July 13, 2010

Dear Members of the Brazil Family Federation for World Peace and Unification (AFUPM),

Over the past two years, we members of the UCI Brazil team have witnessed the beauty of your country, and seen and come to value those places where True Parents invested important years of their lives. We have also learnt of the many trials that members of AFUPM have had to face from the early days of its founding to the present. In recent times we have witnessed those trials first hand and shared the struggles with you.

We now stand at a crossroads. UCI is being unceremoniously ejected from the critical role it has been playing in Brazil. As a result, the work done to resolve outstanding legal and tax issues that threatened the lands True Father invested in, and to restore the land that had been mismanaged, has now been placed in jeopardy.

We sincerely pray that the current, precipitate actions directed from International Unification Church headquarters and carried out by the current leaders of AFUPM are truly in line with God’s expectation and will protect True Parents’ legacy in Brazil that has been preserved to date only with great efforts. Changes now taking place will have a significant impact on Brazil’s providence in the future.

The worldwide membership of the Unification Church knew very little about the reality of the AFUPM in Brazil. They were totally unaware that UCI and its chairman, Dr. Hyun Jin Moon, had spent the last two years battling in the legal trenches of Brazil in an effort to salvage the foundations that had been close to being entirely lost due to decades of mismanagement.

Regrettably they are still unaware of that work. Instead they know Brazil from the much edited, widely circulated videos of the circus into which Rev. Shin Dong Mo turned a respectful invitation for Dr. Hyun Jin Moon to speak to members who eagerly wanted to hear him. They are now being told by International headquarters and AFUPM leaders that the national embarrassment provoked by Rev. Shin was supposedly a ‘hostile takeover’ by Dr. Hyun Jin Moon and by UCI.

Some are even spreading the particularly vicious rumor that UCI wants to steal all the Brazilian assets including land, buildings, and the Sorocaba football team. This is despite the fact that UCI has been managing those assets, worth hundreds of millions of dollars, on behalf of AFUPM for two years and in that time has recovered an equivalent amount of value that otherwise would have been lost owing to earlier incompetence, corruption, and irresponsibility. It is also despite the fact that UCI was working in Brazil at the urgent request of the Korean leaders there, and with the full endorsement of True Father.

On the basis of such unfounded claims and rumors, UCI and the Superior Council, whose support as the legal voice of AFUPM has been critical to the legal salvage work undertaken, are now being shown the door by the Unification Church leadership. Before addressing the steps they have taken, however, it is worth explaining a little about the AFUPM properties and work UCI has been doing in relation to them.

Beginning in 1995, AFUPM purchased several large rural properties in the state of Matto Grosso du Sul. The combined area of the properties was close to 90,000 hectares (222,300 acres). Over the next twelve years problems with the properties accumulated as a result of lack of financial and human resources, poor planning and management, failure to seek sound legal and tax advice, and exploitation by unethical lawyers. By 2007 the Association was under siege from multiple and severe legal problems that threatened its very existence.

At the time of the Paraguay GPF in July 2008, AFUPM’s problems had reached uncontrollable proportions. Faced with this crisis, five Korean and one Japanese leaders, (former Continental Director Cho Jung Soon, Rev. Kim Heung Tae, Rev. Kim Yoon Sang, Rev. Yang Joon Soo, Rev. Shin Myung Ki, and Rev. Hideo Oyamada) overseeing various aspects of AFUPM’s work in Brazil, asked for a meeting with Dr. Hyun Jin Moon and, in unison, requested his assistance in trying to resolve all AFUPM’s issues. Dr. Moon stated that True Father has been directly overseeing the Brazil providence, and insisted that he would only get involved with True Parents’ blessing. As a result of this meeting, these Korean leaders made formal written requests (attached) to True Parents for Dr. Hyun Jin Moon’s assistance. True Parents then urged Dr. Hyun Jin Moon to step in and save the foundation. UCI then set to work, designating a team to evaluate and address the situation.

