EXHIBIT 10.13
BUSINESS SEPARATION AGREEMENT
THIS AGREEMENT is dated this 28th day of April, 1999, and is entered
into by and between USA SPORTS GROUP, INC. ("USAS") and ERUDITE CONSULTING
(sometimes referred to herein as the "Xxxxxxxxx Entities"), and SD STUDIOS
("SDS") (sometimes referred to herein as the "Dymszo Entity"). XXXX XXXXXXXXX
and XXXXXXX XXXXXX, have joined in executing this Agreement for the limited
purposes specifically stated herein.
NOW, THEREFORE, in consideration of their mutual covenants, and for
other good and valuable consideration, the adequacy of which is hereby
acknowledged and agreed, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. At or prior to the signing of this Agreement, Dymszo will tender
to USAS Xxxxx Xxxxxx'x shares ("Dymszo") in USAS. Simultaneously, Dymszo will
resign from any and all positions he may have as director, officer or employee
of USAS. Simultaneously, Dymszo's wife, Xxxxx Xxxxxx, will tender any shares, or
interest in shares, she may have in USAS, and will resign from any and all
positions she may have as a director, officer or employee of USAS.
2. At or prior to the signing of this Agreement, Xxxxxxxxx will
tender to Dymszo all of Xxxxxxxxx'x shares in SD Studios (SDS). At the same
time, Xxxxxxxxx will resign from all positions he may have as director, officer
or employee of SDS.
3. Subject to paragraph 31 Dymszo will agree to complete the
manufacture of approximately forty five (45) briefcases at a location to be
chosen by Dymszo and promptly communicated to Xxxxxxxxx. Dymszo will do so on
the following terms and conditions. Dymszo will complete approximately eight (8)
briefcases per business week. At the end of each day, he will fax Xxxxxxxxx
certification of the number of briefcases finished and ready to be shipped. USAS
will then provide, in immediately available funds, payment in full for said
briefcases by the morning of the next business day. One Hundred Dollars
($100.00) per each completed case. Upon receipt of payment in cash or cash
equivalency, Dymszo will cause the shipment of the briefcases to take place.
USAS will be entitled to any profit realized with respect to the sale of said
briefcases. USAS will be responsible for any and all expenses for packaging and
shipping the cases.
4. In addition to the briefcases referenced above, there are
approximately sixty (60) additional attaches which may be available for sale,
pending the acquisition of purchasers for the same. Dymszo agrees to endeavor to
market to sell said attaches in accordance with paragraph #7. With respect to
each additional attache sold out of the proceeds of said sale, One Hundred
Dollars ($100.00) will be paid to USAS, and Twenty Five Dollars ($25.00) will be
paid to USAS's lender, Xxxxxxx Xxxxxxxxx.
5. USAS shall generate a payment summary, showing all vendors
amounts paid and balances due as of the date of this Agreement. With respect to
the various vendors for whom there is an outstanding balance owed by USAS or SDS
with respect to products manufactured by SDS, and where said product or the
inventory for the same is to be retained by Dymszo and removed from the USAS
corporate offices, Dymszo will take the following action. He will contact all
the vendors in question (the four identified on Exhibit "A" attached hereto) and
will make arrangements with them, such that SDS will assume its prorated portion
of the outstanding balance, and USAS assume its prorated portion of the
outstanding balance, and Dymszo will obtain written assurances from said vendors
that they will hold Xxxxxxxxx and USAS harmless from any portion of the balance
assumed by SDS, with respect to said products. Once satisfactory agreements have
been entered into with the applicable vendors generally in accordance with the
terms of this paragraph, Dymszo shall be entitled to remove from the premises
all inventory related to said products, and shall thereafter be entitled to
attempt to obtain any necessary license(s) to market said products and business
capital so as to be in a position to fabricate, market and sell said products.
