**EXHIBIT 10.5.11**
**Cosi, Inc.**
**Employment Agreement**
     THIS EMPLOYMENT AGREEMENT (“**Agreement**”) is entered into effective as of the 9thday of May, 2005 (the “**Effective Date**”), by and between Cosi, Inc., a Delawarecorporation (“**Cosi**”), and Kevin Armstrong (“**Mr. Armstrong**”).
     Cosi and Mr. Armstrong wish to confirm the terms and conditions upon which Mr.Armstrong agrees to continue to provide services to Cosi as its Chief ExecutiveOfficer and President.
     **Accordingly**, in consideration of the premises and for other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged andagreed, Cosi and Mr. Armstrong hereby agree as follows:
     1. **Duties**.
     (a) **CEO and President**. Cosi hereby agrees to continue to employMr. Armstrong as its Chief Executive Officer (“**CEO**”) and President, and Mr.Armstrong hereby accepts such continued employment and agrees to carry outsuch duties as shall be reasonably requested of him from time to time by theExecutive Chairman and the Board of Directors of Cosi (the “**Board**”), for aterm (the “**Term**”), commencing on the date hereof and continuing untilterminated pursuant to Section 12 below.
     (b) **Board of Directors**. Mr. Armstrong has been elected to theBoard and will continue to serve until his earlier resignation or removal.
     2. **Commitment**. During the Term, Mr. Armstrong shall devote his fullbusiness time and best efforts to his duties as CEO and President and the affairs ofCosi.
     3. **Compensation**. In consideration of the performance by Mr. Armstrongof his duties hereunder, Cosi shall pay or provide to Mr. Armstrong the followingcompensation (along with the benefits set forth in Section 4 below), whichMr. Armstrong agrees to accept in full satisfaction for his services:
     (a) **Annual Base Salary**. Cosi shall pay to Mr. Armstrong,retroactively effective as of January 4, 2005, an annual base salary in thegross amount of Three Hundred Fifty Thousand Dollars ($350,000), payable inbi-weekly installments of Thirteen Thousand Four Hundred Sixty-One Dollars and54/100 ($13,461.54) and net of applicable payroll and withholding taxes inaccordance with Cosi’s regular payroll practices. Mr. Armstrong’s annual basesalary shall be subject to periodic review and adjustment based upon Cosi’sperformance and industry practices.
     (b) **Annual Bonus**. Cosi shall pay to Mr. Armstrong an annualbonus, payable upon achievement of goals agreed upon by Mr. Armstrong and theCompensation Committee of the Board, and targeted at 100% of Mr. Armstrong’sannual base salary, as from time to time in effect.
 

 

     (c) **Initial Restricted Stock****.**Cosi shall grant to Mr. Armstrong300,000 shares of Cosi’s authorized but unissued common stock, $0.01 parvalue, (the “Initial Restricted Stock”), pursuant to the Cosi, Inc. 2005Long-Term Incentive Plan (“LTIP”). The grant of Initial Restricted Stockshall be awarded to Mr. Armstrong on May 9, 2005, pursuant to the LTIP,subject to the terms and conditions of Section 7 of this Agreement andfurther subject to any additional terms and conditions prescribed by theCompensation Committee in the Initial Restricted Stock Award Agreement.
     (d) **Additional Restricted Stock****.**Mr. Armstrong shall be eligibleto receive grants up to, in the aggregate, an additional 800,000 shares ofCosi’s authorized but unissued common stock, $0.01 par value (the “AdditionalRestricted Stock”), pursuant to the LTIP and in accordance with the terms andconditions prescribed by the Compensation Committee. Such grant of AdditionalRestricted Stock shall be awarded to Mr. Armstrong over fiscal years 2006,2007, 2008 and 2009, pursuant to the LTIP, subject to the terms and conditionsof Section 7 of this Agreement and further subject to any additionalterms and conditions prescribed by the Compensation Committee in theAdditional Restricted Stock Award Agreement.
     (e) **Expenses**. Cosi shall pay directly or reimburse Mr. Armstrongfor all reasonable out-of-pocket expenses incurred by Mr. Armstrong inconnection with his performance of services hereunder, provided that all suchexpenses are properly documented in accordance with policies adopted from timeto time by Cosi.
     (f) **Other Compensation**. Cosi shall pay to Mr. Armstrong suchother compensation as may be approved from time to time by the Board.
     4. **Employee Benefits**. During the Term, Mr. Armstrong shall be entitledto the following benefits:
     (a) **Healthcare and Insurance**. Mr. Armstrong shall be entitled toparticipate in any employee benefit plan program or arrangement of Cosigenerally made available to executives of Cosi, including medical, dental,vision, life, accidental death and dismemberment, and long-term disabilityinsurance, on the same basis as other Cosi executive employees are entitled toparticipate. Cosi shall pay 100% of the single and Child/Spouse/Familyhealthcare costs. Participation in, and the terms of, Cosi’s healthcare planare subject to change without notice.
     If at any time during Mr. Armstrong’s employment or during any period oftime in which he is receiving benefits under any such policy, Cosi’s long-termdisability insurance shall terminate or any reason whatsoever, prior to anysuch termination Cosi shall obtain and thereafter maintain a long-termdisability insurance policy providing at least the same or substantially thesame benefits to Mr. Armstrong during the remaining term of his employment orduring any period of time in which he is eligible to continue receiving suchbenefits, as the case may be.
     (b) **4****01(k)****Retirement Plan**. Mr. Armstrong shall be entitled toparticipate in Cosi’s 401(k) retirement plan. Cosi will match Mr. Armstrong’scontributions at 25% up to 4% of Mr. Armstrong’s annual base salary.
     (c) **Vacation**. Mr. Armstrong shall be entitled to up to four (4)weeks paid vacation per annum, in accordance with Cosi’s salaried partnervacation policy.
     (d) **Equipment**. Cosi shall provide to Mr. Armstrong a cell phone,a laptop computer and a blackberry, at Cosi’s cost and expense. Upontermination of Mr. Armstrong’s employment, Cosi shall transfer such equipmentto Mr. Armstrong for his personal use, after which time such use shall be athis cost and expense.
     5. **Treatment of Stock Options or Awards**. Any options and awards topurchase Cosi common stock granted to Mr. Armstrong in connection with hisemployment with Cosi prior to the Effective Date shall
 

