U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
Commission File Number 0-17325
ENVIRONMENTAL REMEDIATION HOLDING CORP.
(Exact name of issuer in its charter)
COLORADO 88-0218499
(State of Incorporation) (IRS Employer ID Number)
777 South Flagler Drive
Suite 903
West Palm Beach, Florida 33401
(Address of principal executive offices) (Zip Code)
Copy of Communications to:
Mercedes Travis, Esq.
Mintmire & Associates
265 Sunrise Avenue
Suite 204
Palm Beach, FL 33480
(561) 832-5696
Registrant's telephone number, including area code: (561) 833-5560
Indicate by check mark whether the registrant (1) has filed reports required to
be filed by Section 13 of 15 (d) of the Securities Exchange Act during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No ____
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common stock, $0.0001 par value
As of March 31, 1999 was 52,215,302
Documents Incorporated by Reference:
See Exhibit List
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Page
Balance Sheets ...........................................................F-2
Consolidated Statements of Operations .....................................F-3
Consolidated Statements of Stockholders' Equity ...........................F-4
Consolidated Statements of Cash Flows ....................................F-6
Notes to Consolidated Financial Statements ................................F-7
<PAGE>
<TABLE>
<CAPTION>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Consolidated Balance Sheets
September 30, March 31,
1998 1999
------------------ ---------------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 36,359 $ 0
Restricted cash 18,826 18,826
Accounts receivable 193,736 159,873
Prepaid expenses and other current assets 256,059 267,887
------------------- ----------------
Total current assets 504,980 446,586
------------------- ----------------
PROPERTY AND EQUIPMENT
Oil and gas properties 1,240,175 1,240,175
Equipment 6,435,113 6,447,113
------------------- ----------------
Total property and equipment before depreciation and depletion 7,675,288 7,687,288
Less: accumulated depreciation and depletion (1,020,626) (1,293,409)
-------------------- -----------------
Net property and equipment 6,654,662 6,393,879
-------------------- -----------------
OTHER ASSETS
Master service agreement 300 300
Investment in STPetro, S.A. 49,000 49,000
Due from STPetro, S.A. 452,276 912,154
DRSTP concession fee 4,000,000 4,000,000
Deferred offering costs 30,000 0
------------------ -----------------
Total other assets 4,531,576 4,961,454
------------------ ------------------
Total Assets $ 11,691,218 $ 11,801,919
==================== =====================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Stockholder loans payable $ 731,328 $ 714,968
Current portion of long-term debt 308,636 734,856
Suspended revenue 141,409 156,282
Accounts payable and accrued liabilities :
Accounts payable 1,365,764 1,962,287
Accrued officer salaries 1,673,985 2,252,575
Accrued interest 1,116,196 2,345,323
-------------------- ---------------
Total current liabilities 5,337,318 8,166,291
-------------------- ----------------
LONG TERM LIABILITIES
Long term loans 41,631 38,568
Convertible debt, net 7,543,178 8,254,621
-------------------- ----------------
Total long term liabilities 7,584,809 8,293,189
-------------------- -----------------
Total Liabilities 12,922,127 16,459,480
-------------------- -----------------
Common stock issued under a repurchase agreement; issued and
outstanding 1,000,000 and 750,000 shares 1,500,000 1,500,000
-------------------- -----------------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value; authorized 10,000,000 shares;
none issued and outstanding 0 0
Common stock, $0.0001 par value; authorized 950,000,000 shares;
issued and outstanding 25,999,900 and 28,469,586 2,600 2,847
Additional paid-in capital in excess of par 25,020,717 26,052,276
Additional paid-in capital - warrants 207,502 207,502
Deficit (29,224,228) (33,745,186)
Stock subscriptions receivable 0 0
Beneficial conversion feature 1,387,500 1,387,500
Deferred compensation, net (125,000) (62,500)
-------------------- ------------------
Total Stockholders' Equity (Deficit) (2,730,909) (6,157,561)
-------------------- --------------------
Total Liabilities and Stockholders' Equity (Deficit) $ 11,691,218 $ 11,801,919
==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Six months ended March 31,
-----------------------------------------------
1998 1999
------------------- -------------------
<S> <C> <C>
REVENUE
Environmental remediation services $ 226,035 $ 0
Crude oil 265,302 0
------------------- -------------------
Other income 11,490
------------------- -------------------
Total revenue 502,827 0
------------------- -------------------
COSTS AND EXPENSES
Compensation :
Officers 712,500 736,500
Directors 0 0
Consulting fees 387,534 580,854
General and administrative expense 2,165,896 1,423,656
Depreciation and depletion 246,548 272,782
Interest expense 120,221 1,507,166
------------------- -------------------
Total costs and expenses 3,632,699 4,520,958
------------------- -------------------
Net income (loss) $ (3,129,872) $ (4,520,958)
=================== ===================
Weighted average number of shares outstanding 24,255,383 27,747,830
=================== ===================
Net income (loss) per share - basic $ (0.13) $ (0.16)
=================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Common Stock Beneficial
APIC Conv.
APIC Warrants Feature
------------------------ -------------- ----------- -------------
Number
of Shares Amount
-------------- --------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, September 30, 1997 21,989,526 $ 2,199 19,952,865 0 0
Year ended September 31, 1998
Common stock issued for :
10/97 - stock subs rec'd - 0 0 0 0
10/97 - Uinta acquisition 1,000,000 100 1,999,900 0 0
10/97 - Nueces acquisition 50,000 5 148,745 0 0
11/97 - bene conv feat create - 0 0 0 1,075,000
1st quarter - services 355,000 36 921,964 0 0
1st quarter - cash 177,008 18 167,676 0 0
01/98 - building equity 24,000 2 69,998 0 0
2nd quarter - services 23,200 2 28,494 0 0
2nd quarter - cash 666,664 67 438,432 0 0
06/98 - bene conv feat create - 0 0 0 312,500
3rd quarter - services 162,420 16 102,868 0 0
3rd quarter - cash 234,200 23 135,577 200,000 0
09/98 - accounts payable 491,646 49 337,958 0 0
09/98 - option fee and penalty 229,536 30 219,193 0 0
4th quarter - services 479,700 48 473,552 0 0
4th quarter - cash 47,000 5 23,495 7,502 0
09/98 - deferred comp. amort - 0 0 0 0
Net loss - 0 0 0 0
-------------- --------- -------------- ----------- -------------
BALANCE September 30, 1998 25,999,900 2,600 25,020,717 207,502 1,387,500
Three months ended December 31,
1998 (Unaudited)
1st quarter - services 1,059,000 106 523,581 0 0
10/98 - conv. debt converted 1,210,686 121 365,999 0 0
11/98 - accounts payable 200,000 20 141,980 0 0
3/99 - deferred comp. amort. - 0 0 0 0
Net loss - 0 0 0 0
-------------- --------- -------------- ----------- -------------
BALANCE, March 31, 1999
(unaudited) 28,469,586 $ 2,847 26,052,277 207,502 1,387,500
============= ========= ============== =========== =============
Common stock issued under a
repurchase agreement:
BALANCE, September 30, 1997 1,000,000 $ 100 1,999,900 0 0
12/97 - cash repurchase (250,000) 0 (500,000) 0 0
-------------- --------- -------------- ----------- ------------
BALANCE, September 30, 1998 750,000 100 1,499,900 0 0
BALANCE, March 31, 1999
(Unaudited) 750,000 $ 100 1,499,900 0 0
============== ========= ============== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
Total
Stk .Subs. Defrd Accum. S/H Equity
Receivable Comp. Deficit (Deficit)
------------ ---------- -------------- ---------------
------------ ---------- -------------- ---------------
<S> <C> <C> <C> <C>
BALANCE, September 30, 1997 (913,300) (250,000) (17,645,204) 1,146,560
Year ended September 31, 1998
Common stock issued for :
10/97 - stock subs recd 913,300 0 0 913,300
10/97 - Uinta acquisition 0 0 0 2,000,000
10/97 - Nueces acquisition 0 0 0 148,750
11/97 - bene conv feat create 0 0 0 1,075,000
1st quarter - services 0 0 0 922,000
1st quarter - cash 0 0 0 167,694
01/98 - building equity 0 0 0 70,000
2nd quarter - services 0 0 0 28,496
2nd quarter - cash 0 0 0 438,499
06/98 - bene conv feat create 0 0 0 312,500
3rd quarter - services 0 0 0 102,884
3rd quarter - cash 0 0 0 135,600
09/98 - accounts payable 0 0 0 338,007
09/98 - option fee and penalty 0 0 0 219,223
4th quarter - services 0 0 0 473,600
4th quarter - cash 0 0 0 23,500
09/98 - deferred comp. amort 0 125,000 0 125,000
Net loss 0 0 (11,582,428) (11,582,428)
------------ ---------- -------------- ---------------
BALANCE September 30, 1998 0 (125,000) (29,224,228) (2,730,909)
Three months ended December 31, 1998
(Unaudited)
1st quarter - services 0 0 0 523,687
10/98 - conv. debt converted 0 0 0 366,120
11/98 - accounts payable 0 0 0 142,000
3/99 - deferred comp. amort. 0 62,500 0 62,500
Net loss 0 0 (4,520,958) (4,520,958)
------------ ---------- -------------- ---------------
BALANCE, March 31, 1999
(unaudited) 0 (62,500) (33,745,186) (6,157,561)
============ ========== ============== ===============
Common stock issued under a repurchase agreement:
BALANCE, September 30, 1997 0 0 0 2,000,000
12/97 - cash repurchase 0 0 0 (500,000)
------------ ---------- -------------- ---------------
BALANCE, September 30, 1998 0 0 0 1,500,000
BALANCE, March 31, 1999
(Unaudited) 0 0 0 1,500,000
============ ========== ============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended March 31,
--------------------------------------------
1998 1999
--------------------- -------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (3,129,872) (4,520,958)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization of deferred compensation 62,500 62,500
Amortization of bene. conv. feat. and conv. debt expenses 0 205,625
Stock issued for services rendered 55,658 523,687
Write-off of deferred offering costs 0 30,000
Depreciation and depletion 246,548 272,782
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 0 33,863
(Increase) decrease in prepaid expenses and other current assets (628,678) (11,828)
(Increase) decrease in due from STPetro, S.A. 0 (459,878)
Increase (decrease) in suspended revenue 0 14,873
Increase (decrease) in accounts payable 683,866 586,537
Increase (decrease) in accrued salaries 569,532 578,590
Increase (decrease) in accrued interest payable 108,396 1,229,127
--------------------- -------------------
Net cash provided by (used by) operating activities (2,032,050) (1,455,080)
--------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
DRSTP concession fee payment (2,008,300) 0
Increase on deposits on fixed assets (137,435) 0
Acquisition of property and equipment (208,532) (12,000)
--------------------- -------------------
Net cash provided by (used by) investing activities (2,354,267) (12,000)
--------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of bank borrowings 9,840 0
Payments on bank borrowings (175,000) (1,843)
Proceeds from loans payable to stockholders 445,821 212,305
Payments on stockholder loans payable (489,730) (230,000)
Common stock and warrants sold for cash 393,970 0
Convertible debt sold for cash 3,838,825 1,300,000
--------------------- -------------------
Net cash provided by (used by) financing activities 4,023,726 1,280,462
--------------------- -------------------
Net increase (decrease) in cash (362,591) (186,618)
CASH, beginning of period 327,743 55,185
--------------------- -------------------
CASH, end of period $ (34,848) (131,433)
===================== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 11,825 0
===================== ===================
Non cash financing and investing activities: Stock issued to acquire :
Equity in building $ 61,218 0
===================== ===================
Conversion of convertible debt $ 0 366,120
===================== ===================
Conversion of accrued interest payable $ 0 6,938
===================== ===================
Conversion of convertible debt discount $ 0 53,168
===================== ===================
Oil and gas properties and equipment $ 2,148,750 0
===================== ===================
Accounts payable settlement $ 0 142,000
===================== ===================
Mortgage payable on building assumed $ 28,782 0
===================== ===================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-6
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(1) Summary of Significant Accounting Policies
Nature of operations.
ERHC operates in the environmental remediation industry and the oil
and natural gas production industry from its corporate headquarters in
Oyster Bay, New York, and its operating offices in Lafayette,
Louisiana.
Use of estimates
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the dates of the statements of financial condition and revenues
and expenses for the years then ended. Actual results could differ
significantly from those estimates.
Principles of consolidation
The consolidated financial statements include the accounts of SSI and
BAPCO, its wholly owned subsidiaries. Intercompany accounts and
transactions have been eliminated in the consolidation. The
consolidated financial statements for the six months ended March 31,
1998 and 1999 include all adjustments which in the opinion of
management are necessary for fair presentation
Cash equivalents
The Company considers all highly liquid debt instruments with an
original maturity of three months or less to be cash equivalents.
Concentration of risks
The Company primarily transacts its business with one financial
institution.
Accounts receivable
No allowance for uncollectible accounts has been provided. Management
has evaluated the accounts and believes they are all collectible.
Compensation for services rendered for stock
The Company issued shares of common stock in lieu of services
rendered. The costs of the services are valued according to the terms
of relative agreements, market value on the date of obligation, or
based on the requirements of Form S-8, if applicable. The cost of the
services has been charged to operations.
Net loss per share
Net loss per common share - basic is computed by dividing the net loss
by the number of shares of common stock outstanding during the period.
Net loss per share - diluted is not presented because the inclusion of
common share equivalents would be anti-dilutive.
(2) Going Concern
The Company's current liabilities exceed its current assets by
$7,719,705. The Company has incurred net losses of $3,129,872 and
$4,520,958 in the six months ended March 31, 1998 and 1999
respectively. These conditions raise substantial doubt as to the
ability of the Company to continue as a going concern. The Company is
in ongoing negotiations to raise general operating funds and funds for
specific projects. However, there is no assurance that such financing
will be obtained. The Company is in preliminary discussions with
several parties regarding the potential sale of some to all of its US
based crude oil production fields. In prior years, the Company was
able to raise funds in a timely manner, there is no evidence that they
will continue to do so in the future.
(3) Restricted Cash
A total balance of $18,826 in restricted cash, which is invested in
interest-bearing certificates of deposit, pledged as collateral for a
performance bond covering the Utah properties.
(4) Property, Equipment, Depreciation and Depletion
Property and equipment are valued at cost. Maintenance and repair
costs are charged to expense as incurred. When items of property or
equipment are sold or retired, the related costs are removed from the
accounts and any gains or losses are reflected as income. Depreciation
is computed on the straight-line method for financial reporting
purposes, based on the estimated useful lives of the assets. Autos and
trucks are depreciated over a three to five year life, field equipment
over a five to fifteen year life, office furniture over a three to
five year life, and the building over a thirty year life. Depreciation
expense totaled $244,210, and $272,092 six months ended March 31, 1998
and 1999, respectively. Depletion (including provisions for future
abandonment and restoration costs) of all capitalized costs of proved
oil and gas producing properties is expensed using the unit-of-
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(4) Property, Equipment, Depreciation and Depletion (continued)
production method by individual fields as the proven developed
reserves are produced. Depletion expense was $2,338 and $690 for
the six months ended March 31, 1998 and 1999, respectively.
At March 31, major classes of property and equipment consisted of the
following :
<TABLE>
<CAPTION>
1998 1999
------------------------ ------------------------
<S> <C> <C>
Oil and gas properties $ 1,044,375 $ 1,240,175
Land 2,500 2,500
Building 96,282 96,282
Field equipment 6,229,859 6,229,859
Office furniture and equipment 35,896 79,800
Vehicles 0 38,672
Deposit on purchase of equipment 266,376 0
------------------------ ------------------------
Total 7,675,288 7,687,288
Less: accumulated depreciation (1,020,626) (1,293,409)
------------------------ ------------------------
Net property and equipment $ 6,654,662 $ 6,393,879
======================== ========================
</TABLE>
(5) Notes payable
The Company issued two notes payable to stockholders who are also officers
and directors in exchange for cash amounting to $2,054,710. These notes
carry no stated maturity date and an 8.5% rate of interest. The Company has
repaid $1,334,247 on these notes, including interest and principal on one.
The remaining note is convertible into restricted stock at 50% of the
average bid price for the month in which the loan was made. The conversion
is at the option of the noteholder.
In October 1998, the Company issued 20% convertible subordinated unsecured
notes due October 2000 in exchange for $500,000 cash. These notes are
convertible into shares of the Company's common stock at a conversion price
to be determined by so stated formula. If all of these notes are converted
using the conversion price as of the issuance date ($1.00), the Company
will be required to issue 500,000 shares of common stock. These notes also
carried warrants for an additional 1,500,000 shares of common stock with an
exercise price of $0.40 per share, or total additional proceeds to the
Company of $600,000 in cash in the event all of the warrants are exercised.
In October 1998, the Company issued 12% convertible subordinated unsecured
notes due December 31, 1999 in exchange for $800,000 cash. These notes are
convertible into shares of the Company's common stock at a conversion price
to be determined by so stated formula. If all of these notes are converted
using the conversion price of the issuance date ($1.25), the Company will
be required to issue 640,000 shares of common stock. These notes also
carried "A" and "B" warrants for an additional 1,200,000 and 1,200,000
shares of common stock with exercise prices of $0.50 and $3.00 per share,
or total additional proceeds to the Company of $4,200,000 in cash in the
event all of the warrants are exercised.
In October 1998, the Company received conversion notices on $412,350 of the
convertible debt issued in July and August, 1998. This debt, and accrued
interest amounting to $6,938, was converted into 1,210,686 shares of common
stock.
(6) Accrued Salaries
At March 31, 1998 and 1999 the Company has accrued salaries of $1,673,985
and $2,252,575, respectively, for three officers. These officers can, at
their option, convert these salaries into common stock of the Company at
the rate of one-half of the average bid price of the Company's common stock
for the months in which the salary was earned.
(7) Accrued Interest
Accrued interest consisted of the following at March 31 :
<TABLE>
<CAPTION>
1998 1999
------------------------ ------------------------
<S> <C> <C>
Accrued interest - other $ 145,624 $ 0
Accrued interest - convertible debt 0 645,198
Accrued penalties - convertible debt 0 1,700,125
------------------------ ------------------------
Total $ 145,624 $ 2,345,323
======================== ========================
</TABLE>
(8) Oil Production
The Company is utilizing the successful effort method of accounting for its
oil and gas producing activities. The Company regularly assesses oil and
gas reserves for possible impairment on an aggregate basis in accordance
with SFAS 121.
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(9) Income Taxes
The Company has a consolidated net operating loss carry-forward amounting
to $33,745,186, expiring as follows: $3,404 in 2015, $728,748 in 2016,
$16,913,052 in 2017, $11,582,428 in 2018 and $4,520,958 in 2019. The
Company has an $13,498,000 deferred tax asset resulting from the loss
carry-forward, for which it has established a 100% valuation allowance.
Until the Company's current plans begin to produce earnings it is unclear
as to the ability of the Company to utilize these carry-forwards. The Tax
Reform Act of 1986 provided for a limitation on the use of net operating
loss carryforwards following certain ownership changes. Such a change in
ownership under the IRS rules and regulations potentially could occur
pursuant to the Company's S-1 amendment.
(10) Stockholders' Equity
The Company has authorized 950,000,000 shares of $0.0001 par value common
stock and 10,000,000 shares of $0.0001 par value preferred stock.
During the first quarter of fiscal 1999, the Company issued 1,059,000
shares of common stock in exchange for services valued at $523,687. The
Company also issued 200,000 shares in settlement of a then outstanding
accounts payable amounting to $142,000. In October 1998, convertible debt
holders converted $412,350 of debt and $6,938 of accrued interest into
1,210,686 shares of common stock.
Rescinded and returned shares
In September 1998, the Board of Directors authorized the issuance of
100,000 shares to a director. This director returned the shares to the
Company due to personal tax considerations. In September 1998, the Board of
Directors authorized the issuance of 2,000,000 shares each to four officers
and directors in connection with the DRSTP Agreement. In December 1998, the
Board of Directors rescinded the issuance as if it had never occurred.
Procura Financial Consultants, cc (PFC)
Under the May 1997 Agreement between the DRSTP and the Company, PFC is a
junior partner to the Agreement. The Company and PFC are negotiating an
agreement whereby the Company would issue shares to PFC in exchange for PFC
foregoing its rights under the May 1997 Agreement. The Company has issued,
but not delivered 2,000,000 shares in anticipation of settling this
negotiation. However, at the date of this report no final agreement has
been reached.
Arbitration settlements
The Company has notified Kingsbridge that it intends to cancel the equity
line of credit previously negotiated. The negotiated cancellation agreement
requires the Company to pay $100,000 in cash and issue warrants for 100,000
shares of common stock. This settlement agreement has not yet been funded
and Kingsbridge filed for arbitration in December 1998.
In April 1998, Uinta Oil and Gas, Inc. (Uinta) filed suit in Utah relating
to the Company's October 1997 acquisition of twenty two oil and gas wells
in Utah. The other two joint sellers of these wells, along with Uinta,
filed a formal demand for arbitration as the purchase agreement requires.
The Company has entered into negotiations to settle this matter and expects
to issue additional shares in this settlement. However, at the date of this
report, no final agreement has been reached.
(11) Commitments and Contingencies
The Company is committed to lease payments for 10 vehicles under operating
leases totaling $50,598, $7,826 and $3,913 for the years ended September
30, 1999, 2000 and 2001. The Company paid $19,160 and $12,650 in vehicle
lease expense for the three months ended December 31, 1997 and 1998,
respectively. The Company currently leases its office space and operating
facilities on a two year lease and three year lease respectively. The
Company is committed to lease payments on the two facilities totalling
$67,108 and $60,808 for the years ending September 30, 1999 and 2000. The
Company paid $11,487 and $17,227 in facility rent for the six months ended
March 31, 1998 and 1999, respectively.
(12) Segment Information
The Company has three distinct lines of business through its two wholly
owned subsidiaries, Site Services, Inc., (SSI), and Bass American Petroleum
Company, (BAPCO), and a joint venture agreement. SSI operates in the
environmental remediation industry and BAPCO will operate in the oil and
gas production industry. SSI's principal identifiable assets consist of
$3,224,000, net, of environmental equipment, and the Chevron P&A master
service agreement valued at $300, net. BAPCO's principal identifiable
assets consist of crude oil reserves valued at $1,240,175, equipment valued
at $2,508,000 and land and building valued at $98,782. The Company also
expects to operate in the supply industry through a joint venture agreement
to supply fuel and other goods to ships transiting the Panama Canal. No
principal identifiable assets yet exist for this line of business.
