COSÌ, INC.
1751 Lake Cook Road, Suite 600
Deerfield, Illinois 60015

April 27, 2012

Dear Fellow Stockholders:

You are cordially invited to attend the 2012 Annual Meeting of Stockholders of Così, Inc. (“Così”, the “Company”, “we”, “us” or “our”) to be held on Tuesday, May 29, 2012, commencing at 8:00 a.m. Central Time, at the Company’s Support Center, 1751 Lake Cook Road, Lower Level Conference Room, Deerfield, Illinois 60015.

At the Annual Meeting, you will be asked (i) to consider and vote upon the election of two directors, (ii) to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm, and (iii) to approve an Amendment to the Corporation’s 2005 Omnibus Long Term Incentive Plan (the “Omnibus Plan”) to increase the number of shares available for issuance under the Omnibus Plan, in the form approved by the Corporation’s Board of Directors. Each of these proposals is more fully described in the Notice of Annual Meeting and Proxy Statement that follows.

We hope that you will find it convenient to attend the Annual Meeting in person. Whether or not you expect to attend personally, please vote your shares by completing, signing and dating the enclosed proxy and promptly returning it in the enclosed envelope to ensure your representation at the Annual Meeting and the presence of a quorum. If you do attend the Annual Meeting, you may withdraw your proxy should you wish to vote in person. You may obtain directions to the location by contacting Investor Relations at (847) 597- 8800.

A copy of the Company’s Annual Report to Stockholders, which includes a copy of the Company’s Form 10-K for the fiscal year ended January 2, 2012, is being provided to each of the Company’s stockholders with this Proxy Statement. Additional copies may be obtained by writing to Così, Inc., 1751 Lake Cook Road, Suite 600, Deerfield, Illinois 60015, Attention: Investor Relations, or by contacting Così, Inc. by email at investorrelations@getcosi.com.

YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the Annual Meeting of Stockholders, we urge you to vote your shares by completing, signing and dating the enclosed proxy and promptly returning it in the enclosed envelope to ensure that your shares will be represented. If you attend the meeting personally, you will, of course, have the right to revoke the proxy and vote your shares in person. If you hold your shares through an account with a brokerage firm, bank or other nominee, please follow the instructions you receive from them to vote your shares.

On behalf of the directors, officers and employees of Così, we would like to express the Company’s appreciation for your continued support.

COSÌ, INC.
1751 Lake Cook Road, Suite 600
Deerfield, Illinois 60015

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 29, 2012

Dear Stockholders:

The 2012 Annual Meeting of Stockholders of Così, Inc., a Delaware corporation (“Così”, the “Company”, “we”, “us” or “our”), will be held at 8:00 a.m. Central Time on Tuesday, May 29, 2012, at the Company’s Support Center, 1751 Lake Cook Road, Lower Level Conference Room, Deerfield, Illinois 60015. The items of business to be transacted at the Annual Meeting are:

The Board of Directors recommends that you vote FOR the nominees for director, FOR the ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm, and FOR the Amendment to the Omnibus Plan to increase the number of shares available for issuance under the Omnibus Plan.

The Board of Directors has fixed the close of business on April 2, 2012 as the record date for the determination of stockholders entitled to notice of and to vote on any matters that may properly come before the Annual Meeting and at any adjournments or postponements thereof.

By order of the Board of Directors,

William E. Koziel
Secretary

Dated: April 27, 2012
               Deerfield, Illinois

COSÌ, INC.
1751 Lake Cook Road, Suite 600
Deerfield, Illinois 60015

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
May 29, 2012
SOLICITATION OF PROXIES

This Proxy Statement is furnished to you by the Board of Directors of Così, Inc., a Delaware corporation (“Così”, the “Company”, “we”, “us”, or “our”), in connection with the solicitation of proxies to be voted at our 2012 Annual Meeting of Stockholders and at any adjournment or postponement of the meeting (the “Annual Meeting”). Our Annual Meeting will be held at 8:00 a.m. Central Time on May 29, 2012, at the Company’s Support Center, 1751 Lake Cook Road, Lower Level Conference Room, Deerfield, Illinois 60015, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. All stockholders are entitled and encouraged to attend the Annual Meeting in person. You may obtain directions to the location by contacting Investor Relations at (847) 597- 8800. Whether or not you expect to attend, please vote your shares by completing, signing and dating the enclosed proxy and promptly returning it in the envelope provided to ensure your representation at the Annual Meeting and the presence of a quorum. If you do attend the Annual Meeting, you may withdraw your proxy should you wish to vote in person. This Notice of Annual Meeting, Proxy Statement, Proxy Card and the accompanying Così, Inc. 2011 Annual Report, which includes the Annual Report on Form 10-K, are being mailed to our stockholders on or about April 27, 2012.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 29, 2012.

This Proxy Statement, the Notice of Annual Meeting of Stockholders
and Our Annual Report to Stockholders are available at
http://phx.corporate-ir.net/phoenix.zhtml?c=131610&p=irol-IRHOME

In voting by proxy with regard to the election of directors, stockholders may vote in favor of each nominee or withhold their votes as to each nominee. In voting by proxy with regard to the ratification of the appointment of our independent registered public accounting firm, stockholders may vote in favor of the proposal or against it, or they may abstain from voting. In voting by proxy with regard to the approval of the Amendment to the Omnibus Plan to increase the number of shares available for issuance under the Omnibus Plan, stockholders may vote in favor of the proposal or against it, or they may abstain from voting. All properly executed proxies delivered pursuant to this solicitation and not revoked will be voted in accordance with the directions given and, in connection with any other business that may properly come before the Annual Meeting, in the discretion of the persons named in the proxy.

If no direction is given on a proxy with respect to a proposal, the proxy will be voted “FOR” the slate of directors described below under “ELECTION OF DIRECTORS”, “FOR” the ratification of BDO USA, LLP as the independent registered public accounting firm of the Company for the current year, and “FOR” the Amendment to the Omnibus Plan to increase the number of shares available for issuance under the Omnibus Plan. As to any other matter of business that may be brought before the Annual Meeting, such proxy will be voted in accordance with the judgment of the persons named in the proxy.

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A stockholder who has given a proxy may revoke it at any time before it is exercised by giving written notice of revocation to the Secretary of Così, by submitting a proxy bearing a later date, or by attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, in itself, constitute revocation of a proxy.

VOTING SECURITIES

The Board of Directors has fixed the close of business on April 2, 2012 as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements of the Annual Meeting. Holders of record of the Company’s common stock as of the close of business on April 2, 2012 will be entitled to one vote for each share held. On April 2, 2012, there were 52,967,365 shares of the Company’s common stock, par value $0.01 per share, outstanding, all of which are entitled to vote with respect to all matters acted upon at the Annual Meeting.

A majority of the outstanding shares of common stock, represented in person or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting. Assuming the presence of a quorum at the Annual Meeting, the affirmative vote of a plurality of the votes cast by holders of shares of common stock represented at the meeting and entitled to vote is required for the election of directors. The affirmative vote of a majority of the votes cast by stockholders who are entitled to vote and are present in person or represented by proxy at the meeting is required for the ratification of BDO USA, LLP, as the Company’s independent registered public accounting firm and for the approval of the Amendment to the Company’s 2005 Omnibus Long-Term Incentive Plan (the “Omnibus Plan”) to increase the number of shares available for issuance under the Omnibus Plan.

Abstentions with respect to the ratification of BDO USA, LLP, as the Company’s independent registered public accounting firm and the approval of the Amendment to the Omnibus Plan to increase the number of shares available for issuance under the Omnibus Plan will be counted as present for purposes of determining a quorum and will have the same effect as a vote against such matter.

If you are a beneficial owner whose shares are held in an account by a broker, you must instruct the broker on how to vote your shares. If you do not provide voting instructions to your broker, your shares will not be voted on any proposal on which your broker does not have discretionary authority to vote. This is called a “broker non-vote”. In these cases, the broker can register your shares as being present at the meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required. The practical effect of a broker non-vote will be the reduction of the total number of affirmative votes required to achieve a majority vote for such matter by reducing the total number of shares from which a majority is calculated, since the broker non-votes will not be deemed to be entitled to vote on that proposal.

Brokers will not have discretionary voting power to vote on the election of directors or on the Amendment to the Omnibus Plan to increase the number of shares available for issuance under the Omnibus Plan. Brokers will have discretionary voting power to vote on the ratification of BDO USA, LLP, as the Company’s independent registered public accounting firm. A broker non-vote on any matter for which the vote required is a plurality or a majority of the votes cast, as in the case of the election of Directors and the ratification of BDO USA, LLP, will not affect the outcome of such vote.

If your shares are registered in your name with the Company’s transfer agent, American Stock Transfer and Trust Company, LLC, then you are the “shareholder of record” of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying documents have been provided directly to you by the Company. If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner” of those shares. This Notice of Annual Meeting and Proxy Statement and any accompanying documents have been forwarded to you by your broker, bank or other holder of record. As the beneficial owner, you have the right to direct your broker, bank or other holder of record how to vote your shares by using the voting instruction card or by following their instructions for voting by telephone or on the Internet if available.

As permitted by the Securities Exchange Act of 1934, as amended (the “Exchange Act”), only one copy of this Proxy Statement is being delivered to stockholders residing at the same address, unless the

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stockholders have notified us of their desire to receive multiple copies of our Proxy Statement. This is known as householding.

We will promptly deliver, upon oral or written request, a separate copy of this Proxy Statement to any stockholder residing at an address to which only one copy was mailed. Requests for additional copies for this year or future years should be directed to Così, Inc., 1751 Lake Cook Road, Suite 600, Deerfield, Illinois 60015, Attention: Investor Relations, or investorrelations@getcosi.com.

Stockholders of record residing at the same address and currently receiving multiple copies of this Proxy Statement may contact our Corporate Secretary to request that only a single copy of our Proxy Statement be mailed in the future.

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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

As of April 2, 2012, the following are the only persons known to the Company to be the beneficial owners of more than 5% of the Company’s outstanding shares of common stock.

Beneficial Owners of More Than 5% Stock

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				Schedule 13G/A, ZAM Equities, Morton Holdings, and Korsant, collectively, beneficially own and have shared voting and shared dispositive power over 4,619,064 shares or 8.7%, and Morton Holdings, as the general partner of ZAM Equities, and Korsant, as the sole shareholder of Morton Holdings, may have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the shares held in the name of ZAM Equities.
(5)				This information is based on a Schedule 13G filed with the SEC on February 9, 2012, by BLUM Growth Fund, LLC. According to the Schedule 13G, BLUM Growth Fund, LLC beneficially owns and has sole voting and sole dispositive power over 3,500,000 or 6.6% of the total shares of the Company’s common stock. Bradley D. Blum is the sole member of BLUM Growth Fund, LLC. Mr. Blum, as the sole member of BLUM Growth Fund, may have sole power to vote and direct the disposition of the shares held by BLUM Growth Fund.