In the event that SDS shall not have received a commitment for the issuance of
the relevant licenses, or in the event that marketing shall not have commenced
by Dymszo, SDS, or any other affiliate of Dymszo, within six (6) months from the
date of the execution of this Agreement, USAS shall be entitled to reclaim all
said inventory, and shall thereafter be entitled to seek to obtain a license for
Xxxxx Xxxx merchandise, and Dymszo, SDS and all Dymszo affiliates shall
cooperate with USAS in returning said inventory, and USAS shall thereafter be
entitled to attempt to market and sell said inventory or completed products with
respect thereto.
6. On all future sales to the existing client base generated by the
marketing efforts of Xxxxxxxxx Entities, including USAS, Dymszo, SDS and all
Dymszo affiliates jointly and severally agree to pay a five percent (5%) royalty
to USAS on the first One Hundred Thousand Dollars ($100,000.00) of sales,
whereupon the royalty shall increase to six percent (6%) on the next One Hundred
Fifty Thousand Dollars ($150,000.00) of sales, whereupon the royalty shall
decrease again to five percent (5%) on sales above Two Hundred Fifty Thousand
Dollars ($250,000.00), which such royalty obligation to expire five (5) years
from the date of this Agreement.
7. (A) Dymszo, SDS and/or Dymszo's affiliates shall be solely liable
and responsible for all debts, obligations, undertakings, liabilities,
commitments or claims of or against (collectively referred to herein as
"Obligations") SDS which accrued or became due prior to January 1, 1998, or
after the date of execution of this Agreement, and SDS and its successors and
assigns shall indemnify, and hold harmless, USAS, Erudite, Xxxxxxxxx and any
Xxxxxxxxx affiliates from and against any claims arising out of said
Obligations. Neither Dymszo, SDS nor any other Dymszo affiliate shall be
responsible for any other Obligations of SDS occurring during the period January
1, 1998 through the effective date of this Agreement, nor for any Obligations of
USAS or Erudite or any other Xxxxxxxxx affiliates.
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(B) USAS shall be solely liable for all Obligations which
occurred, arose or accrued during the period January 1, 1998 through the date of
the execution of this Agreement, and USAS and Erudite and their successors and
assigns, hereby indemnify, and hold harmless, Dymszo, SDS, and all other Dymszo
affiliates, from and against any and all claims which may at any time arise out
of, or in connection with, said Obligations. Neither Lipschutz, USAS, Erudite,
or any other Xxxxxxxxx Entities shall be responsible for any Obligations of SDS
which occurred, arose or accrued prior to January 1, 1998, or after the
execution of this Agreement, nor for any other debts, obligations, commitments,
undertakings or liabilities of Dymszo, SDS, or any other Dymszo affiliates.
(C) Except as specifically set forth in this Agreement, Dymszo,
SDS and all Dymszo affiliates, on behalf of themselves, their heirs, executors,
administrators, successors and assigns, do hereby remise, release, acquit and
forever discharge Lipschutz, USAS, Erudite, and all other Xxxxxxxxx entities,
their insurance carriers, predecessors, successors and assigns, officers,
directors, owners, employees and agents, from and against any and every claim,
demand, right or cause of action, on account of or in any way arising out of the
business relationship between and/or among any two or more of the parties
hereto, whether known or unknown, including but not limited to all claims
arising out of or related to any agreements entered into by, between or among
the parties prior to the date hereof, any stock or other equity interest of any
party held in any other party hereof, any employment relationship, or other
consulting or similar arrangement at any time entered into by and between the
parties, it being the intention of the parties that this release shall be a
complete release, in full, of all claims identified herein which may be
released, except as expressly set forth in this Agreement.
(D) Except as specifically set forth in this Agreement,
Lipschutz, USAS, Erudite, and all other Xxxxxxxxx entities, on behalf of
themselves, their heirs, executors, administrators, successors and assigns, do
hereby remise, release, acquit and forever discharge Dymszo, SDS and all Dymszo
affiliates, their insurance carriers, predecessors, successors and assigns,
officers, directors, owners, employees and agents, from and against any and
every claim, demand, right or cause of action, on account of or in any way
growing out of or arising out of the business relationship between and/or among
any two or more of the parties hereto, whether known or unknown, including but
not limited to all claims arising out of or related to any agreements entered
into by, between or among the parties prior to the date hereof, any stock or
other equity interest of any party held in any other party hereof, any
employment relationship, or other consulting or similar arrangment at any time
entered into by and between the parties, it being the intention of the parties
that this release shall be a complete release, in full, of all claims identified
herein which may be released, except as expressly set forth in this Agreement.