<PAGE>
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
(13) Sao Tome Concession
Concession fee payment
When the Company entered into the joint venture agreement in May 1997 with
the Democratic Republic of Sao Tome and Principe, (DRSTP), the Company was
required to pay a $5,000,000 concession fee to the DRSTP goverment. In
September 1997, the Company received a Memorandum of Understanding from the
DRSTP government which allows the Company to pay this concession fee within
five days after the DRSTP files the relevant official maritime claims maps
with the United Nations and the Gulf of Guinea Commission. In December
1997, the Company paid $2,000,000 of this concession fee to the DRSTP from
the proceeds of the convertible note offering. On July 2, 1998 the Company
paid $1,000,000 of the Concession fee to the government of the DRSTP. On
July 31, 1998 the Company paid an additional $1,000,000 of the concession
fee to the government of the DRSTP.
Investment in STPetro, S.A.
In July 1998, the Government of the Democratic Republic of Sao Tome and
Principe established STPetro, S.A. as the national petroleum company. The
charter established the initial ownership of STPetro, S.A. as 51% by the
government and 49% by ERHC in exchange for $51,000 and $49,000
respectively. The Company immediately forwarded $20,000 of its $49,000 in
cash, and believes that $29,000 of expenses it has paid on behalf of
STPetro, S.A. prior to its formation will be credited to it for the balance
owed.
Due from STPetro,S.A.
The Company has expended approximately $912,154 on behalf of STPetro, S.A.,
principally prior to the formation of STPetro, S.A. The Company believes
that these expenses are recoverable from STPetro, S.A. under its May 1997
agreement with the DRSTP.
(14) Suspended Revenue
The Company's oil and gas production revenue, amounting to $156,282 as of
March 31, 1999, has been placed in suspense as the Company has not yet
received valid complete division orders on its leases and wells
(18) Subsequent Events
Subsequent discovery
Subsequent to the filing of the Company's Form S-1 Amendment No. 3, and
Form 10-K Amendment No. 1 for the year ended September 30, 1998, it was
discovered that there may be a question of the ownership rights of the
Company in the BAPCO tool.The Board of Directors was given notice under
Section 10A(b)(2) of the Securities and Exchange Act of 1934, as amended,
and has filed a Form 8-K in compliance with the requirements of Section
10A(b)(3). The Company and its independent auditors are conducting a full
investigation. Upon completion of the investigation, the Company intends to
amend its financial statements and other disclosures, should changes be
warranted. No changes have been made to the financial statements for the
six months ended March 31, 1998 and 1999, pending the completion of this
investigation.
Change of control, resolution of subsequent discovery and going concern In
April 1999, the Company entered into a Letter of Intent to sell 51% of the
Company to an investment group partially composed of existing convertible
debt and warrant holders in exchange for $3,000,000. $1,000,000 of this
amount is to be forwarded directly to the DRSTP as the final installment of
the original concession fee. At the time of entering into this Letter of
Intent, the Company's Board believe that the Company faced imminent
involuntary bankruptcy proceedings, as it had been made aware of this
probability.
At the conclusion of the auditor's and the Company's investigation
regarding the potential cloud on the title to the BAPCO tool, the Board
chose to realign its assets between ERHC and its wholly owned subsidiary,
BAPCO. The original environmental equipment, the BAPCO tool and the Chevron
contract were all placed in BAPCO, and all other BAPCO assets were moved to
ERHC. The Board then spun-off BAPCO to the former President and Chairman,
Sam Bass, via a recission of the original acquisition transactions between
ERHC and Sam Bass and entities controlled by Sam Bass. In May, 1999, ERHC
has received the 7,744,000 shares originally issued to acquire these
assets. No changes have been made to the financial statements for the six
months ended March 31, 1998 and 1999, as the transaction occurred after
quarterend.
The Company filed an 8-K on May 21, 1999, decribing all of the actions in
detail. The Company expects to file an 8-K amendment to include pro-forma
financial statements as of September 30, 1998 and March 31, 1999, giving
effect to these transactions as if they had occurred at the beginning of
each period.
<PAGE>
Item 2. Management's Discussion and Analysis of the Financial Condition and
Results of Operations
Overview
The Company is an independent oil and gas company engaged in the
exploration, development, production and sale of crude oil and natural gas
properties with current operations focused to a limited extent in Texas and Utah
and primarily in Sao Tome in West Africa. The Company's goal is to maximize its
value through profitable growth in its oil and gas reserves and production. The
Company has taken steps to achieve this goal through its growth strategy of
managing the exploration, exploitation and development of non-producing
properties in known oil-producing areas, such as the Gulf of Guinea in West
Africa, with industry or government partners. The Company is in the process of
exploring the divestiture of certain of its oil and gas properties in the United
States, and seeking farm-out agreements for other of its properties.
The Company acquired all of its oil and gas properties since 1997. The
Company's current development plans require substantial capital expenditures in
connection with the exploration, development and exploitation of oil and natural
gas properties in Sao Tome. The Company has historically funded capital
expenditures through a combination of equity contributions and short-term
financing arrangements.
During the second quarter 1999, the Company was attempting to secure its
position in Sao Tome, but had insufficient cash flow to meet certain commitments
of STPETRO. As a result of information acquired as a result of the annual audit,
it became apparent that there was a cloud on certain of the Company's assets.
The Company filed a Form 8K so that it could investigate these issues; however,
such Form 8K effectively stopped all review of the Company's amended
Registration Statement filed in January 1999. At the same time, the Company was
facing increasing penalties and interest due to the failure to have its
Registration Statement declared effective. The Board of Directors was
considering all options available to the Company, including filing for
protections under the Bankruptcy Act.
In late March, the Company became aware of the fact that one of its
noteholders was interested in presenting an offer to the Company to acquire
control. An initial offer was considered by the Board on April 1, 1999; however,
the Board felt that additional negotiations were required.
On April 8, 1999, after investigation and due consideration of the options
available to the Company regarding the cloud upon certain of its assets, the
Board voted to realign assets between itself and its subsidiary, BAPCO.
Following such realignment, all of the previous transactions with Sam Bass and
his companies were rescinded, and BAPCO, as realigned, was transferred to a
corporation, unrelated to ERHC, formed for the benefit of Sam Bass or his
assigns. This corporation would exchange the shares Mr. Bass and such companies
returned from the rescinded transactions, for all shares in the new corporation.
Such exchanged shares were to be returned to the Company for cancellation.
On April 8, 1999, ERHC Investor Group Inc. ("ERHCIG") presented a revised
offer in the form of a letter of intent whereby they proposed to acquire
fifty-one percent (51%) of the issued and outstanding shares of the Company, on
a fully diluted basis (the "Letter of Intent"). The Letter of Intent relied upon
certain prior actions of the board and final closing is conditioned upon
satisfactory terms and conditions in the form of a Securities Purchase
Agreement. The ERHCIG acquisition could be in one or more transactions and
<PAGE>
ERHCIG was permitted to assign all or any part of its rights. The Letter of
Intent also provided for an Initial Closing at which ERHCIG would subscribe for
the requisite percentage of shares, subject only to the terms of the Final
Closing. The Company executed the Letter of Intent on April 9, 1999.
Pursuant to the Letter of Intent, ERHC was required to secure Standstill
Agreements from its convertible note holders. Each of the Standstill Agreements
was specific to the documents for such investment. However, all of the
Standstill Agreements contained at least the following: (1) each contained as
Exhibit A a copy of the executed Letter of Intent and Term Sheet; (2) each
contained a provision that stated that the information provided was
confidential, non-public information and required the investor to agree not to
disclose, use or trade on such information directly or indirectly in any manner
until the filing of the Company's Form 8-K; (3) all adjustments in the
Securities Purchase Agreement, if applicable, were deleted; (4) all conversion
prices were changed from that which was in the note to $.20 [thereby eliminating
the conversion formulas which were in a majority of the notes requiring
conversion at the lesser of some number at inception or some number at
conversion]; (5) to the extent the adjustment provisions in the note varied from
the note adjustment provisions attached as an exhibit to the Standstill
Agreements, all original provisions were deleted and the attached exhibit
provisions substituted in their place [thereby eliminating inconsistent
adjustment provisions in the notes]; (6) to the extent antidilution provisions
in the warrant varied from the warrant antidilution provisions attached as an
exhibit to the Standstill Agreement, the original provisions were deleted and
the attached exhibit provisions substituted in their place [thereby eliminating
inconsistent antidilution provisions in the warrants]; (7) to the extent the
note did not provide for the payment of interest in the form of Common Stock,
such note was amended to provide for the payment of interest in Common Stock;
(8) to the extent the note did not provide for the conversion of interest and
penalties, if any, into Common Stock, at the time of a voluntary conversion of a
part or all of the principal sum of the note, such provision was amended to
provide for the conversion of interest and penalties, if any, into Common Stock,
at the same time as the conversion of a part or all of the principal sum of the
note; (9) all interest on the note is waived from the date of the Initial
Closing until October 15, 1999 [thereby allowing the Company to stay current on
its interest payments]; (10) all penalties for failure to have a registration
statement declared effective within a specified period of time are waived from
the date of the Initial Closing until October 15, 1999 [thereby allowing the
Company to stay current on its penalty payments]; (11) each investor agreed,
from the date of the Initial Closing until October 15, 1999, not to convert all
or any part of their notes, not to declare a default or seek acceleration of any
payments under the notes; not to commence any foreclosure or bankruptcy actions
under the note; not to declare an event of default or commence any arbitration
action under any of the transaction document; (12) each investor waived all
rights in prior rights, adjustments or antidilution provisions relative to the
Letter of Intent and any settlement with Procura Financial Consultants; (13)
each investor agreed to accept shares of restricted Common Stock through the
Initial Closing date in lieu of payments in cash for all accrued and unpaid
interest and penalties on the notes at a conversion price of $.20 [thereby
allowing the Company to become current on all of its interest and penalty
payments]; (14) each investor agreed, to the extent any third party commenced
any bankruptcy or foreclosure action, to vote with the Company; (15) each
agreement provided that in the event no Final Closing occurred, that all
amendments, modification and consents would be void ab initio; and (16) each
investor ratified the acts of the Board taken in compliance with the Business
Judgment Rule from inception through the Initial Closing.
The initial closing commenced on April 23, 1999; however not all
documentation was complete. The last required document was the subscription of
the ERHCIG or its assigns. By document dated April 27, 1999 but delivered to the
<PAGE>
Company on May 14, 1999, ERHC Investor Group LLC, an assignee, executed a
Subscription Agreement for twenty-one (21%) percent of fifty-one percent (51%)
in consideration of the sum of $210,000; ERHC Investor Group A LLC, an assignee,
executed a Subscription Agreement for 2.805% of fifty-one percent (51%) in
consideration of the sum of $165,000; and ERHC Investor Group A LLC, an
assignee, executed a Subscription Agreement for 27.195% of fifty-one percent
(51%) in consideration of the sum of $2,625,000.
All of the Officers resigned effective April 30, 1999. In addition, Sam
Bass and Al Cotten resigned from the Board effective April 23, 1999 and William
Beaton was removed since he failed to participate in any actions of the Board
from prior to April 1, 199 through April 23, 1999 and was generally unavailable.
It was later discovered that Mr. Beaton had been ill during this period and
unable to be reached. The remaining Board met on April 30, 1999 to elect (i)
three (3) replacement Directors, naming Ernest D. Chu, Stephen J. Warner and Lee
Hendelson; (ii) a new Chairman of the Board, naming Ernest D. Chu; and (iii) new
Officers for the Company, naming Stephen J. Warner as President and Chief
Operating Officer, Ernest D. Chu as Treasurer and Chief Financial Officer and
Lee Hendelson as Secretary. The Chairman, the New Directors and the New Officers
accepted and assumed their position effective the date of the meeting. The four
(4) remaining Board members recused themselves when the New Directors voted upon
the Consulting Agreements, Severance Agreement and Settlement Agreements with
such remaining members and former Officer, Directors, Employees and Consultants
of the Company since such remaining Board members clearly had a vested interest
in the outcome of such vote. Such members also recused themselves while the New
Directors voted upon certain settlements negotiated with various parties
relative to outstanding claims and issues involving the Company, since such
remaining Board members had not participated in these negotiations.
As of May 14, 1999, control of the Company effectively changed, subject to
the Final Closing.
The following discussion should be read in conjunction with the
Consolidated Financial Statements and notes thereto appearing elsewhere in this
Form 10Q.
Results of Operations
Second Quarter Ended March 31, 1999 compared to Second Quarter Ended March
31, 1998.
During the second quarter ended March 31, 1999, the Company incurred a net
loss of $1,681,429, compared to a net loss of $713,578 in the second quarter
ended March 31, 1998, reflecting the Company's decreased level of business
operations. In the second quarter ended March 31, 1999, a total of $353,774 was
accrued, but not paid in cash, as compensation to three officers of the Company.
Depreciation and depletion equaled $ 74 in the second quarter ended March 31,
1999 compared to $1,722 in the second quarter ended March 31, 1998. Amortization
of the beneficial conversion feature discount on convertible debt was $89,417
for the quarter ended March 31, 1999 compared to $646,517 for the quarter ended
March 31, 1998. The net cash operating loss of the Company for the second
quarter ended March 31, 1999 was $183,193 compared to $962,940 for the second
quarter ended March 31, 1998.
Officers' compensation, professional fees, travel, consultant fees and
miscellaneous expenses for the quarter ended March 31, 1999 compared to the
quarter ended March 31, 1998 increased significantly due to the Company's
<PAGE>
business operations continuing to increase. Professional fees in the quarter
ended March 31, 1999 included legal, audit, petroleum engineering and other
engineering costs.
The Company had revenues of $ 0 in the second quarter ended March 31, 1999
compared to $259,830 in the second quarter ended March 31, 1998.
Liquidity and Capital Resources
Historically, the Company has financed its operations from the sale of its
debt and equity securities (including the issuance of its securities in
consideration for services and/or products) and bank and other debt. The Company
had expected to finance its operations and further development plans during
fiscal 1999 in part through additional debt or equity capital and in part
through cash flow from operations. However, due to the fact that the Company's
Registration Statement had not been declared effective, the Company has found
additional debt and equity financing unavailable. Under the terms of the Letter
of Intent, the Company secured Standstill Agreements from its noteholders which
allowed for the Company to become current on all of its debt obligations,
including interest and penalties through the date of the Initial Closing, and
waived interest and penalties until October 15, 1999. The Company believes that
this standstill period places it in the position to review its financial
structure and put together a financial plan which will allow the Company to go
forward with its operations.
The Company presently intends to utilize any cash flow from operations as
follows: (i) seismic studies and fees for the Sao Tome joint venture; and (ii)
working capital and general corporate purposes.
Capital Expenditures and Business Plan
In May 1997, the Company entered into an exclusive joint venture with the
Democratic Republic of Sao Tome & Principe ("Sao Tome") to manage the
exploration, exploitation and development of the potential oil and gas reserves
onshore and offshore Sao Tome, either through the venture or in collaboration
with major international oil exploration companies. At that time, the Company
was required to pay a $5,000,000 concession fee to the Sao Tome government. In
September 1997, the Company received a Memorandum of Understanding from the Sao
Tome government which allows the Company to pay this concession fee within five
days after Sao Tome files the relevant official maritime claims maps with the
United Nations and the Gulf of Guinea Commission. In December 1997, the Company
paid $2,000,000 of this concession fee to Sao Tome from the net proceeds of the
1997 Private Placement, in June 1998, paid $1,000,000 of this concession fee
from the net proceeds of the Third June 1998 Private Placement, in August, paid
$1,000,000 of this concession fee from the net proceeds of the July/August 1998
Financing. $250,000 was paid from the net proceeds of the September 1998
Financing and $500,000 was paid from the net proceeds of the October 1998
Financing to pay other expenses and obligations relative to Sao Tome which the
Company believes will be credited to the concession fee.
The Company is currently in the initial phase of project development and is
conducting seismic surveys, processing existing seismic data and reviewing
environmental and engineering feasibility studies. During fiscal 1997, the
Company issued 1,000,000 shares of its common stock to acquire geologic data
concerning Sao Tome. The Company anticipates spending approximately $2,200,000
over the next 12 months for additional studies necessary to determine the
location and depth of the targeted oil deposits. The Company has spent to date
$250,000 in preparatory expenses including determining the boundaries of the
<PAGE>
concession and facilitating the passage of a law in Sao Tome regarding the
boundaries of the country. The costs of further development of this project
cannot be determined until a more definite development plan is established. The
costs depend on the Company's determination to either independently develop the
concession, take on operational partners or lease a portion of the concession
for third-party development.
In April 1998, the Government of Sao Tome granted approval to the joint
venture to proceed with the preparation and sale of leases of its oil concession
rights, which sales were expected to occur in early 1999. In June 1998, the
Company and Sao Tome signed a letter of intent to award a contract to
Schlumberger to perform a marine seismic survey in anticipation of the license
round to be held in Sao Tome, and to act as the technical advisor and
coordinator of such license round. Schlumberger is a seismic data service
company located in Great Britain. The exact number and size of the lease blocks
to be offered have not yet been determined. The Company intends to run the
survey and acquire the seismic data in late 1998 in order to proceed with the
licensing round commencing in early 1999. In July 1998, the Company closed and
formed the joint venture national oil company with the Government of Sao Tome.
The oil company is called the STPETRO. STPETRO is owned 51% by the Government of
Sao Tome and 49% by the Company. In addition, the Company was granted under the
original agreement with the government, a long term management arrangement with
STPETRO. In July 1998, the Ministry of Cabinets and the Prime Minister executed
the STPETRO formation documents and they were promulgated into law by the
President. In September 1998, the Government of Sao Tome and STPETRO entered
into a Technical Assistance Agreement with Mobil. Under such agreement, Mobil
will perform a technical evaluation and feasibility study of oil and gas
exploration in certain designated acreage. The agreement is for an initial term
of 18 months and superceded the need for lease sales in early 1999. Mobil
retains a right of first refusal to acquire development rights to all or a
portion of the acreage which it is evaluating. Mobil then executed an agreement
with Schlumberger to perform the marine seismic survey as previously agreed
under the letter of intent with the Company signed in June 1998. Under the
Mobil/Schlumberger agreement, Schlumberger began performing seismic work on the
option blocks designated in the TAA Agreement in January 1999. The Company
continues to maintain a right to construct the Off-Shore Logistics Center and is
seeking an appropriate joint venture partner for the project.
Revenues from the Company's operations in Sao Tome and substantially all
raw material purchases for use in Sao Tome will be U.S. dollar-denominated and
managed through the Company's Louisiana operational facility. The Company
believes that it will not be significantly affected by exchange rate
fluctuations in local African currencies relative to the U.S. dollar. The
Company believes that the effects of such fluctuations will be limited to wages
for local laborers and operating supplies, neither of which is expected to be
material to the Company's results of operations when the joint venture begins
more substantial operations in Sao Tome.
In October 1997, the Company acquired a 37.5% interest in a 49,000 acre
natural gas lease, known as the "Nueces River Prospect," in the Nueces River
area of south Texas. The Company paid $200,000 and issued 50,000 shares of its
common stock to acquire the lease. The Company has spent more than $200,000
reworking the first of two existing shut-in wells on the property. Due to
mechanical failure downhole, this well has been shut in again. In 1998, the
Company planned on spending $650,000 to $1,200,000 to make the wells
operational, utilizing funds to be acquired under the Investment Agreement with
Kingsbridge. The Company believes that, assuming the entire lease is productive,
there are about 75 locations to be drilled. In 1998, depending on the
<PAGE>
availability of funding, the Company expected to drill 15 to 20 new wells at
this site, at a cost of approximately $650,000 to $1,200,000 per well. The
Company is responsible for only half of the drilling cost of each well, as it
shares this cost with its operational co-venturer, Autry Stephens & Co. The
operational dates, as well as the daily production rates, of the second well
cannot be determined until the completion of the reentry. The Company is
currently meeting with two potential farm-out partners to work the project and
believes it will negotiate arrangements to drill additional wells on the
northern and southern portions of the leasehold.
In February and March 1997, the Company acquired leases in oil fields,
which together comprise approximately 1,200 acres and 200 wells, located in Rusk
County and Wichita County, Texas. The Company issued 500,000 shares of its
common stock to acquire the leases. Through December 1997, the Company had
recompleted 18 wells, all of which were operational as of March 20, 1998. Of
these wells, 13 had mechanical failures. The Company has located its BAPCO Tool
on site. The Company anticipates spending $1,200,000 in order to bring
production on the fields up to a commercial level. At the current time, the
Company is evaluating feasible economic options including the potential sale of
the Rusk County and Wichita County properties.
In July 1997, the Company entered into a joint venture with MIII
Corporation, a Native American oil and gas company, to workover, recomplete and
operate 335 existing oil and gas wells on the Uintah and Ouray Reservation in
northeastern Utah. At this time, none of the wells are operational. The Company
had designed a development program, under which it planned to recomplete and
restimulate 36 wells and to drill five to seven development and extension wells
at this site. This plan would require spending a minimum of $1,000,000 to
$1,500,000 in order to make the project operational. Subject to the availability
of such funds, the Company anticipated that the first wells would be on line by
fall 1998. The leases on the MIII project were never transferred to the Company
and it is currently evaluating its options with regard to this project. Prior to
the Letter of Intent, the Company placed a stop transfer order on certain shares
issued to MIII relative to this project.
In September 1997, the Company acquired net revenue interests ranging from
76% to 84% (and 100% working interest in all but 2 of the wells) in oil and gas
properties totaling 13,680 acres, located near the MIII fields in the Uinta
Basin with 22 oil and natural gas wells. These wells are currently producing
approximately 70 barrels of oil per day from six producing wells which began
realizing revenues for the Company in November 1997. The Company planned on
spending approximately $1,000,000 on additional equipment and up to $80,000 per
well on well stimulation in order to bring 12 more wells on line in 1999. The
Company plans to plug and abandon 2 more wells and to perform further study on
the other 2 wells. The Company planned on funding this plan through the use of
funds acquired under the Kingsbridge Equity Line of Credit Agreement. To date,
the Company has received no funds under the Kingsbridge Investment Agreement, no
longer intends to take down any funds under this agreement, has negotiated terms
to cancel this agreement and Kingsbridge is seeking arbitration of the agreement
and its cancellation. The Company is currently evaluating a sale of this
property. The Company settled an arbitration brought by the Uintah sellers
regarding this project and executed a settlement agreement in January 1999.
