Document:

Exhibit 10-AA

 

NON-EMPLOYEE DIRECTOR

AUTOMATIC STOCK OPTION GRANT

PROGRAM

 

The following provisions set forth the terms
of the Non-Employee Director Automatic Stock Option Grant Program (the “Program”) for eligible directors of
Donaldson Company, Inc. (the “Company”) under the Company’s 2010 Master Stock Incentive Plan (the “Plan”).
Options granted under this Program are subject to the terms, conditions, and restrictions set forth in the Plan. In the event of
any inconsistency between the terms contained herein and in the Plan, the Plan shall govern. All capitalized terms that are not
defined herein have the meanings set forth in the Plan.

 

SECTION 1. ELIGIBILITY

 

Each member of the Board of Directors of the
Company elected or appointed to the Board who is not otherwise an employee or officer of the Company (an “Eligible Director”)
shall be eligible to receive the grant of Options set forth in the Program, subject to the terms of the Program.

 

SECTION 2. OPTION GRANTS

 

2.1             
Option Grants and Timing of Grants

 

	 	(a)	Annual Option Grants.  On the first day following January 1 that the New York Stock Exchange is open for trading
    (a “First Trading Day”) of 2011 and each First Trading Day thereafter, each Eligible Director shall automatically
    be granted a Nonqualified Stock Option to purchase 7,200 shares of Common Stock (the “Annual Option Grant”).
	 	(b)	Prorated Grant.  With respect to an individual who becomes an Eligible Director
    after the First Trading Day of a calendar year, such Eligible Director’s Annual Option Grant for that year shall equal that
    number of shares of Common Stock obtained by multiplying 7,200 by a fraction, the numerator of which is the number of whole calendar
    months remaining in the calendar year and the denominator of which is twelve.  Such grant shall be made upon the first day
    of the calendar month next following the date such individual becomes an Eligible Director.

 

2.2             
Exercise Price of Options

 

Options shall be granted under the Program
with a per share exercise price equal to the closing price of the Common Stock on the First Trading Day on which such options are
granted.

 

2.3             
Option Vesting

 

Each Annual Option Grant may be exercised by
the Eligible Director under the following schedule except as otherwise provided in this Agreement. The Option may not be exercised
for a

 

    	 

    	 

    

period of one (1) year from the date of grant.
Following that one-year period, the Option vests in equal one-third increments:

 

―   one-third
of the shares vest on the one-year anniversary date from the date of grant;

―   one-third
of the shares vest on the two-year anniversary date from the date of grant;

―   one-third
of the shares vest on the three-year anniversary date from the date of grant.

 

The Option may be exercised as to any or all
of the shares that are vested. An unvested portion of the Option shall only vest so long as:

 

	 	(1)	the Eligible Director remains a Director of the Company on the date that the applicable shares vest,
	 	 	 
	 	(2)	the Eligible Director retires or resigns from service as a Director of the Company in accordance with the age and term limits of the Corporate Governance Guidelines of the Company, or
	 	 	 
	 	(3)	the Eligible Director’s service as a Director of the Company is terminated for any other reason and a majority of the members of the Board of Directors other than the Eligible Director consent to the continued vesting of such portion of the Option in accordance with the original vesting schedule. 

 

The vesting of the Option also is subject to
acceleration in the event of a Change in Control of Donaldson as defined in the Non-Employee Director Non-Qualified Stock Option
Agreement.

 

2.4             
Term of Options

 

Annual Option Grants shall remain exercisable
until the date that is ten years from the grant date (the “Option Expiration Date”), unless sooner terminated
in accordance with the terms below. In the event that an Eligible Director separates from service due to death, the Options must
be exercised on or before the earlier of (i) three years after the date of such termination and (ii) the Option Expiration Date.
If an Eligible Director dies after he separates from service, but while the Option is still exercisable, the Option may be exercised
until the earlier of (x) three years after the date of death and (y) the Option Expiration Date.

 

2.5             
Payment of Exercise Price

 

Options granted under the Program shall be
exercised by giving notice to the Company (or a brokerage firm designated or approved by the Company) in such form as required
by the Company, stating the number of shares of Common Stock with respect to which the Option is being exercised, accompanied by
payment in full for such Common Stock, which payment may be, to the extent permitted by applicable laws and regulations, in whole
or in part:

 

	 	(a)	in cash or by check or wire transfer;

 

    	 

    	 

    

 

	 	(b)	by having the Company withhold shares of Common Stock that would otherwise be issued on exercise of the Option that have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option; or
	 	(c)	by tendering (either actually or by attestation) shares of Common Stock owned by the Eligible Director that have an aggregate Fair Market Value equal to the aggregate exercise price of the shares being purchased under the Option.

