilities or obligations of JV shall be limited to the amount of the capital contribution it has made in accordance with the Charter Documents and applicable law to JV.

3.5

THE PROJECT COMPANY

The JV shall organize and establish the Project Company under applicable law in Mexico.  The Project Company shall be wholly owned, directly or indirectly, by JV.

CHAPTER IV.  GENERAL MEETING

4.1

GENERAL EQUITY HOLDER’S MEETINGS

General Equity Holders’ Meetings for the JV may be convened by resolution of the Board of Directors  or by the Secretary and shall be held at least twice a year, either in the offices of Project Company or at such other location as designated by JV.

4.2

QUORUM

A quorum at any General Equity Holders’ Meeting shall exist whenever one or more Equity Holders owning Equity Interests representing at least sixty per cent (60%) of JV’s Equity Interests are present or represented at the meeting.

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4.3

RESOLUTION

Each Equity Holder shall be entitled to participate in the General Equity Holders’ Meeting.  The Equity Holders present or represented at the meeting and that represent a majority of the Equity Interests in JV will have the final decisions but will always take into account the opinions and suggestions of other Equity Holders.

Except as otherwise provided by this Agreement, all resolutions at any General Equity Holders’ Meeting shall be adopted by the affirmative vote of the Equity Holders representing more than fifty percent (50%) of the present or represented Equity Interests of JV.  An Equity Holder shall be entitled to exercise its right of vote by proxy at any General Equity Holders’ Meeting subject to the requirements of the Charter Documents.

4.4

IMPORTANT MATTERS

The following important matters shall require an Equity Holder’s resolution, which shall only be adopted by the unanimous affirmative vote or consent (in accordance with applicable law) of all Equity Holders of JV.  All Equity Holders agree that when so requested by the other Equity Holder they shall elaborate their reasoning for voting for or against any of the important matters as follows:

(a)

Any increase or decrease in the authorized capital of JV.

(b)

Any purchase or sale of all or substantially all of the assets of JV.

(c)

Any merger, dissolution, liquidation or amalgamation by JV.

(d)

The entry into any contracts or substantial commercial transactions with an Equity Holder other than those that are expressly contemplated herein.

CHAPTER V.  DIRECTORS AND OFFICERS

5.1

ELECTION OF DIRECTORS

JV shall be managed and administered by a Board of Directors (the “Board”), which shall be responsible for the overall management of JV.  The Board shall be composed of four (4) directors (the “Directors”), that will be nominated and appointed by IPWG but taking in account the opinion and suggestions of SEPA.  All meetings of the Board shall be conducted in the English language.

5.2

QUORUM AND RESOLUTION

The Board will meet at least three times a year, either in person, by telephone or by video conference.  The Board may only act when a quorum is present.  A quorum of the Board shall exist only when three-fourths of the Directors are present.  The Board may act by actual meetings, by telephone conference, by video conference or by unanimous written consent.  Any Directors can call a meeting of the Board at any time upon at least one (1) week’s prior written notice to all Directors (which may be waived orally or in writing by such Directors, including by participating in such meeting, by telephone conference, by video conference or by written consent).  Each Director shall serve without compensation or reimbursement of expenses by JV.

Each Director shall have the right to cast one vote on each resolution or other voting matter that is presented at a meeting of the Board and all resolutions shall be adopted by the affirmative vote of not less a majority 

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of the Directors of JV then forming a quorum.  Any deadlock shall be resolved in accordance with the procedures set forth in Sections 5.6 (Occurrence of Deadlock), 5.7 (Mediation), and 5.8 (Offer and Sale of Equity Interests).

5.3

OFFICERS

The officers of JV shall consist of a Chief Executive Officer, a Treasurer and a Secretary, and such other officers as may be determined from time to time by the Board or required by applicable law.  The officers that hold the position of Chief Executive Officer and Secretary need not be Equity Holders, members of the Board, or employees of JV. 

(a)

Appointment of Chief Executive Officer.  The Chief Executive Officer shall serve on a substantially full-time basis, provided however, that he or she may hold other key positions at different companies within Mexico and abroad.

(b)

Duties and Powers of Chief Executive Officer.  The duties, powers and authorities of the Chief Executive Officer shall be as described in the Charter Documents, as they may be amended from time to time and as may be required under applicable law.

(c)

Appointment of Treasurer.  The Treasurer shall serve on a substantially full-time basis.

(d)

Duties and Powers of Treasurer.  The duties, powers and authorities of the Treasurer shall be as described in the Charter Documents, as they may be amended from time to time and as may be required under applicable law.

(e)

Appointment of Secretary.  The Secretary shall serve on a substantially full-time basis, provided however, that he or she may hold other key positions at different companies within Mexico and abroad.

(f)

Duties and Powers of Secretary.  The duties, powers and authorities of the Secretary shall be as described in the Charter Documents, as they may be amended from time to time and as may be required under applicable law.

5.4

OTHER POSTS

JV shall have such other officers as shall be appointed from time to time by its Board.  Officers of JV shall hold office at the pleasure of its Board.  Such other officers of JV shall have such powers and responsibilities as shall be provided by this Agreement, the Charter Documents or resolution of the Board.

5.5

DEADLOCK RESOLUTION

The Equity Holders shall use their good faith efforts to avoid a deadlock in decisions to be made by the unanimous vote of the Equity Holders, and shall cause their representatives on the Board to use their good faith efforts to avoid a deadlock in decisions to be made by a vote of the Board.  

5.6

OCCURRENCE OF DEADLOCK

In any case where:

(a)

Any matter of those specified in  Section 4.4 (Important Matters) as requiring the unanimous vote of the Equity Holders has been considered at a General Equity Holder’s Meeting; and

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(b)

No resolution has been approved at such General Equity Holder’s Meeting in relation to the matter by reason of a failure to receive the requisite number of votes for such resolution.

The matter shall immediately be referred to the CEO of IPWG and the CEO of SEPA for resolution, and they shall attempt to resolve the matter promptly and in good faith within forty-five (45) days of the date of the referral.  If no resolution is reached, a “Deadlock” shall be deemed to have occurred and the dispute shall be referred to mediation in accordance with Section 5.7 (Mediation).

5.7

MEDIATION

A Deadlock that is referred to mediation in accordance with Section 5.6 (Occurrence of Deadlock) shall be mediated in accordance with the following procedure:

(a)

If the CEOs are unable to resolve the matter promptly as provided in Section 5.6 (Occurrence of Deadlock) above, any Equity Holder may make a written demand on the other Equity Holders for mediation by an independent mediator.  The Equity Holders agree to participate in the proceedings in good faith with the intention of resolving the Deadlock.

