Free Motion for Partial Summary Judgment - District Court of Colorado - Colorado

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DISTRICT COURT, CITY AND COUNTY OF DENVER,COLORADO 1437 Bannock Street Denver, CO 80202 Plaintiff: EDWARD C. SEBESTA, Individually and On Behalf of All Others Similarly Situated,

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Defendants: RICHARD E. SCHADEN, RICHARD F. SCHADEN, FREDERICK H. SCHADEN, MARK L. BROMBERG, J. ERIC LAWRENCE, JOHN J. TODD, BRAD A. GRIFFIN, and THE QUIZNO'S CORPORATION. ATTORNEYS FOR PLAINTIFF: Kip B. Shuman (23593) Jeffrey A, Berens (28007) Trig R. Smith (32699) DYER & SHUMAN, LLP 801 East 17th Avenue Denver, CO 802 18-1417 Tel: (303) 861-3003 Fax: (303) 830-6920

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Case Number: 0 1-CV-628 1 Courtroom: 9

STIPULATION OF SETTLEMENT

The parties to the above-captioned action through their attorneys have agreed to a proposed settlement of the action (the "Settlement") and enter into the following Stipulation of Settlement (the "Stipulation") subject to approval of the Court: WHEREAS, The Quizno's Master LLC, successor in interest to The Quizno's Corporation ("Quizno's" or the "Company") is a corporation organized under the laws of the State of Colorado with its principal place of business at 1475 Lawrence Street, Suite 400,

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Denver, Colorado 80202 and through its affiliates operates food service businesses and licenses franchise restaurants; WHEREAS, Edward C. Sebesta, a former individual stockholder of Quizno's, commenced an action on November 13,2001, captioned Edward C. Sebesta v. Richard E. Schaden, et al., Case No. 01 CV 628 1 (the "Action") against Richard E. Schaden, Richard F. Schaden, Frederick H. Schaden, Mark L. Bromberg, J. Eric Lawrence, John J. Todd (the "Individual Defendants") and Quizno's, alleging that Quizno's board of directors breached certain fiduciary duties owed to the Quizno's public stockholders, including the duty to maximize the value of the Shares and the duty to avoid self-dealing, in connection with a merger proposal by the Schaden family pursuant to which a newly-formed company controlled by the Schaden family, Firenze Corp. ("Firenze"), would acquire the remaining publicly-held stock for $8.50 per share; WHEREAS, the Quizno's board of directors formed a special committee consisting of defendants Mark L. Bromberg, J. Eric Lawrence, and John J. Todd (the "Special Committee") to consider the offer proposed by the Schaden family. WHEREAS, Quizno's thereafter received a third party proposal from Fagan Capital, Inc. ("FCI") to acquire all of Quizno's stock for $10.63 per share; WHEREAS, FCI subsequently amended its proposal to include a variety of proposals including a proposal to acquire any or all of Quizno's stock for $9.50 per share; WHEREAS, the Quizno's Special Committee after consideration of the alternatives proposed by FCI endorsed the Schaden's $8.50 per share offer as fair and in the best interests of Quizno's public stockholders;

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WHEREAS, on November 15, 2001, plaintiff moved for entry of a temporary

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restraining order enjoining defendants from conducting a stockholder's meeting on November 30,2001 and compelling defendants to consider FCI's proposal to acquire Quizno's stock;

WHEREAS, on November 28,2001, after briefing and hearing, the Honorable

Frank Martinez denied plaintiffs application for a temporary restraining order; WHEREAS, on December 21,2001, Quizno's merged with Firenze after the

merger was approved at a special meeting of stockholders held on that day. As a result, Quizno's

became a private company with no public stockholders; WHEREAS, defendant Quizno's answered the complaint on December 3,2001,

defendants Richard E. Schaden, Richard F. Schaden, and Frederick Schaden answered the

complaint on February 19,2002, and defendants Bromberg, Lawrence, and Todd answered the complaint on March 11,2002; WHEREAS, on March 13,2002, Quizno's filed a petition requesting the Court to establish fair value of the Quizno's stock held by dissenting stockholders (the "Appraisal

Action") following notification that certain former stockholders sought an appraisal; WHEREAS, the parties in the Sebesta Action moved to consolidate that Action with the Appraisal Action, which motion was subsequently denied by the Court after opposition from the dissenting stockholders in the Appraisal Action; WHEREAS, all parties exchanged initial disclosures and documents pursuant to Rule 26 of the Colorado Rules of Civil Procedure and depositions were conducted in this action; WHEREAS, during the course of this action, counsel for plaintiff and counsel for defendants thought it advisable to enter into preliminary settlement discussions; and

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WHEREAS, after settlement discussions, conducted at arm's-length by their respective counsel, the parties have determined that settlement of the claims raised in the Action on the terms set forth herein is in the best interest of the parties and the absent class members; NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by the parties, acting through their respective counsel, subject to the approval of the Court that:
1.

