UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

FORM 8-K
 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 15, 2014


COSI, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware
 
000-50052
 
06-1393745
(State or other jurisdiction of incorporation
 
(Commission File Number)
 
(IRS Employer)  Identification No.)


294 Washington Street
   
Suite 510
   
Boston, Massachusetts
 
02108
(Address of Principal Executive Offices)
 
(Zip Code)

Registrant’s telephone number, including area code: (847) 597-8800
 
 
 (Former Name or former address, if changed since last report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
    
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 

 
 
ITEM 1.01
Entry Into a Material Definitive Agreement.
 
As of August 15, 2014, Cosi, Inc. (the “Company”) entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Plaisance Fund, LP, a Delaware limited partnership (the “Purchaser”), pursuant to which the Company agreed to sell to the Purchaser, and the Purchaser agreed to purchase from the Company, up to 3,889,613 unregistered shares of the Company’s common stock, par value of $0.01 per share, at a purchase price of $1.15 per share, which number of shares may be reduced only by the number of shares to be purchased by MILFAM (defined below) or an affiliate thereof pursuant to its right to participate in the transaction. The closing of the transaction will occur upon the Company’s notice to the Purchaser that it has received notice from The Nasdaq OMX Group that the Company’s Notice of Listing of Additional Shares has been closed, but in no event later than thirty (30) days after the date of the Purchase Agreement.  The Purchase Agreement is not assignable by the Purchaser party without the prior written consent of the Company.
 
Pursuant to that certain Senior Secured Note Purchase Agreement dated April 14, 2014, entered into between the Company and MILFAM L.P. ("MILFAM"), MILFAM has a right to participate in the transaction on the same terms as the Purchaser.  MILFAM, Lloyd I. Miller Trust C (“Trust C”) and the Company entered into a letter agreement whereby MILFAM has indicated its intent to participate in the transaction, through its affiliate, Trust C, by purchasing up to 521,739 shares of the Company’s common stock at the purchase price of $1.15.  Trust C and the Company will enter into a stock purchase agreement on substantially similar terms as the Purchase Agreement.  Mr. Lloyd I. Miller, III, is the manager of MILFAM, the general partner of MILFAM, and Milfam LLC is also the investment advisor to Trust C.  Mr. Miller is also a significant shareholder of the Company through a variety of entities that he manages.
 
The Company relied on the exemption from registration provided for under Section 4(2) of the Securities Act based in part on the representations made by the Purchaser, including the representations with respect to the Purchaser’s status as an accredited investor, as such term is defined in Rule 501(a) of the Securities Act, and the investment intent of the Purchaser with respect to the shares of common stock.
 
This summary of the terms referenced above and the transactions contemplated thereby is qualified in its entirety by reference to the Purchase Agreement, which is filed hereto as Exhibit 10.1, and the letter agreement between MILFAM, Trust C and the Company, which is filed hereto as Exhibit 10.2.
 
ITEM 3.02
Unregistered Sales of Equity Securities.
 
The information set forth in Item 1.01 is incorporated herein by reference.
 
ITEM 8.01
Other Events.
 
On August 19, 2014, the Company issued a press release announcing the Company’s entry into the Stock Purchase Agreement and letter agreement summarized in Item 1.01. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
 
ITEM 9.01(d)
Exhibits.
 
Exhibit No.
 
Description
 
Paper (P) or
Electronic (E)
         
10.1
 
Stock Purchase Agreement, dated as of August 15, 2014, by and between the Company and Plaisance Fund, LP
 
E
10.2
 
Letter Agreement, dated as of August 18, 2014, by and among the Company, Milfam II L.P. and Lloyd I. Miller Truct C
 
E
99.1
 
Press Release of Cosi, Inc., dated August 19, 2014
 
E
 
 
 
 

 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
  COSI, INC.  
       
Dated: August 19, 2014 
By:
/s/ Scott Carlock  
    Name:  Scott Carlock   
    Title:    Chief Financial Officer  
       
 
 
 
 
 

 
 
 
 

 
 
EXHIBIT INDEX
         
Exhibit No.
 
