AGREEMENT
MEMORANDUM OF AGREEMENT
MADE BETWEEN
THE GOVERNMENT OF THE DEMOCRATIC REPUBLIC OF SAO TOME AND
PRINCIPE
AND
ENVIRONMENTAL REMEDIATION HOLDING CORP.
(A U.S. PUBLIC COMPANY REGISTERED IN THE STATE OF COLORADO)
MAY 21, 2001
MEMORANDUM OF AGREEMENT
This Memorandum of Agreement is entered into this 21st day of May, 2001 by and
between the Democratic Republic of Sao Tome Principe (hereinafter referred to
as "DRSTP") and Environmental Remediation Holding Corp. a company organized
under the laws of the State of Colorado USA (hereinafter referred to as
"ERHC"). DRSTP and ERHC are collectively referred to as the "Parties".
WITNESSETH:
WHEREAS, the Parties, together, at certain times, with Procura Financial
Consultants, C.C. (hereinafter referred to as "Procura") entered into various
memoranda of agreement, letters and stipulations relative to the evaluation
and study of oil, gas and mineral reserves within DRSTP. Those documents are:
(a) Letter of Understanding between DRSTP and ERHC dated May 18, 1997,
(b) Memorandum of Agreement between DRSTP on the one hand and ERHC/Procura on
the other hand dated May 27, 1997,
(c) Memorandum of Understanding between DRSTP and ERHC dated September 30,
1997, and
(d) Stipulation by and between DRSTP and ERHC dated November 20, 1997. (The
above referenced documents (a) through (d) inclusive shall collectively be
referred hereinafter as "the Original Agreement"); and
WHEREAS, under a duly executed settlement agreement dated February 10, 2001,
Procura and its assigns assigned to ERHC any and all rights under the May 27,
1997 Agreement (copy of settlement agreement appended herewith); and
WHEREAS, the May 27, 1997 Agreement led to the creation of Sao Tome and
Principe National Petroleum Company S.A., a public company organized under the
laws of DRSTP (hereinafter referred to as "STPetro"), of which ERHC owns forty
nine percent (49%).
WHEREAS, all matters relative to STPetro were set forth in Decree Law 27/98 of
July, 1998; and
WHEREAS, effective September 18, 1998, the DRSTP, STPetro and Mobil
Exploration and Producing Services Inc. (MEPSI) entered into an 18-month
Technical Assistance Agreement (the TAA) whereby MEPSI undertook to complete a
seismic program, technical evaluation and feasibility study of the oil and gas
exploration potential of acreage described therein; and
WHEREAS, DRSTP and the Government of the Federal Republic of Nigeria
(hereinafter referred to as "FGN") have entered into a draft Treaty on the
Joint Development of Petroleum and other Resources, in respect of Areas of the
Continental Shelf and Exclusive Economic Zone of the two countries which
intends to establish a Joint Development Zone (hereinafter referred to as the
"JDZ") and such JDZ will require DRSTP to cede certain rights that it would
have previously enjoyed in
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the Exclusive Economic Zone of DRSTP which had been filed with the United
Nations (hereinafter referred to as the "EEZ"); and
WHEREAS, the Original Agreement is currently in Arbitration in accordance with
the rules of Arbitration of the United Nations Commission on International
Trade Law (hereinafter referred to as "the Current Arbitration"); and
WHEREAS, DRSTP and FGN signed a Joint Communique on May 5th, 2001, which
listed the points of agreement between the Parties; and
WHEREAS, the Parties wish to resolve their differences by means of this
Agreement and to dismiss the Current Arbitration.
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth below, the Parties hereby agree as follows:
1 INTERPRETATION
In this Agreement the following acronyms, words and expressions shall, where
context permits, be deemed to have the following meanings:
1.1 "Agreement" means this Agreement.
1.2 "Affiliate" means, in relation to ERHC, a company, corporation or other
legal entity, which controls ERHC , is controlled by ERHC or which is
controlled by a legal entity which controls ERHC.
In this definition, "control" means either (i) the direct or indirect
ownership of greater than 50% (fifty percent) of the voting shares or
stock; or (ii) the legal right to make management decisions for ERHC.
