Exhibit 99.1
FORM OF
SUBSCRIPTION AGENT AGREEMENT
November , 2003
American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
Ladies and Gentlemen:
In connection with your appointment as Subscription Agent in the transaction
described herein, pursuant to this Subscription Agent Agreement (this
"Agreement"), Cosi, Inc. (the Company), hereby confirms its arrangements with
you as follows:
1. RIGHTS OFFERING - The Company is offering (the "Rights offering") to
the holders of shares of its Common Stock, par value $0.01 per share
("Common Stock"), on November 24, 2003 (the "Record Date"), the right
("Rights") to subscribe for shares of its Common Stock. Each Right
entitles the holder to subscribe for and purchase a number of shares of
Common Stock having a value equal to an aggregate of $0.6776, at a
purchase price per share equal to the lesser of (i) $1.50 and (ii) 85% of
the weighted average price per share of our common stock as reported on
the Nasdaq National Market for the 15-trading-day period ending three
business days prior to December 19, 2003. Except as set forth under
Paragraphs 8 and 9 below, the Rights shall cease to be exercisable at 5:00
p.m., New York City time, on December 19, 2003 or such later date of which
the Company notifies you orally and confirms in writing (the "Expiration
Date"). One Right is being issued for each share of Common Stock held on
the Record Date. Rights are evidenced by non-transferable rights
certificates in registered form ("Rights Certificates"). Each holder of
Rights Certificate(s) who exercises the holder's right to subscribe for
all shares of Common Stock that can be subscribed for with the Rights
evidenced by such Rights Certificate(s) (the "Basic Subscription Right")
will have the right to subscribe for additional shares of Common Stock, if
any, available as a result of any unexercised Rights (such additional
subscription right being referred to hereafter as the "Over-Subscription
Privilege"). The maximum number of shares for which a holder will be able
to subscribe pursuant to the Over-Subscription Privilege will equal such
holder's pro rata share of the total amount of shares of Common Stock
available for over-subscription. A holder's pro rata share will be based
upon the total number of shares of Common Stock and warrants to purchase
shares of Common Stock owned by such holder compared to the total number
of shares of Common Stock and warrants to purchase shares of Common Stock
owned by (i) all stockholders who exercised their Over-Subscription
privilege and (ii) Eric J. Gleacher, Charles G. Phillips, LJCB Nominees
Pty Ltd and ZAM Holdings, L.P. (collectively, the "Funding Parties"). If
there is an insufficient number of shares of Common Stock remaining unsold
after holders have exercised their basic subscription rights to satisfy in
full all subscriptions received for
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additional shares, you will allocate the available shares among the
holders who exercise their Over-Subscription privilege on a pro rata basis
according to their respective holdings, up to the amount such holder has
subscribed for through the exercise of such holder's over-subscription
privilege. The Rights Offering will be conducted in the manner and upon
the terms set forth in the Company's Prospectus, relating to the Rights
Offering, filed with the Securities and Exchange Commission pursuant to
Rule 424, promulgated under the Securities Act of 1933, as amended, (the
"Prospectus"), which is incorporated herein by reference and made a part
hereof as if set forth in full herein.
2. APPOINTMENT OF SUBSCRIPTION AGENT - You are hereby appointed as
Subscription Agent to effect the Rights Offering in accordance with the
Prospectus. Each reference to you in this letter is to you in your
capacity as Subscription Agent unless the context indicates otherwise.
3. DELIVERY OF DOCUMENTS - Enclosed herewith are the following, the receipt
of which you acknowledge by your execution hereof:
(a) a copy of the Prospectus;
(b) the form of Rights Certificate (with instructions);
(c) resolutions adopted by the Board of Directors of the Company in
connection with the Rights Offering, certified by the secretary of
the Company; and
(d) Notice of Guaranteed Delivery.
As soon as is reasonably practical, you shall mail or cause to be mailed
to each holder of Common Stock at the close of business on the Record Date
a Rights Certificate evidencing the Total Aggregate Share Value for which
such holder is entitled to subscribe, a Notice of Guaranteed Delivery, a
Prospectus and an envelope addressed to you. Prior to mailing, the Company
will provide you with blank Rights Certificates which you will prepare and
issue in the names of holders of Common Stock of record at the close of
business on the Record Date and evidencing the Total Aggregate Share Value
for which they are entitled to subscribe. The Company will also provide
you with a sufficient number of copies of each of the documents to be
mailed with the Rights Certificates.
4. SUBSCRIPTION PROCEDURE -
(a) Upon your receipt prior to 5:00 p.m., New York City time, on the
Expiration Date (by mail or delivery), as Subscription Agent, of (ii) any
Rights Certificate completed and endorsed for exercise, as provided on the
reverse side of the Rights Certificate (except as provided in paragraph 8
hereof), and (ii) payment in full of the Subscription Price in U.S. funds
by check, bank draft or money order payable at par (without deduction for
bank service charges or otherwise) to the order of American Stock Transfer
& Trust Company, you shall as soon as practicable after the Expiration
Date, but after performing the procedures described in subparagraphs (b)
and (c) below, mail to the subscriber's registered address on the books of
the Company certificates representing the securities underlying each Unit
duly subscribed for (pursuant to the Basic Subscription Right and the
Over-Subscription Privilege) and furnish a list of all such information to
the Company.