In April 1997, the Company entered into a master service agreement with
Chevron to rework, in order to draw additional production from, approximately
400 depleting oil and gas wells and to remediate and "plug and abandon" these
and other wells when depleted, in Chevron's oil fields in southern Louisiana
<PAGE>
along the Gulf of Mexico. The Chevron agreement provided for a three-year work
schedule, commencing upon the completion of the Company's 140 foot "plug and
abandonment" barge. This barge was to be used to remediate offshore oil rigs and
be capable of working in coastal waters as shallow as 19 inches. A substantial
deposit was made by the Company to secure the barge. The Company believes the
original barge supplier will not be able to deliver since the owner of the
company died. The Company is attempting to recover the deposit and is seeking an
alternate supplier. Due to the price structure of the oil and gas business at
this time, the Company decided that it was not in its best interest to construct
this barge. The Chevron agreement was originally entered into by BAPCO and BEW
in September 1996, prior to the acquisition of BAPCO by the Company in April
1997, and was assigned to the Company with Chevron's consent at the time of the
acquisition. The Company issued 3,000,000 shares of Common Stock to BEW in
connection with the assignment of this agreement. Pursuant to the actions of the
Board on April 8, 1999, this asset was reassigned to BAPCO and transferred to
the corporation formed for the benefit of Mr. Bass as part of the rescission of
transactions involving Mr. Bass and his companies.
During fiscal 1997, the Company issued 4,000,000 shares of its common stock
to acquire BAPCO, a non-operating oil production company with significant well
rework equipment assets. Pursuant to the actions of the Board on April 8, 1999,
this asset was transferred to the corporation formed for the benefit of Mr. Bass
as part of the rescission of transactions involving Mr. Bass and his companies.
The Company's current development plans require substantial capital
expenditures in connection with the exploration, development and exploitation of
its oil and natural gas properties in Sao Tome. Historically, the Company has
funded capital expenditures through a combination of equity contributions and
short-term financing arrangements. The Company believes that it will require a
combination of additional financing and cash flow from operations to implement
future development plans. Under the terms of the Letter of Intent, the Company
will receive $3,000,000 for the acquisition of 51% percent of its stock on a
fully diluted basis. New management is exploring the private and/or public
equity markets as potential capital sources in connection with its development
plans and believes that certain sources with whom they have met may be in a
position to provide the long term financing needed by the Company to fully
exploit the Company's Sao Tome projects. There can be no assurance that any
additional financing will be available to it on reasonable terms or at all.
Future cash flows and the availability of financing will be subject to a number
of variables, such as the level of production from existing wells, prices of oil
and natural gas and success in locating and producing new reserves. To the
extent that future financing requirements are satisfied through the issuance of
equity securities, shareholders of the Company may experience dilution that
could be substantial. The incurrence of debt financing could result in a
substantial portion of operating cash flow being dedicated to the payment of
principal and interest on such indebtedness, could render the Company more
vulnerable to competitive pressures and economic downturns and could impose
restrictions on operations. If revenue were to decrease as a result of lower oil
and natural gas prices, decreased production or otherwise, and the Company had
no availability under a bank arrangement or other credit facility, the Company
could have a reduced ability to execute current development plans, replace
reserves or to maintain production levels, any of which could result in
decreased production and revenue over time.
Reserves and Pricing
Oil and natural gas prices fluctuate throughout the year. Generally, higher
natural gas prices prevail during the winter months of September throug
<PAGE>
February. A significant decline in prices would have a material effect on the
measure of future net cash flows which, in turn, could impact the value of the
Company's oil and gas properties. Such decline occurred in fiscal 1998. This was
primarily due to excess oil supplies worldwide.
The Company's drilling and acquisition activities have increased its
reserve base and its productive capacity, and therefore, its potential cash
flow. Lower gas prices may adversely affect cash flow. The Company does not
intend to continue to acquire and develop oil and natural gas properties in the
United States unless dictated by market conditions and financial ability. The
Company retains flexibility to participate in oil and gas activities at a level
that is supported by its cash flow and financial ability. The Company intends to
continue to use financial leverage to fund its operations as investment
opportunities become available on terms that management believes warrant
investment of the Company's capital resources.
The Company expects to utilize the "successful efforts" method of
accounting for its oil and gas producing activities once it has reached the
producing stage. The Company expects to regularly assess proved oil and gas
reserves for possible impairment on an aggregate basis in accordance with SFAS
No. 121.
Net Operating Losses
The Company has net operating loss carryforwards of $33,745,186 which
expire in the years 2010 through 2019. The Company has a $13,498,000 deferred
tax asset resulting from the loss carryforwards, for which it has established a
100% valuation allowance. Until the Company's current operations begin to
produce earnings, it is unclear as to the ability of the Company to utilize such
carryforwards.
Year 2000 Compliance
The Company is currently in the process of evaluating its information
technology for Year 2000 compliance. The Company does not expect that the cost
to modify its information technology infrastructure to be Year 2000 compliant
will be material to its financial condition or results of operations. The
Company does not anticipate any material disruption in its operations as a
result of any failure by the Company to be in compliance.
Forward-Looking Statements
This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-Q which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things as
future capital expenditures (including the amount and nature thereof), wells to
be drilled or reworked, oil and gas prices and demand, exploitation and
exploration prospects, development and infill potential, drilling prospects,
expansion and other development trends of the oil and gas industry, business
strategy, production of oil and gas reserves, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
<PAGE>
actual results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general economic
market and business conditions; the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in this Form
10-Q are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequence to or effects on the Company or its business or operations. The
Company assumes no obligations to update any such forward- looking statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
None
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Uinta Oil & Gas, Inc., ("Uinta") one of the three "joint" sellers under the
agreement to acquire the Uinta leases and certain other assets took certain
actions that were in contravention of the agreement when certain anticipated
funding to the Company did not occur. The Company gave Uinta notice of its
demand for arbitration under the agreement. Uinta commenced an action agains the
Company, BAPCO, Sam L. Bass, Jr., Noreen Wilson, Jim Griffin, Robert E. McKnight
and Robert Ballou (the Company's geologist) in Uintah County, Utah in April
1998. The complaint alleges fraud in the inducement, rescission of the
agreement, breach of contract and securities fraud and requests punitive damages
and appointment of a receiver. The Company then filed a formal demand for
arbitration. Uinta filed a request for a receiver to be appointed. This motion
was denied; however, the court held the issue of arbitration in abeyance pending
an evidentiary hearing on the allegations of Uinta's allegations of fraud since
Utah law contains an exception to mandatory arbitration when there are
allegations of fraud. Prior to the hearing on receivership, the other two
"joint" sellers, Coconino, S.M.A., Inc. and Pine Valley Exploration, Inc. filed
their formal demand for arbitration. The Company believed that it has numerous
meritorious defenses to this action. In the interim, the Company made an offer
to settle this matter. A settlement on all issues was completed in January 1999.
Under the terms of the executed settlement, for the 500,000 shares of restricted
stock which were issued at a guarantee price of $2 per share, additional
restricted shares were issued which reflect the difference between $2 and the
price on October 16, 1998 and December 30, 1998 and the 500,000 shares of
restricted stock which were to be issued in early 1998 were issued and treated
as if issued at the time such deliverance was initially required. In addition,
the parties will receive additional shares equal to the difference between the
value calculated on the closing date in January 1999 and $2 (calculated at
$.3267 per share, the "Strike Price") for the second block of 500,000. The
Company reimbursed certain filing fees, attorneys fees and paid for certain
office equipment. The Company received a quitclaim deed and assignments to
perfect the Company's interest in the leases. In addition, (1) Uinta will be
issued shares of the Company's Common Stock the amount of which shall be
determined by dividing $250,000 by the Strike Price, half of which shares shall
be included in the Company's registration statement on Form S-1/A (the
"Registration Statement") and half of which shall be restricted securities, (2)
in exchange for assignment of a 4% overriding royalty interest, Uinta will
receive restricted shares the amount of which shall be determined by dividing
$677,000 by the Strike Price, (3) a deficiency value equal to $41,200 for the
Utah office building will be liquidated by issuance of shares the amount of
<PAGE>
which shall be equal to $41,200 divided by the Strike Price, which shares were
included in the Registration Statement, (4) Uinta receivedno more than $10,000
to cost its court costs and attorneys fees, and (5) payment of outstanding
production service invoices to third parties totally $27,000 shall be paid in
the form of shares included in the Registration Statement, which shares shall be
equal to $27,000 divided by the Strike Price. See Part II, Item 2. "Changes in
Securities and Use of Proceeds - January 1999 Shares Issuances."
On August 11, 1998, the Company and Kingsbridge agreed to enter into an
agreement to cancel the Kingsbridge Private Equity Line of Credit dated March
23, 1998. Pursuant to the terms of the proposed cancellation, the Company will
pay a penalty in the amount of $100,000 and will issue warrants to purchase up
to an additional 100,000 shares of the Company's Common Stock (the "Kingsbridge
Warrants"). The Company has decided to cancel the Kingsbridge Private Equity
Line of Credit because terms of certain of the third quarter 1998 fundings
require the Company to cancel this agreement so as to limit the number of shares
of the Company's Common Stock outstanding upon conversion of the Company's
convertible notes in the future. However, as of December 31, 1998, the Company
had not completed the terms of the anticipated cancellation, and therefore
continues to be obligated to register the potential Kingsbridge shares issuable
under the put option exercise notice and the Kingsbridge Warrant. Under the
terms of the cancellation, the Company will be responsible for the registration
of the additional warrants. On December 10, 1998, Kingsbridge made application
to the American Arbitration Association for arbitration of outstanding issues
between the parties, claiming beaches of contracts. The Company has filed an
Answer in such proceedings. The Company believes it has just and meritorious
defenses to the claims and intends to vigorously defend these claims. An initial
arbitration conference is scheduled for mid May 1999.
Other than the above legal proceeding, the Company is not a party to any
other material pending or threatened legal proceeding outside the course of
ordinary business.
Item 2. Changes in Securities and Use of Proceeds
There have been no changes with respect to defining the rights of holders
of any class of registered securities or otherwise other than those described
above relative to the Standstill Agreements executed under the Letter of Intent.
In the second fiscal quarter 1999 and through the most practicable date,
the Company issued the following rights, shares and warrants of unregistered
securities:
January 1999 Share Issuances
In January 1999, the Company agreed to a settlement with Uinta. Pursuant to
such settlement, the Company issued shares of Common Stock on January 18, 1999
and agreed to issue additional shares based upon the Strike Price determined on
January 18, 1999. The Registration Statement covers the up to 1,144,000 total
shares of Common Stock issuable, with certainty, upon the completion of the
Uinta settlement.
Under the terms of the executed settlement, for the 500,000 shares of
restricted stock which were issued at a guarantee price of $2 per share,
additional restricted shares were issued which reflect the difference between $2
and the price on October 16, 1998 and December 30, 1998 (under the formula set
forth in the agreement, 861,111 and 1,312,500 shares of restricted stock
respectively) and the 500,000 shares of restricted stock which were to be issued
in early 1998 were issued and treated as if issued at the time such deliverance
<PAGE>
was initially required, which shares bear registration rights and are included
in the Registration Statement. In addition, the parties will receive additional
shares equal to the difference between the value on the closing dated of January
18, 0999 and $2 for the second block of 500,000 (2,560,912 at Strike Price of
restricted stock). The Company reimbursed certain filing fees, attorneys fees
and paid for certain office equipment. The Company received a quitclaim deed and
assignments to perfect the Company's interest in the leases. In addition, (1)
Uinta will be issued shares of the Company's Common Stock the amount of which
was determined by dividing $250,000 by the Strike Price, half of which shares
were included in the Registration Statement and half which shall be restricted
securities (at the Strike Price, 382,614 shares of restricted stock and 382,614
shares which bear registration rights and are included in the Registration
Statement) , (2) in exchange for assignment of a 4% overriding royalty interest,
Uinta will receive restricted shares the amount of which shall be determined by
dividing $677,000 by the Strike Price (2,072,238 shares of restricted stock),
(3) a deficiency value equal to $41,200 for the Utah office building will be
liquidated by issuance of shares the amount of which shall be equal to $41,200
divided by the Strike Price, (126,110 shares of Common Stock, which shares bear
registration rights and are included in the Registration Statement, (4) Uinta
received no more than $10,000 to cost its court costs and attorneys fees, and
(5) payment of outstanding production service invoices to third parties totally
$27,000 shall be paid in the form of shares with registration rights, which
shares shall be equal to $27,000 divided by the Strike Price (82,644 shares
which are included in the Registration Statement).
In July 1997, the Company acquired certain geological data and other
information relative to Sao Tome valued at $2,000,000 from Christian Hellinger.
At that time, the Company issued 1,000,000 shares of its Common Stock at a
guaranteed price of $2.00 per share. Subsequently, the price of the Company's
shares dropped. Through December 31, 1998, the Company had repaid $908,925 of
the $2,000,000 debt. In January 1999, the Board of Directors reached a
settlement with Mr. Hellinger relative to the balance of $1,091,075 in which he
agreed to take 3,308,712 share of restricted Common Stock in full liquidation of
the balance due.
February and March 1999 Share Issuances
Pursuant to an agreement with the holder of the Third June 1998 Note, the
Company has agreed to issue 512,501 shares of Common Stock which have
registration rights and which have been included in the Registration Statement
in lieu of certain penalties associated with the Company's failure to have its
Registration Statement effective within sixty days. See Part II, Item 3.
"Defaults Upon Senior Securities."
April 1999 Letter of Intent
On April 8, 1999, after investigation and due consideration of the options
available to the Company regarding the cloud upon certain of its assets, the
Board voted to realign assets between itself and its subsidiary, BAPCO.
Following such realignment, all of the previous transactions with Sam Bass and
his companies were rescinded, and BAPCO, as realigned, was transferred to a
corporation, unrelated to ERHC, formed for the benefit of Sam Bass or his
assigns. This corporation would exchange the shares Mr. Bass and such companies
returned from the rescinded transactions, for all shares in the new corporation.
Such exchanged shares were to be returned to the Company for cancellation. They
included the 4,000,000 shares issued to Mr. Bass in the BAPCO acquisition, the
744,000 shares issued to Mr. Bass's company, for the acquisition of the
environmental remediation equipment and the 3,000,000 shares issued to
<PAGE>
Mr. Bass's company for the Chevron Master Service Agreement.
At the meeting of the Board of Directors on April 8, 1999, the Board also
reviewed certain prior actions of the Board.
The Board placed a stop transfer order on the 200,000 shares issued to
Mytec & Associates because the assignment of the Henderson leasehold was never
made to the Company and they were in default on their agreement.
The Board rescinded a distribution of a portion of the five percent (5%)
overriding royalty interest granted to several Board members, employees and
consultants in February 1999 when the Company was not otherwise able to pay
their salaries and fees. The original passage of such resolution was based upon
a mistaken interpretation of the ability of the Board to disburse a substantial
corporate asset on its own action.
The Board rescinded a conditional issuance of 3,000,000 shares to Mr. Bass,
Mr. Callender and Noreen Wilson in June 1997 relative to Sao Tome and certain
production levels.
The Board rescinded a conditional issuance granted under the MIII agreement
in July 1997 because certain obligations of the Seller under such agreement were
not met and they was a default.
The Board reviewed the extraordinary efforts of certain of its officers and
directors in assuring the formation of STPETRO, having STPETRO's formation
enacted into law and in negotiating the Technical Assistance Agreement between
STPETRO and Mobil. In appreciation of such efforts, the Board approved the
issuance of 2,000,000 shares of the Company's restricted Common Stock to Mr.
Bass, Mr. Callender, Ms. Wilson and Mr. Griffin.
As part of the Letter of Intent, the Company was required to secure
Standstill Agreements from its noteholders. Certain of the noteholders elected
to convert their notes, including principal, interest and penalties into Common
Stock rather than execute the Standstill Agreement. Of these, $750,000 of
principal notes were converted from the October 1997 Financing, and all of the
remaining notes from the July/August 1998 Financing were converted with the
exception of a total of $660,000 in face value which remains outstanding. Such
conversions resulted in the authorization on April 23, 1999 to issue 17, 472,989
shares of the Company's restricted Common Stock based upon the relevant
conversion prices on the dates of the conversion notices, with the holding
period commencing on the date each applicable note was issued. Of the remaining
unconverted notes, all of the noteholders executed Standstill Agreements.
The meeting continued with the Board authorizing the issuance of warrants
in settlement of certain outstanding issues with one of its consultants, which
warrants are exercisable into 414,125 shares of restricted Common Stock.
Also, the Company authorized the issuance of 12,294,674 shares to cover the
accrued interest and penalties on all of the note transactions as required by
the Standstill Agreements.
<PAGE>
After the election of the new Officers and three (3) New Directors at the
meeting of the Board on April 30, 1999, the four (4) remaining Board members
recused themselves when the New Directors voted upon the Consulting Agreements,
Severance Agreement and Settlement Agreements with such remaining members and
former Officer, Directors, Employees and Consultants of the Company since such
remaining Board members clearly had a vested interest in the outcome of such
vote. Such members also recused themselves while the New Directors voted upon
certain settlements negotiated with various parties relative to outstanding
claims and issues involving the Company, since such remaining Board members had
not participated in these negotiations.
Pursuant to the Consulting Agreements, Severance Agreements and Settlement
Agreements, 11,245,000 shares of restricted Common Stock were authorized to be
issued to former Officers, current and former Directors and current and former
Consultants of which 6,770,000 shares were taken in lieu back salaries due to
Noreen Wilson and James Griffin. In addition, pursuant to such Consulting
Agreements, Severance Agreements and Settlement Agreements, warrants to purchase
4,725,000 shares of the Company's restricted Common Stock were authorized to be
granted to former Officers, current and former Directors and current and former
Consultants, which warrants contain graduated exercise prices of $.25, $.50,
$.75, $1.00 and $1.25 and require exercise within a period of four (4) years.
Subsequent to the execution of the Letter of Intent, ERHCIG had negotiated
settlements of a number of outstanding matters which it felt were in the best
interest of the Company. Ms. Wilson, a former director of the Company, elected
to take a convertible note in exchange for unpaid expenses. Ms. Wilson is a
member of ERHCIG and has certain shareholdings relative to such participation.
Pursuant to the negotiated settlements, 3,143,665 shares of Common Stock were
authorized, including shares equal to $700,000 at $.20 per share in lieu of
repayment of a loan made to the Company by an outside party. In addition, the
New Directors granted warrants to purchase 1,000,000 shares of the Company's
Common Stock exercisable at $.25, which warrants expire in April, 2009, to a
noteholder in the October 1997 Financing and the September 1998 Financing in
exchange for its assistance in putting together the Letter of Intent
transaction..
After all actions taken through April 30, 1999 and before issuance of the
shares under the Subscription Agreement, the total number of shares of the
Company's Common Stock authorized for issuance is 89,464,630. Taking into
consideration all outstanding convertible notes, warrants and options and the
total authorized number of shares for issuance, on a fully diluted basis,
146,357,210 shares of Common Stock, represent the total voting capital stock of
the Company for purposes of determining 49%. This is without any consideration
for additional shares to Procura Financial Consultants for settlement above the
2,000,000 shares already held by the Company.
The Company received subscription agreements dated as of April 27, 1999 on
May 14, 1999 from ERHCIG. Pursuant to such agreements, ERHC Investor Group LLC,
ERHC Investor Group A and ERHC Investor Group II have committed to purchase a
total of 51% of the Company's restricted Common Stock, on a fully diluted basis,
in exchange for the payment of $3,000,000. In the event that a Final Closing, as
defined in the Letter of Intent, does not occur within ninety (90) days, ERHC
Investor Group LLC will surrender to the Company, for cancellation, such rights
<PAGE>
as it has or such certificates as it has received less an amount of shares which
it will retain in consideration of the payments which it has made. The amount to
be retained shares will be based upon a $5,882,352 valuation of the Company
after adjustment for the actions of the Board of Directors relative to the
realign of BAPCO and its transfer to the corporation held for the benefit of Sam
Bass or his assigns. Accordingly, an additional 152,330,974 shares of Common
Stock are required to be issued in order to cover 51% on a fully diluted basis.
Item 3. Defaults Upon Senior Securities
None. The Company was in default in the payment of the principal due on the
notes issued in the April 1998 Financing. These notes were due in January 1999;
however, under the terms of the Standstill Agreement with these noteholders, the
principal payment has been deferred until December 1999.
A requirement of funding provided to the Company in November, 1997 from
Avalon Research Group, Inc. ("Avalon") was that the Company would file its
registration statement within forty-five (45) days of the funding. The Form S-1
was filed by the Company on January 8, 1998; however, this eight (8) day
lateness was waived by the Avalon investors. In addition, the Company had agreed
to use its best efforts to have its registration statement declared effective
within one hundred twenty (120) days of the November 15, 1997 closing. The
Company believes that it has used its best efforts to have its registration
declared effective. The Avalon registration rights agreement required that in
the event that the registration statement was not effective within one hundred
twenty (120) days, that the Company would pay as liquidated damages an amount
equal to three percent (3%) of the aggregate amount of the notes per month. As a
result of the delay in declaring the Form S-1 as amended effective, the Company
owed the Avalon investors penalty payments from March 1998 to the present. These
outstanding amounts do not represent a default under the convertible senior
subordinated notes issued to the Avalon investors; however do represent a debt
due by the Company and a default under the Collateral Assignment Security
Agreement under which the Company granted to the Avalon investors a security
interest in the rights to certain oil and gas reserves located in Duchesne and
Uintah Counties, Utah pursuant to which the Company and its subsidiary currently
enjoys the right to exploit certain oil and gas reserves thereon.
In June 1998, the Company raised gross proceeds of $1,250,000 in a private
placement of the Company's 5.5% convertible notes due in June 2000 (the "Third
June 1998 Notes") and warrants to purchase shares of Common Stock (the "Third
June 1998 Warrants") to one "accredited" investor. Pursuant to the terms of the
agreements, certain penalties were to be paid to the Third June 1998 Note
Investor in the event the registration statement was not effective within sixty
days. In lieu of such payments, the Investor has elected to take additional
shares in full liquidation of all penalties due through February 1999.
In July and August 1998, the Company raised gross proceeds of $1,200,000,
$275,000 and $1,010,000 respectively in a private placement of up to $3,000,000
in three(3) tranches of the Company's 8.0% convertible notes due in July and
August 2000 (the "July Notes") to a limited number of "accredited" investors.
Warrants were issued to the placement agent at the close of each tranche (the
<PAGE>
"July Warrants"). The Company has failed to register the shares into which the
July Notes are convertible and the July Warrants are exercisable during the
60-day period following the completion of this transaction as required by the
agreements. As a result, the Company is required to make certain payments to the
July/August Investors.
As part of the Standstill Agreements, the Company agreed to issue shares of
Common Stock sufficient to make it current on all outstanding interest and
penalties for all of the convertible note transactions. Pursuant to such
agreements, the Company is current on all of its debt obligations. Further,
pursuant to such agreements, the noteholders have waived interest and penalties
through October 15, 1999.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
On February 16, 1999, the Company reported that subsequent to the filing of
the Company's S-1/A3 and Amendment No. 1 to the Form 10K for the Fiscal Year
Ended September 30, 1998 ("10K/A1"), it was discovered that there was a question
of the ownership rights of the Company in the BAPCO tool and other assets
acquired from Sam Bass and his companies which created a cloud upon the title to
such assets (the "February 8-K").
