Summary of contract

• Negotiation, representation, and other relevant context

  The agreement template is a form of a lease agreement between the principal men of a chiefdom acting as chiefdom council of that chiefdom (the “chiefdom council”) and Addax Bioenergy Sierra Leone Limited (“Addax”). The agreement is made under the Provinces Land Act, Chapter 122 of the Laws of Sierra Leone (Recitals). The chiefdom council demises unto Addax all the piece of land in the Northern Province of the Republic of Sierra Leone described in Schedule 1 of the agreement for 50 years (Art. 1.1). Addax also has over the adjoining and neighboring land of the chiefdom council the rights set out in Schedule 2 to the agreement: right of way, right of passage through any conduits, right to construct facilities conduit services equipment in connection with the permitted uses; and the right to enter and remain on the adjoining land for any reasonable purpose in connection with the use of the demised land (Schedule 2). Addax’s principal purpose is to develop and operate a new ethanol and ancillary power plant facility using sugarcane grown by Addax on the land (Appendix B, Background). Addax will use the area for permitted uses: (i) the plantation, cultivation, harvesting of sugar cane or other crops; (ii) design, construction, and operation of an ethanol plant; (iii) design, construction, and operation of a power plant; (iv) the construction of accommodation and ancillary facilities which may include any medical, education, religious, social and recreational facilities as determined by Addax; (v) the connection of any utility supply, the storage or disposal of any waste products, the construction, maintenance and replacement of any road, railway, or other method of transportation, communications equipment and electricity and other utilities as determined by Addax; (vi) residential and other activities of persons who reside on or occupy part of the land whether employees or not; and (vii) for any ancillary purpose (Art. 2.2). Addax is entitled to (i) erect or remove any buildings, fixtures or structures; (ii) install or alter any roads; (iii) alter the level of the land; (iv) carry out earthworks; (v) stop up or alter the course of any watercourse; (vi) reduce or remove vegetation (Art. 4.4) Addax cannot use the land for other purposes without the consent of the chiefdom council, such consent not to be unreasonably withheld or delayed (Art. 2.2). Addax will not assign or sublet the demised land without the consent of the chiefdom council and approval in writing of the chief administrative officer, except in case of (i) Addax granting security over the lease and any of its rights in favor of lenders or other persons who may give finance to Addax; and (ii) Addax sharing occupation of the land with any company that is in the same group of companies and with any person or company retained by Addax for operation and maintenance (Art. 2.3). If Addax wants to have a new lease of the demised land after the first 50 years, then the chiefdom council will make and execute to Addax a new lease for twenty-one years (Art. 3.4). Addax seeks to put about 20,000 hectares under sugarcane cultivation, but it depends on some factors like soil fertility, irrigation, and individual property rights (Appendix B, Art. 1.2). Addax has the right to surrender portions of the demised land that it considers unsuitable for its project within the first five years of the agreement (Art. 3.5, Appendix B, Art. 1.2).

• Governance, implementation, dispute resolution

  The chiefdom council has the right to re-enter the demised land if there is at least $US 15,000 of rent in arrears for 21 days or any material breach of any stipulation by Addax. The chiefdom council has to give written notice to Addax of the specific breach. If Addax continues to default or does not make full compensation in money to the chiefdom council for direct losses within three months of providing such notice, the chiefdom council has the right to re-enter to the demised land(Art. 2.5). If the chiefdom council cannot demonstrate that it has suffered any losses, then the chiefdom shall not be entitled to re-enter the demised land (Art. 2.5). The rent shall be subject to revision by the chief administrative officer at the end of every seven years from the commencement of the term, subject to the right of appeal under the Provinces Land Act (Art. 4.2). If the agreement is not registered within three months of its execution in the office of the Registrar-General in Freetown, then the deed shall be voidable at the option of either chief council or Addax (Art. 4.3). Addax shall have exclusive possession over all the demised land and shall be entitled to designate such areas as it wishes for its exclusive use and occupation. Addax shall not be entitled to require a permitted third party to cease to reside on any part of the demised land except in exceptional circumstances and in which case it will pay to the affected party compensation agreed by the chiefdom council, and in the absence of agreement within 30 days, as set by the President of the Bar of Sierra Leone (Art. 4.6). Addax will enter into discussions with traditional landowners while at the same time assessing whether their particular area of land within the lease area is suitable for the project (Appendix B, Art. 1.4). Addax intends to do a detailed mapping exercise so that existing village areas are designated as having shared occupation or will be surrendered (Appendix B, Art. 1.8). All disputes between the parties shall be resolved by arbitration in London before three arbitrators under the International Chamber of Commerce (Art. 5.2 (a)). Each party shall nominate an arbitrator and must agree to nominate a third arbitrator. If the parties fail to nominate the third arbitrator, then the two arbitrators already appointed will nominate the third arbitrator. The proceedings will be in English (Art. 5.2 (b)(c)). The parties irrevocably waive any rights of appeal they might otherwise have had (Art. 5.2 (d)).

• Fiscal obligations: content

  Addax will pay annually in advance the yearly rent of US$3.60 per acre of the demised land from the commencement of the lease and until the lease is surrendered (Art. 1.1, 2.1, and 2.4). The chiefdom council shall arrange with the chief administrative officer that the proceeds of each payment shall be distributed by the chief administrative officer as follows: (i) one-third to be retained by the chief administrative officer; (ii) one-third to the chiefdom council; and (iii) one-third amongst those adults treated as landowners of part of the demised land (Art. 2.4). Addax will enter into discussions with traditional landowners while at the same time assessing whether their particular area of land within the lease area is suitable for the project. If a traditional landowner is agreeable to acknowledging Addax’s rights under the agreement, Addax will pay the landowner $1.40 per acre per annum (Appendix B, Art. 1.4). If a traditional landowner is unwilling to acknowledge Addax’s lease rights, then no amount will be paid directly to that landowner. Addax will likely surrender that area back to the chiefdom council (Appendix B, Art. 1.4).

• Environmental and social protection

  Addax will not resettle any of the existing landowners/users, except when it is considered unavoidable. Addax will pay compensation as agreed by the chiefdom council and the landowner/user or an independent expert. Addax will ensure that the landowners/users have access to an area of land to grow their cash crops (Appendix B, Art. 1.9).