(b) As soon as reasonably practical following the Expiration Date you
shall calculate the number of shares of Common Stock to which each
subscriber is entitled pursuant to the
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Over-Subscription Privilege. The Over-Subscription Privilege may only be
exercised by holders who fully exercise their Basic Subscription Right.
The maximum amount of shares of Common Stock available pursuant to the
Over-Subscription Privilege shall equal that number of shares, at a price
per share equal to the Subscription Price, having a value equal to $7.5
million reduced by the aggregate value of shares subscribed for pursuant
to the Basic Subscription Right. Where there are sufficient shares of
Common Stock remaining unsold, subject to the limitation described above,
to satisfy all Over-Subscriptions by holders exercising their rights under
the Over-Subscription Privilege, each holder shall be allotted the number
of shares of Common Stock, at the Subscription Price, having a value equal
to the amount subscribed for. If there is an insufficient number of shares
of Common Stock remaining unsold after holders have exercised their basic
subscription rights to satisfy in full all subscriptions received for
additional shares, you will allocate the available shares, subject to the
limitation described above, among the holders who exercise their
Over-Subscription privilege on a pro rata basis according to their
respective holdings, up to the amount such holder has subscribed for
through the exercise of such holder's over-subscription privilege. Any
fractional shares of Common Stock to which persons exercising their
Over-Subscription Privilege would otherwise be entitled pursuant to such
allocation shall be rounded down to the next whole share of Common Stock.
(c) Upon calculating the number of shares of Common Stock to which each
subscriber is entitled pursuant to the Over-Subscription Privilege and the
amount overpaid, if any, by each subscriber, you shall, as soon as
practicable, furnish a list of all such information to the Company.
(d) Upon calculating the number of shares of Common Stock to which each
subscriber is entitled pursuant to the Over-Subscription Privilege and
assuming payment for the additional shares of Common Stock subscribed for
has been delivered, you shall mail, as contemplated in subparagraph (a)
above, the certificates representing the additional securities which the
subscriber has been allotted. If a lesser number of shares of Common Stock
is allotted to a subscriber under the Over-Subscription Privilege than the
subscriber has tendered payment for, you shall remit the difference to the
subscriber without interest or deduction at the same time as certificates
representing the securities allotted pursuant to the Over-Subscription
Privilege are mailed.
(e) Funds received by you pursuant to the Basic Subscription Right and the
Over-Subscription Privilege shall be held by you in a segregated account.
Upon mailing certificates representing the securities and refunding
subscribers for additional shares of Common Stock subscribed for but not
allocated, if any, you shall promptly remit to the Company all funds
received in payment of the Subscription Price for shares of Common Stock
sold in the Rights Offering.
5. DEFECTIVE EXERCISE OF RIGHTS; LOST RIGHTS CERTIFICATES - The Company shall
have the absolute right to reject any defective exercise of Rights or to
waive any defect in exercise. Unless requested to do so by the Company,
you shall not be under any duty to give notification to holders of Rights
Certificates of any defects or irregularities in subscriptions.
Subscriptions will not be deemed to have been made until any such defects
or irregularities have been cured or waived within such time as the
Company shall determine. You shall as soon as practicable return Rights
Certificates with the
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defects or irregularities which have not been cured or waived to the
holder of the Rights. If any Rights Certificate is alleged to have
been lost, stolen or destroyed, you should follow the same procedures
followed for lost stock certificates representing Common Stock you use in
your capacity as transfer agent for the Company's Common Stock.
6. LATE DELIVERY - If prior to 5:00 p.m., New York City time, on the
Expiration Date you receive (i) payment in full of the Subscription Price
for shares of Common Stock being subscribed for and (ii) a guarantee
notice substantially in the form of the Notice of Guaranteed Delivery
delivered with the Rights Certificate, from a financial institution having
an office or correspondent in the United States, or a member firm of any
registered United States national securities exchange or of the National
Association of Securities Dealers, Inc. stating the certificate number of
the Rights Certificate relating to the Rights, the name and address of the
exercising subscriber, the number of Rights represented by the Rights
Certificate held by such exercising subscriber, the aggregate value of
shares of Common Stock being subscribed for pursuant to the Rights and
guaranteeing the delivery to you of the Rights Certificate evidencing such
Rights within three NASDAQ National Market ("NNM") trading days following
the date of the Notice of Guaranteed Delivery, then the Rights may be
exercised even though the Rights Certificate was not delivered to you
prior to 5:00 p.m., New York City time, on the Expiration Date, provided
that within three NNM trading days following the date of the Notice of
Guaranteed Delivery you receive the properly completed Rights Certificate
evidencing the Rights being exercised, with signatures guaranteed if
required.
