Exhibit 10.1
FORM OF RESTRICTED STOCK AWARD AGREEMENT
COSI, INC.
2005 OMNIBUS LONG-TERM INCENTIVE PROGRAM
THIS RESTRICTED STOCK AWARD AGREEMENT ("Agreement") dated as of
____________, 20___ (the "Date of Award"), between Cosi, Inc., a Delaware
corporation (the "Company"), and _________________________ (the "Grantee"), is
made pursuant and subject to the provisions of the Company's 2005 Omnibus
Long-Term Incentive Program, as may be amended from time to time (the "Plan"),
which is incorporated herein by reference and made a part hereof. Capitalized
terms not otherwise defined herein have the meanings ascribed to them in the
Plan.
1. Grant of Restricted Stock. Subject to and upon the terms, conditions
and restrictions set forth in this Agreement and in the Plan, the Company hereby
grants to Grantee as of the Date of Award __________________________
(__________) shares of Restricted Stock. The Restricted Stock shall be fully
paid and nonassessable and shall be represented by a certificate registered in
the name of Grantee and bearing a legend referring to the restrictions
hereinafter set forth. The Fair Market Value of Restricted Stock on the Date of
Award is $___________ per share, for an aggregate Fair Market Value of
$_____________.
2. Restrictions on Transfer of Restricted Stock. The shares of Restricted
Stock may not be transferred, sold, pledged, exchanged, assigned or otherwise
encumbered or disposed of by Grantee, except to the Company, until the
restrictions have fully lapsed and the Restricted Stock has fully vested and
become non-forfeitable in accordance with Section 3 below. Notwithstanding the
immediately foregoing sentence, Grantee's interest in the Restricted Stock may
be transferred at any time by will or the laws of decent and distribution,
subject to the terms and conditions of this Agreement and the Plan. Any
purported transfer, encumbrance or other disposition of the Restricted Stock in
violation of this Section 2 shall be null and void, and the other party to any
such purported transaction shall not obtain any rights to or interest in the
Restricted Stock.
3. Lapse of Restrictions and Vesting of Restricted Stock. The restrictions
shall lapse and the Restricted Stock shall vest and become non-forfeitable
according to the following schedule:
(a) 20% on the Date of Award;
(b) 20% on the first anniversary of the Date of Award ("First
Anniversary"), provided that the Grantee remains in the
continuous employ of the Company from and after the Date of
Award and through the First Anniversary;
(c) 20% on the second anniversary of the Date of Award ("Second
Anniversary"), provided that the Grantee remains in the
continuous employ of the Company from and after the Date of
Award and through the Second Anniversary;
(d) 20% on the third anniversary of the Date of Award ("Third
Anniversary"), provided that the Grantee remains in the
continuous employ of the Company from and after the Date of
Award and through the Third Anniversary; and
(e) 20% on the fourth anniversary of the Date of Award ("Fourth
Anniversary"), provided that the Grantee remains in the
continuous employ of the Company from and after the Date of
Award and through the Fourth Anniversary.
(f) Notwithstanding the provisions of Sections 3(a) through (e)
above, the restrictions shall lapse and all of the shares of
Restricted Stock shall immediately become fully vested and
non-forfeitable in the event of any one or more of the
following:
(i) Grantee's death or permanent and total
disability while in the employ of the Company. Grantee's
"permanent and total disability" shall mean: (A)
Grantee's physical or mental disability such that
Grantee is and has been continuously for at least six
(6) months unable to perform the services required to be
performed by Grantee in his or her employment with the
Company, and Grantee is determined to be eligible for
long-term disability benefits under the long-term
disability benefits plan of the Company in effect from
time to time; (B) if the Company does not have a
long-term disability benefits plan then in effect, as
set forth in Section 22(c)(3) of the Internal Revenue
Code of 1986, as amended from time to time (the "Code"),
or any replacement legislation, while in the employ of
the Company;
(ii) Grantee's retirement from service with the
Company, provided that the Compensation Committee of the
Board of Directors of the Company approves immediate
vesting. Grantee will be considered to have retired if
Grantee is age 55 years or older on the date of
termination and if Grantee was employed by the Company
for at least five (5) consecutive years ending on the
date of termination of Grantee's employment with the
Company; and
(iii) Change of Control while Grantee is employed
by the Company. "Change of Control" shall mean the date
on which the earlier of the following events occur: (A)
the acquisition by any entity, person or group (other
than ZAM Holdings, L.P., LJCB Nominees Pty Ltd., ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, or any entity related to any such party) of
beneficial ownership, as that term is defined in Rule
13d-3 under the Securities Exchange Act of 1934, as
amended, of more than 50% of the outstanding capital
stock of the Company entitled to vote for the election
of directors ("Voting Stock"); (b) the merger or
consolidation of the Company with one or more
corporations or other entity as a result of which the
holders of outstanding Voting Stock of the Company
immediately prior to such a merger or consolidation hold
less than 60% of the Voting Stock of the surviving or
resulting corporation or any direct or indirect parent
corporation or entity of such surviving or resulting
entity; (c) the sale or transfer of all or substantially
all of the property of the Company other than to an
entity of which the Company owns at last 80% of the
Voting Stock; or (d) during any period of twenty-four
(24) consecutive months, the individuals who, at the
beginning of such period, constitute the Board of
Directors ("Incumbent Directors") cease for any reason
other than death to constitute at least a majority
thereof, provided, however, that a director who was not
a director at the beginning of such 24-month period
shall be deemed to have satisfied such 24-month
requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or
with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors
either actually (because they were directors at the
beginning of such 24-month period) or through the
operation of this proviso. A Change in Control shall not
include any acquisition in which Grantee is or a member
of the acquiring group or an officer or owner of the
acquiring entity.
