Exhibit 99.1
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THE QUIZNO'S CORPORATION
EMPLOYEE STOCK OPTION PLAN
ARTICLE I
Purpose
The purposes of this Employee Stock Option Plan (the "Plan") are to enable The
Quizno's Corporation (the "Company") to (i) provide opportunities for certain
persons, including directors, officers and key employees of the Company, as
determined by the Committee, as defined below (the "Eligible Participants"), to
acquire a proprietary interest in the Company, (ii) increase incentives for the
Eligible Participants to contribute to the Company's performance and future
success and (iii) attract and retain individuals with exceptional business,
managerial and administrative talent upon whom, in large measure, the sustained
progress, growth and profitability of the Company depend.
ARTICLE II
Plan Overview
The Plan provides for the grant of Incentive Stock Options, as defined below,
and Stock Options that do not qualify as Incentive Stock Options ("Nonqualified
Stock Options"), as contemplated by Sections 421 and 422 of the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder
(the "Code").
ARTICLE III
Definitions
For Plan purposes, except where the context clearly indicates otherwise, the
following terms shall have the following meanings:
"Adoption Date" shall have the meaning set forth in Article XIII.
"Board" shall mean the Board of Directors of the Company.
"Committee" shall mean the Compensation Committee of the Board, or such other
Committee of the Board as the Board shall designate from time to time, which
other Committee shall consist of three or more directors appointed by the Board
from time to time, each of whom is a Disinterested Person.
"Common Stock" shall mean the Common Stock, $.001 par value per share, of the
Company.
"Disinterested Person" shall mean an administrator of this Plan who is not, at
the time he exercises discretion in administering the Plan, eligible, and has
not at any time within one year prior thereto been eligible, to be selected as
an Eligible Participant of this Plan or any other plan of the Company entitling
such participant a right to acquire stock, stock options or stock appreciation
rights of the Company; provided, however, that Committee members may be eligible
for grants or awards under this or another Plan of the Company which constitute
"Formula Awards," as that term is defined in section 16b-3 of the Securities
Exchange Act of 1934.
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"Effective Date" shall have the meaning set forth in Article XIII.
"Eligible Participant" shall have the meaning set forth in Article VI.
"Exercise Price" shall have the meaning set forth in Article VII.
"Fair Market Value" of the Common Stock shall mean the value per share of the
Company's Common Stock, determined without regard to any restriction other than
a restriction which, by its terms, will never lapse, as determined through the
good faith efforts of the Committee, consistent with applicable requirements of
the Code.
"Incentive Stock Option" or "ISO" shall mean a stock option granted under this
Plan which complies with all the terms and conditions for an Incentive Stock
Option, as set forth in Section 422 of the Code.
"Nonqualified Stock Option" or "NQO" shall mean a stock option granted under
this Plan which does not comply with one or more requirements for an Incentive
Stock Option.
"Option" shall mean an Incentive Stock Option or a Nonqualified Stock Option
granted under this Plan.
"Option Shares" shall mean shares of the Company's Common Stock received by an
optionee upon exercise of an option.
"Optionee" shall mean an Eligible Participant who has been granted one or more
options.
"Reorganization" shall have the meaning set forth in Article IX.
"Special Exercise Price" shall have the meaning set forth in Article VII.
"Stock Adjustment" shall have the meaning set forth in Article VIII.
"Stock Option Agreement" shall mean the written agreement entered into by the
Company and each Optionee evidencing the terms and conditions of an Option.
"Ten Percent Share Owner" shall mean an employee of the Company who owns,
whether outright or by attribution under Section 424(d) of the Code, Common
Stock possessing more than ten percent of the total combined voting power of all
classes of stock of the Company.
ARTICLE IV
Administration
4.1 The Committee. The Committee shall administer the Plan and shall have
full power and authority to, in addition to other powers set forth
herein, construe and interpret the Plan, establish any and all rules and
regulations for the operation of the Plan, establish any and all rules
and regulations for the operation of the Committee and the performance
by the Committee of its purposes and functions, and perform all other
acts, including the delegation of administrative responsibilities, that
it deems reasonable and proper.
