Exhibit 10.3
COSI, INC.
EMPLOYMENT AGREEMENT
AGREEMENT entered into effective as of the 20th day of August, 2003 (the
"Effective Date"), by and between Cosi, Inc., a Delaware corporation ("Cosi"),
and Xxxxxxxx X. Xxxxxxxxxx, Xx. ("Xx. Xxxxxxxxxx").
Cosi and Xx. Xxxxxxxxxx wish to confirm the terms and conditions on which
Xx. Xxxxxxxxxx has agreed to continue to provide services 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. Xxxxxxxxxx hereby agree as follows:
1. DUTIES. Cosi hereby agrees to employ Xx. Xxxxxxxxxx as its Vice
President, Concept Development, and Xx. Xxxxxxxxxx hereby accepts such
employment and agrees to carry out such duties as shall be reasonably requested
of him from time to time by the Chief Executive Officer of Cosi.
2. TERM/COMMITMENT. Xx. Xxxxxxxxxx'x employment under this Agreement shall
commence on the Effective Date and shall end on the second anniversary of the
Effective Date (the "Term"). During his employment under this Agreement, Xx.
Xxxxxxxxxx shall devote his full business time and efforts to carrying out the
duties required of him under this Agreement.
3. COMPENSATION. In consideration for the performance by Xx. Xxxxxxxxxx of
his duties hereunder, Cosi shall pay or provide to Xx. Xxxxxxxxxx the following
compensation, which Xx. Xxxxxxxxxx agrees to accept in full satisfaction for his
services:
(a) Upon his execution of this Agreement, Cosi shall pay Xx.
Xxxxxxxxxx a signing bonus of $75,000 less applicable withholding taxes.
(b) During Xx. Xxxxxxxxxx'x employment under this Agreement, Cosi
shall pay Xx. Xxxxxxxxxx an annual base salary of $175,000, in accordance
with its ordinary payroll practices.
(c) During Xx. Xxxxxxxxxx'x employment under this Agreement, Xx.
Xxxxxxxxxx shall be eligible to receive an annual bonus of up to 30% of
his base salary based on the attainment performance parameters established
in advance by the Board.
(d) Cosi shall pay directly or reimburse Xx. Xxxxxxxxxx for all
reasonable out-of-pocket expenses incurred by Xx. Xxxxxxxxxx, in
connection with his performance of services hereunder, provided he
properly documents all such expenses in accordance with policies adopted
from time to time by Cosi.
4. TREATMENT OF OPTIONS. Any options to purchase Cosi common stock granted
to Xx. Xxxxxxxxxx in connection with his prior employment with Cosi shall remain
in full force and effect pursuant to their terms; provided that in the event
Cosi effects a repricing of its employee stock options at a time where Xx.
Xxxxxxxxxx'x Cosi stock options remain outstanding, those stock options shall
also be repriced.
5. EMPLOYEE BENEFITS. Xx. Xxxxxxxxxx shall be entitled to participate in
any employee benefit plan program or arrangement of Cosi generally made
available to executives of Cosi.
6. CONFIDENTIALITY. Xx. Xxxxxxxxxx covenants and agrees that during his
employment with Cosi and following the termination of his employment for any
reason, that he will not at any time divulge any trade secrets or other
confidential information pertaining to the business of Cosi. The term
"confidential information" as used in this Agreement shall mean any secret,
confidential or proprietary information of Cosi or its affiliates, other than
that which has become generally known to the public other than through an act of
Xx. Xxxxxxxxxx in breach of this Section 6. The term "trade secrets" as used in
this Agreement shall mean information, including but not limited to technical or
non-technical data, a formula, a pattern, a compilation, a program, a device, a
method, a technique, a drawing, a recipe, a process, financial data, financial
plans, product plans, or a list of actual or potential customers or suppliers
that:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by
other persons who can obtain economic value from its disclosure or use,
and
(b) is the subject of reasonable efforts by Cosi to maintain its
secrecy.
The Company's rights under this Section 6 shall be in addition to, and not
in lieu of, any rights Cosi might have under applicable state law.
7. NON-COMPETITION. Xx. Xxxxxxxxxx covenants and agrees that during his
employment with Cosi and for twenty-four months following the termination of his
employment for any reason, Xx. Xxxxxxxxxx shall not directly or indirectly,
personally or with other employees, agents or otherwise, or on behalf of any
other person, firm or corporation, engage in any restaurant, bar, coffee shop or
similar business establishment in which a majority of revenues are derived from
retail sales of sandwiches and non-alcoholic beverages (any of the foregoing, a
"Competitive Business"), within a 25 mile radius of any place of business of
Cosi (including franchised operations) or of any place where Cosi (or one of its
franchised operations) has done business since the Effective Date of this
Agreement. Notwithstanding, the above, ownership by Xx. Xxxxxxxxxx of an
interest in any licensed franchisee of Cosi shall not be deemed to be in
violation of this Section 7.
