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$605,500 to be prepaid at the closing as rental for the first 6
months.
In the fourth step of the transaction, Clearwater licensed
the recyclers to First Massachusetts Equipment Corp. (FMEC) for
12 years at a guaranteed minimum royalty of $100,917 per month
beginning with the seventh month of the license plus a prepaid
nonrefundable $20,500 advance royalty. After the 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
recyclers.
In the fifth step of the transaction, FMEC sublicensed the
recyclers back to PI, the manufacturer, 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.
In the final step of the transaction, PI was to sublicense
the recyclers to end-users who would use the recyclers to do the
actual converting of their low density thermoplastic foam or
film. The terms of the sublicense generally required the end-
user to pay PI 100 percent of the recycled foam in exchange for a
payment from FMEC based on the quality and amount of recycled
scrap. PI was to control and be responsible for placing the
recyclers with end-users and for arranging to collect or dispose
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Last modified: May 25, 2011