EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of November __,
2000, is made between The Quizno's Corporation, a Colorado corporation (the
"Company"), and Xxxxxxx X. Xxxxxxx ("Employee").
1. EMPLOYMENT
The Company will employ Employee and Employee will accept employment by
the Company as its Chairman of the Board ("Chairman"), President and Chief
Executive Officer ("CEO"). Employee will have the authority, subject to the
Company's Articles of Incorporation and Bylaws, as may be granted from time to
time by the Board of Directors of the Company. Employee will perform the duties
assigned to the Chairman, President and CEO in the Company's Bylaws, the duties
customarily performed by the Chairman, President and CEO of a corporation which
is similar to the Company and such other duties as may be assigned from time to
time by the Board of Directors of the Company, which relate to the business of
the Company, its subsidiaries or any business ventures in which the Company or
its subsidiaries may participate.
2. ATTENTION AND EFFORT
Employee will devote all of his productive time, ability, attention and
effort to the Company's business and will skillfully serve its interests during
the term of this Agreement; provided, however, that Employee may devote
reasonable periods of time to (a) engaging in personal investment activities,
(b) serving on the Board of Directors of other corporations, if such service
would not otherwise be prohibited by Section 8 hereof, and (c) engaging in
charitable or community service activities, so long as none of the foregoing
additional activities materially interfere with Employee's duties under this
Agreement.
3. TERM
Unless otherwise terminated pursuant to Section 6 of this Agreement,
Employee's term of employment under this Agreement shall expire five (5) years
and six (6) months from the date of this Agreement.
4. COMPENSATION
During the term of this Agreement, the Company agrees to pay or cause
to be paid to Employee, and Employee agrees to accept in exchange for the
services rendered hereunder by him, the following compensation:
4.1 BASE SALARY
Employee's compensation shall consist, in part, of an annual base
salary of Four Hundred Eighty One Thousand Dollars ($481,000) before all
customary payroll deductions. Such annual base salary shall be paid in
substantially equal installments and at the same intervals as other officers of
the Company are paid. Upon each of the first and second anniversaries of the
date of this Agreement, Employee shall receive a raise in his annual base salary
of five percent (5%) or a greater amount determined by and in the sole
discretion of the Board of Directors of the Company.
4.2 BONUS
Employee shall be entitled to receive, in addition to the annual base
salary described above, an annual bonus after the end of each calendar year
based upon the Company's EBITDA for such calendar year, calculated in accordance
with the following schedule: (a) Employee shall receive an annual bonus of four
percent (4%) of the Company's EBITDA up to the amount of EBITDA projected in the
annual budget approved by the Company's Board of Directors at the beginning of
the applicable calendar year, plus (b) to the extent actual EBITDA exceeds
budgeted EBITDA for that calendar year, then Employee shall receive an annual
bonus of twelve percent (12%) of the amount of such excess EBITDA.
5. BENEFITS
During the term of this Agreement, Employee will be entitled to
participate, subject to and in accordance with applicable eligibility
requirements, in fringe benefit programs as shall be provided from time to time
by, to the extent required, action of the Company's Board of Directors (or any
person or committee appointed by the Board of Directors to determine fringe
benefit programs and other emoluments).
Company will pay to or on behalf of Employee a monthly automobile
allowance of up to six hundred twenty dollars ($620.00) for the cost of a
vehicle and up to one hundred fifty dollars ($150.00) for the cost of insurance
on that vehicle.
In addition to other insurance benefits provided by the Company,
Employer will pay one half of the annual premium for disability insurance for
Employee's benefit.
6. TERMINATION
Employment of Employee pursuant to this Agreement may be terminated as
follows, but in any case, the provisions of Section 8 hereof shall survive the
termination of this Agreement and the termination of Employee's employment
hereunder:
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6.1 BY THE COMPANY
With or without Cause (as defined below), the Company may terminate the
employment of Employee at any time during the term of employment upon giving
Notice of Termination (as defined below).
6.2 BY EMPLOYEE
Employee may terminate his employment at any time, for any reason, upon
giving Notice of Termination.