The determination that there were no other persons, entities, or groups known to the Company to beneficially own more than 5% of the Company’s common stock was based on a review of the Company’s internal records and of all statements filed with respect to the Company since the beginning of the past fiscal year with the Securities and Exchange Commission (the “SEC”) pursuant to Section 13(d) or 13(g) of the Exchange Act.

Security Ownership of Management and Directors

The following table sets forth certain information regarding ownership of the Company’s common stock as of April 2, 2012, by (i) each of the members of the Company’s Board of Directors, (ii) each of the Company’s executive officers named in the “Summary Compensation Table” under “Executive Compensation” below, and (iii) all directors and executive officers of the Company as a group. All shares were owned directly with sole voting and investment power unless otherwise indicated.

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(3)				Includes 1,000,000 shares of restricted stock which will vest if the time vesting and market vesting conditions have been satisfied during her employment with the Company.
(4)				Includes 79,956 shares of common stock issuable upon exercise of outstanding options at a weighted average exercise price of $4.95 per share.
(5)				Includes 25,000 shares of common stock issuable upon exercise of outstanding options at a weighted average exercise price of $5.20 per share.
(6)				Includes 365,000 deferred restricted stock units that have vested.
(7)				These 13 persons include all current members of the Company’s Board of Directors and the executive officers detailed under “Information About the Nominees, the Continuing Directors and Executive Officers” below.

CORPORATE GOVERNANCE

Role of the Board of Directors

General. Our business is managed under the direction of our Board of Directors (the “Board”) pursuant to the Delaware General Corporation Law and our Amended and Restated By-laws (the “By-laws”). Our Board, which is elected by the stockholders, is the ultimate decision-making body of the Company except with respect to those matters reserved to the stockholders. The Board selects the Chief Executive Officer and other members of the senior management team, which is charged with the conduct of the Company’s business. Although management is responsible for the day-to-day business operations of the Company, having selected the senior management team, the Board acts as an advisor and counselor to senior management and ultimately monitors its performance. Our Board is kept advised of the Company’s business through discussions with the Chief Executive Officer and other officers of the Company, by reviewing reports, analyses and materials provided to them and by participating in Board and Board committee meetings. The Board has oversight with respect to the strategic direction and key policies of the Company. The Board approves major initiatives, advises on significant financial and business objectives, and monitors progress with respect to such matters.

Succession Planning. The Board also plans for succession to the position of Chief Executive Officer as well as certain other senior management positions. To assist the Board, the Chief Executive Officer annually provides the Board with an assessment of senior executives and of their potential to succeed him or her. The Chief Executive Officer also provides the Board with an assessment of persons considered potential successors to certain senior executive positions.

Composition and Membership of the Board of Directors

Board Size. It is the policy of the Company that the number of directors not exceed a number that can function efficiently as a body. The Board’s optimum size is five to ten members but, as required by our By-laws, may not be less than three members. The Nominating/Corporate Governance Committee, in consultation with the Chair and the Chief Executive Officer, considers and makes recommendations to the Board concerning the appropriate size and needs of the Board. The Nominating/Corporate Governance Committee considers candidates to fill new positions created by expansion and vacancies that occur by resignation, retirement or for any other reason.

Selection Criteria. Pursuant to our Board of Director Candidate Guidelines, the Nominating/Corporate Governance Committee will consider and evaluate director candidates based upon certain minimum qualifications, as set forth in Exhibit A attached hereto. Based upon recommendations of the Nominating/Corporate Governance Committee and following an independent evaluation by the Board, candidates are selected for, among other things, their character, judgment, business experience and acumen and skills that are complementary to the needs of the Company, leadership and their ability to exercise sound judgment. In addition, directors should be willing to devote sufficient time to fulfill their obligations to the Company and its stockholders.

Diversity. Our Nominating/Corporate Governance Committee identifies, evaluates and recommends candidates to become members of the Board with the goal of creating a balance of knowledge, experience and diversity. Stockholders may also recommend candidates to the Nominating/Corporate

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Governance Committee in accordance with the procedures set forth in the Nominating/Corporate Governance Committee Charter (see the section below captioned “Nomination Process”). The Board considers diversity when considering director nominees, taking into consideration not only diversity of national origin, gender, age and race but also of profession and experience. Although diversity is included as a selection criteria under our Nominating/ Corporate Governance Committee charter, our Board has not at this time adopted a separate diversity policy.

Terms and Term Limits. The Board is divided into three classes serving staggered three-year terms. The Board does not favor term limits for directors but believes that it is important to monitor overall Board performance.

Board Action and Committees. It is the general policy of the Company that all major decisions be considered by the Board as a whole. As a consequence, the committee structure of the Board is limited to those committees considered to be basic to, or required for, the operation of a publicly-owned company. Currently, these committees are the Audit Committee, Compensation Committee and Nominating/Corporate Governance Committee.

Committee Members. The members of these committees are recommended to the Board by the Nominating/Corporate Governance Committee in consultation with the Chief Executive Officer. The committees are comprised solely of independent directors. The membership of these three committees is rotated from time to time. The current members of each of these committees are identified below under the heading “Board Committees”.

Functioning of the Board of Directors

Meeting Schedule. The Board sets the annual schedule of Board and Board committee meetings. Our Board holds a minimum of four regular meetings per year to review significant developments affecting the Company and to act on matters requiring Board approval. It also holds special meetings when an important matter requires Board action between scheduled meetings. Committee meeting schedules are recommended by each committee in order to meet the responsibilities of that committee.

Agenda. The Chair of the Board sets the agenda for Board meetings with the understanding that certain items pertinent to the advisory and monitoring functions of the Board be brought to it periodically by the Chief Executive Officer for review. For example, the annual corporate budget is reviewed by the Board. Agenda items that fall within the scope of responsibilities of a Board committee are reviewed with that committee. Any member of the Board may request that an item be included on the agenda.

Board Materials. Board materials related to agenda items are provided to Board members sufficiently in advance of Board meetings where necessary to allow the directors to prepare for discussion of the items at the meeting.

Senior Management Presence. At the invitation of the Board, members of senior management recommended by the Chair and Chief Executive Officer attend Board meetings or portions thereof for the purpose of participating in discussions. Generally, presentations of matters to be considered by the Board are made by the senior manager responsible for that area of the Company’s operations.

Director Access to Management and Corporate and Independent Advisors. Board members have free access to all other members of management and employees of the Company and, as necessary and appropriate, Board members may consult with independent legal, financial and accounting advisors to assist in their duties to the Company and its stockholders.

Director Attendance. Directors are expected to attend all meetings and to have reviewed prior to the meetings, all written materials distributed to them in advance. The Board held four regularly scheduled Board meetings in fiscal 2011. The Board held eleven special meetings. All directors attended 95% or more of the aggregate of the total number of Board meetings and the total number of committee meetings on which he or she served during fiscal 2011. In addition, the Board encourages all of its directors to attend the Company’s Annual Stockholders’ Meeting. All of the Company’s directors attended the 2011 Annual Stockholders’ Meeting.

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Board and Committee Self-Evaluations. The Board, and each committee of the Board, are required to conduct a self-evaluation of their performance at least annually.

New-Director Orientation. The Board works with management to schedule new-director orientation programs. Orientation is designed to familiarize new directors with the Company and the restaurant industry as well as Company personnel, facilities, strategies and challenges.

Director Independence

It is the policy of the Company that the Board consist of a majority of independent directors, who meet the independence requirements of the Nasdaq Marketplace Rules.

The Board has affirmatively determined that four of its seven directors, including all members of the Audit, Compensation and Nominating/Corporate Governance Committees, are “independent” as defined by the listing standards of The NASDAQ Global Market (“Nasdaq”) and all applicable rules and regulations of the SEC. The four independent directors are Creed L. Ford, III, Robert Merritt, Michael O’Donnell and Karl Okamoto. Until his appointment as Interim Chief Executive Officer on August 29, 2011, through December 31, 2011, Mark Demilio was an independent director. Under Nasdaq Rules, Mr. Demilio may still be considered independent since he is no longer serving as interim CEO. Stephen Edwards was an independent director until his appointment as Executive Chair of the Board of Directors on January 1, 2012.

Board Leadership Structure

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership and that the right Board leadership may vary as circumstances warrant. Consistent with this understanding, the independent directors will consider the Board’s leadership structure on an annual basis. In 2007, the Board amended its Amended and Restated By-Laws to provide that the Chair of the Board and the Chief Executive Officer of the corporation shall be two different persons. From 2007 to 2012, the chairmanship was a non-executive position. The Chair of the Board serves in that capacity until an election by the independent directors. In accordance with our corporate governance principles, if the Chair of the Board is not independent, the independent directors will also elect a Presiding Director, who shall be an independent director, whose responsibilities include, among others, calling meetings of the independent directors and presiding over executive sessions of the independent directors.

In March 2010, the independent directors elected Mark Demilio, an independent director (until his appointment as Interim Chief Executive Officer on August 31, 2011) as Chair of the Board. Effective as of January 1, 2012, Stephen Edwards was appointed Executive Chair of the Board, and in March 2012, the independent directors elected Michael O’Donnell, an independent director, as Presiding Director.

The Board’s Role in Risk Oversight

Management of the Company is primarily responsible for assessing and managing the Company’s various exposures to risk on a day-to-day basis, including the creation of appropriate risk management programs and policies. The Board is responsible for overseeing management in the execution of its responsibilities and for assessing the Company’s approach to risk management. The Board executes its oversight responsibility for risk management directly and through its committees, as follows:

The Audit Committee oversees the Company’s financial and management risk programs, including accounting and audit-related exposure, and the steps management has taken to monitor and control such exposures. The Company’s Director of Internal Audit reports independently to the Audit Committee, and the Audit Committee reviews the scope and methodology of the internal audit process. The Audit Committee meets quarterly with and receives reports from management, the Director of Internal Audit, and the Company’s independent certified public accounting firm to review the Company’s major financial risks or exposures. Periodically, the Audit Committee meets in executive session with the Company’s independent certified public accounting firm, and it meets in executive session with the Company’s Director of Internal Audit at least once

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annually. Between meetings, the Director of Internal Audit has direct access to the Audit Committee as necessary. For additional information, see the sections below captioned “Board Committees—Audit Committee” and “Report of the Audit Committee”.

The Chair of the Audit Committee, along with the General Counsel and Chief Compliance Officer, is copied on the transcripts of all calls received through the Company’s whistleblower hotline, and the General Counsel and Chief Compliance Officer reports to the Audit Committee on the results of investigations and other legal developments.

The Board’s other committees—Compensation and Nominating/Corporate Governance—oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive and compensation generally. The Board is kept abreast of its committees’ risk oversight and other activities via reports by the Chair of each committee to the full Board. These reports are presented at regular Board meetings and include discussions of committee agenda topics, including matters involving risk oversight. For additional information, see the sections below captioned “Board Committees—Compensation Committee” and “Nominating/Corporate Governance Committee”.