Description
 
Paper (P) or
Electronic (E)
10.1
 
Stock Purchase Agreement, dated as of August 15, 2014, by and between the Company and Plaisance Fund, LP
 
E
10.2
 
Letter Agreement, dated as of August 18, 2014, by and among the Company, Milfam II L.P. and Lloyd I. Miller Truct C
 
E
99.1
 
Press Release of Cosi, Inc., dated August 19, 2014
 
E


 
 
 
 
 

 
 


 
EXHIBIT 10.1
 
EXECUTION DOCUMENT
 
 
STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREMEENT (“Agreement”), dated as of the 15th day of August 2014, is made and entered into between PLAISANCE FUND, LP, a Delaware limited partnership (the “Purchaser”), and COSI, INC., a Delaware corporation (the “Company”).
 
WHEREAS, the Purchaser desires to purchase from the Company, and the Company desires to sell to the Purchaser, up to 3,889,613 shares of common stock, par value $0.01 per share (the actual number of shares to be purchased by the Purchaser, the “Shares”), at a purchase price of $1.15 per Share (“Per Share Price”), which number of Shares to be purchased by the Purchaser may be reduced only by the number of shares to be purchased by MILFAM (as defined below), or an affiliate thereof, pursuant to its right to participate in the transaction contemplated hereby.
 
NOW, THEREFORE, the parties hereto agree as follows:
 
1.   Purchase and Sale.  Subject to the terms and conditions of this  Agreement, at the Closing (as defined below), the Company will issue and sell to the Purchaser and the  Purchaser will purchase from the Company 3,367,874 Shares at the Per Share Price for an aggregate purchase price of $3,873,055.10 (the “Purchase Price”).  At the Closing, (a) the Purchase Price shall be paid by the Purchaser to the Company by wire transfer of immediately available funds to the account specified by the Company, in United States dollars and (b) the Company shall deliver to Purchaser to the address specified by the Purchaser a certificate registered in the name of the Purchaser representing the Shares.  The Closing shall occur upon the Company’s notice to the Purchaser that it has  received notice from NASDAQ that the Company’s Notice of Listing of Additional Shares has been “closed” (“NASDAQ Notice”) but in no event later than thirty (30) days after the date of this Agreement set forth above (“Closing”).
 
2.   MILFAM Right of Participation.  The Purchaser acknowledges that MILFAM II L.P. (or an affiliate thereof) (“MILFAM”), a large investor of the Company, has a right to participate in this transaction pursuant to the terms of that certain Senior Secured Note Purchase Agreement dated April 14, 2014 (“MILFAM NPA”), entered into between MILFAM and the Company.   MILFAM has notified the Company that MILFAM, or an affiliate thereof, intends to purchase up to 521,739 shares (“MILFAM Allocation”) on the same terms and conditions, including the same Per Share Price, as set forth herein.
 
3.   Purchase Commitment.  In the event MILFAM does not close on the transaction or purchases less than all of the MILFAM Allocation (any such remaining shares being the “Remaining Shares”), the Purchaser hereby commits to purchase all such Remaining Shares on the same terms and conditions, including the same Per Share Price, as set forth herein.  Any closing on the Remaining Shares shall occur within five (5) business days following the earlier to occur of (a) the date of the closing of the MILFAM transaction, (b) the date MILFAM delivers to the Company written notice stating that MILFAM declines to participate in the transaction or does not intend to purchase the full amount of the MILFAM Allocation (or the date the Company notifies the Purchaser of the receipt of such written notice from MILFAM, if later), or (c) the expiration of the 30-day period following the date the Company delivered the
 
 
 

 
 
written notice of the right to participate in the transaction to MILFAM pursuant to the MILFAM NPA, if such 30-day period has not been previously waived by MILFAM.
 
4.   Acknowledgment.  Notwithstanding Sections 1, 2 and 3 above, the Company shall have no obligation whatsoever to issue any shares (and accordingly, the Purchaser shall not have any obligation to pay the Purchase price, or relevant portion thereof):  (a) where shareholder approval would be required pursuant to any rule, regulation or law to which the Company is subject, including the NASDAQ Stock Market Rules, or (b) which would cause the Company to be in violation of its governing documents or any law, rule or regulation to which it is subject.
 
