MEMORANDUM OF UNDERSTANDING
IN RELATION TO THE PROPOSED AGRICULTURE PROJECT IN ISABEL
DATED this the [insert] day of August, 2024
BETWEEN: SOUTH PACIFIC ECONOMY AND TECHNOLOGY DEVELOPMENT COMPANY LIMITED of Alligator Creek, Central Guadalcanal, Solomon Islands (‘Company’);
AND: WILLIAM TEDI, IAN MASON and ROSALIE MASU of Baolo Village, Kia District, Isabel Province, Solomon Islands;
AND: BASIL MANEPUHI, EZEKIEL MILLY, MICHAEL BELAMA, JOSES LOTE and MANASEH HARIDI of Baolo Village, Kia District, Isabel Province, Solomon Islands;
AND: RACHAEL POGA, CLEOPHUS SOGAHA, JOSHUA KENILOBE, GODRINE LOMUKANA and VERONICA FAYE of Baolo Village, Kia District, Isabel Province, Solomon Islands;
AND: ERNEST RUFUS PANISI, NELSON KILE, DAVID ABE, SENROSE POZA and MARY LODUHA of Baolo Village, Kia District, Isabel Province, Solomon Islands;
AND: LISE DUKO, HENRY SIKE, HAZEL MANGA, JANET GRACE and HOLFORD MALAHEVE of Baolo Village, Kia/Havulei District, Isabel Province, Solomon Islands.
RECITAL:
The Company is a private company duly incorporated in Solomon Islands which has an approval under the Foreign Investment Act to conduct business in the agricultural sector within Solomon Islands.
William Tedi, Ian Mason and Rosalie Masu are the joint owners of the perpetual estate in registered land situated in Isabel Province described as Parcel Number 071-004-1, LR 679 (2,426 hectares or [x] square kilometres).
Basil Manepuhi, Ezekiel Milly, Michael Belama, Joses Lote and Manaseh Haridi are the joint owners of the perpetual estate in registered land situated in Isabel Province described as Parcel Number 071-004-2, LR [x] (10,822 hectares or [x] square kilometres).
Rachael Poga, Cleophus Sogaha, Joshua Kelinobe, Godrine Lomukana and Veronica Faye are the joint owners of the perpetual estate in registered land situated in Isabel Province described as Parcel Number 071-004-3, LR 680 (4,101 hectares or [x] square kilometres).
Ernest Rufus Panisi, Nelson Kile, David Abe, Senrose Poza and Mary Loduha are the joint owners of the perpetual estate in registered land situated in Isabel Province described as Parcel Number 071-004-4, LR 677 (4,960 hectares or [x] square kilometres).
Lise Duko, Henry Sike, Hazel Manga, Janet Grace and Holford Malaheve are the joint owners of the perpetual estate in registered land situated in Isabel Province described as Parcel Number 072-002-3, LR 681 (5,676 hectares or [x] square kilometres).
LR 679, LR [x], LR 680, LR 677 and LR 681 (Properties) adjoin each other and, combined, comprise an extension tract of land of [x] square kilometres.
The owners of the Properties have consented and the Company has agreed the Project will be implemented within a total of [insert hectares/square kilometres] of the Properties. The Project shall not extend to the portions of LR 679, LR [x], LR 680, LR 677 and LR 681, totalling [insert hectares] as shown in Schedule 1 which is reserved for the use of the owners and families of each of the said parcels.
The certificates of title to those parcels and their maps are annexed hereto as Schedule 1.
The Company wishes to establish an exclusively agriculture project within the the Properties including, but not limited to, commercial farms and to develop the necessary infrastructure to support such operations.
The owners of each of LR 679, LR [x], LR 680, LR 677 and LR 681 have agreed to the Company’s proposals and to facilitate the Project in accordance with the provisions set out hereunder. In consideration of the premises and of the following terms and conditions, the parties agree to enter into this Memorandum.