The Board of Directors of the Company was given notice by Durland &
Company, CPAs, P.A., under Section 10A(b)(2) of the Securities and Exchange Act
of 1934 and filed the February 8-K in compliance with the requirements of
Section 10A(b)(3).
The Company and its independent auditors, Durland & Company, CPAs, P.A.,
conducted a full investigation. It was determined that it would cause the
Company undue hardship to try to clarify and correct the cloud on the title to
the assets acquired from Sam Bass and his related companies and that the process
of such clarification might result in protracted litigation. The Board
determined that the best course for the Company and its shareholders was to
realign certain of its assets between itself and BAPCO, to rescind the
transactions with Mr. Bass and his related companies and to transfer BAPCO, as
realigned, to a new corporation held for the benefit of Mr. Bass or his assigns.
Upon return of the shares issued in the rescinded transactions, the shares in
the new corporation are to be released to Mr. Bass or his assigns.
On April 8, 1998, the Company and BAPCO entered into an agreement which
provided the following:
a. BAPCO assigned all rights, title and interest, if any, which it had to ERHC
in the leases in the Uintah property, the Wichita Falls property, the
Nueces property and the MIII property, consented to the use of the
agreement as evidence of such assignment and authorized ERHC to perfect the
assignment of interest and to execute any and all documents necessary to
perfect such assignment on its behalf and in its name.
<PAGE>
b. BAPCO consented to its removal as the operator on the leases assigned to
ERHC in accordance with paragraph 1 above, consented to the use of the
agreement as evidence of such consent and authorized ERHC to perfect such
removal and to execute any and all documents necessary to perfect such
removal on its behalf and in its name.
c. ERHC assigned all rights, title and interest, if any, which it had in the
Schellstede-Lee, LLC license to BAPCO, which license is paid through
October 16, 1998.
d. ERHC assumed the liability for the accounts payable previously in BAPCO's
name incurred prior to the date of the Agreement, but only to they extent
they appeared in Schedule A to the Agreement.
e. ERHC assumed the liability for the accounts payable on the Wichita Falls
property incurred prior to the date of the Agreement, subject to
authentication and reconciliation.
f. ERHC assigned all rights, title and interest which it had in the
environmental remediation equipment to BAPCO.
g. ERHC assigned all rights, title and interest which it had in the Chevron
Master Service Agreement to BAPCO.
h. ERHC consented to the assignment of all rights, title and interest in the
remaining non- divested assets, the environmental remediation equipment,
the Chevron Agreement and all shares of BAPCO to a new corporation whose
shares were to be held for the benefit of Sam Bass, Jr. or his assigns
("NEWBASSCORP") and to the attachment of the Agreement to such assignment
agreement subject to the promise of NEWBASSCORP to (1) the return to ERHC
of the four million (4,000,000) shares issued to Sam Bass at the
acquisition of BAPCO in April 1997 at such time as such shares are tendered
to NEWBASSCORP, (2) the return to ERHC of the seven hundred forty four
thousand (744,000) shares issued to Sam Bass, Jr. and/or Bass World Wide
Services for the environmental remediation equipment at such time as such
shares are tendered to NEWBASSCORP, (3) the return to ERHC of the three
million (3,000,000) shares issued to Sam Bass, Jr. and/or Bass
Environmental Services Worldwide Inc. for the Chevron Agreement at such
time as such shares are tendered to NEWBASSCORP and (4) the delivery to
ERHC of a full and general release from Mr. Bass, Bass World Wide Services
and Bass Environmental Services Worldwide Inc. in favor of ERHC.
On April 8, 1999, the Company and White Cloud Development Corporation
("NEWBASSCORP") entered into an agreement which provided for the following:
a. ERHC assigned all rights, title and interest in the shares of BAPCO, all of
its non- divested assets, its environmental remediation equipment and its
Chevron Master Service Agreement as set forth in the agreement between the
Company and BAPCO, subject only to the liabilities specifically assumed as
set forth therein to NEWBASSCORP.
b. In exchange for the assignment contained in paragraph 1, NEWBASSCORP agreed
to hold all such acquired assets for the benefit of Sam Bass or his
<PAGE>
assigns until such time as (1) Mr. Bass tendered the four million
(4,000,000) shares issued to him at the acquisition of BAPCO in April 1997,
(2) Mr. Bass and/or Bass World Wide Services tendered the seven hundred
forty four (744,000) shares issued to them for the acquisition of the
environmental remediation equipment, (3) Mr. Bass and/or Bass Environmental
Services Worldwide Inc. tendered the three million (3,000,000) shares
issued to them for the acquisition of the Chevron Agreement, and (4) Mr.
Bass, Bass World Wide Services and Bass Environmental Services Worldwide
Inc. executed and delivered a full and general release in favor of ERHC
relinquishing, among other things, all claims relative to such shares, the
original acquisition of such assets and the transfer of BAPCO as realigned
and its assets and all claims relative to any part of the overriding
royalty interest previously granted to him relative to Sao Tome.
c. At such time as NEWBASSCORP received tender of any of the shares to be
relinquished in accordance with paragraph 2 above and the delivery of the
full and general release, NEWBASSCORP agreed to return such shares and
release to ERHC forthwith and to deliver the pro rata portion of the shares
in NEWBASSCORP held for the benefit of Mr. Bass or his assigns to Mr. Bass
or to his designated assignee.
d. NEWBASSCORP released and discharged ERHC from all claims or actions
relative to the original acquisition of BAPCO, the environmental
remediation equipment, the Chevron Agreement and the issuance of shares for
each such acquisition and accepted the assignment as full consideration for
the transaction subject only to the full obligation of ERHC relative to the
specific liabilities assumed.
By Agreement effective April 23, 1999 between the White Cloud Development,
Inc. ("White Cloud") and Sam Bass, individually and on behalf of Bass
Environmental Worldwide Services Inc., Mr. Bass exchanged and released 7,744,000
shares of the Company's restricted stock for 100% of the authorized and issued
capital stock in White Cloud. Mr. Bass delivered the Company's restricted shares
previously issued to him and the required release to White Cloud.
The Company does not believe that there need be any changes in the legal or
financial disclosure relative to the financial and legal effects of the
rescission of the related party agreements with Mr. Bass and his companies which
would require further amendment to its Form S-1 and Form 10K for the Fiscal Year
Ended September 30, 1998 and all other reports which has been filed since.
In addition, on May 21, 1999, the Company filed on Form 8K a report of the
change of control and the rescission of the Bass related transactions. Such
report stated that no changes have been made to the legal and financial
disclosure as a result of the completion of the investigation and the
realignment of BAPCO.
All parties may continue to rely upon the previously filed audit opinion
letter, financial statements and the disclosures as to the BAPCO tool contained
in the Company's Form S-1/A3 and the Form 10K/A1. The Company intends to file,
within sixty (60) days of this Form 8K, a pro forma statement for the periods
<PAGE>
ending September 30, 1998 and March 31, 1999 showing the effects of the
rescission as if it had occurred prior to the end of the 1998 Fiscal Year.
Item 6. Exhibits and Reports on Form 8-K
1. Exhibits
10.30 Memorandum of Compromise and Settlement Agreement between
Environmental Redmediation Holding Corporation, Pine Valley
Exploration, Inc., Coconino, S.M.A., Inc., Uinta Oil & Gas, Inc.,
Craig Phillips, and Joseph H. Lorenz dated January 4, 1999.[Previously
filed as Exhibits to the Amendment 3 of the Form S-1 filed January 25,
1999, Registration No. 333-43919]
10.31 * Agreement between ERHC and BAPCO realigning assets dated April 8,
1999
10.32 * Agreement between ERHC and White Cloud Development Inc. ("White
Cloud") dated April 8, 1999 transferring BAPCO to White Cloud
10.33 * Letter of Intent and Revised Term Sheet dated April 8, 1999 and
executed April 9, 1999.
10.34 * Agreement between White Cloud Development Inc. and Sam Bass and Bass
Environmental Services Worldwide, Inc. effective April 23, 1999
10.35.1
to
10.35.8 * Standstill Agreements under the Letter of Intent [See Exhibit 10.33
--- which is Exhibit A to each of these Agreements]
10.36.1
to
10.36.3 * Subscription Documents dated April 27, 1999 representing the
purchase of 51% of the Company's Common Stock on a fully diluted
basis.
2. Reports on Form 8-K
Form 8K: reporting an investigation into a cloud on the title to certain assets
acquired from Sam Bass and his companies. No financial statements were
filed with that report filed February 16, 1999.
[Form 8K filed May 21, 1999 reported the results of the investigation
and the rescission of the Bass related transactions. A pro forma
statement for the periods ending September 30, 1998 and March 31, 1999
<PAGE>
showing the effects of the rescission as if it had occurred prior to
the end of the 1998 Fiscal Year will be filed within sixty (60) days.
The actual effects of such rescission will appear in the Company's
Form 10Q for the Quarter Ending June 30, 1999.]
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant
has duly caused this Form 10-Q to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of West Palm Beach, Florida on the 24th
day of May 1999.
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
By: /s/Ernest Chu
------------------------------------------
Ernest Chu,
Treasurer, Chief Financial Officer and Director
Exhibit 10.31
AGREEMENT
THIS AGREEMENT dated the 8th day of April, 1998 is by and between
Environmental Remediation Holding Corporation, with offices at 1686 General
Mouton, Lafayette, LA ("ERHC") and Bass American Petroleum Corporation, with
offices at 1686 General Mouton, Lafayette, LA ("BAPCO").
WHEREAS, BAPCO is a wholly owned subsidiary of ERHC; and
WHEREAS, ERHC wishes to reassign certain assets currently held in BAPCO to
ERHC, to assign certain assets currently held in ERHC to BAPCO and to assume
certain designated liabilities relative to same.
NOW THEREFORE, in consideration of the promises contained herein, and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
1. BAPCO assigns all rights, title and interest, if any, which it has to ERHC
in the leases in the Uintah property, the Wichita Falls property, the
Nueces property and the MIII property, consents to the use of this
agreement as evidence of such assignment and authorizes ERHC to perfect
<PAGE>
this assignment of interest and to execute any and all documents necessary
to perfect such assignment on its behalf and in its name.
2. BAPCO consents to its removal as the operator on the leases assigned to
ERHC in accordance with paragraph 1 above, consents to the use of this
agreement as evidence of such consent and authorizes ERHC to perfect such
removal and to execute any and all documents necessary to perfect such
removal on its behalf and in its name.
3. ERHC assigns all rights, title and interest, if any, which it has in the
Schellstede-Lee, LLC license to BAPCO, which license is paid through
October 16, 1998.
4. ERHC assumes the liability for the accounts payable previously in BAPCO's
name incurred prior to the date of this Agreement but only to they extent
they appear in Schedule A to this Agreement, which Schedule A is annexed
hereto and made a part hereof.
5. ERHC assumes the liability for the accounts payable on the Wichita Falls
property incurred prior to the date of this Agreement, subject to
authentication and reconciliation.
6. ERHC assigns all rights, title and interest which it has in the
environmental remediation equipment to BAPCO.
7. ERHC assigns all rights, title and interest which it has in the Chevron
Agreement to BAPCO.
8. ERHC consents to the assignment of all rights, title and interest in the
remaining non- divested assets, the environmental remediation equipment,
the Chevron Agreement and all shares of BAPCO to a new corporation whose
shares are held for the benefit of Sam Bass, Jr. or his assigns
("NEWBASSCORP") and to the attachment of this Agreement to such assignment
agreement subject to the promise of NEWBASSCORP to (1) the return of the
four million shares (4,000,000) issued to Sam Bass at the acquisition of
BAPCO in April 1997 at such time as such shares are tender to NEWBASSCORP,
(2) the return of the seven hundred forty four thousand (744,000) shares
issued of Rule 144 stock to the Company to Sam Bass, Jr. and/or Bass World
Wide Services for the environmental remediation equipment at such time as
such shares are tender to NEWBASSCORP, (3) the return of the three million
(3,000,000) shares of Rule 144 stock to the Company issued to Sam Bass, Jr.
and/or Bass Environmental Services Worldwide Inc. for the Chevron Agreement
at such time as such shares are tender to NEWBASSCORP and (4) the delivery
of a full and general release from Mr. Bass, Bass World Wide Services and
Bass Environmental Services Worldwide Inc. in favor of ERHC.
IN WITNESS THEREOF, the parties have executed this Agreement effective on
the date first above written. Environmental Remediation Holding Corporation
<PAGE>
By /s/ JAMAES CALLENDER, SR.
----------------------------
James Callender, President
Bass American Petroleum Corporation
By: /s/ ROBERT MCKNIGHT
Robert McKnight, President
STATE OF Florida )
) SS.
COUNTY OF Palm Beach )
I hereby certify that on this day before personally appeared James
Callender, President of Environmental Remediation Holding Corporation, to me
known to be the person who executed the foregoing instrument and acknowledged to
me that he executed the same as his free and voluntary act.
WITNESS, my hand and official seal in the County and State above
written, this 8 day of April, 1999.
/s/ Donald F. Mintmire
----------------------------------------
Notary Public
My Commission Expires: Feb 18 2003
Commission No. CC790261
STATE OF Florida )
) SS.
COUNTY OF Palm Beach )
I hereby certify that on this day before personally appeared Robert
McKnight, President of Bass American Petroleum Company, to me known to be the
person who executed the foregoing instrument and acknowledged to me that he
executed the same as his free and voluntary act.
WITNESS, my hand and official seal in the County and State above written,
this 8 day of April, 1999.
/s/ Donald F. Mintmire
----------------------------------------
Notary Public
My Commission Expires: Feb 18 2003
Commission No. CC790261
Exhibit 10.32
AGREEMENT
THIS AGREEMENT dated the 8th day of April, 1998 is by and between
Environmental Remediation Holding Corporation ("ERHC"), with offices at 1686
General Mouton, Lafayette, LA and White Cloud Development Corp., a Florida
corporation whose shares are held for the benefit of Sam Bass, Jr. or his
assigns ("NEWBASSCORP").
WHEREAS, ERHC acquired Bass American Petroleum Company ("BAPCO") from Bass
in 1997 and subsequently certain assets were purchased by, acquired or
transferred to BAPCO; and
WHEREAS, certain environmental remediation equipment was acquired or
purchased by the ERHC or its predecessor from Bass World Wide Services; and
WHEREAS, ERHC acquired rights in the Chevron Agreement from Sam Bass, Jr.
and/or Bass Environmental Services Worldwide, Inc.; and
WHEREAS, ERHC has reassigned certain assets and authorized the transfer of
the non- divested assets, the environmental remediation equipment, the Chevron
Agreement and all shares in BAPCO to NEWBASSCORP; and
WHEREAS, the Board has rescinded the original acquisition of BAPCO, the
environmental equipment and the Chevron Agreement due to certain clouds in title
of each of them.
NOW THEREFORE, in consideration of the promises contained herein, and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
1. ERHC assigns all rights, title and interest in the shares of BAPCO, all of
its non-divested assets, its environmental remediation equipment and its
Chevron Agreement as set forth in the agreement between its wholly owned
subsidiary and ERHC of even date, a copy of which is attached hereto and
made a part hereof as Exhibit A, subject only to the liabilities
specifically assumed as set forth therein to NEWBASSCORP.
2. In exchange for the assignment contained in paragraph 1, NEWBASSCORP agrees
to hold all such acquired assets for the benefit of Sam Bass or his assigns
until such time as (1) Mr. Bass tenders the four million (4,000,000) shares
of Rule 144 stock issued Sam Bass at the acquisition of BAPCO in April
1997, (2) Mr. Bass and/or Bass World Wide Services tenders the seven
hundred forty four (744,000) shares issued for the acquisition of the
environmental remediation equipment, (3) Mr. Bass and/or Bass Environmental
Services Worldwide Inc. tenders the three million (3,000,000) shares issued
for the acquisition of the Chevron Agreement, and (4) Mr. Bass, Bass World
Wide Services and Bass Environmental Services Worldwide Inc., execute a
<PAGE>
and general release in favor of ERHC relinquishing, among other things, all
claims relative to such shares, the original acquisition of such assets and
the transfer of BAPCO as realigned and its assets which are the subject of
this Agreement.
3. At such time as NEWBASSCORP receives tender of any of the shares to be
relinquished in accordance with paragraph 2 above and the full and general
release, NEWBASSCORP agrees to return such shares to ERHC forthwith and to
deliver the pro rata portion of the shares in NEWBASSCORP held for the
benefit of Mr. Bass or his assigns to Mr. Bass or to his designated
assignee.
4. NEWBASSCORP releases and discharges ERHC from all claims or actions
relative to the original acquisition of BAPCO, the environmental
remediation equipment, the Chevron Agreement and the issuance of shares for
each such acquisition and accepts this assignment as full consideration for
this transaction subject only to the full obligation of ERHC relative to
the liabilities assumed as set forth in Exhibit A.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the
date first above written.
Environmental Remediation Holding Corporation,
ERHC
By_/s/JAMES CALLENDER,SR.
-----------------------
James Callender, President
NEWBASSCORP
By /s/DONALD F. MINTMIRE
-----------------------------
President White Cloud Development Corp.
STATE OF Florida )
) SS.
COUNTY OF Palm Beach )
I hereby certify that on this day before personally appeared James
Callender, President of Environmental Remediation Holding Corporation, to me
known to be the person who executed the foregoing instrument and acknowledged to
me that he executed the same as his free and voluntary act.
WITNESS, my hand and official seal in the County and State above
written, this 8 day of April, 1999.
/s/ Donald F. Mintmire
----------------------------------------
Notary Public
My Commission Expires: Feb 18 2003
Commission No. CC790261
<PAGE>
STATE OF Florida )
) SS.
COUNTY OF Palm Beach )
I hereby certify that on this day before personally appeared Donald
F. Mintmire, President of White Cloud Development Corp., to me known to be the
person who executed the foregoing instrument and acknowledged to me that he
executed the same as his free and voluntary act.
WITNESS, my hand and official seal in the County and State above written,
this 8 day of April, 1999.
/s/ Bradley F. Rothenberg
----------------------------------------
Notary Public
My Commission Expires: Oct 6 2001
Commission No. CC686183
Exhibit 10.33
LETTER OF INTENT
April 8, 1999
Environmental Remediation Holding Corporation
1686 General Mouton Avenue
Lafayette, LA 70508
Attention: James R. Callender, President
Dear Mr. Callender:
This letter (the "Letter of Intent") and the attached Term Sheet (which is
an integral part hereof) sets forth the general terms of the proposed
transactions in which ERHC Investment Group, Inc. and its affiliates and assigns
(the "Purchasers") will invest in Environmental Remediation Holding Corporation
(the "Company").
This Letter of Intent is not intended to be binding on either the
Purchasers or the Company, except for the respective obligations of the parties
in the following six paragraphs, and will be superseded in its entirety upon the
execution of a definite Securities Purchase Agreement and related agreements
referenced in the attached Term Sheet.
If the Board of Directors of the Company approves the transactions
contemplated by this Letter of Intent, this Letter of Intent will be binding on
the Company subject to obtaining appropriate approval of the stockholders and
convertible noteholders (if required), of the Company, which the Company will
endeavor to obtain.
If the Board of Directors of the Company approves the transactions
contemplated by this Letter of Intent as set forth in the attached Term Sheet,
the Purchasers will be obligate to make the investment on the terms and
conditions set forth in the Term Sheet; subject to the execution of definitive
agreements satisfactory to the Purchasers, including a Securities Purchase
Agreement, and subject to obtaining appropriate approval of the stockholders and
convertible noteholders (if required), of the Company.
After the execution of this Letter of Intent by you and pending the
preparation and execution of the Securities Purchase Agreement and thereafter
until the Closing, the Company will give the Purchasers and their
representatives full access to the premises and management personnel of the
Company and to all accounting, financial and other records applicable to the
Company and will furnish the Purchaser all information with respect to the
business and affairs of the Company as the Purchasers may reasonable request. In
the event the transactions contemplated hereby are not consummated, (i) the
Purchasers and their representatives will return all documents, contracts, and
papers received from the Company and copies thereof, (ii) will not disclose to
any third persons or to the public any of such information, and (iii) each
party, including without limitation, parties which have accepted and agreed to
this Letter of Intent, will execute a general release in favor of the Purchaser
from any and all liabilities related to transaction contemplated by this Letter
<PAGE>
of Intent and the attached Term Sheet.
As material inducement to the Purchasers to commit the financial and other
resources necessary to conduct their investigations and prepare and negotiate
the agreements contemplated by the Term Sheet, the Company covenants and agrees
that none of the Company or the Company's affiliates, agents or representatives
shall, directly or indirectly, entertain any proposals or offers from, or enter
into any negotiations, discussions or agreements with, or provide any other
person with any information in connection with a merger or consolidation, or a
sale of any material portion of the assets or equity or debt securities of the
Company from the date of this Letter of Intent until May 30, 1999, or such
earlier date as the Purchasers advise the Company in writing that they no longer
intend to proceed with an investment in the Company.
Any and all announcement and publicity releases prior to the Closing which
relate to the investment contemplated hereby shall be subject to the parties'
mutual approval. This proposal for investment in the Company, as it may be
modified from time to time, will be held in confidence by the Company and shall
not be disclosed to any third party without the Purchasers' prior written
consent.
If the foregoing is acceptable to you, kindly acknowledge your agreement by
executing this letter where indicated below before April 9, 1999.
Sincerely,
ERHC Investment Group, Inc.
By: /s/ HOWARD TALKS
Howard Talks, President
Date: April 8, 1999
ACCEPTED AND AGREED:
Environmental Remediation Holding Corp.
By: /s/ JAMES R. CALLENDER,SR. Date: April 9, 1999
---------------------------
James R. Callender, President
By: /s/ SAM BASS, JR. Date: April 9, 1999
------------------
Sam L. Bass, Jr.
By: /s/ JAMES A. GRIFFIN Date: April 8, 1999
---------------------
James A. Griffin
By: /s/ KEN WATERS Date: April 8, 1999
---------------
Ken Waters
By: /s/ ROBERT E. MCKNIGHT Date: April 8, 1999
-----------------------
Robert McKnight
<PAGE>
By: /s/ RICHARD MAGAR Date: April 9, 1999
------------------
Richard Magar
<PAGE>
TERM SHEET
TERMS PROPOSED FOR
INVESTMENT BY ERHC INVESTMENTS GROUP, INC.
IN
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
This term sheet summarizes the proposed principle terms of the investment
by ERHC Investment Group, Inc., in Environmental Remediation Holding Corp.
