Einstein Bros 2002 Annual Report Download - page 36

http://www.sec.gov/Archives/edgar/data/949373/000104746903027186/a2116520z10-ka.htm[9/11/2014 10:14:22 AM]
Connecticut.
(8) Represents warrants granted to Genesis Select Corporation for investor relation services pursuant to a consulting services agreement dated
September 1, 2000. As a portion of its compensation under the agreement, we granted Genesis Select warrants exercisable for 150,000
shares of common stock (50,000 shares with an exercise price of $2.00 per share, 50,000 shares with an exercise price of $3.00 per share
and 40,000 shares with an exercise price of $3.50 per share).
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Leonard Tannenbaum, a director, is a limited partner and 10% owner in BET. On August 11, 2000, BET purchased approximately 8,108
shares of our Series D preferred stock for a sum of $7.5 million. In a related transaction on August 18, 2000, Brookwood purchased approximately
8,108 shares of our Series D preferred stock for a sum of $7.5 million (collectively, the "Series D Financing"). Each of BET and Brookwood
received a warrant to purchase 1,196,909 shares of our Common Stock at a price of $0.01 per share. In connection with the Series D Financing,
MYFM Capital LLC, of which Mr. Tannenbaum is the Managing Director, received a fee of $225,000 and a warrant to purchase 70,000 shares of
our Common Stock at its closing price on August 18, 2000. In addition, Mr. Tannenbaum was designated by BET as a director to serve for the
period specified in the Stockholders Agreement.
Eve Trkla, a director of our company, is the Chief Financial Officer of Brookwood Financial Partners, L.P., an affiliate of Brookwood.
Ms. Trkla was designated by Brookwood as a director to serve for the period specified in the Stockholders Agreement.
On January 22, 2001, we consummated a sale of 20,000 shares of our authorized but unissued Series F preferred stock to Halpern Denny in
exchange for the sum of $20.0 million. At such time we entered into a Series F Preferred Stock and Warrant Purchase Agreement with Halpern
Denny. Pursuant to the Series F Preferred Stock and Warrant Agreement, Halpern Denny was paid a transaction fee of $500,000. William Nimmo,
a director, is a partner in Halpern, Denny and Co., an affiliate of Halpern Denny. Mr. Nimmo was designated by Halpern Denny as a director of our
company. In connection with the Series F Preferred Stock and Warrant Purchase Agreement, we issued Halpern Denny a warrant to purchase
8,484,112 shares of our Common Stock at an exercise price of $0.01 per share.
BET and Brookwood had invested the sum of $15.0 million for substantially the same purpose as that contemplated by the Series F Purchase
Agreement, which investment was made in August 2000, and BET and Brookwood were then holding Series D preferred stock, which had a right
to approve the creation of the Series F preferred stock. Therefore, we considered it appropriate to restructure the investment documents relating to
the August 2000 investment by BET and Brookwood. Accordingly, we, BET and Brookwood entered into an Exchange Agreement on January 22,
2001, whereby we exchanged all of our outstanding Series D preferred stock, including accrued but unpaid dividends (all of which were retired),
for a total of 16,398.33 shares of Series F preferred stock. BET and Brookwood also exchanged the warrants received by them in August 2000 for
warrants to purchase an aggregate of 6,526,356 shares of our Common Stock. On May 30, 2001, we issued 25,000 shares of Common Stock to
Mr. Tannenbaum in connection with the exchange of all of the outstanding shares of Series D preferred stock for shares of Series F preferred stock.
In connection with the January 2001 Series F preferred stock financing, Bruce Toll, an affiliate of BET, was issued 200,000 shares of Common
Stock.
On March 29, 2001, we consummated a sale of 5,000 additional shares of our Series F preferred stock to Halpern Denny in exchange for the
sum of $5 million. Pursuant to the terms of the Second Series F Preferred Stock and Warrant Purchase Agreement (the "Second Purchase
Agreement") with Halpern Denny, we also sold Halpern Denny warrants to purchase 2,121,028 shares of our Common Stock at a price per share of
$0.01 (subject to adjustment as provided in the form of warrant). Pursuant to the Second Purchase Agreement, Halpern Denny was paid a
transaction fee of $200,000.
In connection with the Einstein Acquisition, on June 7 and June 19, 2001, Halpern Denny purchased an additional 7,500 shares of Series F
preferred stock for the sum of $7.5 million and warrants to purchase 2,961,551 shares of our Common Stock at a price per share of $0.01 (subject
to adjustment as provided in the form of warrant) pursuant to the Series F Preferred Stock Purchase Agreement. In addition, on June 19, 2001,
Greenlight Capital and certain of its affiliates purchased 12,500 shares of Series F preferred stock and warrants to purchase 10,576,967 shares of
our Common
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Stock at a price per share of $0.01 (subject to adjustment as provided in the form of warrant) pursuant to the Third Series F Preferred Stock and