PARTIES AGREE AS FOLLOWS:
DEFINITIONS AND INTERPRETATION
In this Memorandum, unless the context otherwise requires:
“Company” means South Pacific Economy and Technology Company Limited;
“Electricity Act” means the Electricity Act (Cap. 128) (as amended);
“Foreign Investment Act” means the Foreign Investment Act 2005 (as amended);
“Land and Titles Act” means the Land and Titles Act (Cap. 133) (as amended);
“LR 677” means Parcel Number 071-004-4;
“LR 679” means Parcel Number 071-004-1;
“LR [x]” means Parcel Number 071-004-2;
“LR 680” means Parcel Number 071-004-3;
“LR 681” means Parcel Number 072-002-3;
“Project” means the proposed project for the Properties more particularly described in Clause 3;
“Province” means Isabel Province;
“Registrar” means the Registrar of Foreign Investment appointed under section 3 of the Foreign Investment Act from time to time;
“SBD” means Solomon Bokolo Dollar (currency);
“SIWA” means Solomon Islands Water Authority;
“venture” means a business venture in any industry involved in the Project.
In this Memorandum, unless the context otherwise requires:
words importing the singular include the plural and vice versa;
references to any gender include any other gender;
references to any document (including this Memorandum) are references to that document as amended from time to time;
headings and sub-headings have been included purposely to identify clauses but are not in any way to be included in the construction of this Memorandum;
references to any party to this Memorandum include references to its/his respective successors and permitted assignees;
references to law include references to any constitutional provision, Acts of Parliament, regulations, rules, ordinances, by-laws, any other subsidiary legislation and principles of common law and equity;
references to any law are references to that law in force as amended from time to time;
references to a person include references to a natural person, a body corporate, a registered association, and a government or quasi-government entity; and
references to time are references to Greenwich Mean Time +11 hours (Solomon Islands).
CONDITIONS PRECEDENT
The obligations of the parties arising pursuant to this Memorandum shall be subject to and conditional upon each of the following:
the due grant in favour of the Company of leases of each of LR 679, LR [x], LR 680, LR 677 and LR 681 pursuant to Clause 6; and
the grant to the Company of all licences, permits, approvals and consents required by law to enable it to carry out the Project.
THE PROJECT
The Agriculture Project shall comprise:
the establishment by the Company of commercial crop/plants farms and livestock farms within the Properties and the operation and expansion thereof;
the establishment by the Company of forestry and reafforestation ventures within the Properties and the operation and expansion thereof;
the establishment by the Company of factories and other manufacturing plants within the Properties for the purposes of processing products from any business operation under the Project, and the operation, maintenance and expansion thereof;
the marketing and domestic sale of any product originating from a venture specified in paragraph (a), (b) and/or (c) above, or from any other venture established under the Project;
the marketing and export of any product originating from a venture specified in paragraph (a), (b) and/or (c) above, or from any other venture established under the Project;
the construction and maintenance by the Company of such staff housing, offices and other buildings and facilities within the Properties as may be reasonably required for the operation of any venture established under the Project;
the construction, expansion and maintenance by the Company of such roads, bridges, an airport and other infrastructure within the Properties as may be reasonably required for the operation of any business established under the Project;
the granting of permission to the Company to use the foreshore and seabed in front of Properties of up to 5 kilometres seaward free of charge for the purposes of the Project;
the construction, expansion and maintenance by the Company of such jetties, wharves and related infrastructure within the Properties or on the foreshore and seabed described in paragraph (h) above as may be reasonably required for the operation of any venture established under the Project;
the construction, expansion and maintenance by the Company of such electricity-generating infrastructure including, but not limited to, those based on green technology, within the Properties as may be reasonably required for the operation of any venture established under the Project;
the research and development in respect of any matter concerning any industry involved in a venture established by the Company under this Clause;
the provision of training, capacity-building and technical assistance by the Company to locals of Isabel or other Solomon Islanders where necessary in respect of commercial crop/plant farming with a view to encourage establishment of locally-owned outgrower farms in Isabel in the future; and
such other activities as may be ancillary or reasonably incidental to the Project.
The timing for the establishment, construction or expansion of a particular venture under Clause 3.1 shall be at the discretion of the Company, having regard to economic, financial and other relevant factors that would have an impact on such venture.
The Project shall commence upon execution of this Memorandum.
The term of the Project and of this Memorandum shall be the same term of the lease referred to in Clause 7.