5.   Understandings of the Purchaser.  The Purchaser hereby represents and warrants to, and covenants with, the Company that the Purchaser is aware and understands that:
 
(a)  There are substantial risks incident to the purchase of the Shares.  An investment in the Shares is inherently speculative in nature, and the Purchaser may suffer a complete loss of the Purchaser’s investment, and the tax consequences to the Purchaser of an investment in the Shares will depend upon the Purchaser’s circumstances.
 
(b)  The Shares have not been registered under the Securities Act of 1933, as amended (the “Federal Securities Act”), any state’s securities act (collectively, the “State Securities Acts”) or any other laws of any other securities commission or regulatory authority (the “Other Securities Laws”), and are being offered for sale pursuant to applicable exemptions from registration.  No federal or state agency or regulatory authority or any other securities commission or regulatory authority has made any finding or determination as to the fairness of the offering of the Shares for public investment, or any recommendation or endorsement of the Shares.
 
(c)  The Purchaser may not sell, transfer or assign the Shares, or any portion thereof, without registration under the Federal Securities Act, the State Securities Acts or Other Securities Laws or qualification or perfection of an applicable exemption therefrom.
 
6.   Representations, Warranties and Covenants of the Purchaser.  The Purchaser hereby represents and warrants to and covenants with the Company as follows:
 
(a)  Immediately prior to consummation of this Agreement, the Purchaser, together with all of its affiliates which are required to be aggregated for Commission (as defined below) reporting purposes, beneficially owns 546,158 shares of the Company’s common stock or any class of stock or other securities of the Company.
 
(b)  The Purchaser is a limited partnership validly existing under the laws of the state of formation.
 
(c)  The Purchaser has full power to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.
 
(d)  The execution and delivery of this Agreement, the performance of Purchaser’s obligations hereunder and the consummation of the transactions contemplated
 
 
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hereby have been duly and validly authorized by all necessary proceedings on the part of Purchaser.
 
(e)  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not violate any provision of the partnership agreement or similar organizational instrument of the Purchaser and do not and will not conflict with or constitute a default under any instrument, agreement or document to which Purchaser is a party or by which it is bound.
 
(f)  This Agreement has been duly executed and delivered by Purchaser, and, assuming the due execution hereof by Seller, this Agreement constitutes the legal, valid and binding obligation of Purchaser, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies..
 
(g)  The Purchaser has had a full opportunity to ask questions of and receive answers from the Company or any person or persons acting on behalf of the Company concerning the terms and conditions of an investment in the Company.
 
(h)  The Purchaser confirms that it is not relying on any communication (written or oral) of the Company or any of its affiliates, as investment advice or as a recommendation to purchase the Shares. It is understood that information and explanations related to the terms and conditions of the Shares provided by the Company or any of its affiliates shall not be considered investment advice or a recommendation to purchase the Shares, and that neither the Company nor any of its affiliates is acting or has acted as an advisor to the Purchaser in deciding to invest in the Shares. The Purchaser acknowledges that neither the Company nor any of its affiliates has made any representation regarding the proper characterization of the Shares for purposes of determining the Purchaser’s authority to invest in the Shares.
 
(i)  The Purchaser confirms that the Company has not (i) given any guarantee or representation as to the potential success, return, effect or benefit (either legal, regulatory, tax, financial, accounting or otherwise) of an investment in the Shares or (ii) made any representation to the Purchaser regarding the legality of an investment in the Shares under applicable legal investment or similar laws or regulations. In deciding to purchase the Shares, the Purchaser is not relying on the advice or recommendations of the Company and the Purchaser has made its own independent decision that the investment in the Shares is suitable and appropriate for the undersigned.
 
