EXHIBIT 10.1 LETTER AGREEMENT WITH CHROME (WITHOUT EXHIBITS THERETO).
November 29, 2004
Chrome Energy LLC
RE: Restructure of Current Environmental Remediation Holding Corporation
Debt and Additional Loan for Working Capital in the amount of
$2,500,000.
Dear Xxx Xxxxx Xxxxx:
This Letter Agreement is entered into between, Environmental Remediation
Holding Corporation ("ERHC") and Chrome Energy LLC ("Chrome"), whereby Chrome
agrees to cancel all existing notes between ERHC and Chrome and execute the two
enclosed notes marked EXHIBIT A and EXHIBIT B. The note marked as EXHIBIT A,
reflects your agreement to consolidate and restructure all current notes between
ERHC and Chrome (the "Restructure"). The note marked EXHIBIT B, reflects your
agreement to fund an additional $2,500,000, which is the working capital
requirement of ERHC ("New Financing"). In consideration for agreeing to the
Restructure and New Financing, ERHC has agreed to issue Chrome additional shares
of ERHC common stock (the "Additional Shares.").
As discussed more thoroughly in the report by G.A. Xxxxxxx & Co., dated
July 15, 2004, attached hereto as EXHIBIT C (the "Xxxxxxx Report"), the Board of
Directors of ERHC has determined that it is in the best interest of ERHC for
Chrome to participate in the Restructure and New Financing. ERHC is requesting
that all current note holders restructure or convert their respective notes.
ERHC is also requesting that all note holders participate pro rata in the New
Financing. However, ERHC believes that many, if not all, of the current note
holders will not participate in the New Financing. Due to the perceived lack of
participation from the other current note holders and because Chrome is the
majority note holder, ERHC requests that Chrome initially fund the entire
$2,500,000 needed. In the event that another note holders funds their respective
pro rata share of the New Financing, such amount will be returned to Chrome
immediately.
Letter Agreement ERHC/CELL
November 29, 2005
Page Two
The following is a brief discussion of the terms of the Restructure, New
Financing and Additional Shares*:
RESTURCTURE:
Currently, ERHC has six notes outstanding in favor of Chrome
(collectively, "Old Notes"):
1. Senior Secured 10.00% exchangeable Promissory Note Due February 15,
2005, with an estimated principle amount, as of November 18, 2004,
of $4,294,460.92.
2. Senior Secured 10.00% Exchangeable Promissory Note, dated as of
February 15, 2001, with a principle amount of $1,800,000.
3. Senior Secured 8.00% Exchangeable Promissory Note, dated as of
February 15, 2001, with a principle amount of $2,200,000.
4. Amended and Restated Convertible Note, dated as of January 31, 2001,
with a principle amount of $804.312.50.
5. Amended and Restated Convertible Note, dated as of January 31, 2001,
with a principle amount of $631,666.67.
6. Note, dated as of February 15, 2001, with a principle amount of
$403,643.85.
Upon cancellation of the Old Notes, ERHC has agreed to consolidate all the
Old Notes into one note on the following terms:
1. Principle amount of $10,134,084 (equals the total amount of
principle on the Old Notes);
2. A maturity date of January 31, 2007;
3. ERHC has the right to convert the debt into shares of ERHC common
stock at $0.175 per share (5 of the 6 old notes were convertible by
Chrome at $0.20 per share);
4. ERHC has the right to pre-pay the note for the face amount plus
accrued interest without pre-payment penalty;
5. Chrome is not entitled to convert the debt; and
6. Annual interest payments at 12% per annum (the interest rates on the
Old Notes varied from 20% to 5.5%).
Additionally, Chrome will receive an interest payment for the entire
amount of accrued and unpaid interest, as of December 15, 2004, on the Old Notes
($2,461,711.84) converted into shares of ERHC common stock at $0.20 per share,
or 12,966,686 shares of ERHC common stock.
Letter Agreement ERHC/CELL
November 29, 2005
Page Three
NEW FINANCING:
By December 15, 2004, Chrome will fund ERHC $2,500,000 needed for working
capital. The terms of the New Financing are as follows:
1. Principle amount of $2,500,000 (which will be refunded by an amount
equal to the other note holders participation in the New Financing);
2. A maturity date of January 31, 2007;
3. ERHC has the right to convert the debt into shares of ERHC common
stock at $0.175 per share;
4. A default under this Note by Chrome, will result in the conversion
price automatically increasing to $0.20 per share;
5. ERHC has the right to pre-pay the note for the face amount plus
accrued interest without pre-payment penalty;
6. Chrome is not entitled to convert the debt; and 7. Annual interest
payments at 10% per annum.
ADDITIONAL SHARES:
In consideration for agreeing to the Restructure and New Financing, ERHC
has agreed to issue Chrome a total of 14,023,352 Additional Shares of ERHC
common stock, which is equal to the current value of the Restructure converted
into shares of ERHC common stock at $0.40 per share. ERHC will issue Chrome
12,465,202 Additional Shares when the two new notes are executed, which is equal
to the current value of the Restructure converted into share of ERHC common
stock at $0.45 per share. If for any reason, Chrome defaults under the New
Financing note (as defined in the New Financing note), then the remaining
1,558,150 Additional Shares will be forfeited. ERHC will issue the remaining
1,558,150 shares upon the termination of the New Financing note (as determined
by the terms of the New Financing note), if and only if, Chrome does not default
under the New Financing (as defined in the New Financing note). Prior to
issuance, the remaining 1,558,150 Additional Shares shall be proportionately
adjusted to the then outstanding common stock of ERHC for any stock splits or
combinations, reclassification, exchanges, reorganizations, merger, or
consolidations.
Letter Agreement ERHC/CELL
November 29, 2005
Page Four
* The details of the Restructure, New Financing and Additional Shares
differ from the Xxxxxxx report in the following manners:
1. The Xxxxxxx Report contemplated the new loans maturing on September
30, 2006. However, due to the postponement in finalizing the
documentation, the maturity date will be January 31, 2007.
Therefore, the interest due on such notes has increased.
2. The Xxxxxxx Report contemplated the old notes expiring on September
30, 2004, instead of December 15, 2004. Therefore, the interest due
on such notes has increased.
3. The Xxxxxxx Report does not consolidate the Old Notes into one note
with a 12% interest rate. Therefore, the interest due on the new
note is different. Chrome will receive 2,959,761 more shares with a
consolidated note at 12%, than with notes with varying percentages.
4. The Xxxxxxx Report contemplated the Senior Secured 10.00%
exchangeable Promissory Note Due February 15, 2005 would continue to
be utilized for future draws up to the $5,000,000 ceiling in the
note. This change has decreased the total amount of principle and
interest owed to Chrome.
After review of the enclosed notes, please execute the notes attached
hereto as EXHIBIT A and EXHIBIT B, and forward such executed notes with the
cancelled originals of the Old Notes to ERHC, by no later than December 3, 2004.
Upon receipt of the new notes and cancelled original notes, ERHC will forward
you the shares representing accrued interest through December 15, 2004 and the
Additional Shares.
This Letter Agreement shall be construed according to the laws of the
State of Texas. This Letter Agreement shall be binding upon Chrome and ERHC and
shall inure to the benefit of Chrome and ERHC's successors and assigns.
Very truly yours,
ENVIRONMENTAL REMEDIATION HOLDING CORP.
/s/ Xxx Xxxxx
---------------------------------------
Xxx Xxxxx, President
Agreed and Accepted:
CHROME ENERGY, LLC
By: /s/ Xxx Xxxxx Xxxxx
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Name: Xxx Xxxxx Xxxxx
Title: Sole Manager
