EXHIBITS 4.2
EMPLOYMENT AGREEMENT MADE AND ENTERED INTO
IN THE CITY OF MONTREAL, PROVINCE OF QUEBEC,
AS OF THE 1st DAY OF MAY 2004
BY AND BETWEEN:
PIZZA DONINI INC.
Body politic duly incorporated according to law, having an office at
4555 Boulevard des Grandes Prairies, Suite 30, St-Leonard, Quebec,
herein duly represented by Mr. Theo Kalaitzis, duly authorized for
these purposes
(hereinafter referred to as "Pizza Donini")
AND:
PETER DEROS
residing and domiciled at 8220 Birnam Street, Apt. 2, Montreal, Quebec,
H3N 2T9
(hereinafter referred to as "Peter")
AND:
DONINI, INC.
A New Jersey Corporation duly incorporated according to Law, having an office at
17 Fulton Street, Newark, New Jersey 07102, herein duly represented by Theo
Kalaitzis, its Director, and by Catherine Pantoulis, its Secretary, duly
authorized for these purposes,
(hereinafter referred to as "Donini")
WHEREAS since 1987, Peter has acted as the President and Chief Executive Officer
of Pizza Donini;
WHEREAS in addition to the duties being performed for and on behalf of Pizza
Donini, Peter has been acting as Director, President, Chief Executive Officer
and Treasurer of Donini since February 23, 2001;
WHEREAS Donini wishes to maintain Peter's services as President and Chief
Executive Officer of both Donini and Pizza Donini with respect to the
administration, development and management of both entities, as well as such
other duties and services as may be required of him from time to time, which
services Peter wishes to provide under the terms and conditions provided more
fully herein;
The parties hereby agree as follows:
1. That the preamble to the present Agreement shall form an integral part
hereof as if it were recited at length herein for all legal purposes.
2. Pizza Donini hereby engages the services of Peter in order to administer,
oversee, manage and develop the operations of Pizza Donini, Donini, their
subsidiaries, affiliates and related companies and in that capacity,
Peter shall hold the position of President and Chief Executive Officer of
both Donini and Pizza Donini.
3. The term of this Agreement shall be a period of five (5) years (the
"term") commencing June 1, 2004.
4. In the performance of his duties, Peter shall put forth his best efforts
on a full-time basis exclusively for the benefit of Donini, Pizza Donini
and their respective subsidiaries, related companies and affiliates, and
shall conduct himself in a manner consistent with the best interests of
Donini, Pizza Donini, and their respective subsidiaries, related
companies and affiliates. Peter shall comply with and observe all
resolutions, regulations and directives of Donini and Pizza Donini.
5. During the term of this Agreement and for a period of eighteen (18)
months thereafter, Peter shall not, directly or indirectly, alone, in
concert or partnership with others, through a prete-nom or company either
as an employee, director, shareholder, lender, principal, officer,
associate or consultant, compete with the business of Donini, Pizza
Donini, or their respective subsidiaries or affiliates, nor shall he
offer assistance or advice to any competing business or businesses,
unless and to the extent that the Board of Directors of Donini permits or
allows.
6. Peter acknowledges that during the course of his employment with Donini
and Pizza Donini and throughout the term of this Agreement, he has been
and shall continue to be privy to confidential information and trade
secrets belonging to Donini, Pizza Donini, and their respective
subsidiaries, affiliates and related companies as it relates to the
products, designs, business plans, contracts, proposals, business
opportunities, finances, research, development, know-how, personnel, or
third-party confidential information of any of Donini, Pizza Donini, or
their respective subsidiaries or affiliates to which Peter may have
access and the terms and conditions of this Agreement. For and in
consideration of the entering into of this Agreement and in consideration
of the options and other remuneration granted herein, Peter undertakes
not to divulge any of the aforementioned information to any person,
entity, corporation or authority, nor to use such information for his
benefit or the benefit of anyone other than Donini, Pizza Donini, or
their respective subsidiaries, affiliates, and related companies during
the term of this Agreement and at any time thereafter.
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7. In consideration of the services to be rendered by Peter, Pizza Donini
its shall pay to Peter the following:
a) During the first year of the term of this Agreement, an annual base
salary of one hundred and forty thousand dollars U.S. ($140,000.00
U.S.) payable on a weekly basis at the rate of two thousand six
hundred and ninety-two dollars and thirty-one cents ($2,692.31
U.S.) per week, less all applicable deductions at source;
b) During the second year of the term of this Agreement, an annual
base salary of one hundred eighty-five thousand dollars U.S.
($185,000.00 U.S), payable on a weekly basis at the rate of three
thousand five hundred and fifty-seven dollars and sixty-nine cents
U.S. ($3,557.69 U.S.) per week, less all applicable deductions at
source;
c) During the third year of the term of this Agreement, an annual base
salary of two hundred twenty-five thousand dollars U.S.