The parties stipulate to certification of a class, for settlement purposes

only, of former Quizno's stockholders as of December 21,2001 (other than defendants and those stockholders who have successfully perfected their appraisal rights in the Appraisal Action). The Settlement Class members held 3 16,197 shares of Quizno's stock on December 2 1,2001 (the "Settlement Class").
2.

Plaintiff and members of the Settlement Class will receive an immediate

O payment of $1 . O a share (less attorneys' fees and expenses awarded by the Court) upon final, non-appealable judgment approving the proposed Settlement (the "Immediate Award").
3.

Plaintiff and the Settlement Class will receive a futher incremental

payment (the "Incremental Award") should the Appraisal Action result in a value greater than $15.00 per share in accordance with the following scale: 45% of the amount above $15.00; plus 25% of the amount above $20.00; plus 20% of the amount above $25.00; plus 15% of the amount above $30.00; plus 10% of the amount above $35.00; plus 5% of the amount above $40.00. The Incremental Award shall be cumulative through each level of payment. For example, if the Appraisal Action results in a $34.00 per share value, the payout to the Settlement Class would be an additional $5.10 per share less attorneys' fees (45% of $5.00 plus 25% of $5.00 plus 20% of

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$5.00 plus 15% of $4.00). In the event the Appraisal Action results in a value greater than

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$45.00 per share, no additional payout will be made to members of the Settlement Class above

an additional $6.00 per share pursuant to the Incremental Award. The Incremental Award and attorneys' fees awarded shall be paid only after a final, non-appealable judgment or settlement of

the Appraisal Action. 4. After Court approval, a judgment shall be entered expressly providing,

inter alia: (a) for a judgment in appropriate form dismissing the Action with prejudice and

barring all claims (including, without limitation, any claims for violation of federal and/or state statutory andlor common law andlor duty) that have been or might have been brought in any

court or forum by any member of the Settlement Class constituting or relating to any matters that were or could have been asserted in the Complaint relating to the ownership of Quizno's stock;

(b) for the release of all claims of Settlement Class members, whether known or unknown,
asserted or unasserted against defendants and any of their present or former officers, directors, employees, agents, attorneys, accountants, financial advisors, investment bankers, representatives, affiliates, associates, parents, subsidiaries, general and limited partners and partnerships, heirs, executors, administrators, successors and assigns, whether under state, federal or common or administrative law (including, without limitations, all claims arising under the federal securities laws and all claims for violation of federal andlor state statutory andlor common law andlor duty), and whether directly, derivatively, representatively or arising in any other capacity, and in connection with, or that arise out of any claim that was or could have been brought in the Action or that relates to the ownership of Quizno's stock (whether or not such claim could have been asserted in the Action), and (c) for the appropriate certification of the Settlement Class, for the purposes of settlement of the Action only, as described below.

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5.

Quizno's agrees to bear all costs and expenses of providing notice of the

Settlement and of the hearing to be held thereon by first class mail to each record holder of Quizno's stock on December 21,2001, less defendants, insiders and known record holders who have successfully perfected their appraisal rights in the Appraisal Action. The notice shall include a request to Cede & Co., a nominee holder, to forward said notice to the beneficial owners of the stock. A Notice of Proposed Settlement and Settlement Hearing (the "Notice") is annexed hereto as Exhibit A.
6.

Defendants will have the right to withdraw from the Settlement if

Settlement Class members holding more than 79,049 of the Quizno's stock on December 2 1, 2001 elect to opt out of the Settlement. This condition may be waived at the discretion of defendants.
7.