 

remain in full force and effect pursuant to their terms. Such options and awards,and any other options and awards granted to Mr. Armstrong, shall vest and becomeimmediately exercisable in full upon a Change of Control (as defined in Section13 below).
     6. **Investment Representations**. Mr. Armstrong hereby acknowledges andagrees with Cosi as follows:
     (a) The Initial Restricted Stock and the Additional Restricted Stock(collectively, the “**Shares**”) have not been registered under the Securities Actof 1933, as amended from time to time (the “**Act**”) or any state securitieslaws, in reliance on his representation, hereby confirmed by him, that he isacquiring the Shares for investment and not with any view towards thedistribution thereof. He further acknowledges that any resale of the Sharesis subject to compliance with the registration requirements of the Act or withan applicable exemption with the ownership of Shares.
     (b) Mr. Armstrong is an “accredited investor” as defined in Regulation Dunder the Act and is personally experienced and sophisticated in financial andinvestment matters and is able to assess the risks and rewards associated withthe ownership of Shares.
     7. **Vesting; Repurchase; Repayment; Voting; and Legends**.
     (a) **Vesting of Shares**. Mr. Armstrong’s rights to the Sharesshall vest in accordance with the following provisions of this Section7:
     (i) Twenty percent (20%) of the Initial Restricted Stock shall befully vested upon grant on May 9, 2005.
     (ii) So long as this Agreement then remains in effect, on each ofMay 9, 2006, May 9, 2007, May 9, 2008, and May 9, 2009, an additionaltwenty percent (20%) of the Initial Restricted Stock shall become fullyvested on each such date.
     (iii) The Additional Restricted Stock shall vest in accordance withthe vesting schedule prescribed by the Compensation Committee inconnection with such grant.
     (iii) All Shares not yet vested shall become fully vested upon theearlier to occur of: (A) the termination of this Agreement by Cosiwithout Cause (as defined in Section 12(a) below) and (B) upon aChange in Control.
     (iv) In the event Mr. Armstrong’s employment and this Agreement arevoluntarily terminated by him or are terminated by Cosi for Cause, allgranted but unvested Shares shall be forfeited.
     (b) **Repurchase of Shares on Death or Disability**. In the eventMr. Armstrong’s employment and this Agreement are terminated by reason of Mr.Armstrong’s death or Total Disability, Cosi shall have the right, but not theobligation, to repurchase at any time within ninety (90) days after theeffective date of such termination, all of the Shares. The purchase priceshall be the then-current fair market value of such Shares being repurchased.
     (c) **Repayment of Advance Tax Payments Upon Termination WithoutCause**. In the event Mr. Armstrong’s employment and this Agreement areterminated by Cosi without Cause (other than upon his death or TotalDisability), if Mr. Armstrong has made payments of tax in advance of fullvesting pursuant to an 83b (or similar tax election) (“**Advance Taxes**”), Cosishall reimburse him (or his estate, as the case may be) for the amount ofAdvance Taxes paid with respect to the Shares remaining unvested at the dateof such termination to the extent such Advance Taxes are non-refundable by theInternal Revenue Service or any other applicable taxing authority.
 