It is based upon the fact that ERHC Investment Group, Inc., has been
advised that the Existing Board of Directors has taken certain action
regarding affiliated transactions and rescinded certain minutes. This term
sheet is made in reliance upon such changes as noted herein.
I. INVESTMENT
Issuer: Environmental Remediation Holding Corporation ("The
Company")
Purchasers: ERHC Investment Group, Inc., and its affiliates and assigns
(collectively, "the Purchasers")
Security: The Company will issued to the Purchasers Shares of Common
Stock (the "Common Shares") to be issued in installments as
the Purchase Price is paid, which in the aggregate will
equal 51% of the voting capital stock of the Company on a
fully diluted basis assuming the conversion of all
outstanding option, warrants and other convertible notes and
securities outstanding of the date of the issuance of the
Common Shares (including all stock and warrants to be issued
to other parties as contemplated in the Term Sheet).
Share Holder
Ratification: The Company will take all actions reasonably necessary to
promptly hold a stockholders meeting for the purpose of
obtaining shareholder ratification following the closing of
the Term Sheet.
Assignment
Of
Rights: ERHC Investment Group, Inc., has the right to assign any
part of the right to purchase Common Stock to affiliates and
other assigns who shall together constitute the Purchasers.
Assignment of such shares will be contingent upon assumption
of pro rata obligation under any Investment Documents (as
defined below)
Purchase
Price: Aggregate of three million ($3,000,000) dollars ("The
Purchase Price")
<PAGE>
Payment of
Purchase Price: 1. The Purchase Price will be payable to the Company in
installments as follows: 165,000 at the initial closing
and the balance of the $835,000 to be invexted as
needed from and after the Closing to pay agreed portion
of liabilities, including accrued salaries, and for
working capital.
2. After Closing and upon approval by Purchaser and
Purchasers' counsel of agreements with the Democratic
Republic of Sao Tome and Principe ("Sao Tome")
$1,000,000 will be delivered to the Escrow Account on
behalf of the Company for the Benefit and release of
the Government of Sao Tome pursuant to the terms of an
Escrow Agreement.
3. $1,000,000 to the Company upon approval by Sao Tome and
execution of Production Sharing Agreement between Mobil
Oil Corporation, STPETRO, Sao Tome and the Company;
providing for a 5% royalty override to the Company.
Capital Structure: Upon Consummation of the Closing Date (defined herein), the
capital structure of the Company on a fully diluted basis
(with corresponding voting interests) will be as follows:
Purchaser 51%
Existing investors, shareholders, noteholders and existing
directors and employees ( including shares and warrants
which may be issued or granted as contemplated in the Term
Sheet) 49%*
* Subject to dilution only if the Company issues equity to
Procura Financial Consultants c.c. in connection with
settlement.
Issuance of Shares: Common Shares will be issued and delivered to the Purchaser
as follows:
1. Upon the total investment of $1,000,000 to be invested
as needed from and after the Initial Closing, the
following amounts will be issued on pro rata basis as
invested: 15%
2. Upon the investment of $1,000,000 to be paid to the
Government of Sao Tome: 15%
3. Upon the approval of the Production Sharing Agreement
an additional investment of $1,000,000: 15%
4. Purchaser within 10 day of making the final investment
for a total of $3,000,000 will receive the final 6% for
a total of 51% of the voting capital stock of the
Company on a fully diluted basis
<PAGE>
assuming the conversion of all outstanding option,
warrants and other convertible notes and securities
outstanding of the date of the issuance of the Common
Shares (including all stock and warrants to be issued
to other parties as contemplated in the Term Sheet.)
Initial
Closing
Date: The Initial Closing for issuance of the Common Shares will
be on or before April 19, 1999 unless otherwise extended by
the parties, subject only to the satisfaction of the
"Conditions to the Initial Closing" set forth in the Term
Sheet (The Initial Closing Date)
Final
Closing Date: The Final Closing Date will be upon the signing of the
Security Purchase Agreement, Registration Rights Agreement
and such instruments or documents necessary to close the
transaction but no later than 90 days from the date of other
Initial Closing Date ("The Closing Date")
Board of Directors: Upon approval by the Existing Board of Directors of the
Company of this transaction contemplated by this Term Sheet
and the issuance of Common Shares an the Initial Closing
Date (i) The Existing Board of Directors shall cause all of
the officers of Company to resign as such date, and (ii) the
Purchaser shall have the right to cause any three members of
the current Board of Directors to resign and to fill such
vacancies with three new Board Members designated by
Purchasers. On the Closing Date, the Purchaser will have the
right to cause the remaining four members of the then
current Board of Directors not designated by the Purchaser
to resign and fill such vacancies with four new Board
Members designated by Purchaser. . Existing Board And
Employees: Simultaneous with the Initial Closing Date the
Company will enter into appropriate consulting or settlement
agreement which contain an issuance of Common Stock or
warrants to purchase shares of Common Stock pursuant to
acceptable terms and conditions and seek releases when
appropriate with the following individuals. Mr. Sam L. Bass
Jr Mr. James R. Callender Mr. Richard Magar Mr. James
Griffin Mr. Robert McKnight Mr. Al Cotton Mr. Ken Waters Mr.
Tom Wilson Mr. William Beaton Mr. Nando Rita
Existing board members will be allowed to keep the shares of
stock issued for services rendered and not otherwise
<PAGE>
rescinded subject to the standard restrictive share
provision.
Employees: Effective as of the Initial Closing Date, the Company will
as part of such closing have or will provide severance
agreements for the following employees and consultants and
they will provide a general release for the benefit of the
Company.
Ms. Linda Miser
Ms. Karen Bajar
Mr. George Lablanc
Mr. Charles Briely
Mr. Gerry Graham
Mr. Ed Wilkerson
Ms. Dale Smith
Ms. Jennifer Riggs
Ms. Barbara Roth
Mr. Mark Herpin
Mr. Wade Williams
Miscellaneous: Steve Durland CPA will be paid $75,000 within 30 days of the
initial closing on the outstanding bill. The remainder of
the bill will be paid over the next six months in accordance
with attached schedule.
Mintmire & Associates will be paid %50,000 of the
outstanding bill within 30 days of the initial closing.
The remainder of the accounts payable will be reviewed and a
payment schedule set-up within 30 days of the initial
closing. The Company to provide ERHC Investment Group, Inc.,
and the Accounting firm a final copy of all ERHC/BAPCO
payables. The Existing Board will confirm that the payables
are true and correct to the best of their knowledge.
Prior Actions Taken
By the Existing Board
of Directors:
1. The Board realigned the assets in its subsidiary Bass
American Petroleum ("BAPCO") and transferred BAPCO as
realigned to Mr. Bass or his assigns in exchange for
the 4,000,000 million shares of ERHC common stock
originally issued to him or his assigns as part of the
purchase of BAPCO. Mr Bass will provide releases in
connections with the above action.
2. The Board rescinded the acquisition of the
environmental equipment from Bass World Wide Services
in exchange for the 744,000 shares of ERHC common stock
issued to Mr. Bass and agrees to returned equipment to
him or his assign. Mr. Bass will provide releases in
<PAGE>
connections with the above transaction.
3. The Board rescinded the acquisition of the Chevron
Agreement from Bass Environmental Services in exchange
for the 3,000,000 million shares of ERHC Common stock
issued to Mr. Bass or his assigns and ERHC agrees to
return the Chevron Contract to Mr. Bass or his assigns.
Mr. Bass will provide releases in connection with the
above transaction.
4. The Board placed a stop of the 200,000 shares of stock
issued to MYTEC & Associates.
5. The Board rescinded the distribution of a portion of
the 5% royalty override interest granted on February
11,1999 and did not ratify the supplement to its
counsels' retainer agreement covering a portion of the
distribution. The above parties will provide releases
in connection with the above transaction.
6. The Board rescinded (i) the conditional issuance of
3,000,000 shares of Common Stock to Bass, Griffin, and
Wilson dated June 2, 1997. The above parties will
provide releases in connection with the above
transactions; (ii) the Board rescinded the conditional
issuance granted relative to the MIII Agreement dated
July of 1997. The parties to this transaction will
provide releases in connection with the transaction;
(iii) the Board rescinded the suspension of James
Griffin from the Board.
7. The Board re-approved the issuance of 2,000,000 million
shares each of ERHC common stock to Bass, Griffin,
Noreen Wilson and Jim Callender in consideration of the
formation and legislative adoption of STPETRO and the
execution of the Mobil T.A.A. Agreement.
Conditions to
Investment: The Initial Closing Date shall be conditioned upon (A) the
execution and delivery of the standstill agreement by a
majority of the noteholders entitled to amended in favor of
the Company and the Purchaser which provides a standstill
and ending October 15, 1999 in respect to certain matters,
including but not limited to the conversion of stock,
acceleration, collection, bankruptcy or foreclosures; and
(ii) the modification of the of convertible noteholders to
modify the conversion formula of the notes to a floor of
$.25 per share to the purchase price and waiver of any and
all antidulution provisions or preemptive rights. (B) The
execution and delivery by the Company of a letter
representing and warranting as to the capital structure and
providing indemnity to the Purchaser; and (C) Resolutions of
the Existing Board of Directors approving and authorizing
<PAGE>
the transaction contemplated by this Term Sheet and all
actions required to be taken as conditions to the Initial
Closing as set forth herein.
Conditions to
Closing: The Closing Date shall be conditioned upon (A) the
negotiation and execution of mutually satisfactory
definitive investment agreements reflecting the terms
hereof, including Securities Purchase Agreement,
Registration Rights Agreement and such other instruments or
documents necessary by the Purchasers to consummate their
investment (the "Investment Documents") each containing
appropriate representations, warranties, condition,
covenants and indemnities; (B) completion by Purchasers of
their business, tax, accounting, regulatory, environmental,
legal and other due diligence review shall have been
satisfactory to the Purchasers; (C) receipt of all necessary
governmental and regulatory approval and consents if any
from third parties necessary to consummate the transactions.
In addition, the Company give the Purchasers permission to
open discussions during the due diligence period prior to
closing date with STPETRO, DRSTP, Mobil Oil, Procura, and
Shareholders.
If the Closing Date shall not occur as contemplated in this
Term Sheet, the Company shall issue to the Purchaser Common
Stock based on a $5,882,352.90 valuation of the Company as
adjusted by the Prior Action of the Board and upon which
this Term Sheet is in reliance.
Fees
and Expenses: At the Closing, the Company shall reimburse the Purchaser
for all reasonable fees and expenses incurred by each of
them in connection with their proposed investment in the
Company.
Date of Acceptance: On or before April 9, 1999
Exhibit 10.34
EXCHANGE AGREEMENT
This agreement entered herein effective on the 23rd day of April, 1999, by
and between SAM L. BASS, JR., ("BASS"), of full age of majority and currently a
resident of the State of Florida but domiciled in the State of Louisiana, with a
permanent mailing address in care of his attorney, Charles N. Wooten, Ltd., P.O.
Box 60400, Lafayette, Louisiana 70596-0400, BASS ENVIRONMENTAL SERVICES
WORLDWIDE, INC. ("BESW"), a corporation organized and existing under the laws of
the State of Louisiana, with an office at 1450 Ridge Road, Duson, Louisiana
70529 and WHITE CLOUD, INC., a corporation organized and existing under the laws
of the State of Florida, whose physical and mailing address is 265 Sunrise Ave.,
Suite 204, West Palm Beach, Florida 33480 ("WHITE CLOUD"),
WHEREAS, pursuant to an agreement dated April 9, 1997 (the "Bapco
Agreement") between ERHC and Bas, Bass sold, assigned, transferred, conveyed and
delivered to ERHC all of the issued and outstanding capital stock of BAPCO, (the
Bapco Shares) in exchange for the issuance by ERHC to BESW of 4,000,000 shares
of common stock, with a SEC Rule of 144 restriction ("First ERHC Shares"), par
value of $.0001 per share (the "Common Stock") of ERHC.
WHEREAS, from time to time after Aril 9, 1997, Bass and/or one of his
controlled entities transferred certain environmental equipment to ERHC ("the
Bass transferred Assets") in exchange for the issuance by ERHC to Bass a total
of 744,000 shares (the "Second ERHC Shares") of its SEC Rule 144 restricted
common capital stock.
WHEREAS, at some time on or after April 9, 1997, pursuant to an agreement
between ERHC and BESW, the latter assigned all of its right, title and interest
as Contractor in and to a contract to plug and abandon certain wells owned
and/or operated by Chevron U.S.A., Inc., located in the Gulf of Mexico (the
"Chevron Agreement") in exchange for 3,000,000 shares of SEC Rule 144 capital
stock of ERHC issued in the name of Bass.
WHEREAS, Bapco and/or ERHC has for valid consideration transferred many of
the assets owned by BAPCO and obtained by it from the transactions with BASS or
one or more of his controlled entities to WHITE CLOUD, free and clear of any all
indebtedness owed by BAPCO and/or ERHC to any creditors, all of which valid debt
have been assumed by ERHC.
CONSIDERATION FOR EXCHANGE
BASS and/or any of his controlled entities holding title thereto including
BESW will exchange a release and a total of 7,744.000 restricted shares of the
capital stock of ERHC for 100% of the authorized and issued capital stock of
WHITE CLOUD. The effect of this transfer will place all of the assets of WHITE
<PAGE>
RIVER (originally obtained by ERHC from Bass and/or one or more of his
controlled entities) including but not limited to the physical environmental
equipment, the Shellstead-Lee license agreement for use of a lateral drilling
tool, the Chevron Agreement, and any other assets of the corporation fully owned
by WHITE CLOUD and free and clear of all debts or encumbrances back in the name
of BASS or one of his controlled entities. The effect of the transfer by BASS to
WHITE CLOUD of the specified release and the SEC Rule 144 restricted common
capital stock in ERHC will place all of the consideration he or his controlled
entities received from the original stock transfer from ERHC in kind into the
name of WHITE CLOUD as originally received from ERHC.
NOTICES
Any notices to be given hereunder by either party to the other party may be
effected either by personal delivery in writing or by mail or fax transmission.
Mailed notices shall be addressed to the parties at the address shown in the
introductory paragraph of this Agreement, but each party may change the address
by written notice in accordance with the terms of this paragraph. Notices
delivered personally will be deemed communicated as of the actual receipt,
mailed notices will be deemed communicated as of two days after mailing. Faxed
notices shall be deemed made upon written confirmation of a receipt of the fax
at the fax number of the party to whom notice is given.
OTHER AGREEMENTS
This agreement is one of a series of agreements identified as the
Consulting Agreement, the Exchange Agreement, the Mutual Release Agreement and
the Severance Agreement. All of these agreements executed at one and the same
time, supersedes any and all agreements, either oral or written, between the
parties hereto either by BASS or one of his controlled entities and/or ERHC, and
the series of agreements as a whole contains all of the covenant and agreements
between the parties. No representations, inducements, promises, or agreements,
orally or in writing, [except those mentioned herein] or anyone acting on behalf
of any party, which are not embodied herein or in the Release and Severance
agreements mentioned herein shall be valid or binding on the Parties. Any
modification of this agreement will be effective only if the same is in writing
and signed by both parties hereto.
If any action in this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remaining provisions will
nevertheless continue in full force without being impaired or invalidated in any
way.
Any action to enforce this agreement or any of the terms thereof may be
brought in any State or Federal Court having competent jurisdiction over the
matter.
Each individual executing this agreement warrants that it and/or he has
full authority to execute the same on behalf of the party appearing herein.
<PAGE>
Thus done and signed on the date appearing next to the signature of the
parties hereto, but effective on the date first above written.
/s/ SAM L. BASS
---------------
Sam L. Bass Individually and on behalf of
Bass Environmental Services Worldwide, Inc.
(Sometimes known as Bass Environmental
Worldwide, Inc.)
as Chairman of the Board of Directors
WHITE CLOUD, INC.
By:
---------------------------------------------
(Officer) Date
Exhibit 10.35.1
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC and the Investors executed a Securities Purchase Agreement
and Registration Rights Agreement both dated October 15, 1997 under which ERHC
issued its 5.5% convertible notes due October 2002 (the "Notes), granted
warrants to purchase ERHC's common stock with an exercise date on or before
October 15, 2002 (the "Warrants") and agreed to file a Registration Statement
with the Securities and Exchange Commission ("SEC") relative to the Notes and
Warrants (the "SPA" and "RRA" respectively) ; and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the SPA, RRA the Notes and the Warrants, a copy of which letter of intent is
annexed hereto and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to theSPA, RRA, Notes and Warrant as provided in the Letter
of Intent are conditions precedent to the Initial Closing. This is due to
the fact that the Notes and Warrants have certain adjustments which may
render it impossible for ERHC to issue the requisite control interest
required under the term of the Letter of Intent. The matters contained
herein and in the Letter of Intent are confidential information not
available to the public. These matters will only be made public with a
filing by ERHC of a Form 8K within the time required from the Initial
Closing as defined in the Letter of Intent (the "Initial Closing"), the
date on which an 8K event takes place. Accordingly, the Investors expressly
agree not to disclose, use or trade on this information either directly or
indirectly in any manner until such time as the Form 8K reporting this
Letter of Intent is filed with the SEC.
2. Amendments and Modifications. The SPA provides that upon the vote of 66
2/3% of the Investors under such agreement, any of the terms and conditions
of the SPA, RRA, the Notes and the Warrants may be amended or modified,
<PAGE>
provided such amendment or modification is in writing and executed by not
less than 66 2/3% of the Investors. In such event, the amendment and
modification will be effective as to all of the Investors under such
agreement. In the event that 66 2/3% of the Investors under the SPA execute
this Agreement, and except as otherwise specifically provided for herein,
from the date of the Initial Closing under the Letter of Intent, it is
agreed that the following terms and conditions are amended and modified:
A. The adjustment provisions to the terms of the Notes or Warrants, if
any, contained in the SPA are deleted.
B. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph
1(b) is amended to permit, in addition to the other methods
of payments contained therein, for the payment of interest
in the form of shares in common stock in an amount equal to
the amount of interest due divided by the Conversion Price.
2. In addition to the amendment to paragraph 1(b), the
following will be added to such paragraph: "Notwithstanding
any other provision contained in this paragraph 1(b),
interest is waived from the date of the Initial Closing and
thereafter until October 15, 1999.
3. The provisions for voluntary conversion contained in
paragraph 5(a) is amended to permit, in addition to
conversion of all or a portion of the Notes, for the
conversion of outstanding interest and penalties, if any,
into Common Stock at the time a voluntary conversion of
principal is made for the amount of interest due on the
Notes.
4. The conversion formula in paragraph 5(c) of the Notes is
deleted in its entirety and the following substituted in its
place, "Subject to the Adjustments from time to time as
provided in Section 5(d) below, the "Conversion Price" shall
mean $0.25.
5. The adjustments of Conversion Price in paragraph 5(d) of the
Notes are deleted in their entirety and the text set forth
in Exhibit B annexed hereto and made a part hereof
substituted in its place:
C. The Warrants are amended and modified as follows:
1. The antidilution provisions in paragraphs 2 and 3 of the
Warrants are deleted in their entirety and the text set
forth in Exhibit C substituted in its place.
<PAGE>
D. The RRA is amended and modified as follows:
1. ARTICLE III-LIQUIDATED DAMAGES. Notwithstanding any other
provision contained in this paragraph, the penalty and/or
liquidated damage set forth in this paragraph for failing to
have ERHC's Registration Statement become effective during a
specified period of time is waived from the date of the
Initial Closing and thereafter until October 15, 1999.
E. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until
October 15, 1999 (i) not to convert all or any part of the
Notes, (ii) not to declare a default or seek acceleration of
any payments under the Notes, (iii) not to commence any
collections actions or proceedings under the Notes, (iv) not
to commence any foreclosure or bankruptcy actions under the
Notes, and (v) not to declare any Event of Default or
commence any arbitration action under the SPA, RRA, Notes or
Warrants.
2. From the date of execution of this Agreement, to waive all
rights under any adjustments, antidilution provisions or
preemptive rights previously granted in the SPA, Notes,
Warrants, or RRA or provided by these amendments and
modification (i) relative to the transaction contemplated in
the Letter of Intent or (ii) relative to any settlement with
Procura Financial entered into by the Company upon
commercially reasonable terms to complete the assignment of
all rights, title and interest in Sao Tome in favor of the
Company.
3. Through the Initial Closing, to accept shares of Common
Stock for all accrued and unpaid interest and penalties on
the Notes as of the Initial Closing, which shares shall be
delivered within ten (10) days of the Closing Date.
4. From the date of execution of this Agreement and thereafter
until October 15, 1999, to vote with the Company in the
event that any third party, other than each of the other
note and warrant holders listed as a Selling Shareholder in
Amendment No. 3 to the Form S- 1 filed with the SEC,
commences any bankruptcy or foreclosure action against the
Company or any of its subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
<PAGE>
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the SPA, RRA,
Notes and Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgment Rule from inception through the
Initial Closing Date.
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the Investors set forth in Schedule A from the date ERHC receives
signatures from not less than 66 2/3% of such Investors as to paragraph 2
and from the date of execution by each Investor as to such Investor as to
the other provisions of this Agreement.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the SPA, Notes, Warrants and RRA shall remain in full
force and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
<PAGE>
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
-------------------------
James A. Griffin, Secretary
INVESTOR:
Cranshire Capital, Ltd
Execution Date: April 20, 1999 By: /s/ MITCHELL P. KOPIN *
----------------------
Signature and Title
Print Name: Mitchell P. Kopin
------------------------------
Print Title: President, Dowsview Capital
The General Partner
* Other than the $50,000 submitted for Conversion.
Execution Date: April 23, 1999 Elara
Talisman Capital Opportunity Fund Ltd
By: /s/ BRIAN LADIN
-------------------
Brian Ladin, Vice President
(This Agreement shall be null and void in the event TCOF
does not receive (a) two board seats; and (b) one million
ten year warrants struck at $.25 per the letter dated
4/20/99. By and between Talisman Capital, Noreen Wilson and
Howard Talks. BDL 4/23/99
Execution Date: April 19, 1999 JMG Capital Partners, LP
By: /s/ JONATHAN GLASS
----------------------
Jonathan Glass, Pres. Of GP
Execution Date: April 20, 1999 By: /s/GREGORY MURPHY
-----------------
Gregory W. Murphy, as agent for
Keyway Investments, Ltd
Execution Date: April 21, 1999 By: /s/JEFF PARKER
---------------
Jeff Parker, General Partner
Execution Date: April 19, 1999 Triton Capital Investments, Ltd
By: /s/ JONATHAN GLASS
Jonathan Glass, Vice Pres
[Signature Page 1997 Investor Private Placement]
<PAGE>
SCHEDULE A
BANQUE EDOUARD CONSTANT, S.A.
