AGREEMENT
This agreement is made this 20th day of November, 1999, by and between
Enviro-Recovery, Inc. ("Enviro"), having corporate offices at 2200 East Lake
Shore Drive, Ashland, WI 54806, USA, and the companies, FundAmazon, with its
corporate offices at Conj.Eoclides Figoeido, Rua "J" no 15- Belem, Para, Brazil,
tax registration # 83.340.992/001-23 and Eco-Wood, Ltd. ("Eco- Wood") with its
corporate offices at Rua Tancredo Neves 500-Breves Para, Brazil, tax
registration # 02.432.567/001-62.
FundAmazon and Eco-Wood represent the following:
1. FundAmazon, a non-profit Brazilian company, has the sole license
granted by the State of Para and IBAMA ("Para licenses") in existence for
recovering wood in the State of Para from the Amazon River and all bodies of
fresh water connected to or part of the Amazon River ("Amazon River System"). No
companies or organizations other than FundAmazon have been granted a license or
awarded a contract to extract wood from the Amazon River System by any Brazilian
government agency except for Lake Tucurui.
2. FundAmazon has granted rights to recover wood from the Amazon River
System in the state of Para to Eco-Wood, Ltd., a commercial Brazilian company by
contract ("sublicense") and has not granted recovery rights to any other party.
Therefore, Eco-Wood is the only company that can legal recover wood from the
Amazon River in the state of Para.
3. FundAmazon and Eco-Wood have the authority to grant sublicenses to
recover wood from the Amazon River in the State of Para and the licenses are
assignable to third parties.
4. The licenses held by FundAmazon effectively preclude any company
from obtaining a license to extract wood from the Amazon River System and
further that these licenses give FundAmazon the first rights to salvage wood
from the Amazon River.
5. Eco-Wood is currently recovering wood from the activated areas of
the Para licenses. The area of the Amazon River System covered by the activated
area of the licenses include all rivers in the State of Para.
6. The mill operated by Eco-Wood can receive an international
certification equivalent to FSC or Smartwood certification after correcting
minor discrepancies.
7. Based on the density of logs in the Amazon River estimated from
salvage operations, Eco-Wood and FundAmazon project that the areas in the Amazon
River covered by the activated part of their licenses contain from 10 to 60
million cubic meters of logs.
WHEREAS, Enviro has developed a business in processing and selling salvaged
underwater wood.
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AND WHEREAS, Enviro has developed techniques to locate submersed logs and tree
with the help of sidescan sonar.
NOW, the parties hereby agree as follows:
1. The parties shall prepare and execute an acquisition agreement
containing the following terms:
(a) Upon execution of the acquisition agreement, a Brazilian
subsidiary of Enviro ("the Subsidiary") will acquire the
assets of Eco-Wood (including FundAmazon/Eco-Wood contracts,
licenses, license rights, and other intangible assets) and
Eco-Wood will grant the sole sublicense to Enviro-Recovery,
Inc. for recovering wood from the Amazon River, Inc.
(b) Enviro will transfer 3,000,000 shares of common stock
to Eco-Wood using the following schedule
(i) 1,000,000 shares upon execution of
acquisition agreement;
(ii) 1,000,000 shares one year from the date of
the acquisition agreement;
(iii) 1,000,000 shares two years from the date of
the acquisition agreement;
(iv) the stock will be restricted for not less than
one year depending on U.S. securities laws and its issuance
contingent upon Enviro being the only company that can salvage
wood from the Amazon River System in the state of Para from
the date of this agreement until the stock is issued.
(c) As long as Enviro is the only company that can legally
recover wood from the Amazon River System with the exception
of Lake Tucurui, Enviro shall pay Eco-Wood a royalty of 2% of
net payments received for wood retrieved under this license
and sold by the Subsidiary. Royalties shall be paid quarterly
and shall be subject to adjustment based on receipt of payment
and deductions, bad debt, etc.
(d) Options to Eco-Wood for 1,200,000 shares to be granted at
$.20 when a sole license is granted to Enviro for recovery of
logs from the Amazon River System, state of Para and that
FundAmazon provides Enviro with license documentation to
support that Enviro is the only company that can recover wood
from the Amazon River System in the State of Para. FundAmazon
will meet the documentation requirement upon Enviro confirming
that the federal and state licenses or appropriate
legislation, regulations, etc. represent that any competitor
that wants to recover wood from the Amazon River must obtain
the permission of FundAmazon or show that FundAmazon can stop
the competitor by starting a salvage option in the part of the
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river that the competitor applied for recovery rights
("documentation requirements"). The documentation,
validity and support must be acceptable, in terms of content
and length of time, in the judgment of Enviro ("agreeable
license terms") for the Options to be granted. The Options
shall not be granted if the documentation requirements or
agreeable license terms are not met within 18 months of this
agreement. After the options are granted, options for
purchasing 200,000 shares shall vest every 12 months after the
options are granted. The options shall be exercisable for 2
years after the options vest. If another company legally
recovers wood from the Amazon River in the State of Para all
unexercised options expire.