(b)

If a mediator has not been previously agreed to, the Directors shall meet in person or by telephone within seven (7) days after any Equity Holder has received a written demand for mediation, and select a mutually agreeable mediator or, at any time at the option of an Equity Holder, subject the Deadlock to mediation by the American Arbitration Association.  The mediation shall be conducted in Atlanta, Georgia, unless the Equity Holders agree to an alternate location, and shall be conducted in English.  All related disputes identified after the selection of the mediator shall also be submitted to the mediator.  The mediator’s compensation and expenses shall be shared equally by the Equity Holders.

(c)

The mediator may require each Equity Holder to provide the mediator with a brief memorandum setting forth the Equity Holder’s position with respect to each dispute to be presented to the mediator.

(d)

The date of the mediation shall be set within fifteen (15) days after the selection of a mediator.  The date and time of the mediation shall be determined by the mediator with the consent of the Equity Holders, which shall not be unreasonably withheld.

(e)

In the mediation, each Equity Holder may be represented by counsel.  In addition, each Equity Holder may, with permission of the mediator, bring such additional persons as needed to respond to questions, contribute information, and participate in the negotiations; provided, however, that the mediator shall be disqualified as a witness, consultant, expert, expert or counsel for any Equity Holder with respect to the dispute or any related matter.

(f)

Within ten (10) days after the last day of the mediation, the mediator shall provide to each Equity Holder a written report which shall include a description of any agreements reached by the Equity Holders in the mediation.  If a complete resolution of the Deadlock is not reached during the mediation, the mediator shall include in his or her written report a recommendation of a proposed settlement of the remaining dispute which shall be in the best interest of JV.  If, within ten (10) days after receipt of the proposed settlement, the Equity Holders do not settle their dispute, the Equity Holders shall proceed in accordance with Section 5.8 (Offer and Sale of Equity Interests).

(g)

The entire mediation process shall be confidential, and no stenographic, visual or audio record shall be made.  All conduct, statements, promises, offers, views and opinions, whether oral or written, 

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made in the course of the mediation by any Equity Holder, their Directors, agents, employees or other invitees and the mediator are confidential and shall, in addition and where appropriate, be deemed privileged.  Such conduct, statements, promises, offers, views and opinions shall not be disclosed to anyone not a Director, agent, employee, expert or witness of any of the Equity Holders.

5.8

OFFER AND SALE OF EQUITY INTERESTS

(a)

If the Deadlock has not been resolved within forty-five (45) days after written demand for mediation, IPWG may deliver a written notice (a “Deadlock Notice”) of its intent to purchase from SEPA and Salguero all of the Equity Interests of SEPA and Salguero in JV for the Appraised Value of the combined Percentage Interests of SEPA and Salguero (the “Deadlock Price”).  

(b)

If the Parties have not resolved the Deadlock within ten (10) days after IPWG’s delivery of the Deadlock Notice to SEPA and Salguero, SEPA and Salguero shall be bound to sell, and IPWG shall be bound to purchase, all of SEPA’s and Salguero’s combined Percentage Interest in the Company at the Deadlock Price and upon such other customary terms and conditions proposed by IPWG.

(c)

Any purchase and sale pursuant to this Section 5.8 shall be effected pursuant to a definitive purchase and sale agreement duly executed and delivered by IPWG, SEPA and Salguero and containing the terms and conditions described in Section 5.8(b) above.  The closing of such purchase and sale shall take place (i) thirty (30) days after IPWG’s delivery of the Deadlock Notice to SEPA and Salguero or (ii) the receipt of any necessary approvals of governmental authorities, whichever is later, and at which time:

(i)

SEPA and Salguero each shall deliver to IPWG a duly executed assignment conveying all right, title and interest in and to its Percentage Interest, free and clear of all liens, encumbrances and other adverse claims, together with all Certificates evidencing the Percentage Interest  issued to the selling Equity Holder by the Company and complying with all formalities required by applicable law; and

(ii)

Upon receipt of the articles in subparagraph (i), IPWG shall pay the Deadlock Price to SEPA by wire transfer or certified check.

(d)

Upon a sale of SEPA’s and Salguero’s Equity Interests in accordance with this Section:

(i)

Each selling Equity Holder shall repay all loans, loan capital borrowings and indebtedness in the nature of borrowings outstanding to JV or the Project Company from the selling Equity Holder (together with any accrued interest);

(ii)

JV and the Project Company shall repay all loans, loan capital borrowings and indebtedness in the nature of borrowings outstanding from the selling Equity Holder to JV and the Project Company (together with any accrued interest);

(iii)

IPWG shall use commercially reasonable efforts to secure the release of any third-party guarantees given by the selling Equity Holder to or with respect to JV and the Project Company; and

(iv)

The selling Equity Holder shall, at the request of JV, cause any Director, officer or employee associated with the selling Equity Holder to submit his or her resignation as a Director, officer or employee of the JV, and shall  be responsible for funding of amounts 

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required to pay for any severance payments required by law or for which JV or the Project Company is otherwise obligated to make payment as a result, and shall further indemnify and hold harmless IPWG and its Affiliates from and against any claims and amounts relating to such payment obligations.

CHAPTER VI.  AUDITORS

6.1

AUDITOR

JV shall have one (1) independent outside auditor to be elected and appointed by the Board (the “Auditor”).  The duty and function of such Auditor shall include the performance of an annual audit and examination of the books and records of JV, including in connection with any annual financial reporting of JV; and to inform the Board of the results of such audit and examination.  The Auditor’s fees shall be the responsibility of JV.  The Auditor shall be a Certified Public Accountant or firm of international reputation with offices and which is licensed to practice in the United States and Mexico.  JV shall provide all reasonable cooperation with the auditor’s authorized activities.  JV shall maintain accurate and complete accounting records and books in accordance with Generally Accepted Accounting Principles under the law of JV’s organization, consistently applied with regard to all of its operations. 

CHAPTER VII.  ACCOUNTING

7.1

ACCOUNTING PERIOD

The fiscal year of JV shall begin on the first day of January and end on the 31st day of December in the same year, provided, however, that the initial fiscal year shall begin on the day of the organization of JV under applicable law and end on the 31st day of December of the same year.