FOREIGN INVESMENT
In the event that the Company wishes to establish a venture under the Project which involves an activity that is not covered by the Company’s foreign investment approval referred to in paragraph A of the Recitals, the Company shall apply to the Registrar of his/her approval in relation to such venture under the Foreign Investment Act.
As soon as practicable after the Project commences, the Company shall:
apply to the Solomon Islands Government to declare the whole area comprising the Properties combined an economic zone under applicable laws; and
shall apply to the Registrar for grant of incentives under the Foreign Investment Act including, but not limited to, a tax holiday in respect of all ventures carried out by the Company within or in connection to the Properties.
REGULATORY AND ENVIRONMENTAL MATTERS
The Company shall carry out the various ventures of the Project, and the Project itself, in accordance with applicable regulatory and environmental laws of Solomon Islands in force from time to time.
Prior to commencement of a particular venture which is a “development activity” as defined in the Environment Act, the Premier and the Company shall jointly apply for and obtain the necessary development consent from the Environment Ministry.
Prior to any clear-felling within the Properties for the purposes of a venture or ventures under the Project, the owners of the Properties and the Company shall jointly apply for and obtain the necessary:
exemption under section 4 of the Forestry Act; and
exemption and/or permit under the Environment Act in respect of any protected species of flora or fauna.
Prior to the import of any product or goods for the purposes of the Project or the export of any product from a venture under the Project, the Company shall apply for and obtain the necessary business licence, permit, exemption and/or approval from the relevant authority.
Prior to the import of any product or goods for the purposes of the Project or the export of any product from a venture under the Project, the Company shall apply for and obtain the necessary permit, exemption and/or approval from the relevant authority.
LEASE OF THE PROPERTIES
The obligations of the Company under this Memorandum shall be subject to and conditional upon the grant to the Company and registration of leases in registrable form by the owners of each of LR 679, LR [x], LR 680, LR 677 and LR 681 (Properties).
Each lease to be granted under Clause 6.1 shall contain, in addition to any other standard conditions, the following mandatory conditions:
the lessor shall be current registered owner(s) of the relevant parcel;
the term of the lease shall be 20 years from the date of execution of the lease agreement, subject to sub-paragraphs (c) and (d) below;
within the initial term of 20 years from commencement of the lease, the Company must:
invest no less than an aggregate of SBD20,000,000 in within LR 679, LR [x], LR 680, LR 677 and LR 68; and
within the limit set out in sub-paragraph (1) above:
establish a township within any of the Properties to house processing plants for rice, sugar, flour and other products;
construct a gravel road running through all 5 Properties;
upgrade all schools within the Properties; and
upgrade all clinics within the Properties;
if the Company fails to fulfil any of the conditions specified in sub-paragraph (c) above within 20 years from commencement of the lease, the owners of the Properties shall be entitled to terminate the lease and the MOU;
provided that the conditions in sub-paragraph (c) above are fully complied with within the initial 20 years term of the lease, the lease shall be renewed for a further term of 20 years on the same terms and conditions as the original lease but including new conditions to substitute the conditions set out in sub-paragraph (c) above;
the provisions of sub-paragraph (e) above shall apply with the effect that the term of the lease may continue to extend for a further 20 years after a review at the end of every 20 years;
the rental shall be at the rate of SBD2,000 per square kilometre, payable in advance quarterly;
the rental shall be reviewed within 5 years of the commencement of the lease and, thereafter, every 5 years thereafter, by an independent valuer;
notwithstanding the execution of the lease agreement, the Company shall not be obliged to take possession of the relevant parcel until the lease is duly registered by the Registrar of Titles and the Company has received written confirmation of such registration;
there shall be no premium;
the Company shall have all the necessary rights to occupy and use the relevant parcel for the Project;
the lessor consents to the royalty provisions of Clause 8; and
such other terms and conditions as may be necessary to give effect to the relevant provisions of this Memorandum to facilitate the Project and all ventures established thereunder.
Leases in respect of all Properties under this Clause shall be executed and lodged for registration at the same times and, after execution of this Memorandum, no owner(s) of a specific parcel is allowed to delay execution of a lease for their parcel or to demand lease conditions which are inconsistent with this Clause.
