Einstein Bros 2004 Annual Report Download - page 45

http://www.sec.gov/Archives/edgar/data/949373/000104746905006202/a2153240z10-k.htm[9/11/2014 10:13:29 AM]
are subordinate to the AmSouth Revolver as described below.
The $160 Million Notes contain certain covenants, which, among others, include certain financial covenants such as limitations on capital
expenditures and minimum EBITDA as defined in the agreement. These covenants are measured on a rolling twelve-month period and fiscal
quarter basis, respectively. This debt contains usual and customary default provisions. As of December 28, 2004, we were in compliance with all
our financial and operating covenants.
Interest payments under the $160 Million Notes are payable in arrears at the rate of 13% per year on July 1 and January 1, commencing
January 1, 2004. The notes are redeemable, at our option, in whole or in part at any time after July 1, 2004 at the following redemption prices (as
expressed in percentages of the principal amount):
Year Percentage
2004 104.0%
2005 103.0%
2006 102.0%
2007 101.0%
2008 and thereafter 100.0%
AmSouth Revolver
On July 8, 2003, we entered into a three-year, $15 million senior secured revolving credit facility with AmSouth Bank ("AmSouth Revolver").
The AmSouth Revolver was subsequently amended to
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make technical corrections, clarify ambiguous terms and provide for increased limits with respect to letters of credit. On February 11, 2005, the
AmSouth Revolver was amended again to increase our letter of credit sub-facility from $5 million to $7.5 million.
The AmSouth Revolver is collateralized by substantially all of our assets in which we have an interest and is senior to the $160 Million Notes
pursuant to an Intercreditor Agreement.
The AmSouth Revolver contains certain covenants, which, among others, include certain financial covenants such as limitations on capital
expenditures, operating lease obligations, minimum EBITDA as defined in the agreement, operating cash flow coverage ratio and minimum net
worth. These covenants are measured on a rolling twelve-month period at each fiscal quarter or annually at year-end. Additional covenant
restrictions exist if the total borrowings, including outstanding letters of credit exceed $10,000. This debt also contains usual and customary default
provisions. As of December 28, 2004, we are in compliance with all of our financial and operating covenants.
Interest payments under the AmSouth Revolver are payable in arrears on the first of each month. The net borrowings under the AmSouth
Revolver bear an interest rate equal to the base rate plus an applicable margin with the base rate being the AmSouth Bank "prime rate" and the
applicable margin based on our fixed charge coverage ratio with a minimum and maximum applicable margin of 0.5% and 2.5%, respectively. As
of December 28, 2004 and December 30, 2003, the interest rate on the borrowings outstanding under the AmSouth Revolver was 5.75% and 5.0%,
respectively.
We are required to pay an unused credit line fee of 0.50% per annum on the average daily unused amount. The unused line fee is payable
monthly in arrears. Additionally, we are required to pay a letter of credit fee, based on the average daily undrawn face amount for each letter of
credit issued, of an applicable margin being based on our fixed charge coverage ratio with a minimum and maximum applicable margin of 2.0%
and 4.5% respectively. Letters of credit reduce our availability under the AmSouth Revolver. At December 28, 2004, we had $5,000 of letters of
credit outstanding. The letters of credit expire on various dates during 2005, are automatically renewable for one additional year and are payable
upon demand in the event that we fail to pay certain workers compensation claims. Our availability under the AmSouth Revolver was
approximately $10,000 at December 28, 2004.
Chesapeake Bagel Bakery Note Payable
As a part of the acquisition of the assets of Chesapeake, we entered into a note payable to the seller. The note provided for quarterly payments
of interest only at 10%. The note was paid in full on August 31, 2004 according to its terms.