7.2

INSPECTION OF ACCOUNTING RECORDS AND BOOKS

No later than the sixtieth (60th) day following the end of each fiscal year, JV shall deliver to each Equity Holder its financial statements prepared in accordance with applicable legal requirements, containing a consolidated balance sheet of JV as at the end of such fiscal year and the related statements of income, Equity Holders equity and cash flow for the year then ended, prepared in accordance with Generally Accepted Accounting Principles under the law of JV’s organization, consistently applied, and any other financial statements required by applicable laws, all certified by the Auditor.  The accounting books and records of JV shall be available for inspection and review by the Equity Holders or their authorized representatives (under appropriate obligations of confidentiality) at any reasonable time during normal business hours, at the expense of the inspecting Equity Holder.

CHAPTER VIII.  INCREASE OF CAPITAL

8.1

CAPITAL CALLS

Upon any capital call of JV approved by a resolution of the Board, each Equity Holder shall be obligated to make the capital contribution at the times and in the amounts approved by the Board, on a pro rata basis in relation to its respective Percentage Interest.

JV shall provide thirty (30) calendar days advance written notice of the agreed capital call to the Equity Holders.  Each capital contribution to be made by an Equity Holder to JV shall be made by wire transfer of immediately available funds to the account of JV specified in the notice of the agreed capital call.

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In the event an Equity Holder fails to make the capital contribution required by the capital call in accordance with this Chapter VIII within three (3) business days after the date established for the contribution, the other Equity Holders may at their option:  (i) contribute said amount, and the Percentage Interest of the non-contributing Equity Holder shall be diluted including voting rights in JV to the extent of the other Equity Holder’s additional contribution; (ii) make a loan to JV in the amount of the contribution; or (iii) elect for the JV to receive debt from the non-contributing Equity Holder in the amount of the contribution and until such non-contributing Equity Holder satisfies such debt the Equity Holder shall not have voting rights as an Equity Holder of JV.  

Except as otherwise provided in the Charter Documents or as approved by the Board and Equity Holders in accordance with this Agreement, no Equity Holder shall demand or receive a return of capital contributions.  No Equity Holder shall have the right to receive property other than cash for its capital contribution except as specifically provided in this Agreement or in the Charter Documents.  No Equity Holder shall be entitled to interest on any capital contribution.

CHAPTER IX.  TRANSFER OF EQUITY INTERESTS

9.1

DISPOSAL OF EQUITY INTERESTS

(a)

Neither SEPA nor Salguero may sell, assign, transfer, pledge, or otherwise in any manner dispose of or encumber any of its Equity Interest in JV without the express prior written consent of IPWG. IPWG may, without the consent of SEPA or Salguero:  (i) sell, assign or transfer all or any portion of its Equity Interest in JV to any third party, and (ii) pledge all or any portion of its Equity Interest as security for its debt or debt of JV or the Project Company.  Any attempted sale, assignment, transfer, pledge or other disposal of a Party’s Equity Interest in JV that violates this Section 9.1(a) shall be null and void. 

(b)

IPWG may provide to SEPA and/or Salguero a notice of IPWG’s:  (i) intent to sell, assign or transfer to a third party IPWG’s Percentage Interest in JV in accordance with Section 9.1(a), and (ii) election to cause SEPA and/or Salguero to transfer its Percentage Interest to such third party (“Drag-Along Notice”).  IPWG shall provide any Drag-Along Notice at least thirty (30) days in advance of the consummation of the sale, assignment or transfer.  If IPWG delivers a Drag-Along Notice to SEPA and/or Salguero, then SEPA and/or Salguero, as applicable, shall sell, transfer and assign its Percentage Interest in JV to the third-party transferee, simultaneous with the consummation of IPWG’s sale, conveyance, transfer and assignment of its Percentage Interest to such third party  at the Appraised Value of SEPA’s and Salguero’s Percentage Interest determined in accordance with the following procedure: 

The Appraised Value shall be determined for all purposes in accordance with the following procedure:  Upon the occurrence of an event (the “Triggering Event”) requiring, or giving an Equity Holder the right to require, that the Appraised Value be determined hereunder, the Equity Holders shall, as promptly as practicable, confer with each other for the purposes of agreeing upon the Appraised Value, or if they do not agree thereon, of selecting one of Ernst & Young, Deloitte & Touche, KPMG or PricewaterhouseCoopers or the successor to any of the foregoing (and which is not the Auditor) to perform such appraisal (hereinafter the “Appraiser”).  The Appraiser so selected shall issue its appraisal as soon as practicable but not later than thirty (30) days after its selection.  If within ten (10) days of the Triggering Event, the Equity Holders cannot mutually agree on the Appraised Value and the Appraiser, then each Equity Holder independently shall select one of Ernst & Young, Deloitte & Touche, KPMG or PricewaterhouseCoopers or the successor to any of the foregoing (and which is not the Auditor) to determine the Appraised Value.  Such accounting firms shall immediately choose a final internationally recognized accounting firm 

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(and which is not the Auditor) that shall act as the “Deadlock Appraiser”.  Within forty-five (45) days after the Triggering Event, the accounting firms shall deliver their appraisals to the Deadlock Appraiser.  The Deadlock Appraiser shall review the appraisals prepared by the accounting firms and based upon the underlying information used by these accounting firms to determine the Appraised Value and any other reasonable information, shall determine the Appraised Value within thirty (30) days thereafter.  If the use of the Deadlock Appraiser is necessary, the Deadlock Appraiser’s Appraised Value shall conclusively be the Appraised Value for all purposes relating to the relevant Triggering Event.  The Equity Holder whose accounting firm’s Appraised Value is furthest from the Deadlock Appraiser’s Appraised Value shall pay the fees of the Deadlock Appraiser in addition to the fees of the accounting firm retained by such Equity Holder for purposes of performing the initial valuation.