8. Before the date of this Agreement, USAS will remove Dymszo's
and/or SDS's name from the Sprint cellular phone xxxx and provide written
documentation of same.
9. USAS will provide written evidence to Dymszo that Dymszo's
friends (listed on Exhibit "B") who invested in the company were issued USAS
stock.
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10. USAS will deliver to Dymszo at the date of this Agreement all
product slides obtained from the USAS ad agency.
11. USAS will deliver to Dymszo at the date of this Agreement all
still photographs, instruction manuals, "top secret" xxxxxxx dossier materials,
customer order forms, and miscellaneous SDS files brought to the office by SDS.
12. All dossiers in the office which match up to briefcases will be
issued to Dymszo for completion of said briefcases. All prototype dossiers will
also be returned to Dymszo at the date of this Agreement.
13. At the date of this Agreement, all "originals," prototypes and
mockups for any Bond or Star Trek product which are needed will be delivered to
Dymszo.
14. At the date of this Agreement, Dymszo will be given the schedule
boards on the wall.
15. At the date of this Agreement, Dymszo will be entitled to take
with him the Xxxxxx Registers.
16. At the date of this Agreement, the checkbook and debit card for
SD Studios will be changed so as to remove Xxxxxxxxx from the account. A
corporate resolution will be signed by Xxxxxxx Xxxxxx removing her as a
signatory on the First Union SDS Checking account.
17. The parties have agreed to the following arrangements such that
Xx Xxxxxxxx will be repaid the One Thousand Six Hundred Dollar ($1,600.00) loan,
which was paid to USAS in order to finance a business trip to California. Dymszo
shall build (3) additional briefcases in addition to the forty-five (45)
briefcases referenced in paragraph 3. He will complete said briefcases at the
rate of approximately one(1) every three (3) weeks, and the net proceeds from
the sale of said briefcases will be utilized by USAS to reduce the obligation to
Xxxxxxxx. In this way, USAS will repay the One Thousand Six Hundred Dollar
($1,600.00) loan from Xx Xxxxxxxx within three (3) months from the date of this
Agreement.
18. Effective as of the date of this Agreement, Dymszo shall cancel
all liability insurance, car insurance and property insurance from Erie
Insurance Group, covering all of USAS interests.
19. Effective as of the date of this Agreement, the LP53 air gun and
frame will be given to Dymszo.
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20. The "Xxxxx Xxxx" website will be deleted from the Internet, and
no further promotional activities will be engaged in by USAS with respect to any
Xxxxx Xxxx, Star Trek electronic prop replicas, or Star Wars prop replicas
marketing, subject to the provisions of paragraph 5 hereof.
21. Effective as of the date of this Agreement, the photocopier
leased from Copelco Capital in the name of SD Studios will be turned over to
Dymszo and/or SDS. Dymszo and/or SDS will assume the lease, but USAS shall pay
all outstanding invoices up to the date of this Agreement with respect to said
lease; to bring it current, and shall provide written documentation of this
payment.
22. USAS will assume all liability for any and all Heritage Business
Systems' bills related to the copier incurred prior to this Agreement.
23. USAS shall assume and be responsible for any refund and any
subsequent claims asserted by Xxxx Xxxxxxx in relation to Six Hundred Dollars
($600.00) collected for product that cannot be delivered. Xx. Xxxxxxx has
requested a refund of the above amount.
24. Effective as of the date of this Agreement, Dymszo and/or SDS
will take the Polaroid spectra cameras on consignment. USAS will get paid first
Three Hundred Dollars ($300.00), then Ed will receive additional funds until he
is paid in full. If there is any remaining monies or profit after said payments,
Dymszo, SDS, or the relevant Dymszo affiliate shall be entitled to same.
