As filed with the Securities and Exchange
Commission on May 29 , 2015
Registration No. 333- 204135
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
To
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COSÌ,
INC.
(Exact name of registrant as specified in its charter)
Delaware |
06-1393745 |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
294 Washington Street, Suite 510
Boston, Massachusetts 02108
(857) 415-5000
(Address, including zip code, and telephone number, including area code of principal executive offices)
R. J. Dourney
President and Chief Executive Officer
Così, Inc.
294 Washington Street, Suite 510
Boston, Massachusetts 02108
(857) 415-5000
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Please send copies of all communications
to:
William P. Mills, Esq.
Cadwalader, Wickersham & Taft LLP
One World Financial Center
New York, NY 10281
Tel: (212) 504 - 6000
Approximate date of commencement of
proposed sale to the public: As soon as practicable after the Registration Statement is declared effective.
If any of the securities being registered
on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest reinvestment plans, check the following box. o
If this form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement under the earlier effective registration statement for the same offering. o
If this form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. o
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering. o
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of
“accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer |
o |
|
Accelerated Filer |
o |
Non-accelerated filer |
o |
(Do not check if smaller reporting company) |
Smaller Reporting Company |
x |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered | |
Amount to be Registered (1) | |
Proposed Maximum Offering Price Per Share | |
Proposed Maximum Aggregate
Offering Price (2) | |
Amount of Registration Fee |
Common Stock, par value $0.01 per share | |
13,941,372 | |
$2.180 | |
$30,392,190.96 | |
$3,531.57 |
(1) | This registration statement also relates to an indeterminate number of shares of the Registrant’s
common stock that may be issued upon stock splits, stock dividends or similar transactions in accordance with Rule 416 under the
Securities Act of 1933. |
(2) | Estimated
solely for the purpose of calculating the registration fee, and based upon the average of the high and low prices of the Registrant’s
common stock as reported on the NASDAQ Capital Market on May 8, 2015, in accordance with Rule 457(c) under the Securities Act of
1933. |
The Registrant hereby
amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance
with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the
Security and Exchange Commission, acting pursuant to said section 8(a), may determine.
The information in this prospectus
is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer
to buy these securities in any state where the offer or sale is prohibited.
SUBJECT TO COMPLETION, DATED
MAY 29 , 2015
PROSPECTUS
13,941,372
Shares
of Common Stock
This
prospectus relates to the resale by the selling stockholders identified in this prospectus of a total of up to an aggregate of
13,941,372 shares of our common stock. These shares were issued to the selling stockholders pursuant to the agreements described
in this prospectus.
We will
not receive any proceeds from the sale of the shares of common stock by the selling stockholders. We do not know when or in what
amount the selling stockholders may offer the shares for sale.
We have
agreed to pay certain expenses in connection with this registration statement and to indemnify the selling stockholders against
certain liabilities. The selling stockholders will pay all underwriting discounts and selling commissions, if any, in connection
with the sale of the shares of common stock.
The
selling stockholders (or their pledgees, donees, transferees, distributees or successors in interest) may offer and sell or otherwise
dispose of the shares of common stock described in this prospectus from time to time through public or private transactions at
prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. See “Plan of Distribution”
beginning on page 20 for more information about how the selling stockholders may sell or dispose of their shares of common
stock.
The
common stock is traded on the NASDAQ Capital Market (“NASDAQ”) under the symbol “COSI”. On May 4,
2015, the closing sales price of our common stock on NASDAQ was $2.57 per share.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 5 of this prospectus,
in Item 1A of our Annual Report on Form 10-K for the year ended December 29, 2014, and all other information included or incorporated
by reference in this prospectus in its entirety, before you decide whether or not to make an investment in the common stock.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 29 ,
2015.
TABLE OF CONTENTS
As permitted under
the rules of the Securities and Exchange Commission (the “SEC”), this prospectus incorporates important business information
about Così, Inc. that is contained in documents that we file with the SEC but that are not included in or delivered with
this prospectus. You may obtain copies of these documents, without charge, from the website maintained by the SEC at www.sec.gov,
as well as other sources. See “Where You Can Find Additional Information” in this prospectus.
You should rely
only on the information contained in or incorporated by reference into this prospectus. We have not authorized anyone to provide
you with additional or different information from that contained in or incorporated by reference into this prospectus. You should
assume that the information contained in or incorporated by reference into this prospectus is accurate only as of any date on the
front cover of this prospectus or the date of the document incorporated by reference, as applicable, regardless of the time of
delivery of this prospectus. Our business, financial condition, results of operations and prospects may have changed since those
dates. We are not making an offer of these securities in any state where the offer is not permitted.
PROSPECTUS SUMMARY
This summary highlights
information contained in or incorporated by reference into this prospectus. This summary may not contain all of the information
that you should consider before deciding whether or not you should invest in our securities. You should carefully read this prospectus,
including the documents incorporated by reference, which are described under the heading “Incorporation by Reference”
in this prospectus. References in this prospectus to “Così,” “the Company,” “we,” “us”
and “our” refer to Così, Inc., and its consolidated subsidiaries.
Our Company
We are a company that
owns, operates and franchises fast casual (or premium convenience) restaurants which sell high-quality, made-to-order hot and cold
sandwiches on its signature crackly-crust flatbread, freshly-tossed salads, fresh soups, flatbread pizzas, Squagels®,
breakfast wraps, oatmeal, breakfast parfaits and other breakfast items, S’mores and other snacks and desserts, and a variety of
coffees, teas, and specialty beverages, along with soft drinks and other beverages, and in some locations alcoholic beverages.
Our restaurants are located in a wide range of markets and trade areas, including business districts and residential communities
in both urban and suburban locations. We believe that we have created significant brand equity in our markets and that we have
demonstrated the appeal of our concept to a wide variety of customers.
We are a Delaware corporation
organized in 1998. Our principal executive offices are located at 294 Washington Street, Suite 510, Boston, Massachusetts 02108.
Our phone number is (857) 415-5000. More comprehensive information about us and our products is available through our Internet
website at www.getcosi.com. Except for the documents incorporated by reference into this prospectus as described under the heading
“Incorporation by Reference”, the information and other content contained on our website are not incorporated by reference
in this prospectus, and you should not consider them to be a part of this prospectus.
Recent Developments
Private Placement Closed April 10, 2015
On April 10, 2015, we
entered into a Stock Purchase Agreement, or the 2015 SPA, with Trishield Special Situations Master Fund Ltd., which Trishield fund
is managed by Trishield Capital Management LLC, a fund managed by Janus Capital Management, LLC, or Janus, LKCM Micro-Cap Partnership
L.P. and LKCM Private Discipline Master Fund, SPC, both of which LKCM funds are managed by Luther King Capital Management, Goose
Hill Capital LLC, Bigger Capital Fund, LP, and Kenneth Vaughan, which we refer to collectively as the 2015 Purchasers, under which
the Company sold to the 2015 Purchasers, and the 2015 Purchasers purchased from the Company, an aggregate of 7,160,766 unregistered
shares of the Company’s common stock, par value of $0.01 per share, at a purchase price of $2.16 per share, for aggregate
gross proceeds of $15,467,255. We refer to this transaction as the 2015 Transaction. The closing of the 2015 Transaction occurred
on April 10, 2015.
Pursuant
to that certain Senior Secured Note Purchase Agreement dated April 14, 2014, entered into between the Company and Milfam II L.P.,
or Milfam, Milfam had a right to participate in the 2015 Transaction on the same terms as the 2015 Purchasers. Lloyd I. Miller,
III, is the manager of Milfam LLC, the general partner of Milfam, and Milfam LLC is also the investment advisor to the Lloyd I.
Miller Trust C. Mr. Miller is a significant shareholder of the Company through a variety of entities that he manages. On April 24, 2015, Mr.
Miller notified the Company that he would not be participating in the 2015 Transaction.
The Company relied
on the exemption from registration provided for under Section 4(a)(2) of the Securities Act of 1933 based in part on the representations
made by the 2015 Purchasers, including the representations with respect to each 2015 Purchaser’s status as an accredited investor,
as such term is defined in Rule 501(a) under the Securities Act, and the investment intent of each 2015 Purchaser with respect
to the shares of common stock acquired by such 2015 Purchaser pursuant to the 2015 SPA.
Concurrently with
entering into the 2015 SPA, the Company and the 2015 Purchasers entered into a Registration Rights Agreement dated April 10, 2015,
pursuant to which the Company agreed to file a registration statement within 30 days, subject to certain delays or extensions of
time, covering the shares of the Company’s common stock acquired by each of the 2015 Purchasers, as well as unregistered
shares previously acquired by a fund managed by Janus from the Company in August 2014. See “Selling Security Holders –
Securities Transactions– Janus August 2014 Private Placement and Trust C August 2014 Private Placement Transactions”
below for more information about the 2014 Janus and Trust C private placement transactions.
The Company has also
granted substantially equivalent registration rights to other investors in the Company’s securities, including the shares
issued in August 2014 to each of Milfam and Lloyd I. Miller Trust C, as well as the shares issued in April 2015 in connection with
the previously announced Hearthstone Merger. See “Selling Security Holders – Securities Transactions – Acquisition
of Hearthstone Associates, LLC ” below for more information about the Hearthstone Merger.
The Company had also
granted substantially equivalent registration rights to AB Value Partners, L.P., and AB Opportunity Fund LLC, or the AB Entities,
for shares issued in 2014 upon exercise of $.01 warrants that were acquired by the AB Entities in connection with the previously-disclosed Senior Secured Promissory Notes issued by the Company to the AB Entities on May 20, 2014 ; however, those shares have been sold under an exemption from registration
and will not be covered by this registration statement. See “Selling Security Holders – Securities Transactions –
AB Entities May 2014 Note Purchase Transactions” for more information about the note purchase agreements entered into
with the AB Entities.
Acquisition of
Hearthstone Associates, Inc.
On April
1, 2015, we closed the previously announced merger of Hearthstone Associates, LLC, or Hearthstone Associates, with and into a wholly-owned
subsidiary of the Company, with Hearthstone Associates continuing as the surviving entity. We refer to this transaction as the
Hearthstone Merger. Upon completion of the Hearthstone Merger, Hearthstone Associates became a wholly-owned subsidiary of
the Company, and Hearthstone Partners, LLC, or Hearthstone Partners, a wholly-owned subsidiary of Hearthstone Associates, became
an indirect subsidiary of the Company.
On
April 1, 2015, upon completion of the Hearthstone Merger, we acquired through Hearthstone Associates and Hearthstone Partners an
aggregate of approximately $10.8 million of indebtedness. Approximately $5.6 million of the indebtedness was paid after the
closing of the Hearthstone Merger.
In
connection with the Hearthstone Merger, and as a condition of obtaining the consent of the lender to Hearthstone Partners, the
Company agreed to guarantee the obligations of Hearthstone Partners under those certain loan documents (the “Loan Documents”)
entered into by Hearthstone Partners with First Franchise Corporation (the “Lender”), as previously disclosed
in the Company’s filings with the SEC.
Accordingly,
the Company entered into a guaranty in favor of the Lender, pursuant to which the Company placed $5 million in a control account
as cash collateral to secure the Company’s obligations under the guaranty and certain previously disclosed amendments to
the Loan Documents. As of April 1, 2015, the principal balance outstanding under the Loan Documents was approximately $4.7
million.
On
April 1, 2015, as a condition to the Hearthstone Merger, the Company and R. J. Dourney, our CEO and President, entered into the previously disclosed
Indemnification and Holdback Agreement (the “Holdback Agreement”), pursuant to which Mr. Dourney agreed to retain
and indemnify the Company for certain liabilities. The liabilities being retained by Mr. Dourney include: (a) the amount
of $703,718, and all other amounts, if any, relating thereto, arising out or relating to that certain letter agreement dated April
17, 2013, entered into between Northland Securities, Inc., and Hearthstone Associates, which amount is being disputed in good faith
by Hearthstone Associates and Mr. Dourney ( the “Northland Claim”); and (b) accounts payable and other obligations
owed to third parties for materials, inventory, utilities, supplies, labor or other goods and/or services received by Hearthstone
Associates or Hearthstone Partners, which are past due as of the closing of the Hearthstone Merger or are otherwise not in compliance
with the provisions of the previously disclosed Election to Cause Merger Agreement, as amended, or the Election to Cause Merger
Agreement, which amount will be determined in good faith by the Company and Mr. Dourney, following completion of the Hearthstone
Merger (the “A/P Amounts”).
