Einstein Bros 2008 Annual Report Download - page 52

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312509042707/d10k.htm[9/11/2014 10:10:56 AM]
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par value of $0.001 per share;
• mandatory redemption upon the earlier of (i) a merger or change of control or (ii) June 30, 2009;
• shares are non-voting (except for certain limited voting rights with respect to specified events);
• liquidation value is $1,000 per share;
• an annual dividend rate equal to 250 basis points higher than the highest rate paid on our funded indebtedness is payable if the shares
are not redeemed by the redemption date. The dividend is accrued prospectively based on the outstanding balance;
• shares may be redeemed in whole or in part at an earlier date at our discretion; and
• unpaid dividends accrue and must be paid as additional redemption price at the time the shares are redeemed.
The exchange of the Halpern Denny interest for Series Z resulted in a reduction of our effective dividend rate relative to that required by the Series
F, and, as a result of this and other factors, we accounted for this transaction as a troubled debt restructuring. Since a portion of this exchange
included the receipt of our common stock and warrants previously held by Halpern Denny, we did not recognize a gain from troubled debt
restructuring. The Series Z is recorded in the accompanying consolidated balance sheets at its full face value of $57.0 million, which represents the
total cash payable upon redemption on June 30, 2009.
In accordance with the mandatory redemption provisions of the Series Z Preferred Stock, we currently plan on redeeming a substantial portion of
the Series Z Preferred Stock with our unrestricted cash on June 30, 2009. Under the terms of the Series Z Preferred Stock, we would be required to
pay additional redemption price in the
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
future to redeem any shares not redeemed on June 30, 2009. The additional redemption price would accrue at a rate that is 250 basis points higher
than our highest rate paid on our funded debt.
13. STOCKHOLDERS’ DEFICIT
Common Stock
We are authorized to issue up to 25 million shares of common stock, par value $0.001 per share. As of January 1, 2008 and December 30, 2008,
there were 15,878,811 and 15,969,167 shares outstanding, respectively.
On June 13, 2007, we completed a secondary public offering of 5 million shares of common stock resulting in gross proceeds of $90 million. After
stock issuance costs of $6.7 million related to the offering, we received net proceeds of $83.3 million. Our common stock is now listed on the
NASDAQ Global Market under the symbol “BAGL”. We used the net proceeds from the offering to pay down our existing indebtedness.
Series A Junior Participating Preferred Stock
In June 1999, our Board of Directors (“BOD”) authorized the issuance of a Series A junior participating preferred stock in the amount of 700,000
shares. This authorization was made in accordance with the Stockholder Protection Rights Plan discussed below. There are currently no issued
shares.
Stockholder Protection Rights Plan
We maintain a Stockholder Protection Rights Plan (the “Plan”). Upon implementation of the Plan in June 1999, our BOD declared a dividend
distribution of one right on each outstanding share of common stock, as well as on 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 BOD 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 Series A junior participating 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. Our BOD has the ability to exclude any Acquiring Person from the provision of the Plan, resulting in such
Acquiring Person’ s purchase of our 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 we are 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