1.3 "Available Crude Oil" shall mean the Crude Oil won and saved from any
Concession after deducting amounts used in petroleum operations.
1.4 "Blocks" or "Concession" shall mean an area designated as an individual
unit for the exploration and/or production of Crude Oil and Natural Gas.
Within the context of award of Blocks or Working Interest, the
coordinates of this area shall be the coordinates as defined by DRSTP
Block designations as of 1 January 2001, subject to any changes in block
coordinates that may arise upon the implementation of the JDZ.
1.5 "Contractor" or "Operator" shall mean any party that undertakes the
exploration, development and/or production of Crude Oil and/or Natural
Gas.
1.6 "Cost Oil" shall mean the quantum of Available Crude Oil allocated to
an Operator to enable it to generate the proceeds to recover costs as
specified in an EPA.
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1.7 "Crude Oil" means hydrocarbons that are in natural liquid state at
atmospheric conditions of temperature and pressure, including but not
limited to crude oil, Natural Gas Liquids and condensates, which are
stable or have been stabilized and, if necessary, otherwise treated to
render them suitable for transportation.
1.8 "Dollar" means United States of America Dollar.
1.9 "Effective Date" means the date on which this Agreement is signed.
1.10 "Exploration and Production Agreement" ("EPA") or Production Sharing
Contract ("PSC") for the purposes of this Agreement shall mean any
agreement entered into between the Government of DRSTP, in the case of
the EEZ (and in the case of the JDZ, any agreement among the
Governments of DRSTP and FGN) and any Contractor for the exploration,
development and/or production of Crude Oil and/or Natural Gas.
1.11 "Force Majeure" means an event or circumstance that results in a delay
in performance or any non-performance by a Party of its obligations
under this Contract that are beyond the control and without the fault
or negligence of the Party, including but not limited to: acts of God
or the public enemy, perils of navigation, fire, hostilities, war
(declared or undeclared), blockade, labor disturbances, strikes,
riots, insurrections, quarantine restrictions, epidemics, restriction
or unavailability of goods, labor or services, restraint of access to
the Contract Area, adverse claims to the Contract Area, but excluding
shortage of funds.
1.12 "Government" means the Government of DRSTP or of FGN as the case may
apply including, without limitation, its executive, legislative and
judicial components and all of their regional and administrative
subdivisions.
1.13 "Income Tax" means the tax on Net Income generally imposed under DRSTP
prevailing tax laws on companies operating within the jurisdiction of
DRSTP.
1.14 "Natural Gas" means hydrocarbons that are in a gaseous phase at
atmospheric conditions of temperature and pressure including, but not
limited to, wet mineral gas, dry mineral gas, associated gas,
casinghead gas and residue gas remaining after the condensation,
extraction or separation of liquid hydrocarbons from wet gas and other
valuable non-hydrocarbon gas.
1.15 "Overriding Royalty Interest" or "ORRI" shall mean the percentage of
Available Crude Oil that is allocated to a specific party.
1.16 "Profit Oil" shall mean the balance of available Crude Oil after the
allocation of Royalty Oil and Cost Oil.
1.17 "Royalty Oil" shall mean such Available Crude Oil as it is allocated
to any Operator to enable the Operator or Contractor to discharge its
obligations
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as defined and payable to DRSTP and/or FGN and/or any other entity
formed by DRSTP and FGN for the conduct of operations in the JDZ under
their respective laws and regulations.
1.18 "Signature Bonus" shall mean any funds that an Operator or Contractor
pays to DRSTP and/or FGN and/or any other entity formed by DRSTP and
FGN to acquire the right to sign an Exploration and Production
Agreement.
1.19 Words importing the singular meaning include, unless the context
otherwise demands, the plural meaning and visa versa.
1.20 The clause headings in this Agreement are for convenience and ease of
reference and shall not affect its construction or interpretation
1.21 Reference to clauses and sub-clauses are to clauses and sub-clauses of
the Agreement unless the context clearly indicates otherwise.
Any words, terms or phrases used herein shall be interpreted in accordance
with their generally accepted use by the international petroleum industry.