As part of the team's research and evaluation process, UCI hired two of the finest law firms in Brazil to help solve these multiple and difficult problems. UCI and the law firms have been working together diligently since that time to clean up past problems, protect existing properties, and recover those which had been lost or stolen. As a result of the intense effort invested, significant strides have been made in all areas.

The problems fell into three major legal categories (most of which are related, directly or indirectly, to the ownership of the rural real properties in Mato Grosso do Sul):

First, environmental. Work the AFUPM did at New Hope Farm Jardim, Salobra, Jangada and Nabileque (Hotel Americano) has been prosecuted for violations of environmental laws.

Second, tax-related. Brazil’s Tax Agency has twice issued orders revoking AFUPM’s tax immune status, claiming that AFUPM’s ownership and operation of the rural real properties in Mato Grosso do Sul violates the requirements for tax immunity under the Brazil constitution. Yet at the same time, AFUPM has also been assessed excessive rural land property tax on the grounds of insufficient usage of rural land.

Third, attorney related. AFUPM has been victimized by several extremely unethical and/or incompetent attorneys. One even transferred a large part of AFUPM properties into his own name.

Working with our attorneys, UCI got to work to tackle and resolve this daunting array of legal and tax problems for AFUPM. It was an extremely difficult task. In the first place, it was not easy to even identify what all the legal problems were and, second, in several cases judgment had already been rendered and/or fines, penalties and damages had accumulated which may be irreversible.

However, a major success of our hard labor, in the largest case involving almost half of AFUPM’s rural properties, was achieved when we were notified on July 7, 2010 that the arbitration was decided in our favor (attached). As a result of this decision, we not only prevented further loss of land to an unethical former attorney of AFUPM, but were also successful in reclaiming those properties that had already been transferred to him.

These are the facts. Yet in the face of these facts, and despite the success so far achieved, UCI and its chairman have once again been falsely accused of seeking to take over church assets. UCI is happy to provide its services to support the Unification movement and proud of what it has accomplished for the Brazil AFUPM.

However, it will defend itself against the increasingly frequent misrepresentations and baseless accusations from the Unification Church leadership and set the record straight. To that end, we have asked our Brazilian law firm TozziniFreire to prepare a brief summary report (attached) of the issues addressed and work accomplished until now.

Now that work will have to come to an end. On June 26, on the heels of the very first visit of Rev. Hyung Jin Moon, International President of the Unification Church, to Brazil, an AFUPM general assembly was held to remove the Superior Council. The Council’s support has been critical to winning the legal victories, since they legally represent the Association. The Church leadership has also taken steps to make it impossible for UCI to continue its work.

The future security of the AFUPM properties was perhaps more compromised on June 15, 2010, when Mr. Simão Ferabolli, the national leader and the President of AFUPM, acting at the direction of Continental Director Rev. Shin Dong Mo and the International Unification Church Headquarters, terminated Mr. Clovis da Silva, a church member and general manager of the large-scale properties in Mato Grosso du Sul.

Mr. da Silva was the key person on the ground with whom UCI worked to resolve the serious legal and managerial problems that had arisen in Mato Grosso du Sul outlined above. No one knows the history and understands the complexities of those issues better than he. His summary dismissal occurred unilaterally and without consultation with UCI.

These actions were taken in haste and with no discernible rationale. Their singular purpose has been to oust UCI from Brazil and eliminate its ability to offer advice and managerial oversight of AFUPM’s challenges. This is harsh treatment to receive after faithfully working to restore AFUPM’s fortunes. But what most concerns UCI is the potential for the loss of the hard-earned trust, reputation and credibility with the various Brazilian authorities and agencies that UCI has been dealing with. The good working relations we have established with them have been critical to our success and have allowed us to gain one victory after another.

Now this achievement is once again under threat. While knowing nothing of the complex background of the legal issues related to the Mato Grosso du Sul lands, the Unification Church leadership is taking over management of those lands, eliminating UCI’s on-the-ground expertise and relationships built, dismissing people with knowledge in the many ongoing cases, reinstating individuals who managed the properties when the many problems began, and thus risking again the loss of the assets that had been so recently saved.