($225,000.00 U.S), payable on a weekly basis at the rate of four
thousand three hundred and twenty-six dollars and ninety-two cents
U.S. ($4,326.92 U.S.) per week, less all applicable deductions at
source;
d) During the fourth year of the term of this Agreement, an annual
base salary of two hundred and seventy-five dollars U.S.
($275,000.00 U.S.) payable on a weekly basis at the rate of five
thousand two hundred and eighty-eight dollars and forty-six cents
U.S. ($5,288.46 U.S.) per week, less all applicable deductions at
source;
e) During the fifth year of the term of this Agreement, an annual
base salary of three hundred and fifty thousand dollars U.S.
($350,000.00 U.S), payable on a weekly basis at the rate of six
thousand seven hundred thirty dollars and seventy-seven cents U.S.
($6,730.77 U.S.) per week, less all applicable deductions at
source;
f) a cash bonus within six (6) months following the expiration of
each fiscal year of Pizza Donini, calculated at seven and one-half
percent (7.5%) of the net earnings after taxes, interest,
depreciation and amortization of Donini, on a consolidated basis
using U.S. Generally Accepted Accounting Principles.
g) an annual expense allowance in such amount as may be required for
the use of a company automobile suitable for the position of
President and CEO of a comparable company and such reasonable
business, travel and entertainment expenses incurred within the
scope of Peter's duties herein. Peter shall submit to Pizza Donini
monthly detailed expense and automobile expense reports within
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seven (7) days of the end of each calendar monthly in the manner
and form prescribed by Pizza Donini from time to time and such
expenses shall be reimbursed to Peter on a monthly basis within
seven (7) days of the receipt of the expense reports for the
immediately preceding month. All applicable invoices, statements
and bills shall accompany all reports submitted by Peter to Pizza
Donini;
h) one hundred percent (100%) of the costs of a family health plan
agreeable to the parties, up to a maximum of ten thousand dollars
U.S. ($10,000.00 U.S.) per year;
8. Peter shall be entitled to the grant of 2,000,000 shares of common stock
of Donini, upon payment of the sum of $0.001 per share, as an
extraordinary bonus for entering into this Agreement, said shares to be
issued on or before October 1st, 2004 pursuant to a proper resolution of
Donini's Board of Directors.
9. Peter shall be entitled to the grant of options to purchase shares of the
Company's common stock at the exercise prices per share as set forth
below:
Date Number of Options Exercise Price
---- ----------------- --------------
October 1st 2004 750,000 $.02
October 1st 2005 1,000,000 $.02
October 1st 2006 1,250,000 $.03
October 1st 2007 1,500,000 $.04
October 1st 2008 2,000,000 $.05
10. All shares of Common Stock and Options granted or awarded to Peter
pursuant to Provisions 8 and 9 hereof shall be subject to all applicable
federal and state securities legislation, regulations and policies,
including all rules regarding the disposition of shares by insiders.
11. Peter shall be entitled to four (4) weeks paid vacation per year which
vacation may be taken at such times as are mutually agreed between the
parties.
12. Upon such reasonable notice as is applicable in law, Pizza Donini shall
be entitled to terminate Peter's employment for cause. "Cause" when used
in connection with the termination of employment means (i) the conviction
of Peter of a crime involving moral turpitude by a court of competent
jurisdiction; (ii) the proven commission by Peter of an act of fraud upon
Donini and/or Pizza Donini; (iii) the willful and proven misappropriation
of any funds or property of Donini and/or Pizza Donini by Peter; (iv) the
willful, continued and unreasonable failure by Peter to perform material
duties assigned to Peter after reasonable notice and opportunity to cure
such performance has been given by Donini and/or Pizza Donini; (v) the
knowing engagement by Peter in any direct, material conflict of interest
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with Donini and/or Pizza Donini; (vi) the knowing engagement by Peter,
without the written approval of the Board of Directors of Donini and/or
Pizza Donini, in any activity which competes with the business of Donini
and/or Pizza Donini.