(j)  The Purchaser:  (i) is acquiring the Shares solely for the Purchaser’s own account, and not for or on behalf of other persons; (ii) is acquiring such Shares for investment purposes only, and not for resale or distribution; and (iii) has no contract, agreement, undertaking or arrangement, and no intention to enter into any contract, agreement, undertaking or arrangement, to sell, transfer or pledge such Shares or any part thereof.  Furthermore, the Purchaser does not have any reason to anticipate any change in the Purchaser’s circumstances which would cause the Purchaser to sell the Shares.
 
 
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(k)  The Purchaser understands and acknowledges that the Company is relying upon the representations and agreements contained in this Agreement (and any supplemental information) for the purpose of determining whether this transaction meets the requirements for applicable exemptions from registration under the Federal Securities Act, the State Securities Acts and Other Securities Laws.
 
(l)  The Purchaser hereby expressly represents that it (i) is an “Accredited Investor” within the meaning of Regulation D promulgated pursuant to the Federal Securities Act and (ii) has adequate means of providing for the Purchaser’s current financial needs, including possible future financial contingencies.  The Purchaser is able to bear the economic risks of this investment and, consequently, without limiting the generality of the foregoing, is able to hold the Purchaser’s Shares for an indefinite period of time and has a sufficient net worth to sustain a loss of Purchaser’s entire investment in the Shares.
 
(m)  The Purchaser has such knowledge and experience in financial and business matters that the Purchaser is capable of evaluating the merits and risks of an investment in the Shares.  With the assistance of the undersigned’s own professional advisors, to the extent that the undersigned has deemed appropriate, the undersigned has made its own legal, tax, accounting and financial evaluation of the merits and risks of an investment in the Shares and the consequences of this Agreement. The undersigned has considered the suitability of the Shares as an investment in light of its own circumstances and financial condition and the undersigned is able to bear the risks associated with an investment in the Shares and its authority to invest in the Shares.
 
(n)  The Purchaser understands that the Shares are “restricted securities” under applicable federal securities laws and that the Federal Securities Act and the rules of the U.S. Securities and Exchange Commission (the “Commission”) provide in substance that the undersigned may dispose of the Shares only pursuant to an effective registration statement under the Federal Securities Act or an exemption therefrom, and the undersigned understands that, except as otherwise agreed between the Company and the Purchaser pursuant to the Registration Rights Agreement,  the Company has no obligation or intention to register any of the Shares, or to take action so as to permit sales pursuant to the Federal Securities Act (including Rule 144 (ad defined below) thereunder). Accordingly, the undersigned understands that under the Commission’s rules, the undersigned may dispose of the Shares principally only in “private placements” which are exempt from registration under the Federal Securities Act, in which event the transferee will acquire “restricted securities” subject to the same limitations as in the hands of the undersigned.
 
(o)  The Purchaser agrees:  (i) that the undersigned will not sell, assign, pledge, give, transfer or otherwise dispose of the Shares or any interest therein, or make any offer or attempt to do any of the foregoing, except pursuant to a registration of the Shares under the Federal Securities Act, all applicable State Securities Acts and Other Securities Laws, or in a transaction which is exempt from the registration provisions of the Federal Securities Act, all applicable State Securities Acts and Other Securities Laws; (ii) that the certificates representing the Shares will bear a legend making reference to the foregoing restrictions; and (iii) that the Company and its affiliates shall not be required to give effect to any purported transfer of such Shares (if any) except upon compliance with the foregoing restrictions.
 
 
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(p)  The Purchaser acknowledges that neither the Company nor any other person offered to sell the Shares to it by means of any form of general solicitation or advertising, including but not limited to:  (i) any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio; or (ii) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.
 
(q)  The Purchaser will deliver to the Company any additional information in connection herewith, including the applicable “Know Your Client” information, as may be reasonably requested by counsel to the Company.
 
7.   Representations, Warranties and Covenants of the Company.  The Company hereby represents and warrants to and covenants with the Purchaser as follows:
 
(a)  The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted and as presently proposed to be conducted and to enter into and carry out the provisions of this Agreement and the Registration Rights Agreement.
 
(b)  All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder, and the authorization, issuance (or reservation for issuance), sale and delivery of the Shares being sold hereunder has been taken, and this Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.  Except for the NASDAQ Notice, no consent approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the offer, sale, or issuance of the Shares or the consummation of any other transaction contemplated hereby.
 