8. NON-SOLICITATION OF EMPLOYEES. Xx. Xxxxxxxxxx covenants and agrees that
during his employment with Cosi and for twenty-four months following the
termination of his employment for any reason, he shall not on his own behalf or
on behalf of any other person,
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firm, partnership, association, corporation, or business organization, entity or
enterprise call on, solicit or attempt to induce any other officer or employee
of Cosi or its affiliates or licensed franchisees to terminate his or her
employment with Cosi or its affiliates or licensed franchisees and shall not
assist any other person or entity in such a solicitation unless such employee is
terminated by Cosi. If Xx. Xxxxxxxxxx is found to have hired, during the
aforementioned twenty-four months following the termination of his employment,
any employee (i) whose immediately preceding employer was Cosi, and (ii) who
voluntarily terminated his or her employment with Cosi, then Xx. Xxxxxxxxxx
shall be presumed to have engaged in soliciting that employee to terminate his
or her employment with Cosi.
9. SPECIFIC ENFORCEMENT/SURVIVAL. Xx. Xxxxxxxxxx expressly recognizes that
any breach of Sections 6, 7, or 8 of this Agreement by him is likely to result
in irreparable injury to Cosi and agrees that Cosi shall be entitled, if it so
elects, to institute and prosecute proceedings in any court of competent
jurisdiction, either in law or in equity, to obtain damages for any breach of
this Agreement; to enforce the specific performance of this Agreement by Xx.
Xxxxxxxxxx; and to enjoin Xx. Xxxxxxxxxx from activities in violation of this
Agreement.
Notwithstanding any provisions of this Agreement to the contrary, the provisions
of Sections 6, 7 8 and 9 hereof shall survive the termination of this Agreement.
10. TERMINATION. Either party may terminate this Agreement at any time for
any reason upon 30 days written notice.
(a) In the event Xx. Xxxxxxxxxx'x employment with Cosi is terminated by
Cosi for Cause, Cosi shall pay him his base salary, bonuses and benefits that
are payable through the date of termination ("Accrued Benefits").
The term "Cause," shall mean only one or more of the following:
(i) Xx. Xxxxxxxxxx has willfully failed to follow lawful and
material directives of Cosi's Chief Executive Officer which are consistent
with those duties to be performed by Xx. Xxxxxxxxxx under this Agreement;
(ii) Xx. Xxxxxxxxxx has been convicted of a felony;
(ii) Xx. Xxxxxxxxxx has materially breached this Agreement;
provided, however, that no act or omission shall be treated as Cause under this
Agreement, unless (1) Xx. Xxxxxxxxxx has been provided a written statement of
the basis for Cosi's belief that such act or omission constitutes Cause and (2)
Xx. Xxxxxxxxxx has had at least a 30-day period to take corrective action during
which period he has failed to use reasonable best efforts to take any such
corrective action.
(b) In the event Xx. Xxxxxxxxxx'x employment with Cosi is terminated by
Xx. Xxxxxxxxxx for any reason, other than due to his death or Disability, Cosi
shall pay Mr.
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Xxxxxxxxxx his Accrued Benefits. In addition, if Xx. Xxxxxxxxxx, executes a
Separation and Release Agreement in substantially the form attached hereto as
Exhibit A, all Cosi stock options held by Xx. Xxxxxxxxxx shall become 100%
vested and exercisable, and shall not be subject to any accelerated exercise
requirements or early termination provisions applicable thereto and instead
shall be exercisable through the fifth anniversary of the date of termination.
(c) In the event Xx. Xxxxxxxxxx'x employment with Cosi is terminated due
to his death or Disability, Cosi shall pay Xx. Xxxxxxxxxx, or his estate, the
Accrued Benefits. In addition, if Xx. Xxxxxxxxxx, or his executor in the event
of Xx. Xxxxxxxxxx'x death, executes a Separation and Release Agreement in
substantially the form attached hereto as Exhibit A, (i) all Cosi stock options
held by Xx. Xxxxxxxxxx shall become 100% vested and exercisable, and shall not
be subject to any accelerated exercise requirements or early termination
provisions applicable thereto and instead shall be exercisable through the fifth
anniversary of the date of termination; (ii) Cosi shall continue to pay or
provide Xx. Xxxxxxxxxx'x base salary and welfare benefits for a period of one
year following his date of termination and shall pay an additional amount equal
to 30% of his base salary which shall be paid in equal installments each pay day
over such one year period.
The term "Disability" shall mean Xx. Xxxxxxxxxx'x physical or mental disability
such that Xx. Xxxxxxxxxx is and has been continuously for at least six (6)
months unable to perform the services required to be provided under this
Agreement and Xx. Xxxxxxxxxx is determined to be eligible for long term
disability benefits under the long term disability benefits plan of Cosi as in
effect from time to time.