Plaintiffs counsel will apply to the Court for an award of attorney's fees

not to exceed 25% of the total benefit created as a result of the Settlement, plus expenses. Defendants will not oppose such an application. Subject to the conditions set forth herein and Court approval, proportional attorneys' fees and all of counsel's expenses shall be paid at the same time as distribution of the Immediate Award and additional attorneys1fees shall be paid at the same time as payment, if any, of the Incremental Award to the Settlement Class. Payment of attorneys' fees and expenses shall be made payable to Wechsler Harwood LLP.
8.

As soon as practical after its execution, the parties to the Action will

present this Stipulation to the Court seeking the Court's preliminary approval of the Settlement together with an order (the "Hearing Order") annexed hereto as Exhibit B, setting a hearing date (the "Hearing") and providing for such Notice to the Quizno's stockholders as Quizno's is directed by the Court to provide. The parties shall use their best efforts to obtain Court approval

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of the Settlement and the dismissal of the Action with prejudice as to all of the settled claims without costs to any party (except as provided for herein).
9.

If this Stipulation is approved by the Court after the Hearing, the parties

agree to present to the Court a proposed order (the "Proposed Order and Final Judgment") in the form annexed hereto as Exhibit C. 10. This Court retains jurisdiction of the Action for the purpose of

administering and effectuating the Settlement provided for herein. 1I. This Stipulation and the Settlement shall be governed by, and construed in

accordance with, the laws of the State of Colorado.
12. This Stipulation may be modified or amended only by a writing signed by

all the signatories hereto. Dated: October 15,2003

DYER & FHUMAN LLP

Trig Smith 801 East 17th Street Denver, CO 802 18

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WECHSLER HARWOOD LLP

Matthew M. Houston 488 Madison Avenue New York, NY 10022 Attorneys for Plaintiffs

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PIPER R U D ~ W

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~ r e d d A. Cohen c 203 North LaSalle Street, Suite 1800 Chicago, IL 60601-1293

i?&( A , * I J / ~ F, L ~
Chesley Key Culp 1fI 1225 17th Street, 29th Floor Denver, CO 80202 Attorneys For Defendants

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DISTRICT COURT, CITY AND COUNTY OF DENVER,COLORADO 1437 Bannock Street Denver, CO 80202
Plaintiff: EDWARD C. SEBESTA, Individually and On Behalf of All Others Similarly Situated,

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Defendants: RICHARD E. SCHADEN, RICHARD F. SCHADEN, FREDERICK H. SCHADEN, MARK L. BROMBERG, I. ERIC LAWRENCE, JOHN J. TODD, BRAD A. GRIFFIN, and THE QUIZNO'S CORPORATION. ATTORNEYS FOR PLAINTIFF: Kip B. Shuman (23593) Jeffrey A. Berens (28007) Trig R. Smith (32699) DYER & SHUMAN, LLP 80 1 East 17th Avenue Denver, CO 80218- 1417 Tel: (303) 861-3003 Fax: (303) 830-6920

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Case Number: 0 1-CV-628 1 Courtroom: 9

NOTICE OF PROPOSED SETTLEMENT AND FINAL HEARING

TO:

ALL PERSONS WHO HELD THE QUIZNO'S CORPORATION'S ("QUIZNO'S") COMMON STOCK ON DECEMBER 2 1,2001
CEDE & CO.: PLEASE SEE INSTRUCTIONS ON PAGE 9 HEREIN PLEASE READ THIS NOTICE CAREFULLY THIS NOTICE RELATES TO A PROPOSED SETTLEMENT OF AN ACTION BROUGHT ON BEHALF OF CERTAIN STOCKHOLDERS OF QUIZNO'S AND CONTAINS IMPORTANT INFORMATION WHICH MAY EFFECT YOUR RIGHTS. IF YOU ARE A CLASS MEMBER, YOU MAY BE ENTITLED TO RECEIVE

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BENEFITS PURSUANT TO THE PROPOSED SETTLEMENT DESCRIBED HEREIN. YOU ARE HEREBY NOTIFIED that a settlement (the "Settlement") of the abovecaptioned stockholders' class action (the "Action") has been reached. The Settlement is subject to approval by the Court.
A hearing (the "Hearing") will be held before Hon. Robert S. Hyatt, Judge of the Denver