Until
resolution of the retained liabilities, the parties agree that the Company will hold in escrow a portion of the shares (the “Holdback
Shares”), which would otherwise have been distributed to Mr. Dourney upon consummation of the Hearthstone Merger.
For the Northland Claim, the Company has held back shares equal to the amount of $500,000, to be held in escrow by the Company
until such time as the Northland Claim is finally resolved by payment of any agreed upon liability or other settlement, as evidenced
by proof of payment or in writing, at which time those shares will be promptly released to Mr. Dourney. For the A/P Amounts,
the Company has held back shares equal to the amount of $500,000, to be held in escrow by the Company until such time as the A/P
Amounts are finally resolved by payment of any agreed upon liability or other settlement, as evidenced in writing, at which time
those shares will be promptly released to Mr. Dourney.
Under
the Holdback Agreement, Mr. Dourney will defend, indemnify and hold harmless the Company, its subsidiaries and affiliates, and
their officers, directors, members, managers, stockholders, employees, agents, successors and assigns (collectively, the “Indemnified
Parties”), from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities
and damages, and expenses, including, without limitation, reasonable attorneys’ fees and disbursements, incurred by any of
the Indemnified Parties resulting from, consisting of or arising out of or in connection with the Northland Claim and the A/P Amounts
or the failure of Mr. Dourney to perform any of his obligations under the Holdback Agreement.
On
April 1, 2015, upon completion of the Hearthstone Merger and pursuant to the Election to Cause Merger Agreement, an aggregate of
1,790,993 shares of the Company’s common stock, $0.01 par value, were distributed to the owners of Hearthstone Associates,
with the shares being allocated as follows: 1,701,050 shares to R. J. Dourney, currently the Company’s CEO and President,
17,182 shares to Nancy Dourney, Mr. Dourney’s spouse, and 72,761 shares to Richard Bagge, the Company’s
interim CFO from January 22, 2015, to May 14, 2015, and as of May 15, 2015, the Company’s Vice President Real Estate and Development .
THE OFFERING
The following summary describes the principal
terms of the offering.
Common Stock Offered by Selling Stockholders |
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Up to 13,941,372 shares |
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Common Stock Outstanding |
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48,055,397 shares (as of May 11 , 2015) |
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Terms of the Offering |
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The selling stockholders will determine when and how they sell the common stock offered in this prospectus, as described in the “Plan of Distribution”. |
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Use of Proceeds |
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We will not receive any of the proceeds from the sale of the shares of common stock being offered under this prospectus. See “Use of Proceeds”. |
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NASDAQ Capital Market Trading Symbol |
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Our common stock is listed on the NASDAQ Capital Market under the symbol COSI. |
Risk Factors
Before you invest
in our stock, you should be aware that there are risks associated with your
investment, including the risks described in the section captioned “Risk Factors” beginning on page 5 of this
prospectus and the risks set forth in our Annual Report on Form 10-K for our fiscal year ended December 29, 2014, including, without
limitation, the risks related to our growth strategy, risks related to our business and risks related to the food service industry.
You should carefully read and consider the risk factors contained in our Annual Report on Form 10-K and in this prospectus, together
with all of the other information included in or incorporated by reference into this prospectus, before you decide to invest in
shares of our common stock.
Summary
Financial Information
The
selected consolidated financial data presented below should be read in conjunction with our consolidated financial statements and
the notes to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” included in our Annual Report on Form 10-K for the year ended December 29, 2014, which is incorporated herein
by reference.
Our
revenues, net loss and comprehensive loss for the years ended December 29, 2014, December 30, 2013, and December 31, 2012, were
as follows:
| |
Fiscal Year Ended December 29, 2014 | |
Fiscal Year Ended December 30, 2013 | |
Fiscal Year Ended December 31, 2012 |
| |
(In thousands) ($) | |
(In thousands) ($) | |
(In thousands) ($) |
Revenues | |
| | | |
| | | |
| | |
Restaurant net sales | |
| 74,905 | | |
| 83,338 | | |
| 94,757 | |
Franchise fees and royalties | |
| 2,853 | | |
| 2,989 | | |
| 3,195 | |
Total Revenues | |
| 77,758 | | |
| 86,327 | | |
| 97,952 | |
Net Loss and Comprehensive Loss | |
| (16,625 | ) | |
| (11,444 | ) | |
| (4,441 | ) |
RISK
FACTORS
An investment
in our common stock involves a high degree of risk. You should carefully consider the risks described below and the risks set
forth in our Annual Report on Form 10-K for the fiscal year ended December 29, 2014, including, without limitation, the risks
related to our growth strategy, risks related to our business and risks related to the food service industry, together with the
other information included in or incorporated by reference into this prospectus, before making a decision to invest in our common
stock. If any of these risks actually occur, our business, results of operations and financial condition could suffer. In that
case, the market price of our common stock could decline, and you may lose all or part of your investment.
Risks Related to the Offering
The market price of our common stock
may fluctuate significantly, and you could lose all or part of your investment.
The market price of
our common stock could be subject to wide fluctuations in response to numerous factors, some of which are beyond our control.
These factors include, among other things, actual or anticipated variations in our costs of doing business, operating results
and cash flow, the nature and content of our earnings releases and our competitors’ earnings releases, customers, competitors
or markets, changes in financial estimates by securities analysts, business conditions in our markets and the general state of
the securities markets and the market for similar stocks, changes in capital markets that affect the perceived availability of
capital to companies in our industry, governmental legislation or regulation, as well as general economic and market conditions,
such as continued downturns in our economy and recessions.
Risks Related to Our Common Stock
Sales, or the availability for sale,
of substantial amounts of our common stock could adversely affect the value of our common stock.
No prediction can
be made as to the effect, if any, that future sales of our common stock, or the availability of our common stock for future sales,
will have on the market price of our common stock. Sales of substantial amounts of our common stock in the public market and the
availability of shares for future sales could adversely affect the prevailing market price of our common stock. This in turn could
impair our future ability to raise capital through an offering of our equity securities.
There may be future sales or other
dilution of our equity, which may adversely affect the market price of our common stock.
We are not restricted
from issuing additional shares of common stock, including any securities that are convertible into or exchangeable for, or that
represent the right to receive, shares of common stock. The market price of our common stock could decline as a result of sales
of our common stock made after this offering or the perception that such sales could occur.
As described in this
prospectus and in our filings with the Securities and Exchange Commission (“SEC”), recently we issued and sold
shares of our common stock to investors in a private placement that closed on April 10, 2015, and two other private placements
that closed in August 2014, as well as warrants issued in
connection with note purchase transactions
completed in May 2014 and April 2014. We also issued shares of our common stock as consideration in the Hearthstone Merger completed
on April 1, 2015. In addition, we completed a rights offering in December 2014, and have completed rights offerings in the past,
pursuant to which we have issued shares of our common stock. We may issue and sell additional shares of our common stock in private
placements or registered offerings in the future. We also may conduct additional rights offerings in the future pursuant to which
we may issue shares of our common stock.
Provisions in our certificate of
incorporation, our bylaws, and Delaware law could make it more difficult for a third party to acquire us, discourage a takeover,
and adversely affect existing stockholders.
Our amended and restated
certificate of incorporation, our amended and restated bylaws, and the Delaware General Corporation Law contain provisions that
may have the effect of making more difficult, delaying, or deterring attempts by others to obtain control of our company, even
when these attempts may be in the best interests of stockholders. These include provisions for maintaining a classified board
of directors and limiting the stockholders’ powers to remove directors or take action by written consent instead of at a
stockholders’ meeting. Our certificate of incorporation also authorizes our Board of Directors, without stockholder approval,
to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute
the voting power of the holders of our common stock. Delaware law also imposes conditions on certain business combination transactions
with “interested stockholders.”
These provisions and
others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management,
including transactions in which stockholders might otherwise receive a premium for their shares over then-current market prices.
These provisions may also limit the ability of stockholders to approve transactions that they may deem to be in their best interests.
Risks Related to the Hearthstone Merger
We may be unable to successfully
integrate Hearthstone Associates and Hearthstone Partners into our business or realize any synergies that we anticipate.
Achieving the anticipated
benefits of the combination (the “Hearthstone Merger”) with Hearthstone Associates, LLC, and Hearthstone Partners,
LLC, will depend in part upon whether the companies integrate their businesses in an effective and efficient manner. Our ability
to integrate the Hearthstone entities into our business and realize the synergies that we anticipate is subject to a number of
uncertainties, many of which are related to conditions beyond our control, such as general negative economic trends and competition.
The integration of any business may be complex and time-consuming. The difficulties that could be encountered include the following:
• |
integrating personnel, operations and systems, while maintaining focus on promoting existing
and newly acquired restaurants; |
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• |
distraction of management and employees from operations; |
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• |
retaining existing customers and attracting new customers; |
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• |
maintaining business relationships; and |
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• |
inefficiencies associated with the integration of the operations of the combined company. |
An inability to realize
the full extent of any anticipated benefits of the Hearthstone Merger, including anticipated synergies, as well as any delays
encountered in the integration process and realizing such benefits, could have an adverse effect upon the revenues, level of expenses
and operating results of our company, which may adversely affect the value of our common stock.
We will have to fulfill the debt
obligations of the Hearthstone entities and R.J. Dourney. Our failure to meet our debt service obligations could have a material
adverse effect on our business, financial condition and results of operations.
As previously disclosed
in our filings with the SEC, we incurred a substantial amount of indebtedness in connection with completing the Hearthstone Merger
(the “Hearthstone Indebtedness”) and, as a result, the Hearthstone Merger increased our outstanding indebtedness.
The aggregate of the Hearthstone Indebtedness outstanding as of April 1, 2015, when the Hearthstone Merger was completed, was
approximately $10.8 million, of which approximately $5.6 million was paid shortly following the closing of the Hearthstone Merger.
Our increased indebtedness following completion of the Hearthstone Merger could adversely affect our operations and liquidity.
Our level of indebtedness could, among other things:
• |
make it more difficult for us to pay or refinance our debts as they become due during adverse
economic and industry conditions because we may not have sufficient cash flows to make our scheduled debt payments; |
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• |
cause us to use a larger portion of our cash flow to fund interest and principal payments,
reducing the availability of cash to fund our working capital, capital expenditures, research and development and other business
activities; |
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• |
cause us to be less able to take advantage of significant business opportunities, such as
acquisition opportunities, and to react to changes in market or industry conditions; |
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• |
cause us to be more vulnerable to general adverse economic and industry
conditions; |
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• |
decrease our profitability and/or cash flow; |
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• |
cause us to be disadvantaged compared to our competitors with less leverage; and |
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• |
limit our ability to borrow additional monies in the future to fund our working capital, capital
expenditures, research and development and other general corporate purposes. |
In addition, the terms
of the Hearthstone Indebtedness may restrict certain actions by us and our subsidiaries, including financial, affirmative and
negative covenants, including limitations on our ability to incur indebtedness, create liens, and merge, amalgamate and consolidate
with other companies.
A portion of the Hearthstone
Indebtedness that we assumed will bear interest at variable rates that are linked to changing market interest rates. As a result,
an increase in market interest rates would increase our interest exposure and our debt service obligations.
All of our debt obligations, and
any indebtedness incurred in connection with the Hearthstone Merger, will have priority over our common stock with respect to
payment in the event of a liquidation, dissolution or winding up of our company.
In
any liquidation, dissolution or winding up of our company, our common stock would rank below all debt claims against us, including
claims in connection with the indebtedness under the Senior Secured Promissory Note issued by the Company to Milfam II L.P. in
April 2014 and the Senior Secured Promissory Notes issued by the Company to AB Opportunity Fund LLC and AB Value Partners, L.
P. in May 2014, and the Hearthstone Indebtedness acquired in the Hearthstone Merger. As a result, holders of our common stock
will not be entitled to receive any payment or other distribution of assets upon the liquidation or dissolution until after our
obligations to our debt holders and holders of equity securities that rank senior to our common stock have been satisfied.
The issuance of shares of our common
stock in connection with the Hearthstone Merger resulted in the dilution of our equity.
Upon completion of
the Hearthstone Merger on April 1, 2015, we issued 1,790,993 shares of common stock as consideration for the Hearthstone Merger,
which diluted the equity interests of the holders of our common stock.
