Einstein Bros 2002 Annual Report Download - page 76

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
each share later issued. Each Right will allow stockholders to buy one one-hundredth of a share of Series A Junior Participating preferred stock at
an exercise price of $10.00. The Rights become exercisable if an individual or group acquires 15% or more of Common Stock, or if an individual or
group announces a tender offer for 15% or more of Common Stock. The Board can redeem the Rights at $0.001 per Right at any time before any
person acquires 15% or more of the outstanding Common Stock. In the event an individual (the "Acquiring Person") acquires 15% or more of the
outstanding Common Stock, each Right will entitle its holder to purchase, at the Right's exercise price, one one-hundredth of a share of Preferred
Stock, which is convertible into Common Stock at one-half of the then value of the Common Stock, or to purchase such Common Stock directly if
there are a sufficient number of Shares of Common Stock authorized. The Board has the ability to exclude any Acquiring Person from the
provision of this stockholders Rights Plan, resulting in such Acquiring Person's purchase of the Company's Common Stock not triggering the plan.
Rights held by the Acquiring Person are void and will not be exercisable to purchase shares at the bargain purchase price. If the Company is
acquired in a merger or other business combination transaction, each Right will entitle its holder to purchase, at the Right's then-current exercise
price, a number of the acquiring company's common shares having a market value at that time of twice the Right's exercise price.
Warrants
As of December 31, 2002, the Company has 41,244,218 warrants outstanding all of which were exercisable. These warrants have exercise
prices ranging from $0.01—$11.00 per share, of which 40,357,065 are exercisable at $0.01 per share, and have terms ranging from three to ten
years. Such
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warrants were issued in connection with financings and certain other services. In the third and fourth quarter of 2002, certain holders of warrants
exercised 39,635,976 of warrants, using a cashless exercise options, and were issued 33,325,458 of Common Stock.
December 31, 2002
Warrants
January 1, 2002
Warrants
December 31, 2000
Warrants
Outstanding, beginning of year 57,134,639 3,280,973 369,357
Issued 23,745,555 53,853,666 4,096,286
Exercised (39,635,976) — —
Forfeited — — (1,184,670)
Outstanding, end of year 41,244,218 57,134,639 3,280,973
Exercisable, end of year 41,244,218 57,134,639 3,280,973
Stock Options
The Company's 1994 Stock Plan (the "1994 Plan") provides for the granting to employees of incentive stock options and for the granting to
employees and consultants of non-statutory stock options and stock purchase rights. Unless terminated sooner, the 1994 Plan will terminate
automatically in August 2004. The board of directors has the authority to amend, suspend or terminate the 1994 Plan, subject to any required
stockholder approval under applicable law, provided that no such action may affect any share of Common Stock previously issued and sold or any
option previously granted under the 1994 Plan.
Options generally become exercisable in ratable installments over a period of up to four years and expire ten years from the date of grant. In
December of 2002, the stockholders approved an amendment to the 1994 Plan to increase the number of shares available for issuance under the
1994 Stock plan to 6,500,000. As of December 31, 2002, there were 1,263,149 shares reserved for future issuance under the 1994 Plan. No options
currently available for exercise are considered "in-the-money".
The Company's 1995 Directors' Stock Option Plan (the "Directors' Option Plan") was adopted by the board of directors and approved by the
Company's shareholders in August 1995. Unless terminated sooner, the Directors' Option Plan will terminate automatically in August 2005. The
board of directors may amend or terminate the Directors' Option Plan at any time; provided, however, that no such action may adversely affect any
outstanding option without the optionee's consent and the provisions affecting the grant and terms of options may not be amended more than once
during any six-month period. A total of 100,000 shares of Common Stock have been reserved for issuance under the Directors' Option Plan. The
Directors' Option Plan provides for the automatic grant of non-statutory stock options to nonemployee directors of the Company. These options
vest immediately upon grant.