County District Court, Courtroom 9, 1437 Bannock Street, Denver, Colorado, at 9:00 a.m. on December -, 2003. The purpose of the Hearing is to determine whether the proposed Settlement of the Action as contained in the Stipulation of Settlement (the "Stipulation") on file with the Court should be approved as fair, reasonable, and adequate to former stockholders of Quizno's, whether a final judgment dismissing the Action with prejudice should be entered and whether legal fees and expenses should be awarded to plaintiffs counsel and, if so, in what amount.
BACKGROUND AND DESCRIPTION OF LITIGATION

Plaintiff Edward C. Sebesta, a former individual stockholder of Quizno's, commenced an action on November 13,2001, captioned Edward C. Sebesta v. Richard E. Schaden, et al., Case No. 01 CV 628 1 against Richard E. Schaden, Richard F. Schaden, Frederick H. Schaden, Mark

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L. Bromberg, J. Eric Lawrence, John J. Todd (the "Individual Defendants") and Quizno's,
alleging that the Quimo's board of directors breached certain fiduciary duties owed to the Quizno's public stockholders, including the duty to maximize the value of Quizno's stock and the duty to avoid self-dealing, in connection with a merger proposal by the Schaden family pursuant to which a newly-formed company controlled by the Schaden family, Firenze Corp. ("Firenze"), would acquire all of Quizno's publicly-held stock for $8.50 per share. The Quizno's board of directors thereafter formed a special committee consisting of defendants Mark L. Bromberg, J. Eric Lawrence, and John J. Todd (the "Special Committee") to consider the offer proposed by the Schaden family and Firenze, While considering that offer, Quizno's received a third party proposal from Fagan Capital, Inc. ("FCI") to acquire all of

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Quizno's stock for $1 0.63 per share. FCI subsequently amended its proposal to include a variety of proposals including a proposal to acquire any or all of Quizno's stock for $9.50 per share; Quizno's Special Committee after consideration of the alternatives proposed by FCI endorsed the Schaden's $8.50 per share offer as fair and in the best interests of Quizno's public stockholders; On November 15,2001, plaintiff moved for entry of a temporary restraining order enjoining defendants from conducting a stockholder's meeting on November 30,2001 and compelling defendants to consider FCI's proposal to acquire Quizno's stock. On November 28, 2001, after briefing and hearing, the Honorable Frank Martinez of the Denver County District Court denied plaintiffs application for a temporary restraining order. On December 21,2001, Quizno's merged with Firenze after the merger was approved at a special meeting of stockholders held on that day. As a result, Quizno's became a private company with no public stockholders. Defendant Quizno's answered the complaint on December 3,2001, defendants Richard E. Schaden, Richard F. Schaden, and Frederick Schaden answered the complaint on February 19, 2002, and defendants Bromberg, Lawrence, and Todd answered the complaint on March 1 1, 2002, All parties exchanged initial disclosures and documents pursuant to Rule 26 of the Colorado Rules of Civil Procedure and depositions were conducted in this action. On March 13,2002, Quizno's filed a petition requesting the Court to establish fair value of the Quizno's stock held by dissenting stockholders (the "Appraisal Action") following notification that certain former stockholders sought an appraisal. The parties in the Sebesta Action moved to consolidate that Action with the Appraisal Action, which motion was subsequently denied by the Court after opposition from the dissenting stockholders in the Appraisal Action. During the course of this action, counsel for plaintiff and counsel for defendants thought it advisable to enter into preliminary settlement discussions. After settlement

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discussions, conducted at arm's-length by their respective counsel, the parties have determined that Settlement of the claims raised in the Action on the terms set forth herein is in the best interest of the parties and the absent class members. THE SETTLEMENT CLASS The Court, by Order for Preliminary Approval and Hearing on Proposed Settlement of the Action, dated O c t o b e r , 2003, has certified a class for purposes of this Settlement only, consisting of former Quizno's shareholders as of December 21,2001 (other than defendants and those stockholders who have successfully perfected their appraisal rights in the Appraisal Action). The Settlement Class members held 3 16,197 shares of Quizno's stock on December 2 1,2001 (the "Settlement Class"). If you held shares of Quizno's stock on December 2 1,2001 but successfully perfected your appraisal rights in the Appraisal Action, you are not a member of the Settlement Class and are not entitled to receive benefits pursuant to the proposed Settlement described herein.