2 OBLIGATIONS OF ERHC
2.1 ERHC relinquishes its rights established in f) of paragraph 3.1.1 of
the Memorandum of Agreement of May 27th, 1997 under which: "ERHC/PFC
will negotiate on behalf of DRSTP with major oil companies the
remaining concessions to be leased and developed and will retain a 5%
override to be paid by the oil companies for ERHC/PFC services...".
2.2 ERHC assigns its ownership in STPetro to the DRSTP.
2.3 As a result of the assignment in 2.2 above, ERHC relinquishes its
right, through its ownership in STPetro, to acquire, as STPetro, a
minimum of the four (4) best Concessions in the EEZ.
3 OBLIGATIONS OF DRSTP
3.1 DRSTP hereby assigns to ERHC ten percent (10%) of its share of all
Profit Oil received from operations conducted in the JDZ, payable
in U.S. Dollars.
3.2 DRSTP hereby assigns to ERHC five percent (5%) of its share of all
Signature Bonuses paid by Contractors operating within the JDZ,
payable in U.S. Dollars.
3.3 DRSTP accepts the right of ERHC to receive one and one-half percent
(1.5%) Overriding Royalty Interest (ORRI) in all the production of
Crude Oil and/or Natural Gas in the JDZ, to be paid by the Contractors
in U.S. Dollars. DRSTP shall on a best efforts basis have ERHC's
right to ORRI included in all Exploration and Production Agreements
relating to the JDZ.
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3.4 DRSTP grants ERHC the option to acquire up to fifteen percent (15%)
paid Working Interest in up to two (2) blocks of ERHC's choice in the
JDZ. Said Working Interest must be exercised by ERHC prior to the
signature of an EPA with an Operator. ERHC shall also be required to
pay its proportionate share of the signature bonus to the governing
body.
3.5 DRSTP agrees to award to ERHC up to two (2) blocks of ERHC's choice
(the "ERHC Choice Blocks") in the Sao Tome EEZ (outside the JDZ), for
development. DRSTP shall have the prior right to reserve up to a
maximum of the first three (3) blocks (the "Reserved Blocks"). With
the exception of the Reserved Blocks, ERHC shall have the right to
select any other two blocks in the EEZ as EHRC Choice Blocks. This
option must be subject to the following conditions:
a) ERHC shall be invited up to three (3) times to exercise its
rights on the two (2) blocks. After the third invitation,
ERHC's rights to choose blocks under this provision will
expire. Each DRSTP invitation will be tied to an official
industry offering of blocks by DRSTP, that is, a formal bid
round by DRSTP. Notwithstanding the provisions of this
clause, ERHC may, at any time before the expiry of its rights
to choose blocks, exercise its rights on the two blocks
hereunder.
b) The ERHC Choice Blocks shall not be subject to signature
bonus but shall be subject to the most favorable PSC terms
applicable to other blocks within the EEZ.
3.6 DRSTP grants ERHC the option to acquire up to fifteen percent (15%)
paid Working Interest in up to two (2) Blocks of ERHC's choice in Sao
Tome EEZ (outside JDZ). Said Working Interest must be exercised by
ERHC prior to the signature of an EPA with an Operator. ERHC shall be
required to pay its proportionate share of signature bonus and its
proportionate share of all other costs related to the exploration and
exploitation of the corresponding block.
4. INCOME TAX
4.1 ERHC shall pay Income Tax on net income received from DRSTP
obligations under this Agreement.
4.2 Provided always that in all operations related to exploration for and
exploitation of oil and gas, any tax provisions applied to ERHC shall
be only as provided in the respective EPAs.
5. TERMINATION OF THE ARBITRATION PROCEEDINGS
The Parties agree that upon the occurrence of the suspensive condition set
forth in Section 6.1 below, the Arbitration Proceedings presently pending
before the Xxx. Xxxx Xxxxxx Xxxxxx shall be discontinued with prejudice,
and the terms of this Agreement shall be embodied in a Consent Award to be
issued by the Arbitrator.
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Such consent award shall provide that each party shall bear its own costs,
attorneys fees and 50% of the fees of the arbitrator.
