SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
---------- ----------
Commission File No. 33-8964
AM-PAC INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 16-1260971
- --------------------------------- -----------------------------------
(State or other jurisdiction
of incorporation or organization) (IRS Employer Identification Number)
431 East Central Blvd., Suite 900
Orlando, FL 32801
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(Address of principal executive offices)
(407) 841-1350
---------------------------
(Issuer's telephone number)
Captain Tony's Pizza, Inc.
P. O. Box 82, Deland, FL 32721
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
-------- -------
As of November 10, 1996, 406,583 shares of Common Stock of the issuer were
outstanding.
<PAGE>
AM-PAC INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1996
and June 30, 1996............................................ 3
Consolidated Statements of Operations - For the three
month periods ended September 30, 1996 and 1995.............. 4
Consolidated Statements of Cash Flows - For the three
month periods ended September 30, 1996 and 1995.............. 5
Notes to Consolidated Financial Statements................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............ 7
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders......................................... 9
Item 5. Other Information........................................ 9
Item 6. Exhibits and Reports on Form 8-K.........................10
SIGNATURES.............................................................11
</TABLE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AM-PAC INTERNATIONAL, INC and SUBSIDIARY
Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
September 30, 1996 June 30, 1996
------------------ -------------
<S> <C> <C>
Assets
Cash $ 2,218 $ 47,639
---------- ----------
Total assets $ 2,218 $ 47,639
========== ==========
Liabilities and shareholders' equity
Current liabilities
Accounts payable $ 0 $ 3,765
Other liabilities 0 698
---------- ----------
Total current liabilities 0 4,463
Shareholder's Equity:
Common stock, $.001 par value 407 406
Additional paid in capital 945,605 945,706
Accumulated deficit (943,794) (902,836)
---------- ---------
Total shareholder's equity 2,218 43,176
Total liabilities and shareholder's
equity $ 2,218 $ 47,639
========== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
AM-PAC INTERNATIONAL, INC. and SUBSIDIARY
Consolidated Statements of Operations (Unaudited)
Three Months Ended September 30
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Revenues:
Franchise royalty fees $ 10, 204 $ 14,886
Franchise transfer fees - 2,500
Other sales - 3,793
Other income - 5,957
--------- --------
Cost of goods sold - 4,441
--------- --------
Gross profit 10,024 22,695
Selling, general and administration
expenses 51,105 26,119
--------- --------
Net income (loss) $ (41,081) $ (3,424)
========= ========
Net income (loss) per common share $ (.10) $ (.00)
========= ========
Weighted average number of shares
outstanding 406,583 406,083
========= ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements
4
<PAGE>
AM-PAC INTERNATIONAL, INC. and SUBSIDIARY
Consolidated Statements of Cash Flows (Unaudited)
For the Three Months Ended September 30
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $(40,958) $ (3,424)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization - 72
Increase (decrease) in operating assets:
Accounts receivable (3765) (1055)
Inventories - 2,772
Prepaid expenses - 174
Increase (decrease) in operating
liabilities:
Accounts payable - 2,784
Other liabilities (698) (519)
--------- --------
Net cash provided by (used in)
operating activities (45,421) 804
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock - 1,000
-------- --------
Net cash provided by (used in)
financing activities - 1,000
-------- --------
Net increase (decrease) in cash (45,421) 1,804
Cash at beginning of period 47,639 36,644
-------- --------
Cash at end of period $ 2,218 $ 38,448
========= ========
</TABLE>
See accompanying notes to the condensed consolidated financial statements
5
<PAGE>
AM-PAC INTERNATIONAL, INC. and SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
September 30, 1996
(Unaudited)
1. INTERIM FINANCIAL PRESENTATION
The interim financial statements are prepared pursuant to the requirements
for reporting on Form 10-QSB. The June 30, 1996 balance sheet data was
derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The
interim financial statements and notes thereto should be read in
conjunction with the financial statements and notes included in the
Company's Form 10-KSB dated June 30, 1996. In the opinion of management,
the interim financial statements reflect all adjustments of a normal
recurring nature necessary for a fair presentation of the results for the
interim periods presented.
2. EARNINGS PER SHARE
Earnings per share is calculated for each period and the shares outstanding
have been adjusted to give retroactive effect to the 1:20 reverse stock
split which became effective November 8, 1996.
3. PROPOSED ACQUISITIONS
On September 18, 1996, the Company's shareholders approved the acquisition
of Pacific Foods Limited and LeisureShare International, PLC. Both of
those acquisitions are subject to execution of definitive agreements and
satisfaction of various conditions. On October 15, 1996, the Company
entered into an Acquisition Agreement with the shareholders of Pacific
Foods Limited pursuant to which the Company agreed to issue 7,000,000
shares of Common Stock in exchange for all of the issued and outstanding
shares of Pacific Foods and the principal shareholders of Pacific Foods
agreed to arrange for an infusion of at least $2 million into the Company.
Pacific acts as a representative for American food distributors in
negotiating joint venture operations in China. Pacific Foods is also a
partner in a joint venture formed to open fast food restaurants in China.
Closing of the acquisition of Pacific Foods is subject to receipt of the
required funding to be arranged by Pacific Foods' principal shareholders,
among other conditions.
The acquisition of LeisureShare, a real estate development and operating
company, is subject to final negotiations and documentation.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Revenues for the three months ended September 30, 1996 decreased $17,112
or 63.1% to $10,024 from $27,136 for the three months ended September 30, 1995.
This decrease in revenues was attributable to a decline in royalty fees as a
result of the contesting of certain royalty payments by one of the Company's
franchises, and the absence of franchise transfer fees, other sales and other
income.
Cost of goods sold for the three months ended September 30, 1996,
decreased to $0 from $4,441 for the three months ended September 30, 1995.
This decrease in cost of goods sold was attributable to the absence of other
sale in the current period.
Selling, general and administration expenses for the three months ended
September 30, 1996, increased $24,986 or 95.7% to $51,105 from $26,119 for the
three months ended September 30, 1995. This increase in selling, general and
administrative expenses was entirely attributable to a management bonus.
The net loss for the three months ended September 30, 1996, increased to
$41,081 from $3,424 for the three months ended September 30, 1995. The
increased loss for the three months ended September 30, 1996 was attributable
to reduced revenue and the payment of a $30,000 management bonus.
During the quarter, the Company's shareholders approved the terms of two
proposed acquisitions and the Company entered into an agreement to acquire
Pacific Foods Limited, a British Virgin Islands company formed in 1996 to
license, finance and promote U. S. products in Asian markets. Subsequent to
the end of the quarter the Company entered into discussions with respect to the
acquisition of a third operating business. The Company anticipates that all
three of the proposed acquisitions will be completed during the quarter ended
December 31, 1996. While the Company will continue its prior operations and
franchising of Captain Tony's restaurants, and expects to expand the
franchising of such restaurants pursuant to the proposed acquisition of Pacific
Foods, the Company's operating results for the balance of the fiscal year are
expected to vary substantially from prior operating results assuming the
consummation of the pending acquisitions.
MATERIAL CHANGES IN FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had working capital and a cash balance
of $2,218 compared to working capital of $43,176 and a cash balance of $47,639
as of June 30, 1996. The decrease in working capital was attributable to the
cash used in operating activities from unprofitable operations.
7
<PAGE>
At September 30, 1996, the Company had no current or long-term
liabilities.
Because the Company has insufficient funds to meet its future franchise
obligations and other working capital requirements, including the capital
requirements of the company's proposed to be acquired, the Company is actively
seeking an equity infusion, without which the Company will have insufficient
capital resources to fund its operations for the next twelve months.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On September 18, 1996, a special meeting of shareholders of the
Company was held.
(b) The following directors were elected by the votes indicated at such
meeting:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Thomas Tedrow 5,522,516 For 0 Against 4,200 Abstain
Michael J. Martella 5,521,916 For 0 Against 4,800 Abstain
Malcolm Wright 5,522,116 For 0 Against 4,600 Abstain
Linda Xu 5,522,916 For 0 Against 3,800 Abstain
Sharon C. Martin 5,521,717 For 0 Against 5,000 Abstain
</TABLE>
(c) In addition to the election of directors as noted above, the following
matters were voted up at such meeting:
(i) Reincorporation in Nevada (5,512,116 For, 13,000 Against, 1,600
Abstain).
(ii) Approval of a 1-for-20 reverse split (5,457,681 For, 52,800
Against, 12,235 Abstain).
(iii)Approval of name change to Am-Pac International, Inc. (5,486,716
For, 39,400 Against, 600 Abstain).
(iv) Authorization of a class consisting of 100,000 shares of
preferred stock (5,439,381 For, 50,450 Against, 36,885 Abstain).
(v) Approval of the acquisition of LeisureShare International PLC
(5,511,116 For, 14,500 Against, 1,100 Abstain).
(vi) Approval of the acquisition of Pacific Foods Limited (5,517,516
For, 9,200 Against, 0 Abstain).
ITEM 5. OTHER INFORMATION
Subsequent to September 30, 1996, the Company reincorporated in the State
of Nevada under the name Am-Pac International, Inc. and effected a 1-for-20
reverse stock split.
9
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
2.1 Acquisition Agreement dated October 15, 1996 with Pacific Foods
Limited
3.1 Articles of Incorporation of Am-Pac International, Inc., as
amended
3.2 By-laws of Am-Pac International, Inc., as amended
10.1 Employment Agreement with Michael Martella.
b. Reports on Form 8-K
None
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
<TABLE>
<S> <C>
(REGISTRANT) AM-PAC INTERNATIONAL, INC.