 

     (d) **Non-Transferability**. Mr. Armstrong shall not sell, transfer,assign, pledge or otherwise encumber or dispose of, by operation of law orotherwise, Shares which have not vested pursuant to this Agreement. Any suchpurported transfer will be void and of no force or effect.
     (e) **Dividend and Voting Rights**. Subject to the restrictionscontained in this Agreement, Mr. Armstrong shall have the rights of astockholder: (i) with respect to the Initial Restricted Stock, including theright to vote with respect to all the Initial Restricted Stock, and to receiveall dividends, cash or stock, paid or delivered thereon, from and after May 9,2005, and (ii) with respect to the Additional Restricted Stock, including theright to vote with respect to all the Additional Restricted Stock, and toreceive all dividends, cash or stock, paid or delivered thereon, from andafter the date of grant of such Additional Restricted Stock. In the event offorfeiture of the Shares, Mr. Armstrong shall have no further rights withrespect to the Shares. However, the forfeiture of the Shares shall not createany obligation to repay dividends received as to the Shares, nor shall suchforfeiture invalidate any votes given by Mr. Armstrong with respect to theShares prior to forfeiture.
     (f) **Legend**. All certificates representing the Shares shall haveendorsed thereon the following legends:
     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTEREDUNDER STATE OR U.S. FEDERAL SECURITY LAWS AND MAY NOT BE OFFERED, SOLD,PLEDGED, HYPOTHECATED, OR OTHERWISE DISTRIBUTED OR TRANSFERRED, NOR MAY THESESECURITIES BE TRANSFERRED ON THE BOOKS OF THE COMPANY, IN THE ABSENCE OF SUCHREGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCHREGISTRATION IS NOT REQUIRED.
     THESE SHARES ARE SUBJECT TO AN EMPLOYMENT AGREEMENT DATED AS OF May 9,2005, BY AND BETWEEN COSI, INC., AND MR. ARMSTRONG.
     8. **Confidential Information**. Mr. Armstrong acknowledges and agreesthat during his employment with Cosi and following the termination of his employmentfor any reason, he will not at any time divulge any trade secrets or otherconfidential information pertaining to the business of Cosi. The term “**confidentialinformation**” as used in this Agreement shall mean any trade secret, confidential orproprietary information of Cosi or its affiliates, other than that which has becomegenerally known to the public other than through an act of Mr. Armstrong in breachof this Section 8. The term “**trade secrets**” as used in this Agreement shallmean information, including, but not limited to, technical or non-technical data, aformula, a pattern, a compilation, a program, a device, a method, a technique, adrawing, a recipe, a process, financial data, financial plans, product plans, or alist of actual or potential customers or suppliers that:
     (a) derives economic value, actual or potential, from not being generallyknown to, and not being readily ascertainable by proper means by other personswho can obtain economic value from its disclosure or use, and
     (b) is the subject of reasonable efforts by Cosi to maintain its secrecy.
     9. **Non-Competition**. Mr. Armstrong covenants and agrees that during hisemployment with Cosi and for twelve (12) months following the termination of hisemployment for any reason, he shall not directly or indirectly, personally or withother employees, agents or otherwise, or on behalf of any other person, firm orcorporation, engage in any restaurant, bar, coffee shop or similar businessestablishment in which a majority of revenues are derived from retail sales ofsandwiches, coffee and/or coffee-based drinks and other non-alcoholic beverages orwhich otherwise is or intends to become a direct competitor of Cosi (any of theforegoing, a “**Competitive Business**”), within the continental United States.Notwithstanding the foregoing in this Section 9, ownership by Mr. Armstrongof an interest in Cosi or any licensed franchisee of Cosi shall not be deemed to bea violation of this Section 9.
     10. **Non-Solicitation of Employees**. Mr. Armstrong covenants and agreesthat during his
 