25. Effective as of the date of this Agreement, Dymszo, SDS or the
relevant Dymszo affiliate shall be entitled to take with him and remove from the
premises and thereafter be solely entitled to all equipment and related tangible
personal property which he brought with him to the merged entity, including his
computer, drill press, hand tools and related items, all of which are detailed
on Exhibit "C" attached hereto and incorporated herein by reference.
26. Except as provided herein, all equipment or other tangible
personal property purchased by USAS after the merger shall be retained by USAS.
27. USAS shall be responsible for the approximately Fourteen Hundred
Dollars ($1,400.00) in medical bills incurred by Dymszo and his family as a
result of his health insurance lapsing due to nonpayment of premium. Payment
with respect to the approximately Seven Hundred Twenty Two Dollars ($722.00) of
dental bills shall be made at the rate of One Hundred Dollars ($100.00) per
month following the date of this Agreement.
28. The parties shall enter into a confidentiality, nondisclosure
and limited noncomplete agreement with one another. In particular, in connection
therewith, Dymszo shall agree not to compete with Xxxxxxxxx on the Xxxxxx Xxxxxx
Line, and Xxxxxxxxx shall agree with Dymszo not to compete on the Star Trek,
Star Wars or Xxxxx Xxxx lines (except for the products referenced in paragraph
20), and further subject to the provisions of paragraph 5. Further, Xxxxxxxxx
shall agree not to market any competitive product to any direct customers (as
opposed to wholesalers) on the mailing list attached hereto as Exhibit "D".
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29. Except as specifically referenced herein, this Agreement shall
contain all the essential terms and conditions, covenants and undertakings of
the parties with respect to the transactions contemplated hereby. This Agreement
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Pennsylvania. In the event that either party has any claim or
cause of action or arising out of the terms of this Agreement or the
transactions contemplated hereby, the parties agree to submit such claim, cause
of action or controversy to binding arbitration to be held either in Xxxxxxxxxx
County or Bucks County Pennsylvania and to be conducted in accordance with the
rules and procedures of the American Arbitration Association.
30. Upon the execution of this Agreement, and the transfer of stock
as contemplated hereby, USAS and SD Studios shall thereafter be two, separate
and legally distinct entities, with no equity ownership in common, and that the
two entities shall thereafter operate independently and autonomously.
31. USAS shall pay for any additional expenses incurred by Dymszo to
complete the forty five (45) attache cases. These expenses will cover the
purchase of miscellaneous hardware, magnets, brass number plates, etc. required
to complete the cases. This shall also include payments to the leather company
for the above cases.
32. USAS will be responsible for any and all cancellations and/or
chargebacks of attache orders except where such cancellations or chargebacks are
due to the failure of Dymszo to construct the attaches in a xxxxxxx like manner,
and within a reasonable time period. USAS will refund in full, any customers who
have prepaid for the attaches and wish to be refunded due to the delivery delay.
Dymszo's responsibility will be limited to completing the approximately forty
(40) outstanding orders in a reasonable time frame pursuant to paragraph 7
above.
33. USAS will incur the cost of fulfilling any and all JB
Collectors' Society CLub packages for which USAS collected dues up to the date
of this termination. USAS will provide written documentation to Dymszo as to the
names and address of all Club Members who have received these fulfillments along
with the date of shipment (listed on Exhibit "E").
34. This Agreement shall constitute a legally binding agreement of
the parties. It shall be binding upon the parties, their heirs, successors,
assigns and all entities of which they are now, or may hereafter be, principals.
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IN WITNESS WHEREOF, the parties hereto by their duly appointed
officers thereunto duly appointed, have executed, or have caused this Agreement
to be executed, on the date set forth below.
Dated:________________
Attest: USAS SPORTS GROUP, INC.
______________________ By: /s/ Xxxx X. Xxxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------
Title: Pres.
-----------------------
Attest: ERUDITE CONSULTING
______________________ By: /s/ Xxxx X. Xxxxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxxxx
----------------------
Title: Mtg. Dir.