BY (SIGNATURE) /s/ Thomas Tedrow
(NAME AND TITLE) Thomas Tedrow, President and
Chief Financial Officer
(DATE) December 4, 1996
BY (SIGNATURE) /s/ Scott Crawford
(NAME AND TITLE) Scott Crawford, Chief Financial Officer
(DATE) December 4, 1996
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,218
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,218
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,218
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 407
<OTHER-SE> 1,811
<TOTAL-LIABILITY-AND-EQUITY> 2,218
<SALES> 10,024
<TOTAL-REVENUES> 10,024
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 51,105
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (41,081)
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,081)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,081)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
ACQUISITION AGREEMENT
AGREEMENT, dated as of October 15, 1996 by and between Captain Tony's
Pizza, Inc. a New York corporation (hereinafter "Tony's"), and Thomas L. Tedrow
and Sharron C. Martin (hereinafter "Shareholders") Shareholders of Pacific
Foods Limited, a British Virgin Islands corporation (hereinafter "Foods").
RECITALS
WHEREAS, the Shareholders are the owners of all of the issued and
outstanding shares of Foods;
WHEREAS, the Shareholders are desirous of exchanging their shares of Foods
after completion of the one for twenty reverse split for shares of common stock
("Common Stock") of Tony's;
WHEREAS, Tony's wishes to acquire all of the issued and outstanding shares
of Foods in exchange for shares of Common Stock of Tony's, $.001 par value per
share;
NOW THEREFORE, in consideration of the premises herein contained, the
adequacy of which is hereby acknowledged, and the mutual covenants hereinafter
set forth, the parties hereto have agreed, and by these presents, do hereby
contract as follows:
<PAGE>
TERMS
1. EXCHANGE OF SECURITIES. Subject to the terms and conditions hereinafter set
forth, at the time of the closing referred to in Section 6 hereof
(hereinafter the "Closing Date"), Tony's will issue and deliver, or cause
to be issued and delivered, to the Shareholders, 700,000 post reverse split
shares of Tony's common stock in exchange for all of the issued and
outstanding Common Stock of Foods.
2. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS. The Shareholders
represent and warrant to Tony's, all of which representations and
warranties shall be true and complete at the Closing Date, and shall
survive the Closing Date for a period of two (2) years from the Closing
Date, except as to the warranties and representations set forth in
subsection (f) hereof which shall survive for a period of three (3) years
from the Closing Date, and those set forth in subsection (h) which shall
survive for a period of six (6) months from the Closing Date, or from the
date when the accounts receivable become due and payable, whichever is the
later, that:
(a) Foods is corporation duly organized and validly existing and in good
standing under the laws of the British Virgin Islands and has the
corporate powers to own its property and carry on its business as and
where it is now being conducted. A Certified copy of the Memorandum
and Articles of Association of Foods which have hereto been furnished
by the Shareholders to Tony's, are a true and correct copy of the
Memorandum and Articles of Association and include all amendments to
the date hereof.
2
<PAGE>
(b) The authorized capital stock of Foods consists of 50,000 shares of
Common Stock, $1.00 par value per share of which 200 shares have been
validly issued and are now outstanding.
(c) The Shareholders have the full power and authority to exchange the
shares of the capital stock of Foods upon the terms and conditions
provided for in this Agreement, and all such shares are duly and
validly issued and are free and clear of any lien or other
encumbrance.
(d) The unaudited balance sheet prepared by management, but which will be
audited by H.J. Swart & Company, P.A., Certified Public Accountants,
as of May 31, 1996, attached hereto as Exhibit B, constitute true and
correct statements as of the date thereof of the financial condition
of Foods and of its assets and liabilities prepared in accordance with
generally accepted accounting principles consistently applied, and
that from May 31, 1996, and until the Closing Date, no dividends or
distributions of capital, surplus, or profits shall be paid or
declared by Foods in redemption of its outstanding shares or
otherwise, nor shall any additional shares be issued by Foods.
3
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(e) Since May 31, 1996, Foods has not engaged in any transaction other
than transactions in the normal course of the operations of its
business, except as specifically authorized by Tony's in writing.
(f) Foods is not involved in any pending or threatened litigation which
would materially affect its financial condition as shown by its
balance sheets of May 31, 1996, shown on Exhibit B hereto, which has
not been provided for on such balance sheet, or referred to in such
balance sheet, or disclosed to Tony's in writing.
(g) Foods has and will have at the Closing Date, good and marketable title
to all of its property and assets shown on Exhibit B hereto, free and
clear of any and all liens or encumbrances or restrictions, except as
shown on Exhibit B hereto, and except for taxes and assessments due
and payable after the Closing Date and easements or minor restrictions
4
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with respect to its real property which do not materially affect the
present use of such real property.
(h) The accounts receivable of Foods, as reflected in Exhibit B and as
specifically set forth in separate schedules furnished by Foods prior
to the execution hereof, which shall become due and payable on or
before the closing shall be good and collectible and can reasonably be
anticipated to be paid within 180 days after the Closing Date.
(i) Foods does not now have nor will it have on the Closing Date any
long-term contracts ("long-term" being defined as more than one year)
except for such contracts as are set forth as Exhibit C.
(j) Foods does not now have nor will it have on the Closing Date any
pension plan, profit-sharing plan, or stock-purchase plan for any of
its employees.
3. REPRESENTATIONS AND WARRANTIES BY TONY'S. Tony's represents and warrants
to the Shareholders of Foods, all of which representations and warranties
5
<PAGE>
shall be true at the Closing Date, and shall survive the closing for a
period of three (3) years from the Closing Date as follows:
(a) Tony's is a corporation duly organized and validly existing and in
good standing under the laws of the State of New York and has the
corporate powers to own its properties and carry on its business as
now being conducted and has authorized capital stock consisting of
150,000,000 shares of Common Stock, $.001 par value per share, of
which 8,131,161 shares are issued and outstanding. These shares will
be reverse split as a one for twenty basis prior to closing.
(b) Tony's has the corporate power to execute and perform this Agreement
and to deliver the stock required to be delivered to the Shareholders
of Foods hereunder.
(c) The execution and delivery of this Agreement, and the issuance of the
stock required hereunder, have been duly authorized by all necessary
corporate action, and neither the execution nor delivery of this
Agreement, nor the issuance of the stock, nor the performance,
observance or compliance with the terms and provisions of this
Agreement will violate any provision of law, any order of any court or
6
<PAGE>
other governmental agency, the Certificate of Incorporation or By-Laws
of Tony's or any indenture, agreement or other instrument to which
Tony's is a party, or by which Tony's is bound or by which any of its
property is bound.
(d) The shares of Tony's Common Stock deliverable hereunder will, on
delivery in accordance with the terms hereof, be duly authorized,
validly issued, fully paid and nonassessable. Such shares will be
restricted shares and cannot be sold or exchanged except pursuant to
registration or an exemption therefrom.
(e) The financial statements prepared by Mengel, Metzger Barr & Co.,
Certified Public Accountants, for the year ending June 30, 1995,
attached hereto as Exhibit E constitute true and correct statements as
of such date of the financial condition of Tony's and of its assets,
liabilities and income prepared in accordance with generally accepted
accounting principles consistently applied and that from June 30,
1995, and until the Closing Date, no dividends or distributions of
capital, surplus, or profits have been paid or declared by Tony's in
redemption of its outstanding shares or otherwise, nor have any
additional shares been issued by Tony's.
7
<PAGE>
(f) Since June 30, 1995, Tony's has not engaged in any transaction other
than transactions in the normal course of the operations of its
business, except as specifically authorized by the Shareholders of
Foods in writing. Such authorization specifically includes a bonus
to Martella of Tony's cash, which distribution shall occur at Closing.
(g) Tony's is not involved in any pending or threatened litigation which
would materially adversely affect its financial condition as shown by
the balance sheets of December 31, 1995, attached hereto as Exhibit E,
which has not been provided for on such balance sheet or referred to
in such balance sheet or disclosed to the Shareholders of Foods in its
10-KSB or other filings.
4. CONDITIONS TO THE OBLIGATIONS OF TONY'S. The obligations of Tony's
hereunder shall be subject to the conditions that:
(a) Tony's shall not have discovered any material error or misstatement in
any of the representations and warranties made by the Shareholders of
8
<PAGE>
Foods herein and all the terms and conditions of this Agreement to be
performed and complied with shall have been performed and complied
with.
(b) There shall have been no substantial adverse changes in the
conditions, financial, business or otherwise of Foods from May 31,
1996, to the Closing Date, except for changes resulting from those
operations in the usual and ordinary course of the business, and
between such dates the business and assets of Foods shall not have
been materially adversely affected as the result of any fire,
explosion, earthquake, flood, accident, strike, lockout, combination
or workmen, taking over of any such assets by any governmental
authorities, riot, activities or armed forces, or acts of God or of
the public enemies.
(c) Tony's shall have received the opinion of Messrs. Vanderkam & Sanders,
legal counsel for Foods, to the effect that (1) Foods is duly
organized and validly existing under the laws of the jurisdiction of
its incorporation and has the power and authority to own their
properties and to carry on their respective business wherever the same
9
<PAGE>
may be located and operated as of the Closing Date, and (2) the
Agreement has been duly executed, and when delivered by the
Shareholders is enforceable in accordance with its terms.
