EXHIBIT 4.10
August 5, 2003
William D. Forrest
Cosi, Inc.
242 West 36th Street
New York, NY 10018
Ladies and Gentlemen:
Reference is made to the funding letters, dated as of March 31, 2003, from
each of Eric J. Gleacher ("Gleacher"), Charles G. Phillips ("Phillips") and ZAM
Holdings, L.P. ("ZAM Holdings" and, collectively with Gleacher and Phillips, the
"Funding Parties") to Cosi, Inc. (the "Company") pursuant to which the Funding
Parties individually agreed, subject to certain conditions, to provide funding
to the Company (the "Funding Letters").
The Funding Parties and the Company now desire to specify further the
terms, conditions, rights and obligations of the Funding Parties and the Company
with respect to any funding to be provided to the Company by the Funding
Parties, as follows:
1. The Company and each Funding Party (severally, and not jointly) agree
that, if:
(i) the rights offering referenced in the Funding Letters (the "Rights
Offering") is, and remains, abandoned through December 1, 2003;
(ii) the stockholders of the Company do not approve at the Company's next
stockholders meeting each of (a) the conversion feature of the Company's senior
secured promissory note, dated as of March 31, 2003, for the benefit of First
Republic Bank and its potential assignees (including, without limitation,
Gleacher, Phillips and Ziff Investors Partnership, L.P. II) (the "First Republic
Note"); (b) the conversion feature of the Company's senior secured convertible
promissory notes, in the aggregate amount of $1.5 million, for the benefit of
ZAM Holdings, Gleacher and Phillips ("Bridge Notes"); (c) the Investment
Agreement, among the Company, the Funding Parties and LJCB Nominees Pty. Ltd.
("LJCB"), dated as of August 5, 2003 (the "Investment Agreement") and (d) the
consummation and terms of the Rights Offering;
(iii) as a result, inter alia, of the events described in clauses (i) and
(ii) above, the Funding Parties do not provide the funding contemplated by the
Investment Agreement; and
(iv) the Company satisfies certain financial conditions set forth in
Exhibit A attached hereto and so certifies to the satisfaction of such Funding
Party,
then such Funding Party shall provide funding to the Company (the "Funding") by
purchasing from the Company a senior secured promissory note in the principal
amount of (1) for ZAM Holdings, $1,938,480, (2) for Gleacher, $757,605 and (3)
for Phillips, $303,915.
2. The Funding referred to in paragraph 1 above shall be provided on terms
that are mutually agreeable to each Funding Party, on the one hand, and the
Company, on the other hand, and on terms that are reasonable for transactions of
this type taking into consideration, among other factors, the market
capitalization, condition (financial and otherwise) and prospects of the
Company, provided, however, that the maturity date of the senior secured
promissory notes issued pursuant to the Funding shall be January 15, 2005.
3. If the Funding is provided pursuant to the terms of this Letter
Agreement, then the Funding shall supersede any obligations of the Funding
Parties described in the Funding Letters, the Rights Offering Term Sheet
attached to the Funding Letters or the Investment Agreement, and all such
obligations shall be deemed terminated and of no further force or effect.
Notwithstanding the foregoing, any obligations of the Funding Parties with
respect to (i) the First Republic Note and (ii) the Bridge Notes shall remain in
full force and effect.
This letter agreement may be executed in any number of counterparts, each
of which when executed and delivered shall be deemed an original and all of
which counterparts, when taken together, shall be considered one and the same
agreement.
If the foregoing correctly sets forth our understanding as to the matters
covered hereby, please execute and return to the undersigned the enclosed copy
of this letter.
Very truly yours,
/s/ Eric J. Gleacher
----------------------------------------
Eric J. Gleacher
/s/ Charles G. Phillips
----------------------------------------
Charles G. Phillips
ZAM HOLDINGS, L.P.,
by PBK HOLDINGS, INC.,
its General Partner
By: /s/ Fred Fogel
------------------------------------
Name: Fred Fogel
Title: VP
Acknowledged and Agreed to by:
COSI, INC.
By: /s/ William D. Forrest
------------------------------------
Name: William D. Forrest
Title: Executive Chairman