 

employment with Cosi and for twelve (12) months following the termination of hisemployment for any reason, he shall not on his own behalf or on behalf of any otherperson, firm, partnership, association, corporation or business organization, entityor enterprise call on, solicit or attempt to induce any other officer or employee ofCosi or its affiliates or licensed franchisees to terminate his or her employmentwith Cosi or its affiliates or licensed franchisees and shall not assist any otherperson or entity in such a solicitation unless such employee is first terminated byCosi.
     11. **Specific Enforcement; Survival; Remedies Cumulative**. Mr. Armstrongexpressly recognizes that any breach of Sections 8, 9 or 10 of thisAgreement by him is likely to result in irreparable injury to Cosi and agrees thatCosi shall be entitled, if it so elects, to institute and prosecute proceedings inany court of competent jurisdiction, either at law or in equity, to obtain damagesfor any breach of this Agreement; to enforce the specific performance of thisAgreement by Mr. Armstrong; and, to enjoin Mr. Armstrong from activities inviolation of this Agreement. Notwithstanding any provisions of this Agreement tothe contrary, the provisions of Sections 8, 9, 10, and 11 hereof shallsurvive the termination of this Agreement. All rights and remedies are cumulative,and Cosi’s rights under this Section 11 shall be in addition to, and not inlieu of, any other rights and remedies Cosi may have at law or in equity.
     12. **Termination**. Subject to the terms and conditions of thisAgreement, this Agreement and Mr. Armstrong’s employment with Cosi may be terminatedby either party upon 30 days’ written notice, provided that Cosi may terminate thisAgreement and Mr. Armstrong’s employment immediately upon notice to Mr. Armstrongfor Cause (as hereinafter defined). This Agreement and Mr. Armstrong’s employmentshall also terminate immediately upon Mr. Armstrong’s death or Total Disability (ashereinafter defined), in any such case on the terms and subject to the conditions ofthis Agreement.
     (a) **Definition of Cause**. The term “**Cause**” shall mean only one ormore of the following:
     (i) Mr. Armstrong shall be convicted of, or plead guilty or *nolo contende*to, a felony;
     (ii) Mr. Armstrong shall willfully neglect or fail to perform theservices required to be provided under this Agreement following writtennotice from the Board specifying such neglect and a reasonable opportunity tocure such neglect or failure; and
     (iii) Mr. Armstrong shall commit any fraud, embezzlement or othermaterial act or intentional dishonesty against Cosi, or shall attempt toprofit from any transaction in which Cosi is a participant and in whichMr. Armstrong has an undisclosed interest adverse to Cosi.
     (b) **Definition of Total Disability**. The term “**Total Disability**”shall mean Mr. Armstrong’s physical or mental disability such that Mr.Armstrong is and has been continuously for at least six (6) months unable toperform the services required to be provided under this Agreement, and Mr.Armstrong is determined to be eligible for long-term disability benefits underthe long-term disability benefits plan of Cosi in effect from time to time.
     (c) **Cosi’s Obligations Upon Termination**.
     (i) **Involuntary Termination Other than by Cosi for Cause**.In the event this Agreement and Mr. Armstrong’s employment with Cosi areinvoluntarily terminated for any reason (including, without limitation,by his death or Total Disability) other than by Cosi for Cause, Cosishall pay to him his base salary, bonuses and benefits that are payablethrough the effective date of termination (“**Accrued Benefits**”) andtwelve (12) months severance according to the Cosi Severance Policy.Any Cosi options and awards to purchase Cosi common stock granted to Mr.Armstrong in connection with his employment with Cosi, whether grantedbefore or after the Effective Date, shall become 100% vested andexercisable and shall not be subject to any accelerated exerciserequirements or early termination provisions applicable thereto andinstead shall be exercisable through the fifth anniversary of theeffective date of such termination.
 

 