(d) An Employment Contract with Michael Martella providing for his
continued employment with the surviving entity of Tony's shall have
been executed by all parties a signator thereto and shall constitute a
valid and binding obligation of Tony's after the acquisition of Foods.
5. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS OF FOODS. The
obligations of the Shareholders of Foods hereunder are subject to the
conditions that:
(a) The Shareholders shall not have discovered any material error or
misstatement in any of the representations or warranties made by
Tony's herein and all the terms and conditions of this Agreement to be
performed and complied with by Tony's shall have been performed and
complied with.
(b) The Shareholders shall have received the opinion of Patrick J. Lane,
P.C., counsel for Tony's, to the effect that (1) Tony's is a
corporation duly organized and validly existing under the laws of the
State of New York, and has the power to own and operate its properties
10
<PAGE>
wherever the same shall be located as of the Closing Date; (2) the
execution, delivery and performance of Tony's has been duly authorized
by all necessary corporate action including approval by the
shareholders at a lawfully convened meeting and constitutes a legal,
valid and binding obligation of Tony's enforceable in accordance with
its terms; (3) the stock to be delivered to Tony's pursuant to the
terms of this Agreement has been validly issued, is fully paid and
nonassessable; and (4) the exchange of the stock herein contemplated
does not require the registration of the Tony's Common Stock pursuant
to any Federal law dealing with the issuance, sale, transfer, and/or
exchange of corporate securities as the shares issued are exempt from
registration under the provisions of Regulation D of Rule 506. Tony's
common shares will however bear a Rule 144 Restrictive Legend.
6. CLOSING DATE. The closing shall take place at 10:00 A.M. Central Standard
Time, on July , 1996, at the offices of Vanderkam & Sanders in
Houston, Texas, or at such other time and place as the parties hereto shall
agree upon. This Agreement shall be effective as of the close of business
on the Closing Date.
7. ACTIONS AT THE CLOSING. At the closing, Tony's and the Shareholders of
11
<PAGE>
Foods will each deliver, or cause to be delivered to the other, the
securities to be exchanged in accordance with Section 1 of this Agreement
and each party shall pay any and all Federal and State taxes required to be
paid in connection with the issuance and the delivery of their own party to
which the same are deliverable.
In addition, the following transactions will take place.
(a) Tony's will deliver to the Shareholders of Foods:
(i) Duly certified copies of all corporate resolutions and other
corporate proceedings taken by Tony's to authorize the execution,
delivery and performance of this Agreement.
(ii) The opinion of Patrick J. Lane, P.C., counsel for Tony's, as
provided in Section 5 (b) of this Agreement.
(iii) A Certificate executed by a principal officer of Tony's attesting
to the fact that all of the representations and warranties of
Tony's are true and correct as of the Closing Date, and that all
of the conditions to the obligations of the Shareholders of Foods
to be performed by Tony's have been performed as of the Closing
Date.
12
<PAGE>
(iv) A Certificate of Incumbency and Signatures of the officers of
Tony's dated as of the date of this Agreement.
(v) The written resignations of all directors and such officers and
auditors of Tony's as are requested by the Shareholders, which
resignations shall contain an acknowledgment from each resignee
that they have no claims against Tony's for loss of office or
otherwise.
(vi) All registration certificates, statutory books, minutes books and
common seals of Tony's, all accounts books and all documents of
title relating to Tony's's assets (unless already in the
possession of the Shareholders) as are required by the
Shareholders.
(vii) In addition, Martella shall receive a bonus equal to one-hundred
percent of the cash on hand at Tony's.
(b) The Shareholders of Foods will deliver to Tony's:
13
<PAGE>
(i) The opinion of Vanderkam & Sanders, counsel for the
Shareholders of Foods, as provided for in Section 4(c)
hereof.
(ii) A Certificate from the Shareholders of Foods signed by
all the Shareholders that each of the representations
and warranties of the Shareholders are true and correct
as of the Closing Date and that all of the conditions
to the obligations of Tony's to be performed by the
Shareholders have been performed as of the Closing
Date.
(iii) All of the outstanding common share certificates of
Foods.
8. CONDUCT AND BUSINESS, ETC. Between the date hereof and the Closing Date,
Foods shall conduct its business in the same manner in which it has
heretofore been conducted and the Shareholders will not permit it to (1)
enter into any contract, etc., other than in the ordinary course of
business, or (2) declare or make any distribution of any kind to the
Shareholders, without first obtaining the written consent of Tony's.
9. ACCESS TO THE PROPERTIES AND BOOKS OF FOODS. The Shareholders of Foods
hereby grant to Tony's, through its duly authorized representatives and
14
<PAGE>
during normal business hours between the date hereof and the Closing Date,
the right of full and complete access to the properties of Foods, and full
opportunity to examine Foods's books and records. A similar access to
Tony's's properties, books and records in likewise granted to the
Shareholders of Foods.
10. COSTS AND EXPENSES. Foods shall pay the expenses and costs incident to
the preparation of this Agreement and to the consummation of the
transaction contemplated herein.
11. FUNDING OF CAPTAIN TONY'S PIZZA.The Shareholders agree to fund the
Pizza franchising business with a minimum of two million dollars during
the twelve months following the date of this agreement for expansion and
working capital.
12. MISCELLANEOUS.
(a) This Agreement shall be controlled, construed and enforced in
accordance with the laws of the State of New York.
(b) This Agreement shall not be assignable by either party without the
prior written consent of the other.
(c) All paragraph headings herein are inserted for the parties
convenience in identifying the provisions of this Agreement, and
15
<PAGE>
shall not effect the construction or interpretation of the provisions
of this Agreement.
(d) This Agreement sets forth the entire understanding between the
parties, there being no terms, conditions, warranties or
representations other than those contained herein, and no amendments
hereto shall be valid unless made in writing and signed by the
parties hereto.
(e) This Agreement shall be binding upon and shall inure to the benefit
of the heirs, executors, administrators and assigns of Foods and upon
the successors and assigns of Tony's.
(f) The company "Tony's" shall change its Name to "Am Pac Corporation"
(g) All notices, requests, instructions, or other documents to be given
hereunder shall be in writing and sent by registered mail:
<TABLE>
<S> <C>
If to the Share Thomas L. Tedrow
holders of Foods: Sharon C. Martin
2440 S. Progress Drive
Salt Lake City, UT 84119
with copies to: Messrs. Vanderkam & Sanders
1111 Caroline, Ste. 2905
Houston, Texas 77010
If to Tony's: Captain Tony's Pizza, Inc.
P.O. Box 82
Deland, FL 32721
with copies to: Patrick J. Lane
-------------------------------
-------------------------------
</TABLE>
16
<PAGE>
(h) For purposes of this Agreement only, facsimile signatures shall be
considered original signatures.
(i) This agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when
so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date and year first above written.
<TABLE>
<S> <C>
(REGISTRANT) CAPTAIN TONY'S PIZZA, INC.
BY (SIGNATURE) /s/ Michael J. Martella
(NAME AND TITLE) Michael J. Martella, President
(DATE) October 15, 1996
ATTEST:
BY (SIGNATURE) /s/ Thomas Tedrow
(NAME AND TITLE) Thomas Tedrow
(DATE) October 15, 1996
</TABLE>
ARTICLES OF INCORPORATION
OF
AM-PAC INTERNATIONAL, INC.
The undersigned natural persons of the age of eighteen (18) years or more
acting as incorporator of a corporation under the Nevada Revised Civil Statute
78, hereby adopts the following Articles of Incorporation:
ARTICLE I
NAME
The name of the corporation (hereinafter called "Corporation") is Am-Pac
International, Inc.
ARTICLE II
PERIOD OF DURATION
The period of duration of the Corporation is perpetual.
ARTICLE III
PURPOSES AND POWERS
The purpose for which this Corporation is organized is to engage in the
business of investing in investments of all forms and nature and to engage in
any and all other lawful business.
ARTICLE IV
CAPITALIZATION
The total number of shares of stock which the Corporation shall have the
authority to issue is one hundred fifty million (150,000,000) shares,
consisting of one hundred forty nine million (149,900,000) shares of Common
Stock having a par value of $.001 per share and one hundred thousand (100,000)
shares of Preferred Stock having a par value of $.001 per share.
A. Preferred Stock
The Board of Directors is authorized, subject to the limitations prescribed
by law and the provisions of this Article, to provide for the issuance of
<PAGE>
the shares of Preferred Stock in series, and by filing a certificate
pursuant to the applicable law of the State of Nevada, to establish from
time to time the number of shares to be included in each such series and to
fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof.
1. The authority of the Board with respect to each series shall include,
but not be limited to, determination of the following:
a. The number of shares constituting that series and the distinctive
designation of that series;
b. The dividend rate on the shares of that series, whether dividends
shall be cumulative, and if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on
shares of that series;
c. Whether that series shall have voting rights, in addition to the
voting rights provided by law, and if so, the terms of such voting
rights;
d. Whether that series shall have conversion privileges and, if so,
the terms and conditions of such conversion, including provision
for adjustment of the conversion rate in such events as the Board
of Directors shall determine;
e. Whether or not the shares of that series shall be redeemable and,
if so, the terms and conditions of such redemption, including the
date or dates upon or after which they shall be redeemable and the
amount per share payable in case of redemption, which amount may
vary under different conditions and at different redemption dates;
f. Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series and, if so, the terms and
amount of such sinking fund;
<PAGE>
g. The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of
payment of shares of that series; and
h. Any other relative rights, preferences and limitations of that
series.
