Einstein Bros 2003 Annual Report Download - page 73

http://www.sec.gov/Archives/edgar/data/949373/000104746904009609/a2132006z10-k.htm[9/11/2014 10:13:55 AM]
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 108,406 shares of our common stock. On May 30, 2001, we issued 415 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 3,322 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 35,231 shares of our common stock at a price per share of
$0.60 (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 49,193 shares of our common stock at a price per share of $0.60 (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 175,688 shares of our
common stock at a price per share of $0.60 (subject to adjustment as provided in the form of warrant) pursuant to the Third Series F Preferred
Stock and Warrant Purchase Agreement (the "Third Purchase Agreement"). Pursuant to the Third Purchase Agreement, Halpern Denny was paid a
transaction fee of $250,000 and Greenlight Capital was paid a transaction fee of $417,000.
Commencing in 2002, the holders of the Series F preferred stock became entitled to receive additional warrants. See Note 9—Mandatorily
Redeemable Series F Preferred Stock.
On January 17, 2001, we entered into a Bond Purchase Agreement with Greenlight Capital. Pursuant to the agreement, Greenlight formed a
limited liability company, GNW, and contributed $10.0 million to GNW to purchase Einstein bonds. We were the exclusive manager of GNW.
The agreement provided Greenlight with a secure interest in GNW and a right to receive the return of its original contribution plus a guaranteed
accretion of 15% per year, increasing to 17% on January 17, 2002 and by an additional 2% each six months thereafter (the "Guaranteed Return").
In connection with the agreement, we issued Greenlight warrants to purchase an aggregate of 70,462 shares of our common stock at $0.60 per
share. On June 19, 2001, GNW, Greenlight and we entered into a letter agreement, pursuant to which, among other things, Greenlight consented to
the pledge of the Einstein bonds owned by GNW to secure the EnbcDeb Notes. We were required to apply all proceeds received
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with respect to the Einstein bonds to repay the EnbcDeb Notes. To the extent that there were any excess proceeds, we were required to pay them to
Greenlight. If Greenlight did not receive a return equal to its Guaranteed Return, we were obligated to issue Greenlight Series F with a face amount
equal to the deficiency and warrant coverage equal to 1.125% of our fully diluted common stock for each $1.0 million of deficiency. Except for
the warrants, these items were retired as part of the Debt Refinancing and Equity Recap.
BET, Brookwood, Halpern Denny, Greenlight, Special Situations and we entered into a Stockholders Agreement, which was terminated upon
the Equity Recap, and which related principally to the composition of our board of directors.
On May 30, 2002, we entered into a Loan and Security Agreement with BET, which provided for a $7.5 million revolving loan facility at 11%
interest. The facility was secured by substantially all of our assets. In connection with obtaining the facility, we paid MYFM Capital LLC a fee of
$75,000. As of December 31, 2002, $6.0 million of the revolving credit facility was outstanding. The facility was to expire on March 31, 2003. In
February 2003, BET and we executed an amendment to the facility to extend the maturity of the facility to June 1, 2003. From February 1, 2003 to
June 1, 2003, the interest rate was 13% per annum. BET and MYFM Capital LLC received an extension fee of $187,500 in connection with the
amendment, payable at maturity, and an additional $112,500 because the facility was not paid in full by June 2, 2003. After June 1, 2003, the
interest rate for borrowings under the facility was 15% per annum, and MYFM Capital LLC received a $25,000 fee for entering into a standstill
agreement with us. The facility was repaid with the proceeds of issuance of the $160 Million Facility in July 2003, and BET received $3,000 for
reimbursement of legal fees and expenses.
In July 2003, Greenlight purchased all of the outstanding EnbcDeb Notes from Jefferies. Upon consummation of the Equity Recap, we issued
4,337.481 shares of Series F to Greenlight in full payment of the outstanding Bridge Loan. The shares of Series F were converted into common
stock in the Equity Recap.
On June 25, 2003, Halpern Denny, Greenlight and we entered into the Equity Recap pursuant to which the parties agreed to a recapitalization
of our equity structure. Pursuant to the Equity Recap, we reimbursed Greenlight and Halpern Denny for legal fees and disbursements incurred in
connection with their investment in us and the Equity Restructuring in the respective amounts of $226,000 and $125,000.