It is no longer clear who will take responsibility to manage these delicate issues now. The US Family Federation website posted notes from Rev. Shin Dong Mo, purportedly of a meeting of Brazil’s general assembly on June 12, 2010. In those notes he stated that the continuing legal issues in Brazil would be resolved by remaining in close contact with the lawyers of the church and the Mission Foundation. But who will drive the process? Will it be Mr Simao Ferabolli? Or Rev. Shin? Perhaps even Rev. In Jin Moon in New York? Or Rev. Hyung Jin Moon in Seoul? Without a consistent continuation and follow-up much will be lost.

As UCI is now shut out of any further involvement with the issues of AFUPM, we wish Rev. Shin Dong Mo, Mr. Simão Ferabolli, and the International Unification Church headquarters success as they take over the management of these difficult issues in Brazil. We pray that they can pick up the responsibility of resolving them and add to the existing success.

However, we want to make very clear our deep concern that these matters will not receive the attention they require. A great deal of money and effort has been invested to clean up the terrible mess into which the Brazilian church had fallen. To cease that effort, or return to the haphazard, incompetent methods of the past can only plunge AFUPM back into the state of near-collapse from which it has just been rescued.

UCI

Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Kim Heung Tae’s Request

 

Attachment: Korean and Japanese Leaders’ Request to True Parents

 

 

We tried our best to accomplish True Parents’ big goal and the Jardim project in this providential land, but we made many mistakes due to our lack of understanding the Brazilian culture and language.

As I felt the limitation of my ability, I’m asking Hyun Jim Nim’s attention and guidance by taking this opportunity during the GPF events in Paraguay.

I admit that I made terrible mistakes and I want to do my best at the risk of my life to make up for the past mistakes.

July 2nd, 2008

During Paraguay GPF events

Kim Heung Tae

Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Kim Yoon Sang’s Request

 

Attachment: Korean and Japanese Leaders’ Request to True Parents

Dear True Parents,

I exerted myself as hard as possible to accomplish the mission as the chief of the Jardim project, but I’m feeling repentance and penitence for causing anxiety to True Parents due to my inadequacy in reality.

I beg you that Hyun Jin Nim who has achieved great revolution in Paraguay can oversee (or manage) Brazil.

I will follow your direction with absolute faith, absolute love, and absolute obedience.

Chon Il Kuk 8th year (2008), July 2nd

From Paraguay Asuncion

Kim Yoon Sang

Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Yang Joon Soo and Shin Myung Ki’s Request

 

Attachment: Korean and Japanese Leaders’ Request to True Parents

As a person who had managed the assets and had responsibilities for a long time, I have been feeling deep repentance and regret for the many problems due to my poor management.

We became keenly aware of the limitation of our abilities and I would like to say that we can solve the current problems through Hyun Jin Nim. Please give us your approval (or accept our proposal).

July 2nd, 2008

Best regards,

Yang Joon Soo

Please support us with a competent working management team in order to manage and operate the Jardim project more effectively because the current system has not been working.

Shin Myung Ki

Attachment: Korean and Japanese Leaders’ Request to True Parents

Reverend Hideo Oyamada’s Request

 

Attachment: Korean and Japanese Leaders’ Request to True Parents

We did our best to solve the Jardin problem, but it still remains unsolved as of now due to our fault and incompetence. I am really sorry that we have no choice but to ask HJN to pave the way for resolution.

Sincerely yours,

7/2/2008

Hideo Oyamada

Attachment: Summary of the Arbitration Decision

The following is a summary of the 108 page arbitration decision:

The ruling was a 2:1 decision by the Arbitral Tribunal

Reporting part:

(i) full 60 pages report of the parties’ arguments and petitions presented in the proceeding;

Decision part:

(i) an analysis of the agreement’s legal nature: it reaches the conclusion that the agreement is not a power-of-attorney in rem suam, but refers to it as a partnership;

(ii) the assignment of debt and release of obligation supposedly signed by César Zaduski, was considered unenforceable, since there is no evidence that the creditors agreed with the assignment;

(iii) although the decision considered that the Agreement is valid, it has verified reciprocal breaches: Dr. Antonio did not fulfill the payment of the sale proceeds, and has not acted with the expected diligence while selling the properties, violating, thus, the good faith; the Association, in accordance with the decision, breached the Agreement due to the offering of the lands in guarantee to another party.