.SUMMARY OF SETTLEMENT After arm's-length negotiations, the parties entered into the Stipulation. The Stipulation contains the following terms and provisions: 1. Plaintiff and members of the Settlement Class will receive an immediate

payment of $1. O a share (less attorneys' fees and expenses awarded by the Court) upon final, O non-appealable judgment approving the proposed Settlement (the "Immediate Award").

2.

Plaintiff and the Settlement Class will receive a further incremental

payment (the "Incremental Award") should the Appraisal Action result in a value greater than $15.00 per share in accordance with the following scale: 45% of the amount above $15.00; plus 25% of the amount above $20,00; plus 20% of the amount above $25.00; plus 15% of the amount above $30.00; plus

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$35.01-$40.00 $40.01-$45.00

10% of the amount above $35.00; plus 5% of the amount above $40.00.

The Incremental Award shall be cumulative through each level of payment. For example, if the Appraisal Action results in a $34.00 per share value, the payout to the Settlement Class would be an additional $5.10 per share less attorneys' fees (45% of $5.00 plus 25% of $5.00 plus 20% of $5.00 plus 15% of $4.00). In the event the Appraisal Action results in a value greater than $45.00 per share, no additional payout will be made to members of the Settlement Class above

an additional $6.00 per share pursuant to the Incremental Award. The Incremental Award and
attorneys' fees awarded shall be paid only after a final, non-appealable judgment or settlement of the Appraisal Action. 3. After Court approval, a judgment shall be entered expressly providing,

inter alia: (a) for a judgment in appropriate form dismissing the Action with prejudice and barring all claims (including, without limitation, any claims for violation of federal and/or state statutory andlor common law and/or duty) that have been or might have been brought in any court or forum by any member of the Settlement Class constituting or relating to any matters that were or could have been asserted in the Complaint relating to the ownership of Quizno's stock; (b) for the release of all claims of Settlement Class members, whether known or unknown, asserted or unasserted against defendants and any of their present or former officers, directors, employees, agents, attorneys, accountants, financial advisors, investment bankers, representatives, affiliates, associates, parents, subsidiaries, general and limited partners and partnerships, heirs, executors, administrators, successors and assigns, whether under state, federal or common or administrative law (including, without limitations, all claims arising under the federal securities laws and all claims for violation of federal and/or state statutory and/or

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common law andlor duty), and whether directly, derivatively, representatively or arising in any other capacity, and in connection with, or that arise out of any claim that was or could have been brought in the Action or that relates to the ownership of Quizno's stock (whether or not such claim could have been asserted in the Action), and (c) for the appropriate certification of the Settlement Class, for the purposes of settlement of the Action only, as described above. 4. the Settlement Class. Quizno's agreed to bear all costs and expenses of providing this Notice to

5.

Plaintiffs counsel will apply to the Court for an award of attorney's fees
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not to exceed 25% of the total benefit created as a result of the Settlement, plus expenses. Defendants will not oppose such an application. Subject to the conditions set forth herein and Court approval, proportional attorneys' fees and all of counsel's expenses shall be paid at the same time as distribution of the Immediate Award and additional attorneys' fees shall be paid at the same time as payment, if any, of the Incremental Award to the Settlement Class.

EXCLUSION FROM THE SETTLEMENT CLASS
Each member of the Settlement Class shall be bound by all determinations and judgments in the Sebesta Action concerning the Settlement, whether favorable or unfavorable, unless such person shall mail, by first class mail, a written request for exclusion with respect to the Settlement, postmarked no later than November ,2003, addressed to Patrick E. Meyers,

The Quizno's Master LLC, 1475 Lawrence Street, Suite 400, Denver, Colorado 80202. No
person may exclude himself from the Settlement Class after that date. In order to be valid, each such request for exclusion must set forth the name, address and telephone number of the person or entity requesting exclusion, must state that such person or entity "'requests exclusion from the Settlement Class in the Sebesta Action" and must be signed by such person or entity. Persons or

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entities requesting exclusion are requested to state the number of shares of Quizno's stock the person or entity owned on December 2 1,2001. The request for exclusion shall not be effective unless the request for exclusion provides the required information and is made within the time stated above, or the exclusion is otherwise accepted by the Court. Defendants will have the right to withdraw from the Settlement if Settlement Class members holding more than 79,049 of the Quizno's stock on December 21,2001 elect to be excluded from the Settlement. This condition may be waived at the discretion of defendants.

