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Exhibit 10.9
 
EXECUTION DOCUMENT (rev)

INDEMNIFICATION AND HOLDBACK AGREEMENT
 
THIS INDEMNIFICATION AND HOLDBACK AGREEMENT (“Agreement”) is made as of the 1st
day of April, 2015, by and between R. J. Dourney (“Holder”) and Cosi, Inc. (the
“Company”).

RECITALS:

WHEREAS, Cosi and Hearthstone Associates, LLC (“HoldCo”) have entered into an
Election to Cause Merger Agreement (the “Election Agreement”) whereby Cosi has
granted HoldCo the right to require Cosi to acquire 100% of the interests in
HoldCo pursuant to a reverse triangular merger of Cosi-Hearthstone Merger Sub,
LLC (“Merger Sub”) with and into HoldCo (the “Merger”), subject to certain
conditions (“Merger Conditions”) as set forth in the Election Agreement;

WHEREAS, at the time the Merger becomes effective (the “Effective Time”), the
Company shall issue and deliver to the owners of HoldCo, including Holder, on a
pro rata basis, an aggregate of 1,790,993 shares of Cosi’s common stock (the
“Merger Shares”) as set forth in more detail in Section 3 of the Election
Agreement; and

WHEREAS, HoldCo has exercised its right under the Election Agreement, and the
parties desire to enter into this Agreement to relating to certain Merger
Conditions.

AGREEMENT:

NOW THEREFORE, for and in consideration of the premises and covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:

1.            Retained Liabilities. In connection with consummation of the
Merger, the parties have agreed that certain liabilities of Holdco and Partners
shall be retained by Holder and will not be transferred and assigned to, or
assumed by, Cosi, directly or indirectly, in the Merger (the “Retained
Liabilities”), as follows:

(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, LLC, which amount is being disputed in good faith by Holder (the
“Northland Claim”).

(b)            Accounts payable and other obligations owed to third parties for
materials, inventory, utilities, supplies, labor or other or other goods and/or
services received by HoldCo or Hearthstone Partners, LLC, a wholly-owned
subsidiary of HoldCo, which are past due as of the closing of the Merger or are
otherwise not in compliance with Section 8(e) of the Election Agreement, in an
amount to be agreed upon by the Company and Holder, which amount will be finally
determined by the parties in their good faith determination following
consummation of the Merger (the “A/P Amounts”)
 
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EXECUTION DOCUMENT (rev)
2.            Escrow and Release. Until resolution of the Retained Liabilities,
the parties agree that the Company will hold in escrow a portion of the Merger
Shares (“Holdback Shares”) which would otherwise be distributed to Holder upon
consummation of the Merger, as follows

(a)            NC Holdback Shares. Merger Shares equal to the amount of
$500,000.00 will be held in escrow by the Company until such time as the
Northland Claim (“NC Holdback Shares”) is finally resolved by payment of any
agreed upon liability or other settlement, as evidenced by proof of payment or
in writing, the NC Holdback Shares will be promptly released to Holder.

(b)            A/P Holdback Shares. Merger Shares equal to the amount of
$500,000.00 will be held in escrow by the Company until such time as the A/P
Amount (the “A/P Holdback Shares”) is finally resolved by payment of any agreed
upon liability or other settlement, as evidenced in writing, the A/P Holdback
Shares will be promptly released to Holder.

3.            Indemnification. Holder shall defend, indemnify and hold harmless
the Company, its subsidiaries and affiliates, and their officers, directors,
members, managers, stockholders, employees, agents, successors and assigns (each
an “Indemnified Party” and 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 Retained Liabilities or the failure of Holder to perform any
obligation of Holder under this Agreement.

4.            Severability. If any provision of this Agreement or the
application of any provision of it to any person or circumstance is held
invalid, unenforceable, or otherwise illegal, the remainder of this Agreement
and the application of the provision to other persons or circumstances shall not
be affected, and the provision so held to be invalid, unenforceable, or
otherwise illegal shall be revised to the extent (and only to the extent)
necessary to make it enforceable, valid, and legal.

5.            Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
its conflict of laws principles.

6.            Notices. The Indemnified Parties shall give the Holder written
notice as soon as practicable of any claim for which such Indemnified Party may
seek indemnification hereunder. The delay or failure to give such notice shall
not affect the Indemnitee’s right to be indemnified under this Agreement, except
to the extent the Holder is actually damaged thereby.
 
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EXECUTION DOCUMENT (rev)
7.            Binding Effect. This Agreement shall be binding on and inure to
the benefit of and be enforceable by the parties to it and their respective
successors (including any direct or indirect successor by purchase, merger,
consolidation, or otherwise to all or substantially all of the Company’s
business or assets or both), assigns, spouses, heirs, and personal and legal
representatives.

8.            Amendment of This Agreement. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties to it. No waiver of any of the provisions of this Agreement shall
operate as a waiver of any other provisions of this Agreement, nor shall any
waiver constitute a continuing waiver. Except as specifically provided in this
Agreement, no failure to exercise or delay in exercising any right or remedy
under it shall constitute a waiver of the right or remedy.

9.            Recitals; Construction. The foregoing recitals are hereby
incorporated into and made a part of this Agreement. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.

10.         Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and all of which taken together shall
constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
indicated above.
 
HOLDER:
 
COMPANY:
     
COSI, INC., a Delaware corporation
         
By:
  
 
By:
    
R. J. Dourney, individually
 
Name:
       
Title:
 

 
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