(iv) the effect of the reciprocal breach is the restitution of the parties to the previous status (status quo ante), which means that the selling of the properties grounded on the breached agreement is null and do not have any effect, even to third parties, in accordance to the ruling;

(v) the validity of the sale and purchase agreement of the Rio Branco farm, as expected, was not analyzed by the Arbitral Tribunal, since it involves different parties and also has a jurisdiction clause (Campo Grande);

(vi) due to the ruling that the parties shall be restituted to the previous status, the Tribunal determined the Association to reimburse Dr. Antonio in the amount of R$ 2.909.058,75, to be adjusted and accrued with interest since the start of the proceeding. Such amount represents the sum claimed by Dr. Antonio as expenses (R$ 3,266,499.53) with the deduction of R$ 357,440.78, not related to the Farms of the Agreement in accordance with the decision; such amount shall be paid by the Association within 30 days after the restitution of all the properties to the Association;

(vii) the lease agreements were not analyzed by the Tribunal, since they have different parties and also have a jurisdiction clause (Jardim and Porto Murtinho);

(viii) finally, Dr. Antonio shall present a reconciliation of account of all acts taken on behalf of the Association and provide report of all the cases that are currently being handled by him.

Attachment: Summary of the Arbitration Decision

Attachment: Summary of the Arbitration Decision

Tozzini, Freire, Teixeira e Silva R. Borges Lagoa 1328 04038-904 São Paulo SP Brasil T 55 11 5086-5000 F 55 11 5086-5555 www.tozzinifreire.com.br

São Paulo Rio de Janeiro Brasília Porto Alegre Campinas New York

REPORT

DATE: July 8th, 2010 TO: AFUPM – “Association”

ATTN: Associates of AFUPM and Worldwide Unification movement

FROM: Giovanni Ettore Nanni SUBJECT: Association’s current legal situation in Brazil

1. INTRODUCTION

By July, 2008, the situation of Associação das Famílias para Unificação e Paz Mundial (AFUPM or Association) in Brazil was extremely dire, where financial and legal wellbeing of AFUPM was in serious question. UCI decided to intervene in order to reverse further trending catastrophe, initiating to adopt some measures in order to guide the Association onto the right path. As example of the bad situation experienced by the Association at that moment it’s possible to mention that it was involved in numerous lawsuits mainly running before the Court of Mato Grosso do Sul. Some of the attorneys handling those lawsuits have never provided the Association with reports or copies of the claims, so the Association’s representatives could not have control of it. Most of all Association’s properties in Mato Grosso do Sul, as well as few in other states, had been attached by opposing parties in the lawsuits to guarantee the debts. The Association’s financial situation was terrible. It had no resources to address the existing debts which included taxes, environmental fines, attorney’s fees and others. At that moment, the most relevant properties in Mato Grosso do Sul were involved in a Contract signed by and between the Association and its attorney Antonio Augusto de Souza Coelho ("Antonio Augusto"). According to such Contract, said attorney had power to sell the lands to himself or to third parties. The lands started to be sold, but the Association never received anything for that. There is no doubt that the Contract was unfair and absolutely unfavorable to the Association. Briefly, the Association was involved in the following relevant cases: (i) five tax foreclosures in the total amount of approximately R$31,500,000.00 (updated until December, 2009); (ii) five tax administrative proceedings in the total amount of approximately R$32,900,000.00 (updated until April, 2010); (iii) one arbitration proceeding, in which the amount of approximately R$150,000,000.00 involved refers to the properties discussed on the dispute;

