Exhibit No. 10.40
Memorandum of Intent
This is a Memorandum of Intent by and between Waste Technology Corp.
("Seller"), a Delaware corporation, and Xxxxxx Xxxxxx and Xxxxxxx X. Xxxxxx
("Buyer").
BACKGROUND
A. Seller owns International Press & Shear Inc. ("IPS"), a Georgia
corporation, which owns and operates a hydraulic press baler manufacturing
facility in Baxley, Georgia.
B. Buyers are officers of IPS and manage the said IPS facility.
C. It is in the best interests of Seller and its shareholders to sell
the IPS facility, and Buyers are logical purchasers, with their background in
the baler industry and close involvement with IPS.
D. Buyers, together with possible other investors, are interested in
acquiring the assets of IPS, along with its name but not the stock of the
corporation.
E. This Memorandum outlines the intention of the parties as developed
to this date.
STATEMENT OF INTENTION
The parties intend to negotiate in good faith to reach and execute a
definitive agreement whereby Buyer would acquire substantially all of the assets
and assume certain liabilities of IPS on terms to be contained in a definitive
Asset Purchase Agreement (the "APA") to be entered into between the parties
including substantially the following:
1. Assets. Buyer would acquire the tangible and intangible assets of
IPS, including but not limited to land, buildings, real and personal property
leases, inventory, finished goods, work-in-process, patent rights (subject to
paragraph 4), parts, furnishings, fixtures, equipment, name, signage, telephone
numbers, listings, supplies, accounts receivable, orders and contract rights in
existence and reflected upon the financial statements of IPS as of the date of
closing, which shall be substantially the same as on October 31, 1999, subject
only to the operation of the business of IPS in accordance with Section 5
hereof.
2. Purchase Price. The purchase price of the said assets shall be the
sum of $800,000, plus the assumption of the liabilities set forth in paragraph 3
hereof. Eighty percent (80%) of the purchase price will be paid at closing, with
the balance due and payable sixty (60) days after closing.
3. Liabilities. Buyer will assume and indemnify Seller against the
following liabilities:
a. Note payable to Xxxxxxx County for EIP loan secured by
equipment.
b. Lease/purchase payment in favor of the Development
Authority of Xxxxxxx County, payable directly to SouthTrust Bank.
c. Guaranty of note payable to SunTrust Bank secured by baler
sold to AmeriTech.
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Buyer will also assume all IPS liabilities as of the closing date which are
properly reflected on IPS's balance sheet which shall be substantially the same
as of October 31, 1999 as of the date of closing, a copy of which is attached
hereto as Exhibit A. Provided, however, Seller, and not Buyer, shall be liable
for all warranty and product liability claims on equipment manufactured by IPS
prior to the closing date. Buyers will personally indemnify Sellers against any
loss resulting from the liabilities listed as paragraphs a., b, and c, of this
Section and the liabilities listed on Exhibit B attached hereto and made a part
of this agreement.
4. Patents. The parties acknowledge a controversy regarding the hinge
side patent acquired in the name of Xxxxx Xxxxxx while employed by IPS/Seller
(the "Patent"), and the uncertain status of ownership of the Patent. With
Seller's knowledge and consent, Buyer has been negotiating with Xxxxxx to
acquire the Patent, and Buyer has secured an option to so acquire it. As a part
of the transaction contemplated by this memorandum, Seller will convey and
relinquish unto Buyer all right, title and interest it has or may have in and to
the Patent. Buyer will grant Seller a license to manufacture for its own sales
purposes seven- and eight-inch bore standard hinge side closed door and open end
auto tie products; such license will not include any high speed or large wide
box two-ram machines. Seller shall pay to Buyer patent royalties equal to
Seller's proportionate share of the royalties paid by Buyer to Xxxxxx, based
upon their respective sales of equipment subject to the Patent. Seller's right
to manufacture said products shall be co-existent with Buyer's right to
manufacture the same equipment as long as the required royalties are paid, but
Buyer shall not grant such a right or license to any other entity in the United
States. Seller's rights to manufacture and sell such patented products shall be
limited to itself, with no right to assign or license the said rights to any
other party.
5. Interim Operation of Business. Buyer and Seller will continue to
operate the business of IPS in the same manner the business has been conducted
through the date of closing. All sales and accounts receivable will be directed
to the Baxley plant account and all payables directly attributable to its
operations will be paid from said account. No income or other funds will be
credited to any inter-company expenses or loans, which accounts with any current
balances will terminate as of closing.
6. Employees. Buyer shall not assume any employee obligations,
including any employment contracts, and specifically including any compensation
due Xxxx Xxxxxxx and/or Xxxxx Xxxxxx, which shall be satisfied by Seller
pursuant to negotiations between Seller and those persons. All employee matters,
including wages, salaries, benefits, bonuses, payroll taxes and workers'
compensation entitlements shall be paid in full or accrued by Seller as of the
date of closing, with Buyer to have no responsibility for any such issues
accruing prior to the date of sale.
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Buyers shall waive and relieve Seller of any back pay issues applicable to them.
7. Private Labeling; Product Cooperation. Each party will be willing to
manufacture baling presses for the other as a private labeled product, for a
price equal to five percent (5%) below dealer net price. Such cooperation shall
include Buyer's manufacture for Seller of the nine inch (9") hinge side standard
machine, and Seller's providing to Buyer auto-tie/twister products including the
complete machine and components thereof, including service parts and components
thereof.
8. Conditions. Consummation of the transaction contemplated by this
agreement is expressly conditioned upon the following:
a. Negotiation and execution of an APA in form and substance
satisfactory to Buyer and Seller, which contains customary representations,
warranties, indemnities and contingencies.
c. Receipts of consents as may be necessary for the purchase
and/or assignment of all tangible and intangible assets, leases and contracts.
d. Receipt of consents as may be necessary for Buyer to assume
liabilities stated in paragraph 3 hereof.
e. Satisfactory indemnification of claims relating to taxes,
product liability, warranty, environmental matters and other IPS liabilities not
expressly assumed by Buyer arising out of events occurring prior to closing.
f. Assurance of good, marketable title to the assets to be
acquired by Buyer unencumbered by any liabilities except those expressly assumed
herein and at closing Buyer.
g. Compliance with all securities regulations applicable to
the transactions completed by this agreement.
9. Acceptance and Closing. If this memorandum of intent is not executed
by both parties by November 2nd, 1999, it shall become null and void. The
closing of the transaction contemplated by this document shall be concluded as
expeditiously as practicable with full cooperation by both parties. Closing is
scheduled for November 15, 1999, and will actually occur sooner or later as may
be reasonably practical.
10. Assignment. Buyer shall have the right to assign its rights and
obligations under this memorandum of intent and any asset purchase agreement
subsequently entered into between the parties to a corporation or other entity
which would include the Xxxxxxx and Xxxxxx Xxxxxx as substantial shareholders.
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IN WITNESS WHEREOF, the parties have signed and sealed this Memorandum
of Intent evidencing their agreement with the terms hereof, on the date(s)
indicated below.
SELLER:
WASTE TECHNOLOGY CORP. (L.S.)
Date: 11/2/99 By: /s/ Xxx X. Xxxxx
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Xxx Xxxxx, CEO
BUYER:
Date: 11/2/99 /s/ Xxxxxx Xxxxxx (L.S.)
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Xxxxxx Xxxxxx
Date: 11/2/99 /s/ Xxxxxxx X. Xxxxxx (L.S.)
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Xxxxxxx X. Xxxxxx
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