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Exhibit 10.1

MEMORANDUM OF UNDERSTANDING DATED MARCH 15, 2003 ("MoU")

The Democratic Republic of Sao Tome and Principe ("DRSTP") and Environmental
Remediation Holding Corporation ("ERHC"), with respect to the Memorandum of
Agreement between the parties of May 21, 2001 ("MoA"), hereby agree as follows:

(A) TRADE-OFF OF ECONOMIC VALUES

ERHC shall:

1.Relinquish 100% of Signature Bonus, 100% of Profit Oil and 100% of Overriding
Royalty Interest (namely the "Financial Interests") attributable to ERHC under
the MoA, to DRSTP; and shall

2.Relinquish the ERHC right of choice of blocks in the JDZ as contained in the
MoA,

at such time as the following be fully and finally accomplished:

DRSTP shall cause the Joint Development Authority ("JDA") to grant ERHC the
option to request and be awarded the following Preferential Working Interests
("PWI") within the Joint Development Zone ("JDZ") in the immediate forthcoming
licensing round:

1.15% PWI in one block of ERHC's first choice. This choice may not be exercised
in the block that ExxonMobil has exercised its right to PWI of 40%. DRSTP shall
cause the JDA to waive 100% of the total signature bonus payable on ERHC's 15%
in this block.

2.15% PWI in one block of ERHC's second choice. This choice may not be exercised
in the block that ExxonMobil has exercised it's right to PWI of 40%. ERHC shall
pay 100% of the total signature bonus payable on ERHC's 15% in this block.

3.20% PWI in one block of ERHC's third choice. This choice may not be exercised
in the block that ExxonMobil has exercised its right to PWI of 25% or 40%. DRSTP
shall cause the JDA to waive 100% of the total signature bonus payable on ERHC's
20% in this block.

4.30% PWI in one block of ERHC's fourth choice. This choice may not be exercised
in the block that ExxonMobil has exercised its right to PWI of 25% or 40%. DRSTP
shall cause the JDA to waive 100% of the total signature bonus payable on ERHC's
30% in this block.

5.25% PWI in one block of ERHC's fifth choice. This choice may not be exercised
in the block that ExxonMobil has exercised its right to PWI of 25% or 40%. DRSTP
shall cause the JDA to waive 100% of the total signature bonus payable on ERHC's
25% in this block.

6.20% PWI in one block of ERHC's sixth choice. This choice may not be exercised
in the block that ExxonMobil has exercised its right to PWI of 25% or 40%. ERHC
shall pay 100% of the total signature bonus payable on ERHC's 20% in this block.

ERHC must exercise its PWI options in the afore-mentioned blocks within a
reasonable time after the licensing round subject to approval of the JDA.

(B) MISCELLANEOUS UNDERSTANDINGS

The relinquishment of ERHC rights described herein shall be subject to and
conditioned upon the following being true and correct and being fully and
finally accomplished:

1.DRSTP represents and warrants that the number of, designation of, boundaries
of, and sizes of blocks (that is, the parameters of acreage) to be offered in
the immediately forthcoming licensing round shall not be materially less than
the parameters of acreage as indicated on the

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attached Exhibit A, and DRSTP further represents and warrants that should the
parameters of acreage on offer be materially lower for whatever reason then
DRSTP shall compensate ERHC such that ERHC's economic position as contemplated
herein be not diminished thereby.

2.DRSTP represents and warrants that the rights of ExxonMobil as contemplated
under this MoU shall not exceed PWI of 40% in one block and PWI of 25% each in
two blocks in the JDZ and DRSTP further represents and warrants that its has not
granted any other PWI rights in the JDZ to ExxonMobil or any other company that
may cause conflict with or be contrary to the PWI rights granted ERHC under this
MoU.

3.DRSTP and ERHC shall execute definitive legal agreement(s) to incorporate and
reflect the contents and intentions of this MoU and such agreement(s), which
shall include a proposed agreement to be signed between the JDA and ERHC as an
exhibit therein, must contain mutually acceptable terms and conditions.

4.DRSTP shall cause the definitive agreement(s) between DRSTP and ERHC to be
approved by the Joint Ministerial Council ("JMC") of the JDA at the next JMC
meeting and DRSTP shall further cause the JMC to approve that the JDA enter into
agreements with ERHC to implement this MoU and the MoA and DRSTP shall forthwith
after the JMC meeting notify ERHC of these approvals.

5.After the afore-mentioned JMC meeting, but before formal announcement of the
licensing round, ERHC and JDA shall execute a definitive legal agreement to
enable full implementation of the definitive agreement(s) between DRSTP and ERHC
including the exhibit therein.

6.Any agreements contemplated under this MoU shall be prepared so as not to
affect the integrity, legality, and validity of the MoA and Consent Award.

7.This MoU and any agreements contemplated herein are, and shall be, without
prejudice to ERHC rights and interests in the Exclusive Economic Zone of DRSTP
as contained in the MoA.

8.ERHC, under United States of America Securities and Exchange Commission
("SEC") regulations, is required to file details of this MoU with the SEC.

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INTENDING TO BE LEGALLY BOUND the parties hereby incorporate by reference and
make a part hereof as though set out in full herein, Articles 9, 10 and 11
(excluding sub-paragraph 11.5) of the MoA. This MoU is hereby executed this 15th
Day of March 2003, in the presence of members of the Joint Development
Authority.

/  / (Signed)
His Excellency, Rafael Branco
Minister of Public Works, Infrastructure,
Natural Resources and Environment
DRSTP
 
/  / (Signed)
Mr Chude Mba
President & Chief Executive
Officer
ERHC
Witnessed by:
 
 

/  / (Signed)
Dr Tajudeen Umar
Chairman of the Executive Board
JDA

 

 

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MEMORANDUM OF UNDERSTANDING DATED MARCH 15, 2003 ("MoU")