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The Committee shall hold its meetings at such times and places as it shall deem
advisable. A majority of the members of the Committee shall constitute a quorum
of the Committee. All actions of the Committee shall be taken by a majority of
its members. Any action of the Committee may be taken by a written instrument
signed by a majority of the Committee's members, and any action so taken shall
be as effective as if it had been taken by a vote of the Committee.
4.2 Powers of the Committee. The Committee, without limitation and in its sole
discretion, shall have full power and authority to, among other things:
(a) determine those persons who are Eligible Participants;
(b) determine any conditions precedent and other applicable criteria in
allocating and granting Options;
(c) determine the number and type of each Option and the number of shares of
Common Stock covered by each option;
(d) determine the Exercise Price of each option (subject to the terms and
conditions set forth in this Plan and in any Stock Option Agreement);
(e) determine the grant date of any option;
(f) impose any vesting restrictions or other restrictions on exercise of an
Option;
(g) accelerate the exercise or vesting date of an option;
(h) impose cancellation, transfer, forfeiture and other repurchase restrictions
and limitations on any option or Option Shares; and
(i) determine any and all other terms, provisions and/or conditions regarding
the grant or exercise of an Option or the exchange, gift, transfer, pledge
or other disposition of Options or Option Shares.
The terms and conditions of each Stock Option Agreement shall be determined
solely in the discretion of the Committee, subject to the terms and conditions
of this Plan. The terms and conditions of each option and the related Stock
option Agreement may be different as among optionees and/or as among Options
granted to the same optionee.
4.3 Corrective Measures. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan, any Option or
Stock Option Agreement, in the manner and to the extent it shall deem
necessary, including amendments hereto or thereto approved by not less
than a majority of the Committee; provided, however, that any such
Committee action shall be effective only if (i) any stockholder consent
required by applicable provisions of the Code is obtained, and (ii)
such action is otherwise consistent with the applicable provisions of
the Code.
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4.4 Decisions Final. Any decision made or action taken by the Committee or
the Board arising out of or in connection with the interpretation and
administration of the Plan shall be final and conclusive and shall be
binding upon all Optionees and their successors or assigns.
ARTICLE V
Number of Shares Subject to the Plan
The aggregate number of shares of Common Stock available for grants of Options
under this Plan shall be 670,000 shares, subject to adjustment in accordance
with Article VIII of the Plan, and the aggregate number of shares of Common
Stock for which options may be granted under this Plan shall not exceed such
number. Such shares may be either authorized but unissued shares or treasury
shares. If an Option or portion thereof shall expire or terminate for any reason
without having been exercised, the unpurchased shares covered by such option
shall be available for future grants of options; provided, however, that in no
event shall the Committee have any obligation to make such shares available for
the granting of other Options under the Plan.
ARTICLE VI
Eligibility
Consistent with this Plants purposes and the terms herein, options may be
granted to persons, including directors, officers and key employees of the
Company ("Eligible participants") at times and based on criteria the Committee,
in its sole discretion, determines are appropriate.
ARTICLE VII
Option Terms and conditions
All Options granted under this Plan shall be evidenced by a Stock Option
Agreement in substantially the form attached hereto, or such other form as the
Committee shall approve from time to time. The Stock Option Agreement shall be
subject to the provisions of the Plan and such other provisions as the Committee
may adopt, including the following provisions:
7.1 Exercise Price. The exercise price per share for each Option granted
under this Plan shall be set forth in the Stock Option Agreement;
provided, however, that the exercise price per share for any Option
shall not be less than the Fair Market Value of a share of Common Stock
on the date such option is granted (the "Exercise Price"). The
Committee shall be authorized to grant Nonqualified Stock Options which
shall have an exercise price per share which is below the Fair Market
Value of a share of Common Stock on the date such Option is granted at
the "Special Exercise Price").