(c)  The execution, delivery and performance by the Company of this Agreement, and the consummation of the transactions contemplated thereby, do not and will not conflict with, or result in, a breach or violation of or default under any applicable law or any agreement or instrument to which the Company is a party.
 
(d)  The Shares being purchased by the Purchaser hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of all liens and restrictions on transfer other than restrictions on transfer under this Agreement and under the Federal Securities Act, State Securities Acts and any Other Securities Laws.
 
(e)  As of August 8, 2014, the authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, 19,457,794 of which were issued and
 
 
 
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outstanding as of August 8, 2014.  All issued and outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable. Other than as provided in the SEC Reports (as defined below), there are no outstanding rights, options, warrants, preemptive rights, rights of first refusal or similar rights for the purchase or acquisition from the Company of any securities of the Company nor are there any commitments to issue or execute any such rights, options, warrants, preemptive rights or rights of first refusal.  There are no outstanding rights or obligations of the Company to repurchase or redeem any of its securities. All outstanding securities have been issued in compliance with state and federal securities laws.
 
(f)  SEC Reports.  The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the  Securities Act of 1933, as amended (“Securities Act”) and the Securities Exchange Act of 1933, as amended (“Securities Act” of 1934, as amended (Exchange Act”) (“SEC Reports”) on a timely basis, except for certain beneficial ownership forms which were filed but may not have been timely and an amendment to the Company’s most recent Form10-K which will be filed to include certain disclosures which were also included in the Company’s proxy statement.  The Company’s SEC Reports complied in all material respects with the requirements of the Exchange Act as of their respective dates and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.  Except as disclosed in the SEC Reports, since the last day of the fiscal year of the most recent audited financial statements included in the SEC Reports, there has been no occurrence or event which would reasonably be expected to have a material adverse effect on the financial condition, results of operations, properties or business of the Company.
 
(g)  Financial Statements.  The Company’s audited income statement, balance sheet, and statement of cash flows for the year ended December 30, 2013, included in the Company Annual Report on Form 10-K filed on April 14, 2014 (collectively, the “Financial Statements”) have been prepared in accordance with generally accepted accounting principles consistent with methods used in prior periods, and present fairly the financial condition and operating results of the Company as of the dates and for the periods indicated, subject to normal year-end audit adjustments and except that the unaudited statements included in the Financial Statements may not contain footnotes as would be required by generally accepted accounting principles. Except as disclosed in the Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other person or entity.  The Company maintains a standard system of accounting established and administered in accordance with generally accepted accounting principles.
 
(h)  Shell Company.  The Company is not, and has never been, a “shell company,” as described in paragraphs (i)(1)(i) and (ii) of Rule 144 promulgated under the Securities Act (“Rule 144”).
 
(i)  Liabilities.  Except as disclosed in the SEC Reports, the Company has no material Liabilities (as defined below), except for (Liabilities disclosed in the Financial Statements, (b) Liabilities relating to future executor obligations arising under the Company’s contracts, and (c) Liabilities which have arisen since December 31, 2013 in the ordinary course of business.  As used herein, “Liabilities” shall mean any and all debts, liabilities and
 
 
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obligations, whether known or unknown, absolute or contingent, accrued or unaccrued, disputed or undisputed, matured or unmatured, joint or several, due or to become due, fixed, determined or determinable.
 
8.   Further Assurances.  The Company and the Purchase agree that, from time to time, whether at or after the Closing, each of them will execute and deliver such further instruments of conveyance and transfer and take such other action as may be necessary to carry out the purposes and intents of this Agreement.
 
9.   Survival.  All representations, warranties, covenants, agreements and restrictions contained in this  Agreement shall survive the acceptance of this subscription.
 
10.   Additional Information.  The Purchaser covenants and agrees to promptly furnish to the Company any and all information concerning the Purchaser and the Purchaser’s investment in the Company that the Company may from time to time request for the purpose of complying with any federal, state, local or foreign law, statute, rule, regulation or governmental or regulatory requirement, and the Purchaser warrants and represents that, at the time any such information is furnished to the Company, such information shall be accurate and complete.
 