The Board considers specific risk topics, including risks associated with our strategic plan, our capital structure and our development activities. Throughout the year, our Board provides guidance to management regarding our strategy and helps to refine our operating plans to implement our strategy. Each year, the Board reviews and discusses with executive management our long-term operating plans and overall corporate strategy. A discussion of key risks to the plans and strategy as well as risk mitigation plans and activities is led by the Chief Executive Officer and Chief Financial Officer as part of the meeting. In addition, the Board receives detailed regular reports from the members of our executive leadership team—the heads of our principal business and corporate functions—that include discussions of the risks and exposures involved in their respective areas of responsibility. These reports are provided in connection with regular Board meetings and are discussed, as necessary, at Board meetings. Further, the Board is routinely informed of developments at and affecting the Company that could affect our risk profile or other aspects of our business.

Executive Sessions

The Company believes that regular scheduling of meetings of non-management directors is important in order to foster better communication among non-management directors. Accordingly, the independent directors meet without any management directors or employees present at least twice each year in executive sessions.

Corporate Governance Principles

The Board adopted Corporate Governance Principles that, along with the charters of the Board committees, provide the framework for governing the operation of the Board and its committees and for guiding the Board and our senior management team in the execution of their responsibilities. The Board’s Nominating/Corporate Governance Committee is responsible for overseeing and reviewing the Corporate Governance Principles from time to time and recommending any proposed changes to the Board for approval. The Corporate Governance Principles are available on the Company’s website at www.getcosi.com.

Board Committees

The Board has three committees: Audit, Compensation and Nominating/Corporate Governance. The membership of each committee as of April 2, 2012 and the function of each committee are described below.

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Director

Audit Committee(1)

Compensation Committee(2)

Nominating/Corporate Governance Committee(3)

Carin Stutz

Stephen Edwards

Mark Demilio

Creed L. Ford, III

X

X

*

Robert Merritt

X

Michael O’Donnell

X

**

X

Karl Okamoto

X

X

*

Audit Committee. The Audit Committee is established in accordance with Section 3(a)(58)(A) of the Exchange Act. The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Company and the audits of the Company’s financial statements. The functions of the Audit Committee include, without limitation, (i) responsibility for the appointment, compensation, termination, retention and oversight of the Company’s internal auditor and independent registered public accounting firm, (ii) review and pre-approval of all auditing, non-audit and internal control-related services provided to the Company by the independent registered public accounting firm, other than as may be allowed by applicable law, and (iii) review of the annual audited and quarterly consolidated financial statements. The Company’s Amended and Restated Audit Committee Charter, which describes all of the Audit Committee’s responsibilities, is posted on the Company’s website at www.getcosi.com.

The Audit Committee has procedures in place to receive, retain and treat complaints received regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by anyone of concerns regarding questionable accounting or auditing matters.

The current members of the Audit Committee are Messrs. O’Donnell, Ford and Okamoto, with Mr. O’Donnell serving as the Chair. The Board has determined that each member meets the independence requirements set forth by NASDAQ and Rule 10A-3(b)(1) of the Exchange Act and is able to read and understand fundamental financial statements. In addition, Messrs. O’Donnell, Ford and Okamoto each qualifies as an “audit committee financial expert” within the meaning of the SEC regulations.

The Audit Committee met four times in fiscal 2011. The Audit Committee Report appears on page 20.

Compensation Committee. The principal functions of the Compensation Committee include (i) annually reviewing and approving corporate goals and objectives relevant to the compensation of the Chief Executive Officer, (ii) annually evaluating the performance of the Chief Executive Officer in light of those goals and objectives, (iii) annually reviewing and approving the compensation of the Chief Executive Officer and all other senior executives, and (iv) implementing incentive programs, including the Company’s stock incentive plans. The Company’s Compensation Committee Charter, which describes all of the Compensation Committee’s responsibilities, is posted on the Company’s website at www.getcosi.com.

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The Compensation Committee meets at least annually with the Chief Executive Officer while it is determining the annual and long-term performance goals and compensation levels for the Chief Executive Officer. Both the goals and the Compensation Committee’s evaluation of the Chief Executive Officer’s performance against such goals are then submitted for consideration by the independent directors of the Board at a meeting or executive session. Compensation decisions for the Chief Executive Officer must be determined and approved by the Compensation Committee in executive sessions. The Compensation Committee also meets with the Chief Executive Officer to review its evaluation of his or her performance against such goals.

The Chief Executive Officer meets at least annually with each of the other named executive officers while the Chief Executive Officer is determining the annual and long-term performance goals and compensation levels for each. The Chief Executive Officer then submits compensation recommendations to the Compensation Committee, along with the goals and evaluations of the other named executive officers’ respective performance against such goals. Both the goals and the Compensation Committee’s evaluation of the other named executive officers’ performance against such goals are then submitted for consideration by the independent directors of the Board at a meeting or in executive session. The Compensation Committee also meets with the Chief Executive Officer to review his or her recommendations and evaluations of the other named executive officers’ respective performance against such goals.

The Compensation Committee may form and delegate authority to subcommittees to perform its duties when appropriate. No such delegation was made in 2011. In addition, the Compensation Committee has the sole authority to retain and terminate any compensation consultants to be used to assist in the evaluation of executive compensation. In 2011, the Compensation Committee did not retain any independent compensation consultants.

The current members of the Compensation Committee are Messrs. O’Donnell and Okamoto, with Mr. Okamoto serving as the Chair. The Board has determined that each member of the Compensation Committee is a “non-employee director” as defined in Rule 16b-3 under Section 16 of the Exchange Act and is an “outside director” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended. The Compensation Committee met two times in fiscal 2011.

Nominating/Corporate Governance Committee. The principal functions of the Nominating/Corporate Governance Committee include, without limitation, (i) establishing the Board of Director Candidate Guidelines and the Corporate Governance Principles, (ii) identifying and nominating individuals qualified to become directors, (iii) considering all recommendations of director candidates made by eligible stockholders, and (iv) monitoring and recommending the functions of the Board committees. The Company’s Nominating/Corporate Governance Committee Charter, which describes all of the Committee’s responsibilities, is posted on the Company’s website at www.getcosi.com.

The current members of the Nominating/Corporate Governance Committee are Messrs. Ford and Merritt, with Mr. Ford serving as the Chair. The Nominating/Corporate Governance Committee met two times in fiscal 2011.

Stockholder Communications

Stockholders and other parties interested in communicating directly with the Board may do so by writing to a specific director, or to the whole Board, care of the Company’s Secretary. The Company’s Secretary will distribute any security holder communications received, as defined by the rules and regulations of the SEC, to the director(s) to whom the letter is addressed or to all of the directors if addressed to the entire Board. The following is the address to which stockholders should send such communications: Così, Inc., c/o Secretary, 1751 Lake Cook Road, Suite 600, Deerfield, Illinois 60015.

Code of Conduct and Ethics

All directors, officers and employees must act ethically at all times and in accordance with the Company’s Code of Conduct and Ethics. This Code satisfies the definition of “code of ethics” under the rules and regulations of the SEC and is available on the Company’s website at www.getcosi.com.

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NOMINATION PROCESS

Role of the Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee identifies individuals that it believes are qualified to become directors in accordance with the Board of Director Candidate Guidelines, attached hereto as Exhibit A. Candidates are reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of the Company’s stockholders, and they are evaluated for their character, judgment, business experience, and acumen. Pursuant to the Board of Director Candidate Guidelines, the Nominating/Corporate Governance Committee will consider and evaluate director candidates based upon certain minimum qualifications, as set forth in Exhibit A attached hereto.

After identifying the qualified individuals and conducting interviews, as appropriate, the Nominating/Corporate Governance Committee will recommend the selected individuals to the Board for election at an annual stockholders’ meeting. In the event there is a vacancy on the Board between such annual stockholders’ meetings, the Nominating/Corporate Governance Committee will recommend one or more of the qualified individuals for appointment to the Board.

The Nominating/Corporate Governance Committee may retain a director search firm to help the Committee identify qualified director nominees.

Candidates Proposed by Stockholders for Consideration by the Nominating/Corporate Governance Committee

The Nominating/Corporate Governance Committee has a policy to consider recommendations for director candidates submitted by stockholders. A stockholder recommending an individual for consideration by the Nominating/Corporate Governance Committee must provide (i) evidence in accordance with Rule 14a-8 of compliance with the stockholder eligibility requirements, (ii) the written consent of the candidate(s) for nomination as a director, (iii) a resume or other written statement of the qualifications of the candidate(s) for nomination as a director and (iv) all information regarding the candidate(s) and the security holder that would be required to be disclosed in a proxy statement filed with the SEC if the candidate(s) were nominated for election to the Board, including, without limitation, name, age, business and residence address, and principal occupation or employment as required by Item 401(e) of Regulation S- K. Stockholders should send the required information to: Così, Inc., c/o Secretary, 1751 Lake Cook Road, Suite 600, Deerfield, Illinois 60015.

In order for a recommendation to be considered by the Nominating/Corporate Governance Committee for the 2013 Annual Meeting of Stockholders, the Secretary must receive the recommendation no later than December 28, 2012. Such recommendations must be sent via registered, certified, or express mail, or by any other means that allows the stockholder to determine when the recommendation was received by the Company. The Company’s Secretary will send properly submitted stockholder recommendations to the Nominating/Corporate Governance Committee for consideration at a future Nominating/Corporate Governance Committee meeting. Individuals recommended by stockholders in accordance with these procedures will receive the same consideration as other individuals evaluated by the Nominating/Corporate Governance Committee.

Stockholder Nominations

In addition, the Company’s By-laws permit stockholders to nominate directors at an annual meeting of stockholders or at a special meeting of stockholders at which directors are to be elected in accordance with the notice of meeting. Stockholders intending to nominate a person for election as a director must comply with the requirements set forth in the Company’s By-laws, which were filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended October 1, 2007 and can also be obtained, without charge, upon written request to the Company’s Secretary, whose address is: Così, Inc., c/o Secretary, 1751 Lake Cook Road, Suite 600, Deerfield, Illinois 60015. In order for nominations to be made by a stockholder for the 2013 Annual Meeting of Stockholders, the By-laws require, without limitation, that the Company receive written notification from the record stockholder

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containing the information described in the section above and any other information required by the By-laws no earlier than December 30, 2012, nor later than January 29, 2013.

COMPENSATION OF DIRECTORS

Annual compensation for non-employee directors for 2011 was comprised of cash compensation and equity-based compensation in the form of shares of restricted stock. Each of these components is described in more detail below. Except as otherwise approved by the independent directors of the Board, employee directors do not receive any compensation in connection with their director service.