(c)

In the event SEPA or Salguero desires to sell, transfer or convey all or a portion of SEPA’s or Salguero’s Equity Interests, such Party shall provide a written notice (the “Transfer Notice”) to IPWG stating its intent to make such sale, transfer or conveyance, the Equity Interests it wishes to sell, transfer or convey, the price of such Equity Interest and the identity of the proposed purchaser. IPWG shall have the right of first refusal to purchase such Equity Interest on terms no less favorable than those offered to or by such purchaser. Within thirty (30) days of receipt of the Transfer Notice from SEPA or Salguero, as applicable, IPWG shall deliver its response stating whether it chooses to exercise its right to purchase the Equity Interest such Party wishes to sell, transfer or convey. If IPWG chooses to exercise this right, then the Parties shall be deemed to have a binding agreement to sell, transfer and convey the Equity Interests to IPWG on the terms proposed by IPWG; provided, however, that if the Parties do not agree on the purchase price, then the purchase price shall be determined in accordance with Section 9.1(b).  If IPWG fails to respond to the Transfer Notice within such thirty (30) day period, it shall be deemed to have given its prior written consent to sale, transfer and conveyance by the Party providing the Transfer Notice of its Equity Interest on the terms set forth in the Transfer Notice.

(d)

The provisions of this Section 9.1 shall be binding upon all Equity Holders of JV, whether or not any such Party becomes a bankrupt or otherwise has its assets owned, controlled, disposed of or monitored by a Third Party, whether voluntarily or involuntarily, in which event the provisions of this Chapter IX, Section 1 shall apply to the bankrupt Party’s legal representative.  Any transferee of an Equity Interest shall be deemed the transferor for purposes of this Agreement.

9.2

EFFECT OF TRANSFER

In the event of any transfer of any Equity Interest in JV pursuant to or as permitted by this Agreement:

(a)

each Equity Holder shall vote in such a manner as to give effect to any such transfer of Equity Interests in JV and cause the directors of JV whom such Equity Holder has designated to take such action as may be necessary in connection therewith; and

(b)

each Equity Holder shall see to it that upon completion of transfer of all of its Equity Interests in JV that the Director or Directors of JV whom such Equity Holder has designated shall forthwith resign with immediate effect and without claim for compensation for loss of office.

9.3

INSOLVENCY

Notwithstanding any other provision of this Agreement, if any Party to this Agreement commences a voluntary case under any applicable bankruptcy or business reorganization law, or consents to the entry of an order for relief in an involuntary case under any such bankruptcy or business reorganization law, the 

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filing of an involuntary case under any such bankruptcy or business reorganization law, or becomes insolvent, or enters into an assignment for the benefit of its creditors or is liquidated such occurrence shall be an “Event of Insolvency” as to that Party.  Within thirty (30) days after an Event of Insolvency, the subject Party shall by whatever means necessary exclude from the claims of any creditor of said Party, that Party’s direct or indirect ownership interest in JV.  A Party that is the subject of an Event of Insolvency who has failed to exclude from the claims of any creditor of said Party, that Party’s direct or indirect ownership interest in JV as required in the preceding sentence shall, upon the issuance of an insolvency notice by the remaining Equity Holders, be obligated to sell all the Equity Interest in JV owned by the subject Equity Holder to the remaining Equity Holders at a price determined in accordance with Section 9.1(b).  

9.4

CHANGE IN CONTROL

SEPA shall provide notice to IPWG at least thirty (30) days in advance of the consummation of any Change in Control of SEPA.  SEPA shall be obligated to offer all of its Equity Interests in JV to IPWG for purchase, and IPWG shall be entitled to purchase all of SEPA’s Equity Interests in JV, prior to the consummation of any Change in Control of SEPA at a price determined in accordance with Section 9.1(b).  A "Change in Control" means any transaction or series of transactions including a stock sale, merger or other transaction following which a party that is not an Affiliate of SEPA as of the date of this Agreement:  (i) owns at least fifty percent (50%) of the equity interest or voting securities of SEPA; or (ii) owns all or substantially all of the assets of SEPA.

9.5

RIGHT TO PURCHASE EQUITY INTERESTS IN JV

The non-defaulting or non-breaching Party will have the right to purchase all of the Equity Interests of the defaulting or breaching Party at a price determined in accordance with Section 9.1(b) above upon the occurrence of any of the events of Default set forth in Section 18.1(a) of this Agreement; or upon a Party’s material breach of Chapter XVI (Compliance) of this Agreement (each, a “Triggering Event”).

CHAPTER X.  [RESERVED]

CHAPTER XI [RESERVED]

CHAPTER XII.  GOVERNMENT APPROVALS AND PROTECTIVE MEASURES

12.1

APPLICATION

Subject to the Satisfaction of the conditions set forth in Chapter II of this Agreement and to the formation of the Project Company pursuant to this Agreement, the Project Company shall apply, as applicable law may require, to the Government of Mexico for the registration of foreign investment.  The Project Company shall diligently prosecute such application.  The Project Company shall also keep an Equity Holders Registry Book, certificates, and all other similar documentation required by the law of the jurisdiction under which the Project Company is organized.

CHAPTER XIII.  PAYMENTS AND BEARING OF COST AND EXPENSES

13.1

DISTRIBUTIONS

All profits of JV, as may be determined by the Board from time to time, after all applicable taxes have been paid and the legal reserve fund has been established, may be declared as cash distributions by the approval of the Board and thereafter paid as cash distributions to the Equity Holders at least annually, on a pro rata basis in proportion to the Percentage Interest of each Equity Holder.

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Insofar as the profit, cash flow and conditions of JV so permit, JV shall not declare less than 50% of its net profit as cash distributions.

13.2

COSTS AND EXPENSES

The costs and expenses paid or incurred by the Parties to prepare and file the Charter Documents with applicable governmental authorities and to receive necessary government approvals of same, and the costs and expenses reasonably paid and incurred by the Parties on behalf of the JV and the Project Company to consummate the formation of the JV, construction of the JV Facility, and launch of the Project Company’s operations, shall in each case be the responsibility of JV.  JV shall reimburse each Party for such reasonable actual costs and expenses, as supported by reasonable documentation, promptly following the Financial Close Date.

Except as expressly provided in this Section 13.2 or elsewhere in this Agreement, each Party shall pay and be responsible for the fees, costs and expenses it incurs in connection with this Agreement and the transactions contemplated by this Agreement, including the fees, costs and expenses of its financial advisors, accountants and counsel.

CHAPTER XIV.  NON-DISCLOSURE PROVISION

14.1

CONFIDENTIALITY

(a)

Each Equity Holder will hold, and will use reasonable efforts to cause its Affiliates, officers, directors, employees, agents, representatives and advisors to hold, in confidence, all confidential documents and information concerning JV, the Project Company, and the Project., furnished to or otherwise received by such Equity Holder in connection with this Agreement and the transactions herein contemplated (“Confidential Information”).  Confidential Information shall not include information that (i) was previously known on a non confidential basis by the Equity Holder, (ii) enters the public domain in its entirety through no fault of any Equity Holder, (iii) becomes known to Equity Holder from a source which legally derives such information independently of the disclosing Equity Holder; or (iv) is independently developed by the Equity Holder.  If this Agreement terminates, the confidentiality and non-use obligations of this Section 14.1 shall survive for a period of five (5) years after termination.