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(iv) two lawsuits involving the transfer of the properties of the Figueira Farm and the Morraria Farm, which involves the total amount of approximately R$74,000,000.00; (v) nine lawsuits filed by David Moura de Olindo (“David”), involving the total amount of approximately R$10,000,000.00; (vi) five lawsuits filed by Wilson Francisco Fernandes, involving the total amount of R$2,700,000.00; (vii) one lawsuit filed by Laura Cristina Ricci Cristóvão, involving the total amount of approximately R$600,000.00; (viii) one enforcement of final decision involving the total amount of approximately R$70,000,000.00; (ix) five public civil actions, involving environmental issues: three of them concerns the New Hope Farm, one concerns the Hotel Americano and one concerns the Salobra Farm. The amounts involved in such claims are considerable, but very hard to estimate; (x) other less relevant cases. 2. SERVICES RENDERED BY TOZZINIFREIRE ADVOGADOS

At the time UCI started to assist the Association, the first step taken was hiring TozziniFreire Advogados. Along with it, several measures have been adopted, initiating by a research to identify all the problems involving the Association which took over 4 months to fully catalogue and analyze due to the extensive and complicated nature of the problems. Some of the problems and solutions found by UCI and TozziniFreire will be briefly described below.

2.1. Real estate properties’ disputes

Part of the chaotic and uncontrolled situation was reflected directly in the past decision by the Association to settle an Agreement with ex-lawyer Antonio Augusto. The Agreement, signed by the Association in error, induced by its ex lawyer and without any kind of legal assistance, basically granted Antonio Augusto powers to sell most of the Association’s farms in Mato Grosso do Sul. In other words, the Association assigned control and/or ownership over 46,000 hectares of property worth approximately R$150,000,000.00 in exchange of assuming debt and liabilities of no more than R$25,000,000.00 (though Antonio Augusto convinced the Association to believe that these debts actually amounted to over ten times their real amount). In fact, Antonio Augusto sold some of the Association’s farms and was taking all actions in order to sell the rest of them.

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Thus, UCI immediately authorized TozziniFreire, on behalf of Association, to request an Injunction, which was granted and kept in force, preventing Antonio Augusto from selling all Association’s farms in Mato Grosso do Sul. In parallel, an arbitration proceeding was initiated in which the Association claimed for the nullification and/or Antonio Augusto’s breach of the Agreement signed by the Association and all the acts taken by Antonio Augusto on behalf of it, which caused inestimable losses for the Association’s assets. Recently, an extremely favorable decision was rendered. The Agreement was terminated and the Association regained all the properties back, except Fazenda Rio Branco that was not included in the Agreement. It was a two-year proceeding, that demanded hard work by TozziniFreire and UCI, and the final decision was a great victory. Moreover, several farms owned by the Association have been invaded and occupied by third parties for the past years. The situation was not under control and the possibility of losing the areas to occupants was worrying. UCI and TozziniFreire have taken the necessary actions to identify the occupants and to repossess those areas, avoiding the properties’ loss.

2.2. Former lawyers’ disputes

UCI and TozziniFreire, duly representing the Association, were also able to intercept another abusive action taken by one of the Association’s ex lawyer, David. There is a foreclosure proceeding filed by Apolinário Adames de Souza ("Apolinário”) against the Association in the unreasonable amount of approximately R$70,000,000.00. David, then, on behalf of the Association, filed a supposed defense, arguing that the amount due would be approximately R$40,000,000.00. Both the amount plead by Apolinário and the acknowledgment of debt in the sum of R$40,000,000.00 by David have no reasonable grounds. TozziniFreire plead the nullity of the unduly defense presented by David on behalf of the Association and presented a real refutation for the entire debt that is being collected. There is still missing a decision about it, but in any case the nullity of David’s act in the case was already declared by the Lower Court judge and the collection proceeding is suspended at this time. Not only are civil measures being taken against all the people involved in such cases, but also criminal actions are being looked into in this regard. Also, when UCI undertook the control of the Association’s situation, there were 9 (nine) lawsuits filed by David, involving the total amount of approximately R$10,000,000.00, 5 (five) lawsuits filed Wilson Francisco Fernandes (“Wilson”), a former attorney too, involving the total amount of R$2,700,000.00, and 1 (one) lawsuit filed by Laura Cristina Ricci Cristóvão (“Laura”), also a former attorney, involving the total amount of approximately R$600,000.00. All these cases refer to attorney fees supposedly owed by the Association and were not, at that time, being handled by any attorney, reason why

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the Association’s assets and real estate properties had being attached and lost. With UCI’s intervention, all these cases started to be handled by TozziniFreire and a lot of victories have been done in its favor from then on. It is important to point out that at UCI’s direction, the Association, assisted by TozziniFreire, filed a lawsuit against David, his companies and Laura in order to annul some of these lawsuits because the Association was induced in error by them.