 

SECTION 3. AMENDMENT, SUSPENSION
OR TERMINATION

 

The Board, or the Human Resources Committee
of the Board, may amend, suspend or terminate the Program or any portion of it at any time and in such respects as it deems advisable.
Except as provided in the Plan, any such amendment, suspension or termination shall not, without the consent of the Eligible Director,
impair or diminish any rights of an Eligible Director under an outstanding Option.

 

SECTION 4. TRANSFERABILITY OF
OPTIONS

 

Options shall not be transferable otherwise
than by will or the laws of descent and distribution and may be exercised during the lifetime of the Eligible Director to whom
they are granted only by such Eligible Director; provided, however, that notwithstanding the above, Options shall be transferable
by the Eligible Director to family members and related estate planning entities as designated in a transfer document in such form
as required by the Company, and to the extent permitted under the Plan.

 

SECTION 5. EFFECTIVE DATE

 

The Program shall become effective on the Effective
Date of the Plan, and any amendment to this Program shall become effective on the date specified by the Board or the Human Resources
Committee of the Board. Provisions of the Plan (including any amendments) that are not discussed above, to the extent applicable
to Eligible Directors, shall continue to govern the terms and conditions of Options granted to Eligible Directors.co24162797-ex10_1.htm

Exhibit 10.1

EXECUTION DOCUMENT

 

 

 

Cosi, Inc.

 

Employment Agreement

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into effective as of the 31st of August, 2011 (the “Effective Date”), by and between Cosi, Inc., a Delaware corporation (“Cosi”), and Mark Demilio (“Mr. Demilio”).

 

Cosi and Mr. Demilio wish to confirm the terms and conditions upon which Mr. Demilio agrees to provide services to Cosi as its Interim Chief Executive Officer.

 

Accordingly, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and agreed, Cosi and Mr. Demilio hereby agree as follows:

 

1. Duties.  Mr. Demilio agrees to carry out such duties as shall be reasonably requested of him from time to time as Interim Chief Executive Officer (“Interim CEO”) by the Board of Directors of Cosi (the “Board”).  Mr. Demilio will be based primarily out of an office at Cosi’s headquarters located in Deerfield, Illinois (the “Cosi Support Center”).

 

2. Compensation.  In consideration of the performance by Mr. Demilio of his duties hereunder, Cosi shall pay or provide to Mr. Demilio the following compensation (along with the benefits set forth in Section 3 below), which Mr. Demilio agrees to accept in full satisfaction for his services.

 

(a) Annual Base Salary.  Cosi shall pay to Mr. Demilio, effective as of the Effective Date, an annual base salary in the gross amount of Three Hundred Fifty Thousand Dollars ($350,000), payable in bi-weekly installments and net of applicable payroll and withholding taxes, in accordance with Cosi’s regular payroll practices.

 

(b) Business Expenses.  Cosi shall promptly pay directly or reimburse Mr. Demilio for all reasonable out-of-pocket business expenses incurred by Mr. Demilio in connection with his performance of services hereunder, including, without limitation, all travel, housing and other expenses incurred by Mr. Demilio in connection with commuting to and working out of the Cosi Support Center and all travel expenses incurred by or related to Mr. Demilio’s spouse accompanying him on up to two (2) trips per month (to either the Cosi Support Center or other travel conducted by Mr. Demilio in his capacity as Interim CEO); provided that all such expenses are properly documented in accordance with policies adopted from time to time by Cosi.  Provided that the reimbursement request and required documentation have been submitted to Cosi to allow for timely processing, in no event will such payments or reimbursements be made to Mr. Demilio later than the 15th day of March of Mr. Demilio’s taxable year next following the taxable year in which Mr. Demilio incurs the expense.

 

(c) Other Compensation.  Cosi shall pay to Mr. Demilio such other compensation for his services as Interim CEO as may be approved from time to time by the Board and/or the Compensation Committee, as applicable.

 

 

  

  

  

 

3. Employee Benefits.  During the Term, Mr. Demilio shall be entitled to the following benefits:

 

(a) Healthcare and Insurance.  Mr. Demilio shall be entitled to participate in any employee welfare benefit plan, program or arrangement of Cosi generally made available to executives of Cosi, in accordance with its terms in effect from time to time, including medical, dental, vision, life, accidental death and dismemberment, and long-term disability insurance, on the same basis as other Cosi executive employees are entitled to participate.  Participation in, and the terms of, Cosi’s healthcare plan are subject to change without notice.

 

(b) 401(k) Retirement Plan.  Mr. Demilio shall be entitled to participate in Cosi’s 401(k) retirement plan in accordance with its terms in effect from time to time.

 

4. At−Will Employment. The employment relationship between Cosi and Mr. Demilio shall be “at−will” at all times.  Either Cosi or Mr. Demilio may terminate Mr. Demilio’s employment with Cosi at any time, without any advance notice, for any reason or no reason at all, notwithstanding anything to the contrary contained in or arising under any statements, policies, or practices of Cosi relating to the employment, discipline or termination of its employees.  Upon and after such termination, all obligations of Cosi under this Agreement shall cease.

