Exhibit 5
AGREEMENT MADE AND ENTERED INTO AS OF DATES AND AT THE PLACES INDICATED
HEREINBELOW.
BY AND BETWEEN:
DONINI, INC.
a New Jersey corporation, duly incorporated and
validly existing according to law, having a
registered office at 4555 des Grandes Prairies Blvd.,
Suite 30, in the City of St. Leonard, Province of
Quebec, H1R 1A5, herein duly represented by Mr. Peter
Deros, its representative, duly authorized for these
purposes as he so declares,
hereinafter referred to as "DONINI"
AND:
LARS MULLER,
Businessman, residing and domiciled at Earls Neuk,
Chapel Green, Elie, Levan, Fife, KY9-1AD, Scotland
hereinafter referred to as "LARS"
WHEREAS DONINI has acquired all of the issued and outstanding shares of Pizza
Donini Inc., a Canadian corporation and is in the process of becoming listed on
the Over-the-Counter Bulletin Board or Nasdaq for the purpose of selling its
stock over the counter;
WHEREAS LARS has provided certain strategic, market-positioning and consulting
services to DONINI, its subsidiaries and affiliates since April 2001;
WHEREAS, upon the date on which the shares of DONINI begin trading on the
Over-the-Counter Bulletin Board or Nasdaq (the "effective date"), LARS wishes to
continue to provide certain strategic, market-positioning and other related
consulting services to DONINI, its subsidiaries and affiliates;
WHEREAS in addition to the consulting services outlined herein, LARS shall act
as agent to DONINI and shall provide certain marketing and sales services to
DONINI, its subsidiaries and affiliates;
WHEREAS DONINI wishes to engage the services of LARS as of the effective date,
under the terms and conditions provided herein.
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THE PARTIES HEREBY AGREE AS FOLLOWS:
1. The preamble shall form an integral part of this Agreement.
2. Save and except as otherwise stipulated herein, DONINI shall engage the
services of LARS on a non-exclusive basis for a period of three (3)
years commencing on the effective date and terminating thirty-six (36)
months thereafter.
3. LARS shall provide to DONINI such services as may be necessary for the
arrangement of short and long-term funding from private and
institutional investors, shall assist DONINI in the location and
funding of potential mergers and acquisitions, shall provide to DONINI
such consulting services as required in respect of the corporate
structure of DONINI, strategic and market-positioning issues,
identification and negotiation of strategic alliances useful and
beneficial to DONINI and such other services as DONINI shall require
within the scope of the duties outlined herein. Where LARS fails or
omits to provide satisfactory consulting and advisory services pursuant
to the terms hereof at any time, DONINI shall be entitled to reasonably
amend the present Agreement.
4. LARS shall also act as agent exclusively for DONINI and shall provide
to DONINI, its affiliates and subsidiaries such marketing and sales
services as DONINI shall require in order to establish and expand the
market presence of "Pizza Donini" products and services within the
territory consisting of the State of Massachusetts and Rhode Island
(herein referred to as the "Territory"), to the best of his abilities.
In addition to the Territory indicated hereinabove, LARS shall have a
right of first refusal to expand the Territory into the states of
Vermont and New Hampshire, or either of them, for the purposes stated
in this Agreement, within fifteen (15) days of receipt of a written
notice from DONINI that it has received an acceptable offer, interest
or other commitment from a third party for the states or state so
stipulated and upon such terms and conditions of such third party
offer, interest or commitment. In the event that LARS wishes to
exercise his right hereunder, he must so advise DONINI in writing prior
to the expiration of the delay provided herein and must consent; in
writing, to fulfil all of the terms and conditions of the third party
offer, interest or commitment.
5. LARS shall receive, over the term of this agreement, and in lieu of
remuneration for all services rendered herein, the following shares in
the capital stock of DONINI:
a) on or before August 30th, 2001, THIRTY SEVEN THOUSAND FIVE
HUNDRED (37,500) shares of common stock of DONINI, as fully
paid and non-assessable.