6.3 NOTICE
The term "Notice of Termination" shall mean at least 30 days' written
notice of termination of Employee's employment, during which period Employee's
employment and performance of services will continue; provided, however, that
the Company may, upon notice to Employee and without reducing Employee's
compensation during such period, excuse Employee from any or all of his duties
during such period. The effective date of the termination of Employee's
employment hereunder shall be the date on which such 30-day period expires.
7. TERMINATION PAYMENTS
In the event of termination of the employment of Employee, all
compensation and benefits set forth in this Agreement shall terminate except as
specifically provided in this Section 7:
7.1 TERMINATION BY THE COMPANY
If the Company terminates Employee's employment without Cause prior to
the end of the term of this Agreement, Employee shall be entitled to receive the
greater of (a) (i) termination payments equal to the base salary and bonus
Employee would have received if his employment hereunder had continued until the
end of the term of this Agreement and (ii) any unpaid base salary and bonus
which has accrued for services already performed as of the date termination of
Employee's employment becomes effective; or (b) a severance payment equal to
three (3) years bases salary and bonus ("Severance"). The Severance will be
calculated using (x) actual base salary as of the termination date plus annual
increases thereafter (as provided by Section 4.1) and (y) bonus as calculated in
Section 4.2, provided that the bonus payment will not be less than four hundred
thousand dollars ($400,000) for each year in which the Severance payment is due.
If Employee is terminated by the Company for Cause, Employee shall not be
entitled to receive any of the foregoing benefits, other than those set forth in
clause (b) above.
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7.2 TERMINATION BY EMPLOYEE
In the case of the termination of Employee's employment by Employee,
Employee shall not be entitled to any payments hereunder, other than those set
forth in clause (a)(ii) of Section 7.1 hereof.
7.3 EXPIRATION OF TERM
In the case of a termination of Employee's employment as a result of
the expiration of the term of this Agreement, (a) if Company decides not to
renew Employee's employment under terms at least as favorable as exist as of the
expirations date, Employee shall be entitled to the Severance payment; (b) if
Employee decides not to renew his employment, Employee will not be entitled to
receive any payments hereunder, other than those set forth in clause (a) (ii) of
Section 7.1 hereof.
7.4 PAYMENT SCHEDULE
All payments under this Section 7 shall be made to Employee at the same
interval as payments of salary were made to Employee immediately prior to
termination.
7.5 CAUSE
Wherever reference is made in this Agreement to termination being with
or without Cause, "Cause" shall include, but not be limited to, the occurrence
of one or more of the following events:
(a) Failure or refusal to substantially perform the lawful
duties of Employee described in Section 1 hereof or any directions of the Board
of Directors of the Company, which directions are reasonably consistent with the
duties herein set forth to be performed by Employee after the Board of Directors
has made a written demand for performance that specifically identifies the
manner in which it believes that Employee has not substantially performed his
duties and Employee, after receipt of such notice, fails to correct the
deficiency indicted in the notice;
(b) Violation by Employee of a state or federal criminal law
involving the commission of a crime against the Company or a felony; or
(d) Any other material violation of any provision of this
Agreement.
8. NONCOMPETITION AND NONSOLICITATION
8.1 APPLICABILITY
This Section 8 shall survive the termination of Employee's employment
with the Company or the expiration of the term of this Agreement.
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8.2 SCOPE OF COMPETITION
Employee agrees that he will not, directly or indirectly, during his
employment and for a period of three (3) years from the date on which his
employment with the Company terminates (for any reason) or this Agreement
expires, be employed by, consult with or otherwise perform services for, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of or be connected with, in any manner, any Competitor.
Notwithstanding the foregoing, if Employee's employment is terminated by the
Company without Cause, then Employee's noncompetition obligations under this
Section 8.2 shall terminate at such time as the Company is no longer paying
continual base salary and bonus payments to Employee under Section 7.1hereof. A
"Competitor" shall include any business operating, or granting franchises or
licenses to others to operate, a restaurant or other food service business
deriving more than ten percent (10%) of its gross receipts, excluding gross
receipts relating to the sale of alcoholic beverages, from the sale of
submarine, hoagie, hero-type, and/or deli-style sandwiches in each case within
any state, country or province in which the Company has restaurant operations as
of the termination date, unless released from such obligation in writing by the
Company's Board of Directors. This Section 8.2 will not, however, prohibit
Employee from owning securities in a Competitive Business if such securities are
listed on a stock exchange, or quoted on an automatic quotation system of The
Nasdaq Stock Market, and represent five percent (5%) or less of that class of
securities issued and outstanding. Employee shall be deemed to be related to or
connected with a Competitor if such Competitor is (a) a partnership in which he
is a general or limited partner or employee, (b) a corporation or association of
which he is a shareholder, officer, employee or director, or (c) a partnership,
corporation or association of which he is a member, consultant or agent.