(b)

An Equity Holder shall not, and shall not allow its Affiliates, to make use of any Confidential Information except in furtherance of the business of JV.

(c)

In the event an Equity Holder is required to disclose Confidential Information by applicable law, including filings with regulatory agencies such as the U.S. Securities and Exchange Commission, the Equity Holder shall provide the other Equity Holders with reasonable advance notice of the disclosure to provide the other Equity Holder with an opportunity to take measures to protect the continued confidentiality of the information.  The Parties further agree that disclosures by IPWG in press releases approved by SEPA, which approval SEPA shall not unreasonably withhold or later condition, shall not constitute a violation of this Chapter XIV.

CHAPTER XV.  OBLIGATIONS, REPRESENTATIONS AND WARRANTIES

15.1

OBLIGATIONS OF THE EQUITY HOLDERS

(a)

Each Equity Holder shall take all actions necessary or appropriate, including voting its Percentage Interest and causing its representatives on the Board to vote in such a manner, as to ensure that JV 

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fully implements the terms of this Agreement and the other Transaction Documents to which it is or will be a party and fully satisfies its obligations hereunder and thereunder.

(b)

Each Equity Holder shall, to the extent permitted by any applicable law, furnish such information, execute such applications and similar documents as are or may be required by any governmental authorities, and shall use commercially reasonable efforts to take such other action reasonably requested by officers of JV or its Board and which are necessary or reasonably desirable in connection with the business of JV.

15.2

REPRESENTATIONS AND WARRANTIES

(a)

By IPWG.  IPWG represents and warrants, which representations and warranties shall survive the execution and delivery of this Agreement, that:

(i)

It is validly organized, in existence and in good standing in its place of incorporation;

(ii)

It has all requisite legal power and authority to enter into and perform its obligations under this Agreement, and all corporate and other actions required to authorize it to do so have been taken;

(iii)

This Agreement has been duly executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with the terms hereof, except as enforceability may be limited by applicable equitable principles and defenses (whether applied in a proceeding at law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors' rights generally;

(iv)

None of the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby will violate or result in a breach of any of the terms and provisions of, constitute a default under or conflict with IPWG certificate of incorporation, by-laws or similar organizational or governance documents;

(v)

There is no action, claim, suit, judicial or administrative proceeding, arbitration, investigation or review by any governmental authority pending, filed or threatened against or involving IPWG or its properties, assets or rights that could impair its ability to consummate the transactions contemplated by this Agreement; and

(b)

By SEPA.  SEPA represents and warrants, which representations and warranties shall survive the execution and delivery of this Agreement, that:

(i)

It is validly organized, in existence and in good standing in its place of incorporation and that is a Business Corporation, constituted under Mexican Laws, as written in the Act of Incorporation Number 65,666, Volume 1,186, dated March 4th, 1994, certified by Lic. Xavier Ibánez H., Notary Public number three of the State of North Baja California, México, with IRS Registration:  SEP 940308 S70;

(ii)

It has all requisite legal power and authority to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated hereby and thereby.  The execution, delivery, and performance by SEPA of this Agreement has been duly and validly authorized and approved by all necessary action on the part of SEPA.  This Agreement is the legal, valid, and binding obligations of SEPA, and is enforceable against it in accordance with its terms, except as enforceability may be limited by applicable 

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equitable principles and defenses (whether applied in a proceeding at law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors' rights generally;

(iii)

None of the execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby will violate or result in a breach of any of the terms and provisions of, constitute a default under or conflict with SEPA certificate of incorporation, by-laws or similar organizational or governance documents;

(iv)

There is no action, claim, suit, judicial or administrative proceeding, arbitration, investigation or review by any governmental authority pending, filed or threatened against or involving SEPA or its properties, assets or rights that could impair its ability to consummate the transactions contemplated by this Agreement;

(v)

There is no litigation related to environmental laws with respect to the ownership, use, condition or operation of the Premises in any court or before or by any regulatory authority or private arbitration tribunal.  There are no existing material violations of U.S. or Mexico federal, state or local environmental laws by SEPA or the current owner with respect to the ownership, use, condition, lease or operation of the Premises.  No written or oral notice, or other communication from any court or regulatory authority, of any alleged violation of any environmental laws has been filed or communicated to SEPA, or the current owner of the Premises or any of its predecessors with respect to the use, ownership, condition, operation, or disposal of such Premises;

(vi)

SEPA is the permitee or licensee under the necessary Permits, or has the absolute unconditional right to acquire such Permits, and such Permits are freely assignable and transferable, without necessary approval or consent of any third party including any governmental entity, to the Project Company; 

(vii)

SEPA has the necessary power and authority to enter into the Lease Agreement with the Project Company for the Premises;

(viii)

Neither the execution and delivery of this Agreement and the other Transaction Documents by SEPA, nor the consummation by SEPA of the transactions contemplated hereby or in the Transaction Documents, (i) requires any consent by, or notice to, any governmental entity or other entity or (ii) violates any applicable law or regulation; except for such consents, notices and/or violations which (individually or in the aggregate) do not materially adversely affect the JV; and

(ix)

It complies and during the term of this Agreement will comply in all respects with applicable Mexican and international laws regulating the employment of children and pregnant women and forced labor, laws concerning the maintenance of safe, secure, and sanitary work facilities, laws regulating workers’ hours and working conditions, environmental protection laws, and laws prohibiting bribery and corrupt business practices.