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b) on or before August 30th, 2001, an additional THIRTY SEVEN
THOUSAND FIVE HUNDRED (37,500) shares of common stock of
DONINI, as fully paid and non-assessable.
c) on or before August 30th, 2001, TWENTY-FIVE THOUSAND (25,000)
shares of common stock of DONINI to be issued to LARS as fully
paid and non-assessable in connection with future consulting
and/or other services to be provided by LARS together with a
third party, Manuel Hatziioannou, in respect of the expansion
of the Donini concept in Peabody, Massachusetts to Donini,
Inc. and/or its subsidiaries.
d) In the event that LARS shall cease to provide any of the
services outlined hereunder after the commencement date but
prior to the issuance of the shares provided in subparagraphs
b) and c) above, LARS shall forfeit the right to receive the
shares outlined in sub-paragraphs b) and c) above.
e) All shares so issued shall be subject to all applicable
federal and state securities legislation, regulation and
policy, including all rules regarding the disposition of
shares by insiders.
6. In addition to the above, DONINI shall reimburse or ensure that LARS be
reimbursed for any out of pocket expenses incurred by him, provided
that prior to incurring such expenses, DONINI shall have approved same.
LARS must submit, together with his claim for reimbursement, such
invoices, vouchers, cash register slips or other items as DONINI, its
affiliates or subsidiaries shall reasonably require.
7. LARS agrees that to the best of his ability and experience he will at
all times loyally and conscientiously perform all of the obligations
required of him either expressly or implicitly by the terms of this
Agreement.
8. During the term of this agreement LARS shall not, directly or
indirectly participate in any business that is in direct competition in
any manner whatsoever with the business of DONINI.
9. The parties acknowledge and agree that during the term of this
Agreement and in the course of the discharge of his duties hereunder,
LARS shall have access to and become acquainted with information
concerning the operation of DONINI, including without limitation,
customers, financial, personnel, sales, planning, marketing and other
information that is owned by DONINI and regularly used in the operation
of the DONINI's business and that this information constitutes DONINI's
trade secrets. LARS agrees that he shall not disclose any such trade
secrets, directly or indirectly, to any other person or use them in any
way, either during the term of this agreement or at any time
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thereafter, except as is required in the course of his consulting with
DONINI. The unauthorized use or disclosure of any of DONINI's trade
secrets obtained by LARS during his consulting with DONINI shall
constitute unfair competition. LARS further agrees that all files,
records, documents, equipment and similar items relating to DONINI's
business, whether prepared by LARS or others, are and shall remain
exclusively the property of DONINI.
10. In recognition of services rendered and provided that LARS is
continuing to act for DONINI as provided herein, LARS shall also
receive from DONINI certain stock options, the whole as detailed more
fully hereinbelow, which options and the shares that may be issued
pursuant thereto shall be subject to all applicable securities laws,
regulations and policies, including all rules regarding the disposition
of shares by insiders:
a) ninety-one (91) days following the effective date, LARS shall
receive an option to purchase FIFTY THOUSAND (50,000) shares
of the common stock of DONINI at a price equal to one hundred
and ten percent (110%) of the five (5) day average trading
price immediately following the first ninety (90) days of
trading of the common stock of DONINI on the Over-the-Counter
Bulletin Board or Nasdaq (the "exercise price"), provided
however that the exercise price of the stock is not less than
fifty percent (50%) of the average of the five (5) highest
closing prices during the ninety (90) day period immediately
following commencement of trading. The option so granted may
be exercised at any time between the 96th day following the
effective date and twenty-four months following the granting
of the option;
b) Twelve (12) months following the granting of the option
described in subparagraph 10a) hereof, LARS shall receive an
option to purchase ONE HUNDRED THOUSAND (100,000) shares of
the common stock of DONINI at a price equal to one hundred and
ten percent (110%) of the five (5) day average trading price
immediately following the granting of the said option (the
"exercise price"), provided however that the exercise price of
the stock is not less than fifty percent (50%) of the average
of the five (5) highest closing prices during the ninety (90)
day period immediately following commencement of trading. The
option so granted may be exercised at any time within
twenty-four (24) months following the granting of the said
option.
