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 9 th 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,
