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.
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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.
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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.
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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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D.
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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.
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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