11.   Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the Company and its successors and shall not be assignable by it without the prior written consent of the Company.  This Agreement, upon acceptance by the Company shall, where applicable, be binding upon the Purchaser and the Purchaser’s successors and assigns.
 
12.   Registration Rights Agreement.  The Company and the Purchaser agree to negotiate in good faith a Registration Rights Agreement (the “Registration Rights Agreement”) within ninety (90) days of the date of this Agreement that would provide the Purchaser with mutually agreeable rights to effect registration of the Shares.
 
13.   Miscellaneous.
 
(a)  This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without reference to its choice of law principles.
 
(b)  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and may be amended only by a writing executed by each of the parties hereto; provided, however, that the Purchaser will not assign its rights or delegate its obligations under this Agreement without the express prior written consent of the Company.
 
(c)  This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together, shall constitute one and the same Agreement.  Counterparts may be executed in either original or electronically transmitted form (e.g. facsimile or emailed portable document format (pdf), and the parties hereby adopt as original any signatures received via electronically transmitted form.
 
 
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(d)  This Stock Purchase Agreement contains the entire understanding of the parties hereto with respect to the subject matter contained herein and therein, and supersedes and cancels all prior agreements, negotiations, correspondence, undertakings and communications of the parties, oral or written, regarding such subject matter.
 
(e)  This Agreement may not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement of any such modification or amendment is sought.  Either party hereto may, only by an instrument in writing, waive compliance by the other party hereto with any term or provision of this Agreement on the part of such party hereto to be performed or complied with.  The waiver by any party hereto of a breach of any term or provision of this Agreement shall not be construed as a waiver of any subsequent breach.
 

 
[SIGNATURE PAGE FOLLOWS]
 
 
 
 
 
 
 
 

 
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[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
 

 
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties as of the day first written above.
 

 
THE PURCHASER:
 
PLAISANCE FUND, LP
 
By:  Janus Capital Management LLC, its
        investment advisor
 
By:  /Daniel Kozlowski/
 
Name: Daniel Kozlowski
 
Title: Vice President
 

 
THE COMPANY:
 
COSI, INC.
 
By:  /Scott Carlock/
 
Name: Scott Carlock
 
Title:  CFO
 

 

 
 



 
EXHIBIT 10.2
 
EXECUTION DOCUMENT
 

 
 
 
COSÌ, INC.
294 Washington Street, Ste. 510
Boston, MA  02108
 
Main Tel:  (847) 597-8800
Website:  www.getcosi.com
Writer’s Information:
Vicki Baue
V. P. & General Counsel, CCO
Tel:  (847) 597-8818
Cell:  (312) 310-1336
Email:  vbaue@getcosi.com
 
 
 
    August 18, 2014  
 
Via Overnight Delivery (w/copy by email)
 
MILFAM II L.P.
222 Lakeview Avenue, Suite 160-365
West Palm Beach, FL  33401
Attn:  Mr. Lloyd I. Miller, III
 
With a copy to:
Andrews Kurth LLP
450 Lexington Avenue
New York, NY  10017
Attn:  Paul N. Silverstein, Esq.
 
Financing Notice - Right of Participation in Financing Transaction by Cosi, Inc.
 
Dear Mr. Miller:
 
This letter serves as the formal Financing Notice regarding your Right of Participation in a Financing Transaction, pursuant to that certain Senior Secured Note Purchase Agreement, dated April 14, 2014 (“MILFAM NPA”), by and among the Company and MILFAM II L.P. (“MILFAM”).  Capitalized terms not otherwise defined herein shall have the meanings set forth in the MILFAM NPA.
 