7.2 Term of Option. No Option shall be granted pursuant to the Plan after
the date ten (10) years after the earlier of the Adoption Date and the
Effective Date. Options which are outstanding after such date will,
however, remain in effect until such options are exercised or expire
pursuant to their terms. An Option shall not be exercisable after the
expiration of ten years from the date such option is granted.
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7.3 Assignability of Option. An Option shall be exercisable only by the
Optionee, his guardian or legal representative during his or her
lifetime and shall not be assignable or transferable by the Optionee
otherwise than by will or the laws of descent and distribution.
Executors, administrators, heirs, successors and assigns of the
optionee shall be bound by the terms of the Stock Option Agreement and
this Plan.
7.4 Time of Exercise. Each Option granted under this Plan shall be
exercisable on the date or dates, and during the period, and for the
number of shares specified in the Stock option Agreement. The Committee
may establish vesting provisions applicable to an Option such that the
option becomes fully exercisable, for example, in a series of
cumulating portions. The Committee may, upon request, permit the
accelerated exercise of any option, the exercise of all or a portion of
which is subject to vesting provisions. Also, exercise of an option
shall be accelerated upon the occurrence of an event of acceleration as
described in any applicable Stock Option Agreement or this Plan.
7.5 Exercise. An Option or portion thereof shall be exercised by delivery
of a written notice of exercise to the Secretary of the Company and
payment of the full Exercise Price or the Special Exercise Price. Until
the certificates for Option Shares represented by an exercised option
are issued to an (Optinee, such Optionee shall have none of the rights
of a stockholder. No Option Shares shall be delivered upon any exercise
of an Option until the requirements of all applicable laws, rules and
regulations have, in the opinion of the Company's counsel, been
satisfied. Under normal circumstances, certificates for Option Shares
to be delivered upon exercise of an option shall be delivered within
thirty (30) days following exercise of an option.
7.6 Payment. The Exercise Price or the Special Exercise Price payable upon
exercise of an option or portion -thereof may be paid:
(a) in United States dollars in cash or by check, bank draft or money order,
(b) by delivery of shares of Common Stock with an aggregate value equal to the
Exercise Price, or the Special Exercise Price,
(c) by delivery of options with an aggregate net value (i.e., the aggregate
value of the Common Stock subject to such Options less the aggregate
Exercise Price or the Special Exercise Price of such Options), or
(d) by a combination of both (a), (b) or (c) above.
If the optionee delivers shares of Common Stock or Options as payment of the
Exercise Price or the Special Exercise price upon exercise of an Option, the
Committee shall determine acceptable methods for tendering such shares or
Options by the optionee, and may impose such limitations and prohibitions on the
use of Common Stock or options for such purposes as it deems appropriate. Any
Option tendered as payment of the Exercise Price or the Special Exercise Price
shall be canceled by the Company upon receipt.
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7.7 Termination of Service. Subject to the terms set forth in any employment
or other binding agreement, in the event an Optionee's Current Position,
as defined below, with the Company shall terminate (i) "for cause," as
defined below, while holding one or more Options, that portion of each
option which has not already been exercised shall expire coincident with
the termination of the Optionee's Current Position, or (ii) for a reason
other than "for cause," other than by reason of disability or death as
discussed below, any options or portion thereof which are exercisable on
the date of such termination shall be exercisable until a date three (3)
months after such date of -termination or shall expire coincident with
such three (3) month period, except to the extent the Committee shall
determine otherwise. For purposes hereof, "Current Position" shall mean
the Optionee's position with the Company as an employee, director,
officer or independent contractor. For purposes hereof "for cause" shall
mean termination of an optionee's Current Position with the Company
because of such Optionee's (i) misfeasance, waste of corporate assets,
gross negligence or willful continued failure to substantially perform
his reasonably assigned duties or (ii) engagement in dishonest or
illegal conduct that is demonstrably injurious to the Company. Upon the
termination of an Optionee's Current Position with the Company by reason
of disability (within the meaning of Section 22(e)(3) of the Code) or
death, the Option may be exercised within one (1) year after such
termination.