13. If Peter terminates his employment prior to April 30, 2009 for "Good
Cause", Donini shall promptly pay Peter, in one lump sum payment within
thirty days of such termination, all of the compensation due him under
provision 7 including all amounts previously deferred. In addition, all
stock and options to be granted or awarded pursuant to provisions 8 and 9
hereof shall be immediately and fully vested. For purposes of this
agreement "Good Cause" means the occurrence of any of the following
events:
a) Peter is assigned duties, taken as a whole, that are materially
inconsistent with, or materially diminished from, his positions,
duties, responsibilities and status with Donini immediately prior to
such action, or his status, reporting responsibilities, titles or
offices are materially diminished from those in effect immediately
prior to such action; provided, however, that Good Reason shall not
be triggered under this subsection (a) by an immaterial action not
taken in bad faith or by an action that is remedied by Donini
promptly after receipt of written notice from Peter; or
b) Donini requires Peter at any time to relocate more than 100 miles
from the location of his principal office as of the dated hereof; or
c) Donini shall violate or breach any of its obligations (regardless
whether such obligation be set forth in the Bylaws of Donini or Pizza
Donini and/or in this Agreement or any other separate agreement
entered into between Donini and/or Pizza Donini and Peter) to
indemnify Peter against any claim, loss, expense or liability
sustained or incurred by Peter by reason, in whole or in part, of the
fact that Peter is or was an officer or director of the Donini or
Pizza Donini; or
d) Donini shall violate or breach any other material obligation owed to
Peter relating to his employment, provided that in the event of a
violation or breach that is reasonably subject to being cured, Good
Reason shall only occur if Donini shall fail or refuse to commence a
cure within 15 days after written notice thereof is given by Peter or
shall thereafter fail to diligently prosecute such cure to
completion; or
e) Donini shall fail to keep in force, for the benefit of Peter,
directors' and officers' insurance policy with coverage amounts and
scope at least equal to the coverage amounts in effect on the date
hereof; or
f) Donini fails to obtain from a successor (including a successor to a
material portion of the business or assets of Donini) a satisfactory
assumption in writing of Donini's obligations under this Agreement;
or
g) Donini notifies Peter of its intention not to observe or perform one
or more of the material obligations of Donini under this Agreement;
or
h) There is a change of control of Donini. For purposes of this
Agreement, a "Change of Control" shall mean the consummation of any
of the following events during the Employment Period: (i) a sale,
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lease or disposition of all or substantially all of the assets of the
Company, or (ii) a sale, merger, consolidation, reorganization,
recapitalization, sale of assets, stock purchase, contribution or
other similar transaction (in a single transaction or a series of
related transactions) of Donini with or into any other corporation or
corporations or other entity, or any other corporate reorganization,
where the stockholders of Donini immediately prior to such event do
not retain (in substantially the same percentages) beneficial
ownership, directly or indirectly, of more than fifty percent (50%)
of the voting power of and interest in the successor entity or the
entity that controls the successor entity, or (iii) if any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange
Act) becomes the beneficial owner, directly or indirectly, of
securities of the Company representing more than 35% of the combined
voting power of the Donini's then outstanding securities; or (iv) a
majority of the members of the Board of Directors in office prior to
the happening of any event and who are still in office after such
event, determine in their sole discretion within one year after such
event, that as a result of such event there has been a Change in
Control.
14. In the event of the termination of employment by Peter as a result of his
death or disability, Donini shall pay, in one lump sum, Peter, or his
estate as the case may be, 50% of all compensation due or to be due Peter
pursuant to provisions 7, 8 and 9 hereof.
15. Upon the termination of this Agreement, Peter shall return to Pizza Donini
all books, records, material, customer and supplier lists, confidential
information, franchisee lists and documents and all other material, whether
written, electronic or other, in respect of the operations of Donini, Pizza
Donini and any of their respective subsidiaries, affiliates, shareholders,
franchisees, lenders, suppliers, customers and other business contacts of
any nature whatsoever and shall not retain any copies, records or other
similar information.
16. All notices, requests, demands and other communications pursuant to this
Agreement shall be in writing and shall be deemed to have been duly given
if delivered by registered mail or by messenger, bailiff or any other
expedient method to the intended party at the addresses indicated
hereinabove, or at such other address as the parties may advise the others
in writing and such notice shall be deemed to be received on the fifth
(5th) business day following its mailing, where the postal service is in
full operation during such entire time, or on the actual date of service or
delivery, where the notice is sent by messenger, bailiff or other method of
personal delivery.
17. This Agreement shall be interpreted in accordance with the Laws of Quebec
and any and all disputes shall be submitted to the appropriate court for
the District of Montreal. 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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AND THE PARTIES HAVE SIGNED AT THE PLACE AND AS OF DATE ENUMERATED HEREINABOVE.
PIZZA DONINI INC.
Per: /s/ THEO KALAITZIS
-----------------------------------
THEO KALAITZIS
duly authorized for the purposes
stated herein
/s/ PETER DEROS
-----------------------------------
PETER DEROS, Personally
DONINI, INC.
Per: /s/ THEO KALAITZIS
-----------------------------------
THEO KALAITZIS, DIRECTOR
duly authorized for the purposes
stated herein
Per: /s/ CATHERINE PANTOULIS
-----------------------------------
CATHERINE PANTOULIS, SECRETARY
duly authorized for the purposes
stated herein
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