     In addition, the terms of Sections 7(a)(iv) and 7(b) shallapply with respect to the Shares.
     (ii) **Voluntary Termination or Termination by Cosi forCause**. In the event this Agreement and Mr. Armstrong’s employmentwith Cosi are voluntarily terminated by Mr. Armstrong or areinvoluntarily terminated by Cosi for Cause, Cosi shall pay to him hisAccrued Benefits. In such event, any Cosi options and awards topurchase Cosi common stock granted to Mr. Armstrong in connection withhis employment with Cosi, whether granted before or after the EffectiveDate, shall expire in accordance with the terms and conditions of theapplicable plan and agreement pursuant to which such options and awardswere granted. In addition, the terms of Section 7(a)(v) shallapply with respect to the Shares.
     13. **Change in Control**. For purposes of this Agreement, a “**Change inControl**” shall mean the date on which the earlier of the following events occur:(a) the acquisition by any entity, person or group (other than ZAM Holdings, L.P.,LJCB Nominees Pty Ltd., Charles G. Phillips, or any entity related to any suchparty) of beneficial ownership, as that term is defined in Rule 13d-3 under theSecurities Exchange Act of 1934, as amended, of more than 50% of the outstandingcapital stock of Cosi entitled to vote for the election of directors (“**VotingStock**”); (b) the merger or consolidation of Cosi with one or more corporations orother entity as a result of which the holders of outstanding Voting Stock of Cosiimmediately prior to such a merger or consolidation hold less than 60% of the VotingStock of the surviving or resulting corporation or any direct or indirect parentcorporation or entity of such surviving or resulting entity; (c) the sale ortransfer of all or substantially all of the property of Cosi other than to an entityof which Cosi owns at least 80% of the Voting Stock; or (d) during any period oftwenty-four (24) consecutive months, the individuals who, at the beginning of suchperiod, constitute the Board of Directors (the “**Incumbent Directors**”) cease for anyreason other than death to constitute at least a majority thereof provided, however,that a director who was not a director at the beginning of such 24-month periodshall be deemed to have satisfied such 24-month requirement (and be an IncumbentDirector) if such director was elected by, or on the recommendation of or with theapproval of, at least two-thirds of the directors who then qualified as IncumbentDirectors either actually (because they were directors at the beginning of such24-month period) or through the operation of this proviso. A Change in Controlshall not include any acquisition in which Mr. Armstrong is a member of theacquiring group or an officer or owner of the acquiring entity.
     14. **No Assignment**. Neither party may assign or delegate any of its orobligations hereunder, without the prior written consent of the other party, whichconsent may be withheld by the other party in its or his sole discretion.
     15. **Entire Agreement; Modification**. This instrument contains theentire agreement of Cosi and Mr. Armstrong with respect to the subject mattercontained herein, and all promises, representations, understandings, arrangementsand prior agreements with respect to such subject matter are merged herein andsuperseded hereby, including, without limitation, the offer letter between Cosi andMr. Armstrong dated as of July 3, 2003. This Agreement may be altered or amended orsuperseded only by an agreement in writing, signed by both parties or by the partyagainst whom enforcement of any waiver, change, modification, extension or dischargeis sought. No action or course of conduct shall constitute a waiver of any of theterms and conditions of this Agreement, unless such waiver is specified in writing,and then only to the extent so specified. A waiver of any of the terms andconditions of this Agreement on one occasion shall not constitute a waiver of theother terms and conditions of this Agreement, or of such terms and conditions on anyother occasion.
     16. **Severability**. Mr. Armstrong and Cosi hereby expressly agree thatthe provisions of this Agreement are severable and, in the event that any court ofcompetent jurisdiction shall determine that any provision or covenant hereincontained is invalid, in whole or in part, the remaining provisions shall remain infull force and effect and any such provision or covenant shall nevertheless beenforceable as to the balance thereof.
     17. **Binding Effect; Benefit**. This Agreement shall be binding upon andshall inure to the benefit of Mr. Armstrong and his administrators, executors, heirsand permitted assigns, and Cosi and its successors and permitted assigns.
     18. **Notices.** Any notice required or permitted to be given under thisAgreement shall be in writing
 

 

and shall be delivered by hand or mailed by certified mail, return receiptrequested, postage prepaid, addressed as follows:   To Mr. Armstrong: To Cosi:Cosi, Inc. Cosi, Inc.1751 Lake Cook Road, 6th Floor 1751 Lake Cook Road, 6th FloorDeerfield, Illinois 60015 Deerfield, Illinois 60015Attn: Mr. Kevin Armstrong Attn: General Counsel   With a copy to:       Mr. Kevin Armstrong       216 N. 4th Street       Delavan, Wisconsin 53115  
or to such other address as a party hereto may designate to the other in writing inaccordance herewith. Notices are effective upon actual receipt.
     19. **Withholding**. All amounts payable under this Agreement shall besubject to applicable employee withholding taxes.
     20. **Counterparts**. This Agreement may be executed in counterparts, eachof which shall be considered and have the force and effect of an original, but allof which taken together shall constitute one and the same instrument.
     21. **Governing Law**. The validity, interpretation and performance ofthis Agreement shall be governed by and construed in accordance with the laws of theState of Illinois.
     IN WITNESS WHEREOF, Cosi has caused this Agreement to be duly executed on itsbehalf and Mr. Armstrong has hereunder set his hand, all as of the date first abovewritten.                COSI, INC           By: /s/ KEVIN ARMSTRONG By: /s/ WILLIAM D. FORREST            Kevin Armstrong    William D. Forrest      Title: Chairman of the Board