7. DELIVERY - You shall deliver to the Company copies of the exercised Rights
Certificates in accordance with written directions received from the
Company and shall deliver to the subscribers who have duly exercised
Rights at their registered addresses certificates representing the
securities subscribed for as instructed on the reverse side of the Rights
Certificates.
8. REPORTS - You shall notify the Company by telephone on and before the
close of business on each business day during the period commencing 5
business days after the mailing of the Rights and ending at the Expiration
Date (and in the case of guaranteed deliveries ending three NNM trading
days after the Expiration Date) (a "daily notice"), which notice shall
thereafter be confirmed in writing, of (i) the aggregate value of Rights
exercised on the day covered by such daily notice, (ii) the aggregate
value of Rights subject to guaranteed exercises on the day covered by such
daily notice, (iii) the aggregate value of Rights for which defective
exercises have been received on the day covered by such daily notice, and
(iv) the cumulative total of the information set forth in clauses (i)
through (iii) above. At or before 5:00 p.m., New York City time, on the
first NNM trading day following the Expiration Date you shall certify in
writing to the Company the cumulative total through the Expiration Date of
all the information set forth in clauses (i) through (iii) above. At or
before 10:00 a.m., New York City time, on the fourth NNM trading day
following the Expiration Date you will execute and deliver to the Company
a certificate setting forth the aggregate value of Rights exercised
pursuant to a Notice of Guaranteed Delivery and as to which Rights
Certificates have been timely received. You shall also maintain and update
a listing of holders who have fully or partially exercised their Rights,
and holders who have not exercised their Rights. You shall provide the
Company or its designees with such information compiled by you
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pursuant to this paragraph 9 as any of them shall request.
9. FUTURE INSTRUCTIONS - With respect to notices or instructions to be
provided by the Company hereunder, you may rely and act on any written
instruction signed by any one or more of the following authorized officers
or employees of the Company:
William D. Forrest, Executive Chairman;
Kevin Armstrong, Chief Executive Officer; and
Mark Stickney, Chief Financial Officer.
10. PAYMENT OF EXPENSES - The Company will pay you compensation for acting in
your capacity as Subscription Agent hereunder in the amount of
$___________ plus your reasonable out-of-pocket expenses.
11. COUNSEL - You may consult with counsel satisfactory to you, which may be
counsel to the Company, and the advice or opinion of such counsel shall be
full and complete authorization and protection in respect of any action
taken, suffered or omitted by you hereunder in good faith and in
accordance with such advice or opinion of such counsel.
12. INDEMNIFICATION - The Company covenants and agrees to indemnify and hold
you harmless against any costs, expenses (including reasonable fees of
legal counsel), losses or damages, which may be paid, incurred or suffered
by or to which you may become subject arising from or out of, directly or
indirectly, any claim or liability resulting from your actions as
Subscription Agent pursuant hereto; provided that such covenant and
agreement does not extend to such costs, expenses, losses and damages
incurred or suffered by you as a result of, or arising out of, your own
gross negligence, misconduct or bad faith or that of any employees, agents
or independent contractors used by you in connection with performance of
your duties as Subscription Agent hereunder.
13. NOTICES - Unless otherwise provided herein, all reports, notices and other
communications required or permitted to be given hereunder shall be in
writing and delivered by hand or confirmed telecopy or by first class U.S.
mail, postage prepaid, shall be deemed given if by hand or telecopy, upon
receipt or if by U.S. mail, three business days after deposit in the U.S.
mail and shall be addressed as follows
(a) If to the Company, to:
Cosi, Inc.
242 West 36th Street
New York, NY 10018
Attention: Kevin Armstrong
Telephone: (212) 739-7178
Telecopy: (212) 653-1666
With a copy to:
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Cadwalader, Wickersham & Taft LLP
100 Maiden Lane
New York, NY 10038
Attention: William P. Mills
Telephone: (212) 504-6436
Telecopy: (212) 504-6666
(b) If to you, to:
American Stock Transfer & Trust Company
59 Maiden Lane
New York, N.Y. 10038
Attention: George Karfunkel
Telephone: (718) 921-8200
Telecopy: (718) 236-4588
15. CAPTIONS. The headings in this Agreement are inserted for convenience of
reference only, and shall not affect the interpretation of this Agreement.
16. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which together shall
be considered one and the same agreement. All such counterparts will be
deemed an original, will be construed together and will constitute one and
the same instrument.
17. SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in
force and effect and shall in no way be affected, impaired or invalidated
so long as the economic and legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to
any party. Upon such determination, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated
to the fullest extent possible.
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COSI, INC.
By: _________________________
Name:
Title:
Acknowledged and Agreed:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: _________________________
Name:
Title:
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