For the purposes of this Plan, it shall not be considered a termination of a
Current Position when an optionee is placed by the Company on military or sick
leave or such other type of leave of absence that is deemed by the Committee to
continue intact the employment relationship.
Notwithstanding anything in this Section 7.7 to the contrary, the committee, in
its sole discretion, may waive any restrictions, including applicable exercise
periods.
7.8 Special Rules for Incentive Stock Options.
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(a) Employment Status. An ISO must be granted for a reason connected with
employment, as defined in the Code, by the Company and shall not be
exercisable unless the optionee was, at all times during the period
beginning on the date of the grant of the option and ending on the date
three (3) months (one year if the Optionee is disabled, within the
meaning of Section 22(e)(3) of the Code) before the exercise of the
Option, an employee of the Company, except that such employment
requirement does not apply in the event of an Optionee's death as
provided in Section 421(c)(1) of the Code. ISO's may not be granted to
Company directors who are not also employees.
(b) Ten Percent Stockholder. No ISO shall be granted under this Plan to a
Ten Percent Share Owner unless (a) such ISO is granted at an Exercise
Price equal to not less than 110% of Fair Market Value of the Common
Stock on the date of grant, and (b) such ISO expires on a date not
later than five years from the date of grant.
(c) Aggregate Value of Options. The aggregate Fair Market Value (determined
at the time the ISO is granted) of ISO's granted by the Company (under
this and all other Plans) to an optionee which are exercisable for the
first time by such optionee in any single calendar year shall not
exceed $100,000.
(d) Notification of Disqualifying Dispositions. Any Optionee who disposes
of Option Shares acquired pursuant to the exercise of an ISO during the
period within two years from the date such option is granted or within
one year after the transfer of the Option Shares to such Optionee
pursuant to the ISO's exercise (the "ISO Nontransfer Periods") shall
notify the Company of such disposition and of the amount realized upon
such disposition.
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ARTICLE VIII
Adjustments
In the event of a stock dividend, stock split or other subdivision,
consolidation, reorganization or similar change in the outstanding shares of
Common Stock or capital structure of the Company (collectively, a "Stock
Adjustment"), the following shall occur under the Plan: (i) the number of shares
of Common Stock reserved or otherwise available under Article V for options, and
subject to outstanding options, shall be adjusted proportionately (and
automatically reduced by any fraction resulting from such adjustment); and (ii)
the Exercise Price per share of outstanding Options shall be adjusted so that
the aggregate Exercise Price payable pursuant to each outstanding Option after
the Stock Adjustment shall equal the aggregate amount so payable prior to the
Stock Adjustment. In the event of any dispute concerning such adjustment, the
decision of the Committee shall be conclusive. If a Stock Adjustment is made,
the Committee shall notify all optionees of such adjustment within thirty (30)
days of making such an adjustment, which notification shall state the adjusted
number of shares of Common Stock for which a particular option is exercisable.
ARTICLE IX
Corporate Reorganization or Initial Public Offering
9.1 Merger, Consolidation or Change of Control. In connection with any merger,
consolidation, change in control or similar reorganization, excluding an
initial public offering ("Reorganization"), the Committee may in its
discretion:
(a) Negotiate a binding agreement whereby any acquiring or successor
corporation will assume each option then outstanding or substitute an
equivalent option meeting the requirements of Section 424(a) of the Code
for each Option outstanding;
(b) Accelerate any applicable vesting provisions; or
(c) Authorize cash payments to optionees equal to the difference between the
aggregate Exercise Price of each
Option then outstanding irrespective of the option's current exercisability,
and, (i) if the Common Stock is not publicly traded, the Fair Market Value of
the shares covered by such Option or (ii) if the Common Stock is publicly
traded, the average of the daily Closing Price, as defined below, per share of
Common Stock for the ten (10) consecutive trading days commencing fifteen (15)
trading days before such date. For purposes hereof, "Closing Price" shall mean,
with respect to each share of Common Stock for any day, (a) the last reported
sale price or, in case no such sale takes place on such day, the average of the
closing bid and asking price, in either case as reported on the principal
national securities exchange on which the Common Stock is listed or admitted for
trading or, (b) if the Common Stock is not listed or admitted for trading on any
national securities exchange, the last reported sale price, or in the case no
such sale takes place on such day, the average of the highest reported bid and
the lowest reported asked quotation for the Common Stock, in either case as
reported on the Automatic Quotation System of NASDAQ or a similar service if
NASDAQ is no longer reporting such information. Any cash payment that the
Company may be required to make pursuant to such Committee authorization shall
be made within sixty days following such authorization and fully discharge any
and all obligation the Company may have in connection with the Options.