2. Dividends on outstanding shares of Preferred Stock shall be paid or
declared and set apart for payment, before any dividends shall be paid
or declared and set apart for payment on Common Stock with respect to
the same dividend period.
3. If upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the assets available for distribution
to holders of shares of Preferred Stock of all series shall be
insufficient to pay such holders the full preferential amount to which
they are entitled, then such assets shall be distributed ratably among
the shares of all series of Preferred Stock in accordance with the
respective preferential amounts (including unpaid cumulative dividends,
if any) payable with respect thereto.
4. Unless otherwise provided in any resolution of the Board of Directors
providing for the issuance of any particular series of Preferred Stock,
no holder of Preferred Stock shall have any pre-emptive right as such
holder to subscribe for, purchase or receive any part of any new or
additional issue of capital stock of any class or series, including
unissued and treasury stock, or obligations or other securities
convertible into or exchangeable for capital stock of any class or
series, or warrants or other instruments evidencing rights or options
to subscribe for, purchase or receive any capital stock of any class
or series, whether now or hereafter authorized and whether issued for
cash or other consideration or by way of dividend.
<PAGE>
B. Common Stock
1. Subject to the prior and superior rights of the Preferred Stock and on
the conditions set forth in the foregoing parts of this Article or in
any resolution of the Board of Directors providing for the issuance of
any particular series of Preferred Stock, and not otherwise, such
dividends (payable in cash, stock or otherwise) as may be determined by
the Board of Directors may be declared and paid on the Common Stock
from time to time out of any funds legally available therefor.
2. Except as otherwise provided by law, by this Certificate of
Incorporation or by the resolution or resolutions of the Board of
Directors providing for the issue of any series of the Preferred Stock,
the Common Stock shall have the exclusive right to vote for the
election of directors and for all other purposes, each holder of the
Common Stock being entitled to one vote for each share held.
3. Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and after the holders of the
Preferred Stock of each series shall have been paid in full the amount
to which they respectively shall be entitled, or a sum sufficient for
such payments in assets of the Corporation shall be distributed pro
rata to the holders of the Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of the
Preferred Stock.
ARTICLE V
REGISTERED OFFICE AND AGENT
The name and address of the corporation's registered agent and address is The
Corporation Trust Company of Nevada, One, East First Street, Reno, Nevada
89501.
<PAGE>
ARTICLE VI
DIRECTORS
The Corporation shall be governed by a Board of Directors consisting of
such number of directors as shall be fixed the Corporation's bylaws. The
number of directors constituting the initial board of directors of the
corporation is five and the names and addresses of the directors are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Thomas L. Tedrow 431 E. Central Blvd., Suite 900
Orlando, Florida 32801
Michael J. Martella 431 E. Central Blvd., Suite 900
Orlando, Florida 32801
Malcolm Wright 431 E. Central Blvd., Suite 900
Orlando, Florida 32801
Linda Xu 2440 South Progress Dr.
Salt Lake City, Utah 84109
Sharon C. Martin 2440 South Progress Dr.
Salt Lake City, Utah 84109
</TABLE>
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
There shall be no preemptive right to acquire unissued and/or treasury
shares of the stock of the Corporation.
ARTICLE VIII
LIABILITY OF OFFICERS AND DIRECTORS
A director or officer of the Corporation shall not be liable to the
Corporation or its shareholders for damages for breach of fiduciary duty as a
director or officer unless the act or omission involves intentional misconduct,
fraud, a knowing violation of law or the payment of an unlawful dividend in
violation of NRS 78.300.
<PAGE>
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall indemnify any and all persons who may serve or who
have served at any time as directors or officers or who, at the request of the
Board of Directors of the Corporation, may serve or at any time have served as
directors or officers of another corporation in which the Corporation at such
time owned or may own shares of stock or of which it was or may be a creditor,
and their respective heirs, administrators, successors and assigns, against any
and all expenses, including amounts paid upon judgments, counsel fees and
amounts paid in settlement (before or after suit is commenced), actually and
necessarily by such persons in connection with the defense or settlement of any
claim, action, suit or proceeding in which they, or any of them, are made
parties, or a party, or which may be asserted against them or any of them, by
reason of being or having been directors or officers of the Corporation, or of
such other corporation, except in relation to matters as to which any such
director or officer of the Corporation, or of such other corporation or former
director or officer or person shall be adjudged in any action, suit or
proceeding to be liable for his own negligence or misconduct in the performance
of his duty. Such indemnification shall be in addition to any other rights to
which those indemnified may be entitled under any law, by law, agreement, vote
of shareholder or otherwise.
DATED this 4th day of October, 1996. Incorporator:
William Erwin
CT Corporation System
811 Dallas Ave.
Houston, Texas 77002
STATE OF TEXAS )
(
COUNTY OF HARRIS )
On October 4, 1996, personally appeared before me, a Notary Public,
William Erwin, who acknowledged that he executed the above document in his
capacity as duly authorized agent of the C T Corporation System and
Incorporator Am-Pac International, Inc.
- -----------------------------
Notary Public
<PAGE>
<PAGE>
Certificate of Acceptance of Appointment of Resident Agent
The Corporation Trust Company of Nevada hereby accepts appointment as Resident
Agent for the above named corporation.
Dated:
Corporation Trust Company of Nevada
- -----------------------------------
By:--------------------------------
Title:-----------------------------
BYLAWS
OF
AM-PAC INTERNATIONAL, INC.
ARTICLE I
OFFICES
1.01 REGISTERED OFFICE AND AGENT
The registered office of the Corporation shall be maintained at The
Corporation Trust Company in Nevada, One East First Street, Reno, Nevada 89501
in the State of Nevada. The registered office or the registered agent, or
both, may be changed by resolution of the Board of Directors, upon filing the
statement required by law.
1.02 PRINCIPAL OFFICE
The principal office of the Corporation shall be at Waterford & Sterling,
431 E. Central Blvd., Ste. 900, Orlando, Florida 32801 provided that the Board
of Directors shall have power to change the location of the principal office in
its discretion.
1.03 OTHER OFFICES
The Corporation may also maintain other offices at such places within or
without the State of Nevada as the Board of Directors may from time to time
appoint or as the business of the Corporation may require.
ARTICLE II
SHAREHOLDERS
2.01 PLACE OF MEETING
All meetings of shareholders, both regular and special, shall be held
either at the registered office of the Corporation, or at such other place as
shall be designated in the notice of the meeting.
-2-
<PAGE>
2.02 ANNUAL MEETING
The annual meeting of shareholders for the election of directors and for
the transaction of all other business which may come before the meeting shall
be held on the 30th day of April in each year (if not a legal holiday and, if a
legal holiday, then on the next business day following) at the hour specified
in the notice of meeting.
If the election of directors shall not be held on the day above designated
for the annual meeting, the Board of Directors shall cause the election to be
held as soon thereafter as conveniently may be at a special meeting of the
shareholders called for the purpose of holding such election.
The annual meeting of shareholders may be held for any other purpose in
addition to the election of director which may be specified in a notice of such
meeting. The meeting may be called by resolution of the Board of Directors or
by a writing filed with the secretary signed either by a majority of the
directors or by shareholders owning a majority in amount of the entire capital
stock of the Corporation issued and outstanding and entitled to vote at any
such meeting.
2.03 NOTICE OF SHAREHOLDERS' MEETING
A written or printed notice stating the place, day and hour of the
meeting, and in case of a special meeting, the purpose or purposes for which
the meeting is called, shall be delivered not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally or by mail,
by or at the direction of the president, secretary or the officer or person
calling the meeting, to each shareholders of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the shareholder at his address as it
appears on the share transfer books of the Corporation, with postage thereon
prepaid.
2.04 VOTING OF SHARES
-2-
<PAGE>
Each outstanding share, regardless of class, shall be entitled to one vote
on each matter submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or classes are limited
or denied by the Articles of Incorporation or by law.
Treasury shares, shares of its own stock owned by another corporation the
majority of the voting stock of which is owned or controlled by this
Corporation, and shares of its own stock held by this Corporation in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
A shareholder may vote either in person or by proxy executed in writing by
the shareholder or by his duly authorized attorney-in-fact. No proxy shall be
valid after eleven (11) months from the date of its execution unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain irrevocable for a
period of more than eleven (11) months.
At each election for directors and every shareholder entitled to vote at
such election shall have the right to vote, in person or by proxy, the number
of shares owned by him for as many persons as there are directors to be elected
and for whose election he has a right to vote, or unless prohibited by the
Articles of Incorporation, to cumulate his votes by giving one candidate as
many votes as the number of such directors multiplied by the number of his
shares shall equal, or by distributing such votes on the same principal among
any number of such candidates. Any shareholder who intends to cumulate his
votes as herein authorized shall give written notice of such intention to the
secretary of the Corporation on or before the day preceding the election at
which such shareholder intends to cumulate his votes.
2.05 CLOSING TRANSFER BOOKS AND FIXING RECORD DATE
For the purpose of determining shareholders entitled to notice of or to
-3-
<PAGE>
vote at any meeting of shareholders or any adjournment thereof, or entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the share transfer books shall be closed for a stated period not exceeding
sixty (60) days. If the stock transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten (10) days immediately
preceding such meeting. In lieu of closing the stock transfer books, the
ByLaws or, in the absence of an applicable ByLaw, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, not later than sixty (60) days and, in case of a meeting of
shareholders, not earlier than ten (10) days, prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the share transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination
shall apply to any adjournment thereof, except where the determination has been
made through the closing of share transfer books and the stated period of
closing has expired.