This Financing Notice confirms the notice provided by R. J. Dourney, CEO & President of the Company, on August 13, 2014, and subsequent conversations with the Company, regarding a Financing Transaction contemplated between the Company and an investment fund managed by Janus Capital Management, LLC (the “Janus Fund”), on the following terms:
 
Purchase of unregistered shares of the common stock of the Company, up to $5,000,000, at a purchase price of $1.15 per share; provided, however, that in no event will the shares issued to the Janus Fund and MILFAM, in the aggregate, meet or exceed 20% of the Company’s outstanding shares, and in no event will the shares issued to either Janus Fund or MILFAM result in such entity owning 20% or more of the Company’s outstanding common stock, or any other transaction requiring shareholder approval.  Under a stock purchase agreement between the Company and Janus, the transaction will close as soon as the Company receives notice from Nasdaq that the Notice of Listing of Additional Shares submission has been “closed”.  Pursuant to your Right of Participation, you may elect to participate in the Financing Transaction on the

 
 
 

 
 
EXECUTION DOCUMENT
 

same terms as negotiated with the Janus Fund, provided that in no event shall you acquire an amount of shares whereby your ownership percentage would meet or exceed 20% of the Company’s outstanding common stock, or otherwise require shareholder approval.  MILFAM has requested that its Right of Participation in this Financing Transaction be transferred to Lloyd I. Miller Trust C, and the Company has agreed to such transfer.
 
This letter also confirms that, on August 18, 2004, you notified the Company that you intend to participate in the Financing Transaction, up to but not to exceed 521,739 shares (the “MILFAM Allocation”), for a purchase price of $1.15 per share, on the same terms and conditions as the stock purchase by the Janus Fund, subject to your due diligence evaluation and review of the proposed stock purchase agreement.
 
By signing below, (a) you hereby acknowledge and agree that this letter will serve as your Participation Notice; (b) you hereby waive any right to increase participation in this Financing Transaction above the MILFAM Allocation; (c) you hereby waive the 30-day notice period to consider whether or not to participate and the amount of your participation pursuant to Section 6(a)(i) of the MILFAM NPA; and (d) you hereby acknowledge that, if you don’t purchase the full amount of the MILFAM Allocation, the Janus Fund has committed to buy any portion of the MILFAM Allocation that you do not purchase.
 
Please sign and return the acknowledgment below if you agree with the foregoing.
 
     Very truly yours,  
 
 
 COSI, INC.  
       
     /s/ Vicki Baue  
       
     Vicki Baue,  
     Vice President  
 
Acknowledged and Agreed
(as of the date set forth above):
 
  LLOYD I. MILLER TRUST C   MILFAM II L.P.  
         
  By: MILFAM LLC   By: MILFAM LLC  
  Its: Investment Advisor   Its: General Partner  
             
   By:
/s/ Lloyd I. Miller III
   By:
/s/ Lloyd I. Miller III
 
   Name:
Lloyd I. Miller III
   Name:
Lloyd I. Miller III
 
   Title:
Manager
   Title:
Manager
 
 
 
 
 
 
 

 


 
EXHIBIT 99.1
CONTACT:  Scott Carlock
(857-415-5020)                                  
 
 
Così, Inc. Enters Agreement to Issue $4,473,055 of Shares of Common Stock
 
BOSTON, MA - August 19, 2014 - Così, Inc. (NASDAQ: COSI), the fast casual restaurant company, today announced that it has entered into a Stock Purchase Agreement ("Stock Purchase Agreement") with a fund managed by Janus Capital Management LLC ("Janus") pursuant to which Janus has agreed to purchase up to 3,889,613 shares of the Company’s Common Stock at a purchase price of $1.15 per share.  The total proceeds to the Company of $4,473,055 will be used for general corporate purposes.  The transaction will close upon the expiration of the 15-day notice period to NASDAQ required for issuances of greater than 10% of the voting stock of a company or such earlier time that NASDAQ may permit.  The Company filed the notice with NASDAQ on August 15, 2014.
 
Milfam II L.P. (“Milfam”), the holder of the Company’s Note Payable, has the right under its Note Purchase Agreement with the Company dated April 17, 2014 to participate in such transaction on the same terms as Janus.  Milfam has indicated that it intends to participate, through an affiliate, by purchasing 521,739 shares of the Company’s Common Stock (the “Milfam Allocation”) at $1.15 per share. If Milfam purchases the Milfam Allocation or any portion thereof, the shares purchased by Janus will be reduced accordingly.  In any event, the Company will issue a total of 3,889,613 shares for a total consideration of $4,473,055.
 