6. TERM OF AGREEMENT
6.1 Subject to the suspensive condition that the Treaty between The
Federal Republic of Nigeria and the Democratic Republic of Sao Tome e
Principe on the Joint Development of Petroleum and other Resources in
respect of Areas of the Exclusive Economic Zone of the two States,
signed in February 21st, 2001 in Abuja, enter into force, this
Agreement shall be effective as of the Effective Date and, except as
otherwise provided in this Agreement, shall continue for a period of
twenty five (25) years from October 1st, 1999.
6.2 Should said Treaty not enter into force within two (2) years of the
date of this Agreement, (a) this Agreement shall be deemed null and
void, and (b) the arbitration proceedings referred to in Section 5.1
above shall resume, unless the Parties shall agree otherwise.
6.3 On the expiration of the term of this Agreement, if ERHC have Working
Interest in all or part of any Block in production, ERHC's
corresponding rights in the said Blocks shall continue as long as
those Blocks are in production.
7 ASSIGNMENT
ERHC's interest in this Agreement shall be assignable by ERHC to a subsidiary
of ERHC without the specific consent of DRSTP, however, ERHC shall notify DRSTP
within sixty (60) days of such assignment. Prior written consent of DRSTP
shall be required if an assignment is made to a non-subsidiary of ERHC, such
consent shall not be unreasonably withheld by DRSTP.
8 REPRESENTATIONS AND WARRANTIES
8.1 ERHC hereby represents and warrants that:
8.1.1 It is a duly formed corporate entity and currently exists in
good standing under the laws of the State of Colorado, and that it has
full power and authority to execute this Agreement;
8.1.2 ERHC has not gone into liquidation, made an assignment for the
benefit of creditors, declared or been declared bankrupt or insolvent
by a competent court or had a receiver appointed in respect of the
whole or any part of its assets and has no plans to do so.
8.1.3 ERHC shall not engage in conduct or enter into agreements that
would tend to circumvent the obligations of this Agreement.
8.2 DRSTP hereby represents and warrants that:
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8.2.1 The signatory(s) to this Agreement have full authority to commit
the full faith and credit of the Government of the Democratic Republic
of Sao Tome and Principe;
8.2.2 No laws, regulations, rules, contracts, agreements or the like
are currently in existence that prohibit the enforcement of any of the
terms of this Agreement
8.2.3 In the event that any new laws, regulations, rules, contracts,
agreements or the like are issued or promulgated into law, this
Agreement, and all of its terms and conditions, shall be exempted from
any adverse effects upon ERHC.
8.2.4 DRSTP shall not engage in conduct or enter into agreements that
would tend to circumvent the obligations of this Agreement
9. GOVERNING LAW, ARBITRATION AND LIABILITIES
9.1 This Agreement shall be governed by, construed, interpreted and
applied in accordance with the Lex Mercatoria, to the exclusion of any
conflicts of law rules that would refer the matter to the laws of
another jurisdiction. Where deemed necessary because of lacunae in
the international Lex Mercatoria, it may be amplified by reference to
the commercial law of England.
9.2 Any dispute, controversy or claim arising out of or in relation to or
in connection with this Agreement or the activities carried out under
this Agreement, including without limitation any disputes as to the
construction, validity, interpretation, enforceability or breach of
this Agreement, shall be exclusively and finally settled by
arbitration under the Rules of Conciliation and Arbitration of the
International Chamber of Commerce, and the English Arbitration Act, as
such statutes as then enacted, by three (3) arbitrators. Each side
shall appoint one (1) arbitrator within thirty (30) days of the
submission of a Notice of Arbitration. The Party-appointed arbitrators
shall in turn appoint a presiding arbitrator within thirty (30) days
following the appointment of the Party-appointed arbitrators.
9.3 The arbitration proceedings shall be held in London, England. The
proceedings shall be conducted in the English language and the
Portuguese language. The arbitrators shall have at all times no
financial interest in the Parties, dispute, controversy or claim.
9.4 Awards shall be final and not subject to appeal. Judgment upon the
award may be entered in any court having jurisdiction over the Party
or the assets of the Party owing the judgment or application may be
made to such court for a judicial acceptance of the award and an order
of enforcement, as the case may be.