2.06 QUORUM OF SHAREHOLDERS
Unless otherwise provided in the Articles of Incorporation, the holders of
a majority of the shares entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of shareholders, but in no event shall a
quorum consist of the holders of less than one-third (1/3) of the shares
entitled to vote and thus represented at such meeting. The vote of the holders
-4-
<PAGE>
of a majority of the shares entitled to vote and thus represented at a meeting
at which a quorum is present shall be the act of the shareholders' meeting,
unless the vote of a greater number is required by law, the Articles of
Incorporation or the ByLaws.
2.07 VOTING LISTS
The officer or agent having charge of the share transfer books for the
shares of the Corporation shall make, at least ten (10) days before each
meeting of shareholders, a complete list of the shareholders entitled to vote
at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for a
period of ten (10) days prior to such meeting, shall be kept on file at the
registered office of the Corporation and shall be subject to inspection by any
shareholders at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting. The original share transfer books shall be prima-facie evidence as to
who are the shareholders entitled to examine such list or transfer books or to
vote at any meeting of shareholders.
2.08 ACTION BY CONSENT OF SHAREHOLDERS
In lieu of a formal meeting, action may be taken by written consent of
such number of the shareholders as is required by either State law or the
Corporation's Bylaws for passage of such corporate action.
ARTICLE III
DIRECTORS
3.01 BOARD OF DIRECTORS
The business and affairs of the Corporation shall be managed by a Board of
Directors. Directors need not be residents of the State of Nevada or
shareholders in the Corporation.
-5-
<PAGE>
3.02 NUMBER AND ELECTION OF DIRECTORS
The number of directors shall be five (5) provided that the number may be
increased or decreased from time to time by an amendment to these ByLaws, but
no decrease shall have the effect of shortening the term of any incumbent
director. At each annual election the shareholders shall elect directors to
hold office until the next succeeding annual meeting.
3.03 VACANCIES
Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the remaining directors, though less than a quorum of the
Board. A director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any directorship to be filled by reason of
an increase in the number of directors shall be filled by election at an annual
meeting or at a special meeting of shareholders called for that purpose.
3.04 QUORUM OF DIRECTORS
A majority of the Board of Directors shall constitute a quorum for the
transaction of business. The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of
Directors.
3.05 ANNUAL MEETING OF DIRECTORS
Within thirty (30) days after each annual meeting of shareholders, the
Board of Directors elected at such meeting shall hold an annual meeting at
which they shall elect officers and transact such other business as shall come
before the meeting.
3.06 REGULAR MEETING OF DIRECTORS
A regular meeting of the Board of Directors may be held at such time as
shall be determined from time to time by resolution of the Board of Directors.
-7-
<PAGE>
3.07 SPECIAL MEETINGS OF DIRECTORS
The secretary shall call a special meeting of the Board of Directors
whenever requested to do so by the President or by two directors. Such special
meeting shall be held at the time specified in the notice of meeting.
3.08 PLACE OF DIRECTORS MEETINGS
All meetings of the Board of Directors (annual, regular or special) shall
be held either at the principal office of the Corporation or at such other
place, either within or without the State of Nevada, as shall be specified in
the notice of meeting.
3.09 NOTICE OF DIRECTORS MEETINGS
All meetings of the Board of Directors (annual, regular or special) shall
be held upon five (5) days written notice stating the date, place and hour of
meeting delivered to each director either personally or by mail or at the
direction of the president or the secretary or the officer or person calling
the meeting.
In any case where all of the directors execute a waiver of notice of the
time and place of meeting, no notice thereof shall be required, and any such
meeting (whether annual, regular or special) shall be held at the time and at
the place (either within or without the State of Nevada) specified in the
waiver of notice. Attendance of a director at any meeting shall constitute a
waiver of notice of such meeting, except where the directors attends a meeting
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any annual,
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
-7-
<PAGE>
3.10 COMPENSATION
Directors, as such, shall not receive any stated salary for their
services, but by resolution of the Board of Directors a fixed sum and expenses
of attendance, if any, may be allowed for attendance at each annual, regular or
special meeting of the Board, provided, that nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
3.11 ACTION BY CONSENT OF DIRECTORS
In lieu of a formal meeting, action may be taken by written consent of
such number of the directors as is required by either State law or the
Corporation's Bylaws for passage of such corporate action.
ARTICLE IV
OFFICERS
4.01 OFFICERS ELECTION
The officers of the Corporation shall consist of a president, one or more
vice presidents, a secretary, and a treasurer. All such officers shall be
elected at the annual meeting of the Board of Directors provided for in Article
III, Section 5. If any office is not filled at such annual meeting, it may be
filled at any subsequent regular or special meeting of the Board. The Board of
Directors at such annual meeting, or at any subsequent regular or special
meeting may also elect or appoint such other officers and assistant officers
and agents as may be deemed necessary. Any two or more offices may be held by
the same person, except the offices of president and secretary.
All officers and assistant officers shall be elected to serve until the
next annual meeting of directors (following the next annual meeting of
shareholders) or until their successors are elected; provided, that any officer
or assistant officer elected or appointed by the Board of Directors may be
removed with or without cause at any regular or special meeting of the Board
-8-
<PAGE>
whenever in the judgment of the Board of Directors the best interests of the
Corporation will be served thereby, but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Any agent appointed
shall serve for such term, not longer than the next annual meeting of the Board
of Directors, as shall be specified, subject to like right of removal by the
Board of Directors.
4.02 VACANCIES
If any office becomes vacant for any reason, the vacancy may be filled by
the Board of Directors.
4.03 POWER OF OFFICERS
Each officer shall have, subject to these ByLaws, in addition to the
duties and powers specifically set forth herein, such powers and duties as are
commonly incident to his office and such duties and powers as the Board of
Directors shall from time to time designate. All officers shall perform their
duties subject to the directions and under the supervision of the Board of
Directors. The president may secure the fidelity of any and all officers by
bond or otherwise.
4.04 PRESIDENT
The president shall be the chief executive officer of the Corporation. He
shall preside at all meetings of the directors and shareholders. He shall see
that all orders and resolutions of the Board are carried out, subject however,
to the right of the directors to delegate specific powers, except such as may
be by statute exclusively conferred on the president, to any other officers of
the Corporation.
He or any vice president shall execute bonds, mortgages and other
instruments requiring a seal, in the name of the Corporation, and, when
authorized by the Board, he or any vice president may affix the seal to any
instrument requiring the same, and the seal when so affixed shall be attested
by the signature of either the secretary or an assistant secretary. He or any
vice president shall sign certificates of stock.
-9-
<PAGE>
The president shall be ex-officio a member of all standing committees.
He shall submit a report of the operations of the Corporation for the year
to the directors at their meeting next preceding the annual meeting of the
shareholders and to the shareholders at their annual meeting.
4.05 VICE PRESIDENT
The vice president shall, in the absence or disability of the president,
perform the duties and exercise the powers of the president, and they shall
perform such other duties as the Board of Directors shall prescribe.
4.06. SECRETARY AND ASSISTANT SECRETARIES
The secretary shall attend all meetings of the Board and all meetings of
the shareholders and shall record all votes and the minutes of all proceedings
and shall perform like duties for the standing committees when required. He
shall give or cause to be given notice of all meetings of the shareholders and
all meetings of the Board of Directors and shall perform such other duties as
may be prescribed by the Board. He shall keep in safe custody the seal of the
Corporation, and when authorized by the Board, affix the same to any instrument
requiring it, and when so affixed, it shall be attested by his signature or by
the signature of an assistant secretary.
The assistant secretary shall, in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and
they shall perform such other duties as the Board of Directors shall prescribe.
In the absence of the secretary or an assistant secretary, the minutes of
all meetings of the Board and shareholders shall be recorded by such person as
shall be designated by the president or by the Board of Directors.
-10-
<PAGE>
4.07 TREASURER AND ASSISTANT TREASURERS
The treasurer shall have the custody of the corporate funds and securities
and shall keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit all moneys and other
valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors.
The treasurer shall disburse the funds of the Corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
disbursements. He shall keep and maintain the Corporation's books of account
and shall render to the president and directors an account of all of his
transactions as treasurer and of the financial condition of the Corporation and
exhibit his books, records and accounts to the president or directors at any
time. He shall disburse funds for capital expenditures as authorized by the
Board of Directors and in accordance with the orders of the president, and
present to the president for his attention any requests for disbursing funds if
in the judgment of the treasurer any such request is not properly authorized.
He shall perform such other duties as may be directed by the Board of Directors
or by the president.
If required by the Board of Directors, he shall give the Corporation a
bond in such sum and with such surety or sureties as shall be satisfactory to
the Board for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the Corporation.
The assistant treasurers in the order of their seniority shall, in the
absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer, and they shall perform such other duties as the Board
of Directors shall prescribe.
-11-
<PAGE>
ARTICLE V
CERTIFICATES OF STOCK: TRANSFER, ETC.