 

5. Cosi’s Obligations Upon Termination.  In the event Mr. Demilio’s employment hereunder is terminated for any reason, Cosi shall pay to him (or his estate) his accrued but unpaid base salary, bonuses and medical benefits that are payable through the effective date of termination as soon as administratively practicable following termination of employment.

 

6. No Assignment.  Neither party may assign or delegate any of its or his obligations hereunder, without the prior written consent of the other party, which consent may be withheld by the other party in its or his sole discretion; provided that Cosi may assign this Agreement in connection with a sale or other disposition of all or substantially all of its assets.

 

7. Entire Agreement; Modification.  This instrument contains the entire agreement of Cosi and Mr. Demilio with respect to its subject matter.  This Agreement may be altered or amended or superseded only by an agreement in writing, signed by both parties or by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.  No action or course of conduct shall constitute a waiver of any of the terms 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 and conditions of this Agreement on one occasion shall not constitute a waiver of the other terms and conditions of this Agreement, or of such terms and conditions on any other occasion.

 

8. Severability.  Mr. Demilio and Cosi hereby expressly agree that the provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any provision or covenant herein contained is invalid, in whole or in part, the remaining provisions shall remain in full force and effect and any such provision or covenant shall nevertheless be enforceable as to the balance thereof.

 

 

  

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9. Binding Effect; Benefit.  This Agreement shall be binding upon and shall inure to the benefit of Mr. Demilio and his administrators, executors, heirs and permitted assigns, and Cosi and its successors and permitted assigns.

 

10. Notices.  Any notice required or permitted to be given under this Agreement shall be in writing and shall be delivered by hand or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows:

 

	
  

	
To Mr. Demilio:

	
  

	
Mark Demilio

	
  

	
104 Sagewood Court

	
  

	
Sparks, MD 21152

	
  

	
(410) 627-5708

 

	
  

	
To Cosi:

 

	
  

	
Cosi, Inc.

	
  

	
1751 Lake Cook Road, 6th Floor

	
  

	
Deerfield, Illinois  60015

	
  

	
Attn:  General Counsel

	
  

	
Phone:  (847) 597-8818

 

or to such other address as a party hereto may designate to the other in writing in accordance herewith.  Notices are effective upon actual receipt.

 

11. Withholding.  All amounts payable under this Agreement shall be subject to applicable employee payroll and withholding taxes.

 

12. Counterparts; Facsimile Signatures.  This Agreement may be executed in counterparts, each of which shall be considered, and shall have the force and effect of, an original but all of which taken together shall constitute one and the same instrument.  Signatures by facsimile are hereby authorized and shall have the same force and effect as the original.

 

13. Governing Law.  The validity, interpretation and performance of this Agreement shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to its principles of conflicts of law.

 

14. Effect of Section 409A.  It is expressly contemplated by the parties that this Agreement will conform to, and be interpreted to comply with, Section 409A of the Internal Revenue Code, as amended (the “Code”).  Notwithstanding any other provision of this Agreement, if Mr. Demilio is a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code at the time of his separation from service, then the payment of any amount this Agreement which is considered deferred compensation subject to Section 409A of the Code shall be deferred for six (6) months after his “separation from service” or, if earlier, his death as required by Section 409A(a)(2)(B)(i) of the Code (the “409A Deferral Period”).  In the event payments are otherwise due to be made in installments or periodically during the 409A Deferral 

 

 

  

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Period, the payments which would otherwise have been made in the 409A Deferral Period shall be accumulated and paid in a lump sum as soon as the 409A Deferral Period ends, and the balance of the payments shall be made as otherwise scheduled.  For purposes of this Agreement, Mr. Demilio shall not be deemed to have terminated employment unless he has a “separation from service” within the meaning of Section 409A of the Code where it is reasonably anticipated that no further services will be performed after such date or that the level of bona fide services he will perform after that date (whether as an employee or independent contractor) will permanently decrease to no more than 20 percent of the average level of bona fide services performed by him over the immediately preceding 36-month period.  All rights to payments and benefits under this Agreement shall be treated as rights to receive a series of separate payments and benefits to the fullest extent allowed by Section 409A of the Code.

 

IN WITNESS WHEREOF, Cosi has caused this Agreement to be duly executed on its behalf and Mr. Demilio has hereunder set his hand, all as of the date first above written.

 

	 	
COSI, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ KARL OKAMOTO	 
	 	 	Name: Karl Okamoto	 
	 	 	Title:  Chair, Compensation Committee of the Board	 
	 	 	 	 

 

	 	 	 
	 	 	 	 
	
 

	
 

	/s/ MARK DEMILIO 9/23/2011	 
	 	 	MARK DEMILIO	 
	 	 	 	 
	 	 	 	 

 

 

 

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