SETTLEMENT HEARING
Any member of the Settlement Class who has not properly submitted a request for exclusion from the Settlement Class may appear in person or through counsel at the Hearing to show cause why the proposed Settlement should not be approved and why the Action should not be dismissed with prejudice, or to object to plaintiffs counsel's application for an award of attorneys' fees and reimbursement of expenses. If you have requested exclusion from the Settlement Class you may not object to the Settlement. However, no member of the Settlement Class shall be heard unless he, she, or it files the following documents with the Clerk of the Court, no later than ,2003: (a) a notice of intention to appear; (b) proof of

ownership of Quizno's common stock on December 21,2001; and (c) a detailed statement of the stockholder's specific objections to the proposed Settlement, the terms of the Stipulation, or any award of attorneys' fees and expenses as provided therein. The statement of objection should include as attachments any documents or writings that the Settlement Class member wishes the Court to consider or examine in considering the objections. The address of the Clerk of the Court is:

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Clerk of the Court Denver County District Court 1437 Bannock Street Denver, CO 80202 The Settlement Class Member must also serve copies of the above described documents upon the following attorneys for the parties, no later than the above mentioned date:

Matthew M. Houston, Esq. Wechsler Harwood LLP 488 Madison Avenue, 8th Floor New York, NY 10022 Counsel for Plaintiff

Fredric A. Cohen, Esq. Piper Rudnick 203 North LaSalle Street, Suite 1800 Chicago, IL 6060 1-1293 Counsel for Defendants

No Settlement Class member will be heard and no papers submitted by or on behalf of any such member will be received or considered by the Court at or in connection with the Hearing, except as the Court in its discretion may otherwise direct, unless the above described documents have been filed and served in the manner prescribed above.

YOU ARE HEREBY NOTIFIED that any Settlement Class member who

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fails to object to the proposed Settlement in the manner prescribed above shall be deemed to have waived his, her, or its objections and shall forever be barred from making any such objections.

Accordingly, if the Court at or in connection with the Hearing grants final approval of the proposed Settlement, no Settlement Class member shall be permitted to institute, commence, or continue, directly or in any other capacity, any action asserting any of the claims settled in the proposed Settlement, any claim which has been or could have been asserted in the Action, or any other claim arising out of or relating to the subject matter of the Action at any time after such approval is granted by the Court.

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The Stipulation of Settlement and any and all other papers filed in the Action may be examined at any time during regular office hours at the office of the Clerk of this Court, Denver, Colorado. PLEASE DO NOT CALL OR WRITE THE CLERK OF THE COURT

OR THE COURT DIRECTLY. All inquiries regarding these actions should be addressed in
writing to counsel at the addresses set forth above.

SPECIAL NOTICE TO CEDE & CO.
The Court has directed that, within seven (7) days of your receipt of this notice, you request the number of additional copies of this notice needed, which will be provided to you free of charge, and within seven (7) days mail the notice to the beneficial owners of the common stock of The Quizno's Corporation on December 21,2001. The Court has directed that, upon such mailing, you send a statement to confirming that the mailing was made as directed. You are entitled to reimbursement from Quizno's of your reasonable expenses actually incurred in connection with the foregoing, including reimbursement of postage expense and costs of ascertaining the names and addresses of beneficial owners. Those expenses will be paid upon request and submission of appropriate supporting documentation.

Dated: Denver, Colorado October -- 2003

BY ORDER OF THE DENVER COUNTY
DISTRICT COURT FOR THE STATE OF COLORADO

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DISTRICT COURT, CITY AND COUNTY OF DENVER, COLORADO 1437 Bannock Street Denver, CO 80202 Plaintiff EDWARD C. SEBESTA, Individually and On Behalf of All Others Similarly Situated,
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Case Number: 0 1-CV-628 1 Defendants: RICHARD E. SCHADEN, RICHARD F. SCHADEN, FREDERICK H. SCHADEN, MARK L. BROMBERG, J. ERIC LAWRENCE, JOHN J. TODD, BRAD A. GRIFFJN, and THE QUIZNO'S CORPORATION. ATTORNEYS FOR PLAINTIFF: Kip B. Shuman (23593) Jeffrey A. Berens (28007) Trig R. Smith (32699) DYER & SHUMAN, LLP 80 1 East 17th Avenue Denver, CO 80218-141 7 Tel: (303) 861-3003 Fax: (303) 830-6920 Courtroom: 9

ORDER FOR PRELIMINARY APPROVAL AND HEARING ON PROPOSED SETTLEMENT OF THE ACTION

Upon the consent of all parties and the Stipulation of Settlement dated October --, 2003 (the "Stipulation"), it is hereby ORDERED as follows:
1.