5.01 CERTIFICATES OF STOCK
The certificates for shares of stock of the Corporation shall be numbered
and shall be entered in the Corporation as they are issued. They shall exhibit
the holder's name and number of shares and shall be signed by the president or
a vice president and the secretary or an assistant secretary or if the Board of
Directors determines, by any one of the afore named officers and shall be
sealed with the seal of the Corporation or a facsimile thereof. If the
Corporation has a transfer agent or a registrar, other than the Corporation
itself or an employee of the Corporation, the signatures of any such officer
may be facsimile. In case any officer or officers who shall have signed or
whose facsimile signature or signatures shall have been used on any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before said
certificate or certificates shall have been issued, such certificate may
nevertheless be issued by the Corporation with the same effect as though the
person or persons who signed such certificates or whose facsimile signature or
signatures shall have been used thereon had been such officer or officers at
the date of its issuance. Certificates shall be in such form as shall in
conformity to law be prescribed from time to time by the Board of Directors.
The Corporation may appoint from time to time transfer agents and
registrars, who shall perform their duties under the supervision of the
secretary.
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5.02 TRANSFERS OF SHARES
Upon surrender to the Corporation or the transfer agent of the Corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
Corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction upon its books.
5.03 REGISTERED SHAREHOLDERS
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder in fact thereof and, accordingly shall
not be bound to recognize any equitable or other claim to or interest in such
share on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by law.
5.04 LOST CERTIFICATE
The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate to be lost. When
authorizing such issue of a new certificate or certificates, the Board of
Directors in its discretion and as a condition precedent to the issuance
thereof, may require the owner of such lost or destroyed certificate or
certificates or his legal representative to advertise the same in such manner
as it shall require or to give the corporation a bond with surety and in form
satisfactory to the Corporation (which bond shall also name the Corporation's
transfer agents and registrars, if any, as obligees) in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
or other obligees with respect to the certificate alleged to have been lost or
destroyed, or to advertise and also give such bond.
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ARTICLE VI
DIVIDEND
6.01 DECLARATION
The Board of Directors may declare at any annual, regular or special
meeting of the Board and the Corporation may pay, dividends on the outstanding
shares in cash, property or in the shares of the Corporation to the extent
permitted by, and subject to the provisions of, the laws of the State of
Nevada.
6.02 RESERVES
Before payment of any dividend there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the directors from
time to time in their absolute discretion think proper as a reserve fund to
meet contingencies or for equalizing dividends or for repairing or maintaining
any property of the Corporation or for such other purpose as the directors
shall think conducive to the interest of the Corporation, and the directors may
abolish any such reserve in the manner in which it was created.
ARTICLE VII
MISCELLANEOUS
7.01 INFORMAL ACTION
Any action required to be taken or which may be taken at a meeting of the
shareholders, directors or members of the executive committee, may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by all of the shareholders, directors, or members of the
executive committee, as the case may be, entitled to vote with respect to the
subject matter thereof, and such consent shall have the same force and effect
as a unanimous vote of the shareholders, directors, or members of the executive
committee, as the case may be, at a meeting of said body.
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7.02 SEAL
The corporate seal shall be circular in form and shall contain the name of
the Corporation, the year of its incorporation and the words "State of Nevada",
and "CORPORATE SEAL". The seal may be used by causing it or a facsimile to be
impressed or affixed or in any other manner reproduced. The corporate seal may
be altered by order of the Board of Directors at any time.
7.03 CHECKS
All checks or demands for money and notes of the Corporation shall be
signed by such officer or officers or such other person or persons as the Board
of Directors may from time to time designate.
7.04 FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of January
in each and every year.
7.05 DIRECTORS ANNUAL STATEMENT
The Board of Directors shall present at each annual meeting of
shareholders a full and clear statement of the business and condition of the
Corporation.
7.06 CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the Articles of Incorporation of the Corporation and each certificate
representing its issued and outstanding shares states that the business and
affairs of the Corporation shall be managed by the shareholders of the
Corporation rather than by the Board of Directors, then, whenever the context
so requires the shareholders of the Corporation shall be deemed the directors
of the Corporation for the purposes of applying any provision of these ByLaws.
7.07 AMENDMENTS
These ByLaws may be altered, amended or repealed in whole or in part by
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the affirmative vote of the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The following Articles describes and sets out the parameters of
indemnification as set out in Article 2.02-1 of the Texas Business Corporations
Act.
"Article 2.02-1 of the Texas Business Corporation Act provides the
following with respect to indemnification of officers and directors:
Art. 2.02-1 Power to Indemnify and to Purchase Indemnity Insurance; Duty
to Indemnify.
A. 1. "Corporation" includes any domestic or foreign predecessor entity
of the corporation in a merger, consolidation, or other transaction
which the liabilities of the predecessor are transferred to the
corporation by operation of law and in any other transaction in
which the corporation assumes the liabilities of the predecessor
but does not specifically exclude liabilities that are the subject
matter of this article.
A. 2. "Director" means any person who is or was a director of the
corporation and any person who, while a director of the
corporation, is or was serving at the request of the corporation as
a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or
domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise.
A. 3. "Expenses" include court costs and attorney's fees.
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A. 4. "Official capacity" means:
a. When used with respect to a director, the office of director in
the corporation, and
b. When used with respect to a person other than a director, the
elective or appointive office in the corporation held by the
officer or the employment or agency relationship undertaken by
the employee or agent in behalf of the corporation, but
c. In both paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or any partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or
other enterprise.
5. "Proceeding" means any threatened, pending, or completed action,
suit, or proceedings, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit,
or proceeding, and any inquiry or investigation that could lead to
such an action, suit, or proceeding.
B. A corporation may indemnify a person who was, is or is threatened to be
made a named defendant or respondent in a proceeding because the person
is or was a director only if it is determined in accordance with
Section F of this article that the person:
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1. Conducted himself in good faith;
2. reasonably believed;
a. In the case of conduct in his official capacity as a director
of the corporation, that his conduct was in the corporation's
best interest, and
b. In all other cases, that his conduct was at least not opposed
to the corporation's best interest; and
3. In the case of any criminal proceeding, had no reasonable cause to
believe his conduct was lawful.
C. A director may not be indemnified under Section B of this article for
obligations resulting from a proceeding:
1. In which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit
resulted from an action taken in the persons' official capacity; or
2. In which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of
itself determinative that the person did not meet the requirements set
forth in Section B of this article.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines,
settlements, and reasonable expenses actually incurred by the person in
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connection with the proceeding; but if the proceeding was brought by or
in behalf of the corporation, the indemnification is limited to
reasonable expenses actually incurred by the person in connection with
the proceeding.
F. A determination of indemnification under Section B of this article must
be made:
1. By a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the
proceeding;
2. If such a quorum cannot be obtained, by a majority vote of a
committee of the board of directors, designated to act in the
matter by a majority vote of all directors, consisting solely of
two or more directors who at the time of the vote are not named
defendants or respondents in the proceeding.
3. By special legal counsel selected by the board of directors or a
committee of the board by vote as set for in Subsection (1) or (2)
of this section, or, if such quorum cannot be obtained and such a
committee cannot be established, by a majority vote of all
directors; or
4. By the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the
proceeding.
G. Authorization of indemnification and determination as to reasonableness
of expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
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indemnification is permissible is made by special legal counsel,
authorization of indemnification and determination as to reasonableness
of expenses must be made in the manner specified by Subsection (3) of
section F of this article for the selected of special legal counsel. A
provision contained in the article of incorporation, bylaws, a
resolution of shareholders or directors, or an agreement that makes
mandator the indemnification permitted under section B of this article
shall be deemed to constitute authorization of indemnification in the
manner required by this section even though such provision may not have
been adopted or authorized in the same manner as the determination that
indemnification is permissible.
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named
defendant or respondent because he is or was a director if he has been
wholly successful, on the merits or otherwise, in the defense of the
proceeding.
I. If, in a suit for the indemnification required by section H of this
article, a court of competent jurisdiction determines that the director
is entitled to indemnification under that section, the court shall
order indemnification and shall award to the director the expenses
incurred in securing the indemnification.
J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that
the director is fairly and reasonably entitled to indemnification in
view of all the relevant circumstances, whether or not he has met the
requirements set forth in section B of this article or has been
adjudged liable in the circumstances described by section C of this
article, the court may order the indemnification that the court
determines is proper and equitable. The court shall limit
indemnification to reasonable expenses if the proceeding is brought by
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or on behalf of the corporation or if the director is found liable on
the basis that personal benefit was improperly received by him, whether
or not the benefit resulted from an action taken in the person's
official capacity.
K. Reasonable expenses incurred by a director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding
may be paid or reimbursed by the corporation in advance of the final
disposition of the proceeding after:
1. The corporation receives a written affirmation by the director of
his good faith belief that he has met the standard of conduct
necessary for indemnification under this article and a written
undertaking by or on behalf of the director to repay the amount
paid or reimbursed if it is ultimately determined that he has not
met those requirements; and
2. A determination that the facts then known to those making the
determination would not preclude indemnification under this
article.
L. The written undertaking required by section K of this article must be
an unlimited general obligation of the director but need not be
secured. It may be accepted without reference to financial ability to
make repayment. Determinations and authorizations of payments under
section K of this article must be made in the manner specified by
section F of this article for determining that indemnification is
permissible.
M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors,
an agreement, or otherwise, except in accordance with section R of this
article, is valid only to the extent it is consistent with this article
as limited by the articles of incorporation, if such a limitation
exists.
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<PAGE>
N. Notwithstanding any other provision of this article, a corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or the participation in a proceeding at a time
when he is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by section H, I, and J of this article for a director
and is entitled to seek indemnification under those sections to the
same extent as a director. A corporation may indemnify and advance
expenses to an officer, employee, or agent of the corporation to the
same extent that it may indemnify and advance expenses to directors
under this article.