8.3 SCOPE OF NONSOLICITATION
Employee shall not directly or indirectly solicit, influence or entice,
or attempt to solicit, influence or entice, any employee or consultant of the
Company to cease his relationship with the Company or solicit, influence, entice
or in any way divert any customer, distributor, partner, joint venturer or
supplier of the Company to do business or in any way become associated with any
Competitor. This Section 8.3 shall apply during the time period and geographical
area described in Section 8.2 hereof.
8.4 NONDISCLOSURE; RETURN OF MATERIALS
During the term of his employment by the Company and following
termination of such employment, he will not disclose (except as required by his
duties to the Company), any concept, design, process, technology, trade secret,
customer list, plan, embodiment, or invention, any other "Intellectual Property"
or any other confidential information, whether patentable or not, of the Company
of which Employee becomes informed or aware during his employment, whether or
not developed by Employee. In the event of the termination of his employment
with the Company or the expiration of this Agreement, Employee will return all
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documents, data and other materials of whatever nature, including, without
limitation, drawings, specifications, research, reports, embodiments, software
and manuals to the Company which pertain to his employment with the Company or
to any Intellectual Property and shall not retain or cause or allow any third
party to retain photocopies or other reproductions of the foregoing.
8.5 EQUITABLE RELIEF
Employee acknowledges that the provisions of this Section 8 are
essential to the Company, that the Company would not enter into this Agreement
if it did not include this Section 8 and that damages sustained by the Company
as a result of a breach of this Section 8 cannot be adequately remedied by
damages, and Employee agrees that the Company, notwithstanding any other
provision of this Agreement, including, without limitation, Section 13 hereof,
and in addition to any other remedy it may have under this Agreement or at law,
shall be entitled to injunctive and other equitable relief to prevent or curtail
any breach of any provision of this Agreement, including, without limitation,
this Section 8.
Employee acknowledges that damages would be an inadequate remedy for
breach of any of the provisions of this Section 8, and that any breach of such
provisions will result in immeasurable and irreparable harm to the Company and
its affiliates. Therefore, in addition to any other remedy to which the Company
may be entitled by reason of Employee's breach of any such provision, the
Company shall be entitled to equitable relief against Employee, including, but
not limited to, temporary, preliminary and permanent injunctive and/or equitable
relief. Without limiting the generality of the foregoing, Employee agrees that a
showing by the Company of a breach of any provision of this Section 8 shall
constitute, for the purposes of all determinations of the issue of injunctive
relief, conclusive proof of all of the elements necessary to entitle the Company
to temporary, preliminary and permanent injunctive relief.
8.6 EFFECT OF VIOLATION
Employee and the Company acknowledge and agree that additional
consideration has been given for Employee entering into this Section 8, such
additional consideration including, without limitation, the annual bonus
pursuant to Section 4.2 above and certain provisions for termination payments
pursuant to Section 7 above. Violation by Employee of this Section 8 shall
relieve the Company of any obligation it may have to make such bonus and
termination payments, but shall not relieve Employee of his obligations, as
required hereunder, not to compete.
8.7 DEFINITION OF THE COMPANY
For purposes of Section 8.2 and Section 8.3 hereof, the "Company" shall
include all subsidiaries of the Company, the Company's parent corporation (if
any) and any business ventures in which the Company, its subsidiaries or its
parent corporation may participate.
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9. REPRESENTATIONS AND WARRANTIES
In order to induce the Company to enter into this Agreement, Employee
represents and warrants to the Company neither the execution nor the performance
of this Agreement by Employee will violate or conflict in any way with any other
agreement by which Employee may be bound, or with any other duties imposed upon
Employee by corporate or other statutory or common law.