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Notwithstanding the forgoing, the Committee shall have no obligation to take any
action with respect to any option in connection with a Reorganization.
9.2 Initial Public offering. Notwithstanding the registration with the
Securities and Exchange Commission of any Common Stock pursuant to a
plan for the initial public offering of Common Stock (the "IPO Plan"),
the applicable vesting schedule shall continue to apply to all Options.
Upon the registration of any Common Stock, and notwithstanding anything
herein to the contrary, the Optionee must comply with all securities
laws that apply to such optionees and any stock received upon exercise
of any Options.
ARTICLE X
Securities and Other Regulation
10.1 Applicable Law. The obligation of the Company to issue Common Stock
upon the exercise of options shall be subject to all applicable laws,
regulations, rules and orders which shall then be in effect and
required by governmental entities and the stock exchanges on which the
Common Stock may then be traded.
10.2 Disclosures and Certificate Legend. Any person exercising an option
shall make such representations and furnish such information as may, in
the opinion of counsel for the Company, be appropriate to permit the
Company to issue the Option shares in compliance with the provisions of
the Securities Act of 1933 and any applicable state securities laws or
any comparable laws. If appropriate under applicable law, the Company
may legend the stock certificates evidencing the shares in a manner
that is the same or similar to that which follows: "The securities
evidenced by this certificate have been issued to the registered owner
in reliance upon written representations that these shares have been
purchased for investment. These shares may not be sold, transferred, or
assigned unless, in the opinion of the Company and its legal counsel,
such sale, transfer, or assignment will not be in violation of the
Securities Act of 1933, as amended, applicable rules and regulations of
the Securities and Exchange Commission, and any applicable state
securities laws."
Nothing contained herein shall be deemed to require the Company to file any
registration statement under the securities Act of 1933 or other applicable
securities laws with respect to any options or Option Shares.
ARTICLE XI
Amendment and Termination of Plan
11.1 Amendment or Termination. The Board, without further approval of the
stockholders of the Company, except as otherwise provided herein, may
at any time and from time to time suspend or terminate the Plan in
whole or in part, or amend the Plan in such respects as the Board may
deem appropriate and in the best interests of the Company; provided,
however, that no such amendment shall be made more than once every six
months, other than to comport with changes in the Code, or without
approval of a majority of the stockholders entitled to vote thereon
which would:
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(a) change the class of persons from which Eligible Participants are selected;
(b) increase the total number of shares of Common Stock which may be issued
pursuant to Options, except as provided in Article VIII;
(c) reduce the Exercise Price;
(d) extend the period for granting options; or
(e) otherwise materially increase the benefits accruing to Optionees.
11.2 No Impairment. No amendment, suspension or termination of the Plan
shall, without the Optionee's written consent, alter or impair any of
the rights or obligations under any Option therefore granted to such
optionee under this Plan.
11.3 Conforming Amendments. The Board may amend the Plan, subject to the
limitations cited above, in such manner as it deems necessary to permit
the granting of Options meeting the requirements of future amendments,
if any, to the Code.
