EXHIBIT 10.4
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMENT ("MOA") is entered into this 15th day of
June, 2001 by and between EnviroClean International, Inc. (formerly known as
Advanced EnviroTech Systems, Inc.,) with offices at 00000 Xxxxx Xxxxx-Xxxx
Xxxxxxx XXX, Xxxxx 000, Xxxxxx, Xxxxx 00000 (hereinafter "ENVI"), and
Intercontinental Manufacturing Company, a division of Datron, Inc., having an
address at 0000 X. Xxxxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000 (hereinafter "IMCO").
WHEREAS, ENVI owns certain intellectual property rights in and to a
solid waste treatment technology marketed under the trade name EnviroClean
Thermal Oxidation System ("TOS"); and
WHEREAS, ENVI has entered into an arrangement with IMCO wherein ENVI
has granted IMCO the exclusive right to, among other things, market TOS to
certain foreign countries including, without limitation, the Kingdom of Saudi
Arabia; and
WHEREAS, in consideration for granting such exclusive marketing rights,
ENVI is entitled to receive from IMCO a royalty fee for each TOS sold by IMCO;
and
WHEREAS, in order to attempt to effect a sale of a quantity of TOS
units to the Kingdom of Saudi Arabia, IMCO deems it necessary to reduce the unit
sales price of TOS below those levels previously contemplated, which action will
also require a reduction to the royalty percentage rate applied to such
contemplated sales; and
WHEREAS, ENVI is willing to accept a reduced royalty on such sales to
the Kingdom of Saudi Arabia in return for the potential marketing benefits that
could be expected to occur as a result of the market exposure such a sale to the
Kingdom of Saudi Arabia could create; and
WHEREAS, ENVI owes IMCO for certain expenses incurred by IMCO on ENVI's
behalf and has previously agreed to reimburse IMCO for these amounts owed by, in
part, permitting IMCO to retain portions of any such royalties received from TOS
sales; and
WHEREAS, ENVI and IMCO desire to amend the manner in which any such
royalty amounts are to be applied to reduce the amounts owed IMCO by ENVI.
NOW THEREFORE, the parties hereto, in consideration of the foregoing
and of the mutual covenants, agreements and conditions herein contained, do
hereby agree as follows:
1. REVISED ROYALTY RATE. ENVI and IMCO hereby agree that, with
respect to the sale of any TOS units made by IMCO to the
Kingdom of Saudi Arabia (including, without limitation, any
persons, firms or entities acting as contractors or agents of
the Kingdom of Saudi Arabia) during the six (6) month period
commencing as of the effective date of the MOA, royalties will
accrue at the flat rate of $25,000 per TOS unit.
2. APPLICATION OF ROYALTY AMOUNTS. ENVI and IMCO hereby agree
that, with respect to the sale of any TOS units made by IMCO
to the Kingdom of Saudi Arabia (including, without limitation,
any persons, firms or entities acting as contractors or agents
of the Kingdom
of Saudi Arabia), any royalty amounts applicable to any such
TOS sales will be applied cumulatively in the following manner;
o First, to reduce that amount owed by ENVI to IMCO and
generally referred to as the "contingent accounts
payable", in the approximate amount of $400,000.
o Second, applicable royalties up to an amount of $500,000
in excess of the "contingent accounts payable amount"
will be permanently waived by ENVI as a means to permit
IMCO to achieve a reduction in the selling price of
TOS units below those levels previously contemplated
by IMCO.
o Third, any royalties received in excess of those
permanently waived or applied to the "contingent
accounts payable" amount (the "excess royalties"), shall
be paid to ENVI. In the event that the quantity of TOS
units ordered by the Kingdom of Saudi Arabia is
sufficient to result in any such "excess royalties",
IMCO will use its reasonable best efforts to collect and
remit such royalty amounts to ENVI on an accelerated
basis.
3. CONVERSION OF IMCO ACCOUNTS RECEIVABLE. At present, IMCO has
on its books an accounts receivable due from ENVI in the
approximate amount of $600,000. IMCO hereby agrees to accept
and ENVI agrees to tender to IMCO common stock shares in a
company named MedSolutions, Inc., a corporation formed or to
be formed by ENVI, in full satisfaction of the amount of this
accounts receivable. ENVI and IMCO agree that IMCO shall
receive a number of shares in MedSolutions, Inc., equal to
that number derived by dividing the total amount of the
approximate $600,000 accounts receivable due IMCO by $1.25,
the anticipated per share price of MedSolutions, Inc. at date
of initial issuance.
4. COMPLETE AGREEMENT. This agreement sets forth the entire
understanding of the parties with respect to this MOA and
supersedes all prior agreements, covenants, arrangements,
communications and representations with respect to this MOA
and supersedes all prior agreements, covenants, arrangements,
communications and representations with respect to the subject
matter of this MOA.
IN WITNESS WHEREOF, the parties hereto have caused this MOA to be
executed as of the day and year first written above.
INTERCONTINENTAL MANUFACTURING COMPANY ENVIROCLEAN INTERNATIONAL, INC.
By: /s/ X.X. XXXXX By: /s/ XXXXXXX X. XXXXXXX
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X. X. Xxxxx Xxxxxxx X. Xxxxxxx