We may be subject to liabilities
of the Hearthstone entities that are unknown to us, which may have a material adverse effect on our profitability, financial condition
and results of operations and which may result in a decline in the market value of our common stock.
We may be subject
to liabilities of the Hearthstone entities unknown us, which may have a material adverse effect on our business, financial condition
and results of operations and the market value of our common stock after the consummation of the Hearthstone Merger.
We may be unable to retain key employees
of Hearthstone Partners or prevent them from competing with us.
Hearthstone Partners
has been dependent on certain key employees for its economic performance, and none of these key employees are subject to employment
agreements with us at this time. As a result, there can be no assurance that these key employees will continue to be employed
with us. In addition, these key employees are not prohibited from competing with us if they are not employed by us.
Certain of the benefits we expect
from completion of the Hearthstone Merger, including increased revenues and EBITDA, are based on projections and assumptions,
which are uncertain and subject to change.
Certain of the benefits
we expect from the Hearthstone Merger, including increased revenue and EBITDA in 2015, are based on projections and assumptions
that are uncertain and subject to change. These projections and assumptions are based on preliminary information, which may prove
to be inaccurate. There can be no assurance that we will realize the increased revenues and EBITDA or any other benefits we anticipate
following completion of the Hearthstone Merger. The market price of our common stock may decline if the estimates are not realized
or we do not achieve the perceived benefits of the Hearthstone Merger as rapidly or to the extent anticipated.
Hearthstone’s business and
financial performance could be negatively impacted by many factors, which could in turn adversely affect our business, financial
condition and results of operation.
Hearthstone’s
business and the restaurants operated by the Hearthstone entities may be adversely affected by several factors, including, for
example, competition in the restaurant market, seasonality associated with the restaurant business, and general economic uncertainty
or a decrease in consumer confidence. In addition, new restaurants opened by the Hearthstone entities prior to completion of the
Hearthstone Merger may not generate the level of sales that is projected. If these or any other factors were to affect the Hearthstone
entities and their restaurants following the Hearthstone Merger, we could suffer a material adverse effect on our business, financial
condition and results of operations.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This prospectus contains
forward-looking statements, within the meaning of the Federal securities laws, which involve substantial risks and uncertainties.
Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words “outlook,” “believes,” “plans,” “intends,” “expects,”
“goals,” “potential,” “continues,” “may,” “should,” “seeks,” “will,”
“would,” “approximately,” “predicts,” “estimates,” “anticipates” and similar
expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words.
You should read statements that contain these words carefully because they discuss our plans, strategies, prospects and expectations
concerning our business, operating results, financial condition and other similar matters. We believe that it is important to
communicate our future expectations to our investors. There will be events in the future, however, that we are not able to predict
accurately or control. The factors listed under “Risk Factors” in this prospectus and in any documents incorporated
by reference into this prospectus as well as any cautionary language in this prospectus, provide examples of risks, uncertainties
and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements.
Such risks and uncertainties include, among other things, risks and uncertainties related to:
• |
the cost of our principal food products and supply and delivery shortages or 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. C oli, “mad cow disease” and avian influenza or “bird flu”; |
|
|
• |
competition in our markets, both in our business and locating suitable restaurant sites; |
|
|
• |
our operation and execution in new and existing markets; |
|
|
• |
expansion into new markets, including foreign countries; |
|
|
• |
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 new
and 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 governmental 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 new 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; |
• |
adverse economic conditions; and |
|
|
• |
other risks, including those discussed in “Risk Factors” in this prospectus and
incorporated by reference into this prospectus, including from our Annual Report on Form 10-K for the fiscal year ended December
29, 2014. |
Before you invest
in our securities, you should be aware that the occurrence of the events described in these risk factors and elsewhere in this
prospectus under the heading “Risk Factors,” and in any documents incorporated by reference into this prospectus could
have a material adverse effect on our business, results of operations and financial position. Any forward-looking statement made
by us in this prospectus speaks only as of the date on which we make it. Factors or events that could cause our actual results
to differ will emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update
or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except
as required by law. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You
are advised to consult any further disclosures we make on related subjects in the reports we file with the SEC pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
USE OF PROCEEDS
This prospectus relates
to 13,941,372 shares of our common stock which may be sold from time to time by the selling stockholders. We will not receive
any proceeds from the sale of common stock by the selling stockholders.
DETERMINATION OF OFFERING PRICE
This offering is being
made solely to allow the selling stockholders to offer and sell shares of common stock to the public. The selling stockholders
may offer for resale some or all of their shares at the time and price that they choose. On any given day, the price per share
is likely to be based on the market price for our common stock on NASDAQ on the date of sale, unless shares are sold in private
transactions.
Consequently, we cannot
currently make a determination of the price at which shares offered for resale pursuant to this prospectus may be sold.
MARKET INFORMATION
Our
common stock trades on NASDAQ under the trading symbol “COSI.” On May 11 , 2015, there were 9 3 record holders of our common
stock. This number does not include the number of persons or entities that hold stock in nominee or street name through various
brokerage firms, banks and other nominees. On May 27 , 2015, the last closing sale price reported on NASDAQ for our common stock
was $2. 34 per share. Past price performance is not indicative of future price performance.
The
following table sets forth the high and low closing sale prices of our common stock on NASDAQ for the periods indicated:
|
|
Price Range |
|
|
High |
Low |
Fiscal 2012 |
|
|
|
|
|
|
|
First Quarter |
|
$ |
5.00 |
(a) |
$ |
2.60 |
(a) |
Second Quarter |
|
$ |
4.40 |
(a) |
$ |
2.68 |
(a) |
Third Quarter |
|
$ |
3.36 |
(a) |
$ |
2.72 |
(a) |
Fourth Quarter |
|
$ |
3.12 |
(a) |
$ |
2.28 |
(a) |
Fiscal 2013 |
|
|
|
|
|
|
|
First Quarter |
|
$ |
3.68 |
(a) |
$ |
2.76 |
(a) |
Second Quarter |
|
$ |
3.07 |
|
$ |
1.93 |
|
Third Quarter |
|
$ |
2.62 |
|
$ |
2.08 |
|
Fourth Quarter |
|
$ |
2.39 |
|
$ |
1.35 |
|
Fiscal 2014 |
|
|
|
|
|
|
|
First Quarter |
|
$ |
1.70 |
|
$ |
0.99 |
|
Second Quarter |
|
$ |
1.31 |
|
$ |
1.04 |
|
Third Quarter |
|
$ |
2.43 |
|
$ |
1.11 |
|
Fourth Quarter |
|
$ |
1.80 |
|
$ |
1.55 |
|
Fiscal 2015 |
|
|
|
|
|
|
|
First Quarter |
|
$ |
2.81 |
|
$ |
1.59 |
|
Second Quarter (through May 27 , 2015) |
|
$ |
2.78 |
|
$ |
1.96 |
|
(a) | | Denotes a post-reverse stock split price. |
DIVIDEND HISTORY
We have never paid
cash dividends on our common stock, and we do not currently intend to pay any dividends.
DESCRIPTION OF CAPITAL STOCK
The following is
a summary of the material terms of our capital stock. This summary does not purport to be exhaustive and is qualified in its entirety
by reference to our amended and restated certificate of incorporation, amended and restated bylaws and to the applicable provisions
of Delaware law.
General
The following description
of our capital stock and provisions of our amended and restated certificate of incorporation and our amended and restated bylaws
are summaries and are qualified by reference to the amended and restated certificate of incorporation and the amended and restated
bylaws currently in effect. Copies of these documents have been filed with the SEC.
Our authorized capital
stock consists of 140,000,000 shares. The authorized capital stock is divided into 40,000,000 shares of preferred stock, par value
$0.01 per share, and 100,000,000 shares of common stock, par value $0.01 per share. As of May 11 , 2015, we had issued and outstanding
48,055,397 shares of common stock, held by approximately 91 stockholders of record, which does not include persons or entitles
holding stock in nominee or street name. As of May 11 , 2015, approximately 6,250 shares of common stock were reserved for issuance
upon the exercise of employee stock options (of which options to purchase an aggregate of 3,750 shares of common stock currently
were exercisable). Each share of common stock has the same relative rights as, and is identical in all respects with, each other
share of common stock. As of May 11 , 2015, no shares of preferred stock were issued or outstanding.
Common Stock
Holders of common
stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Thus, holders of a majority of the shares of common stock entitled to vote in any election of directors may elect
all of the directors standing for election. Holders of common stock are entitled to receive ratably any dividends that may be
declared by our Board of Directors out of funds legally available for dividends, subject to any preferential dividend rights of
outstanding preferred stock. If we liquidate, dissolve or wind up, the holders of common stock are entitled to receive ratably
all of our assets available after payment of all debts and other liabilities, subject to the prior rights of any outstanding
preferred stock. Holders of common stock
have no preemptive, subscription, redemption or conversion rights or any rights to share in any sinking fund. The rights, preferences
and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares
of any series of preferred stock that we may designate and issue in the future.
Preferred Stock
Our amended and restated
certificate of incorporation authorizes the issuance of up to 40,000,000 shares of preferred stock from time to time in one or
more series and with terms of each series to be stated in our Board’s resolutions providing for the designation and issuance
of that series. Our amended and restated certificate of incorporation also authorizes the Board of Directors to fix, state and
express the powers, rights, designations, preferences, qualifications, limitations and restrictions, and dividend, voting, conversion
and redemption rights pertaining to each series of preferred stock that we issue. Without seeking any stockholder approval, our
Board of Directors may issue preferred stock with voting and other rights that could adversely affect the voting power of the
holders of our common stock and could have the effect of delaying, deferring or preventing a change in control. We have no present
plans to issue any shares of preferred stock.
Anti-Takeover Provisions
Section 203 of the
Delaware General Corporation Law (the “DGCL”) provides that, subject to certain exceptions specified therein,
an “interested stockholder” of a Delaware corporation may not engage in any business combination with the corporation
for a three-year period following the time that such stockholder becomes an “interested stockholder” unless (1) prior
to such time, the board of directors of the corporation approved either the business combination or the transaction which resulted
in the stockholder becoming an “interested stockholder”, (2) upon consummation of the transaction which resulted in
the stockholder becoming an “interested stockholder,” the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding certain shares), or (3) at or subsequent to such
time, the business combination is approved by the board of directors of the corporation and authorized at an annual or special
meeting of stockholders by the affirmative vote of at least 66⅔% of the outstanding voting stock which is not owned
by the “interested stockholder.” Except as otherwise specified in Section 203, an “interested stockholder”
is defined to include (a) any person that is the owner of 15% or more of the outstanding voting stock of the corporation, or is
an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation
at any time within three years immediately prior to the relevant date and (b) the affiliates and associates of any such person.
Under certain circumstances, Section 203 makes it more difficult for a person who would be an “interested stockholder”
to effect various business combinations with a corporation for a three-year period, although the stockholders may elect to exclude
a corporation from the restrictions imposed thereunder. Our amended and restated certificate of incorporation does not exclude
us from the restrictions imposed under Section 203. The provisions of Section 203 may encourage companies interested in acquiring
us to negotiate in advance with our board, since the stockholder approval requirement would be avoided if a majority of the directors
then in office approve either the business combination or the transaction which results in the stockholder becoming an interested
stockholder. These provisions also may have the effect of preventing changes in our management. It is possible that such provisions
could make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
Anti-Takeover Provisions of Our Certificate of Incorporation
and By-laws
General
The provisions of our amended and restated
certificate of incorporation, amended and restated by-laws and Delaware statutory law described in this section may delay or make
it more difficult for someone to acquire
us without the approval of our Board. These provisions could
have the effect of discouraging third parties from making acquisition proposals although such proposals, if made, might be considered
desirable by a majority of our stockholders. These provisions may also have the effect of making it more difficult for third parties
to cause the replacement of our current management without the concurrence of our Board.
Classified Board of Directors
The amended and restated
certificate of incorporation provides for our Board of Directors (other than those directors elected solely by any series of preferred
stock created by resolution of our Board) to be divided into three classes of directors serving staggered three year terms. As
a result, approximately one-third of our Board will be elected each year.
We believe a classified
board will help to assure the continuity and stability of our Board of Directors, and our business strategies and policies as
determined by our Board, because a majority of the directors at any given time will have prior experience as our directors. This
provision should also help to ensure that our Board of Directors, if confronted with an unsolicited proposal from a third party
that has acquired a block of our voting stock, will have sufficient time to review the proposal and appropriate alternatives and
to seek the best available result for all stockholders.
