Exhibit 10.4
The Beard Company
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
Fax (405) 842-9901
(405) 842-2333
February 7, 2005
Mr. John Harvison
FEDERAL EXPRESS
2810 Glenda Ave.
Telephone:
817-838-4740
Fort Worth, TX 76117
Attention: Theresa
Smith
Re: BEE/7HBF, LLC
Tongzhou Venture
("BEE/7HBF Tongzhou Venture")
Dear John:
This will confirm our agreement last Friday concerning the subject
Venture. The
terms of the revised deal are detailed in the Terms Sheet attached
hereto as
"Exhibit A.".
Per the discussions at our January 17 meeting we agreed with you
that the
payments for your investment will be spread over a six-month
period. As a result
of the revised structure, the new payment schedule is set forth in
the Terms
Sheet and highlighted in the attached "Exhibit B."
The organizational mechanics of the deal are depicted in the Terms
Sheet. Upon
receipt of a signed copy of this Letter Agreement we will form
BEE/7HBF, LLC
(the "LLC") which will in turn form the WFOE (once its name has
been determined)
that will own the initial mini-plant (Plant #1). Further, the LLC
will have the
first right of refusal to participate in all of Beard's
subsequent
fertilizer/composting operations in China until and unless it opts
out of a
participation.
If the above meets with your approval, we ask that you please have
7HBF indicate
its acceptance by signing and returning one copy of this Letter
Agreement
together with 7HBF's check in the amount of US$62,500 to cover your
US$50,000
capital contribution plus the Month 1 cash requirement of
US$12,500. Three extra
copies are enclosed for your individual files.
We are excited about the opportunity in China, and are doubly
excited to have
you folks as our partner.
Sincerely,
ACCEPTED AND AGREED TO THIS
THE BEARD COMPANY
11th DAY OF FEBRUARY, 2005
7HBF, Ltd.
/s/ Herb Mee, Jr.
By: 7HBF Management
Company, Ltd.
General Partner
Herb Mee, Jr., President
/s/ Randall W. Harvison
HMJr/do
By
_____________________________
Name: Randall W.
Harvison
Title:
Manager
cc: Randall W.
Harvison
John
D. Harvison
<PAGE>
Exhibit A
Terms Sheet
Beard Environmental Engineering, L.L.C. ("BEE") is seeking the
influx of
US$900,000 to fund this project. Following is a summary of the
terms of the
proposed arrangement.:
1. BEE, an
Oklahoma limited liability company, and 7HBF, Ltd., a Texas
limited
partnership ("7HBF"), will form BEE/7HBF, LLC, an Oklahoma
limited
liability company (the "LLC").
2. BEE and 7HBF
will each contribute US$50,000 in cash to the LLC. Such
contributions will be made to the LLC upon execution of the
Letter
Agreement.
3. 7HBF will
loan US$850,000 to the LLC in exchange for a 5-year
Non-Recourse
Promissory Note (the "Note") at the current Applicable Federal Mid
Term
Rate
of 3.83%. Advances will be made against the Note in accordance
with
the
following schedule:
Upon execution of
the Letter Agreement - US$12,500
March 1, 2005
- US$100,000
April 1, 2005
-
US$90,000
May 1, 2005
- US$297,500
June 1, 2005
- US$100,000
July 1, 2005
- US$250,000
----------
Total
- US$850,000
==========
Interest will be paid on such Note annually.
4. The total
investment will be $US950,000, as follows:
7HBF
BEE
TOTAL
----
---
-----
Contributions to the LLC -
US$50,000
US$50,000
US$100,000
Loan
to the LLC
- US$850,000
-
US$850,000
----------
---------
----------
Total
- US$900,000
US$50,000
US$950,000
==========
=========
==========
5. The LLC will
use such funds, as required, to fund the ownership and
operation of BEE's
initial plant (Plant #1) for the formulation of Organic
Chemical Compound Fertilizer ("OCCF