The following table summarizes the compensation paid to our non-employee directors for service on the Board during fiscal 2011:

2011 Director Compensation⁽¹⁾

Description of Non-Employee Director Compensation

The Nominating/Corporate Governance Committee and the Compensation Committee annually review the compensation of directors. During 2011, directors who were not employees of the Company or any of its subsidiaries received compensation for their service on the Board and were eligible to participate in the Amended and Restated Così, Inc. Non-Employee Director Stock Incentive Plan (“Non-Employee Director SIP”), as described below. Messrs. Ford, Merritt, O’Donnell and Okamoto were independent directors during fiscal 2011. Mr. Demilio was an independent director until his appointment as Interim CEO on August 29, 2011 through December 31, 2011 and thus was eligible to participate in the Non-Employee Director SIP during fiscal 2011. Stephen Edwards was an independent director until January 1, 2012 when he was appointed as Executive Chair of the Board and received a pro rated grant under the Non- Employee Director SIP. As Chief Executive Officer and President of the Company, Carin Stutz was not compensated for serving as a director on the Board during fiscal 2011. James Hyatt, who served as Chief Executive Officer and President of the Company until his resignation as an officer and director of the Company on August 29, 2011, was not compensated for serving as a director on the Board during fiscal 2011.

The Company paid the following cash compensation in quarterly payments during the 2011 fiscal year to its non-employee directors. The Company awards the annual common stock grant on the day of the Company’s Annual Meeting of Stockholders.

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Annual Board Retainer		$10,000
Annual Board Chair Retainer		$20,000
Annual Audit Committee Chair Retainer		$10,000
Annual Compensation Committee Chair Retainer		$   5,000
Board Meeting In-Person Attendance Fees (per meeting)		$   2,000
Board Meeting Telephonic Attendance Fees (per meeting)		$   1,000
Annual Stock Grant		Value equal to $25,000

Directors are also reimbursed for out-of-pocket expenses incurred in connection with their service as directors.

Amended and Restated Così, Inc. Non-Employee Director Stock Incentive Plan

The Amended and Restated Così, Inc. Non-Employee Director Stock Incentive Plan, as approved at the 2004 Annual Meeting of Stockholders, provides for (i) automatic grants of shares of common stock to non-employee directors and (ii) discretionary grants of non-qualified stock options and stock appreciation rights (“SARs”) to non-employee directors. The Board has the discretionary authority to determine the eligibility of non-employee directors to receive stock options and SARs, the time or times at which the options or SARs may be exercised and whether all of the options or SARs may be exercised at one time or in increments. Under the terms of the plan, each non-employee director annually receives an automatic grant of the Company’s common stock having a fair value of $25,000 at the time of the award. A total of 250,000 shares of common stock were reserved for issuance under the Amended and Restated Così, Inc. Non-Employee Director Stock Incentive Plan. As of May 2009, all of the shares reserved for issuance under the plan were issued, and the grants to non-employee directors in June 2011 were made under the Così, Inc. 2005 Omnibus Long-Term Incentive Program.

Chair of the Board

Non-Executive Chair of the Board

Mark Demilio served as the non-executive Chair of the Board from March 9, 2010 through December 31, 2011. While serving as non-executive Chair of the Board, Mr. Demilio was paid an annual Board retainer of $10,000 plus an annual retainer of $20,000, in addition to the annual stock grant of the Company’s common stock having a fair value of $25,000 at the time of award granted to the Company’s non-employee directors. He was also paid for all Board meetings attended at the rate of $2,000 per meeting for in-person meetings and $1,000 for teleconference meetings, and he was also reimbursed for out-of- pocket expenses incurred in connection with his service as a director. The total compensation paid to Mr. Demilio in fiscal year 2011 as a director is summarized in the table below captioned “Summary Compensation”.

Appointment of Executive Chair of the Board

Pursuant to his Letter Agreement dated December 12, 2011, Stephen Edwards began serving as Executive Chair of the Board on January 1, 2012. While serving as Executive Chair of the Board, Mr. Edwards is paid an annual base salary in the gross amount of $100,000, net of applicable withholding taxes and other applicable deductions, payable in bi-weekly installments in accordance with the Company’s payroll practices in effect from time to time. On January 1, 2012, Mr. Edwards was also awarded 100,000 shares of the Company’s common stock, which will vest in equal quarterly installments at the end of each calendar quarter during calendar year 2012 provided that he remains continuously employed by the Company through each such vesting date. Mr. Edwards will also be paid an annual Board retainer of $10,000, and he will receive an annual stock grant of the Company’s common stock equal to $25,000. He is also paid for any Board meetings attended at the rate of $2,000 per meeting for in-person meetings and $1,000 for teleconference meetings, and he is also reimbursed for out-of-pocket expenses incurred in connection with his service as a director.

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I. PROPOSAL NUMBER ONE—ELECTION OF DIRECTORS

The Company’s By-laws provide that the Company’s Board of Directors will consist of not less than three members, the exact number to be determined from time to time by resolution adopted by the affirmative vote of a majority of all directors of the Company, with the members to be divided into three classes. The number of directors of the Company is presently fixed at eight. Directors in each class are elected for staggered three-year terms.

In November 2008, director resigned from the Board, resulting in a vacancy in the class of directors whose terms expire in 2014, which vacancy has not yet been filled.

Consequently, the Board currently consists of seven directors. Proxies may not be voted for a greater number of persons than the number of nominees named.

The terms of Michael O’Donnell and Karl Okamoto expire this year. Messrs. O’Donnell and Okamoto have been nominated by the Board for a term of three years expiring at the 2015 Annual Meeting of Stockholders and until their successors have been duly elected and qualified. Messrs. O’Donnell and Okamoto are presently directors of the Company and each has consented to be named as a nominee and to serve as a director if elected. Should Mr. O’Donnell or Mr. Okamoto be unable or unwilling to serve as a director, the enclosed proxy will be voted for such other person or persons as the Board may recommend. Management does not anticipate that such an event will occur.

The Board of Directors recommends a vote “FOR” the election of the nominees named above.

Information about the Nominees, the Continuing Directors and the Executive Officers

The table below sets forth the names and ages of the directors, including the nominees, and the current executive officers of the Company, as well as the positions and offices held by such individuals. A summary of the background and experience of each of these individuals is set forth below the table.

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DIRECTORS WHOSE TERMS EXPIRES IN 2012

Michael O’Donnell, Director. Mr. O’Donnell has been a member of our Board of Directors since March 2006. He also serves as a director and a member of the audit committee of Sbarro, Inc. and as a director of Ruth’s Hospitality Group and of Logan’s Roadhouse, Inc. Since August 2008, Mr. O’Donnell has served as President and Chief Executive Officer of Ruth’s Hospitality Group, Inc., and he has served as Chair of their board since October 2010. From March 2005 until the consummation of the company’s merger in October 2007, he served as Chair of the Board, President and Chief Executive Officer of Champps Entertainment, Inc. From September 2003 until March 2005, he served as Chief Executive Officer and President and as a Director of Sbarro, Inc. From August 1998 through October 2002, he served in various executive capacities with Outback Steakhouse, Inc., including as President and Chief Executive Officer of New Business. From 1995 to 1998, Mr. O’Donnell was President, Chief Operating Officer and a partner of Ale House Restaurants, Inc. He graduated from Rollins College in 1978.

Key Attributes, Experience and Skills

As a result of Mr. O’Donnell’s long tenure as a chief executive officer and director of public companies in the restaurant industry, he provides valuable industry-specific business knowledge and executive leadership experience as well as insights into driving strategic direction. In addition, Mr. O’Donnell brings financial expertise to the board, including through his service on the audit committee of another public restaurant company, as well as ours.

Karl Okamoto, Director. Mr. Okamoto has been a member of our Board of Directors since December 2007. He also served as a director and chairman of the compensation committee of Champps Entertainment, Inc. Since July 2007, Mr. Okamoto has been serving as Director of the Program in Business & Entrepreneurship Law and as a Professor of Law at Drexel University’s Earle Mack School of Law in Philadelphia, Pennsylvania. He is also the Chief Executive Officer of ApprenNet LLC, an online education company he founded in June 2011. From January 2007 through June 2007, he served as a consultant to Drexel University’s Earle Mack School of Law, and from February 2004 to August 2006, he served as a Senior Managing Director of Atticus Capital LP. Prior to that, he served as an independent consultant to Soros Fund Management from October 2001 to October 2003. Mr. Okamoto received his B.A. in 1982 and his J.D. in 1985 from Columbia University.

Key Attributes, Experience and Skills

Mr. Okamoto brings to our Board strong leadership and legal experience, along with an understanding of business strategy. His experience as a professor, consultant and investment fund manager provides additional perspectives on our business as well as a broad knowledge of public companies, corporate governance, executive compensation and risk management. Through his experience, he also brings to our Board financial expertise.

CONTINUING DIRECTORS

Mark Demilio, Director. Mr. Demilio has been a member of our Board of Directors since April 2004. He served as Chair of the Audit Committee of the Board from August 2004 until March 2010 and as Chair of the Board from March 2010 to December 31, 2011. Mr. Demilio was appointed as Interim CEO of the Company from August 29, 2011 through December 31, 2011. He also serves as a member of the board of directors and chairman of the audit committee of Restoration Hardware, a privately-held retailer of high quality furniture, lighting, textiles, hardware and other household goods, positions he has held since October 2009. From December 2000 until his retirement at the end of October 2008, Mr. Demilio served as the Chief Financial Officer of Magellan Health Services, Inc., a $2.6 billion publicly-traded managed specialty healthcare company that manages the delivery of behavioral healthcare treatment services, specialty pharmaceuticals and radiology services. He also served as General Counsel of that company from July 1999 to October 2001 and from March 2004 to January 2005. Prior to joining Magellan Health Services, Inc., Mr. Demilio was with Youth Services International, Inc., a publicly-traded company that managed residential treatment centers for behaviorally troubled youth and behavioral treatment programs in juvenile correction facilities, serving as Executive Vice President, Business Development and General Counsel from March 1997 to March

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1999 and as Chief Financial Officer from June 1998 to March 1999. Prior thereto, Mr. Demilio was a partner with Miles & Stockbridge, a Baltimore, Maryland-based law firm. Mr. Demilio has also been a financial analyst for CareFirst BlueCross BlueShield of Maryland and a certified public accountant with Arthur Andersen. Mr. Demilio holds a Juris Doctor degree from the University of Maryland School of Law and a Bachelors of Science degree in Accounting from Villanova University. He was a principal officer of Magellan Health Services, Inc. and 88 of its affiliates which commenced a case on March 11, 2003 under Chapter 11 of Title 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. These companies successfully emerged from Chapter 11 on January 5, 2004.

Key Attributes, Experience and Skills

Through his experience as a chief financial officer and as a general counsel of public companies, as well as his experience as a board member of another retail company, Mr. Demilio brings extensive executive leadership and business experience to the Board. That experience, along with his training and background as a certified public accountant, his experience as a corporate and securities lawyer representing public and private companies, and his services as chairman of our Audit Committee and the audit committee of another retail company, provides financial and legal perspectives on our business as well as financial expertise to the Board.

Creed L. Ford, III, Director. Mr. Ford has been a member of our Board of Directors since March 1997. Mr. Ford is also currently the President and Chief Executive Officer of Fired Up, Inc. in Austin, Texas, the parent company of Carino’s Italian Restaurants, and has held this position since June 1997. He has been a partner of Ford Restaurant Group since 1997 and is a partner of Rudy’s Texas BBQ. From 1976 through 1997, Mr. Ford served in various capacities at Brinker International, Inc., including Chief Operating Officer and Director, over operations for all of its restaurant concepts. Mr. Ford also currently serves as Chairman of the Board of Fired Up, Inc., as a board member of Nolan Ryan Beef Company, and as an Advisor to the Mays College of Business at Texas A&M University.

