Exhibit 10.1
Cosi, Inc.
Addendum to Employment Agreement
This Addendum to Employment Agreement is being executed effective as of
February 9, 2004 (the "Effective Date"), by and between Cosi, Inc., a Delaware
corporation ("Cosi"), and Xxxxxxx X. Xxxxxxx ("Xx. Xxxxxxx").
Cosi and Xx. Xxxxxxx are parties to an Employment Agreement dated as of
June 24, 2003 (the "2003 Agreement"), pursuant to which Xx. Xxxxxxx agreed to
serve as Cosi's Executive Chairman. Xx. Xxxxxxx has now agreed to devote his
full time efforts to his duties in such capacity. The purpose of this Addendum
is to confirm the additional compensation to be provided by Cosi to Xx. Xxxxxxx,
in consideration for his further commitment to Cosi.
Accordingly, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Cosi and Xx. Xxxxxxx hereby agree as follows:
1. Certain Defined Terms. Capitalized terms used in this Addendum and not
otherwise defined shall have the respective meanings ascribed to them in the
2003 Agreement.
2. Further Commitment. During the Term, Xx. Xxxxxxx shall devote his full
business time and best efforts to his duties as Executive Chairman of Cosi.
3. Additional Compensation. In consideration for the further commitment by
Xx. Xxxxxxx to his duties under the 2003 Agreement, in addition to the
compensation to which he is entitled under the 2003 Agreement, Cosi shall pay or
provide to Xx. Xxxxxxx the following compensation, which Xx. Xxxxxxx agrees to
accept in full satisfaction for such further commitment:
(a) A base salary at the annual rate of $350,000.00, payable net of
applicable payroll and withholding taxes in accordance with Cosi's regular
payroll practices, subject to periodic review and adjustment based on
Cosi's performance and industry practice;
(b) A annual bonus, payable in the discretion of the Board and
targeted at 100% of Xx. Xxxxxxx'x base salary, as from time to time in
effect;
(c) The grant, effective as of the Effective Date, of an option (the
"February 9 Option"), to be issued under Cosi's Amended and Restated Stock
Incentive Plan (the "SIP") to acquire up to 350,000 shares of Common Stock
at a per share exercise price of $2.85, which shall become exercisable as
follows:
(i) The February 9 Option is immediately exercisable as to
87,500 shares.
(ii) So long as the 2003 Agreement then remains in effect,
the February 9 Option shall become exercisable as to an
additional 87,500 shares on February 9, 2005
(iii) So long as the 2003 Agreement then remains in effect,
the February 9 Option shall become exercisable as to an
additional 7,292 shares on the last day of each month,
commencing with February 28, 2005 and ending with
December 31, 2006, and as to 7,284 shares on January 31,
2007.
(iv) To the extent not yet exercisable, the February 9 Option
shall become exercisable in full on the earlier to occur
of (1) the termination of the 2003 Agreement by Cosi
without Cause and (2) upon a Change in Control.
(v) In the event that the outstanding shares of Common Stock
are changed into or exchanged for a different number or
kind of shares or other securities of Cosi or of another
corporation by reason of any reorganization, merger,
consolidation, recapitalization, reclassification, stock
split-up, combination of shares or dividend payable in
capital stock, appropriate adjustment shall be made in
the number and kind of shares as to which the February 9
Option, or any part thereof then unexercised, shall be
exercisable and with a corresponding adjustment in the
then applicable exercise price per share under the
February 9 Option.
(d) Additional options to acquire up to an aggregate of an
additional 381,000 shares, which shall be issued under the SIP and shall
also be on the following terms and conditions:
(i) The exercise price under all such options shall be the
fair market value of the underlying shares on the date
of grant;
(ii) Such options shall become exercisable in accordance with
the vesting provisions contained in the SIP.
(iii) An option for 65,333 shares shall be granted promptly
following the execution of this Addendum;
(iv) An option for 65,333 shares shall be granted once Cosi
has finalized its operating results for the first fiscal
quarter ending after the Effective Date, in which it
realizes positive EBITDA;
(v) An option for 65,334 shares shall be granted once Cosi
has finalized the operating results for the first fiscal
period ending on or after December 31, 2004, in which
Cosi's financial performance for such fiscal period
meets the financial plan approved by the Board for such
fiscal period.
(vi) An option for 128,000 shares shall be granted once Cosi
has finalized its operating results for the fiscal year
ending December 31, 2005, subject to confirmation of
such results by Cosi's outside auditors, provided that
Cosi's financial performance for its 2005 fiscal year
meets the financial plan approved by the Board for such
fiscal year.
(vii) An option for 57,000 shares shall be granted once Cosi
has finalized the operating results for the fiscal year
ending December 31, 2006, subject to confirmation of
such results by Cosi's outside auditors, provided that
Cosi's financial performance for its 2006 fiscal year
meets the financial plan approved by the Board for such
fiscal year.
(e) Benefits as a participant in the Cosi (i) health benefits
program, including medical, dental, vision, life, accidental death and
dismemberment, and long term disability insurance, (ii) 401(k) plan, and
(iii) Severance Policy, on the same basis as other Cosi executive
employees are entitled to participate; and
(f) Up to four (4) weeks paid vacation per annum, in accordance with
the Cosi salaried partner vacation policy.
4. Entire Agreement; Modification. This Addendum contains the entire
Agreement of Cosi and Xx. Xxxxxxx with respect to the additional consideration
to which Xx. Xxxxxxx is and may become entitled, as a result of his further
commitment to his duties to Cosi, and all promises, representations,
understandings, arrangements and prior agreements with respect to such subject
matter are merged herein and superseded hereby. This Agreement may be altered,
amended or superseded only by an agreement in writing, signed by both parties or
the party against whom enforcement of any waiver, change, modification,
extension or discharge is sought. No action of course of conduct shall
constitute a waiver of any of the terms and conditions of this Agreement, unless
such waiver is specified in writing, and then only to the extent so specified. A
waiver of any of the terms and conditions of this Agreement on one occasion
shall not constitute a waiver of the other terms and conditions of this
Agreement, or of such terms and conditions on any other occasion.
5. Ratification of 2003 Agreement. Xx. Xxxxxxx and Cosi hereby expressly
agree that, except to the extent specifically inconsistent with the foregoing
provisions of this Addendum, the provisions of the 2003 Agreement remain in full
force and effect.
6. Binding Effect; Benefit. This Addendum shall be binding upon and inure
to the benefit of Xx. Xxxxxxx and his administrators, executors, heirs, and
permitted assigns, and Cosi and its successors and permitted assigns.
7. Notices. From and after the date hereof, any notice required or
permitted to be given to Xx. Xxxxxxx under the 2003 Agreement shall be delivered
by hand or mailed by certified mail, return receipt requested, postage prepaid,
addressed as follows:
Xx. Xxxxxxx X. Xxxxxxx
0 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
or to such other address as he may designate to Cosi in writing.
8. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be considered and have the force and effect of an original.
9. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of New York.
In Witness Whereof, Cosi has caused this Addendum to be duly executed on
its behalf and Xx. Xxxxxxx has hereunto set his hand and seal, all as of the
date first above written.
Cosi, Inc. Xx. Xxxxxxx
By: /s/ Xxxxx Xxxxxxxxx /s/ Xxxxxxx X. Xxxxxxx
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