BANQUE FRANCK, S.A
CRANSHIRE CAPITAL, L.P.
EDJ LIMITED
ELARA, LTD.
JMG CAPITAL PARTNERS, L.P.
KEYWAY INVESTMENTS, LTD.
LEGION FUND, LTD.
PORTER PARTNERS, L.P.
TRITON CAPITAL INVESTMENTS, LTD.
<PAGE>
EXHIBIT B
Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section .
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section (i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the
Company shall at any time or from time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in shares of Common Stock,
then, and in each event, the applicable Conversion Price in effect immediately
prior to such event shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying, as applicable, the applicable Conversion
Price then in effect by a fraction;
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of shares
of Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holder of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section (iii) with respect
to the rights of the holders of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or different
<PAGE>
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided
for in Section (v)), then, and in each event, an appropriate revision to the
Conversion Price shall by made and provisions shall be made (by adjustments of
the Conversion Price of otherwise) so that the holder of this Note shall have
the right thereafter to convert such Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section (i), (ii) and (iii), or a reclassification, exchange or substitution of
shares provided for in Section (iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price shall be made and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (v) with respect to the rights of
the holders of this Note after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (v) (including any
adjustment in the applicable Conversion Ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Note)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
<PAGE>
EXHIBIT C
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof, effect a stock split of the
outstanding Common Stock, the applicable Exercise Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the date hereof, combine the
outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification,
<PAGE>
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
Exhibit 10.35.2
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC issued its 12.0% convertible notes due on the earlier of the
date upon which the Company accepted the first take down under the Kingsbridge
Equity Line of Credit or January 1999 (the "Notes) and granted warrants to
purchase ERHC's common stock with an exercise date on or before April 12, 2001
(the "Warrants"); and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the Notes and the Warrants, a copy of which letter of intent is annexed hereto
and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the Notes and Warrants as provided in the Letter of Intent
are conditions precedent to the Initial Closing. This is due to the fact
that the Notes and Warrants have certain adjustments which may render it
impossible for ERHC to issue the requisite control interest required under
the term of the Letter of Intent. The matters contained herein and in the
Letter of Intent are confidential information not available to the public.
These matters will only be made public with a filing by ERHC of a Form 8K
within the time required from the Initial Closing as defined in the Letter
of Intent (the "Initial Closing"), the date on which an 8K event takes
place. Accordingly, the Investors expressly agree not to disclose, use or
trade on this information either directly or indirectly in any manner until
such time as the Form 8K reporting this Letter of Intent is filed with the
SEC.
2. Amendments and Modifications. From the date of the Initial Closing under
the Letter of Intent, it is agreed that the following terms and conditions
are amended and modified:
A. The Notes are amended and modified as follows:
<PAGE>
1. The Maturity Date of the Notes set forth in paragraph 1(a)
is amended to be December 31, 1999.
2. The provision for payment of interest contained in paragraph
1(b) is amended to permit, in addition to the other methods
of payment contained therein, for the payment of interest in
the form of shares in common stock in an amount equal to the
amount of interest due divided by the Conversion Price.
3. In addition to the amendment to paragraph 1(b), the
following will be added to such paragraph: "Notwithstanding
any other provision contained in this paragraph 1(b),
interest is waived from the date of the Initial Closing and
thereafter until October 15, 1999.
4. The provisions for voluntary conversion contained in
paragraph 4(a) is amended to permit, in addition to
conversion of all or a portion of the Notes, for the
conversion of outstanding interest and penalties, if any,
into Common Stock at the time a voluntary conversion of
principal is made for the amount of interest due on the
Notes.
5. The Conversion Price in paragraph 4(b) of the Notes is
amended to be $0.25.
C. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until
October 15, 1999 (i) not to convert all or any part of the
Notes, (ii) not to declare a default or seek acceleration of
any payments under the Notes, (iii) not to commence any
collections actions or proceedings under the Notes (iv) not
to commence any foreclosure or bankruptcy actions under the
Notes and (v) not to declare any Event of Default or
commence any arbitration action under the Notes or Warrants.
2. From the date of execution of this Agreement, to waive all
rights under any adjustments, antidilution provisions or
preemptive rights previously granted in the Notes or
Warrants or provided by these amendments and modifications
(i) relative to the transaction contemplated in the Letter
of Intent or (ii) relative to any settlement with Procura
Financial entered into by the Company upon commercially
reasonable terms to complete the assignment of rights, title
and interest in Sao Tome in favor of the Company.
<PAGE>
3. Through the Initial Closing, to accept shares of Common
Stock for all accrued and unpaid interest and penalties on
the Notes as of the Initial Closing, which shares shall be
delivered within ten (10) days of the Closing Date.
4. From the date of execution of this Agreement and thereafter
until October 15, 1999, to vote with the Company in the
event that any third party, other than each of the other
note and warrant holders listed as a Selling Shareholder in
Amendment No. 3 to the Form S- 1 filed with the SEC,
commences any bankruptcy or foreclosure action against the
Company or any of its subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the Notes and
Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgement Rule from inception through the
Initial Closing Date.
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the each Investor set forth in Schedule A individually from the date of
execution by each Investor. 9. Binding Obligations. The obligations of the
parties set forth herein shall be binding upon and inure to the benefit of
each party's heirs, executors, administrators, beneficiaries, transferees,
successors and assigns.
<PAGE>
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the Notes and Warrants shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
------------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: 4/20 1999 /s/ ROBERT BARON
----------------
Signature and Title
Print Name: Robert Baron
Execution Date: April 22, 1999 /s/ EUGENE FRIEDMAN,
---------------------
Signature and Title
Print Name: Eugene Friedman
Print Title: Trustee
Execution Date: 4/23 1999 /s/ DIONE HOM
-------------
Signature and Title
Print Name: Dione Hom
Execution Date: April 23, 1999 /s/ STANLEY KAFL
---------------
Signature and Title
Print Name: Stanley Kafl
Execution Date: 1999 /s/ HOWARD TALKS
----------------
Signature and Title
Print Name: Howard Talks & Carol Ha JTWROS
Execution Date: April 22, 1999 /s/ DAVID WARREN
----------------
Signature and Title
Print Name: David Warren
Print Title: Investor
<PAGE>
Execution Date: April 22, 1999 /s/ STEPHEN J. WARRER
---------------------
Signature and Title
Print Name: Stephen J. Warrer
Print Title: Trustee
[Signature Page April 1998 Financing]
<PAGE>
SCHEDULE A
ROBERT AND JESSICA BARON
FRANK FERRANTE
ROSEMARY FRIEDMAN TRUST
DIANE HOM
STANLEY KATZ
HOWARD TALKS AND CAROL HALL, JTWROS
KENNETH TICE
STEPHEN WARNER
DAVID WARREN
Exhibit 10.35.3
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation,
with offices at 1686 General Mouton Avenue, Lafayette, LA 70508 and the
Investors or their permitted assigns whose names are included in Schedule A
annexed hereto and made a part hereof (collectively the "Investors" or
individually, the "Investor").
WHEREAS, on June 1, 1998 ERHC granted warrants to purchase ERHC's
common stock with an exercise date on or before fourteen (14) months from the
effective date of a Registration Statement covering the warrants, which warrants
also contained rights for the holders to be granted additional warrants in
certain circumstances (the "Warrants"); and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the Warrants, a copy of which letter of intent is annexed hereto and made a part
hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding
and agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the Warrants as provided in the Letter of Intent are
conditions precedent to the Initial Closing. This is due to the fact
that the Warrants have certain adjustments which may render it
impossible for ERHC to issue the requisite control interest required
under the term of the Letter of Intent. The matters contained herein
and in the Letter of Intent are confidential information not available
to the public. These matters will only be made public with a filing by
ERHC of a Form 8K within the time required from the Initial Closing as
defined in the Letter of Intent (the "Initial Closing"), the date on
which an 8K event takes place. Accordingly, the Investors expressly
agree not to disclose, use or trade on this information either
directly or indirectly in any manner until such time as the Form 8K
reporting this Letter of Intent is filed with the SEC.
2. Amendments and Modifications. From the date of the Initial Closing
under the Letter of Intent, it is agreed that the following terms and
conditions are amended and modified:
A. The Warrants are amended and modified as follows:
<PAGE>
1. The antidilution provisions in Article III, paragraph 3.2
and 3.4 of the Warrants are deleted in their entirety and
the text set forth in Exhibit B substituted in their place.
2. Article III, paragraph 3.3 is deleted in its entirety.
B. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of execution of this Agreement, to waive all
rights under any adjustments, antidilution provisions or
preemptive rights previously granted in the Warrants or
provided by these amendments and modification (i) relative
to the transaction contemplated in the Letter of Intent or
(ii) relative to any settlement with Procura Financial
entered into by the Company upon commercially reasonable
terms to complete the assignment of all rights, title and
interest in Sao Tome in favor of the Company.
2. From the date of execution of this Agreement and thereafter
until October 15, 1999, to vote with the Company in the
event that any third party, other than each of the other
note and warrant holders listed as a Selling Shareholder in
Amendment No. 3 to the Form S- 1 filed with the SEC,
commences any bankruptcy or foreclosure action against the
Company or any of its subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the Warrants
remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgement Rule from inception through the
Initial Closing Date.
<PAGE>
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the each Investor set forth in Schedule A individually from the date of
execution by each Investor.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the Warrants shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
-------------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: April 23, 1999 Corporate Builders
By: /s/ EARNEST D. CHU
-----------------------
Signature and Title
Print Name: Earnest D. Chu
Print Title: President
Execution Date: 1999 /s/ HOWARD TALKS
-----------------
Signature and Title
Print Name: Howard Talks
Execution Date: 1999 Legal Computer Technology, Inc.
By: /s/ DONALD F. MINTMIRE
---------------------------
Signature and Title
Print Name: Donald F. Mintmire
Print Title: President
[Signature Page First June 1998 Financing]
<PAGE>
SCHEDULE A
CORPORATE BUILDERS, INC.
LEGAL COMPUTER TECHNOLOGY, INC.
HOWARD TALKS
<PAGE>
EXHIBIT B
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company
shall at any time or from time to time after the date hereof, effect a stock
split of the outstanding Common Stock, the applicable Exercise Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the date hereof, combine
the outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification,
<PAGE>
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
Exhibit 10.35.4
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC issued its 12.0% convertible notes due on the earlier of the
date upon which the Company received debt or equity financing in excess of
$4,000,000 or December 31, 1999 (the "Notes) and granted warrants to purchase
ERHC's common stock with an exercise date on or before June 18, 2002 (the
"Warrants"); and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the Notes and the Warrants, a copy of which letter of intent is annexed hereto
and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the Notes and Warrants as provided in the Letter of Intent
are conditions precedent to the Initial Closing. This is due to the fact
that the Notes and Warrants have certain adjustments which may render it
impossible for ERHC to issue the requisite control interest required under
the term of the Letter of Intent. The matters contained herein and in the
Letter of Intent are confidential information not available to the public.
These matters will only be made public with a filing by ERHC of a Form 8K
within the time required from the Initial Closing as defined in the Letter
of Intent (the "Initial Closing"), the date on which an 8K event takes
place. Accordingly, the Investors expressly agree not to disclose, use or
trade on this information either directly or indirectly in any manner until
such time as the Form 8K reporting this Letter of Intent is filed with the
SEC.
2. Amendments and Modifications. From the date of the Initial Closing under
the Letter of Intent, it is agreed that the following terms and conditions
are amended and modified:
<PAGE>
A. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph 1(b)
is deleted and in its place shall read "Interest on the unpaid
balance of this Note at the rate of twelve percent (12.0%) per
annum shall accrue from the date hereof and shall be payable on
the earlier of (i) the Maturity Date or (ii) the Conversion Date
as to all or that portion of the Note converted in cash or in the
form of shares in common stock in an amount equal to the amount
of interest due divided by the Conversion Price. The Company may
elect to make accrued interest payments at any time in the form
of shares in common stock in an amount equal to the amount of
interest due to date divided by the Conversion Price. In such
event, only interest which accrues from such election payment
shall be payable on any subsequent election date or on maturity
or conversion."
2. In addition to the amendment to paragraph 1(b), the following
will be added to such paragraph: "Notwithstanding any other
provision contained in this paragraph 1(b), interest is waived
from the date of the Initial Closing and thereafter until October
15, 1999.
3. The provisions for voluntary conversion contained in paragraph
4(a) is amended to permit, in addition to conversion of all or a
portion of the Notes, for the conversion of outstanding interest
and penalties, if any, into Common Stock at the time a voluntary
conversion of principal is made for the amount of interest due on
the Notes.
4. The Conversion Price in paragraph 4(b) of the Notes is amended to
be $0.25.
C. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until October
15, 1999 (i) not to convert all or any part of the Notes, (ii)
not to declare a default or seek acceleration of any payments
under the Notes, (iii) not to commence any collections actions or
proceedings under the Notes (iv) not to commence any foreclosure
or bankruptcy actions under the Notes and (v) not to declare any
Event of Default or commence any arbitration action under the
Notes or Warrants.
2. From the date of execution of this Agreement, to waive all rights
under any adjustments, antidilution provisions or preemptive
rights previously granted in the Notes or Warrants or provided by
these amendments and modifications (i) relative to the
<PAGE>
transaction contemplated in the Letter of Intent or (ii) relative
to any settlement with Procura Financial entered into by the
Company upon commercially reasonable to complete the assignment
of all rights, title and interest in Sao Tome in favor of the
Company.
3. Through the Initial Closing, to accept shares of Common Stock for
all accrued and unpaid interest and penalties on the Notes as of
the Initial Closing, which shares shall be delivered within ten
(10) days of the Closing Date.
4. In consideration for the reduction in the Conversion Price of the
Notes, each Investor waives any and all claims relative to
additional warrants which may or may not have been required to be
granted under the terms of the Term Sheet for this offering.
5. From the date of execution of this Agreement and thereafter until
October 15, 1999, to vote with the Company in the event that any
third party, other than each of the other note and warrant
holders listed as a Selling Shareholder in Amendment No. 3 to the
Form S- 1 filed with the SEC, commences any bankruptcy or
foreclosure action against the Company or any of its subsidiaries
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the Notes and
Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgement Rule from inception through the
Initial Closing Date.
<PAGE>
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the each Investor set forth in Schedule A individually from the date of
execution by each Investor.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the Notes and Warrants shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
-------------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: April 21, 1999 By: /s/ AZRIEL NAGAR
--------------------
Signature and Title
Print Name: Azriel Nagar
Execution Date: May 5, 1999 By: /s/ EDWARD REHQUIN
----------------------
Signature and Title
Print Name: Edward Rehquin
Print Title: President
Execution Date: April 22, 1999 By: /s/ JOSEPH GRIFFIN SPANO
----------------------------
Signature and Title
Print Name: Joseph Griffin Spano
Execution Date: , 1999 By: /s/ DAVID B. THORNBURGH
----------------------------
Signature and Title
Print Name: David B. Thornburgh MD
Print Title: Trustee
<PAGE>
Execution Date: 4-23 , 1999 By: /s/ DAVID B. THORNBURGH
----------------------------
Signature and Title
Print Name: David B. Thornburgh MD
Print Title: Trustee
[Signature Page Second 1998 Financing]
<PAGE>
SCHEDULE A
AZRIEL NAGAR
EDWARD R. ROLQUIN
JOSEPH SPANO AND VALERIA SPANO
DAVID B. THORNBURGH
DAVID B. THORNBURGH FAMILY TRUST
Exhibit 10.35.5
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC and the Investors executed a Securities Purchase Agreement
and Registration Rights Agreement both dated June 24, 1998 under which ERHC
issued its 5.5% convertible notes due June 23, 2000 (the "Notes), granted
warrants to purchase ERHC's common stock with an exercise date on or before June
23, 2003 (the "Warrants") and agreed to file a Registration Statement with the
Securities and Exchange Commission ("SEC") relative to the Notes and Warrants
(the "SPA" and "RRA" respectively) ; and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the SPA, RRA the Notes and the Warrants, a copy of which letter of intent is
annexed hereto and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the SPA, RRA, Notes and Warrant as provided in the Letter
of Intent are conditions precedent to the Initial Closing. This is due to
the fact that the Notes and Warrants have certain adjustments which may
render it impossible for ERHC to issue the requisite control interest
required under the term of the Letter of Intent. The matters contained
herein and in the Letter of Intent are confidential information not
available to the public. These matters will only be made public with a
filing by ERHC of a Form 8K within the time required from the Initial
Closing as defined in the Letter of Intent (the "Initial Closing"), the
date on which an 8K event takes place. Accordingly, the Investors expressly
agree not to disclose, use or trade on this information either directly or
indirectly in any manner until such time as the Form 8K reporting this
Letter of Intent is filed with the SEC.
2. Amendments and Modifications. The SPA provides that upon the vote of 66
2/3% of the Investors under such agreement, any of the terms and conditions
of the SPA, RRA, the Notes and the Warrants may be amended or modified,
<PAGE>
provided such amendment or modification is in writing and executed by not
less than 66 2/3% of the Investors. In such event, the amendment and
modification will be effective as to all of the Investors under such
agreement. In the event that 66 2/3% of the Investors under the SPA execute
this Agreement, and except as otherwise specifically provided for herein,
from the date of the Initial Closing under the Letter of Intent, it is
agreed that the following terms and conditions are amended and modified:
A. The adjustment provisions to the terms of the Notes or Warrants, if
any, contained in the SPA are deleted.
B. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph 1(b)
is amended to permit the payment of interest in the form of
shares in common stock in an amount equal to the amount of
interest due divided by the Conversion Price.
2. In addition to the amendment to paragraph 1(b), the following
will be added to such paragraph: "Notwithstanding any other
provision contained in this paragraph 1(b), interest is waived
from the date of the Initial Closing and thereafter until October
15, 1999.
3. The provisions for voluntary conversion contained in paragraph
5(a) is amended to permit, in addition to conversion of all or a
portion of the Notes, for the conversion of outstanding interest
amd penalties, if any, into Common Stock at the time a voluntary
conversion of principal is made for the amount of interest due on
the Notes.
4. The conversion formula in paragraph 5(c) of the Notes is deleted
in its entirety and the following substituted in its place,
"Subject to the Adjustments from time to time as provided in
Section 5(d) below, the "Conversion Price" shall mean $0.25.
5. The adjustments of Conversion Price in paragraph 5(d) of the
Notes are deleted in their entirety and the text set forth in
Exhibit B annexed hereto and made a part hereof substituted in
its place:
C. The Warrants are amended and modified as follows:
1. The antidilution provisions in paragraphs 2 and 3 of the Warrants
are deleted in their entirety and the text set forth in Exhibit C
substituted in its place.
<PAGE>
D. The RRA is amended and modified to add the following subparagraph:
1. ARTICLE 2, Paragraph 2.2(a) - "(vii) Notwithstanding any other
provision contained in this subparagraph (a) , the penalty and/or
liquidated damage set forth in this paragraph for failing to have
ERHC's Registration Statement become effective during a specified
period of time is waived from the date of the Initial Closing and
thereafter UNTIL October 15, 1999."
E. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until October
15, 1999 (i) not to convert all or any part of the Notes, (ii)
not to declare a default or seek acceleration of any payments
under the Notes, (iii) not to commence any collections actions or
proceedings under the Notes, (iv) not to commence any foreclosure
or bankruptcy actions under the Notes, and (v) not to declare any
Event of Default or commence any arbitration action under the
SPA, RRA, Notes or Warrants.
2. From the date of execution of this Agreement, to waive all rights
under any adjustments, antidilution provisions or preemptive
rights previously granted in the SPA, Notes, Warrants, or RRA or
provided by these amendments and modifications (i) relative to
the transaction contemplated in the Letter of Intent or (ii)
relative to any settlement with Procura Financial entered into by
the Company upon commercially reasonable terms to complete the
assignment of all rights, title and interest in Sao Tome in favor
of the Company.
3. Through the Initial Closing, to accept shares of Common Stock for
all accrued and unpaid interest and penalties on the Notes as of
the Initial Closing, which shares shall be delivered within ten
(10) days of the Closing Date.
4. From the date of execution of this Agreement and thereafter until
October 15, 1999, to vote with the Company in the event that any
third party, other than each of the other note and warrant
holders listed as a Selling Shareholder in Amendment No. 3 to the
Form S- 1 filed with the SEC, commences any bankruptcy or
foreclosure action against the Company or any of its
subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
<PAGE>
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the SPA, RRA,
Notes and Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgment Rule from inception through the
Initial Closing Date.
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the Investors set forth in Schedule A from the date ERHC receives
signatures from not less than 66 2/3% of such Investors as to paragraph 2
and from the date of execution by each Investor as to such Investor as to
the other provisions of this Agreement.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the SPA, Notes, Warrants and RRA shall remain in full
force and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
<PAGE>
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
-------------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: April 20, 1999 By Global Capital Advisors Ltd
The Funds Investment Advisor
By: /s/ LEWIS N. LESTOR
------------------------
Signature and Title
Print Name: Lewis N. Lestor
Print Title: President & Sr.Managing Director
[Signature Page Third June 1998 Financing]
<PAGE>
SCHEDULE A
JOSEPH CHARLES & ASSOCIATES
THE INTERCONTINENTAL HOLING COMPANY
GCA STRATEGIC INVESTMENT FUND LIMITED
(Permittee Assignee of
ProFutures Special Equities Fund L.P.)
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EXHIBIT B
Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section .
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section (i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Conversion Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Conversion Price then in
effect by a fraction;
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holder of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section (iii) with respect
to the rights of the holders of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or different
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number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided
for in Section (v)), then, and in each event, an appropriate revision to the
Conversion Price shall by made and provisions shall be made (by adjustments of
the Conversion Price of otherwise) so that the holder of this Note shall have
the right thereafter to convert such Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section (i), (ii) and (iii), or a reclassification, exchange or substitution of
shares provided for in Section (iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price shall be made and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (v) with respect to the rights of
the holders of this Note after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (v) (including any
adjustment in the applicable Conversion Ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Note)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
<PAGE>
EXHIBIT C
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof, effect a stock split of the
outstanding Common Stock, the applicable Exercise Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the date hereof, combine the
outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different
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number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
Exhibit 10.35.6
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC and the Investors executed a Securities Purchase Agreement
and Registration Rights Agreement at three (3) closings in July and August 1998
under which ERHC issued its 8.0% convertible notes due July 29, 2000, August 4,
2000 and August 19, 2000 (the "Notes), ERHC and J.P. Carey executed Warrant
Agreements for each of the three (3) closings (the "WA") under which ERHC
granted J.P. Carey warrants to purchase ERHC's common stock with exercise dates
on or before July 28, 2003, August 3, 2003 and August 18, 2003 (the "Warrants")
and ERHC agreed to file a Registration Statement with the Securities and
Exchange Commission ("SEC") relative to the Notes and Warrants (the "SPA" and
"RRA" respectively) ; and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the SPA, WA, RRA the Notes and the Warrants, a copy of which letter of intent is
annexed hereto and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the SPA, WA, RRA, Notes and Warrant as provided in the
Letter of Intent are conditions precedent to the Initial Closing. This is
due to the fact that the Notes and Warrants have certain adjustments which
may render it impossible for ERHC to issue the requisite control interest
required under the term of the Letter of Intent. The matters contained
herein and in the Letter of Intent are confidential information not
available to the public. These matters will only be made public with a
filing by ERHC of a Form 8K within the time required from the Initial
Closing as defined in the Letter of Intent (the "Initial Closing"), the
date on which an 8K event takes place. Accordingly, the Investors expressly
agree not to disclose, use or trade on this information either directly or
indirectly in any manner until such time as the Form 8K reporting this
Letter of Intent is filed with the SEC.