4. Leave of Absence. If Grantee is on an approved leave of absence from
the Company, or a recipient of Company-sponsored disability benefits, Grantee
will continue to be considered as employed for purposes of this Agreement. If
Grantee does not return to active employment upon the expiration of such leave
of absence or the expiration of Grantee's Company-sponsored disability benefits,
Grantee will be considered to have voluntarily terminated Grantee's employment.
Notwithstanding anything to the contrary herein, the Company reserves the right
to determine which leaves of absence will be considered as continuing employment
and when Grantee's employment terminates for all purposes under this Agreement.
5. Forfeiture of Restricted Stock. Except as expressly provided in Section
3(f) above, and except as the Compensation Committee of the Board of Directors
of the Company may determine on a case-by-case basis, any shares of Restricted
Stock that have not theretofore become non-forfeitable shall be forfeited if
Grantee ceases to be continuously employed by the Company at any time prior to
the applicable vesting date. In the event of a forfeiture, the certificate(s)
representing the shares of Restricted Stock shall be cancelled.
6. Legend. All certificates representing the Restricted Stock shall have
endorsed thereon the following legends and any other legends as reasonably
determined by the Company:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER STATE OR U. S. FEDERAL
SECURITY LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISTRIBUTED OR
TRANSFERRED, NOR MAY THESE SECURITIES BE TRANSFERRED
ON THE BOOKS OF THE COMPANY, IN THE ABSENCE OF SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
7. Investment Representations. Grantee hereby acknowledges and
agrees with the Company as follows:
The shares of Restricted Stock have not been
registered under the Securities Act of 1933, as
amended from time to time (the "Act") or any state
securities laws, in reliance on Grantee's
representation, hereby confirmed by Grantee, that
Grantee is acquiring the shares of Restricted Stock
for investment and not with any view towards sale or
distribution thereof. Grantee further acknowledges
that any resale of the shares of Restricted Stock is
subject to compliance with the registration
requirements of the Act or with an applicable
exemption from such registration requirements.
8. Dividend, Voting and Other Rights. Except as otherwise provided
in this Agreement, Grantee shall have all of the rights of a shareholder with
respect to the Restricted Stock, including the right to vote such shares and
receive any dividends that may be paid thereon; provided, however, that any
additional shares of common stock that Grantee may become entitled to receive
pursuant to a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, separation or reorganization or any
other change in the capital structure of the Company shall be subject to the
same restrictions as the shares of Restricted Stock. In the event of forfeiture
of the Restricted Stock, Grantee shall have no further rights with respect to
such shares.
9. Retention of Stock Certificate(s) by the Company. The
certificate(s) representing the Restricted Stock shall be held in custody by the
Secretary of the Company or the Secretary's designee until such Restricted Stock
vests pursuant to Section 3 herein.
10. No Employment Contract. Nothing contained in this Agreement
shall confer upon Grantee any right with respect to continuance of employment by
the Company, nor limit or affect in any manner the right of the Company to
terminate the employment or adjust the compensation of Grantee.
11. Taxes and Withholding. The Company shall have the right to
deduct from any compensation due Grantee from the Company any federal, state,
local or foreign taxes required by law to be withheld in connection with the
issuance or vesting of any Restricted Stock pursuant to this Agreement. To the
extent that the amounts payable to Grantee are insufficient for such
withholding, it shall be a condition to the issuance or vesting of the
Restricted Stock, as the case may be, that Grantee shall pay such taxes or make
provisions that are satisfactory to the Company, for the payment thereof.
