www.sec.gov/Archives/edgar/data/1201251/...20409063031/v168199_8k.htm Item 1.01 Entry Into a Material Definitive Agreement Effective as of November 14, 2009 (the “Effective Date”), SpongeTech Delivery Systems, Inc. (“SpongeTech”) entered into a license agreement (the “Agreement”) with Marvel Characters B.V., a wholly owned subsidiary of Marvel Entertainment, Inc. (formerly known as Marvel Enterprises, Inc.) (“Marvel”). Although, the Agreement was effective on November 14, 2009, Spongetech only received the countersigned agreement on December 2, 2009. Pursuant to the Agreement, SpongeTech was granted a non-exclusive license to use the Marvel Spider-Man and Marvel Super Hero Squad characters in the manufacture, promotion, sale and distribution of sponges for SpongeTech’s child care bath sponge line in the United States, its territories, and Canada. The term of the license commenced on the Effective Date of the Agreement and expires on December 31, 2011, unless earlier terminated upon the terms and conditions set forth in the Agreement. All intellectual property rights related to the characters remain the property of Marvel. SpongeTech agreed to pay the following royalties to Marvel under the Agreement: (1) 12% of Net Sales (as such term is defined in the Agreement) of sales directly to customers, and in connection with all distributions; and (2) an additional 4% added to the royalty rates if the Licensed Articles (as defined in the Agreement) are sold F.O.B. In addition, SpongeTech agreed to a minimum royalty guarantee of $80,000 (allocated at $72,000 for the U.S. and its territories, and $8,000 for Canada), payable as follows: (1) $28,000 advance, which was paid by SpongeTech upon execution of the Agreement; (2) $26,000 payable on or before each of July 1, 2010 and January 1, 2011. These advances will offset actual royalties owed. In the event that the minimum royalty guarantees are not paid, Marvel has the right to terminate the Agreement. Marvel also has other rights to terminate the Agreement as set forth therein. SpongeTech also agreed to purchase a banner advertisement on Marvel’s website, and to contribute certain funds to Marvel’s Common Marketing, Brand Equity, and Participation Fund. The foregoing summary of the agreements and transactions described in above is qualified in its entirety by reference to the definitive transaction document, a copy of which are attached as exhibits to the this Current Report on Form 8-K. Item 9.01. Financial Statements and Exhibits. Exhibit No. Description 10.1 License Agreement by and between Marvel Characters B.V. and SpongeTech Delivery Systems, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SpongeTech Delivery Systems, Inc. Date: December 3, 2009 By: /s/ Steven Moskowitz Steven Moskowitz Chief Operating Officer and Chief Financial Officer |
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