The Action, as that term is defined in the Stipulation, shall, only for

purposes of the Settlement, as that term is defined in the Stipulation, be maintained and proceed 8, ;4

:Tzs

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as a class action on behalf and for the benefit of former Quizno's stockholders as of December 2 1,2001 (other than defendants and those stockholders who have successfully perfected their appraisal rights in the Appraisal Action). The Settlement Class members held 3 16,197 shares of Quizno's stock on December 2 1,2001 (the "Settlement Class"). 2. A hearing (the "Hearing") will be held before the undersigned at 9:00 a.m.

on December --, 2003 in the Denver County District Court, Denver, Colorado, 80202 for the purpose of determining (a) whether the terms of the Stipulation should be approved as fair, reasonable, and adequate, and (b) to consider plaintiffs application for an award of attorneys' fees and reimbursement of expenses in accordance with the terms and conditions of the Stipulation.

3.

The Hearing may, without further notice, be adjourned by this Court at the

time of the hearing or on any adjourned date thereof. 4. Notice of the Hearing, including the Notice of Proposed Settlement and

Settlement Hearing (the "Notice") (substantially in the form annexed to the Stipulation as Exhibit A) is hereby approved by this Court. The Court finds that such Notice meets the requirements of the Colorado Rules of Civil Procedure and due process, and is the best possible notice practicable under the circumstances and constitutes due and sufficient notice to all persons entitled thereto.
5.

The Notice shall be mailed to each record holder of Quizno7sstock on

December 21,2001, less defendants, insiders and known record holders who have successfully perfected their appraisal rights in the Appraisal Action, no later than 45 days prior to the date of the Hearing. On or before the date of the Hearing, proof by affidavit of the mailing of the Notice

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shall be filed with the Court. Costs incurred in connection with producing and sending the Notice provided herein shall be paid by Quizno's.
6.

At the Hearing, any member of the Settlement Class who has not

requested to be excluded from the class may appear in person or by attorney to show cause, if any, why the proposed Settlement should not be approved as fair, reasonable, and adequate, why judgment should not be entered dismissing the Action with prejudice, or why the Court should not grant plaintiffs counsel's application for allowance of attorneys' fees and reimbursement of expenses. However, unless the Court otherwise directs for good cause shown, no person or

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entity other than the named parties shall be heard and no briefs or papers submitted by or on behalf of such Settlement Class member shall be received or considered by this Court at or in connection with the Hearing, unless no later than 15 days prior to the Hearing the following documents are served and filed in the manner provided below: (a) a notice of intention to appear; (b) proof of ownership of Quizno's common stock as of December 2 1,2001 ; and (c) a detailed statement of such stockholder's specific objections to any matter before the Court, including any documents and writings such person wishes the Court to consider. Such

. documents shall be filed with the Clerk of the Cout-t, Denver County District Court, 1437 . I
Bannock Street, Denver, Colorado 80202. Copies of such documents shall be served upon the
following counsel: Matthew M. Houston, Esq., Wechsler Harwood LLP, 488 Madison Avenue, New York, New York 10022, Counsel for Plaintiff; and Fredric A. Cohen, Esq., Piper Rudnick, 203 North LaSalle Street, Suite 1800, Chicago, Illinois 60601, Counsel for Defendants. Any person or entity who fails to object in the manner provided herein shall be deemed to have waived his, her or its objections and shall forever be barred from making any such objections in the Action or in any other action or proceeding.

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7.

If the terms and provisions of the Stipulation are not approved by this

Court or if for any other reason the Settlement does not become final, all the proceedings had in connection with the Settlement, including the provisions of this Order, shall be without prejudice to the rights of any of the parties and inadmissible for any purpose in this or in any other proceeding or action.