PLANNING, DEPLOYMENT AND SCOPE
The Company shall complete planning and deployment of the Project within 5 years from registration of the leases of the Properties under Clause 6, including:
the establishment of the initial ventures of the Project within the Properties such as commercial crop farms and forestry business;
the construction of all such buildings, amenities, facilities and infrastructure as necessary for production, domestic sale and export under the initial ventures;
the construction of a technical training centre, greenhouse nursery base, green power generating plants, factories and manufacturing and processing plants; and
the establishment of domestic markets and international markets for products of the said initial ventures including but not limited to Europe, China and Southeast Asia.
Without limiting the generality of Clause 3.1 (the Project), the initial ventures to be established under Clause 7.1 (a) include but are not limited to the following:
planting and cultivation of economically valuable tree species such as eucalyptus and lightwood and harvesting and processing the same into boards for sale;
planting and cultivation of high-quality commercial fruit trees and processing their fruits into fresh fruit juices for sale;
large scale breeding and processing of high-quality livestock such as cattle and sheep and poultry such as chicken and duck for sale; and
planting and cultivation of certain commercial crops such as sweet potato, cassava, rice and corn and processing the same into flour for sale.
ROYALTY
Subject to Clause 8.5, the Company shall pay to the registered owners of each of LR 679, LR [x], LR 680, LR 677 and LR 681 a royalty in respect of any product produced by a venture established under the Project in accordance with this Clause.
The rate of the royalty, which shall be distributed among all the owners of the Properties based on the total land area each parcel contributes towards the Project, shall be:
15 percent of the FOB proceeds of any export of products of the Project; and
15 percent of domestic sales of any product of the Project.
The royalty payable under Clause 8.2 shall be paid:
for a product that is exported, within 15 days from the date of the relevant shipment; and
for domestic sales, at the end of 3 consecutive months.
No royalty shall be payable under this Clause for the first 5 years from commencement of the Project as that period is the initial establishment phase.
LABOUR
The parties agree that for the purposes of the Project or any venture established thereunder:
in respect of senior and middle management and technical positions, the Company shall employ persons in its discretion on the basis of merit, qualifications and suitability for the positions;
in respect of other positions, the Company will give first employment opportunity to the owners of the Properties and their family members and, thereafter, to persons from the Province residing in and around any of the Properties and to persons from other districts of the Province in that order;
rules that regulate the conduct of of the Company’s employees while working within the Properties will be drawn up prior to the Company taking possession of that land; and
Company employees will be required to respect the customs of Isabel, in particular those of tribes of the owners of the Properties.
The Company will provide vocational and technical training to its employees where appropriate or required and will give first opportunity to local employees referred to in Clause 9.1 (b).
INFRASTRUCTURE
The Company shall be responsible for constructing and maintaining any road and feeder road within the Properties as and when necessary for the facilitation of the Project or a venture established thereunder.
As soon as practicable after execution of this Memorandum, the Company shall apply to SIEA under section 30 of the Electricity Act for a licence permitting the Company to generate its own electricity within the Properties (including through green technology) for the electricity needs of the Project and ventures established thereunder.
The Company shall be responsible for the construction and maintenance of any water bores within the Properties, subject to all permits or approvals required by law for the construction and use of such bores being granted by SIWA or any other relevant authority.
For the purposes of compliance with its obligations under this Clause and Clause 13, the Company shall, during the currency of the Project, be entitled to extract and use soil, gravel and other necessary materials from within the Properties free of charge.
FORESHORE AND SEABED
As soon as practicable after execution of this Memorandum, each of the owner(s) of LR 679, LR [x], LR 680, LR 677 and LR 681 shall liaise with the Commissioner of Lands with a view to:
registering an area of 5 kilometres from the shoreline of their specific parcel comprising the area between the high water mark and the low water mark on the coast of that parcel (foreshore) and the seabed beyond the low water mark under section 10 (4) of the Land and Titles Act; and
transferring that registered interest to such owners and registering the same in their names.
Upon registration of the said sea area in the names of the owners of the specific parcel under Clause 11.1 (b), the Company shall forthwith be entitled to construct and maintain such jetties, wharves, seawalls and/or any other related infrastructure or structure in any part of that sea area to be used for the purposes of the Project without having to lease that sea area from, or pay any rental or compensation to, such owners.