(x)

Salguero is the General Director and owns a majority interest in the issued capital stock or other equity interests of SEPA.  SEPA has duly authorized all in accordance with applicable law Salguero’s entry into this Agreement and participation in his individual capacity in connection with the Project and JV;

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(c)

By Salguero. Salguero represents and warrants, which representations and warranties shall survive the execution and delivery of this Agreement, that:

(i)

Salguero is the General Director and owns a majority interest in the issued capital stock or other equity interests of SEPA.  SEPA has duly authorized all in accordance with applicable law Salguero’s entry into this Agreement and participation in his individual capacity in connection with the Project and JV;

(ii)

He has all requisite legal power and authority to enter into and perform his obligations under this Agreement and to consummate the transactions contemplated hereby and thereby.  This Agreement is the legal, valid, and binding obligations of Salguero, and is enforceable against him in accordance with its terms, except as enforceability may be limited by applicable equitable principles and defenses (whether applied in a proceeding at law or in equity) or by bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors' rights generally;

(iii)

There is no action, claim, suit, judicial or administrative proceeding, arbitration, investigation or review by any governmental authority pending, filed or threatened against or involving Salguero or his properties, assets or rights that could impair his ability to consummate the transactions contemplated by this Agreement;

(iv)

Neither the execution and delivery of this Agreement and the other Transaction Documents by Salguero, nor the consummation by Salguero of the transactions contemplated hereby or in the Transaction Documents, (i) requires any consent by, or notice to, any governmental entity or other entity or (ii) violates any applicable law or regulation; except for such consents, notices and/or violations which (individually or in the aggregate) do not materially adversely affect the JV; and

(v)

He complies and during the term of this Agreement will comply in all respects with applicable Mexican and international laws regulating the employment of children and pregnant women and forced labor, laws concerning the maintenance of safe, secure, and sanitary work facilities, laws regulating workers’ hours and working conditions, environmental protection laws, and laws prohibiting bribery and corrupt business practices.

CHAPTER XVI.  COMPLIANCE

16.1

COMPLIANCE WITH LAWS AND STANDARDS OF CONDUCT

Each Party agrees that the business of JV and the Project Company shall be conducted in conformity with applicable laws of all jurisdictions having authority or jurisdiction over the activities of JV and the Project Company, respectively.  In no event shall JV or the Project Company be required to take, nor shall any Party take or permit JV or the Project Company to take, any action (or in each case engage in any omission) that violates the United States Foreign Corrupt Practices Act of 1977 (including all regulations promulgated pursuant thereto), as amended.

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CHAPTER XVII.  INDEMNIFICATION

17.1

INDEMNIFICATION

(a)

Each Party (the “Indemnifying Party”) will indemnify and hold harmless the other Party and its Affiliates (collectively, the “Indemnified Parties”) from and against all losses, liabilities, damages, deficiencies, judgments, assessments, fines, settlements, costs or expenses that the Indemnified Parties suffer or incur arising from or related to any inaccuracy in or any breach of any representation, warranty or covenant of the Indemnifying Party contained in this Agreement or any of the Transaction Documents.  The Indemnifying Party shall defend the Indemnified Parties, at its expense, from and against all claims, demands, suits and causes of action arising from or related to any breach of any representation, warranty or covenant of the Indemnifying Party contained in this Agreement or any of the Transaction Documents.  

(b)

Without limiting the generality of Section 17.1(a), SEPA and Salguero will jointly and severally indemnify and hold harmless JV, the Project Company and IPWG and their respective Affiliates from and against all losses, liabilities, damages, deficiencies, judgments, assessments, fines, settlements, costs or expenses that JV, the Project Company and IPWG and their respective Affiliates suffer or incur arising from or related to any hazardous substances or environmental conditions or events on, under or relating to the Premises.  SEPA and Salguero shall jointly and severally defend JV, the Project Company and IPWG and their respective Affiliates, at their expense, from and against all claims, demands, suits and causes of action arising from or related to any hazardous substances or environmental conditions or events on, under or relating to the Premises.  

CHAPTER XVIII.  GENERAL PROVISIONS

18.1

DEFAULT

(a)

A default (“Default”) shall be deemed to have occurred in the event that a Party (herein “Defaulting Party”):

(i)

commits a Material Breach of this Agreement; or

(ii)

shall have made any representation or warranty in this Agreement which representation or warranty is in any material respect false or misleading, which has a material adverse effect upon the Non-Defaulting Party (defined below), JV or Project Company; or

(ii)

shall make an assignment for the benefit of creditors, be adjudicated insolvent as a result of its inability to pay its debts as they mature, or shall file a petition in voluntary bankruptcy or a petition or answer or consent seeking reorganization or readjustment of indebtedness under any jurisdiction’s bankruptcy or similar laws now or hereafter existing, or consent to the appointment by a court of a receiver or trustee of all or a substantial part of the assets or property of the Party for the benefit of its creditors, or a similar involuntary proceeding shall be commenced, which proceeding shall not have been dismissed or stayed within one hundred and eighty  (180) days after its institution.

In the event of a Default, the other Parties (herein “Non-Defaulting Parties”) may, upon declaration or discovery of the Default and the expiration of the cure period, if any, at its sole option 

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(i) purchase for cash not less than all of the Equity Interests held by the Defaulting Party at the price determined in accordance with Section 9.1(b), and/or (ii) terminate this Agreement.

(b)

“Material Breach” means any of the following events with the passing of any applicable notice and cure periods:

(i)

JV takes any action requiring unanimous Equity Holder approval in accordance with Chapter IV, Section 4 at the request or direction of a Party (or any other person acting on behalf of a Party) without receiving the appropriate level of approval by the Equity Holders required by applicable law, the Charter Documents and/or this Agreement, and such action is not subsequently duly approved by both Parties or remedied or revoked within sixty (60) days after written notice is given by the Party that did not make or provide such request or direction (directly or through any other person acting on its behalf) to the Party and the JV identifying the relevant action as a Material Breach, or, if such action is not capable of being remedied or revoked within such sixty (60) day period, the JV does not provide the Parties a plan to remedy or revoke such action within such sixty (60) day period and continuously pursue and effect such remedy or revocation within one hundred twenty (120) days after receiving written notice thereof;

(ii)

A Party breaches any of Section 8.1 (Capital Calls), Section 9.1(Disposal of Equity Interests), Section 9.5 (Change in Control), Chapter XIV (Non-Disclosure Provision), Section 15.2 (Representations and Warranties), or Chapter XVI (Compliance) and such breach is not subsequently remedied within thirty (30) days after written notice is given by the non-breaching Party to the breaching Party, or, if such action is not capable of being remedied within such thirty (30) day period, the breaching Party does not provide the non-breaching Party a plan to remedy such breach within such thirty (30) day period and continuously pursue and effect such remedy within sixty (60) days after receiving written notice thereof;

(iii)

SEPA breaches the Waste Handling Agreement and such breach is not subsequently remedied within thirty (30) days after written notice is given by IPWG to SEPA; or

(iv)

SEPA breaches the Lease Agreement and such breach is not subsequently remedied within thirty (30) days after written notice is given by IPWG to SEPA.