<PAGE>
2. Amendments and Modifications. The SPA provides that upon the vote of 66
2/3% of the Investors under such agreement, any of the terms and conditions
of the SPA, WA, RRA, the Notes and the Warrants may be amended or modified,
provided such amendment or modification is in writing and executed by not
less than 66 2/3% of the Investors. In such event, the amendment and
modification will be effective as to all of the Investors under such
agreement. In the event that 66 2/3% of the Investors under the SPA execute
this Agreement, and except as otherwise specifically provided for herein,
from the date of the Initial Closing under the Letter of Intent, it is
agreed that the following terms and conditions are amended and modified:
A. The adjustment provisions to the terms of the Notes or Warrants, if
any, contained in the SPA are deleted.
B. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph 1(b)
is amended to permit, in addition to the other methods of payment
contained therein, for the payment of interest in the form of
shares in common stock in an amount equal to the amount of
interest due divided by the Conversion Price.
2. In addition to the amendment to paragraph 1(b), the following
will be added to such paragraph: "Notwithstanding any other
provision contained in this paragraph 1(b), interest is waived
from the date of the Initial Closing and thereafter until October
15, 1999.
3. The provisions for voluntary conversion contained in paragraph
5(a) is amended to permit, in addition to conversion of all or a
portion of the Notes, for the conversion of outstanding interest
and penalties, if any, into Common Stock at the time a voluntary
conversion of principal is made for the amount of interest due on
the Notes.
4. The conversion formula in paragraph 5(c) of the Notes is deleted
in its entirety and the following substituted in its place,
"Subject to the Adjustments from time to time as provided in
Section 5(d) below, the "Conversion Price" shall mean $0.25.
5. The adjustments of Conversion Price in paragraph 5(d) of the
Notes are deleted in their entirety and the text set forth in
Exhibit B annexed hereto and made a part hereof substituted in
its place:
C. The Warrant Agreements are amended and modified as follows:
<PAGE>
1. The antidilution provisions in paragraph 7 of the Warrant
Agreements are deleted in their entirety and the text set forth
in Exhibit C substituted in its place.
D. The RRA is amended and modified to add the following subparagraph:
1. ARTICLE 2, Paragraph 2.2(a) - "(vii) Notwithstanding any other
provision contained in this subparagraph (a) , the penalty and/or
liquidated damage set forth in this paragraph for failing to have
ERHC's Registration Statement become effective during a specified
period of time is waived from the date of the Initial Closing and
thereafter until October 15, 1999."
E. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until October
15, 1999 (i) not to convert all or any part of the Notes, (ii)
not to declare a default or seek acceleration of any payments
under the Notes, (iii) not to commence any collections actions or
proceedings under the Notes, (iv) not to commence any foreclosure
or bankruptcy actions under the Notes, and (v) not to declare any
Event of Default or commence any arbitration actions under the
SPA, WA, RRA, Notes or Warrants.
2. From the date of execution of this Agreement, to waive all rights
under any adjustments, antidilution provisions or preemptive
rights previously granted in the SPA, WA, Notes, Warrants, or RRA
or provided by these amendments and modifications (i) relative to
the transaction contemplated in the Letter of Intent or (ii)
relative to any settlement with Procura Financial entered into by
the Company upon commercially reasonable terms to complete the
assignment of all rights, title and interest in Sao Tome in favor
of the Company.
3. Through the Initial Closing, to accept shares of Common Stock for
all accrued and unpaid interest and penalties on the Notes as of
the Initial Closing, which shares shall be delivered within ten
(10) days of the Closing Date.
4. From the date of execution of this Agreement and thereafter until
October 15, 1999, to vote with the Company in the event that any
third party, other than each of the other note and warrant
holders listed as a Selling Shareholder in Amendment No. 3 to the
Form S- 1 filed with the SEC, commences any bankruptcy or
foreclosure action against the Company or any of its
subsidiaries.
<PAGE>
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the SPA, WA, RRA,
Notes and Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgment Rule from inception through the
Initial Closing Date.
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the Investors set forth in Schedule A from the date ERHC receives
signatures from not less than 66 2/3% of such Investors as to paragraph 2
and from the date of execution by each Investor as to such Investor as to
the other provisions of this Agreement.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the SPA, WA, Notes, Warrants and RRA shall remain in
full force and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
<PAGE>
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
By: /s/ JAMES A.GRIFFIN
------------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: April 22, 1999 Atlantis Capital Fund Ltd
By: /s/ MARK VALENTINE
--------------------
Signature and Title
Print Name: Mark Valentine
Print Title: Agent
Standstill on: $100,000
Execution Date: , 1999 By: /s/ SANDRO GRIMALDI
---------------------
Signature and Title
Print Name: Sandro Grimaldi
Execution Date: , 1999 By: /s/ MOHAMMED KHLIFA
---------------------
Signature and Title
Print Name: Mohammed Khlifa
for $460,000 of unconverted debenture
[Signature Page July/August 1998 Funding]
<PAGE>
SCHEDULE A
ATLANTIS CAPITOL FUND, LTD
ATLAS CAPITAL FUND, LTD.
OSCAR BRITO
CORRELLUS INTERNATIONAL, LTD.
SANDRO GRIMALDI
HOLDEN HOLDING, LTD.
PRIMECAP MANAGEMENT GROUP, LTD.
MOHAMMED KHALIFA
GPS AMERICA FUND, LTD.
J. P. CAREY, INC.
<PAGE>
EXHIBIT B
Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section .
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section (i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Conversion Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Conversion Price then in
effect by a fraction;
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holder of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section (iii) with respect
to the rights of the holders of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or different
<PAGE>
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided
for in Section (v)), then, and in each event, an appropriate revision to the
Conversion Price shall by made and provisions shall be made (by adjustments of
the Conversion Price of otherwise) so that the holder of this Note shall have
the right thereafter to convert such Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section (i), (ii) and (iii), or a reclassification, exchange or substitution of
shares provided for in Section (iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price shall be made and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (v) with respect to the rights of
the holders of this Note after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (v) (including any
adjustment in the applicable Conversion Ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Note)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
<PAGE>
EXHIBIT C
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof, effect a stock split of the
outstanding Common Stock, the applicable Exercise Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the date hereof, combine the
outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification,
<PAGE>
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
Exhibit 10.35.7
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, ERHC and the Investors executed a Securities Purchase Agreement
dated September 26, 1998 under which ERHC issued its 20.0% convertible notes due
October 26, 2000 (the "Notes), executed a warrant agreement ("WA") under which
it granted "A" and "B" warrants to purchase ERHC's common stock with exercise
dates on or before October 26, 2008 (the "Warrants") and agreed to file a
Registration Statement with the Securities and Exchange Commission ("SEC")
relative to the Notes and Warrants (the "SPA") ; and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the SPA, WA, the Notes and the Warrants, a copy of which letter of intent is
annexed hereto and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the SPA, WA, Notes and Warrant as provided in the Letter
of Intent are conditions precedent to the Initial Closing. This is due to
the fact that the Notes and Warrants have certain adjustments which may
render it impossible for ERHC to issue the requisite control interest
required under the term of the Letter of Intent. The matters contained
herein and in the Letter of Intent are confidential information not
available to the public. These matters will only be made public with a
filing by ERHC of a Form 8K within time required from the Initial Closing
as defined in the Letter of Intent (the "Initial Closing"), the date on
which an 8K event takes place. Accordingly, the Investors expressly agree
not to disclose, use or trade on this information either directly or
indirectly in any manner until such time as the Form 8K reporting this
Letter of Intent is filed with the SEC.
2. Amendments and Modifications. The SPA provides that upon the vote of 66
2/3% of the Investors under such agreement, any of the terms and conditions
of the SPA, WA, the Notes and the Warrants may be amended or modified,
provided such amendment or modification is in writing and executed
<PAGE>
by not less than 66 2/3% of the Investors. In such event, the amendment and
modification will be effective as to all of the Investors under such
agreement. In the event that 66 2/3% of the Investors under the SPA execute
this Agreement, and except as otherwise specifically provided for herein,
from the date of the Initial Closing under the Letter of Intent, it is
agreed that the following terms and conditions are amended and modified:
A. The adjustment provisions to the terms of the Notes, Warrant or WA, if
any, contained in the SPA are deleted.
B. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph 1(b)
is amended to permit, in addition to the other methods of payment
contained therein, for the payment of interest in the form of
shares in common stock in an amount equal to the amount of
interest due divided by the Conversion Price at the election of
the Company.
2. In addition to the amendment to paragraph 1(b), the following
will be added to such paragraph: "Notwithstanding any other
provision contained in this paragraph 1(b), interest is waived
from the date of the Initial Closing and thereafter until October
15, 1999.
3. The conversion formula in paragraph 4(c) of the Notes is deleted
in its entirety and the following substituted in its place,
"Subject to the Adjustments from time to time as provided in
Section 4(d) below, the "Conversion Price" shall mean $0.25.
4. The adjustments of Conversion Price in paragraph 4(d) of the
Notes are deleted in their entirety and the text set forth in
Exhibit B annexed hereto and made a part hereof substituted in
its place:
C. The Warrant Agreement is amended and modified as follows:
1. The antidilution provisions in paragraph 11 of the Warrant
Agreement is deleted in its entirety and the text set forth in
Exhibit C substituted in its place.
D. In addition to the foregoing amendments and modifications, the Investors
consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until October 15,
1999 (i) not to convert all or any part of the Notes, (ii) not to
declare a default or seek acceleration of any payments under the
Notes, (iii) not to commence any collections actions or proceedings
<PAGE>
under the Notes, (iv) not to commence any foreclosure or bankruptcy
actions under the Notes, and (v) not to declare any Event of Default
or commence any arbitration action under the SPA, WA, Notes or
Warrants.
2. From the date of execution of this Agreement, to waive all rights
under any adjustments, antidilution provisions or preemptive rights
previously granted in the SPA, Notes, Warrants, or WA or provided by
these amendments and modifications (i) relative to the transaction
contemplated in the Letter of Intent or (ii) relative to any
settlement with Procura Financial entered into by the Company upon
commercially reasonable terms to complete the assignment of all
rights, title and interest in Sao Tome in favor of the Company.
3. Through the Initial Closing, to accept shares of Common Stock for all
accrued and unpaid interest and penalties on the Notes as of the
Initial Closing, which shares shall be delivered within ten (10) days
of the Closing Date.
4. From the date of execution of this Agreement and thereafter until
October 15, 1999, to vote with the Company in the event that any third
party, other than each of the other note and warrant holders listed as
a Selling Shareholder in Amendment No. 3 to the Form S- 1 filed with
the SEC, commences any bankruptcy or foreclosure action against the
Company or any of its subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the SPA, WA,
Notes and Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgment Rule from inception through the
Initial Closing Date.
<PAGE>
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
the Investors set forth in Schedule A from the date ERHC receives
signatures from not less than 66 2/3% of such Investors as to paragraph 2
and from the date of execution by each Investor as to such Investor as to
the other provisions of this Agreement.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the SPA, Notes, Warrants and WA shall remain in full
force and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
-------------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: April 23 1999 Talisman Capital Opportunity Fund, Ltd.
By: /s/ BRIAN LADIN
-----------------
Signature and Title
Print Name: Brian Ladin
Print Title: Vice President
[Signature Page September 1998 Financing]
<PAGE>
SCHEDULE A
TALISMAN CAPITAL OPPORTUNITY FUND L.P.
<PAGE>
EXHIBIT B
Adjustments of Conversion Price. The Conversion Price in effect from time to
time shall be, subject to adjustment in accordance with the provisions of this
Section .
(i) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Issuance Date, effect a stock split of
the outstanding Common Stock, the applicable Conversion Price in effect
immediately prior to the stock split shall be proportionately decreased. If the
Company shall at any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion Price in
effect immediately prior to the combination shall be proportionately increased.
Any adjustments under this Section (i) shall be effective at the close of
business on the date the stock split or combination occurs.
(ii) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the Issuance Date, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Conversion Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Conversion Price then in
effect by a fraction;
(A) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(B) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and Distributions. If the Company
shall at any time or from time to time after the Issuance Date, make or issue or
set a record date for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than shares of Common
Stock, then, and in each event, an appropriate revision to the Conversion Price
shall be made and provision shall be made (by adjustments of the Conversion
Price or otherwise) so that the holder of this Note shall receive upon
conversions thereof, in addition to the number of shares of Common Stock
receivable thereon, the number of securities of the Company which they would
have received had this Note been converted into Common Stock on the date of such
event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section (iii) with respect
to the rights of the holders of the Note.
(iv) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Note at any time or from time to
time after the Issuance Date shall be changed into the same or different
<PAGE>
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (i), (ii) and
(iii), or a reorganization, merger, consolidation, or sale of assets provided
for in Section (v)), then, and in each event, an appropriate revision to the
Conversion Price shall by made and provisions shall be made (by adjustments of
the Conversion Price of otherwise) so that the holder of this Note shall have
the right thereafter to convert such Note into the kind and amount of shares of
stock and other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares of Common Stock
into which such Note might have been converted immediately prior to such
reclassification, exchange, substitution or other change, all subject to further
adjustment as provided herein.
(v) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the Issuance Date there shall
be a capital reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions provided for in
Section (i), (ii) and (iii), or a reclassification, exchange or substitution of
shares provided for in Section (iv)), or a merger or consolidation of the
Company with or into another corporation, or the sale of all or substantially
all of the Company's properties or assets to any other person, then as a part of
such reorganization, merger, consolidation, or sale, an appropriate revision to
the Conversion Price shall be made and provision shall be made (by adjustments
of the Conversion Price or otherwise) so that the holder of this Note shall have
the right thereafter to convert this Note into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (v) with respect to the rights of
the holders of this Note after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (v) (including any
adjustment in the applicable Conversion Ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Note)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
<PAGE>
EXHIBIT C
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof, effect a stock split of the
outstanding Common Stock, the applicable Exercise Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the date hereof, combine the
outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different
<PAGE>
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
Exhibit 10.35.8
STANDSTILL AGREEMENT
THIS AGREEMENT effective as provided herein by and between ENVIRONMENTAL
REMEDIATION HOLDING CORPORATION ("ERHC"), a Colorado corporation, with offices
at 1686 General Mouton Avenue, Lafayette, LA 70508 and the Investors or their
permitted assigns whose names are included in Schedule A annexed hereto and made
a part hereof (collectively the "Investors" or individually, the "Investor").
WHEREAS, in three (3) closings, ERHC issued its 12.0% convertible notes due
on the earlier of the date upon which the Company received $5,000,000 from the
sale of any securities, assets or rights, or upon receipt of advance payments,
royalties or similar funds or December 31, 1999 (the "Notes) and executed a
Warrant Agreement under which it granted "A" and "B" warrants (the "WA") to
purchase ERHC's common stock with exercise dates on or before December 31, 2003
on the "A" Warrants and on the earlier of five years from the exercise of the
"A" Warrants or December 31, 2008 for the "B" Warrants (the "Warrants"); and
WHEREAS, ERHC has executed and its Board of Directors have approved a
letter of intent dated April 8, 1999 with ERHC Investment Group, Inc. which
requires certain consents from the Investors and amendments and modifications to
the Notes, WA and the Warrants, a copy of which letter of intent is annexed
hereto and made a part hereof as Exhibit A (the "Letter of Intent"); and
WHEREAS, the parties wish to confirm in writing their understanding and
agreement regarding these matter.
NOW THEREFORE in consideration of the mutual promises contained herein and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Confidential Information. Investors' consent and amendments and
modifications to the Notes, WA and Warrants as provided in the Letter of
Intent are conditions precedent to the Initial Closing. This is due to the
fact that the Notes, WA and Warrants have certain adjustments which may
render it impossible for ERHC to issue the requisite control interest
required under the term of the Letter of Intent. The matters contained
herein and in the Letter of Intent are confidential information not
available to the public. These matters will only be made public with a
filing by ERHC of a Form 8K within the time required from the Initial
Closing as defined in the Letter of Intent (the "Initial Closing"), the
date on which an 8K event takes place. Accordingly, the Investors expressly
agree not to disclose, use or trade on this information either directly or
indirectly in any manner until such time as the Form 8K reporting this
Letter of Intent is filed with the SEC.
2. Amendments and Modifications. From the date of the Initial Closing under
the Letter of Intent, it is agreed that the following terms and conditions
are amended and modified:
<PAGE>
A. The Notes are amended and modified as follows:
1. The provision for payment of interest contained in paragraph 1(b)
is amended to permit, in addition to the other methods of payment
contained therein, for the payment of interest in the form of
shares in common stock in an amount equal to the amount of
interest due divided by the Conversion Price at the election of
the Payee.
2. In addition to the amendment to paragraph 1(b), the following
will be added to such paragraph: "Notwithstanding any other
provision contained in this paragraph 1(b), interest is waived
from the date of the Initial Closing and thereafter until October
15, 1999.
3. The provisions for voluntary conversion contained in paragraph
4(a) is amended to permit, in addition to conversion of all or a
portion of the Notes, for the conversion of outstanding interest
and penalties, if any, into Common Stock at the time a voluntary
conversion of principal is made for the amount of interest due on
the Notes.
4. The Conversion Price in paragraph 4(b) of the Notes is amended to
be $0.25.
B. The Warrant Agreement is amended and modified as follows:
1. The antidilution provisions of paragraph 11 of the Warrant
Agreement is deleted in its entirety and the text set forth in
Exhibit B substituted in its place.
C. In addition to the foregoing amendments and modifications, the
Investors consent and agree to the following additional terms:
1. From the date of the Initial Closing and thereafter until October
15, 1999 (i) not to convert all or any part of the Notes, (ii)
not to declare a default or seek acceleration of any payments
under the Notes, (iii) not to commence any collections actions or
proceedings under the Notes (iv) not to commence any foreclosure
or bankruptcy actions under the Notes and (v) not to declare any
Event of Default or commence any arbitration action under the
Notes, WA or Warrants.
2. From the date of execution of this Agreement, to waive all rights
under any adjustments, antidilution provisions or preemptive
rights previously granted in the Notes, WA or Warrants provided
by these amendments and modifications (i) relative to the
transaction contemplated in the Letter of Intent
<PAGE>
or (ii) relative to any settlement with Procura Financial entered
into by the Company upon commercially reasonable terms to
complete the assignment of all rights, title and interest in Sao
Tome in favor of the Company.
3. Through the Initial Closing, to accept shares of Common Stock for
all accrued and unpaid interest and penalties on the Notes as of
the Initial Closing, which shares shall be delivered within ten
(10) days of the Closing Date.
4. From the date of execution of this Agreement and thereafter until
October 15, 1999, to vote with the Company in the event that any
third party, other than each of the other note and warrant
holders listed as a Selling Shareholder in Amendment No. 3 to the
Form S- 1 filed with the SEC, commences any bankruptcy or
foreclosure action against the Company or any of its
subsidiaries.
3. Effects of No Closing under the Letter of Intent. In the event that no
Closing as defined in the Letter of Intent (the "Closing") occurs within
ninety (90) days from the date of the Initial Closing, the amendments,
modifications and consents in paragraph 2 above shall be null and void ab
initio.
4. ERHC Representations and Warranties. ERHC represents and warrants that the
amendments, modifications and consents set forth in paragraph 2 are
substantially similar to the amendments, modifications and consents sought
from each of the other convertible note and warrant holders listed as
Selling Shareholders in the Amendment No. 3 to the Form S-1 filed with the
SEC and differ only in those matters which are specific to any particular
note or warrant transaction listed therein.
5. Effect upon Other Terms and Conditions. Notwithstanding the amendments and
modifications contained herein, it is expressly agreed by the parties
hereto that all other terms, conditions and provisions of the Notes, WA and
Warrants remain in full force and effect.
6. Ratification. The Investors ratify the acts of and hold harmless the Board
of Directors and Officers for all actions taken by them in compliance with
the interpretations of any court of competent jurisdiction as to the
application of the Business Judgement Rule from inception through the
Initial Closing Date.
7. Intended Beneficiaries. ERHC and ERHC Investment Group Inc. are the
intended beneficiaries of this Agreement. In the event of any breach, the
parties and the intended beneficiaries of this Agreement shall have all
remedies available at law or in equity including the right to seek
injunctive relief.
8. Effective Date. This Agreement shall be effective and binding upon ERHC and
<PAGE>
the each Investor set forth in Schedule A individually from the date of
execution by each Investor.
9. Binding Obligations. The obligations of the parties set forth herein shall
be binding upon and inure to the benefit of each party's heirs, executors,
administrators, beneficiaries, transferees, successors and assigns.
10. Governing Law, Jurisdiction and Venue. The governing law, jurisdiction and
venue set forth in the Notes, WA and Warrants shall remain in full force
and effect.
11. Counterparts. This Agreement may be executed in one or more counterpart,
each of which when taken together shall represent one binding agreement.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, each party set their hand and seal effective as
provided herein.
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN
----------------------
James A. Griffin, Secretary
INVESTOR:
Execution Date: , 1999 By: /s/ DAVID B. THORNBURGH, Family Trust
--------------------------------------
Signature and Title
Print Name: David B. Thornburgh, MD
Print Title: Trustee
Execution Date: , 1999 By: /s/ DAVID ABOLOVE
-------------------
Signature and Title
Print Name: David Abolove
Execution Date: , 1999 By: /s/ DAVID B. THORNBURGH
-------------------------
Signature and Title
Print Name: David B. Thornburgh, MD
[Signature Page October 1998 Financing]
<PAGE>
SCHEDULE A
DAVID B. THORNBURGH FAMILY TRUST
DAVID ABELOVE
PRUDENTIAL SECURITIES, INC.
c/o DAVID THORNBURGH IRA
WINDLASS CORPORATION
<PAGE>
EXHIBIT B
Antidilution Provision. The Exercise Price in effect from time to time shall be,
subject to adjustment in accordance with the provisions of this Section .