Key Attributes, Experience and Skills

Mr. Ford’s long tenure and experience as an executive in the restaurant industry with multiple concepts of varying sizes brings extensive industry-specific business, executive management, and operations experience to the Board. Additionally, having served several years on our Board, he provides valuable historical knowledge of our Company. Mr. Ford also brings financial experience to the Board, including through his previous audit committee experience on our Board and as the Chief Operating Officer of a public company.

Robert S. Merritt, Director. Mr. Merritt has been serving as a member of the Company’s Board of Directors since October 2005 and served as Chair of the Board from November 4, 2008 until March 9, 2010. Since October, 2009, he also serves as a director of Ruth’s Hospitality Group, Inc. From March 12, 2007 to September 15, 2007, Mr. Merritt served as the Company’s Interim Chief Executive Officer and President, while continuing to serve as a director of the Company. In 2005, Mr. Merritt retired from Outback Steakhouse, Inc., where he served as Senior Vice President-Finance, Chief Financial Officer, Treasurer and Secretary since February 1991, and served as Vice President and Chief Financial Officer from January 1990 to February 1991. Mr. Merritt also served as a member of the board of directors of Outback Steakhouse, Inc. and each of it subsidiaries and affiliates from 1991 to his retirement in 2005. From 1988 to 1989, he served as Executive Vice President of Administration and Chief Financial Officer of JB’s Restaurants, Inc., a restaurant operator. From 1985 to 1988, he was Vice President of Finance for JB’s Restaurants. From 1981 to 1985, Mr. Merritt was employed by Vie de France Corporation, a restaurant and specialty baking company, as Vice President of Finance and Accounting and Chief Financial Officer. He received his B.B.A. in Accounting from George Washington University.

Key Attributes, Experience and Skills

Through his many years of experience as a chief financial officer of publicly-traded and privately-held companies in the restaurant industry, along with his experience as a board member of another public company, Mr. Merritt brings extensive public company financial expertise, executive leadership and industry-specific experience to the Board. That experience, along with having served as our interim

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President and Chief Executive Officer, provides important perspectives to the Board on the issues facing our Company.

Stephen Edwards, Executive Chair and Director. Mr. Edwards joined the Company’s Board of Directors in October 2011, and on January 1, 2012, began serving as the Executive Chair of the Company’s Board of Directors. Mr. Edwards is currently a managing member of Edwards Capital Management LLC, a private investment company. From July 2002 to January 2009, Mr. Edwards served as a Senior Managing Director of Atticus Capital LLC, a private partnership investing globally in public equity securities. From January 2003 to February 2006, Mr. Edwards also served as a founding partner and portfolio manager of Atticus Opportunity Fund, Ltd., a private partnership investing in distressed assets. Prior to that time, Mr. Edwards served as a Senior Managing Director of Bruckmann, Rosser, Sherrill & Co., LLC, a middle market leveraged buyout fund. He has previously served on the Boards of Directors of Kemet Corporation, Smith Alarm Holdings, Town Sports International Holdings, Au Bon Pain Inc, Windy Hill Pet Food Company Inc, Unwired Plc, Anvil Holdings, and Champps Entertainment Inc. (NASDAQ: CMPP). Mr. Edwards holds a B.A. degree in Economics from Yale University and an M.B.A from Harvard Business School.

Key Attributes, Experience and Skills

Through his prior business and board experience, Mr. Edwards brings to our Board strong executive leadership, financial expertise, and an understanding of business strategy. His experience as a consultant and investment fund manager provides additional perspectives on our business as well as a broad knowledge of public companies and equity markets. Additionally, Mr. Edwards has broad corporate governance experience from his service on the boards of other public and private companies.

Carin Stutz, Chief Executive Officer and President, Director. As of January 1, 2012, Ms. Stutz was appointed Chief Executive Officer, President and director of the Company. Prior to joining the Company, she served as President of Global Business Development at Brinker International, Inc. from December 2010 through December 2011. Previously, Ms. Stutz served as Senior Vice President of Strategic Operations of Brinker International, Inc. from December 2009 to December 2010, and as Senior Vice President and Chief Operations Officer for Global Business Development of Brinker International, Inc. from June 2009 to December 2009. Prior to joining Brinker International, Inc., Ms. Stutz was employed by Applebee’s International, Inc. from 1999 to 2007, serving in various roles, most recently as Executive Vice President of Operations from January 2005 to November 2007. Previously, Ms. Stutz was Division Vice President with Wendy’s International, Inc., Regional Operations Vice President for Sodexho, USA, and Vice President of Corporate Operations for NutriSystem, Inc. Prior to 1990, Ms. Stutz was employed for 12 years with Wendy’s International, Inc. Ms. Stutz is a member of the Women’s Foodservice Forum, serving in various leadership roles, most recently as Chair of the Executive Committee. Ms. Stutz holds a Bachelor of Science degree from Western Illinois University and a Master of Business Administration degree from Mid American Nazarene University.

Key Attributes, Experience and Skills

As a result of Ms. Stutz’ 35 years of experience in the restaurant industry and having held leadership positions at several industry-leading companies, Ms. Stutz brings extensive industry-specific operations knowledge, strong leadership, and innovative strategic brand-building experience to the Company. Ms. Stutz’ service as CEO and President and as a director on the Board creates a critical link between management and the Board, enabling the Board to perform its oversight function with the benefit of management’s perspectives on the business. In addition, having the CEO and President on our Board provides our Company with decisive and effective leadership. As a result of Ms. Stutz’ leadership experience in both domestic and global operations and business development, Ms. Stutz also brings extensive business, operating and franchise knowledge to the Board. In addition, Ms. Stutz brings her strategic vision for our Company to the Board.

EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS

William Koziel, Chief Financial Officer, Secretary & Treasurer. William Koziel was appointed Chief Financial Officer, Secretary and Treasurer of the Company in August 2005 and was Controller from

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August 2004 until August 2005. He has over 20 years of executive finance and accounting experience in the retail industry, more than 10 of which have been with publicly-traded companies. From January 2002 to July 2004, Mr. Koziel served as Vice President Controller of Galyan’s Sporting Goods, Inc., a $700 million publicly-traded sporting goods retailer. Prior to joining Galyan’s, Mr. Koziel served as Vice President Controller of Homelife Corporation, a $600 million furniture retailer, from July 1999 to January 2002. From 1998 to June 1999, he served as Vice President Finance for Futorian Furnishings, a $200 million furniture manufacturer. From 1995 to December 1998, Mr. Koziel served as Chief Financial Officer of Evans, Inc., a $150 million publicly-traded specialty retailer. He received a Masters of Business Administration from De Paul University in 1992 and a Bachelor of Science in Accounting from De Paul University in 1980. Mr. Koziel successfully achieved accreditation as a certified public accountant in 1981.

Vicki Baue, Vice President and General Counsel, Chief Compliance Officer, Chief Legal Officer, Assistant Secretary. Ms. Baue was appointed Vice President and General Counsel in February 2007 and was General Counsel from September 2004 until February 2007. Ms. Baue also serves as the Company’s Chief Legal Officer and Chief Compliance Officer and as Assistant Secretary. From August 1998 to April 2004, Ms. Baue was an associate in the Corporate and Securities practice group in the Chicago, Illinois, office of Piper Rudnick, LLP (n/k/a DLA Piper US LLP) where her practice focused on Mergers and Acquisitions and General Corporate. From 1988 to August 1998, Ms. Baue was employed by Creative Expressions Group, Inc., an international manufacturer and distributor of paper party goods, where she was Director of Process Improvements and responsible for legal affairs and business results from 1997 to 1998, a member of the senior leadership team, and Manager of Customer Services, Credit and Support Services from 1988-1997. Ms. Baue received a Juris Doctor degree from the University of Indiana School of Law in 1997 and a Bachelors of Science degree in Human Resources Management from the University of Alabama in 1980. She was admitted to the Indiana Bar in 1997 and the Illinois Bar in 1998.

Becky Iliff, Vice President of People. Becky Iliff was appointed Vice President of People by the Company in November 2005. From January 2004 to November 2005, Ms. Iliff was Vice President Field Training & Human Resources at Jamba Juice Company in San Francisco, California. Prior to that, she was at Bennigan’s Irish American Grill & Tavern in Dallas, Texas, where she served as Vice President Culture & Education from June 2002 to November 2004, Director of Training & Development from January 2000 to June 2002, and Manager of Training from June 1998 to January 2000. Ms. Iliff received a Master of Arts in Human Communication Studies from the University of Denver in 1993 and a Bachelor of Arts in Organizational Communication from Purdue University in 1991.

John Gohde, Vice President of Development. Mr. Gohde was appointed Vice President of Development by the Company in June 2011. From March 2010 to June 2011, he held the position of Vice President—Automotive Franchise at Sears Holding Corporation. Prior to that, he served as President, CEO, Executive Board Member and Board Consultant to Knowledge Points Inc. and Knowledge Points Development Corporation from January 2005 to January 2010. Mr. Gohde attended Michigan State University where he majored in Business Administration and he attended the Executive Education Program at the University of Michigan where he received a Certificate in Business Management in 1982.

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REPORT OF THE AUDIT COMMITTEE

The members of the Audit Committee have been appointed by the Board of Directors. The Audit Committee is governed by a charter that has been approved and adopted by the Board of Directors and which is reviewed and reassessed annually by the Audit Committee. The Audit Committee Charter can be found in the Investor/Corporate Governance section of the Così website at www.getcosi.com. The Audit Committee is comprised of three independent directors.

The following Audit Committee Report does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates this Audit Committee Report by reference therein.

The Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities by reviewing (i) the financial reports and other financial information provided by the Company to any governmental body or to the public, (ii) the Company’s systems of internal controls regarding finance, accounting, legal compliance, and ethics, and (iii) the Company’s auditing, accounting and financial reporting processes generally.

Management is solely responsible for the preparation and integrity of the Company’s financial statements and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and for expressing an opinion on the conformity of those audited consolidated financial statements with accounting principles generally accepted in the United States of America. The independent registered public accounting firm is accountable to the Board of Directors and the Audit Committee. The Audit Committee has the authority and responsibility to retain and terminate the Company’s independent registered public accounting firm, and exercised this authority by retaining BDO USA, LLP.

To fulfill our responsibilities, we did the following:

Members of the Audit Committee rely without independent verification on the information provided to them and on the representations made by management and the independent registered public accounting firm. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with PCAOB standards or that the Company’s independent registered public accounting firm is in fact “independent”.

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Based upon these reviews and discussions described in this report, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 2, 2012.

Respectfully submitted,
The Audit Committee
Michael O’Donnell, Chair
Creed L. Ford, III
Karl Okamoto

EXECUTIVE COMPENSATION

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis (“CD&A”) with management and, based upon such review and discussion, the Compensation Committee recommended to the Board of Directors that the CD&A be included in the Company’s 2012 Proxy Statement.