P. A corporation may indemnify and advance expenses to persons who are not
or were not officers, employees, or agents of the corporation but who
are or were serving at the request of the corporation as a director,
officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee
benefit plan, or other enterprise to the same extent that it may
indemnify and advance expenses to directors under this article.
Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in section P of this article and
who is not a director to such further extent, consistent with law, as
may be provided by its articles of incorporation, bylaws, general or
specific action of its board of directors, or contract or as permitted
or required by common law.
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R. A corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee, or agent of the
corporation or who is or was serving at the request of the corporation
as a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic
corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, against any liability
asserted against him and incurred by him or in such a capacity or
arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that
liability under this article.
S. Any indemnification of or advance of expenses to a director in
accordance with this Article shall be reported in writing to the
shareholders with or before the notice or waiver of notice of the next
shareholders' meeting or with or before the next submission to
shareholders of a consent to action without a meeting pursuant to
section A. Article 9.10 of this Act and, in any case, within the twelve
month period immediately following the date of the indemnification or
advance.
T. For purposes of this article, the corporation is deemed to have
requested a director to serve an employee benefit plan whenever the
performance by him of his duties to the corporation also imposes duties
on or otherwise involves services by him to the plan or participants or
beneficiaries of the plan. Excise taxes assessed on a director with
respect to an employee benefit plan pursuant to applicable law are
deemed fines. Action taken or omitted by him with respect to an
employee benefit plan in the performance of his duties for a purpose
reasonably believed by him to be in the interest of the participants
and beneficiaries of the plan is deemed to be for a purpose which is
not opposed to the best interest of the corporation.
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U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to
indemnify a person under sections H, I, J, O, P, or Q of this
article."
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EMPLOYMENT AGREEMENT
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
AGREEMENT, dated this day of May, 1996, but effective as of
-------
, 1996, by and between CAPTAIN TONY'S PIZZA, INC., a New York
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corporation ("Company"), and MICHAEL J. MARTELLA ("Employee").
Recitals
WHEREAS, the Company and its affiliates are engaged in the restaurant,
restaurant franchising and food marketing industries.
WHEREAS, the Company desires to retain the ongoing services of the
Employee, and the Employee desires to serve, as the President and Chief
Operating Officer of the Captain Tony's Pizza Company (a subsidiary to be
formed) and in such capacities as the Company's Board of Directors shall from
time to time determine.
WHEREAS, the Employee is, and will be, employed by the Company in a
confidential relationship wherein Employee, in the course of his employment
with the Company, has, and will, become familiar with and aware of information
as to the specific manner of doing business and the customers of the Company
and its affiliates and future plans with respect thereto, all of which has been
established and maintained, and will be established and maintained, at great
expense to the Company.
WHEREAS, Employee recognizes that the Company's business is dependent upon
a number of trade secrets, the protection of which is of critical importance to
the Company.
WHEREAS, the Company will sustain great loss and economic damage if during
the term of this Agreement or Employee's employment with the Company, or for a
period of one (1) year immediately following the termination of the Agreement
or Employee's employment, for any reason, Employee should violate the
provisions of Paragraphs 3 or 4 of this Agreement.
WHEREAS, monetary damages for such losses would be extremely difficult to
measure.
<PAGE>
<PAGE>
WHEREAS, the Company and Employee desire to formally evidence their
relationship and the terms of employment.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby
agreed as follows:
ARTICLE I
Employment and Duties
1.01 Employment. The Company hereby employs Employee as the President and
Chief Operating Officer of Captain Tony's Pizza Company (a company to be
formed). Additional or different duties, titles or positions may be assigned
to Employee or may be taken from Employee from time to time at the discretion
of the Board of Directors ("Board") of the Company. Employee hereby accepts
this employment upon the terms and conditions herein contained and agrees to
devote his time, attention and efforts to promote and further the business and
services of the Company. Employee shall faithfully adhere to, execute and
fulfill all policies established by the Company.
1.02 Duties.Employee shall perform such duties, assume such
responsibilities and devote such time, attention and energy to the business of
the Company as the Board shall from time to time require including working
overseas, although such shall be limited to not more than two consequative
weeks per trip, and shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. However, the foregoing limitations shall not be
construed as prohibiting Employee from making personal investments in such form
or manner as will neither require his services in the operation or affairs of
the companies or enterprises in which such investments are made nor violate the
terms of Paragraphs 3 or 4 hereof.
The parties acknowledge that Employee is the owner of a Captain Tony's
franchise in Rochester, New York and is authorized to devote his services to
such franchise as from time to time may be required. Although Employee shall
be authorized to determine the best location from which to perform his services
if such are performed from a location other than the corporate office, employee
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shall be responsible for all expenses incurred in connection with maintaining
such seperate office.
1.03 Custody of Company Funds. All funds received by Employee on behalf of
the Company, if any, shall be held in trust for the Company and shall be
delivered and accounted for to the Company as soon as practicable.
ARTICLE II
Compensation
2.01 Base Salary. From and after the execution of this Agreement, the
Company shall pay a base salary to Employee in the amount of $75,000 per year,
payable in equal installments on a semi-monthly basis.
2.02 Expense Reimbursement. The Company shall reimburse Employee for all
reasonable travel, entertainment and other expenses related to his employment
by, or promotion of, the Company. Employee shall provide a written accounting
and explanation of all expenses for which reimbursement is sought on a monthly
basis and the Company shall reimburse all such expenses within ten (10) days
following receipt of each written accounting.
2.03 Bonuses. After the first anniversary of this Agreement, the Employee
shall be entitled to receive such bonuses as the Board shall determine from
time to time in accordance with Company policy and at the sole discretion of
the Board.
2.04 Plan Participation. The Employee shall be entitled to participate in
any and all stock option, stock bonus, pension, profit sharing, retirement or
other similar plans adopted by the Company. In addition, the employee shall be
granted an option to acquire 100,000 shares of the Company's common stock at
anytime after the date of this agreement and for a period ending one day
before, the fifth anniversary of this agreement at a price equal to the fair
market value of the Company's common stock (fair market value to be the mean of
the closing bid/asked price) as of the date of this agreement.
2.05 Other. The Employee shall be entitled to such fringe benefits as the
Company shall establish for its employees generally which shall include with
respect to the Employee at least three weeks paid vacation annually, life
insurance, disability pay and such other benefits as the Company shall adopt,
subject to the discretion of the Company to add or delete such standard
benefits as the Board deems appropriate, from time to time. The Company agrees
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to pay Employees Blue Cross premium until such time as the Company has a health
plan of its own.
ARTICLE III
Non-Competition Agreement
3.01 Non-Competition Agreement. Employee will not, during either the
period of this Agreement or of his employment by or with the Company, whichever
period is longer, and for a period of one (1) year immediately following the
termination of this Agreement, or his employment, whichever is longer, for any
reason whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation
or business of whatever nature (i) call upon any customer of the Company
(including, but not limited to, any customer obtained for the Company by
Employee) for the purpose of soliciting or selling any products or services in
competition with those of the Company or its affiliates; (ii) call upon any
employee of the Company or any of its affiliates for the purpose or with the
intent of enticing them away from or out of the employ of the Company or any
reason whatever; (iii) establish, enter it, be employed by or, advise, consult
with or become a part of, any company, partnership, corporation or other
business entity or venture, or in any way engage in business for himself or for
others, within ten miles of a Captain Tony's Pizza location, including any
franchise locations, in competition with the Company or its affiliates; or (iv)
during or after the term of his employment with the Company, disclose the
Company's customers or any other trade secrets of the Company whether in
existence or proposed, to any person, firm, partnership, corporation or
business for any reason or purpose whatsoever.
3.02 Equitable Relief. Because of the difficulty of measuring economic
losses to the Company and its affiliates as a result of the Employee's breach
of the foregoing covenant, and because of the immediate and irreparable damage
that would be caused to the Company and its affiliates for which it would have
no other adequate remedy, Employee agrees that the covenant specified in
Paragraph 3.01 may be enforced by the Company and its affiliates in the event
of breach by him by injunctions, restraining orders or similar equitable
relief.
3.03 Reasonableness of the Covenant Not to Compete. It is agreed by the
parties that the covenants in Paragraph 3.01 are necessary to protect the
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goodwill and business interests of the Company and its affiliates and impose a
reasonable restraint on Employee in light of the activities and business of the
Company and its affiliates on the date of the execution of this Agreement and
the future plans of the Company; but it is also the intent of the Company and
Employee that such covenants be construed and enforced in accordance with the
activities and business of the Company and its affiliates on the date of the
termination of the employment of Employee.
3.04 Severability of the Covenant Not to Compete. The covenants in
Paragraph 3.01 are severable and separate, and the unenforceability of any
specific covenant shall not affect the provisions of any other covenant.
Moreover, in the event any court of competent jurisdiction shall determine that
the scope, time or territorial restrictions set forth are unreasonable, then it
is the intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable and the Agreement shall thereby
be reformed.