(c) In the event (i) Xx. Xxxxxxxxxx'x employment with Cosi is terminated
by Cosi other than for Cause, Cosi shall pay him the Accrued Benefits.
Furthermore, if Xx. Xxxxxxxxxx executes a Separation and Release Agreement in
substantially the form attached hereto as Exhibit A, (i) Cosi shall pay him a
severance payment equal to the excess of $873,000, over the amount of all base
salary, annual bonuses and the signing bonus paid to Xx. Xxxxxxxxxx under the
terms of this Agreement, such severance payment shall be payable in 12 equal
monthly installments following the termination of Xx. Xxxxxxxxxx'x employment,
and (ii) all Cosi stock options held by Xx. Xxxxxxxxxx shall become 100% vested
and exercisable, and shall not be subject to accelerated exercise requirements
or early termination provisions applicable thereto and instead shall be
exercisable through the fifth anniversary of the date of termination.
For purposes of this Agreement, in the event that Cosi fails to effect a
repricing of its stock options as contemplated by Section 4 hereof prior to
January 1, 2004 and Xx. Xxxxxxxxxx is still in Cosi's employee at such time, Xx.
Xxxxxxxxxx shall have the right to resign pursuant to a written notice of
resignation delivered to Cosi during the period from January 1, 2004 through
January 15, 2004 and such resignation shall be deemed to be a termination of Xx.
Xxxxxxxxxx'x employment by Cosi without Cause for purposes of determining Xx.
Xxxxxxxxxx'x entitlement under this Section 10(c).
(d) In the event Cosi and Xx. Xxxxxxxxxx do not enter into a new written
employment arrangement prior to the expiration of the Term, Cosi shall pay him
the Accrued
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Benefits. Furthermore, if Xx. Xxxxxxxxxx executes a Separation and Release
Agreement in substantially the form attached hereto as Exhibit A, (i) Cosi shall
pay him a lump sum severance payment equal to the excess of $873,000, over the
amount of all base salary, annual bonuses and the signing bonus paid to Xx.
Xxxxxxxxxx under the terms of this Agreement, and (ii) all Cosi stock options
held by Xx. Xxxxxxxxxx shall become 100% vested and exercisable, and shall not
be subject to accelerated exercise requirements or early termination provisions
applicable thereto and instead shall be exercisable through the fifth
anniversary of the date of termination.
11. NO ASSIGNMENT. Neither party may assign or delegate any of its rights
or obligations hereunder, without the prior written consent of the other party,
which consent may be withheld by the other party in its or his sole discretion.
.
12. ENTIRE AGREEMENT; MODIFICATION. This instrument contains the entire
Agreement of Cosi and Xx. Xxxxxxxxxx with respect to the subject matter
contained herein, and all promises, representations, understandings,
arrangements and prior agreements with respect to such subject matter are merged
herein and superseded hereby, including, without limitation, the employment
agreement between Xx. Xxxxxxxxxx and Cosi, dated as of January 1, 2002, the
terms of which are hereby specifically waived by Xx. Xxxxxxxxxx. 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.
13 SEVERABILITY. Xx. Xxxxxxxxxx and Cosi hereby expressly agree that the
provisions of this Agreement are severable and, in the event that any court of
competent jurisdiction shall determine that any provision or covenant herein
contained is invalid, in whole or in part, the remaining provisions shall remain
in full force and effect and any such provision or covenant shall nevertheless
be enforceable as to the balance thereof.
14 BINDING EFFECT; BENEFIT. This Agreement shall be binding upon and inure
to the benefit of Xx. Xxxxxxxxxx and his administrators, executors, heirs, and
permitted assigns, and Cosi and its successors and permitted assigns.
15 NOTICES. Any notice required or permitted to be given hereunder shall
be in writing and shall be delivered by hand or mailed by certified mail, return
receipt requested, postage prepaid, addressed as follows:
To Xx. Xxxxxxxxxx: Cosi, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxxxxxx, Xx.
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To Cosi: Cosi, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
or to such other address as each of the above may designate to the other in
writing. Notices are effective upon actual receipt.
16 WITHHOLDING. All amounts payable under this agreement shall be subject
to applicable employee withholding taxes.
17 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be considered and have the force and effect of an original.
18 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.
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IN WITNESS WHEREOF, Cosi has caused this Agreement to be duly executed on
its behalf and Xx. Xxxxxxxxxx has hereunto set his hand, all as of the date
first above written.
Cosi, Inc. Xxxxxxxx X. Xxxxxxxxxx
By: /s/ Xxxxx Xxxxxxxxx /s/ Xxxxxxxx X. Xxxxxxxxxx
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