-----------------------
Attest: SD STUDIOS
______________________ By: /s/ Xxxxxxx Xxxxxx
-------------------------
Name: Xxxxxxx Dymzo
----------------------
Title: Pres.
-----------------------
Witness:
/s/ Xxx Xxxxxxxxx /s/ Xxxxxxx Xxxxxx
--------------------- -------------------------------
XXXXXXX XXXXXX
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Witness:
/s/ Xxx Xxxxxxxxx /s/ Xxxxx Xxxxxx
--------------------- -------------------------------
XXXXX XXXXXX
(Xxxxx Xxxxxx executing this
Agreement solely with respect with
her undertakings set forth in
paragraph 1 of this Agreement)
Witness:
/s/ Xxx Xxxxxxxxx /s/ Xxxx Xxxxxxxxx
--------------------- ---------------------------------
XXXX XXXXXXXXX, Pr.
EXHIBIT "A"
VENDORS TO BE CONTACTED TO CONFIRM
----------------------------------
NEW PAYMENT ARRANGEMENTS
------------------------
Xxxx X. Xxxxxxx (Machine Shop) (000) 000-0000
Contact: Xxxxx Xxxxxxx
000 X. Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
--------------------------------------------------------------------------------
Montco Manufacturing (000) 000-0000
Contact: Xxxx Xxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
--------------------------------------------------------------------------------
Precision Finishing (000) 000-0000
Contact: Xxxx Xxxx
000 Xxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
The Leather Company (000) 000-0000
Contact: Xxxxx Xxxxx
0000 Xxxxxx Xxxxxx, Xxx 000
Xxxxxxxxxxxx, XX 00000
--------------------------------------------------------------------------------
Also need status of payments for Xxxxxx Co., Erie Insurance, Laser Creations,
Coincraft, West Coast Video royalty.
EXHIBIT "B"
LIST OF DYMSZO'S FRIENDS WHO HAVE ALSO INVESTED
-----------------------------------------------
IN THE COMPANY
--------------
Xxxxxx Xxxxx Xxxxxx 2,000 shares/$500.00
000 Xxxxxxx Xxxxxx X
Xxxxxxx Xxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxx Xxxxx 8,000 shares/$2,000.00
000 Xxxxxxx Xxxxxx X
Xxxxxxx Xxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxx Xxxxxx
0000 Xxxx Xxxxx, #0
Xxxxxxxx Xxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxxx X. Xxxxx 8,000 shares/$2,000.00
00 X. Xxxx Xxxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxxxxx & Xxxxx Xxxxxxx 4,000 shares/$1,000.00
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxx X. Pisa-Relli __________shares/$2,000.00
0000 Xxxxxxxx Xxxxx, Xxx. 000
Xxxxxxxxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxx X. Xxxxx (moved) 2,000 shares/$500.00
0000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxxx Xxxxxx 4,000 shares/$1,000.00
000 Xxxx 0xx Xxxxxx
Xxxxxx, XX 00000
(000) 000-0000
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxx ___________shares/$5,000.00
000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
(000) 000-0000
EXHIBIT "C"
LIST OF EQUIPMENT AND TANGIBLE PERSONAL PROPERTY
------------------------------------------------
TO BE TAKEN BY DYMSZO
---------------------
1 Compac computer with laser printer and miscellaneous hardware
1 Drill press and drill bits
1 Grinder with related materials
1 Hard drill with changer
1 Dremel tool with miscellaneous parts
1 Belt Sander
2 Boxes of miscellaneous spray paint
Various hand tools, files, sandpaper and adhesives
1 Cut-off saw
3 Chains
2 Trash cans
1 Desk
1 Filing cabinet
3 Telephones
1 Copier
Casting rubber and resin
2 Card tables
1 Push broom
1 Filing cabinet and related files
3 Wall planners
EXHIBIT "D"
MAILING LIST OF SDS CUSTOMERS
-----------------------------
EXHIBIT "E"
NAMES AND ADDRESS OF ALL CLUB MEMBERS WHO HAVE RECEIVED
-------------------------------------------------------
FULFILLMENTS ALONG WITH THE DATE OF SHIPMENT
--------------------------------------------