Respectfully submitted,
The Compensation Committee
Karl Okamoto (Chair)
Michael O’Donnell

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COMPENSATION DISCUSSION AND ANALYSIS

Introduction

This Compensation Discussion and Analysis provides information on our compensation objectives and philosophy, the components of our compensation program and the reasons we provide each component. We also discuss how we determine targeted compensation and the basis of our pay decisions for the executive officers of the Company, including the amounts paid to the named executive officers included in the “Summary Compensation Table”.

Executive Summary

The Compensation Committee of the Board of Directors, with recommendations by the Company’s Chief Executive Officer, is responsible for determining the compensation of the executive officers and administering the plans in which the executive officers, the directors and the Company’s other employees participate. The goal of the Company’s compensation program is to attract, motivate and retain talented individuals to help Così attain the Company’s business goals and objectives. Così is committed to achieving long-term sustainable growth and increasing stockholder value. Our compensation programs for executive officers are designed to maintain these commitments and to encourage strong financial performance on an annual and long-term basis by using appropriate compensation structures and sound pay practices, without creating undue stockholder risk.

The principal elements of the total compensation for the Chief Executive Officer and other named executive officers are annual base salary, annual cash incentive compensation, and long-term equity-based compensation consisting of restricted stock units and restricted stock, as well as limited benefits and perquisites.

Oversight of the Executive Compensation Program

Role of the Compensation Committee. The Compensation Committee acts pursuant to a written charter and is comprised entirely of independent directors. The Compensation Committee has overall authority for approving and evaluating the director and officer compensation plans, policies and programs of the Company. Pursuant to its charter, the Compensation Committee has authority and responsibility to:

Discussions regarding the compensation of the Chief Executive Officer occur during executive sessions when only Compensation Committee members are present. The Compensation Committee’s complete charter is available at the Company’s web site at www.getcosi.com.

Role of the Chief Executive Officer and Others in Compensation Decisions. The Chief Executive Officer discusses the performance of the executive officers with the Compensation Committee on an annual basis and provides his or her recommendations on compensation actions for other executive officers. Additionally, he or she provides his or her perspective and recommendations to the

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Compensation Committee on compensation and benefit plan design and strategies, financial goals and criteria for the annual cash incentives and the amount of long-term equity-based compensation. Our Chief Executive Officer does not provide input or recommendations with regard to his or her own pay. The Compensation Committee reviews and discusses pay decisions related to the Chief Executive Officer in executive session without the Chief Executive Officer and other members of management present.

At the request of the Chief Executive Officer and the Compensation Committee, the Vice President of People from time to time performs a review of competitive compensation practices for executive officer positions and, based on that assessment, provides data and advice regarding compensation for new executives, new positions, promotions and salary adjustments, using data obtained from a variety of sources, including the Chain Restaurant Compensation Association’s annual compensation survey by The Hay Group, other industry surveys, executive recruiters and on-line HR and recruiting resources, in order to provide a general understanding of current compensation practices within the industry.

Role of the Independent Compensation Consultant. To assist the Compensation Committee with its responsibilities, the Compensation Committee has sole authority to retain and terminate any compensation consultant to be used to assist in the evaluation of Chief Executive Officer or senior executive compensation and has sole authority to approve the consultant’s fees and other retention terms. The Compensation Committee also has authority to obtain advice and assistance from internal or external legal, accounting or other advisors. In 2011, the Compensation Committee did not engage any third-party compensation consultants.

Executive Compensation Philosophy and Objectives

Our executive compensation philosophy, reviewed annually by the Compensation Committee, is to provide competitive levels of compensation that integrate pay with the Company’s short-term and long-term performance goals, reward corporate performance and recognize individual initiative and achievement.

Although the Compensation Committee does not engage in benchmarking, the Compensation Committee believes that it is appropriate to pay the executive officers cash and equity-based compensation that is generally competitive in the restaurant industry. The guiding principle in the design and administration of our compensation program is built on this philosophy and serves the following objectives:

Components and Analysis of Total Compensation

The Company’s direct compensation program for executive officers, including a portion that is at risk, consists of the following elements:

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•				limited benefits and perquisites, which are also generally available to all of the Company’s full-time employees.

Our compensation program is designed to provide an appropriate balance between annual and long-term performance of the Company, as well as between fixed and variable (“at-risk”) compensation. Each of these elements of pay is described below.

Base Salary. The annual base salary for executive officers is determined relative to job scope and responsibilities, past and current contributions, compensation for similar positions within the Company, time in position, the critical nature of the role to the Company and the difficulty of replacing the executive, and individual factors such as unique skills, expertise, demand in the labor market, and longer-term development and succession plans. Individual performance is measured by what is achieved (results) as well as how it is achieved (behaviors).

Executive officers’ salaries are reviewed annually after the end of each fiscal year, typically in February. In addition to considering the performance of individual executive officers and information concerning competitive salaries, significant weight is placed on the financial and operating performance of the Company when considering salary adjustments. Also, increases are aligned with the Company’s merit-increase targets for the year. The Compensation Committee does not rely solely on predetermined formulas or a limited set of criteria when it evaluates the performance of these officers.

The Compensation Committee reviewed the Company’s financial and operating performance in 2011 as compared to its internal business plan and the various operating and financial targets that management of the Company had set for themselves in 2011, as well as overall salary trends in the industry. In March 2012, the Compensation Committee determined that, given the Company’s fiscal 2011 financial and operating results as compared to its internal business plan and management’s various targets and overall industry salary trends, no increases to base salaries were approved for the named executive officers for 2012. Thus, none of our named executive officers received a salary increase in fiscal 2012.

Annual Cash Incentive Compensation. Annual cash incentive compensation is based upon achievement of the Company’s annual financial and operating goals and each executive officer’s level of achievement against his or her individual financial, operational and strategic performance goals, including various quantitative and qualitative performance criteria for executive officers, with payouts ranging from 0% to 100% of the targeted payouts for each executive, which range from 30% to 100% of the executive’s base salary, in accordance with the executive’s employment agreement or offer letter. The performance goals have been linked to the Company’s revenue, comparable sales growth, operating income, cash position, franchise growth, earnings before interest, taxes, depreciation and amortization (EBITDA) performance and strategic objectives which are part of the Company’s internal long-range business plan, generally excluding the effects of extraordinary, unusual or infrequently occurring events or changes in accounting principles. These performance goals have been selected because they are important indicators of increased stockholder value. However, even though the performance goals have been linked to the Company’s internal business plan, the Compensation Committee has not relied solely upon predetermined formulas or a limited set of criteria in evaluating the performance of the executive officers. These decisions have typically included subjective judgments, based upon a number of factors relating to an individual executive’s performance.

For fiscal 2011, the Compensation Committee reviewed the Company’s financial and operating performance as compared to its internal business plan and the various operating and financial targets management of the Company had set for themselves for 2011. In March 2012, the Compensation Committee determined that, given the Company’s 2011 financial and operating results as compared to its internal business plan and the various operating and financial targets management of the Company had set for themselves for 2011, no cash incentive compensation will be paid to named executive officers in respect of fiscal year 2011.

Long-Term Equity-Based Compensation. The Company strongly believes that equity ownership by executive officers creates incentive to build stockholder value and align the interests of executive officers with the stockholders. The Compensation Committee believes that awards of restricted stock or restricted stock units under the Company’s stock incentive plans remain an effective instrument to

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achieve this goal. Grants of restricted stock or restricted stock units facilitate ownership in the Company and serve to retain executive officers since the awards have multi-year vesting schedules.

Under the Omnibus Plan, the Company may provide long-term equity incentives in the form of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units and any other stock awards that may be payable in shares, cash, other securities or any other form of property as may be determined by the Compensation Committee. Annually in March, beginning in 2005, the Company has awarded long-term equity-based compensation, which has been in the form of restricted stock or restricted stock units, to executive officers, based on an evaluation of the Company’s financial and operating performance and their individual performances in the prior year.

Under the Omnibus Plan, restricted stock awards typically vest 20% on the date of grant and 20% annually on each anniversary of the grant date over the next four years provided that the executive officer is continuously employed by the Company through each such date. Previously awarded but unvested shares of restricted stock are forfeited and cancelled on the date of termination if an executive officer’s employment with the Company is terminated (other than due to a change in control) and subject to the specific terms of his or her employment agreement.

Long-term equity incentive award targets vary based upon each executive officer’s employment agreement or offer letter and consistent with similar positions within the Company. Actual awards are determined based upon the Company achieving its annual financial and operating goals and executives achieving their individual performance goals.

In determining long-term equity incentive awards each year, the Compensation Committee and the Board may consider a number of factors. In addition to the Company’s financial performance and the individual performance of the eligible executive officers, the Committee considers the prevailing stock price and the consequent dilution that would result from any awards, the existing equity holdings of the eligible executives from prior award grants and the remaining availability under the Company’s stock incentive plans, among other factors. In March 2012, based on its consideration of these factors, the Compensation Committee determined not to award long-term equity incentive awards to executive officers of the Company in respect of fiscal year 2011.

Company’s Policy on Timing of Long-Term Equity-Based Incentive Compensation. Since May 2005, the Company has awarded long-term equity compensation in the form of restricted stock and restricted stock units, but has not awarded stock options since that date. The annual award date is typically the end of March, on a date that customarily falls between the Company’s regularly-scheduled Board and Compensation Committee meetings in the first quarter and the disclosure of the Company’s fiscal year-end financial results.

Other Compensation and Benefits

The Compensation Committee oversees the design, implementation and administration of the Company-wide benefit programs. The Company periodically reviews the cost and prevalence of these programs to ensure these programs are in line with competitive practices and warranted, based upon the business need and contributions of the executive officers.

Health and Welfare Benefits. Health and welfare benefits are an important component of the total compensation package and are commonplace among similarly-sized companies in the restaurant industry and generally available to other employees in the Company. We provide both Company-subsidized and voluntary benefit programs to our employees that generally include medical, dental, life insurance and disability coverage. In fiscal year 2011, pursuant to the terms of his employment agreement, the Company paid 100% of the single and child/spouse/family healthcare premiums for Mr. Hyatt, Chief Executive Officer and President in 2011, which is more than the standard Company contribution towards healthcare premiums for all other executives and employees of the Company. The Company’s cost of these healthcare premiums paid for the benefit of the Chief Executive Officer in 2011 is provided below in the table captioned “All Other Compensation”.

401(k) Plan. The Company’s 401(k) Plan allows employees to invest funds on a pre-tax basis for their retirement. Until April 2009, the Company matched employee contributions to the Company’s 401(k) plan (at a 50% rate up to 4% of an employee’s pay, but not in excess of 20% of gross pay).

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Employees must be employed by the Company for ninety days to be eligible to participate in the plan, and all employees are eligible to participate on the same terms. The Company matching contributions vest after one year of employment. As of April 2009, the Company matching contributions to the Company’s 401(k) plan were suspended, and there were no Company matching contributions in 2010. Effective January 1, 2011, Company matches of employee contributions to the Company’s 401(k) plan were reinstated.

