EXHIBIT 2.6
This Letter sets out the general terms and conditions under which Arena
Power, L.P., ("Arena") and Potomac Energy Corporation, ("Potomac"),
collectively the Parties, ("Parties"), will jointly participate in the
development, exploitation, ownership, and operation of a coal deposit and a
coal-fired electric power production plant which will be located near
Guaduero in the Emerald Mountain Region northwest of Bogota, Columbia, the
Project ("Project").
As required, an ownership entity will be formed in Columbia, presumably
under an S.A. or S.A. de C.V. structure. The entity will be called
NEWCO, S.A. or NEWCO S.A. de C.V. ("Newco").
Newco will be owned by Arena and Potomac who will each own one-half
(1/2) of the stock of the entity and contribute required equity and/or
guarantees in proportion to their ownership. If Newco enters any
agreement to provide any local partners or equity/debt providers with
equity, then dilution of Arena and Potomac will occur on an equal basis.
Arena will be responsible for day to day management of Newco. Newco's
board will have a minimum of four seats which will be held by Arena and
Potomac. The board of Newco will adopt a resolution containing a list of
management functions and business activities that will require unanimous
consent of the Arena and Potomac directors.
Arena and Potomac will equally share development costs of the Project
once their capital accounts have equalized. To date, Potomac has
incurred project development costs of $30,000. Arena will fund 100% of
the next $30,000 in development costs to equalize its capital account
with Potomac's. Thereafter, Arena and Potomac will each be responsible
for one-half of the development costs of the Project.
If a Project Development Fee is included in long term project debt
financing, this development fee will be split equally among Arena and
Potomac to offset each groups development costs.
The Basic Contract for Small Carbon Exploration/Exploitation between
Ecocarbon and Xxxxxx Potomac, will be formally assigned to Newco within
60 days of Newco's formation.
This Memorandum of Understanding is binding on Arena and Potomac.
This Agreement is dated effective December 2, 1998.
/s/Xxxxxx X. Xxxxxx /s/Xxxx Xxxx
Xxxxxx X. Xxxxxx Xxxx Xxxx
Vice President, Potomac Energy Corporation
Arena Power Company, General Partner of
Arena Power, L.P.
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