This provision could
prevent a party who acquires control of a majority of our outstanding voting stock from obtaining control of our Board of Directors
until the second annual stockholders’ meeting following the date the acquiror obtains the controlling stock interest, could
have the effect of discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of us
and could thus increase the likelihood that incumbent directors will retain their positions.
Number of Directors; Removal; Vacancies
Our amended and restated
certificate of incorporation and our amended and restated by-laws provide that the number of directors will not be less than three
nor more than fifteen and, except as may be provided in the terms of any series of preferred stock created by resolutions of the
Board of Directors, will be determined from time to time exclusively by a vote of a majority of our Board then in office. Our
amended and restated certificate of incorporation also provides that our Board of Directors has the exclusive right, except as
may be provided in the terms of any series of preferred stock created by resolutions of the Board of Directors, to fill vacancies,
including vacancies created by expansion of our Board. Furthermore, except as may be provided in the terms of any preferred stock
created by resolution of our Board of Directors with respect to the election of directors by the holders of such series, directors
may be removed by stockholders only for cause and only by the affirmative vote of at least 66⅔% of the voting power
of all of the shares of our capital stock then entitled to vote generally in the election of directors, voting together as a single
class.
These provisions,
in conjunction with the provision of the amended and restated certificate of incorporation authorizing our Board of Directors
to fill vacant directorships, could prevent stockholders from removing incumbent directors without cause and filling the resulting
vacancies with their own nominees.
No Stockholder Action by Written Consent; Special Meetings
Our amended and restated
certificate of incorporation provides that, except as may be provided in the terms of any series of preferred stock created by
resolution of our Board of Directors, stockholder action can be taken only at an annual or special meeting of stockholders and
cannot be taken by written consent in lieu of a meeting. Our amended and restated certificate of incorporation also provides that
special meetings of
stockholders can only be called by the
Chairman of the Board or by the Secretary pursuant to a resolution approved by a majority of our Board of Directors then in office.
Stockholders are not permitted to call a special meeting of stockholders.
Approval of Certain Business Combinations
Our amended and restated
certificate of incorporation requires that certain business combinations with a “Related Person” (as such term is defined
in our amended and restated certificate of incorporation) be approved by the affirmative vote of 80% of our outstanding shares
generally entitled to vote for the election of directors, unless (i) the business combination has been approved by two-thirds
of the Board of Directors; or (ii) the amount of consideration to be received in the business combination by the holders of common
stock or any class or series of outstanding voting stock, other than common stock, is equal to the greater of: (a) the highest
per-share price paid by the Related Person for any shares of our stock acquired within the prior two years; or (b) the fair market
value (as such term is defined in our amended and restated certificate of incorporation) of our common stock.
Advance Notice for Raising Business or Making Nominations
at Meetings
Our amended and restated
by-laws establish an advance notice procedure with regard to stockholder proposals and nominations of individuals for election
to the Board of Directors. In general, notice of a stockholder proposal or a director nomination for an annual meeting must be
delivered to us at our executive offices not less than 120 days nor more than 150 days before the date of the anniversary of the
last annual stockholders’ meeting (unless the meeting is to be held more than 30 days in advance of such anniversary date,
in which event the stockholder proposal or director nomination shall be delivered to us no later than the close of business on
the 10th day following the day on which notice of the meeting was given) and must contain specified information and conform to
certain requirements, as set forth in our amended and restated by-laws. Notice of a director nomination for a special meeting
must be received by us no later than the 10th day following the day on which notice of the date of a special meeting of stockholders
was given. If the presiding officer at any stockholders’ meeting determines that a stockholder proposal or director nomination
was not made in accordance with the amended and restated by-laws, we may disregard such proposal or nomination.
The notice of any
nomination for election as a director must set forth the name, age, business and residence address of the person or persons to
be nominated; the business experience during the past five years of such person or persons; including the person’s principal
occupation or employment during such period, the name and principal business of any corporation or other organization in which
such occupation or employment was carried on, and such other information as to the nature of the persons responsibilities and
level of professional competence as may be sufficient to permit assessment of the person’s prior business experience, the
class or series and number of shares of our capital stock beneficially owned by the person and any other information relating
to the person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder.
Amendments to By-Laws
Our amended and restated
certificate of incorporation provides that our Board of Directors or the holders of at least 66⅔% of the voting
power of all shares of our capital stock then entitled to vote generally in the election of directors, voting together as a single
class, have the power to further amend or repeal our amended and restated by-laws.
Amendment of the Certificate of Incorporation
Any proposal to amend,
alter, change or repeal any provision of our amended and restated certificate of incorporation, except as may be provided in the
terms of any preferred stock created by resolution of the Board of Directors and which relate to such series of preferred stock,
requires approval by the affirmative vote of both a majority of the members of the Board of Directors then in office and a majority
vote of the voting power of all of the shares of our capital stock entitled to vote generally in the election of directors, voting
together as a single class. However, any proposal to further amend, alter, change or repeal the provisions of our amended and
restated certificate of incorporation relating to (1) the classification of our Board of Directors, (2) removal of directors,
(3) the prohibitions on stockholder action by written consent or stockholder calls for special meetings, (4) amendment of amended
and restated by-laws, or (5) amendment of the amended and restated certificate of incorporation, requires approval by the affirmative
vote of 66⅔% of the voting power of all of the shares of our capital stock entitled to vote generally in the election
of directors, voting together as a single class; except in the case of any proposal to further amend, alter, change or repeal
the provision of our amended and restated certificate of incorporation relating to business combinations which requires approval
by the affirmative vote of 80% of the voting power of all of the shares of our capital stock entitled to vote generally in the
election of directors, voting together as a single class.
Preferred Stock and Additional Common Stock
Under our amended
and restated certificate of incorporation, our Board of Directors will have the authority to provide by resolution for the issuance
of shares of one or more series of preferred stock. Our Board of Directors is authorized to fix by resolution the terms and conditions
of each such other series.
We believe that the
availability of our preferred stock, in each case issuable in series, and additional shares of common stock could facilitate certain
financings and acquisitions and provide a means for meeting other corporate needs which might arise. The authorized shares of
our preferred stock, as well as authorized but unissued shares of common stock, will be available for issuance without further
action by our stockholders, unless stockholder action is required by applicable law or the rules of any stock exchange on which
any series of our stock may then be listed, or except as may be provided in the terms of any preferred stock created by resolution
of our Board of Directors.
These provisions give
our Board of Directors the power to approve the issuance of a series of preferred stock, or additional shares of common stock,
that could, depending on its terms, either impede or facilitate the completion of a merger, tender offer or other takeover attempt.
For example, the issuance of new shares of preferred stock might impede a business combination if the terms of those shares include
voting rights which would enable a holder to block business combinations or, alternatively, might facilitate a business combination
if those shares have general voting rights sufficient to cause an applicable percentage vote requirement to be satisfied.
NASDAQ Capital Market
Our common stock is traded on NASDAQ under
the symbol “COSI.”
SELLING SECURITY HOLDERS
We are registering
on behalf of the selling stockholders identified below 13,941,372 shares of our common stock. These shares were issued to the
selling stockholders pursuant to the Purchase Agreements, Registration Rights Agreement and Election to Cause Merger Agreement,
each of which are described below. We are required to file this registration statement pursuant to those agreements. See “Securities
Transactions” below for more information about these agreements.
We cannot advise you
as to whether the selling stockholders will in fact sell any or all of such shares of common stock. In addition, the selling stockholders
may sell, transfer or otherwise dispose of, at any time and from time to time, the shares of common stock in transactions exempt
from the registration requirements of the Securities Act after the date as of which the information is set forth on the table
below.
When we refer to “selling
stockholders” in the “Plan of Distribution” section of this prospectus, we mean the persons listed in the table
below, and the pledgees, donees, permitted transferees, distributees, successors in interest and others who later come to hold
any of the selling stockholders’ interests in shares of common stock other than through a public sale.
R. J. Dourney is our
Chief Executive Officer and President and a director on our Board, positions he has held since March 17, 2014. Nancy Dourney is
not currently, and has not been in the past three years, an employee of the Company, but she is the spouse of Mr. Dourney. Mr.
and Mrs. Dourney were one of the Company’s largest franchisees from December 2005, until April 1, 2015, when the Hearthstone
Merger was completed. See “Securities Transactions – Acquisition of Hearthstone Associates” below for more
information about the Hearthstone Merger. Richard Bagge was our interim Chief Financial Officer, from January 22, 2015, to May 14, 2015, and as of May 15, 2015, our Vice President Real Estate and Development . From January 2013 to January 2015, Mr. Bagge was Chief Financial Officer of Hearthstone Associates, LLC, and Hearthstone
Partners, LLC.
Except as set forth
in the foregoing paragraph, none of the selling stockholders holds or has held any position or office, or otherwise has or has
had a material relationship, with us, or any of our predecessors or affiliates, within the past three years other than as a result
of the ownership of common stock.
| |
| |
| |
| |
|
Name of Selling Stockholder | |
Common Stock Beneficially
Owned Prior to the Offering | |
Common Stock Offered Pursuant
to this Prospectus | |
Common Stock Owned Upon
Completion of this Offering (1) | |
Percentage of Common Stock
Owned Upon Completion of this Offering (if greater than 1%) (2) |
| |
| | | |
| | | |
| | | |
| | |
Plaisance Fund, LLC c/o Janus Capital Institutional Advisors (3) | |
| 9,405,129 | | |
| 5,125,483 | | |
| 4,279,646 | | |
| 8.91 | % |
Trishield Special Situations Master Fund Ltd. (4) | |
| 3,761,492 | | |
| 3,761,492 | | |
| --- | | |
| * | |
LKCM Micro-Cap Partnership L.P. (5) | |
| 69,444 | | |
| 69,444 | | |
| --- | | |
| * | |
LKCM Private Discipline Master Fund, SPC (5) | |
| 856,481 | | |
| 856,481 | | |
| --- | | |
| * | |
MILGRAT J10 (6) | |
| 979,179 | | |
| 521,739 | | |
| 457,440 | | |
| * | |
Milfam II L. P. (6) | |
| 1,287,020 | | |
| 1,100,000 | | |
| 187,020 | | |
| * | |
Goose Hill Capital LLC (7) | |
| 527,962 | | |
| 462,962 | | |
| 65,000 | | |
| * | |
Bigger Capital Fund L. P. (8) | |
| 195,078 | | |
| 152,778 | | |
| 42,300 | | |
| * | |
Kenneth Vaughan (9) | |
| 600,000 | | |
| 100,000 | | |
| 500,000 | | |
| 1.0 4 | % |
R. J. Dourney (10) | |
| 2, 733,834 | | |
| 1,701,050 | | |
| 1,032.784 | | |
| 2.15 | % |
Nancy Dourney (10) | |
| 17,182 | | |
| 17,182 | | |
| --- | | |
| * | |
Richard Bagge (11) | |
| 73,661 | | |
| 72,761 | | |
| 900 | | |
| * | |
Total | |
| | | |
| 13,941,372 | | |
| 6,565,090 | | |
| 13. 6 6 | % |
(1) |
We do not know when or in what amounts the selling stockholders may offer shares for sale. The selling stockholders may not sell
any or all of the shares offered by this prospectus. Because the selling stockholders may offer all or some of the shares pursuant
to this prospectus, and because we have been informed by the selling stockholders that there are currently no agreements, arrangements
or understandings with respect to the sale of any of the shares, we cannot estimate the number of shares that will be sold or
that will be held by a selling stockholder after completing of the offering. However, for purposes of this table, we have assumed
that, after completion of the offering, none of the shares covered by this prospectus will be held by any selling stockholder. |
(2) | Ownership percentages are based on
48,055,397 shares of our common stock outstanding on May 11 , 2015. None of the selling
stockholders holds any options. |
(3) | Plaisance Fund LP (“Plaisance”),
is neither a registered broker-dealer nor an affiliate of a registered broker-dealer.