Compensation of Executive Chair

Effective as of January 1, 2012 and continuing through fiscal year 2012, Stephen Edwards was appointed Executive Chair of the Company’s Board of Directors. The terms of Mr. Edwards’ employment agreement are described below in the section captioned “Executive Agreements” and the compensation costs for fiscal 2011 are included below in the table captioned “Summary Compensation”.

Compensation of Chief Executive Officer

Effective as of August 29, 2011, James Hyatt voluntarily resigned as the Company’s Chief Executive Officer and President and as a director. In light of his resignation, the Company appointed Mark Demilio as Interim Chief Executive Officer of the Company until a replacement was identified, and he served in that capacity from August 29, 2011 through December 31, 2011. The Compensation Committee determined it was appropriate to award to Mr. Demilio the gross annual base salary of $350,000. Under the terms of Mr. Demilio’s agreement with the Company, he was paid a gross monthly base salary of $29,166.67 and was reimbursed for all reasonable out-of-pocket business expenses incurred by him so long as he served as Interim Chief Executive Officer of the Company, including, without limitation, all travel, housing and other expenses incurred by Mr. Demilio in connection with commuting and working out of the Company’s headquarters located in Deerfield, Illinois, and all travel expenses incurred by or related to his spouse accompanying him on up to two (2) trips per month. Mr. Demilio was also entitled to participate in any of the Company’s employee welfare benefit plans generally made available to executives of the Company, including medical, dental, vision, life, accidental death and dismemberment, and long-term disability insurance, on the same basis as other Company executive employees are entitled to participate. In addition, Mr. Demilio had the option to participate in the Company’s 401(k) retirement plan. The compensation costs for fiscal 2011 are included below in the table captioned “Summary Compensation”.

The special search committee of the Board, with the assistance of a third-party executive recruiting firm, undertook a search for a highly qualified candidate to fill the position of Chief Executive Office. Effective as of January 1, 2012, after a thorough and comprehensive review, the Company’s Board of Directors, at the recommendation of the special search committee of the Board, appointed Carin Stutz as the Company’s Chief Executive Officer and President and as a director on the Board.

Consistent with our executive compensation philosophy and objectives described above, the search committee of the Board, with assistance from the Compensation Committee and the third-party executive recruiting firm, considered various factors in determining Ms. Stutz’ total compensation package, including job scope and responsibilities, the Company’s short-term and long-term objectives, and individual factors such as the critical nature of the role to the Company, unique skills, and achievements and contributions in past positions. Ms. Stutz’ skills, experience and capabilities are consistent with the needs of the Company and the position, and the total compensation package is consistent with the targeted compensation package. The terms of her employment agreement are described below in the section captioned “Executive Agreements” and the compensation costs for fiscal 2011 are included below in the table captioned “Summary Compensation”.

In light of the fact that Ms. Stutz had been in position only since January 1, 2012, the Compensation Committee did not approve a salary adjustment, annual cash incentive or long-term equity incentive for the Chief Executive Officer and President in March 2012 with respect to fiscal year 2011.

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Tax Information

The Company has considered the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended, which restricts the deductibility of compensation paid to each of the Chief Executive Officer and next three most highly compensated executive officers at the end of any fiscal year (other than the Chief Financial Officer) to the extent such compensation exceeds $1 million in any year and does not otherwise qualify for an exception. The Company’s deduction for executive compensation provided during 2011 was not limited by Section 162(m). To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy requiring all compensation to be deductible. In the future, the Compensation Committee will continue to monitor the deductibility of its executive compensation.

No Stock Ownership Requirements

Under the terms of her employment agreement, Ms. Stutz will retain, and will not transfer, at least 50% of the restricted stock granted to her with respect to which the restrictions on transfer, sale or assignment may have lapsed, unless otherwise approved by the independent directors. Except for Ms. Stutz, the Company does not currently require named executive officers or other executive officers of the Company to acquire or hold a specified number of shares of Company common stock. The Company encourages named executive officers and other executive officers of the Company to retain the shares of stock awarded under the Company’s stock incentive plans, including any shares received upon the exercise of stock options. However, the Company does permit executive officers and other management employees of the Company to sell a portion of their vested shares for payment of taxes and exercise costs, personal or family emergencies, or special purposes, such as purchasing a home, college tuition for children, financial and estate planning, or other similar purposes.

Change-In-Control Arrangements

Stock Incentive Plans

In accordance with the Company’s stock incentive plans, in the event of a change in control of the Company, all unvested stock options, shares of restricted stock and restricted stock units previously awarded to the executive officers (and all other employees) would automatically become fully vested.

Carin Stutz, Chief Executive Officer and President

Effective as of January 1, 2012, the Company entered into an employment agreement with Carin Stutz, Chief Executive Officer and President, which provides for certain additional benefits if her employment is terminated without “cause” following a “change in control” of the Company. This agreement is intended to provide for continuity of management in the event of a “change in control”. The agreement does not provide for severance payments solely upon a “change in control”.

The terms of Ms. Stutz’ employment agreement are described below in the narrative following the “Summary Compensation Table”. The estimated payments and benefits to Ms. Stutz following termination of her employment without “cause” following a “change in control” of the Company, as determined as of January 2, 2012, are included below in the compensation table captioned “Estimated Payments and Benefits Following a Change in Control”.

Other Executive Officers

In December 2008, the Company entered into Change in Control Severance Agreements with Mr. Koziel, Chief Financial Officer, Vicki Baue, Vice President, General Counsel, and Chief Compliance Officer, and Becky Iliff, Vice President of People, which provide for certain payments and benefits if their employment is terminated without “cause” following a “change in control” of the Company. These agreements are intended to provide for continuity of management in the event of a “change in control”. The agreements do not provide for severance payments solely upon a “change in control”. The Compensation Committee believed it was appropriate to enter into these agreements due to the review of strategic alternatives announced in November 2008.

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The terms of their Change in Control Severance Agreements are described below in the narrative following the “Summary Compensation Table”. The estimated payments and benefits to the executive officers following termination of their employment without “cause” after a “change in control” of the Company, as determined as of January 2, 2012, are included below in the compensation table captioned “Estimated Payments and Benefits Following a Change in Control”.

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EXECUTIVE COMPENSATION TABLES AND OTHER INFORMATION

The following table summarizes compensation awarded to, earned by, or paid by the Company to its named executive officers for each of the last three completed fiscal years and two additional individuals who would have been included in this summary but for the fact that they were not serving as executive officers of the Company as of January 2, 2012.

Summary Compensation Table

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				Board of Directors in October 2011, as as more fully described below in the table captioned “Other Compensation”.
(4)				Carin Stutz was appointed Chief Executive Officer and President effective as of January 1, 2012. Pursuant to her employment agreement, effective as of January 1, 2012, (a) she is being paid an annualized base salary in the gross amount of $460,000, payable in accordance with the Company’s payroll practices, and (b) she received, as a long-term incentive, 1,000,000 restricted shares of the Company’s common stock, which will vest in 5 equal annual installments commencing on the first anniversary of employment so long as Ms. Stutz remains continuously employed by the Company through each such vesting date and specified price targets (as adjusted for stock splits or similar events) of $1.25, 2.00, 2.75, 3.50 and $4.50 for the Company’s common stock are achieved for a period of 30 consecutive days. So long as the time vesting condition has been satisfied, the market vesting condition may be satisfied at any time provided Ms. Stutz remains continuously employed by the Company through and including the vesting date.
(5)				Mark Demilio served as Interim Chief Executive Officer of the Company from August 29, 2011 through December 31, 2011. Pursuant to his employment agreement as Interim Chief Executive Officer, he received an annual base salary in the gross amount of $350,000, pro rated for his term of service. During that time, Mr. Demilio also continued to serve as the Chair of the Company’s Board of Directors and to be compensated as a director, as more fully described in the table below captioned “All Other Compensation”.
(6)				James Hyatt voluntarily resigned his employment and all offices and positions with the Company on August 29, 2011. In accordance with the terms of his employment agreement and the Company’s Omnibus Plan under which his restricted stock was granted, Mr. Hyatt’s unvested shares of restricted stock and restricted stock units (200,000) were forfeited and cancelled.
(7)				Paul Bower voluntarily resigned his employment and all offices and positions with the Company on March 18, 2011. In accordance with the terms of the Company’s Omnibus Plan under which his restricted stock was granted, Mr. Bower’s unvested shares of restricted stock (36,000 shares) were forfeited and cancelled.

The table set forth below lists the elements of “All Other Compensation” included in the Summary Compensation Table above:

All Other Compensation

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(c)				Mark Demilio served as the Interim Chief Executive Officer of the Company from August 29, 2011 through December 31, 2011. Pursuant to the terms of his employment agreement Interim as Chief Executive Officer, he also continued to serve as Chair of the Company’s Board of Directors. Mr. Demilio’s total compensation as a director and Chair of the Company’s Board of Directors in fiscal year 2011 was $80,000, comprised of an annual Board retainer of $10,000, an annual Chair retainer of $20,000, $25,000 in meeting fees earned, and common stock in the amount of $25,000.
(d)				Pursuant to the terms of Mr. Hyatt’s employment agreement, the Company paid 100% of his single and child/spouse/family healthcare premiums during his employment with the Company.

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Executive Officer Agreements

Employment Agreement with Stephen Edwards. On December 12, 2011, we entered into an employment agreement with Stephen Edwards to serve as the Executive Chair of the Company’s Board of Directors, effective as of January 1, 2012. Pursuant to the terms of this employment agreement, we agreed to pay Mr. Edwards an annual base salary in the gross amount of $100,000, payable in accordance with the Company’s payroll practices. Also, as long-term incentive compensation, he received a grant of 100,000 restricted shares of the Company’s common stock that will vest at a rate of 25,000 shares on each of March 31, 2012, June 30, 2012, September 30, 2012 and December 31, 2012, so long as he remains continuously employed by the Company through the vesting date. If he ceases to be Executive Chair, any shares remaining unvested as of that date shall be forfeited. The Company will reimburse Mr. Edwards for all reasonable business expenses according to the Company’s business expense reimbursement policies. Throughout the duration of his services as Executive Chair, he will continue to receive board fees, stock grants, and other benefits that other members of the Board receive.

Employment Agreement with Carin Stutz. On December 12, 2011, we entered into an employment agreement with Carin Stutz to serve as the Company’s Chief Executive Officer and President, effective as of January 1, 2012. Pursuant to the terms of this employment agreement, we agreed to pay Ms. Stutz an annual base salary in the gross amount of $460,000 payable in accordance with the Company’s payroll practices. She also has the ability to earn an annual cash incentive (bonus) of up to 100% of her annual base salary based upon the attainment of performance goals established by the Compensation Committee in consultation with Ms. Stutz and up to 50,000 shares of the Company’s common stock in the form of restricted stock or restricted stock units. In accordance with the terms of her employment agreement, we granted to Ms. Stutz an initial grant of 1,000,000 restricted shares of the Company’s common stock pursuant to the Omnibus Plan, which will vest over time and upon attainment of certain targets, as follows:

So long as the time vesting condition has been satisfied, the market vesting condition may be satisfied at any time provided Ms. Stutz remains employed by the Company through and including the vesting date. Under her employment agreement, Ms. Stutz will retain, and will not transfer, at least 50% of this restricted stock with respect to which restrictions on transfer, sale or assignment may have lapsed.

