**Exhibit 10.55**
**EMPLOYMENT AGREEMENT**
     **AGREEMENT**by and between Schlotzsky’s, Inc., a Texas corporation (the“Company”), and Sam Coats (the “Executive”), dated as of the 17th day of June,2004 (the “Effective Date”).
     **WHEREAS**, the Company has determined that it is in the best interests ofthe Company to employ the Executive as the President and Chief ExecutiveOfficer of the Company, and the Executive desires to serve the Company in thatcapacity pursuant to the terms set forth herein.
     **NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:**
     1. Employment Period. The Company shall employ the Executive, and theExecutive shall serve the Company, on the terms and conditions set forth inthis Agreement, during the employment period, which shall begin on theEffective Date and continue on a month to month basis pursuant to the terms ofthis Agreement (the “Employment Period”), The Company and/or Executive mayterminate this Agreement at any time by giving the other party 30 days priorwritten notice.
     2. Position and Duties. During the Employment Period, the Executive shallserve as President and Chief Executive Officer of the Company and inappropriate positions in the subsidiaries and affiliates of the Company, withthe duties, functions, responsibilities and authority customarily associatedwith such positions. Executive will report to the Schlotzsky’s, Inc. Board ofDirectors. During the Employment Period, the Executive will devotesubstantially all of his attention and time to the business and affairs of theCompany, excluding any periods of vacation and sick leave to which Executive isentitled, and will not engage in any other business activities that willunreasonably interfere with the Executive’s employment pursuant to thisAgreement. It is understood by the parties hereto that Executive presentlyserves on the Board of Directors of Safety-Kleen Holdco and nothing in thisAgreement shall preclude Executive from continuing to serve as a member of theBoard of Directors of Safety-Kleen. During the Employment Period, Executivewill be based out of the Company’s offices in Austin, Texas, and theExecutive’s services shall be performed at such locations where the Companyconducts business throughout North America as the needs and exigencies of thebusiness of the Company from time to time reasonably require. It is understoodand agreed that Executive will continue to maintain his primary residence inDallas, Texas during the term of this Agreement and shall not be required topermanently relocate from his current residence to the Austin, Texas area. TheCompany will reimburse Executive for reasonable commuting and living expenses(including business meal expenses, but not normal “living” meal expenses)during the term of this agreement.
     3. Compensation. (a) Salary. From the Effective Date through the end ofthe Employment Period, the Executive shall receive a monthly base salary (the“Salary”) of $30,000, payable in accordance with the Company’s normal payrollpractices for executives.
 

 

          (b) Performance Bonus. Executive will have a Performance Bonusopportunity, within parameters set by the Board of Directors, that will vestupon the occurrence of a refinancing, recapitalization, judicialreorganization, or change of control relating to the Company.
          (c) Insurance and Other Benefits. The Executive shall receive all standardbenefits afforded to Company employees except that the Company shall also payall medical and dental premiums for his spouse. The Company agrees to reimburseExecutive for all medical, dental and drug costs incurred by Executive or hisspouse beginning at the Effective Date of this Agreement until July 1, 2004.During the Employment Period: (i) the Executive shall be entitled toparticipate in the Company’s 401k Plan, applicable fringe benefit programs andother benefit plans, policies and programs of the Company applicable to allCompany employees, as may be amended by the Company from time to time; and (ii)the Executive shall be entitled to one week of vacation per year, effective andvested as of the Effective Date, and shall be entitled to one additional weekof vacation per year, effective and vested as of August 17, 2004.
          (d) Programs, Procedures and Policies. Executive will comply with and bebound by the Company’s applicable current and future programs, procedures,plans and policies, as may be amended by the Company from time to time, exceptto the extent such programs, procedures, plans or policies are contrary to theterms and conditions of this Agreement.
          (e) Hold Harmless and Indemnity. The Company shall provide Executive withits standard indemnification agreement for its officers and directors.
