- 7 -
After the Sentinel EPE recyclers were placed in service, the
license required additional royalty payments based on a
percentage of profits that might be realized on the sale or use
of the resin pellets produced by the Sentinel EPE recyclers.
FMEC Corp.'s sublicense to PI, the manufacturer, was on a
month-to-month basis for a royalty of $100,917 per month. The
sublicense to PI was subject to most of the terms of the license
from Clearwater to FMEC Corp.
No arm's-length negotiations for the price of the Sentinel
EPE recyclers took place among PI, ECI Corp., F&G Corp.,
Clearwater, and FMEC Corp. All of the monthly payments required
among the entities in the above transactions offset each other,
and the transactions occurred simultaneously. For convenience,
we refer to the series of transactions among PI, ECI Corp., F&G
Corp., Clearwater, and FMEC Corp. as the Clearwater transactions.
PI allegedly sublicensed the Sentinel EPE recyclers to
entities that would use the recyclers to recycle plastic scrap.
These agreements provided that the end-users would transfer to PI
100 percent of the recycled scrap in exchange for a payment from
FMEC Corp. based on the quality and amount of recycled scrap.
End- users were also required to use their best efforts to
recycle 220 pounds per hour for 16 hours per week. Profits could
then allegedly be made by lessees, such as Clearwater, in the
form of royalties calculated as the sale price of the resin
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011