(c)

IPWG may elect at its sole option to deem a Material Breach to have occurred, and in such event shall be deemed the Non-Defaulting Party, in the event of a failure to achieve any of the milestones listed in Exhibit C (Joint Venture Milestones) by the respective milestone dates in Exhibit C.

18.2

TERMINATION

(a)

This Agreement will terminate automatically in the event an Equity Holder acquires all of the Equity Interests in JV.

(b)

This Agreement will terminate automatically upon the Financial Close Date.

(c)

This Agreement shall be of no further effect, and the Parties shall have no further obligations under this Agreement, upon termination except as provided in Section 18.19 (Survival).

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18.3

FORCE MAJEURE

Except to the extent caused by the negligence, recklessness or willful misconduct of the Party asserting force majeure or within such Party’s reasonable control, no Party shall be liable to the other Parties for failure or delay in the performance of any of its obligations under this Agreement for the time and to the extent such failure or delay is caused by riots, civil commotions, acts of terrorism, wars, hostilities between nations, governmental laws, orders or regulations, embargoes, actions or inactions by the government or any agency thereof, Acts of God, storms, fires, accidents, strikes, sabotages, explosions, or their similar different contingencies beyond the reasonable control of the respective Parties.  If a Party’s performance is affected, or may be affected, by force majeure, that Party shall give notice thereof to the other Parties as soon as practicable after the occurrence of such force majeure, which notice shall include, insofar as known, a statement of the probable extent to which the affected Party will be unable to perform or will be delayed in performing its obligations hereunder.  Each Party shall exercise due diligence to eliminate or remedy any such force majeure and to prevent the same from unnecessarily delaying and interrupting its performance hereunder, and shall give the other Parties prompt written notice when such force majeure causes shall have been eliminated or remedied.

18.4

NOTICE

All notices and other communications given or made in accordance with or in connection with this Agreement shall be made in writing and may be delivered in person or by internationally recognize courier service such as Federal Express or DHL, fully prepaid, in an envelope properly addressed to the respective Parties at the address set forth below or to such changed address as may be given by either Party to the other Party by such written notice.  Any such notice, reports and other communications shall be considered to have been received and made effective three (3) business days (Monday through Friday excluding federal holidays in the recipient’s country) after their dispatch.

To IPWG:

International Power Group Ltd.

Attn.:  Mr. Peter Toscano

950 Celebration Boulevard Suite A

Celebration, Florida, Z.C. 34347

USA

With a Copy to:

Alston & Bird LLP

Attn:  Douglas L.  Miller, Esq.

1201 West Peachtree Street

Atlanta, Georgia  30309

USA

And

Rosales, Rosales, Alhovich & Associates

Attn: Rene F. Rosales Ortiz

Culiacán No 17-6o. Piso

Colonia Hipódromo Condesa

Delegación Cuauhtemoc

México City, Z.P. 06170

México

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To SEPA:

Sistemas Ecológicos para la Protección Ambiental, S.A. de C.V.

Attn.:  Mr. Mario Salguero Rossainzz

Calle Juan Ugarte No. 11062-4

Fraccionamiento Garita de Otay

Tijuana, North Baja California, Z.C. 22440

México

To SALGUERO:

Mr. Mario Salguero Rossainzz

Calle Juan Ugarte No. 11062-4

Fraccionamiento Garita de Otay

Tijuana, North Baja California, Z.C. 22440

México

18.5

NO WAIVER

No waiver by any Party at any time of any breach of any of the terms and conditions of this Agreement shall be interpreted as a waiver of any subsequent breach, whether of the same or of any other terms and conditions this Agreement.

18.6

DIVISIBILITY OF PROVISIONS

In the event of any provision of this Agreement becoming null and/or unenforceable or having been interdicted by the law of the country where this Agreement is to be performed or the Project Company is located, only the provision concerned shall be deemed divisible and nullified.  The remaining part shall hold good and bind the Parties, as would be the case if the said provision nullified were not in this Agreement.

In the case of the preceding paragraph, the Parties shall confer in good faith and agree upon an effective provision to be inserted to take the place of that nullified.

18.7

ASSIGNMENT

This Agreement and the rights and obligations hereunder are personal to the Parties hereto and shall not be assigned or transferred, by operation of law or otherwise, by any of the Parties to any third party; provided, however, that IPWG may assign this Agreement or any portion thereof to any Affiliate of IPWG.  This Agreement shall be binding upon and enforceable against each Party and its successors and permitted assigns.

18.8

ARBITRATION

(a)

Any controversy or claim arising out of, related to, or in connection with this Agreement (including any amendment or modification thereof), or the breach, termination, interpretation, construction, or validity thereof, including but not limited to any claim for damages or rescission or for fraud in the inducement to enter into the Agreement (“Disputes”) shall be submitted to binding arbitration administered in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”) before a single arbitrator mutually agreed by the parties, or in the absence of an agreement within ten (10) days, designated by the AAA.  The place of arbitration will be Atlanta, Georgia.  The language of the arbitration, and the arbitration award, shall be English.  Limited discovery will be permitted in connection with the arbitration upon agreement of the parties or  upon a showing of substantial need by the Party seeking discovery.  The arbitrator’s decision shall follow the plain and natural meaning of the relevant documents, and shall be final and binding.  All 

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aspects of the arbitration will be confidential.  Each Party will promptly pay its share of all arbitration fees and costs, provided that such fees and costs shall be recoverable by the prevailing Party as determined by the arbitrator. 

(b)

In the arbitration award, the arbitration panel shall state the reasons upon which the award is based.  The award (if monetary) shall be made in United States Dollars.  The award shall include interest from the date of any damages incurred from the breach or other violation of this Agreement until the date of the award and from the date of the award until the award is paid in full, at an annual rate which shall be 1% (one percent) over the rate which shall be announced from time to time as the Prime Rate of Chase Manhattan Bank in New York, or any successor institution.

(c)

Notwithstanding the determination by the parties to utilize arbitration as specified above for resolution of Disputes, nothing herein shall preclude either Party from seeking and obtaining from a court of competent jurisdiction an order compelling arbitration or enforcing an arbitration award hereunder, or appropriate preliminary or equitable relief, including without limitation, a temporary restraining order or other injunctive relief, or an order to otherwise maintain the status quo pending outcome of any arbitration, or from preserving the Party’s rights under applicable statutes of limitations or agreed limitations periods.

