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EXHIBIT 10.2
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT ("MOA") effectived as of the
13th day of December, 1997 between Cotabato Electric Cooperative
Inc. North Cotabato, Philippines ("COTELCO") as one party, and
ESI E&C Co., Inc., Palm Beach, Florida, USA ("ESI") as the other
party. COTELCO and ESIEC are each referred to as a "Party" and
jointly as "Parties."
I. Premises
* Philippines requires renewable energy, regionally developed
in the Philippines
* COTELCO has solicited and received interest from ESI to
invest in COTELCO
* COTELCO has the rights, permits, licenses, and
pre-feasibility study to the Kabacan 8MW mini-hydro project,
and
* COTELCO has the rights, permits, licenses and going power
distribution business.
Following the evaluation of the proposals received and
subsequent negotiations, COTELCO and ESI mated a PARTNERSHIP for
designing, building, owning, and operating the Kabacan 8MW
mini-hydro project and an investment in COTELCO.
The Project will serve the Philippines under a long term
Power Purchase Agreement ("PPA").
Commencing with the effective date of this MOA, the Parties
Wed to work together exclusively in good faith, negotiate various
contracts and agreements required to permit the PARTNERSHIP to
proceed to finance, construct, own, and operate the Project.
2. Joint Responsibilities/Ownership of the Parties.
2.1 The Parties agreed to developed within 90 days of the
effective date of this MOA or as mutually agreed, the
specific parameters for the Project, including but not
limited to, the location and size of the plant site, future
expansion requirements, configuration of the electrical
interconnection, total list and schedule of all approvals,
licenses and permit requirements and the scope of the
Environmental Impact Assessment.
2.2 The Parties agreed that total project cost will be secured
by ESI E&C Co., Inc.
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2.3 The Parties will own the PARTNERSHIP as follows:
* COTELCO - 10% of all outstanding shares of PARTNERSHIP
* ESI - 90% of all outstanding shares of PARTNERSHIP
3. Responsibilities of ESI
ESI shall
3.1 Submit to COTELCO a draft Shareholders Agreement,
Implementation Agreement, Power Purchase Agreement, other
necessary contractual documents, and a milestone schedule
within 90 days of completing Article 2 of this MOA;
3.2 Submit applications or requests, as appropriate, for
approvals, licenses and permits within 90 days following the
completion of Article 2 of this MOA:
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4. Responsibilities of COTELCO
COTELCO shall:
4.1 Confirm within 60 days of completing Article 2 of this MOA,
the site characteristics and site size for the Project, all
relevant drawings, plans, studies, etc. and future expansion
requirements;
4.2 Within 120 days following ESI's submissions of applications
and requests for approval, pursuant to Article 3.2 above,
assist to deliver all permits. licenses, and approvals
necessary for EST to finance, construct and operate the
Project
4.3 Confirm within 30 days of ESI's submittal of the
requirements pursuant to Article 3.3 above, that COTELCO
will be able to satisfy or assist to have such requirements,
consistent with do Article 7, below, of the PPA and
Financial Closing.
5. Price Basis
The Parties agree that the monthly invoicing by PARTNERSHIP
for new monthly energy and capacity contracted for by off-takers
at the metering point shall be composed of
* Capacity Fee PESO/Kw/Month based upon 8 Mw
* Energy Fee PESO/KwHr
* The average is approximately 10% below the new avoided
cost of NPC.
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6. Financing
ESI shall make best efforts to secure financing for the
Project within the time frame stipulated in Article 7 below. If
the financial closing has not occurred prior to the construction
start date, ESI shall fund the initial phase of design of the
Project from equity and begin the detailed design phase.
7. Time Schedule
Subject to all the other items and conditions in this MOA,
the Parties agree that the following time schedule shall be the
basis for execution of the Project's first phase:
Commence Engineering, three (3) months after MOA signed.
Execute the PPA and Implementation Agreement in twelve to
fourteen (12-14) months after MOA signed.
Financial Closing, sixteen (16) months after MOA signed.
Construction Mobilization, twenty (20) months after MOA
signed.
Commission the Project, three (36) months after MOA signed.
8. Technical Basis
The Parties agree that the power plant design shall be based
on ESI's transfer of technology.
9. Confidentiality
Information supplied by the Parties to each other or in
connection with the Project shall be kept confidential and the
Parties shall not disclose such information to any other entity
or person, except that ESI may provide certain information on
confidential basis to third parties no required for financing the
Project.
The Parties also represent that such signature is duly
authorized and that no further action is required to enable them
to perform, their obligations under this MOA.
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For COTELCO; For ESI;
BY: /s/ Wilfredo A. Juloya BY: /s/ David E. Atkinson
Print: Wilfredo A. Juloya Print: David E. Atkinson
Title: President, COTELCO BOD Title: President, ESI E&C Co.,
Inc.
Date: Saturday 13 December 1997 Date: Saturday, 13 December
1997
Witnessed by:
/s/ Elmer B. Bautista
General Manager, COTELCO
/s/ Polerio "Phol" R. Babao Jr. I
Regional Manager, ESI E&C Co., Inc. (Philippines)
