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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 








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. 











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")