c) Twenty-four (24) months following the granting of the option
described in subparagraph 10a) hereof, LARS shall receive an
option to purchase ONE HUNDRED FIFTY THOUSAND (150,000) shares
of the common stock of DONINI at a price equal to one hundred
and ten percent (110%) of the five (5) day average trading
price immediately following the granting of the said option
(the "exercise price"), provided however that the exercise
price of the stock is not less than fifty percent (50%) of the
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average of the five (5) highest closing prices during the
ninety (90) day period immediately following commencement of
trading. The option so granted may be exercised at any time
within twenty-four (24) months following the granting of the
said option;
e) In the event that LARS shall cease to provide any of the
services outlined herein prior to the granting of any of the
options described in this paragraph 10 then LARS shall forfeit
the right to receive any option hereunder that has yet to be
granted by DONINI. In addition, where LARS has ceased to
provide any of the services outlined herein within six (6)
months of the granting of any option hereunder, LARS shall
remit to DONINI for cancellation any option or portion
thereof, prorated to the amount of service provided by LARS in
that year;
11. LARS undertakes to devote such time and effort as is mutually agreed in
order to diligently provide the services specified herein as DONINI may
require within the scope of his duties during the term hereof.
12. DONINI and LARS shall enter into a brokerage agreement, the terms of
which shall be mutually acceptable to the parties, wherein LARS shall
act, on an exclusive basis, as the agent for DONINI, in respect of the
sale of the products listed in Schedule "A" annexed hereto (the
"Products") within the State of Massachusetts and Rhode Island (the
"Territory") within the context of sales on a business to business
level, pursuant to which LARS shall receive a commission equal to
between one percent (1%) and three percent (3%) of any sums received by
DONINI, its affiliates or subsidiaries, in respect of sales of the
Products introduced or sold directly through LARS's efforts. The total
commission payable to LARS in each instance shall be determined by
DONINI on a case-by-case basis and, in any event, the total commission
payable by DONINI, its subsidiaries and affiliates shall not exceed
five percent (5%) of the amounts received by DONINI, its affiliates or
subsidiaries in respect of the sales of the Products. In addition to
the Territory indicated hereinabove, LARS shall have a right of first
refusal to expand the Territory into the states of Vermont and New
Hampshire, or either of them, for the purposes stated in this
paragraph, within fifteen (15) days of receipt of a written notice from
DONINI that it has received an acceptable offer, interest or other
commitment from a third party for the states or state so stipulated and
upon such terms and conditions of such third party offer, interest or
commitment. In the event that LARS wishes to exercise his right
hereunder, he must so advise DONINI in writing prior to the expiration
of the delay provided herein and must consent; in writing, to fulfil
all of the terms and conditions of the third party offer, interest or
commitment. Where LARS fails or omits to secure such satisfactory
business-to-business agreements or contracts pursuant to the terms
hereof within five (5) months following the effective date, DONINI
shall be entitled to reasonably amend the present Agreement.
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13. LARS shall be granted a master franchise agreement for the State of
Massachusetts and Rhode Island (the "Territory"), and shall have the
right to sub-franchise to qualified persons or entities the right and
license to operate "Pizza Donini" restaurants under such terms and
conditions as are stipulated by DONINI, its affiliates and
subsidiaries. In respect of the master franchise rights granted in this
paragraph 13, LARS shall act exclusively for DONINI. LARS shall receive
ten percent (10%) of the amount of any initial franchise fee received
by DONINI, its affiliates or subsidiaries in respect of such
sub-franchises as commission for the sale of the said franchises and
ten percent (10%) of any royalties received in respect of such
franchises, less any and all amounts payable to any third parties as
provided herein. In addition to the Territory, DONINI shall grant to
LARS, during the term of the agreement, a right of first refusal to
expand the master franchise rights into the States of Vermont and New
Hampshire, or either of them, within fifteen (15) days of receipt of a
written notice from DONINI that it has received an acceptable offer,
interest or other commitment from a third party for the states or state
so stipulated and upon such terms and conditions of such third party
offer, interest or commitment. In the event that LARS wishes to
exercise his right hereunder, he must so advise DONINI in writing prior
to the expiration of the delay provided herein and must consent; in
writing, to fulfil all of the terms and conditions of the third party
offer, interest or commitment. LARS hereby acknowledges that ten
percent (10%) of all commissions and amounts payable to him hereunder
shall be remitted to ZSQUARED, LLC. LARS shall, on a timely basis,
advise DONINI, ZSQUARED, LLC, Chet Zalesky and Dennis Zweig of all
information regarding franchisees and potential franchisees within the
Territory and of any change in such franchisees and potential
franchisees. The parties shall enter into such master franchise
agreement(s) as shall be required, which agreement(s) shall contain
such terms and conditions as are usually contained in similar
agreements, including provisions for the payment of master franchise
fees, royalties and other fees to DONINI. Where LARS fails or omits to
secure a satisfactory master franchise or sub-franchise agreement
pursuant to the terms hereof within ten (10) months following the
effective date, DONINI shall be entitled to reasonably amend the
present Agreement.