ENTERED:

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DISTRICT COURT, CITY AND COUNTY O F DENVER,COLORADO 1437 Bannock Street Denver, CO 80202 Plaintiff: EDWARD C. SEBESTA, Individually and On Behalf of All Others Similarly Situated,
A

COURTUSEONLY

A

Case Number: 0 1-CV-628 1 Defendants: RICHARD E. SCHADEN, RICHARD F. SCHADEN, FREDERICK H. SCHADEN, MARK L. BROMBERG, J. ERIC LAWRENCE, JOHN J. TODD, BRAD A. GRIFFIN, and THE QUIZNO'S CORPORATION. ATTORNEYS FOR PLAINTIFF: Kip B. Shuman (23593) Jeffrey A. Berens (28007) Trig R. Smith (32699) DYER & SHUMAN, LLP 80 1 East 17th Avenue Denver, CO 80218-141 7 Tel: (303) 861-3003 Fax: (303) 830-6920 ORDER AND FINAL JUDGMENT APPROVING SETTLEMENT O F THE ACTION Courtroom: 9

This matter having come before the Court on the application of the plaintiff for approval of the settlement (the "Settlement") set forth in the Stipulation of Settlement dated October -, 2003 (the "Stipulation") of this action (the "Action") on behalf of stockholders of The Quizno's Corporation ("Quizno's"); and upon reading the verified pleadings, the Stipulation, the Notice of Proposed Settlement and Settlement Hearing, with proof of service thereof; and a hearing on the fairness and adequacy of the Settlement (the "Hearing") having been held on 4 : ,+3F$) :

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,2003; and the Court having considered all papers filed and proceedings had herein; and good cause appearing therefor:

IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT:
A. The Court has jurisdiction over the subject matter of the Action and all the

parties to this litigation.

B.

The Court has determined that the Notice given to the stockholders of

Quizno's common stock as of December 2 1,2001 (other than defendants and stockholders who successfully perfected their appraisal rights), fully and adequately informed the Quizno's stockholders of the proposed Settlement of the Action, meets the requirements of the Colorado Rules of Civil Procedure and due process, is the best notice practicable under the circumstances, and shall be deemed to constitute sufficient notice to all persons entitled thereto. C. The Court finds that the Stipulation and Settlement are fair, reasonable,

and adequate, finally approves the Settlement, and directs implementation of all of the terms and
provisions of the Stipulation.

D.

Plaintiffs counsel are hereby awarded attorneys' fees in an amount equal

m e

to
$

% of the total benefit created by this settlement and expenses in the amount of

, which aggregate sum the Court finds to be fair and reasonable. Proportional

attorneys' fees and all of counsel's expenses shall be paid at the same time as distribution of the Immediate Award and additional attorneys' fees shall be paid at the same time as payment, if any, of the Incremental Award to the Settlement Class in accordance with the terms of the Stipulation.

E.

Upon full compliance with the terms of this Order, judgment shall be

entered expressly providing, inter alia: (a) for a judgment in appropriate form dismissing the

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Action with prejudice and barring all claims (including, without limitation, any claims for violation of federal andlor state statutory andlor common law andlor duty) that have been or might have been brought in any court or forum by any member of the Settlement Class constituting or relating to any matters that were or could have been asserted in the Complaint relating to the ownership of Quizno's stock; (b) for the release of all claims of Class members, whether known or unknown, asserted or unasserted against defendants and any of their present or former officers, directors, employees, agents, attorneys, accountants, financial advisors, investment bankers, representatives, affiliates, associates, parents, subsidiaries, general and limited partners and partnerships, heirs, executors, administrators, successors and assigns, whether under state, federal or common or administrative law (including, without limitations, all claims arising under the federal securities laws and all claims for violation of federal and/or state statutory and/or common law andlor duty), and whether directly, derivatively, representatively or arising in any other capacity, and in connection with, or that arise out of any claim that was or could have been brought in the Action or that relates to the ownership of Quizno's stock (whether or not such claim could have been asserted in the Action); and (c) for the appropriate certification of a Class, for the purposes of Settlement of the Action, as described in the Stipulation of Settlement.

F.

This Order is not a finding of any wrongdoing by any of the defendants

and shall not constitute an admission by any of the defendants of fault, omission, liability or wrongdoing.

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G.

Without affecting the finality of this Order, this Court retains jurisdiction

of the Action for the purpose of administering and effectuating the Settlement provided for herein and in the Stipulation.

ENTERED: