CAT LITTER DEVICE DEVELOPMENT AGREEMENTDevelopment Agreement |
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Exhibit 10.27
CAT LITTER DEVICE DEVELOPMENT AGREEMENT
This Cat Litter Device Development Agreement (the “Agreement”) is made on January 15, 2007, by and between Nottingham-Spirk Design Associates, Inc., an Ohio corporation with offices at 2200 Overlook Road, Cleveland, Ohio 44106 (“NSDA”) and OurPet’s Company, a Colorado corporation with offices at 1300 East Street, Fairport Harbor, Ohio 44077 (“OurPets”).
Recitals
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A. |
NSDA is providing services to OurPets for the development of certain pet products (the “Product”) as more full described on Exhibit A attached hereto. The development of such Product is hereafter referred to as the “Project.” |
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B. |
The parties expect the Project costs to exceed the original budget for development of the Product set forth in the Development Agreement and the timeline for marketing Product to need revision, and therefore wish to memorialize their agreements with respect to the handling of these issues. |
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C. |
Beginning in September 2006, NSDA has invoiced OurPets for their professional development costs (“Professional Fees”) for the Product less a fifty percent (50%) deferral for future consideration (the “Deferred Costs”). |
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Through November 2005, the accumulated Deferred Costs were $86,200.00 and the total Deferred Costs upon completion of the Project are estimated to be $132,425.00. |
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by each party, NSDA and OurPets agree as follows:
1. Payment of Deferred and Non-Deferred Costs.
(a) Payment of Non-Deferred Costs. NSDA shall invoice OurPet’s for the non-deferred fifty percent (50%) of its Professional Fees plus its out-of-pocket expenses at actual cost as incurred.
(b) Restricted Shares. As payment for Fifty Thousand Dollars ($50,000) of the Deferred Costs, OurPets will issue shares of its common stock (the “Shares”). Such Shares shall be restricted securities pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), and will bear a legend to such effect upon issuance. The number of Shares to be issued shall be calculated by dividing $50,000 by the average closing price of the Shares over the last ten (10) trading days prior to the date of this Agreement.
(c) Royalty Payments. At such time as the Product is available for sale in the marketplace, NSDA shall be entitled to receive a royalty payment of $0.20 per unit of Product sold (the “Royalty Payment”). Royalty Payments would be paid on a quarterly basis, within thirty (30) days of each quarter end.
2. Termination of Royalty Payment. NSDA’s right to receive Royalty Payments shall automatically terminate at such time that all outstanding Deferred Costs which are due and payable hereunder are paid in full, unless earlier terminated by mutual agreement of the parties.
3. Estimated Timeline. The parties anticipate that the Product will be ready to market by the summer of 2007 and will use commercially reasonable efforts to stay within this timeline.
4. Cost Control. NSDA shall use its best efforts to minimize the Remaining Costs incurred in completing the development of the Product.
5. Progress Reports. NSDA shall provide OurPets with monthly progress reports detailing the progress achieved and anticipated actions that remains to be completed. Such progress reports shall include updates on Remaining Costs incurred to date and est