All shares of restricted stock, restricted stock units, or other similar rights held by Ms. Stutz will become fully vested upon a “change in control” (as defined in her employment agreement and

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described under “Change of Control” below). In addition, if Ms. Stutz is terminated without “cause” (as defined her agreement) or Ms. Stutz resigns under circumstances constituting “good reason” (as defined in her agreement), she is entitled to receive: (i)(A) her base salary through the date of termination, if not previously paid, (B), the amount of any accrued but unpaid annual bonus, (C) all accrued benefits, if any, and (D) 12 months of her base salary (provided that if such termination occurs prior to the first anniversary of the agreement, then such salary continuation will be for a period equal to 24 months less the number of full months elapsed since the date of the agreement), (ii) the right to retain any shares (including restricted stock, restricted stock units, or other similar rights held by Ms. Stutz) that would have vested if not terminated prior to the date six months following the date of termination, and (iii) continuation of health insurance benefits for the lesser of 12 months or the balance of the employment period.

If Ms. Stutz’ employment is terminated without “cause” at any time within one year following a “change in control” or is terminated prior to a “change in control” in anticipation of such “change in control”, she is entitled to receive the same compensation she would be entitled to receive if she were terminated without “cause” or resigned under circumstances constituting “good reason” described above, except that in lieu of receiving 12 months of her base salary, she will be entitled to receive an amount equal to twice her base salary and any accrued but unpaid bonus. In addition, all unvested restricted stock, restricted stock units, or other similar rights held by Ms. Stutz will immediately vest. The Company will also make certain additional payments to Mr. Stutz if the Company reasonably determines that payment of the compensation to which she is entitled upon a “change in control” would give rise to “excess parachute payments” under the Internal Revenue Code of 1986, as amended, and would subject Ms. Stutz to an excise tax.

If Ms. Stutz’ employment terminates upon death, she is entitled to receive all accrued benefits through the effective date of termination. If Ms. Stutz’ employment terminates for “cause” or disability or she resigns under circumstances not constituting “good reason”, Ms. Stutz is entitled to receive her base salary through the date of termination and all accrued benefits through the date of termination. If Ms. Stutz’ employment is terminated for “cause” or she resigns under circumstances not constituting “good reason”, all unvested restricted stock, restricted stock units or similar equity awards will be forfeited.

Ms. Stutz is further entitled to the standard benefits available to the Company’s executive officers generally, including health insurance, life and disability coverage, and participation in the Company’s 401(k) Savings Plan. The agreement contains standard confidentiality, non-competition and non-solicitation provisions. Ms. Stutz will also be entitled to reimbursement for reasonable out-of-pocket expenses incurred in connection with her relocation expenses and sale of her home up to $100,000. The Company, or another party at the Company’s direction, will purchase Ms. Stutz’ home at the appraised market value if the sale of her home does not close within 180 days from the effective date of her employment.

Employment Agreement with William Koziel. On August 17, 2005, the Company entered into an oral employment agreement with Mr. Koziel. Pursuant to the terms of this agreement, Mr. Koziel will serve as Chief Financial Officer and will be paid an annual base salary of $250,000. He will be eligible to receive an annual performance cash incentive (bonus) of up to 50% of his annual base salary based upon attaining mutually agreed upon performance levels and restricted stock pursuant to the Omnibus Plan. Mr. Koziel entered into a confidentiality and non-compete agreement that includes customary non- competition and non-solicitation provisions. Mr. Koziel’s employment may be terminated by either party at any time for any reason. Compensation is reviewed annually and may be subject to adjustment. Additionally, on September 19, 2011, the Company entered into a written severance agreement with Mr. Koziel. Pursuant to the terms of this severance agreement, in the event his employment with the Company is terminated without “cause” (as defined in the agreement) at any time on or after the date of the appointment of a permanent Chief Executive Officer of the Company (which occurred as of January 1, 2012) but prior to the first anniversary of such appointment, the Company will continue to pay to Mr. Koziel his then-current base salary and will pay for the cost to continue his medical and health benefits coverage during the twelve-month period following his termination.

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Employment Agreement with Vicki Baue. In February 2007, the Company entered into an amended oral employment agreement with Vicki Baue to serve as the Company’s Vice President and General Counsel, Chief Compliance Officer and Chief Legal Officer. Pursuant to the terms of this agreement, as amended, Ms. Baue will receive an annual base salary of $205,000. She will also be eligible to receive an annual performance bonus of up to 30% of her annual base salary based on the attainment of mutually agreed upon performance levels and restricted stock pursuant to the Omnibus Plan. She entered into a confidentiality and non-solicitation agreement that includes customary non-solicitation provisions. Ms. Baue’s employment may be terminated by either party at any time for any reason. Compensation is reviewed annually and may be subject to adjustment.

Employment Agreement with Becky Iliff. In November, 2005 the Company entered into an oral employment agreement with Becky Iliff to serve as Vice President of People. Pursuant to the terms of this agreement, Ms. Iliff will receive an annual base salary of $195,250. She will also be eligible to receive an annual performance bonus of up to 30% of her annual base salary based on the attainment of mutually agreed upon performance levels and restricted stock pursuant to the Omnibus Plan. She entered into a confidentiality and non-solicitation agreement that includes customary non-competition and non-solicitation provisions. Ms. Iliff’s employment may be terminated by either party at any time for any reason. Compensation is reviewed annually and may be subject to adjustment.

Employment Agreement with John Gohde. In June, 2011, the Company entered into an oral employment agreement with John Gohde to serve as Vice President of Development. Pursuant to the terms of this agreement, Mr. Gohde will receive an annual base salary of $185,000. He will also be eligible to receive an annual performance bonus of up to 30% of his annual base salary based on the attainment of mutually agreed upon performance levels and restricted stock pursuant to the Omnibus Plan. He entered into a confidentiality and non-solicitation agreement that includes customary non-competition and non- solicitation provisions. Mr. Gohde’s employment may be terminated by either party at any time for any reason. Compensation is reviewed annually and may be subject to adjustment.

Agreements with James Hyatt. On September 15, 2007, we entered into an employment agreement with James Hyatt to serve as the Company’s Chief Executive Officer and President, which was amended on December 18, 2008. Pursuant to the terms of his employment agreement, we agreed to pay Mr. Hyatt an annual base salary of $600,000. He also had the ability to earn an annual cash incentive (bonus) of up to 100% of his annual base salary based upon the attainment of performance goals established by the Compensation Committee in consultation with Mr. Hyatt. After execution of his employment agreement, pursuant to its terms, we granted to Mr. Hyatt an initial grant of 275,000 shares of the Company’s common stock pursuant to the Omnibus Plan. He also received a sign-on grant of 200,000 shares of Common Stock pursuant to the Omnibus Plan. Mr. Hyatt was also eligible to receive annual grants of up to 100,000 shares of common stock for each of fiscal years 2008, 2009 and 2010, and he was eligible to receive an annual grant of up to 100,000 shares for fiscal year 2011, based upon the attainment of performance goals established annually by the Compensation Committee in consultation with Mr. Hyatt. Each such grant would be granted pursuant to the Omnibus Plan and would vest 20% immediately on the date of grant and 20% annually on the anniversary of the grant date over the next four years, provided that Mr. Hyatt was continuously employed by the Company from and after the grant date and through each such anniversary date. All shares of common stock would become fully vested upon the earlier to occur of a “change in control” (as defined in the employment agreement), Mr. Hyatt’s death or total disability (in accordance with the terms of the Omnibus Plan) or the occurrence of certain other termination events. Mr. Hyatt was entitled to health benefits (at the Company’s expense) and life and long-term disability insurance in amounts standard for all of the Company’s executives. Mr. Hyatt’s agreement included customary non-competition and non-solicitation provisions.

As noted in the subsection of the CD&A captioned “Compensation of the Chief Executive Officer”, effective as of August 29, 2011 Mr. Hyatt voluntarily resigned as the Company’s Chief Executive Officer and President and as a director. As a result, Mr. Hyatt’s unvested shares of restricted stock and restricted stock units were forfeited and cancelled. In connection with Mr. Hyatt’s resignation from the Company, the Company and Mr. Hyatt entered into a letter agreement, dated August 31, 2011, pursuant to which, among other things, Mr. Hyatt provided a general release of claims in favor of the Company, a non- disparagement covenant to the Company and an agreement to cooperate with the

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Company with respect to transition and certain other matters in exchange for a non-disparagement covenant from the Company.

Employment Agreement with Mark Demilio. On September 23, 2011, we entered into an employment agreement effective as of August 31, 2011, with Mark Demilio concerning the compensation he would receive in his interim role as Chief Executive Officer. Under the agreement, we agreed to pay Mr. Demilio an annualized gross salary equal to $350,000 and to reimburse Mr. Demilio for all reasonable out-of-pocket business expenses incurred by him in connection with his performance of services under the agreement, including, without limitation, all travel, housing and other expenses incurred in connection with commuting to and working out of the Company’s headquarters located in Deerfield, Illinois (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). The agreement also provided that Mr. Demilio would be entitled to participate in any of the Company’s employee welfare benefit plans generally made available to executives of the Company, including medical, dental, vision, life, accidental death and dismemberment, and long-term disability insurance, on the same basis as other Company executive employees are entitled to participate. In addition, Mr. Demilio was eligible to participate in the Company’s 401(k) retirement plan. Mr. Demilio’s employment was terminable by either Mr. Demilio or the Company at any time for any reason.

2011 Grants of Plan Based Awards

The following table provides additional information about stock and stock option awards and non-equity incentive plan awards granted to our named executive officers during the fiscal year ended January 2, 2012.

Grants of Plan-Based Awards⁽¹⁾

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Edwards on October 28, 2011 of 18,254 shares, having a fair market value of $0.70 per share on the award date (pro-rated for fiscal year 2011), representing the annual non-employee director stock compensation for fiscal year 2011.

Unless otherwise agreed to by the Compensation Committee, shares of restricted stock granted under the Omnibus Plan generally vest 20% on the grant date and 20% annually thereafter on the next four anniversaries of the grant date, subject to continued employment by the Company. Pursuant to the terms of their respective employment agreements, the shares of restricted stock granted to Mr. Edwards and to Ms. Stutz respectively on January 1, 2012 will vest according to their respective vesting schedules described under “Executive Officer Agreements”. Grantees of restricted stock under the Omnibus Plan have all of the rights of stockholders with respect to restricted stock voting and dividend rights, subject to the terms of the Omnibus Plan.

Outstanding Equity Awards at 2011 Fiscal Year-End

The following table provides information about outstanding equity awards, including the vesting schedules, at January 2, 2012 for each of the named executive officers.

Outstanding Equity Awards at Fiscal Year End