     4. Termination of Employment. (a) Death or Disability. In the event ofthe Executive’s death during the Employment Period, the Executive’s employmentwith the Company shall terminate automatically. In addition, the Company shallhave the right to terminate the Executive’s employment because of theExecutive’s Disability (as defined in the Company’s Long Term DisabilityBenefit Plan) during the Employment Period. A termination of the Executive’semployment by the Company for Disability shall be communicated to the Executiveby written notice, and shall be effective on the 5th day after receipt of suchnotice by the Executive (the “Disability Effective Date”), unless the Executivereturns to full-time performance of the Executive’s duties before theDisability Effective Date.
     (b) Date of Termination. The “Date of Termination” means the last day ofthe Employment Period, the date of the Executive’s death, the DisabilityEffective Date, the date on which the termination of the Executive’s employmentby the Company is effective, or the date on which the voluntary termination ofthe Executive’s employment by Executive is effective, as the case may be.
     5. Obligations of the Company on Termination. (a) If the Executive’semployment is terminated for any reason, the Company shall, upon execution byExecutive of the Company’s settlement agreement and general release, pay to theExecutive within 10 days after
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the Date of Termination, a lump-sum cash amountequal to the sum of any portion of the Salary for the period up to the Date ofTermination that has not yet been paid.
     (b) In addition to the payments and benefits to which the Executive or theExecutive’s estate may be entitled under Section 5(a) above, the Executiveshall be entitled to receive any vested or other benefits to which he may beentitled pursuant to the terms and conditions of the Company’s 401k Plan andany Company Life, Disability or Health Insurance Plan in which he mayparticipate, and any other amounts due under this Agreement.
     6. Successors. (a) This Agreement is personal to the Executive and,without the prior written consent of the Company, shall not be assignable bythe Executive otherwise than by will or the laws of descent and distribution.This Agreement shall inure to the benefit of and be enforceable by theExecutive’s legal representatives.
     (b) This Agreement shall inure to the benefit of and be binding upon theCompany and its successors and assigns. The Company shall not assign thisAgreement without the prior written consent of the Executive, which consentshall not be unreasonably withheld.
     7. Miscellaneous. (a) The captions of this Agreement are not part of theprovisions hereof and shall have no force or effect. This Agreement may not beamended or modified except by a written agreement executed by the partieshereto or their respective successors and legal representatives.
     (b) All notices and other communications under this Agreement shall be inwriting and shall be given by hand delivery to the other party or by registeredor certified mail, return receipt requested, postage prepaid, addressed asfollows:   If to the Executive: Sam Coats [Address on file with the Company]   If to the Company: Schlotzsky’s, Inc. 203 Colorado Street, Suite 600 Austin, Texas 78701 Attention: General Counsel & Chairman of the Board
or to such other address as either party furnishes to the other in writing inaccordance with this paragraph (b) of Section 8. Notices and communicationsshall be effective when actually received by the addressee.
     (c) The invalidity or unenforceability of any provision of this Agreementshall not affect the validity or enforceability of any other provision of thisAgreement. If any provision of this Agreement shall be held invalid orunenforceable in part, the remaining portion of such
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provision, together withall other provisions of this Agreement, shall remain valid and enforceable andcontinue in full force and effect to the fullest extent consistent with law.
     (d) Notwithstanding any other provision of this Agreement, the Company maywithhold from amounts payable under this Agreement all federal, state, localand foreign taxes that are required to be withheld by applicable laws orregulations.
     (e) The Executive’s or the Company’s failure to insist upon strictcompliance with any provision of, or to assert any right under, this Agreementshall not be deemed to be a waiver of such provision or right or of any otherprovision of or right under this Agreement.
     (f) The Executive and the Company acknowledge that this Agreementsupersedes any other agreement, whether written or oral, between themconcerning the subject matter hereof.
     (g) This Agreement may be executed in several counterparts, each of whichshall be deemed an original and said counterparts shall constitute but one andthe same instrument.
     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand,and the Company has caused this Agreement to be executed in its name on itsbehalf, all as of the day and year first above written.    /s/ SAM COATS    Sam Coats (“Executive”)  Schlotzsky’s, Inc.    /s/ ALICE KLEPAC   By: Alice Klepac Title: Vice President – Human Resources
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