12. Code Section 83(b) Election. Under Section 83(a) of the Code,
the Fair Market Value of the Restricted Stock on the date the restrictions lapse
and such shares become fully vested and non-forfeitable will be reportable as
ordinary income at that time. Grantee may elect to be taxed at the time the
Restricted Stock is awarded to Grantee, rather than when the restrictions lapse
and the shares become fully vested and non-forfeitable, by filing an election
under Section 83(b) of the Code with the Internal Revenue Service within thirty
(30) days after the Date of Award (the "83(b) Election"). The form for making
the 83(b) Election is attached as Exhibit A hereto. Failure to make this filing
for the 83(b) Election within the thirty (30) day period immediately following
the Date of Award will result in the recognition or ordinary income by Grantee
(in the event that the Fair Market Value of the Restricted Stock increases after
the Date of the Award) as the restrictions lapse and such shares become fully
vested and non-forfeitable. GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE'S SOLE
RESPONSIBILITY, AND NOT THE COMPANY'S, TO FILE A TIMELY ELECTION UNDER CODE
SECTION 83(b). GRANTEE ACKNOWLEDGES THAT GRANTEE IS RELYING SOLELY ON ADVICE
FROM GRANTEE'S OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO
FILE A CODE SECTION 83(b) ELECTION AND NOT ON ADVICE OF THE COMPANY.
13. Compliance with Law. The Company shall make reasonable efforts
to comply with all applicable federal and state securities laws. Notwithstanding
any other provision of this Agreement, the Company shall not be obligated to
issue any Restricted Stock or other securities pursuant to this Agreement if the
issuance thereof would result in a violation of any such law.
14. Amendments. Any amendment to the Plan shall be deemed an
amendment to this Agreement to the extent that the amendment is applicable
hereto; provided, however, that no amendment shall adversely affect the rights
of Grantee under this Agreement without Grantee's consent, except and only to
the extent otherwise expressly authorized in the Plan.
15. Severability. In the event that one or more of the provisions of
this Agreement shall be invalidated for any reason by a court of competent
jurisdiction, any provision so invalidated shall be deemed to be separable from
the other provisions hereof, and the remaining provisions shall continue to be
valid and fully enforceable.
16. Relation to Plan. This Agreement is subject to the terms and
conditions of the Plan. In the event of any inconsistency between the provisions
of this Agreement and the Plan, the Plan shall govern. Capitalized terms used
herein without definition shall have the meanings ascribed to them in the Plan.
The Compensation Committee and the Board, acting pursuant to the Plan, as
constituted from time to time, shall, except as expressly provided otherwise
herein, have the right to determine any questions that arise in connection with
this Agreement.
17. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their successors and assigns.
18. Waiver. The failure of the Company to enforce at any time any
provision of this Agreement shall in no way be construed a waiver of such
provision or any other provision hereof.
19. Governing Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Illinois without
regard to its conflicts of law provisions.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
Company and Grantee as of the date and year first above written.
COMPANY:
COSI, INC., a Delaware corporation
By:
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Name:
--------------------------------
Title:
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The undersigned Grantee hereby (i) accepts the right to receive the
shares of Restricted Stock or other securities covered hereby, subject to the
terms and conditions of the Plan and the terms and conditions hereinabove set
forth, and (ii) accepts, and agrees to, all of the terms and provisions of this
Agreement and the Plan.
GRANTEE:
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Signature
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Print Name
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Social Security Number
Date: ________________________
Note: Do not have this Section 83(b) Election filed unless you wish to pay tax
withholding to Cosi, Inc. at the same time.
EXHIBIT A
ELECTION UNDER SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:
1. The name, address and social security number of the undersigned:
__________________________________________________________________
Social Security No.: __________________________
2. Description of property with respect to which the election is being made:
____________________ shares of common stock of Cosi, Inc.
3. The date on which the property was transferred is
___________________, 20___.
4. The taxable year to which this election relates is calendar year 20___.
5. Nature of restrictions to which the property is subject:
The shares of stock are subject to the provisions of a Restricted Stock
Award Agreement (the "Agreement") between the undersigned and Cosi, Inc.
The shares of stock are subject to forfeiture under the terms of the
Agreement.
6. The fair market value of the property at the time of transfer
(determined without regard to any lapse restriction) was
$______________ per share, for a total of $__________________________.
7. The amount paid by taxpayer for the property was $0.
8. A copy of this statement has been furnished to Cosi, Inc.
Dated: _________________, 20___.
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Taxpayer's Name
Note: A valid Section 83(b) Election must be filed with the IRS within 30 days
of the Date of Award. Accordingly, if you wish to file the Section 83(b)
Election, please submit this signed form for receipt by _______________[1] 2005,
to Cosi, Inc., [Human Resources], ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Facsimile: (847) _____________.
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1 Insert date that is two (2) weeks after the Date of Award.