(e) Options to Eco-Wood for 1,200,000 shares to be granted at
$.20 when a sole license is granted to Enviro for removal of
logs from the Amazon River System, state of Amazonia and that
FundAmazon provides Enviro with license documentation to
support that Enviro is the only company that can recover wood
from the Amazon River System in the State of Para. FundAmazon
will meet the documentation requirement upon Enviro confirming
that the federal and state licenses or appropriate
legislation, regulations, etc. represent that any competitor
that wants to recover wood from the Amazon River must obtain
the permission of FundAmazon or shows that FundAmazon can stop
the competitor by starting a salvage operation in the part of
the river that the competitor applied for recovery rights
("documentation requirements"). The documentation, validity
and support must be acceptable, in terms of content of length
of time, in the judgment of Enviro ("agreeable license terms")
for the Options to be granted. The Options shall not be
granted if the documentation requirements or agreeable license
terms are not met within 18 months of this agreement. After
the options are granted, options for purchasing 200,000 shares
shall vest every 12 months after the options are granted. The
options shall be exercisable for 2 years after the options
vest. If another company legally recovers wood from the Amazon
River in the State of Amazonia all unexercised options expire.
(f) Eco-Wood has the right to retain its name and legal
identity.
(g) Eco-Wood shall have the right of first refusal to
reacquire license rights at fair market value if Enviro or,
its assignee, ceased at it's volition for reasons other than
economic, legal or political to recover logs under this
license for a continuous period of six months. This first
right of refusal extends until two years from the date that
the acquisition agreement is executed.
(h) Enviro cannot reassign the license to a non-affiliated 3rd
party during the period when shares in item (b) above are not
issued without the written consent of Eco-Wood which shall not
be withheld unreasonably.
(i) Enviro agrees to meet all requirements as specified in the
licenses for recovering wood from the Amazon River.
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(j) FundAmazon and Eco-Wood agree to keep all required
licenses for wood recovery current and active and to ensure
that the licenses are renewed so there is no period during
which all licenses are not active.
(k) Enviro or its subsidiary have the rights to act as a power
of attorney for FundAmazon or Eco-Wood if FundAmazon or
Eco-Wood are not take the necessary steps to maintain or renew
the licenses to recover wood from the Amazon River System.
2. Both parties shall proceed expeditiously to prepare and to
execute the acquisition agreement.
3. Enviro may terminate or abandon this agreement, at any time,
if
(a) Eco-Wood or FundAmazon is in material default or
breach of the terms hereof or is in default in the due and
timely performance of any of its covenants and agreements
contained herein (including, but not limited to,
(i) the recovery license cannot be transferred
or sublicensed to Enviro,
(ii) the recovery license is not or will not be
exclusive to Enviro other than because Enviro did not act as
required or permitted,
(iii) the recovery license is terminable by any party
or government authority for any reason other than failure to
retrieve logs by Enviro for greater than six months,
(iv) the recovery license is terminated other
than because of a breach or failure to act by Enviro,
(v) the assets of Eco-Wood are not previously
represented,
(vi) Enviro or its subsidiary are prohibited from
conducting business in Brazil,
(vii) Enviro is unable to account for its assets
acquired from Eco-Wood on a consolidated basis as required by
United States law or GAAP through no fault of its own), and
the default cannot be cured within a reasonable time, or
(b) the representations and warranties of Eco-Wood or
FundAmazon given to Enviro are not true and correct at any
time before the entry into an asset purchase agreement.
4. Enviro and Eco-Wood/FundAmazon may terminate this agreement if
an asset purchase agreement is not entered into by July 1, 2000.
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In Witness whereof, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives on the date first written above.
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John Vallosa Gregory J. Grambow
President Chief Executive Officer
FundAmazon Enviro-Recovery, Inc.
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Don Davis Josue Matos
Director and Officer Director and Officer
Eco-Wood Ltd. Eco-Wood Ltd.