10 NOTICES
10.1 Any notice to be given hereunder shall be in writing and may be
delivered by hand, sent by certified or registered mail or transmitted
by telex, cable or facsimile
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to the relevant address set forth below, or such other address as may
be communicated in writing by the relevant Party to the other Parties
from time to time.
10.2 The relevant addresses for all notices shall be as follows:
ENVIRONMENTAL REMEDIATION HOLDING CORP.
0000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000, X.X.X.
Telephone No.: 000-000-0000
FAX No.: 000-000-0000
Attention: Xx. Xxxxx Mba, President
DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE
Ministry of Infrastructure, Natural Resources and Environment
PO Box 130, Sao Tome
Telephone No.: 000 00 00000
FAX No.: 000 00 00000
Attention: Minister Xxxx Xxxxxxx Xxxxxxxx
11 MISCELLANEOUS
11.1 The captions and headings for the Articles of this Agreement are made
for ease of reference only and shall not be interpreted or construed
so as to limit or in any way change the substantive provisions of any
part of this Agreement.
11.2 No waiver by any Party of any provision of this Agreement shall be
binding unless made expressly in writing. Further, any such waiver
shall relate only to such matter, non-compliance or breach as it
expressly relates to and shall not apply to any subsequent or other
matter, non-compliance or breach.
11.3 None of the rights, requirements or provisions of this Agreement shall
be deemed to have been waived by any Party by reason of such Party's
failure to enforce any right or remedy granted it hereunder or to take
advantage of any default, and each Party shall at all times hereunder
have the right to require the strict compliance of the other Parties
to the provisions of this Agreement.
11.4 DRSTP waives any and all rights it may have to object to any provision
or enforcement of this Agreement under any claim of sovereign immunity.
11.5 Except as otherwise provided herein, this Agreement constitutes the
entire understanding of the Parties with respect to the subject matter
hereof and supersedes all prior negotiations and agreements, whether
oral or written, of the Parties. This Agreement shall not be amended
or modified, except in writing,
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signed by both Parties. This Agreement replaces all previous
agreements between DRSTP and ERHC including but are not limited to:
- Letter of Understanding between DRSTP and ERHC dated May 18, 1997,
- Memorandum of Agreement between DRSTP on the one hand and ERHC/Procura
on the other hand dated May 27, 1997,
- Memorandum of Understanding between DRSTP and ERHC dated September 30,
1997, and
- Stipulation by and between DRSTP and ERHC dated November 20, 1997.
11.6 Should any provision of this Agreement, or any portion thereof, be
determined to be void, the remained of this Agreement shall remain in
full force and effect.
11.7 Each Party undertakes to execute all other documents, permits, and
agreements as may be required to carry out the intent of this
Agreement.
11.8 Should any of the provisions of this Agreement requiring enactment
not be enacted through no fault of the Parties, the Parties agree to
deal with each other in good faith and with fair dealings in order to
agree to alternative solutions that provide economic equilibrium
IN WITNESS WHEREOF, the duly authorized representatives of the Parties hereto
have executed this Agreement, intending to be legally bound, in triplicate
originals on the day, month and year first written above.
ENVIRONMENTAL REMEDIATION HOLDING CORP.
By: /s/ Chude Mba
-----------------------
Xx Xxxxx Mba
President and Chief Executive Officer
By: /s/ Xxxxx Offer
-----------------------
Xxx Xxxxx Xxxxx
Chairman
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DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE
By: /s/ Xxxx Xxxxxxx dos Prazeres
----------------------------------
Xx Xxxx Xxxxxxx dos Prazeres
Minister of Infrastructure, Natural Resources and Environment
WITNESS:
THE FEDERAL REPUBLIC OF NIGERIA
By: /s/ Dubem Xxxxx
----------------------------------
His Excellency, Hon. Dubem Xxxxx
Minister of State for Foreign Affairs
DEMOCRATIC REPUBLIC OF SAO TOME AND PRINCIPE
By: /s/ Xxxxxxx Xxxxxx Xxxxxx
----------------------------------
His Excellency Xxxxxxx Xxxxxx Xxxxxx
Minister of Foreign Affairs and Cooperation
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