2.3. Environmental issues

In relation to environmental issues, it was possible to verify that in the past some fines were imposed to the Association by environmental authorities and UCI is handling these cases at the moment. Also, TozziniFreire found at that time 5 (five) public civil actions filed against Association related to environmental issues which were completely ignored by the Association and with high risks of condemnations and huge fines. Then, one of them, in which was running against the Association, TozziniFreire presented an appeal to the Superior Court of Justice in order to revoke the unfavorable decision rendered against the Association. The case has been suspended and UCI has negotiated a very reasonable agreement that is about to be settled with the Public Prosecutor. In another case, an engineer was hired by UCI in order to draft a project to recover the environmentally damaged area, which will be presented to the Public Prosecutor to settle the case. It is TozziniFreire’s understanding that a settlement can quickly be reached if the Association removes all structures that currently reside in the permanent preservation area along the river. However, UCI has argued that this is a religious holy ground for the Association and has been working to find a suitable agreement to keep these structures in their places. In a third case, UCI negotiated the terms, assisted by TozziniFreire, where the Association settled an agreement with the Public Prosecutor, ending the lawsuit. It is important to emphasize that the involved amount in such actions is considerable, but very hard to estimate. UCI and TozziniFreire succeeded in obtaining great victories for the Association.

2.4. Tax issues

2.4.1. Judicial tax proceedings

As for the tax liabilities involving the Association, TozziniFreire is currently handling the defenses filed in the five tax foreclosures already filed by National Treasury aiming at collecting alleged ITR unpaid taxes, involving approximately R$50,000,000.00.

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A favorable Lower Court decision was rendered in the single case already judged, which involves the amount of approximately R$2,500,000.00. The Federal Lower Court recognized the Association’s tax immunity due to an understanding that the documentation and allegations presented by TozziniFreire, on behalf of the Association, were enough to prove that it fulfills the requirements established by law for granting such immunity. This favorable decision may influence the other pending tax foreclosures related to the ITR tax debts collection (a potential liability involving R$47,500,000.00), since the basis of the defenses are the same, as well as any other tax foreclosure involving the same object (TozziniFreire has been constantly searching for any new tax foreclosure filed by National Treasury). Besides the handling of the ITR taxes already assessed by Brazilian IRS, UCI and TozziniFreire have been coordinating a large and complex work involving the georreference and registration of Association’s rural real estate properties in order to properly designate permanent preservation and required legal reserve areas. The presentation of the proper register and georreference is mandatory to reduce several of ITR tax debts already assessed and yet avoid potential liabilities involving the rural property taxes.

2.4.2. Administrative tax proceedings

TozziniFreire is currently handling five tax administrative proceedings issued by the Internal Revenue Office in order to collect different federal taxes – IRPJ, CSLL, COFINS and PIS. The values of IRPJ, CSLL, COFINS and PIS are being charged in virtue of an act issued by the federal tax authorities suspending the tax immunity applicable to the Association. TozziniFreire presented a defense alleging the expiration of the statute of limitations for collection of the debts object of such tax collection as well as the application of tax immunity to the Association, as it fulfills the legal requirements. Such proceedings are extremely important for the Association as it discusses the tax immunity applicable in the case. Recently, TozziniFreire has had a partially favorable decision in the proceeding regarding ITR issued by the lower court which canceled part of the tax collected that will benefit the Association. Unfortunately, it is not possible yet to estimate the amount of benefit that the Association will have in virtue of such decision as it stills need to be confirmed by the higher court but a decision of the lower court is good news indeed. An appeal was filed before the higher court in order to change the part of the decision that was unfavorable to the Association and TozziniFreire is closely following up on it.