Pursuant to a Form 4 filed with the SEC on April 14, 2015, there are 9,405,129 shares
or 19. 57 % of our common stock beneficially owned directly by Plaisance. Janus
Capital Institutional Advisors LLC (“JCIA”), which serves as the general
partner to Plaisance, may be deemed to share voting and dispositive power over the securities
held by Plaisance, and accordingly, may be deemed to be a beneficial owner of the securities
reported in this Form 4 for purposes of Rule 16a-1(a) of the Securities Exchange Act
of 1934, as amended. In accordance with Instruction 4(b)(iv) of the Form 4, the entire
amount of the Company’s common stock held by Plaisance is reported therein for purposes
of the indirect pecuniary interest of JCIA. |
(4) | Trishield Special Situations Master
Fund Ltd. (“Trishield Special Situations”), is neither a registered
broker-dealer nor an affiliate of a registered broker-dealer. Pursuant to a Form 13G/A
filed with the SEC on April 17, 2015, Trishield Special Situations, Trishield Capital
Management LLC, Alan Jeffrey Buick Jr., and Robert L. Harteveldt have shared voting power
and shared dispositive power over 3,761,492 shares or 7. 88 % of our common stock. |
(5) |
LKCM Micro-Cap Partnership L.P. (“LKCM Micro-Cap”), and LKCM Private Discipline Master Fund, SPC, (“LKCM Private”)
are neither registered broker-dealers nor affiliates of a registered broker-dealer. LKCM Micro-Cap Management, L.P. (“Micro-Cap
Management”) is the general partner of LKCM Micro-Cap. LKCM Private Discipline Management, L.P. (“Private Management”)
is the sole holder of management shares of LKCM Private. LKCM Alternative Management, LLC (“Alternative Management”)
is the general partner of Micro-Cap Management, and Private Management, J. Luther King, Jr. and J. Bryan King are managing members
of Alternative Management. Each of LKCM Micro-Cap and LKCM Private has sole voting and sole dispositive power over the shares
owned by it. |
(6) | MILGRAT J10 and Milfam II L.P. are
neither registered broker-dealers nor affiliates of a registered broker-dealer. According
to notice provided on or about April 30, 2015, on behalf of MILGRAT J10, on March 29,
2015, all 979,179 shares of our common stock held by Lloyd I. Miller Trust C were transferred
to MILGRAT J10. Pursuant to a Form 13D/A filed with the SEC on December 17, 2014, Mr.
Miller beneficially owns and has sole voting and sole dispositive power over an aggregate
of 5,517,127 shares or 11. 48 % of the total shares of our common stock as (i) the manager
of a limited liability company that is the general partner of a certain limited partnership,
(ii) the manager of a limited liability company that is the advisor to a certain trust,
(iii) the manager of a limited liability company, (iv) the trustee to a certain grantor
retained annuity trust, and (v) an individual. Mr. Miller also has shared voting and
shared dispositive power over 19,953 shares or less than 1% of the total shares of our
common stock as an advisor to the trustee of a certain trust. The numbers in this table
do not include the other shares owned by Mr. Miller and his affiliated entities and trusts. |
(7) | Goose Hill Capital LLC (“Goose
Hill”) is neither a registered broker-dealer nor an affiliate of a registered
broker-dealer. Steven D. Heinnaman, Managing Member, has sole voting and sole dispositive
power over the shares held by Goose Hill. |
(8) | Bigger Capital L. P. (“Bigger
Capital”), is neither a registered broker-dealer not an affiliate of a registered
broker-dealer. Bigger Capital Fund GP, LLC, is the General Partner of Bigger Capital,
and Michael Bigger is the Managing Member of the General Partner. Bigger Capital has
sole voting and sole dispositive power over the shares held by Bigger Capital |
(9) | Kenneth Vaughan is neither a registered
broker-dealer nor an affiliate of a registered broker-dealer. The shares are beneficially
owned directly by Mr. Vaughan. |
(10) | R. J. Dourney, our CEO & President and a director on our
Board of Directors, is neither a registered broker-dealer nor an affiliate of a registered broker-dealer.
Pursuant to a Form 4 filed by Mr. Dourney on May 13 , 2015, the shares are beneficially owned
directly by Mr. Dourney. Mr. Dourney may also be deemed to indirectly own 17,182 shares held
in the name of Nancy Dourney, his spouse, as indicated in Note 10 below; however, those shares
are not included in Mr. Dourney’s beneficial numbers reported in this table. |
(10) | Nancy Dourney is neither a registered broker-dealer nor an affiliate
of a registered broker-dealer. The shares are beneficially owned directly by Ms. Dourney. The
shares may be deemed to be indirectly owned by R. J. Dourney, her spouse and the CEO and President
and a director of the Board of our Company. |
(11) | Richard Bagge is neither a registered broker-dealer nor an affiliate
of a registered broker-dealer. Pursuant to a Form 4 filed by Mr. Bagge on April 6, 2015, the
shares are beneficially owned directly by Mr. Bagge. |
Securities Transactions
2015 Private Placement Transaction
On April 10, 2015,
we entered into a Stock Purchase Agreement (the “2015 SPA”) with Trishield Special Situations Master Fund Ltd.,
which Trishield fund is managed by Trishield Capital Management LLC, a fund managed by Janus Capital Management, LLC (“Janus”),
LKCM Micro-Cap Partnership L.P. and LKCM Private Discipline Master Fund, SPC, both of which LKCM funds are managed by Luther King
Capital Management, Goose Hill Capital LLC, Bigger Capital Fund, LP, and Kenneth Vaughan (collectively, the “2015 Purchasers”).
Pursuant to the 2015 SPA, we sold to the 2015 Purchasers an aggregate of 7,160,766 unregistered shares of the Company’s common
stock, par value of $0.01 per share, at a purchase price of $2.16 per share, for aggregate gross proceeds of $15,467,255 (the
“2015 Transaction”). The closing of the 2015 Transaction occurred on April 10, 2015.
The
Company relied on the exemption from registration provided for under Section 4(a)(2) of the Securities Act based in part on the
representations made by the 2015 Purchasers, including the representations with respect to their status an accredited investors,
as such term is defined in Rule 501(a) under the Securities Act, and the investment intent of the 2015 Purchasers with respect
to the shares of common stock issued under the 2015 SPA.
Registration Rights Agreement
Concurrently
with entering into the 2015 SPA, we also entered into a Registration Rights Agreement dated April 10, 2015 (the “Registration
Rights Agreement”), pursuant to which we agreed to file a registration statement covering the shares of the Company’s
common stock acquired by each of the 2015 Purchasers, as well as unregistered shares of the Company’s common stock previously
acquired by a fund managed by Janus from the Company in August 2014, as described below under “Janus
August 2014 Private Placement and Trust C August 2014 Private Placement Transactions”.
Under the terms of
the Registration Rights Agreement, it was agreed that the Company would also include the unregistered shares of common stock previously
issued to the other stockholders identified in the table above.
Acquisition of
Hearthstone Associates, LLC
On March 18, 2014,
we entered into an Election to Cause Merger Agreement, as amended by Amendment No. 1 dated April 1, 2015 (as amended, the “Election
to Cause Merger Agreement”), with Hearthstone Associates, LLC (“Hearthstone Associates”), R. J. Dourney
and Nancy Dourney. Pursuant to the Election to Cause Merger Agreement, Hearthstone Associates had the right to cause the merger
of Hearthstone
Associates with and into a wholly-owned subsidiary of the Company (the “Hearthstone Merger”).
On April 1, 2015, the Hearthstone Merger was completed, and Hearthstone Associates became a wholly-owned subsidiary of the Company,
and Hearthstone Partners, LLC (“Hearthstone Partners”), a wholly-owned subsidiary of Hearthstone Associates,
became an indirect subsidiary of the Company. In consideration of the Hearthstone Merger, an aggregate of 1,790,993 unregistered
shares of the Company’s common stock, $0.01 par value, were distributed to the owners of Hearthstone Associates (the “Holders”),
as follows: 1,701,050 shares to R. J. Dourney, the Company’s CEO and President, 17,182 shares to Nancy Dourney, Mr. Dourney’s
spouse, and 72,761 shares to Richard Bagge, the Company’s interim CFO from January 22, 2015, to May 14, 2015, and currently the Company’s Vice President Real Estate and Development, and formerly the CFO of Hearthstone Associates
and Hearthstone Partners.
Pursuant to the Election
to Cause Merger Agreement, we agreed to file a registration statement covering the shares of the Company’s common stock acquired
by the Holders upon completion of the Hearthstone Merger.
The
Company relied on the exemption from registration provided for under Section 4(a)(2) of the Securities Act based in part on the
representations made by the Holders with respect to their status as accredited investors, as such term is defined in Rule 501(a)
of the Securities Act, and the investment intent of the Holders with respect to the Merger Shares.
Janus
August 2014 Private Placement and Trust C August 2014 Private Placement Transactions
On
August 22, 2014, pursuant to the Stock Purchase Agreement dated August 15, 2014 (the “Janus 2014 SPA”) entered
into with Plaisance Fund, LP, a fund managed by Janus Capital Management LLC (the “Janus Fund”), we sold to the
Janus Fund 3,367,874 unregistered shares of our common stock at a purchase price of $1.15 per share, or an aggregate purchase
price of $3,873,055.
On
August 22, 2014, concurrently with closing of the 2014 Janus 2014 SPA, we entered into a stock purchase agreement with Lloyd I.
Miller Trust C (“Trust C”) on the same terms as the Janus 2014 SPA (the “Trust C 2014 SPA”),
pursuant to which we sold to Trust C 521,739 unregistered shares of our common stock at a purchase price of $1.15 per share, or
an aggregate purchase price of $600,000.
Pursuant to the Janus
2014 SPA and the Trust C 2014 SPA, we agreed to file a registration statement covering the shares of the Company’s common
stock acquired by the Janus Fund and Trust C under those transactions.
The
Company relied on the exemption from registration provided for under Section 4(a)(2) of the Securities Act based in part on the
representations made by the Janus Fund and Trust C, including the representations with respect to their status as accredited investors,
as such term is defined in Rule 501(a) under the Securities Act, and the investment intent of the Janus Fund and Trust C with
respect to the shares of common stock issued under the Janus 2014 SPA and the Trust C 2014 SPA, respectively.
AB
Entities May 2014 Note Purchase Transactions
On May 20, 2014, we
entered into a Senior Secured Note Purchase Agreement (the “AB NPA”), with AB Opportunity Fund LLC (“AB
Opportunity Fund”), and AB Value Partners, L.P. (“AB Value Partners”, together with AB Opportunity Fund,
the “AB Entities”), pursuant to which we sold an aggregate of $2,500,000 in Senior Secured Promissory Notes to
the AB Entities (the “AB Notes”), of which $2,000,000 was sold to AB Opportunity Fund, and $500,000 was sold
to AB Value Partners. As consideration for the AB Notes, we issued warrants to the AB Entities, exercisable to purchase up to
550,000 shares of our common stock at an exercise price per share of $.01 (the “AB Warrants”). On October 14,
2014, the AB Entities fully exercised the AB
Warrants, purchasing an aggregate of 550,000 shares of our common stock using the
cashless exercise method by forfeiting 2,895 shares to pay for the shares in lieu of cash, for net issuance of 547,105 shares
of our common stock the “AB Shares”).
Pursuant to the AB
NPA, we agreed to file a registration statement covering the shares of the Company’s common stock acquired by the AB Entities
upon exercise of the AB Warrants. However, prior to the date hereof, the AB Entities sold all of the AB Shares pursuant to an exemption from the registration requirements of the Securities Act, and the AB Shares are not being covered under this registration statement.
The
Company relied on the exemption from registration provided for under Section 4(a)(2) of the Securities Act based in part on the
representations made by the AB Entities, including the representations with respect to their status an accredited investors, as
such term is defined in Rule 501(a) under the Securities Act, and the investment intent of the AB Entities with respect to the
AB Warrants and the underlying shares of common stock.
Milfam April 2014 Note Purchase Agreement
On April 14, 2014,
we entered into a Senior Secured Note Purchase Agreement (the “Milfam 2014 NPA”) with Milfam II L. P. (“Milfam”),
pursuant to which we sold a $5,000,000 Senior Secured Promissory Note to Milfam (the “Milfam Note”). As consideration
for the Milfam Note, we issued a warrant to Milfam, exercisable to purchase up to 1,100,000 shares of our common stock at an exercise
per share of $.01 (the “Milfam Warrants”). On September 16, 2014, Milfam fully exercised the Milfam Warrants,
purchasing 1,100,000 shares of our common stock for a total purchase price of $11,000.
Pursuant to the Milfam
2014 NPA, we agreed to file a registration statement covering the shares of the Company’s common stock acquired by Milfam
upon exercise of the Milfam Warrants.
The
Company relied on the exemption from registration provided for under Section 4(a)(2) of the Securities Act based in part on the
representations made by Milfam, including the representations with respect to its status an accredited investor, as such term
is defined in Rule 501(a) under the Securities Act, and the investment intent of Milfam with respect to the Milfam Warrants and
the underlying shares of common stock.
Registration Rights
We are required to
file this registration statement pursuant to the 2015 SPA, the Janus 2014 SPA, the Trust C 2014 SPA and the Milfam 2014 NPA (collectively,
the “Purchase Agreements”), the Registration Rights Agreement, and the Election to Cause Merger Agreement, each
as described above.
PLAN OF DISTRIBUTION
We are registering
shares of common stock issued to the selling stockholders under the Purchase Agreements, Registration Rights Agreement and the
Election to Cause Merger Agreement in order to permit the resale of these shares of common stock by the security holders of such
shares from time to time after the date of this prospectus.
Such shares of common
stock were originally issued to the selling stockholders pursuant to an exemption from the registration requirements of the Securities
Act. We agreed to register such shares of common stock pursuant to the Purchase Agreements, Registration Rights Agreement and
Election to Cause Merger Agreement.
We will pay all expenses
incurred by the Company or its subsidiaries in effecting any registration pursuant to the Purchase Agreements and the Registration
Rights Agreement, or in otherwise complying with our obligations under the registration rights provisions of such agreements,
including, without limitation, all registration, filing and listing fees, provided that the selling stockholders will pay any
underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of shares of common stock by them.
We have agreed in the Purchase Agreements, Registration Rights Agreement and Election to Cause Merger Agreement to indemnify the
selling stockholders against specified liabilities, including some liabilities under the Securities Act, and in some circumstances
they may be entitled to contribution. The selling stockholders also have agreed in the Purchase Agreements, Registration Rights
Agreement and Election to Cause Merger Agreement to indemnify us against specified liabilities, including some liabilities under
the Securities Act, and in some circumstances we may be entitled to contribution.
We will not receive
any proceeds from sales of any shares of common stock by the selling stockholders.
We do not know when
or in what amount the selling stockholders may offer the shares for sale. We expect that the offering price for the common stock
will be based on the prevailing market price of the common stock at the time of sale.
The selling stockholders
(or their permitted transferees) may sell all or a portion of the shares of common stock beneficially owned by them and registered
hereby from time to time directly or through one or more underwriters, broker-dealers or agents, and any broker-dealers or agents
may arrange for other broker-dealers or agents to participate in effecting sales of these securities. These underwriters or broker-dealers
may act as principals, or as an agent of a selling stockholder. If the shares of common stock are sold through underwriters or
broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or selling or agent’s
commissions. The shares of common stock may be sold on any national securities exchange or automated interdealer quotation system
on which the shares may be listed or quoted at the time of sale, in the over-the-counter market or in transactions otherwise than
on these exchanges or systems or in the over-the-counter market and in one or more transactions at fixed prices, at prevailing
market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales
may be effected in a variety of transactions, which may involve crosses or block transactions. The selling stockholders may use
any one or more of the following methods when selling shares:
| • | purchases by underwriters, brokers,
dealers, and agents who may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling
stockholders and/or the purchasers of the shares for whom they
may act as agent; |
| • | ordinary brokerage transactions
and transactions in which the broker solicits purchasers; |
| • | one or more block trades in which
a broker or dealer so engaged will attempt to sell the shares
as agent, but may position and resell a portion of the block as
principal to facilitate the transaction, or in crosses in which
the same broker acts as agent on both sides; |
| • | purchases by a broker or dealer
(including a specialist or market maker) as principal and resale
by such broker or dealer for its account pursuant to this prospectus; |
| • | an exchange distribution in accordance
with the rules of any stock exchange on which the shares of common
stock are listed; |
| • | face-to-face privately negotiated
transactions between sellers and purchasers without a broker-dealer; |
| • | an agreement between broker-dealers
and the selling stockholders to sell a specified number of such
shares at a stipulated price per share; |
| • | the pledge of shares as security
for any loan or obligation, including pledges to brokers or dealers
who may from time to time effect distributions of the shares or
other interests in the shares; |
| • | settlement of short sales or transactions
to cover short sales relating to the shares entered into after
the effective date of the registration statement of which this
prospectus is a part; |
| • | distributions to creditors, equity
holders, partners and members of the selling stockholders; |
| • | transactions in options, swaps
or other derivatives (whether listed on an exchange or otherwise); |
| • | sales in other ways not involving
market makers or established trading markets, including direct
sales to institutions or individual purchasers; and |
| • | any combination of the foregoing
or by any other legally available means. |
The selling stockholders
may also transfer the shares of common stock by gift. We do not know of any arrangements by the selling stockholders for the sale
of any of the shares of common stock.
The selling stockholders
also may resell all or a portion of the shares of common stock in open market transactions in reliance upon Rule 144 under the
Securities Act, as permitted by that rule, or Section 4(a)(1) under the Securities Act, if available, rather than under this prospectus,
provided that they meet the criteria and conform to the requirements of those provisions.
Brokers or dealers
engaged by the selling stockholders may arrange for other brokers or dealers to participate in sales. If the selling stockholders
effect such transactions by selling shares of common stock to or through underwriters, brokers, dealers or agents, such underwriters,
brokers, dealers or agents may receive compensation in the form of discounts, concessions or commissions from the selling stockholders.
Underwriters, brokers,
dealers or agents may also receive compensation from the purchasers of shares of common stock for whom they act as agents or to
whom they sell as principals, or both. Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement
to the prospectus contained in the registration statement, in the case of an agency transaction will not be in excess of a customary
brokerage commission in compliance with applicable rules of the Financial Industry Regulatory Authority, Inc.
In connection with
sales of the shares of common stock or otherwise, the selling stockholders (or their permitted transferees) may enter into hedging
transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of shares of common
stock in the course of hedging in positions they assume. The selling stockholders may also sell these securities short, and if
such short sale shall take place after the date that the registration statement is declared effective by the SEC, the selling
stockholders may deliver the securities covered by this prospectus to close out short positions and to return borrowed shares
in connection with such short sales. The selling stockholders may also loan or pledge shares of common stock to broker-dealers
that in turn may sell such securities, to the extent permitted by applicable law. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions or one or more derivative transactions which
require the delivery to such broker-dealer or other financial institution of shares of common stock offered by this prospectus,
which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction). Notwithstanding the foregoing, the selling stockholders have been advised that they may not use
shares of common stock registered on the registration statement to cover short sales of common stock made prior to the date the
registration statement, of which this prospectus forms a part, has been declared effective by the SEC.
Subject to any applicable
company policy, the selling stockholders (or their permitted transferees) pledgees, from time to time, pledge, hypothecate or
grant a security interest in some or all of the shares of common stock registered by the registration statement owned by them
and, if they default in the performance of their secured obligations, the pledgees, secured parties or persons to whom the securities
have been hypothecated may offer and sell such securities from time to time pursuant to this prospectus or any amendment or supplement
to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list
of selling stockholders to include the pledgee, transferee, persons to whom the shares have been hypothecated or other successors
in interest as selling stockholders under this prospectus. The plan of distribution for that selling stockholder’s shares
of common stock will otherwise remain unchanged. The selling stockholders (or their permitted transferees) also may transfer and
donate the shares of common stock in other circumstances in which case the permitted transferees will be the selling beneficial
owners for purposes of this prospectus.
The selling stockholders
(or their permitted transferees) and any broker-dealers or agents participating in the distribution of the shares of common stock
may be deemed to be “underwriters” within the meaning of Section 2(a)(11) of the Securities Act in connection with such
sales. In such event, any profits realized by the selling stockholders and any compensation earned by such broker-dealers or agents
may be deemed to be underwriting commissions or discounts under the Securities Act. Selling stockholders (or their permitted transferees)
who are “underwriters” within the meaning of Section 2(a)(11) of the Securities Act will be subject to the applicable
prospectus delivery requirements of the Securities Act including Rule 172 thereunder and may be subject to certain statutory liabilities
of, including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.
We will make copies
of this prospectus (as it may be amended or supplemented from time to time) available to the selling stockholders (or their permitted
transferees) for the purpose of satisfying any prospectus delivery requirements. Except as otherwise set forth herein, each selling
stockholder has informed us that it is not a registered broker-dealer or is not an affiliate of a registered broker-dealer and
does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute common stock.
Under the securities
laws of some states, the shares of common stock may be sold in such states only through registered or licensed brokers or dealers.
In addition, in some states the shares of common stock may not be sold unless such shares have been registered or qualified for
sale in such state or an exemption from registration or qualification is available and is complied with.
The selling stockholders
(or their permitted transferees) may sell the shares covered by this prospectus from time to time, and may also decide not to
sell all or any of the shares they are allowed to sell under this prospectus.
The selling stockholders
(or their permitted transferees) will act independently of us in making decisions regarding the timing, manner, and size of each
sale. There can be no assurance, however, that all or any of the shares will be offered by the selling stockholders. We know of
no existing arrangements between any selling stockholders and any broker, dealer, finder, underwriter, or agent relating to the
sale or distribution of the securities.
Each selling stockholder
(or its permitted transferees) and any other person participating in such distribution will be subject to applicable provisions
of the Exchange Act and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation
M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling stockholder
and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged
in the distribution of the shares of common stock to engage in market-making activities with respect to
the shares of common stock.
All of the foregoing may affect the marketability of the shares of common stock and the ability of any person or entity to engage
in market-making activities with respect to the shares of common stock.
To the extent permitted
by applicable law, this plan of distribution may be modified in a prospectus supplement or otherwise. All of the foregoing may
affect the marketability of the securities offered hereby.
LEGAL MATTERS
The validity of the
shares of common stock offered by this prospectus have been passed upon for us by Vicki Baue, Esq., the Company’s Vice President
& General Counsel. Ms. Baue beneficially owns or has the right to acquire under employee benefit plans maintained by the Company
an aggregate of less than 1% of the Company’s outstanding common stock.
EXPERTS
The financial statements
as of December 29, 2014, and December 30, 2013, and for each of the three years in the period ended December 29, 2014, incorporated
by reference into this prospectus have been so incorporated in reliance on the report of BDO USA, LLP, an independent registered
public accounting firm, incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting.
INCORPORATION BY
REFERENCE
The SEC allows us to
incorporate by reference information contained in documents we file with it, which means that we can disclose important information
to you by referring you to those documents already on file with the SEC that contain that information. The information incorporated
by reference is considered to be part of this prospectus. The following documents, which have been filed with the SEC pursuant
to the Exchange Act, are incorporated by reference:
• |
our Annual Report on
Form 10-K for the fiscal year ended December 29, 2014, filed with the SEC on March 26, 2015; |
|
|
• |
our Quarterly Report on Form 10-Q for the three months ended March 30, 2015, filed with the SEC on May 14, 2015; |
|
|
• |
our Definitive Proxy
Statement on Schedule 14A, filed with the SEC on April 10, 2015; |
|
|
• |
our Current Reports
on Form 8-K, filed with the SEC on May 21, 2015, April 15, 2015, April 7, 2015, April 6, 2015, March 24, 2015, January 22, 2015, and January
6, 2015; and |
|
|
• |
the description of our
common stock, which is registered under Section 12 of the Securities Exchange Act, contained in our Registration Statement
on Form 8-A (File No. 000-50052) filed with the SEC on October 25, 2002, including any subsequently filed amendments and reports
updating such description. |
You may request copies
of the documents incorporated by reference in this prospectus, at no cost, by writing or telephoning us at:
Così, Inc.
294 Washington Street, Suite 510
Boston, Massachusetts 02108
(857) 415-5000
Attention: Investor Relations Department
AVAILABLE INFORMATION
We file annual, quarterly
and current reports, proxy statements and other information with the SEC. Our filings are available to the public over the Internet
at the SEC’s web site at http://www.sec.gov. You may also read and copy any document we file with the SEC at the SEC’s
Public Reference Room, located at 100 F Street, N.E., Washington, D.C. 20549. You can also obtain copies of the documents at prescribed
rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for further information on the operation of its Public Reference Room. We will also provide you with a copy
of any or all of the reports or documents that have been incorporated by reference into this prospectus or the registration statement
of which it is a part (i) upon written or oral request, and at no cost to you. If you would like to request any reports or documents
from the company, please contact our Investor Relations Department at Così, Inc., 294 Washington Street, Suite 510, Boston,
Massachusetts 02108, (857) 415-5000, or at investorrelations@getcosi.com.
DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us pursuant
to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable. In addition, indemnification may be limited by state securities
laws.
13,941,372
Shares
of Common Stock
PROSPECTUS
May 29 ,
2015
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Distribution
SEC Registration Fee | |
$ | 5,000 | |
Accounting Fees and Expenses* | |
$ | 20,000 | |
Legal Fees and Expenses* | |
$ | 125,000 | |
Transfer Agent Fees | |
$ | 5,000 | |
Miscellaneous Fees and Expenses* | |
$ | 50,000 | |
Total Expenses* | |
$ | 205,000 | |
* |
Estimated solely for the purpose of this Item. Actual expenses may vary. |
Item 14. Indemnification of Directors and Officers
Our amended and restated bylaws provide
that all directors, officers, employees and agents of the registrant shall be entitled to be indemnified by us to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law. Under Section 145 of the Delaware General Corporation law, we
are permitted to offer indemnification to our directors, officers, employees and agents. Our policy is to offer the fullest extent
of indemnification permitted under Delaware law.
Section 145 of the Delaware General Corporation
Law concerning indemnification of officers, directors, employees and agents is set forth below.
“Section 145. Indemnification of
officers, directors, employees and agents; insurance.
(1) A corporation shall
have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of
the corporation) by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action, suit or proceeding if the person acted in good faith
and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably
believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that the person’s conduct was unlawful.
(2) A corporation
shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that the
person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys’ fees) actually and reasonably incurred by the person in connection with the defense or settlement
of
such action or suit if the person acted
in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged
to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other
court shall deem proper.
(3) To the extent
that a present or former director or officer of a corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this section, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such
person in connection therewith.
(4) Any indemnification
under subsections (a) and (b) of this section (unless ordered by a court) shall be made by the corporation only as authorized in
the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper
in the circumstances because the person has met the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made, with respect to a person who is a director or officer at the time of such determination,
(1) by a majority vote of the directors who are not parties to such action, suit or proceeding, even though less than a quorum,
or (2) by a committee of such directors designated by majority vote of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
(5) Expenses (including
attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the corporation as authorized in this section. Such expenses (including attorneys’
fees) incurred by former directors and officers or other employees and agents may be so paid upon such terms and conditions, if
any, as the corporation deems appropriate.
(6) The indemnification
and advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action
in another capacity while holding such office. A right to indemnification or to advancement of expenses arising under a provision
of the certificate of incorporation or a bylaw shall not be eliminated or impaired by an amendment to the certificate of incorporation
or the bylaws after the occurrence of the act or omission that is the subject of the civil, criminal, administrative or investigative
action, suit or proceeding for which indemnification or advancement of expenses is sought, unless the provision in effect at the
time of such act or omission explicitly authorizes such elimination or impairment after such action or omission has occurred.
(7) A corporation shall
have power to purchase and maintain insurance on behalf of any person who is or was director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify
such person against such liability under this section.
(8) For purposes of this section, references
to “the corporation” shall include, in addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the resulting or surviving corporation as such person would have
with respect to such constituent corporation if its separate existence had continued.
(9) For purposes of
this section, references to “other enterprises” shall include employee benefit plans; references to “fines”
shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving
at the request of the corporation” shall include any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner
“not opposed to the best interests of the corporation” as referred to in this section.
(10) The indemnification
and advancement of expenses provided by, or granted pursuant to, this section shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit
of the heirs, executors and administrators of such a person.
(11) The Court of Chancery
is hereby vested with exclusive jurisdiction to hear and determine all actions for advancement of expenses or indemnification brought
under this section or under any bylaw, agreement, vote of stockholders or disinterested directors, or otherwise. The Court of Chancery
may summarily determine a corporation’s obligation to advance expenses (including attorneys’ fees).”
Article VII of our amended bylaws provides:
“Section 7.1. Right to Indemnification.
Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”),
by reason of the fact (a) that he or she is or was a director or officer of the Corporation, or (b) that he or she, being at the
time a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, member,
employee, fiduciary or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service
with respect to an employee benefit plan (collectively, “another enterprise” or “other enterprise”), shall
be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware law as the same exists or may hereafter
be amended (but, in the case of any such amendment, with respect to alleged action or inaction occurring prior to such amendment,
only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto),
against all expense, liability and loss (including, without limitation, attorneys’ and other professionals’ fees and expenses,
claims, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) actually and reasonably incurred or suffered
by such person in connection therewith (“Losses”). Without diminishing the scope of indemnification provided by this
Section 7.1, such persons shall also be entitled to the further rights set forth below.
“Section 7.2. Actions, Suits or Proceedings
Other Than Those By Or In The Right of the Corporation. (a) Subject to the terms and conditions of this Article VII, the Corporation
shall indemnify any person who was or is a party or is threatened to be made a party to any Proceeding (other than an action by
or in the right of the Corporation) by reason of the fact that such person is or was a director, officer or employee of the Corporation,
or, being at the time a director, officer
or employee of the Corporation, is or was serving at the request of the Corporation as a director, officer, member, employee, fiduciary
or agent of another enterprise, against all Losses, actually and reasonably incurred or suffered by such person in connection with
such Proceeding if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was
unlawful. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner reasonably believed
to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable
cause to believe that the conduct was unlawful.
“Section 7.3. Actions, Suits or Proceedings
By Or In The Right Of the Corporation. Subject to the terms and conditions of this Article VII, the Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that such person is or was a director, officer or employee of the Corporation,
or being at the time a director, officer or employee of the Corporation, is or was serving at the request of the Corporation as
a director, officer, member, employee, fiduciary or agent of another enterprise against all Losses actually and reasonably incurred
or suffered by such person in connection with the defense or settlement of such action or suit if such person acted in good faith
and in a manner reasonably believed to be in or not opposed to the best interests of the Corporation except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.”
We have entered into indemnification agreements with certain
of our officers and all the members of our Board of Directors. The indemnification agreements provide for the indemnification,
advancement and reimbursement of certain liabilities and expenses to the fullest extent permitted by law.
Item 15. Recent Sales of Unregistered Securities
Issuance of Shares Upon Closing of
Private Placement Transaction. On April 10, 2015, we issued and sold an aggregate of 7,160,766 unregistered shares of our
common stock, $0.01 par value, at a price of $2.16 per share, for total gross proceeds of $15,467,255, to selling stockholders
identified in the prospectus that is a part of this registration statement, as follows: 1,757,609 shares to Plaisance Fund LLC,
a fund managed by Janus Capital Management, LLC, 3,761,492 shares to Trishield Special Situations Master Fund Ltd., which Trishield
fund is managed by Trishield Capital Management LLC, 69,444 shares to LKCM Micro-Cap Partnership L.P. and 856,481 shares to LKCM
Private Discipline Master Fund, SPC, both of which LKCM funds are managed by Luther King Capital Management, 462,962 shares to
Goose Hill Capital LLC, 152,778 shares to Bigger Capital Fund, LP, and 100,000 shares to Kenneth Vaughan. The shares were issued
in a private placement exempt from registration pursuant to Section 4(a)(2) of the Securities Act, in connection with entering
into the Stock Purchase Agreement dated April 10, 2015.
Issuance of Shares Upon Completion
of Hearthstone Merger. On April 1, 2015, in consideration of closing of the merger of Hearthstone Associates, LLC, which
was merged with and into a wholly-owned subsidiary of the Company, we issued an aggregate of 1,790,993 unregistered shares of our
common stock, $0.01 par value (the “Merger Shares”), to selling stockholders in the prospectus that is a part
of this registration statement, as follows: 1,701,050 shares to R. J. Dourney, 17,182 shares to Nancy Dourney, and 72,761 shares
to Richard Bagge. We did not receive any proceeds from the issuance of the Merger Shares.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
The Exhibits to this registration statement
are listed in the Exhibit Index attached hereto and incorporated herein by reference.
(b) Financial Statement Schedules
Schedules have been omitted because the
information to be set forth therein is not applicable or is shown in the consolidated financial statements or notes incorporated
by reference from the Annual Report on Form 10-K for the year ended December 29, 2014, and Current Report on Form 8-K filed on
March 26, 2015.
Item 17. Undertakings
| (a) | The undersigned registrant hereby undertakes: |
| (1) | To file during any period in which offers or sales are being made, a post-effective amendment to this registration statement; |
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act. |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information
in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set
forth in the “Calculation of Registration Fee” table in the effective registration statement; and |
| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in this registration
statement or any material change to such information in this registration statement. |
| (2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof. |
| (3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold
at the termination of the offering. |
| (4) | That, for the purpose of determining liability under the Securities Act to any purchaser, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or deemed |
incorporated by reference into
the registration statement or prospectus that is a part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.
| (5) | That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution
of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to this offering required to be filed pursuant
to Rule 424; |
| (ii) | Any free writing prospectus relating to this offering prepared by, or on behalf of, the undersigned registrant or used or referred
to by the undersigned registrant; |
| (iii) | The portion of any other free writing prospectus relating to this offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in this offering made by the undersigned registrant to the purchaser. |
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-1 and has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Boston, State of Massachusetts, on the 29 th day of May, 2015.
|
COSI, INC. |
|
|
|
|
By: |
/s/ R. J. Dourney |
|
|
(R. J. Dourney
Chief Executive Officer & President) |
|
|
|
|
By: |
/s/ Miguel Rossy-Donovan |
|
|
( Miguel Rossy-Donovan
Chief Financial Officer) |
POWER OF ATTORNEY
Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement has been signed by the following persons in the capacities indicated below on the 29 th
day of May, 2015.