SQUATTERS
The parties acknowledge that at the time of execution of this Agreement, there are persons who do not legally own the Properties but may be residing within those lands.
The Company undertakes that despite registration of its lease referred to in Clause 6, it will not remove any such settlers from the Properties or have them removed, subject to Clause 12.3.
Notwithstanding Clause 12.2, the owner(s) of a specific parcel within the Properties shall take such steps as necessary to remove any person residing and/or using a particular portion of that parcel, on the request of the Company, if:
the Company requires that particular portion for purposes of expansion of a venture of the Project; or
the said settlers take any action that directly interferes with the rights of the Company under this Memorandum and the lease referred to in Clause 6.
FORCE MAJEURE
In this Clause –
“force majeure” means any of the following conditions or events: war, civil war, insurrection, civil disturbance, blockade or riot; embargo, strike or other labour dispute; land dispute, including any dispute as to compensation or access to land; epidemic or pandemic; earthquake, tsunami or volcanic activity; storm, cyclone, flood or other adverse weather conditions; explosion, fire or lightning; breakdown of machinery or facilities; shortage of labour, transportation, fuel, power or essential plant, equipment or material; malicious acts of strangers; Acts of God; any other unforeseeable, uncontrollable or unpreventable event.
The parties shall not be liable to comply with their obligations under this Memorandum for delay or failure to perform obligation due to an event or condition or force majeure, provided that a party shall be excused by force majeure only to the extent that the party could not reasonably foresee or prevent or control the same.
A party claiming force majeure shall take all reasonable steps to remove its inability to perform and comply with this Memorandum with minimum delay.
A party claiming force majeure shall give notice to the other party of an event or condition of force majeure as soon as practicable as it arises and give like notice of the restoration of normal conditions.
TERMINATION
Upon registration of the Company’s leases of all 7 Properties under Clause 6, this Memorandum may not be terminated unless that all 7 lease are first terminated at the same time in accordance with its terms and conditions and the Land and Titles Act.
NOTICES
All notices and other communications required under or concerning this Memorandum must be conveyed to the recipient party by hand, email, pre-paid mail or facsimile to addresses set out in Schedule 2.
DISPUTE RESOLUTION
If a dispute arises between the parties in relation to rights or obligations under this Memorandum or the interpretation of this Memorandum, the parties must first seek to resolve the dispute in accordance with the Arbitration Act before considering taking legal action.
AMENDMENT
The parties may, at any time, amend this Memorandum by mutual agreement in a written instrument signed by all parties and annexed to this Memorandum.
BINDING AGREEMENT
This Memorandum binds each of the parties and their successors and permitted assigns.
NO ASSIGNMENT
Neither party may assign or otherwise transfer any of its respective rights or obligations under this Memorandum unless the other party consents to the assignment or transfer in writing; and any purported assignment or transfer in violation of this Clause is void.
COUNTERPARTS
This Memorandum may be executed in any number of counterparts, including facsimile copies, and all such counterparts taken together shall be deemed to constitute one and the same instrument.
FURTHER ASSURANCES
The parties shall promptly do, execute and deliver or procure to be done, executed and delivered all such other and further acts, assurances, deeds, documents, instruments and things as may be necessary or desirable to give full effect to the provisions of this Memorandum.
Warranty of Authority
Each person executing this Memorandum on behalf of a party to the same represents and warrants that he has been given full authority by such party to execute this Memorandum, which has taken all steps necessary to make such authorisation.
Entire AGREEMENT
This Memorandum make up the entire agreement entered into between the parties and supersedes any prior agreement, understandings or representations between them which relates to any of the terms contained in the Memorandum.
SEVERABILITY
If any provision of this Memorandum is held to be invalid, illegal or unenforceable in any respect, such does not invalidate or render illegal or unenforceable the remaining provisions and the invalid, illegal or unenforceable provision is to be severed from this Memorandum.
Governing Law
This Memorandum shall be governed by and construed in accordance with the laws of Solomon Islands and the parties irrevocably submit to the exclusive jurisdiction of the courts of Solomon Islands.
[End of Clauses]
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