10. FORM OF NOTICE
All notices given hereunder shall be given in writing, shall
specifically refer to this Agreement and shall be personally delivered or sent
by telecopy or other electronic facsimile transmission or by registered or
certified mail, return receipt requested, at the address set forth below or at
such other address as may hereafter be designated by notice given in compliance
with the terms hereof:
If to Employee: Xxxxxxx X. Xxxxxxx
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If to the Company: The Quizno's Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Vice President and
General Counsel
If notice is mailed, such notice shall be effective upon mailing, or if notice
is personally delivered or sent by telecopy or other electronic facsimile
transmission, it shall be effective upon receipt.
11. ASSIGNMENT
This Agreement is personal to Employee and shall not be assignable by
Employee. The Company may assign its rights hereunder to (a) any corporation
resulting from any merger, consolidation or other reorganization to which the
Company is a party or (b) any corporation, partnership, association or other
person to which the Company may transfer all or substantially all of the assets
and business of the Company existing at such time. All of the terms and
provisions of this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and permitted assigns.
12. WAIVERS
No delay or failure by any party hereto in exercising, protecting or
enforcing any of its rights, titles, interests or remedies hereunder, and no
course of dealing or performance with
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respect thereto, shall constitute a waiver thereof. The express waiver by a
party hereto of any right, title, interest or remedy in a particular instance or
circumstance shall not constitute a waiver thereof in any other instance or
circumstance. All rights and remedies shall be cumulative and not exclusive of
any other rights or remedies.
13. ARBITRATION
Subject to the provisions of Section 8.5 hereof, any controversies or
claims arising out of or relating to this Agreement shall be fully and finally
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then in effect (the "AAA Rules"), conducted
by one arbitrator either mutually agreed upon by the Company and Employee or
chosen in accordance with the AAA Rules, except that the parties thereto shall
have any right to discovery as would be permitted by the Federal Rules of Civil
Procedure for a period of 90 days following the commencement of such arbitration
and the arbitrator thereof shall resolve any dispute which arises in connection
with such discovery. The prevailing party shall be entitled to costs, expenses
and reasonable attorneys' fees, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
14. AMENDMENTS IN WRITING
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure therefrom by either
party hereto, shall in any event be effective unless the same shall be in
writing, specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by the Company
and Employee, and each such amendment, modification, waiver, termination or
discharge shall be effective only in the specific instance and for the specific
purpose for which given. No provision of this Agreement shall be varied,
contradicted or explained by any oral agreement, course of dealing or
performance or any other matter not set forth in an agreement in writing and
signed by the Company and Employee.
15. APPLICABLE LAW
This Agreement shall in all respects, including all matters of
construction, validity and performance, be governed by, and construed and
enforced in accordance with, the laws of the state of Colorado, without regard
to any rules governing conflicts of laws.
16. SEVERABILITY
If any provision of this Agreement shall be held invalid, illegal or
unenforceable in any jurisdiction, for any reason, including, without
limitation, the duration of such provision, its geographical scope or the extent
of the activities prohibited or required by it, then, to the full extent
permitted by law (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intent of the parties hereto as nearly as may be possible, (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or
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unenforceability of any other provision hereof, and (c) any court or arbitrator
having jurisdiction thereover shall have the power to reform such provision to
the extent necessary for such provision to be enforceable under applicable law.
17. HEADINGS
All headings used herein are for convenience only and shall not in any
way affect the construction of, or be taken into consideration in interpreting,
this Agreement.
18. COUNTERPARTS
This Agreement, and any amendment or modification entered into pursuant
to Section 16 hereof, may be executed in any number of counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
19. ENTIRE AGREEMENT
This Agreement on and as of the date hereof constitutes the entire
agreement between the Company and Employee with respect to the subject matter
hereof and all prior or contemporaneous oral or written communications,
understandings or agreements between the Company and Employee with respect to
such subject matter are hereby superseded and nullified in their entireties.
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IN WITNESS WHEREOF, the parties have executed and entered into this
Agreement on the date set forth above.
XXXXXXX X. XXXXXXX
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THE QUIZNO'S CORPORATION
By:
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Name
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Title:
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