14. In the event that DONINI shall authorize any other sales agent for the
purpose of selling "Pizza Donini" franchises in the U.S. outside the
Territory (the "Outside Agent"), LARS shall be entitled to receive a
maximum of ten percent (10%) of the commission on any master franchise
fee and of the commission on any initial franchise fee received by the
Outside Agent on the sale of franchises by the Outside Agent and on the
commissions on royalties generated by the Outside Agent where LARS is
instrumental in assisting or advising DONINI and the Outside Agent. The
amount to be received by LARS shall be determined between the parties
on a case-by-case basis. LARS hereby acknowledge that he shall not be
entitled to any fees or commissions in respect of the rights granted by
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DONINI to ZSQUARED, LLC, Chet Zalesky and Dennis Zweig (for the area
consisting of Georgia, Alabama, Tennessee, South Carolina, North
Carolina and Florida), to JT Tucker, Inc. (for the area consisting of
California, Arizona and Nevada), to Scott Parliament (for the area
consisting of Michigan, Wisconsin and Illinois), and to Doug Furth (
for the area consisting of Ohio, Pennsylvania and Indiana) unless LARS,
DONINI and the above-named Outside Agents (or such other Outside Agents
as shall be appointed by DONINI, its subsidiaries and affiliates from
time to time) have entered into and executed a mutually acceptable
agreement. DONINI shall advise LARS from time to time of the
appointment of any new Outside Agents and the territories attributed to
them as well as of such changes as may be appropriate.
15. LARS shall have the option to open one (1) "Pizza Donini" retail store
within the Territory subject to the prior approval of DONINI or its
nominee under the current franchise and related agreements, save and
except that LARS shall not be liable for the payment of any initial
franchise fees in respect of such location. In respect of the rights
granted in this paragraph, LARS shall act exclusively for DONINI. LARS
shall however be liable for the payment of such royalties and other
fees normally payable by Pizza Donini franchisees. LARS shall execute
the "Pizza Donini" standard form Franchise Agreement and ancillary
documents for the United States.
16. The parties shall execute such further documents, agreements and
instruments as may be necessary in order to give full force and effect
to the foregoing and shall obtain such authorizations, approvals,
permits and consents as may be required by law or otherwise, including
any approvals of the Board of Directors of any corporate entities.
17. This Agreement is personal to LARS and may not be sold, transferred,
assigned or otherwise conveyed without the prior written consent of
DONINI, which consent may be subject to additional terms,
representations, warranties and conditions.
18. The present agreement supersedes and replaces all previous agreements,
understandings, instruments and contracts that may exist between the
parties, whether verbal or written.
19. This Agreement shall be interpreted in accordance with the laws of the
state of New Jersey, U.S.A. and any and all disputes shall be submitted
to the Superior Court for the state of New Jersey.
20. This Agreement was drafted in English at the request of the parties
hereto. La presente convention a ete redigee en anglais a la demande
des parties aux presentes.
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SIGNED AT MONTREAL, QUEBEC, CANADA, AS OF THE 30TH DAY OF MAY, 2001.
DONINI, INC.
Per: /s/ PETER DEROS
-------------------------
PETER DEROS
duly authorized for these purposes
SIGNED AT MONTREAL, QUEBEC, CANADA, AS OF THE 30th DAY OF MAY, 2001.
/s/ LARS MULLER
-------------------------
LARS MULLER
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SCHEDULE "A"
PRODUCTS TO BE SOLD
PURSUANT TO CONSULTING AGREEMENT
--------------------------------------------------------------------------------
1. Frozen Pizza Shells - Regular and Self-Rising;
2. Refrigerated and/or Frozen Raw Dressed Self-Rising Pizza (single or
multi-serve);
3. Refrigerated, Par-baked Crust, Deli-Counter Dressed Pizza (single or
multi-serve);
4. Frozen, Par-Baked Dressed Pizza (single or multi-serve);
5. Frozen Pizza Pockets (regular or microwave oven);
6. Microwaveable Frozen Dressed Pizza (single or multi serve);
7. Pizza and Pasta Sauce.
8. Raw Dough Balls
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