ARTICLE XII
Miscellaneous Provisions
12.1 Right to Continued Employment. No person shall have any claim or right
to be granted an Option, and the grant of options shall not be
construed as giving an Optionee the right to be retained in the employ
of, or retain any other relationship with, the Company. Further, the
Company expressly reserves the right at any time to dismiss an optionee
with or without cause, free from any liability or claim under the Plan,
except as provided herein or in another binding agreement.
12.2 Rights as Stockholders. Optionees and their heirs, successors or
assigns shall not have any rights with respect to any shares of Common
Stock subject to an Option until the date of the issuance of stock
certificates for such Option Shares. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or
other property) or other rights distributed with respect to the Common
Stock for which the record date is prior to the date such stock
certificate is issued, except as provided in Article VIII.
12.3 Non-Transferability. Except by will or the laws of descent and
distribution, or as otherwise provided herein, no right or interest in
any option granted under the Plan shall be assignable or transferable,
and no right or interest of any Optionee shall be subject to attachment
or garnishment proceedings.
12.4 Withholding Taxes. To cover applicable withholding for income and
employment taxes in the event of the exercise of an NQO or upon a
disqualifying disposition during the ISO Nontransfer Periods, or at
such other times as it may be necessary, the Company shall withhold
shares of Common Stock otherwise to be received by the optionee equal
in value to the federal and state withholding taxes due upon said
exercise. The withholding by the Company for such tax liability shall
be mandatory; provided, however, the payment of such liability by the
Company on behalf of the optionee does not cause the Company to be in
violation of any loan covenant or other agreement or law to which it
may be subject. In such event, the Optionee must satisfy such liability
in cash upon the request of the Company and comply with all applicable
securities laws.
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12.5 Plan Expenses. Any expenses of administering the Plan shall be borne by the
Company.
12.6 Use of Exercise Proceeds. The Payment received from optionee from the
exercise of options shall be used for the general corporate purposes of the
Company.
12.7 No Liability of Committee Members and Indemnification Thereof. No member of
the Committee shall be personally liable by reason of any contract or other
instrument executed by him or on his behalf in his capacity as a member of
the Committee, nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee and
each other officer, employee or director of the Company to whom any duty or
power relating to the administration or interpretation of the Plan may be
allocated or delegated, against any cost and expense, including legal fees
and costs, or liability, including any sum paid in settlement of a claim
with the approval of the Board, arising out of any act or omission to act
in connection with the Plan unless arising out of such person's own fraud
or bad faith, provided that within fifteen (15) business days after the
institution of any such action, suit or proceeding by service of process on
the Committee member, such member shall give the Company written notice
thereof and an opportunity, at the Company's expense, to undertake to
defend the same before such Committee member undertakes such defense on his
own behalf, and provided that the Committee member cooperates with the
Company in such defense and takes no actions (including inaction) which
would materially prejudice the Company. The foregoing right to
indemnification shall be in addition to such other rights as the Committee
member or other person may enjoy as a matter of law or by reason of
insurance coverage of any kind. Rights granted hereunder shall be in
addition to and not in lieu of any rights to indemnification to which the
Committee member or other person may be entitled pursuant to the articles
or bylaws of the Company.
12.8 Severability. In the event any provision of the Plan shall be held to be
illegal, invalid or unenforceable for any reason, the illegality,
invalidity or unenforceability of such provision shall not affect the
remaining provisions of the Plan, but shall be fully severable and the Plan
shall be construed and enforced as if the illegal, invalid or unenforceable
provision had never been included herein.
ARTICLE XIII
Board of Director Adoption and Stockholder Approval of the Plan
This Plan was adopted by the Board on November 30, 1993 (the "Adoption Date")
and shall be approved by the Company's stockholders at the first stockholders'
meeting following such date which shall be within twelve (12) months of the
Adoption Date. The Plan shall be effective as of December 1, 1993 (the
"Effective Date"). Stockholder approval shall comply with all applicable
provisions of the Company's charter, bylaws, and applicable state law
prescribing the method and degree of stockholder approval required for the
issuance of corporate stock or options. In the event stockholder approval is not
obtained within the requisite period, the Plan shall have no force or effect.
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