Signature |
|
Title |
|
|
|
/s/ R. J. Dourney |
|
Chief Executive Officer and President (Principal Executive
Officer), Director |
(R. J. Dourney) |
|
|
|
|
/s/ Miguel Rossy-Donovan |
|
Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer, Principal Accounting Officer) |
( Miguel Rossy-Donovan ) |
|
|
|
|
* |
|
Chairman of the Board |
(Mark Demilio) |
|
|
|
|
* |
|
Director |
(Patrick Bennett) |
|
|
|
|
* |
|
Director |
(Jean Birch) |
|
|
|
|
* |
|
Director |
(Michael Collins) |
|
|
|
|
* |
|
Director |
(David Lloyd) |
|
* By: |
/s/ Vicki Baue |
|
Vicki Baue |
|
as attorney-in-fact |
EXHIBIT INDEX
Number |
|
Title
of Exhibit |
2.1 |
|
Election to Cause Merger Agreement, dated March 18, 2015, by and among Cosi, Inc., Hearthstone Associates, LLC, Robert J. Dourney and Nancy Dourney (Filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K, dated March 21, 2014). |
2.2 |
|
Amendment No. 1 to Election to Cause Merger Agreement, dated as of April 1, 2015, by and among Cosi, Inc., Hearthstone Associates, LLC, Robert J. Dourney and Nancy Dourney (Filed as Exhibit 10.11 to the Company’s Current Report on Form 8-K, dated April 15, 2015, File No. 001-36196). |
3.1 |
|
Amended and Restated Certificate of Incorporation of Così, Inc. (Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the fiscal year ended December 30, 2002). |
3.2 |
|
Amended and Restated By-Laws of Così, Inc. (Incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended October 1, 2007). |
3.3 |
|
Certificate of Designation of Series E Junior Participating Preferred Stock of Cosi, Inc. (Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K dated November 13, 2013). |
3.4 |
|
Certificate of Elimination of Certificate of Designation of Cosi, Inc. (Filed as Exhibit 3.2 to the Company’s Current Report on Form 8-K filed November 13, 2013). |
4.1 |
|
Form of Certificate of Common Stock (Incorporated by reference to Exhibit 4.1 to our Registration Statement on Form S-1 (File No. 333-86390)). |
4.2 |
|
Amended and Restated Registration Agreement, dated as of March 30, 1999 (Incorporated by reference to Exhibit 4.3 to our Registration Statement on Form S-1 (File No. 333-86390)). |
4.3 |
|
Supplemental Registration Rights Agreement, dated as of August 5, 2003, by and among Così, Inc. and the parties thereto (Incorporated by reference to Exhibit 4.4.2 to our Registration Statement on Form S-1 (File No. 333-107689)). |
4.4 |
|
Senior Secured Note Purchase Agreement dated as of April 14, 2014, by Cosi, Inc. in favor of Milfam II L.P. (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated April 17, 2014, File No. 001-36196). |
4.4.1 |
|
Senior Secured Promissory Note dated as of April 14, 2014, by Cosi, Inc. in favor of Milfam II L.P. (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated April 17, 2014, File No. 001-36196). |
4.4.2 |
|
Warrant dated as of April 14, 2014, by Cosi, Inc. in favor of Milfam II L.P. (Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, dated April 17, 2014, File No. 001-36196). |
4.5 |
|
Warrants dated as of May 20, 2014, by Cosi, Inc., one in favor of AB Opportunity Fund LLC and the other in favor of AB Value Partners, L.P. (Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, dated May 23, 2014 (File No. 001-36196). |
4.5.1 |
|
Senior Secured Promissory Notes dated May 20, 2014, by Cosi, Inc., one in favor of AB Opportunity Fund LLC and the other in favor of AB Value Partners, L.P. (Filed as Exhibit 10. 2 to the Company’s Current Report on Form 8-K, dated May 23, 2014, File No. 001-36196). |
4.5.2 |
|
Stock Purchase Agreement dated as of August 15, 2014, by and between Cosi, Inc. and Plaisance Fund, LP (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated August 19, 2014, File No. 001-36196). |
4.5.3 |
|
Stock Purchase Agreement dated as of August 22, 2014, by and between Cosi, Inc. and Lloyd I. Miller Trust C (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated August 26, 2014, File No. 001-36196). |
4.6 |
|
Stock Purchase Agreement dated as of April 10, 2015, by and among Cosi, Inc. and Trishield Special Situations Master Fund Ltd., LKCM Micro-Cap Partnership L.P. and LKCM Private Discipline Master Fund, SPC, funds management by Luther King Capital Management, Goose Hill Capital LLC, Bigger Capital Fund, LP, Ken Vaughan and a fund managed by Janus Capital Management, LLC (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 15, 2015, File No. 001-36196). |
4.6.1 |
|
Registration Rights Agreement dated as of April 10, 2015, by and among Cosi, Inc. and Trishield Special Situations Master Fund Ltd., LKCM Micro-Cap Partnership L.P. and LKCM Private Discipline Master Fund, SPC, funds management by Luther King Capital Management, Goose Hill Capital LLC, Bigger Capital Fund, LP, Ken Vaughan and a fund managed by Janus Capital Management, LLC (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated April 15, 2015, File No. 001-36196). |
5.1 |
|
Opinion of Vicki Baue, Esq., Vice President & General Counsel (Previously filed as Exhibit 5.1 to the Company’s Registration Statement on Form S-1, File No. 333-204135) . |
10.1 |
|
Amended & Restated Cosi, Inc. 2005 Omnibus Long-Term Incentive Plan (Filed as Exhibit B to the Company’s Proxy Statement on Schedule 14A filed on July 18, 2014, File No. 001-36196). |
10.2 |
|
Cosi Non-Employee Director Stock Incentive Plan (Filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-1, File No. 333-86390). |
10.3 |
|
Cosi Sandwich Bar, Inc. Incentive Stock Option Plan (Filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-1, File No. 333-86390). |
10.4.1 |
|
Terms of Employment between Cosi, Inc. and William E. Koziel, effective as of August 17, 2005 as described in the Company’s Current Report on Form 8-K, File No. 000-50052 (Filed on August 23, 2005). |
10.4.2 |
|
Employment agreement, dated as of September 15, 2007 by and between the Company and James F. Hyatt (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated September 18, 2007, File No. 000-50052). |
10.4.3 |
|
General Separation and Release Agreement by and between the Company and Christopher Ames, dated August 26, 2008 (Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2008, File No. 000-50052). |
10.4.4 |
|
General Separation and Release Agreement by and between the Company and Christopher Carroll, dated August 26, 2008 (Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended September 29, 2008, File No. 000-50052). |
10.4.5 |
|
Form of Indemnification Agreement, dated as of December 19, 2008 by and between the Directors and Officers of the Company (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated December 18, 2008, File No. 000-50052). |
10.4.6 |
|
Change in Control Severance Agreement, dated as of December 18, 2008 by and between William Koziel and the Company (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated December 18, 2008, File No. 000-50052). |
10.4.7 |
|
Change in Control Severance Agreement, dated as of December 18, 2008 by and between Vicki Baue and the Company (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated December 18, 2008, File No. 000-50052). |
10.4.8 |
|
Change in Control Severance Agreement, dated as of December 18, 2008 by and between Paul Bower and the Company (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated December 18, 2008, File No. 000-50052). |
10.4.9 |
|
Change in Control Severance Agreement, dated as of December 18, 2008 by and between Becky Iliff and the Company (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated December 18, 2008, File No. 000-50052). |
10.4.10 |
|
First Amendment to Employment Agreement, dated as of December 18, 2008 by and between the Company and James Hyatt (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, dated December 18, 2008, File No. 000-50052). |
10.4.11 |
|
Form of Purchase Agreement, dated as of September 28, 2009, for Jim Hyatt, Bill Koziel, Vicki Baue, Paul Bower, Becky Iliff, Maggie Martensen, Bob Merritt, Creed Ford, Mark Demilio, Karl Okamoto and Mike O’Donnell (Filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-3, File No. 333-162233). |
10.4.12 |
|
General Separation and Release Agreement by and between the Company and James F. Hyatt, dated August 31, 2011 (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated September 1, 2011, File No. 000-50052). |
10.4.13 |
|
Employment Agreement, dated as of September 23, 2011 by and between the Company and Mark Demilio, (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K/A, dated September 23, 2011, File No. 000-50052). |
10.4.14 |
|
Compensatory Agreement, dated as of September 22, 2011 by and between Cosi, Inc. and William E. Koziel, (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated September 23, 2011, File No. 000-50052). |
10.4.15 |
|
Employment Agreement, dated as of December 12, 2011 by and between the Company and Carin L. Stutz, (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated December 14, 2011, File No. 000-50052). |
10.4.16 |
|
Agreement, dated as of December 12, 2011 by and between the Company and Stephen F. Edwards, (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated December 14, 2011, File No. 000-50052). |
10.4.17 |
|
Letter Agreement, dated as of March 17, 2014 by and between the Company and Stephen F. Edwards, (Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, dated March 21, 2014, File No. 001-36196). |
10.4.18 |
|
Employment Agreement, dated as of March 17, 2014 by and between the Company and R.J. Dourney, (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated March 21, 2014, File No. 001-36196). |
10.4.19 |
|
Terms of the employment offer letter by the Company to Scott Carlock, dated July 7, 2014 (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated July 10, 2015, File No. 001-36196). |
10.4.20 |
|
Clarification of grant of unregistered shares of the Company’s common stock to Scott Carlock as a material inducement to enter into employment with the Company (Filed in Current Report on Form 8-K, dated July 25, 2014, File No. 001-36196). |
10.4.21 |
|
Separation Agreement and General Release by and between the Company and Scott Carlock, dated January 21, 2015 (Filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K, dated January 22, 2015, File No. 001-36196). |
10.4.22 |
|
Terms of the employment offer by the Company to Richard Bagge, dated January 22, 2015 (Filed on Current Report on Form 8-K dated January 22, 2015, File No. 001-36196). |
10.5.1 |
|
Foodservice
Distribution Agreement between Cosi, Inc. and Distribution Market Advantage, Inc. dated as of November 1, 2005.
(1) |
10.5.2 |
|
Amendment to Foodservice Distribution agreement between Cosi, Inc. and Distribution Market Advantage, Inc. dated as of May 28, 2010 (Filed as Exhibit 10.6.2 to the Company’s Annual Report on Form 10-K, dated March 28, 2011, File No. 000-50052). |
10.6.1 |
|
Cosi, Inc. Form of Area Developer Franchise Agreement (Filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2005, File No. 000-50052). |
10.6.2 |
|
Cosi, Inc. Form of Area Developer Franchise Agreement (Filed as Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 4, 2005, File No. 000-50052). |
10.7 |
|
Form of Senior Secured Note and Warrant Purchase Agreement (Filed as Exhibit 10.7 to the Company’s Registration on Form S-1, File No. 333-86390). |
10.8 |
|
Securities Purchase Agreement dated as of April 27, 2004 (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 28, 2004, File No. 000-50052). |
10.9 |
|
Form of Restricted Stock Award Agreement (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated June 6, 2005, File No. 000-50052). |
10.10 |
|
Asset Purchase and Sale Agreement, dated April 27, 2010, by and among Cosi, Inc., Cosi Sandwich Bar, Inc., Capitol C Holdings LLC and Capitol C Restaurants LLC. (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 30, 2010, File No. 000-50052) |
10.11 |
|
Master Security Agreement Dated May 9, 2013, by and between Hearthstone Partners, LLC and First Franchise Capital Corporation (Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated April 7, 2015, File No. 001-36196). |
10.12 |
|
Secured Promissory Note dated May 9, 2013, in the amount of $1,633,090, by Hearthstone Partners, LLC in favor of First Franchise Capital Corporation (Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, dated April 7, 2015, File No. 001-36196). |
10.13 |
|
Master Security Agreement Dated May 9, 2013, by and between Hearthstone Partners, LLC and First Franchise Capital Corporation (Filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K, dated April 7, 2015, File No. 001-36196). |
10.14 |
|
Secured Promissory Note dated May 9, 2013, in the amount of $1,721,455, by Hearthstone Partners, LLC in favor of First Franchise Capital Corporation (Filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K dated April 7, 2015, File No. 001-36196). |
10.15 |
|
Master Security Agreement Dated May 9, 2013, by and between Hearthstone Partners, LLC and First Franchise Capital Corporation (Filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K, dated April 7, 2015, File No. 001-36196). |
10.16 |
|
Secured Promissory Note dated May 9, 2013, by Hearthstone Partners, LLC in the amount of $2,045,455 in favor of First Franchise Capital Corporation (Field as Exhibit 10.6 to the Company’s Current Report on Form 8-K dated April 7, 2015, File No. 001-36196). |
10.17 |
|
Guaranty dated March 31, 2015, by Cosi, Inc. in favor of First Franchise Capital Corporation (Filed as Exhibit 10.7 to the Company’s Current Report on Form 8-K dated April 7, 2015, File No. 001-36196). |
10.18 |
|
Master Amendment to Loan Documents dated as of March 31, 2015 between First Franchise Capital Corporation and Hearthstone Partners, LLC (Filed as Exhibit 10.8 to the Company’s Current Report on Form 8-K dated April 7, 2015, File No. 001-36196). |
10.19 |
|
Indemnification and Holdback Agreement dated April 1, 2015 between R.J. Dourney and Cosi, Inc. (Filed as Exhibit 10.9 to the Company’s Current Report on Form 8-K dated April 7, 2015, File No. 001-36196). |
10.20 |
|
Membership Interest Purchase Agreement and LLC Admission, Amendment and Member Consent dated March 31, 2015 among Hearthstone Associates LLC, Richard Bagge, R. J. Dourney and Nancy Dourney (Filed as Exhibit 10.10 to the Company’s Current Report on Form 8-K dated April 7, 2015, File No. 001-36196). |
21.1 |
|
Subsidiaries of Cosi, Inc. (Filed as Exhibit 21.1 to the Company’s Registration Statement on Form S-1, File No. 333-86390). |
23.1 |
|
Consent of BDO USA, LLP, Independent Registered Public Accounting Firm.* |
23.2 |
|
Consent of Vicki Baue, Esq., Vice President & General Counsel (included in Exhibit 5.1, previously filed as Exhibit 5.1 to the Company’s Registration Statement on Form S-1, File No. 333-204135) . |
24.1 |
|
Power of Attorney (included in signature page hereto). |
(1) |
Portions of exhibit 10.5.1 have been omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment. |
Exhibit 23.1
Consent of Independent Registered Public
Accounting Firm
Cosi, Inc.
Boston, Massachusetts
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement, as amended, of our report dated March 26, 2015, relating to the consolidated
financial statements of Cosi, Inc., which is incorporated by reference in the Prospectus.
We also consent to the reference to us under the caption “Experts”
in the Prospectus.
/s/ BDO USA, LLP
Boston, Massachusetts
May 29, 2015