2.5. Real Estate Properties

As for the real estate properties owned by Association, UCI and TozziniFreire have prepared an inventory including all properties owned by the Association with a description of their legal and documental current status and if they have been sold or encumbered. With this

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inventory that had previously not been prepared, the Association knows exactly the situation of each of its real estate properties. Due to the Arbitration Proceeding and to avoid the real estate properties to be transferred to third parties, especially to Antonio Augusto, TozziniFreire has blocked all real estate registries of these properties grounded on an injunction. This action enabled the Association to keep ownership of all the real estate properties.

Later on, the final decision of the arbitration proceeding determined the termination of the Agreement and gave back to Association all the properties object of the Agreement. Due to UCI and TozziniFreire’s actions, the georreference procedure of the farms has been mostly completed by the engineer hired by UCI. The georreference of the farms shall allow the regularization of the farms with INCRA, the remission of rural estate taxes (ITR) of the farms, and the free disposal of the farms by the Association if it intends to.

3. CONCLUSION

To sum up, actions taken by TozziniFreire jointly with UCI have already avoided the payment of outrageous amounts and have avoided the lost of thousands of hectares of land areas as well. UCI and TozziniFreire participate in weekly conference calls (usually lasting at least one (1) hour) to discuss updates, legal strategies, direction etc. For instance, TozziniFreire and UCI prevented the loss of 46,000 hectares of property worth approximately R$150,000,000.00, by means of the above mentioned Injunction. Afterwards, a very successful work by TozziniFreire and UCI granted the most important victory to the Association: the arbitration proceeding was judged and the Association got back all the properties object of the Agreement. In addition, TozziniFreire, assisted by UCI, plead the nullity of the defense presented by a former lawyer, which have erroneously acknowledged a R$ 40,000,000.00 debt of the Association. As informed, there is still one missing decision, but in any case the nullity of ex lawyer’s act in the case was already declared by the Lower Court judge and the collection proceeding is suspended at this time. Moreover, the Association was about to accomplish an award. An appeal to the Superior Court of Justice was presented in order to revoke the unfavorable decision rendered against the Association and is about to settle an agreement with the Public Prosecutor. In other environmental lawsuits, (i) an agreement was settled with the Public Prosecutor, assisted by TozziniFreire and UCI, ending the lawsuit and (ii) UCI hired an engineer in order to draft a project to recover the damaged area while maintaining existing structures, which will be presented to the Public Prosecutor to settle another environmental case.

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It is important to inform that, in Brazil, the georreference procedure is required to regularize rural areas’ situation, allowing the remission of rural real estate taxes (ITR) of the farms and the properties’ free disposal. The Association should have hired an engineer to do the farms’ georreference procedure years ago but it had no resources to pay for that complex work. For that reason, UCI hired an engineer to proceed with the georreference of all farms owned by Association, needed especially to transfer to the Association the ones that have been previously acquired and paid, but were still in the name of previous owners, due to the lack of georreference. Actions taken by TozziniFreire and UCI made it possible for the mostly completed georreference procedure of most of the farms. As for the tax liabilities involving Association, TozziniFreire and UCI are currently handling the defenses filed in the five tax foreclosures already filed by National Treasury aiming at collecting alleged ITR unpaid taxes, involving approximately R$50,000,000.00. A favorable Lower Court decision was rendered in the single case already judged which involves the amount of approximately R$2,500,000.00. The Federal Lower Court recognized the Association’s tax immunity and if this favorable decision influences the other pending tax foreclosures related to the ITR tax debts collection, the Association might be released of the payment of R$47,500,000.00. It is clear that UCI and TozziniFreire are taking all the necessary actions to preserve the Association’s patrimony and are being successful at their job, as for instance the regain of all the properties that worth R$ 150,000,000.00 by means of the arbitration proceeding. Unless forced by AFUPM to withdraw from all work, they intend to continue with it, in order to safeguard the Association’s situation in Brazil.