3.05 Independence of Covenant Not to Compete. All of the covenants in
Paragraph 3.01 shall be construed as an agreement independent of any other
provision in this Agreement and the existence of any claim or cause of action
of Employee against the Company or its affiliates, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by
the Company of such covenants. It is specifically agreed that the period of
one (1) year stated at the beginning of this Paragraph 3, during which the
agreements and covenants of Employee made in Paragraph 3.01 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this Paragraph 3 and any
time during which there is pending in any court of competent jurisdiction any
action (including any appeal from any final judgment) brought by any person,
whether or not a party to this Agreement, in which action the Company or its
affiliates seeks to enforce the agreements and covenants of Employee or in
which any person contests the validity of such agreements and covenants or
their unenforceability or seeks to avoid their performance or enforcement.
ARTICLE IV
Non-Disclosure Agreement and Proprietary Information.
4.01 Proprietary Information. The Employee recognizes and acknowledges that
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the information, techniques, processes, developments, work in progress,
business, list of the Company's customers and any other trade secret or other
secret or confidential information relating to Company's business as they may
exist from time to time, are valuable, special and unique assets of Company's
business. In addition, Employee recognizes that Company is continually engaged
in research, design and development of new products and innovations and
improvements to the information, techniques, processes, developments, trade
secrets, and other secrets and confidential matters relating to Company's
business. Therefore, Employee agrees as follows:
A. That Employee will hold in strictest confidence and not disclose,
reproduce, publish or use in any manner, whether during or subsequent
to his employment, without the express authorization of the Board of
Directors of the Company, any information, design, production
technique, process, business customer lists, trade secrets or any
other secrets or confidential matter relating to any aspect of the
Company's business as designated from time to time by the Board of
Directors of Company, except as such disclosure or use may be required
in connection with Employee's work for the Company.
B. That upon request or at the time of leaving the employ of the Company
the Employee will deliver to the Company, and not keep or deliver to
anyone else, any and all notes, memoranda, documents and, in general,
any and all material relating to the Company's business.
C. That the Board of Directors of the Company may from time to time
designate other subject matters requiring confidentiality and secrecy
which shall be deemed to be covered by the terms of this Agreement.
However, any such matters must be mutually agreed upon by both the
Board and Employee.
4.02 Breach. In the event of a breach or threatened breach by the Employee
of the provisions of this Paragraph 4, the Company shall be entitled to an
injunction:
A. Restraining the Employee from disclosing, in whole or in part, any
information described in Paragraph 4.01 or from rendering any services
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to any person, firm, corporation association or other entity to whom
such information, in whole or in part, has been disclosed or is
threatened to be disclosed; and/or
B. Requiring that Employee deliver to Company all information, documents,
notes, memoranda and any and all discoveries or other material as
described above upon Employee's leave of the employ of the Company.
Nothing herein shall be construed as prohibiting the Company from
pursuing other remedies available to the Company for such breach or
threatened breach, including the recovery of damages from the
Employee.
ARTICLE V
Term; Terminations
5.01 Term. The term of this Agreement shall begin on the effective date of
this Agreement and continue for a term of two (2) years, unless terminated as
herein provided.
5.02 Termination. This Agreement and Employee's employment may be
terminated in any one of the following ways:
A. The death of Employee shall terminate the Agreement.
B. The Company may terminate the Agreement after thirty (30) days written
notice to Employee for good cause, including, but without limitation (i)
Employee's material breach of this Agreement; (ii) the material default of the
Company or its affiliates in performing their obligations under contracts with
other persons or business entities if directly caused by Employee; (iii) if,
because of illness or physical or mental disability or other incapacity which
continues for a period in excess of six (6) months, Employee is unable to
perform his duties under this agreement; (iv) Employee's fraud with respect to
the business or affairs of the Company or its affiliates or if Employee is
convicted of a felony; or (v) alcohol or drug abuse by Employee.
C. This Agreement will terminate upon (i) the sale by the Company of all
or substantially all of its assets to a bona fide third party purchaser(s);
(ii) the sale, exchange or disposition in one transaction of fifty percent
(50%) or more of the outstanding voting securities of the Company to a bona
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fide third party purchaser; (iii) a bona fide decision by the Company to
terminate its business and liquidate its assets; or (iv) the merger or
consolidation of the Company in a transaction wherein the shareholders of the
Company hold less than fifty percent (50%) of the post-transaction shares of
the surviving entity. The Employee shall have the option, at his discretion,
of joining in any sale or transfer of the Company's stock to any bona fide
third party purchaser by having a ratable portion of his stock sold on the same
terms and conditions.
5.03 Rights of Termination; Severance Payments. Upon termination of this
Agreement and Employee's employment, Employee shall be entitled to receive all
compensation earned under this Agreement to the date of termination. In the
event of termination pursuant to Paragraph 5.02C, the Employee shall be
entitled to, and the Company shall pay the Employee, severance pay in an amount
equal to ninety days (90) pay payable within 10 days of termination.
In the event of termination of this Agreement for any reason provided in
this Article 5, other than Paragraph 5.02C or if Employee resigns prior to this
expiration of the term of this Agreement, except as provided above, all rights
and obligations of the Company and Employee under this Agreement shall cease
immediately, except that Employee's obligations under Paragraph 3.01, 4.01 and
5.01 herein shall survive such termination and thereafter Employee shall have
no right to receive any compensation hereunder except as set forth in this
Paragraph, or to the extent employee is prohibited from competing under 3.01,
compensation shall continue for the non-compete period.
ARTICLE VI
Representations of Employee
6.01 Representation of Employee. Employee has represented and hereby
represents and warrants to the Company that he is not subject to any
restriction or non-competition covenant in favor of a former employer or any
other person or entity and that the execution of this Agreement by Employee and
his employment by the Company or its affiliates and the performance of his
duties hereunder will not violate or be a breach of any agreement with a former
employer or any other person or entity. Further, Employee agrees to indemnify
the Company and its affiliates for any claim, including, but not limited to,
attorney's fees and expenses of investigation, by any such third party that
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such third party may now have or may hereafter come to have against the Company
or its affiliates based upon or arising out of any non-competition agreement or
invention and secrecy agreement between Employee and such third party.
ARTICLE VII
Special Provisions
7.01 Renewal. If Captain Tony's Pizza Company (an entity to be formed)
is part of the Company operations as of a date, two (2) years from the date of
this agreement, and the agreement has not terminated pursuant to Paragraph
5.02, this agreement shall be renewable at the discretion of the Employee for
additional one year periods on each subsequent anniversary therefor, on the
same terms and conditions as herein set out. Notwithstanding the foregoing,
the Employees base compensation set out in Paragraph 2.01 may be changed to a
revised amount. However, such revised amount may not be less than $75,000.00.
7.02 Sale of Captain Tony's Pizza Company. In the event that the Company
determines that it is in its best interest to sell or otherwise dispose of all
or more than fifty percent (50%) of the Captain Tony's Pizza operations,
Employee shall have the right of first refusal to purchase these operations at
a price equal to the fair market value of such operations as determined by a
third party independent appraiser competant to value such operations less ten
percent (10%). The Company agrees to finance any such sale to Employee on
terms to be mutually agreed upon. However, such financing shall extend only to
the purchase price and shall not include working capital. If a sale to the
Employee is concluded, this Agreement shall terminate as of the date of sale.
ARTICLE VIII
Miscellaneous
8.01 Complete Agreement. This Agreement is not a promise of future
employment. There are no oral representations, understandings or agreements
with the Company or any of its officers, directors or representatives covering
the same subject matter as this Agreement. This written Agreement is the
final, complete and exclusive statement and expression of the agreement between
the Company and Employee and of all the terms of this Agreement and it cannot
be varied, contradicted or supplemented by evidence of any prior or
contemporaneous oral or written agreements. Furthermore, this agreement
supersedes any and all prior agreements. This written agreement may not be
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later modified except by a further writing signed by the Company and Employee,
and no term of this Agreement may be waived except by writing signed by the
party waiving the benefit of such terms.
8.02 No Waiver. No waiver by the parties hereto of any default or breach
of any term, condition or covenant of this Agreement shall be deemed to be a
waiver of any subsequent default or breach of the same or any other term,
condition or covenant contained herein.
8.03 Assignment; Binding Effect. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, that this
Agreement and the rights to his services may be assigned by the Company to
another member of the Company's affiliated group at any time without notice to
him, but that he cannot assign all or any portion of this Agreement. Subject
to the preceding two sentences, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
assigns. It is further understood and agreed that the Company may be merged or
consolidated with another entity and that any such entity shall automatically
succeed to the rights, powers and duties of the Company hereunder.
8.04 Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
<TABLE>
<S> <C>
To the Company: CAPTAIN TONY'S PIZZA, INC.
431 East Central Blvd., Ste. 900
Orlando, Florida 32801
To Employee: MICHAEL MARTELLA
515 Brokenshire Drive
DeBary, Florida 32713
</TABLE>
Notice shall be deemed given and effective three (3) days after the
deposit in the United States mail of a writing addressed as above and sent
first class mail, certified, return receipt requested, or when actually
received. Either party may change the address for notice by notifying the
other party of such change in accordance with this Section 8.04.
8.05 Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
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given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof.
8.06 Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the in
accordance with the rules then existing of the American Arbitration Association
and judgment upon the award may be entered in any Court having jurisdiction
thereof.
8.07 Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Florida.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and date herein first set forth.
<TABLE>
<S> <C>
ATTEST:
(REGISTRANT) CAPTAIN TONY'S PIZZA, INC.
BY (SIGNATURE)
(NAME AND TITLE)
(DATE)
EMPLOYEE:
BY (SIGNATURE)
(NAME AND TITLE) MICHAEL J. MARTELLA
(DATE)
</TABLE>
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