Einstein Bros 2002 Annual Report Download - page 69

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
(amounts in thousands)
Senior secured increasing rate notes, net of unamortized
discount of $1,916 and $7,959 (a) (Note 3-C) $ 138,084 $ 132,041 $ —
Bridge loan (b) (Note 3-C) 4,443 34,350 —
Greenlight obligation (c) (Note 3-C) 10,000 10,437 —
Note payable to a bank (d) — — 11,000
Revolving credit note payable to a bank (e) — — 3,000
Revolving credit note payable to an affiliate (f) 6,000 — —
Promissory note payable in connection with Chesapeake
Bagel Bakery acquisition (g) 1,500 1,500 1,500
Note payable to New Jersey Economic Development
Authority (h) 1,680 1,960 2,240
Other (i) (j) 176 225 373
161,883 180,513 18,113
Less-Current portion of long-term debt 150,872 168,394 16,240
$ 11,011 $ 12,119 $ 1,873
a. The Company consummated a private placement of 140,000 units consisting of $140 million of senior secured increasing rate notes
(the "$140 Million Facility") and 140,000 Common Stock purchase warrants, each exercisable into 98 shares of Common Stock.
The notes under the $140 Million Facility were issued at 91.75% of par, resulting in an initial discount of $11,550,000. The terms
of the facility are governed by a certain indenture (the "Indenture") dated as of June 19, 2001, mature on June 15, 2003 and bear
interest at an initial annual rate of 13%, increasing by 100 basis points each quarter commencing September 15, 2001 to a maximum
rate of 18%. The Company commenced quarterly interest payments on September 15, 2001. The Company may redeem all or a
portion of the notes at any time for their face value plus accrued and unpaid interest. If there is a Change in Control (as such term is
defined in the Indenture) of the Company, the holders of the notes will have the right to require the Company to repurchase the
notes at a price equal to 101% of the face amount plus accrued and unpaid interest. The notes are secured by a security interest in all
of the Company's assets and the assets of the Company's subsidiaries (other than the assets of a non-restricted subsidiary (EnbcDeb
Corp.) which holds the Einstein Bonds (see (b) below). The Indenture also contains certain restrictive covenants, including certain
financial covenants that are required to be measured on an annual basis, such as minimum consolidated cash flow and capital
expenditures, each defined in the Indenture. The Company has violated certain of these covenants during the year ended January 1,
2002 and continuing into 2003, which could trigger an event of default if the Company was to receive a written notice of default
from the trustee or holders that was not cured within 30 days. Although such notice of default has not been received as of March 26,
2003, the amounts outstanding under the $140 Million Facility have been classified as current within the January 1, 2002, as well as
the December 31, 2002 balance sheet. The Company did not obtain waivers from the trustee or holders.
F-35
As noted above, the Company also issued warrants to purchase in the aggregate 13,720,000 shares of the Company's Common
Stock at an exercise price of $0.01 per share. The warrants will expire on June 20, 2006. The Company is required to repurchase all
the outstanding warrants in the event of a change in control (as defined in the warrant agreement) at a price equal to the fair market
value of the common stock issuable upon exercise of the warrants, less the exercise price. The Company is also contingently
obligated to issue additional $0.01 warrants as follows: (1) an additional 1% of the fully-diluted common stock if the Notes remain
outstanding on March 15, 2002, (2) an additional 1% of the fully-diluted common stock if the Notes remain outstanding on June 15,
2002, and (3) an additional 1% of the fully-diluted common stock issued on a monthly basis if the Notes remain outstanding after
June 15, 2002. If the Company redeems all or a portion of the notes prior to the dates on which additional warrants become issuable
it will not be required to issue the additional warrants relating to the portion of the notes redeemed. The additional warrants also
expire on June 20, 2006. Through March 26, 2003, the Company has issued 6,454,084 of additional $0.01 warrants and has
obligations (issuance date has occurred, but warrants have not yet been issued) to issue an additional 4,158,826.
The warrants were issued pursuant to, and are governed by, the terms of a certain Warrant Agreement dated as of June 19, 2001, by
and among the Company, Jefferies & Co. and U.S. Trust. The holders of the notes and warrants are entitled to certain registration
rights as set forth in the Registration Rights Agreement dated as of June 19, 2001, by and among the Company, Jefferies & Co. and
U.S. Trust. Pursuant to the Registration Rights Agreement, the Company was required, among other things, to consummate an