Phantasy, Inc. is a research and development company that primarily develops and patents products. Phantasy, Inc.
then licenses other companies to produce and sell the products. In return, Phantasy, Inc. receives royalties from these
In 2009, Phantasy, Inc. developed and patented a product and then licensed Thurber Company to produce and sell it.
Thurber Company will pay royalties to Phantasy, Inc. based upon the amount of sales.
Phantasy, Inc. and Sumi, Inc., another independent company, have agreed to the following:
Sumi, Inc. will pay Phantasy, Inc. $5,000,000 in 2009. This payment is non-refundable.
In return, Phantasy, Inc. will give Sumi, Inc. 17% of the royalties Phantasy, Inc. receives during the years 2010-2015
from Thurber Company for the above product.
In the case that the total amount paid by Phantasy, Inc. to Sumi, Inc. exceeds $7,500,000, the percentage of royalties
paid by Phantasy, Inc. will drop from 17% to 5% on future royalties.
Phantasy, Inc. does not guarantee any payments to Sumi, Inc.