“We are very pleased to receive this funding from Janus and believe that this infusion of stable capital will provide us with funding in the near-term to continue to drive the initiatives that are at the core of our turn-around”, stated RJ Dourney, Cosi CEO and President.  “Going forward, we will continue to evaluate additional sources of growth capital to help fund our longer-term goals in a measured manner.”
 
About Così, Inc.
Così® (http://www.getcosi.com) is a national fast casual restaurant chain that has developed featured foods built around a secret, generations-old recipe for crackly crust flatbread. This artisan bread is freshly baked in front of customers throughout the day in open-flame stone-hearth ovens prominently located in each of the restaurants. Così's warm and urbane atmosphere is geared towards its sophisticated, upscale, urban and suburban guests. There are currently 63 Company-owned and 46 franchise restaurants operating in sixteen states, the District of Columbia, Costa Rica and the United Arab Emirates. The Così® vision is to become America's favorite fast casual restaurant by providing customers authentic, innovative, savory food while remaining an affordable luxury.
 
The Così® menu features Così® sandwiches, freshly-tossed salads, bowls, breakfast wraps, melts, soups, Squagels®, flatbread pizzas, S'mores, snacks and other desserts, and
 
 
 

 
 
a wide range of coffee and coffee-based drinks and other specialty beverages. Così® restaurants are designed to be a welcoming and comfortable environment. Così's sights, sounds, and spaces create a tasteful, relaxed ambience that provides a fresh and new dining experience.
 
"Così," "(Sun & Moon Design)" and related marks are registered trademarks of Così, Inc. in the U.S.A. and certain other countries. Copyright © 2014 Così, Inc. All rights reserved.
 
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This press release contains statements that constitute forward- looking statements under the federal securities laws.  Forward-looking statements are statements about future events and expectations and not statements of historical fact. The words "believe," "may," "will," "should," "anticipate," "estimate," "expect," "intend," "objective," "seek," "plan," "strive," or similar words, or negatives of these words, identify forward- looking statements. We qualify any forward-looking statements entirely by these cautionary factors. Forward-looking statements are based on management's beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to management. Forward-looking statements involve risks and uncertainties that may cause our actual results, performance or financial condition to differ materially from the expectations of future results, performance or financial condition we express or imply in any forward-looking statements. Factors that could contribute to these differences include, but are not limited to: the results being reported in this release are unaudited and subject to change; the cost of our principal food products and supply and delivery shortages and interruptions; labor shortages or increased labor costs; changes in demographic trends and consumer tastes and preferences, including changes resulting from concerns over nutritional or safety aspects of beef, poultry, produce, or other foods or the effects of food-borne illnesses, such as E. coli, "mad cow disease" and avian influenza or "bird flu"; competition in our markets, both in our business and in locating suitable restaurant sites; our operation and execution in new and existing markets; expansion into new markets including foreign markets; our ability to attract and retain qualified franchisees and our franchisees' ability to open restaurants on a timely basis; our ability to locate suitable restaurant sites in new and existing markets and negotiate acceptable lease terms; the rate of our internal growth and our ability to generate increased revenue from our existing restaurants; our ability to generate positive cash flow from existing and new restaurants; fluctuations in our quarterly results due to seasonality; increased government regulation and our ability to secure required government approvals and permits; our ability to create customer awareness of our restaurants in new markets; the reliability of our customer and market studies; cost effective and timely planning, design and build out of restaurants; our ability to recruit, train and retain qualified corporate and restaurant personnel and management; market saturation due to new restaurant openings; inadequate protection of our intellectual property; our ability to obtain additional capital and financing; adverse weather conditions which impact customer traffic at our restaurants; and adverse economic conditions. Further information regarding factors that could affect our results
 
 
 

 
 
and the statements made herein are included in our filings with the Securities and Exchange Commission.
 
 
Additional information is available on Così's website at
http://www.getcosi.com in the investor relations section.