18.9

GOVERNING LAW

This Agreement and all questions arising out of or under this Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware, United States of America, without the application of conflict of law principles. 

18.10

ENTIRE AGREEMENT

This Agreement together with the other Transaction Documents is an integrated agreement, constitutes the entire and only agreement between the Parties hereto with respect to the subject matter of this Agreement, and supersedes all previous and contemporaneous commitments, agreements or understandings, written or oral, between the Parties with respect to such subject matter (specifically including, without limitation, the document titled, “Issues To Be Taken in Account in the Contract That Establish the Alliance Between IPWG-SEPA”).  No modification, changes and amendments of this Agreement shall be binding upon the Parties except by instrument signed by duly authorized officer or representative of each of the Parties.  The Parties acknowledge and agree that they have mutually negotiated the terms and conditions of this Agreement and that they have negotiated this Agreement with the assistance of legal counsel, and that any provision contained herein with respect to which an issue of interpretation or construction arises shall not be construed to the detriment of the drafter on the basis that such party or its attorney was the drafter.

18.11

HEADINGS

The headings used in this Agreement are for the convenience of the parties only and shall not be deemed a part of or utilized in interpreting this Agreement.

18.12

CUMULATIVE REMEDIES

The remedies set forth in this Agreement are cumulative to, and not in lieu of, any other rights and remedies available under this Agreement or applicable law.

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18.13

NO GUARANTEES OF SUCCESS

The parties acknowledge that they are not relying upon any representations or statements except as specifically set forth in this Agreement.  SEPA specifically acknowledges that IPWG has not issued any guarantees or assurances that the JV will be successful or profitable or that either Party will achieve a positive return on its investment in JV.  SEPA further acknowledges that IPWG has and may in the future enter into similar relationships with third parties and that SEPA is not the exclusive joint venture partner of IPWG in matters such as those covered by the subject matter of this Agreement.  

18.14

LANGUAGE

To the full extent permitted by law and consistent with valid entry into a binding agreement, the Parties expressly agree that the official language of this Agreement is English and that all documents to be prepared or supplied hereunder, including any notices or other communications, shall be in English and shall be of no effect unless in English.  The Parties agree that any translation of this Agreement is provided solely for convenience.  

18.15

COUNTERPARTS

This Agreement may be executed in counterparts (including facsimile counterparts), each of which shall be an original and all of which shall together constitute one and the same instrument.

18.16

PRECEDENCE OF AGREEMENT

The Parties intend for this Agreement to be the supreme and governing document regarding the Parties’ rights in operating the JV.  The Parties hereby agree that the terms of each of the Charter Documents are subject to the terms of this Agreement and that any conflict or inconsistency between the terms of this Agreement and the terms of the any of the Charter Documents will be resolved in such a manner as to cause this Agreement to be enforced.

18.17

RELATIONSHIP OF THE PARTIES

In all activities under this Agreement, the Parties will act as and be deemed independent contractors with respect to one another with no authorization to any way obligate or bind the other Parties.  Accordingly, no Party will hold itself out to third parties as purporting to act on behalf of, or serving as the agent of, another Party.  No Party is authorized to enter into any understandings or agreements, whether oral or written, on another Party's behalf without the prior written consent of such other Party.  

18.18

NO PUBLICITY

Neither Party shall use the name or logo of the other Party, or any abbreviation or adaptation thereof, in any advertising, trade display, client list, or public statement, or for any other commercial purposes without the prior written consent of the other Party in each instance.

18.19

SURVIVAL

The following Chapters and Sections of this Agreement shall survive the termination or expiration of this Agreement: Chapter I (Definitions), Section 2.5 (SEPA Contacts and Relationships), Section 2.14 (Non-Competition) (for the period of time provided in the non-competition agreement entered pursuant to Section 2.14), Section 3.4 (Limited Liability), Section 5.6 (Occurrence of Deadlock), Section 5.7 (Mediation),  Section 5.8 (Offer and Sale of Equity Interests), Chapter VI (Auditors), Chapter VII 

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(Accounting), Section 9.1 (Disposal of Equity Interests), Section 9.2 (Effect of Transfer), Section 9.3 (Insolvency), Section 9.6 (Right to Purchase Equity Interests in JV), Chapter XIV (Non-Disclosure Provision) (for the period of time set forth therein), Section 15.2 (Representations and Warranties), Chapter XVI (Compliance), and Sections 18.1 (Default), Section 18.4 (Notice), 18.5 (No Waiver), 18.6 (Divisibility of Provisions), 18.7 (Assignment), 18.8 (Arbitration), 18.9 (Governing Law), 18.10 (Entire Agreement), 18.11 (Headings), 18.12 (Cumulative Remedies), 18.13 (No Guarantees of Success), 18.14 (Language), 18.15 (Counterparts), 18.17 (Relationship of the Parties), 18.18 (No Publicity), 18.19 (Survival) and 18.20 (Labor Matters).

18.20

LABOR MATTERS

Each Party will be the sole employer of its personnel, and each Party shall further comply with and shall be the only Party responsible of any and all the rights and obligations derived from the Mexican Federal Labor Law, Social Security Law, Law of the Institute of the National Workers Housing Fund, and the legal provisions regulating the Retirement Savings System with respect to its personnel.  Each Party shall have no relationship, obligation or responsibility whatsoever with the employees of the other Party.  In view of the foregoing, each Party hereby releases the other Party from any joint liability which may arise out from the Federal Labor Law, the Social Security Law, the Law of the Institute of the National Workers Housing Fund and the provisions regulating the Retirement Savings System.  Both Parties Party hereby agree to indemnify and hold the other Party and its respective shareholders, officers, directors, employees, agents and legal representatives, harmless from any and all liabilities, losses, damages, costs or expenses (including without limitation, reasonable attorney’s fees) arising out from or relating to claims made by any of the other parties employees or by third parties due to actions carried out by any of such employees.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed by its respective representatives thereunto duly authorized as of the Effective Date.

FOR IPWG:

INTERNATIONAL POWER GROUP LTD.

__________Peter Poscano_________________

By:

Peter Toscano

Title:

Chief Executive Officer/President

FOR SEPA:

SISTEMAS ECOLOGICOS DE PROTECCION AMBIENTAL S.A. DE C.V.

______Mario Salguero _____________________

By:

Mario Salguero

Title:

Chief Executive Officer

FOR SALGUERO:

Mr. Mario Salguero Rossainzz

_______________________________

Signature

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