(a) Adjustments for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof, effect a stock split of the
outstanding Common Stock, the applicable Exercise Price in effect immediately
prior to the stock split shall be proportionately decreased. If the Company
shall at any time or from time to time after the date hereof, combine the
outstanding shares of Common Stock, the applicable Exercise Price in effect
immediately prior to the combination shall be proportionately increased. Any
adjustments under this Section (a) shall be effective at the close of business
on the date the stock split or combination occurs.
(b) Adjustments for Certain Dividends and Distributions. If the Company
shall at any time or from time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common Stock, then, and in
each event, the applicable Exercise Price in effect immediately prior to such
event shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the applicable Exercise Price then in
effect by a fraction;
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date; and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or distribution.
(c) Adjustment for Other Dividends and Distributions. If the Company shall
at any time or from time to time after the date hereof, make or issue or set a
record date for the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in other than shares of Common Stock,
then, and in each event, an appropriate revision to the Exercise Price shall be
made and provision shall be made (by adjustments of the Exercise Price or
otherwise) so that the holder of this Note shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had this
Note been converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and including the
date hereof, retained such securities (together with any distributions payable
thereon during such period), giving application to all adjustments called for
during such period under this Section (c) with respect to the rights of the
holders of the Warrant.
(d) Adjustments for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon conversion of this Warrant at any time or from time
to time after the date hereof shall be changed into the same or different
<PAGE>
number of shares of any class or classes of stock, whether by reclassification,
exchange, substitution or otherwise (other than by way of a stock split or
combination of shares or stock dividends provided for in Sections (a), (b) and
(c), or a reorganization, merger, consolidation, or sale of assets provided for
in Section (e), then, and in each event, an appropriate revision to the Exercise
Price shall by made and provisions shall be made (by adjustments of the Exercise
Price of otherwise) so that the holder of this Warrant shall have the right
thereafter to convert such Warrant into the kind and amount of shares of stock
and other securities receivable upon reclassification, exchange, substitution or
other change, by holders of the number of shares of Common Stock into which such
Warrant might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.
(e) Adjustments for Reorganization, Merger, Consolidation or Sales of
Assets. If at any time or from time to time after the date hereof there shall be
a capital reorganization of the Company (other than by way of a stock split or
combination of shares or stock dividends or distributions provided for in
Section (a), (b), and (c), or a reclassification, exchange or substitution of
shares provided for in Section (d), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or substantially all of the
Company's properties or assets to any other person, then as a part of such
reorganization, merger, consolidation, or sale, an appropriate revision to the
Exercise Price shall be made and provision shall be made (by adjustments of the
Exercise Price or otherwise) so that the holder of this Warrant shall have the
right thereafter to convert this Warrant into the kind and amount of shares of
stock and other securities or property of the Company or any successor
corporation resulting from such reorganization, merger, consolidation, or sale,
to which a holder of Common Stock deliverable upon conversion of such shares
would have been entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon conversion of such
shares would have been entitled upon such reorganization, merger, consolidation,
or sale. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Section (e) with respect to the rights of
the holders of this Warrant after the reorganization, merger, consolidation, or
sale to the end that the provisions of this Section (e) (including any
adjustment in the applicable conversion ratio then in effect and the number of
shares of stock or other securities deliverable upon conversion of this Warrant)
shall be applied after that event in as nearly an equivalent manner as may be
practicable.
Exhibit 10.36.1
ERHC INVESTMENT GROUP, LLC
c/o Corporate Builders
777 South Flagler Drive, Suite 909
West Palm Beach, Florida 33401
As of April 27, 1999
Environmental Remediation
Holding Corporation
3-5 Aubry Lane
Oyster Bay, New York 11753
Attention: President
Re: Subscription Agreement
Ladies and Gentlemen:
We refer to the letter if intent, dated as of April 8, 1999 (the "Letter of
Intent"), between ERHC Investment Group, Inc., a corporation organized under the
laws of the State of Florida ("Investment Group Inc."), and Environmental
Remediation Holding Corporation, a corporation organized under the laws of the
State of Colorado (the "Company"), pursuant to which the Company agreed, among
other things: (i) to issue to Investment Group Inc. or its assigns in one or
more transactions validly issued, fully paid, and nonassessable shares (the
"Shares") of common stock, par value $.0001 per share, of the Company (the
"Common Stock") representing fifty-one percent of the issued and outstanding
capital stock of the Company on a fully-diluted basis after giving effect to all
of the transaction contemplated by the Letter of Intent; and (ii) to enter into
a definitive securities purchase agreement (the "Securities Purchase Agreement")
with respect to such issuances of Common Stock. This letter agreement (as
amended, supplemented, or otherwise modified from time to time, this
"Agreement), is intended to set forth the mutual understanding and agreement
between ERHC Investment Group LLC, a limited liability company organized under
the laws of the State of Delaware ("Investor"), the assignee of all of
Investment Group Inc.'s rights under the Letter of Intent, and the Company
regarding Investor's initial subscription for a portion of the Shares prior to
the execution and delivery of the Securities Purchase Agreement by the parties
thereto. In consideration of the respective agreements, covenants,
representations, and warranties hereinafter set forth and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
Investor hereby irrevocably subscribes for the portion of the Shares (the
"Initial Shares") representing twenty-one percent of the issued and outstanding
capital stock of the Company on a fully-diluted basis after giving effect to all
of the transactions contemplated by the Letter of Intent, and Investor shall pay
therefor in lawful money of the United States of America in one or more
installments from time to time after the date hereof $210,000 in the aggregate
(the "Purchase Price"). The unpaid amount of the Purchase Price at any time
outstanding shall bear interest at the "applicable federal rate" per annum
<PAGE>
(as such term is used for purposes of ss. 1274(d) of te Internal Revenue Code of
the United States of America) as in effect on the date hereof. Upon payment in
full of the Purchase Price and all accrued interest, the Company shall issue to
Investor the Initial Shares, and shall deliver or cause to be delivered to
Investor a certificate or certificates evidencing such Initial Shares.
Upon the execution and delivery of the Securities Purchase Agreement, the
terms and provisions of the Securities Purchase Agreement shall apply to the
Initial Shares subscribed for and purchased hereby, and the other transactions
contemplated by this Agreement.
Notwithstanding anything to the contrary contained herein, if the Final
Closing (as defined in the Letter of Intent) has not occurred within ninety days
after the date hereof, Investor shall surrender to the Company for cancellation
such rights as it has or such certificates as it has received with respect to
that number of the Initial Shares such that, after giving effect to such
surrender, the remaining Initial Shares held by Investor would represent that
percent of the issued and outstanding capital stock of the Company on a
fully-diluted basis after giving effect to all of the transactions contemplated
by the Letter of Intent based upon a $5,882,352.90 valuation of the Company as
adjusted by the Prior Action of the Board (as defined in the Letter of Intent).
As an inducement to the Company to enter into this Agreement, Investor
hereby represents and warrants to the Company that:
(i) Investor has duly executed and delivered this agreement, and
(assuming due execution and delivery by the Company) this agreement
constitutes a legal, valid and binding obligation of Investor, enforceable
against Investor in accordance with its terms;
(ii) Investor's execution, delivery and performance hereof do not and
will not: (A) violate or conflict with Investor's certificate of formation
or similar organizational documents, or any law or any order, writ,
judgment, injunction, decree, stipulation, determination, or award entered
by or with any governmental authority and applicable to Investor; (B)
violate or infringe upon any rights of any person; or (C) require any
consent, approval, authorization or other order of, action by, filing with,
or notification to, any governmental authority or any other person; and
(iii) Investor understands that the Initial Shares have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or transferred, or otherwise disposed of, without
registration under the Securities Act and applicable state securities laws,
or pursuant to an exemption therefrom.
As an inducement to Investor to enter into this Agreement, the Company
hereby represents and warrants to Investor as follows:
(i) The Company has duly executed and delivered this agreement, and
(assuming due execution and delivery by Investor) this agreement
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms;
<PAGE>
(ii) The Company's execution, delivery, and performance hereof do not
and will not; (A) violate or conflict with the Company's articles of
incorporation or by-laws or similar organizational documents, or any law or
any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any governmental authority and applicable to
the Company; (B) violate or infringe upon any rights of any person; or (C)
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any governmental authority or any other
person; and
(iii) Upon issuance, the Initial Shares will be validly issued, fully
paid, and nonassessable and will not be subject to any preemptive rights,
and will represent not less than twenty-one percent of the issued and
outstanding capital stock of the Company on a fully-diluted basis after
giving effect to all of the transactions contemplated by the Letter of
Intent.
No amendment hereof or supplement or other modification hereto, and no
consent to, or waiver, discharge, or release of, any term or provision or breach
hereof, shall be valid or effective unless such amendment, supplement, or other
modification, or such consent, waiver, discharge, or release is in writing,
expressly refers hereto, and is signed by the party to be bound thereby.
If any term or other provision hereof is determined by any court of
competent jurisdiction to be invalid, illegal, or unenforceable in whole or in
part by reason of any applicable law or public policy, and such determination
becomes final and nonappealable, such term or other provision shall remain in
full force and effect to the fullest extent permitted by law, and all other
terms and provisions hereof shall remain in full force and affect in their
entirety.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
Each party hereto hereby unconditionally and irrevocably waives all right
to trial by jury in any action, suit, or proceeding (whether based on contract,
tort, or otherwise) based upon, resulting from, arising out of, or relating to
this Agreement or any transaction or agreement contemplated hereby.
This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each which when executed
shall be deemed to be an original, and all of which taken together shall
constitute one and the same agreement with the same effect as if such signatures
were upon the same instrument.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of an manually executed counterpart hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK].
<PAGE>
Please evidence your acknowledgment of and agreement to the foregoing by
executing and delivering to Levin & Srinivasan LLP, counsel to the undersigned,
by telecopier at (212) 957-4565 a counterpart hereof.
Very truly yours,
ERHC INVESTMENT GROUP LLC
By: /s/ HOWARD TALKS
------------------------------
Howard D. Talks
Member
ACKNOWLEDGED AND AGREED as of April 27, 1999:
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN, CORP SECRETARY
--------------------------------------------------------
Name: James A. Griffin
Title: Corp. Secretary
Exhibit 10.36.2
ERHC INVESTMENT GROUP, LLC
c/o Corporate Builders
777 South Flagler Drive, Suite 909
West Palm Beach, Florida 33401
As of April 27, 1999
Environmental Remediation
Holding Corporation
3-5 Aubry Lane
Oyster Bay, New York 11753
Attention: President
Re: Subscription Agreement
Ladies and Gentlemen:
We refer to the letter if intent, dated as of April 8, 1999 (the "Letter of
Intent"), between ERHC Investment Group, Inc., a corporation organized under the
laws of the State of Florida ("Investment Group Inc."), and Environmental
Remediation Holding Corporation, a corporation organized under the laws of the
State of Colorado (the "Company"), pursuant to which the Company agreed, among
other things: (i) to issue to Investment Group Inc. or its assigns in one or
more transactions validly issued, fully paid, and nonassessable shares (the
"Shares") of common stock, par value $.0001 per share, of the Company (the
"Common Stock") representing fifty-one percent of the issued and outstanding
capital stock of the Company on a fully-diluted basis after giving effect to all
of the transaction contemplated by the Letter of Intent; and (ii) to enter into
a definitive securities purchase agreement (the "Securities Purchase Agreement")
with respect to such issuances of Common Stock. This letter agreement (as
amended, supplemented, or otherwise modified from time to time, this
"Agreement), is intended to set forth the mutual understanding and agreement
between ERHC Investment Group LLC, a limited liability company organized under
the laws of the State of Delaware ("Investor"), the assignee of all of
Investment Group Inc.'s rights under the Letter of Intent, and the Company
regarding Investor's initial subscription for a portion of the Shares prior to
the execution and delivery of the Securities Purchase Agreement by the parties
thereto. In consideration of the respective agreements, covenants,
representations, and warranties hereinafter set forth and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
Investor hereby irrevocably subscribes for the portion of the Shares (the
"Group II Shares") representing 27.195 percent of the issued and outstanding
capital stock of the Company on a fully-diluted basis after giving effect to all
of the transactions contemplated by the Letter of Intent, and Investor shall pay
therefor in lawful money of the United States of America in one or more
installments from time to time after the date hereof in accordance with the
terms and conditions of the Letter of Intent $2,625,000 in the aggregate (the
"Purchase Price"). Notwithstanding anything to the contrary contained herein,
<PAGE>
the obligatins of Investor and the Company hereunder shall be subject in all
respects to the execution and delivery of the Securities Purchase Agreement and
the other terms and conditions of the Letter of Intent
As an inducement to the Company to enter into this Agreement, Investor
hereby represents and warrants to the Company that:
(i) Investor has duly executed and delivered this agreement, and
(assuming due execution and delivery by the Company) this agreement
constitutes a legal, valid and binding obligation of Investor, enforceable
against Investor in accordance with its terms;
(ii) Investor's execution, delivery and performance hereof do not and
will not: (A) violate or conflict with Investor's certificate of formation
or similar organizational documents, or any law or any order, writ,
judgment, injunction, decree, stipulation, determination, or award entered
by or with any governmental authority and applicable to Investor; (B)
violate or infringe upon any rights of any person; or (C) require any
consent, approval, authorization or other order of, action by, filing with,
or notification to, any governmental authority or any other person; and
(iii) Investor understands that the Group II Shares have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or transferred, or otherwise disposed of, without
registration under the Securities Act and applicable state securities laws,
or pursuant to an exemption therefrom.
As an inducement to Investor to enter into this Agreement, the Company
hereby represents and warrants to Investor as follows:
(i) The Company has duly executed and delivered this agreement, and
(assuming due execution and delivery by Investor) this agreement
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms;
(ii) The Company's execution, delivery, and performance hereof do not
and will not; (A) violate or conflict with the Company's articles of
incorporation or by-laws or similar organizational documents, or any law or
any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any governmental authority and applicable to
the Company; (B) violate or infringe upon any rights of any person; or (C)
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any governmental authority or any other
person; and
(iii) Upon issuance, the Group II Shares will be validly issued, fully
paid, and nonassessable and will not be subject to any preemptive rights,
and will represent not less than 27.195 percent of the issued and
outstanding capital stock of the Company on a fully-diluted basis after
giving effect to all of the transactions contemplated by the Letter of
Intent.
<PAGE>
No amendment hereof or supplement or other modification hereto, and no
consent to, or waiver, discharge, or release of, any term or provision or breach
hereof, shall be valid or effective unless such amendment, supplement, or other
modification, or such consent, waiver, discharge, or release is in writing,
expressly refers hereto, and is signed by the party to be bound thereby.
If any term or other provision hereof is determined by any court of
competent jurisdiction to be invalid, illegal, or unenforceable in whole or in
part by reason of any applicable law or public policy, and such determination
becomes final and nonappealable, such term or other provision shall remain in
full force and effect to the fullest extent permitted by law, and all other
terms and provisions hereof shall remain in full force and affect in their
entirety.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
Each party hereto hereby unconditionally and irrevocably waives all right
to trial by jury in any action, suit, or proceeding (whether based on contract,
tort, or otherwise) based upon, resulting from, arising out of, or relating to
this Agreement or any transaction or agreement contemplated hereby.
This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each which when executed
shall be deemed to be an original, and all of which taken together shall
constitute one and the same agreement with the same effect as if such signatures
were upon the same instrument.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of an manually executed counterpart hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK].
<PAGE>
Please evidence your acknowledgment of and agreement to the foregoing by
executing and delivering to Levin & Srinivasan LLP, counsel to the undersigned,
by telecopier at (212) 957-4565 a counterpart hereof.
Very truly yours,
ERHC INVESTMENT GROUP LLC
By: /s/ HOWARD TALKS
------------------------------
Howard D. Talks
Member
ACKNOWLEDGED AND AGREED as of April 27, 1999:
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN, CORP SECRETARY
----------------------------------------
Name: James A. Griffin
Title: Corp. Secretary
Exhibit 10.36.3
ERHC INVESTMENT GROUP, LLC
c/o Corporate Builders
777 South Flagler Drive, Suite 909
West Palm Beach, Florida 33401
As of April 27, 1999
Environmental Remediation
Holding Corporation
3-5 Aubry Lane
Oyster Bay, New York 11753
Attention: President
Re: Subscription Agreement
Ladies and Gentlemen:
We refer to the letter if intent, dated as of April 8, 1999 (the "Letter of
Intent"), between ERHC Investment Group, Inc., a corporation organized under the
laws of the State of Florida ("Investment Group Inc."), and Environmental
Remediation Holding Corporation, a corporation organized under the laws of the
State of Colorado (the "Company"), pursuant to which the Company agreed, among
other things: (i) to issue to Investment Group Inc. or its assigns in one or
more transactions validly issued, fully paid, and nonassessable shares (the
"Shares") of common stock, par value $.0001 per share, of the Company (the
"Common Stock") representing fifty-one percent of the issued and outstanding
capital stock of the Company on a fully-diluted basis after giving effect to all
of the transaction contemplated by the Letter of Intent; and (ii) to enter into
a definitive securities purchase agreement (the "Securities Purchase Agreement")
with respect to such issuances of Common Stock. This letter agreement (as
amended, supplemented, or otherwise modified from time to time, this
"Agreement), is intended to set forth the mutual understanding and agreement
between ERHC Investment Group LLC, a limited liability company organized under
the laws of the State of Delaware ("Investor"), the assignee of all of
Investment Group Inc.'s rights under the Letter of Intent, and the Company
regarding Investor's initial subscription for a portion of the Shares prior to
the execution and delivery of the Securities Purchase Agreement by the parties
thereto. In consideration of the respective agreements, covenants,
representations, and warranties hereinafter set forth and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:
Investor hereby irrevocably subscribes for the portion of the Shares (the
"Initial Shares") representing 2.805 percent of the issued and outstanding
capital stock of the Company on a fully-diluted basis after giving effect to all
of the transactions contemplated by the Letter of Intent, and Investor shall pay
therefor in lawful money of the United States of America contemporaneously
herewith $165,000 in the aggregate (the "Purchase Price"). Upon payment in full
of the Purchase Price, the Company shall issue to Investor the Initial shares,
and shall deliver or cause to be delivered to Investor a certificate or
certificates evidencing such Initial Shares.
<PAGE>
Upon the execution and delivery of the Securities Purchase Agreement, the
terms and provisions of the Securities Purchase Agreement shall apply to the
Initial Shares subscribed for and purchased hereby, and the other transactions
contemplated by this Agreement.
As an inducement to the Company to enter into this Agreement, Investor
hereby represents and warrants to the Company that:
(i) Investor has duly executed and delivered this agreement, and
(assuming due execution and delivery by the Company) this agreement
constitutes a legal, valid and binding obligation of Investor, enforceable
against Investor in accordance with its terms;
(ii) Investor's execution, delivery and performance hereof do not and
will not: (A) violate or conflict with Investor's certificate of formation
or similar organizational documents, or any law or any order, writ,
judgment, injunction, decree, stipulation, determination, or award entered
by or with any governmental authority and applicable to Investor; (B)
violate or infringe upon any rights of any person; or (C) require any
consent, approval, authorization or other order of, action by, filing with,
or notification to, any governmental authority or any other person; and
(iii) Investor understands that the Initial Shares have not been
registered under the Securities Act of 1933, as amended, or the laws of any
state and may not be sold or transferred, or otherwise disposed of, without
registration under the Securities Act and applicable state securities laws,
or pursuant to an exemption therefrom.
As an inducement to Investor to enter into this Agreement, the Company
hereby represents and warrants to Investor as follows:
(i) The Company has duly executed and delivered this agreement, and
(assuming due execution and delivery by Investor) this agreement
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms;
(ii) The Company's execution, delivery, and performance hereof do not
and will not; (A) violate or conflict with the Company's articles of
incorporation or by-laws or similar organizational documents, or any law or
any order, writ, judgment, injunction, decree, stipulation, determination
or award entered by or with any governmental authority and applicable to
the Company; (B) violate or infringe upon any rights of any person; or (C)
require any consent, approval, authorization or other order of, action by,
filing with, or notification to, any governmental authority or any other
person; and
(iii) Upon issuance, the Initial Shares will be validly issued, fully
<PAGE>
paid, and nonassessable and will not be subject to any preemptive rights,
and will represent not less than 2.805 percent of the issued and
outstanding capital stock of the Company on a fully-diluted basis after
giving effect to all of the transactions contemplated by the Letter of
Intent.
No amendment hereof or supplement or other modification hereto, and no
consent to, or waiver, discharge, or release of, any term or provision or breach
hereof, shall be valid or effective unless such amendment, supplement, or other
modification, or such consent, waiver, discharge, or release is in writing,
expressly refers hereto, and is signed by the party to be bound thereby.
If any term or other provision hereof is determined by any court of
competent jurisdiction to be invalid, illegal, or unenforceable in whole or in
part by reason of any applicable law or public policy, and such determination
becomes final and nonappealable, such term or other provision shall remain in
full force and effect to the fullest extent permitted by law, and all other
terms and provisions hereof shall remain in full force and affect in their
entirety.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
Each party hereto hereby unconditionally and irrevocably waives all right
to trial by jury in any action, suit, or proceeding (whether based on contract,
tort, or otherwise) based upon, resulting from, arising out of, or relating to
this Agreement or any transaction or agreement contemplated hereby.
This Agreement may be executed in any number of counterparts and by the
different parties hereto in separate counterparts, each which when executed
shall be deemed to be an original, and all of which taken together shall
constitute one and the same agreement with the same effect as if such signatures
were upon the same instrument.
Delivery of an executed counterpart hereof via telecopier shall be as
effective as delivery of an manually executed counterpart hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK].
<PAGE>
Please evidence your acknowledgment of and agreement to the foregoing by
executing and delivering to Levin & Srinivasan LLP, counsel to the undersigned,
by telecopier at (212) 957-4565 a counterpart hereof.
Very truly yours,
ERHC INVESTMENT GROUP LLC
By: /s/ HOWARD TALKS
------------------------------
Howard D. Talks
Member
ACKNOWLEDGED AND AGREED as of April 27, 1999:
ENVIRONMENTAL REMEDIATION
HOLDING CORPORATION
By: /s/ JAMES A. GRIFFIN, CORP SECRETARY
-------------------------------------
Name: James A. Griffin
Title: Corp. Secretary
<TABLE> <S> <C>
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<NAME> Environmental Remediation Holding Corp.
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<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
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<CASH> 0
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<DEPRECIATION> (1,293,409)
<TOTAL-ASSETS> 11,801,919
<CURRENT-LIABILITIES> 8,166,291
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0
0
<COMMON> 2,847
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<TOTAL-LIABILITY-AND-EQUITY> 11,801,919
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