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Case Status:    SETTLED
On or around 06/09/1999 (Date of order of final judgment)

Filing Date: July 25, 1997

According to the firm's 10-K filing dated 3/26/1999, the Company and certain of its current and former officers and directors entered into an agreement to settle a class action lawsuit brought against them in the United States District Court for the District of Colorado and in state court in Jefferson County of Colorado. The settlement was later approved, and on 06/04/1999, the District Court entered the final Judgment and Order of Dismissal with Prejudice of all claims brought against the Company and certain of its current and former officers and directors.

The March of 1999's settlement did not include the claims pending in the lawsuit against the underwriters in the Company's public offerings of common stock in August 1996 and November 1996. However, on 11/03/2000, the Court entered a Judgment and Order of Dismissal with Prejudice of all claims brought against the underwriters and against the Company's independent public accountants.

The original complaint alleges, among other things, that the Company and the other defendants violated Sections 11, 12(2) and 15 of the Securities Act of 1933, as amended, and Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder. More specifically, the complaint alleges that Company and certain of its officers and directors violated the federal securities laws by issuing false and misleading statements and omitting material facts regarding the company's financial results throughout the Class Period. The Complaint alleges that defendants artificially inflated Einstein's earnings and inflated the value of its stock by: -- concealing the huge losses suffered by and the poor financial health of its Financed Area Developers ("FADs"), 11 separate entities that owned the bulk of the bagel stores and were financed by Einstein; -- failing to consolidate the FADs' financial results with those of Einstein, as the company was required to do under Generally Accepted Accounting Principles ("GAAP"); -- listing the loans it provided to the FADs as an asset on Einstein's balance sheet despite grave uncertainty regarding the FADs' ability to repay the loans, failing to establish a loss reserve for these loans, and failing to disclose the financial results of the individual FADs; -- failing to provide material facts concerning related party transactions, and instead providing only skeletal, and aggregated, financial information on the FADs; The Complaint further alleges that, as a result of the defendants' violations, the market price of Einstein stock during the Class Period was as high as $36.40, and tumbled to $11.25 by the end of the Class Period.

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