(11) Subsequent Events

Cerberus Credit Facility – Forbearance, Waiver and Amendment

On June 27, 2017, the Company obtained a forbearance from Cerberus regarding (i) the Company’s failure to comply with certain reporting covenants under the Cerberus Credit Facility as a result of the Company’s late filing of the quarterly report in which these consolidated financial statements are included, and (ii) the Company’s failure to meet certain financial covenants set forth in the Cerberus Credit Facility, namely the required leverage ratio (as defined and calculated in the Cerberus Credit Facility) of 3.00 to 1.00 and the required fixed charge ratio (as defined and calculated in the Cerberus Credit Facility) of 1.50 to 1.00. Pursuant to the forbearance, Cerberus agreed that it would not exercise its rights or remedies under the Cerberus Credit Facility solely with respect to these events of default through July 7, 2017, which was subsequently extended on multiple occasions through August 11, 2017.

On August 11, 2017, the Company entered into an amendment (the “Cerberus Amendment”) to the Cerberus Credit Facility. The Cerberus Amendment includes a waiver of all events of default under the Cerberus Credit Facility described above and amends certain other terms thereof, as follows: (i) the required leverage ratio (as defined and calculated in the Cerberus Credit Facility) has been amended to 16.00 to 1.00 through July 31, 2017, 10.50 to 1.00 through October 31, 2017, and decreasing ratios at the end of each of the Company’s fiscal quarters thereafter as set forth therein; (ii) the required fixed charge coverage ratio (as defined and calculated in the Cerberus Credit Facility) has been amended to 0.25 to 1.00 through July 31, 2017, 0.35 to 1.00 through October 31, 2017, and increasing ratios at the end of each of the Company’s fiscal quarters thereafter as set forth therein; (iii) the Company has agreed to a new liquidity covenant that requires the Company to maintain an amount of unrestricted cash on-hand, together with the availability under the revolving credit facility of the Cerberus Credit Facility, of no less than $3,000, and (iv) the parties have agreed to certain additional administrative amendments. The Cerberus Amendment also provides that, if at any time the new liquidity covenant is not satisfied and Cerberus submits a written capital demand, the Company would be required to complete an equity financing resulting in net cash proceeds to the Company of the amount requested by Cerberus in such demand, subject to an aggregate maximum of approximately $5,500 and certain additional conditions (such financings, the “Committed Financings”). The Company anticipates that it will be able to satisfy the amended covenants described above for at least the next twelve months.

As a condition to effectiveness of the Cerberus Amendment, the Company is required to: (i) complete the Concurrent Financing, as defined and described below, and (ii) obtain a firm commitment from one or more investors to fund one or more Committed Financings if required on or before March 5, 2018, which is also described below.

Concurrent Financing and Committed Financing

On August 11, 2017, the Company and several investors, including certain of the Company’s directors, officers and large stockholders, entered into common stock purchase agreements (the “Purchase Agreements”) to effect the Concurrent Financing and agree to the Committed Financing as required by the Cerberus Amendment. Pursuant to the terms of the Purchase Agreements, the investors have agreed to purchase, and the Company has agreed to issue and sell, an aggregate of 947,870 shares of the Company’s common stock in a private placement financing at a per share purchase price of $4.22 for net cash proceeds to the Company of approximately $4,000 (the “Concurrent Financing”). The Concurrent Financing closed on August 17, 2017.

In addition, pursuant to the terms of the Purchase Agreements, certain investors have agreed to participate in the Committed Financings, such that, if the Company notifies any such investor on or before March 5, 2018 of a failure to meet the new liquidity covenant set forth in the Cerberus Amendment, then such investor will be obligated to purchase in a private placement financing additional shares of the Company’s common stock as requested at a per share purchase price equal to the lower of $4.22, 90% of the average closing price of the Company’s common stock for the 20 days prior to the date of the Company’s notification, or the closing price of the Company’s common stock on the day prior to the Company’s notification, subject to certain other conditions and caps, including that the aggregate number of shares issuable in the Concurrent Financing and the Committed Financings will not exceed 19.9% of the total number of shares of the Company’s common stock outstanding as of August 11, 2017. The maximum aggregate value of the commitments from all investors for the Committed Financings is approximately $5,500. In addition, pursuant to the terms of the Purchase Agreements, in consideration for the agreement of certain investors to participate in the Committed Financings, the Company has issued to such investors warrants to purchase up to an aggregate of 326,695 shares of the Company’s common stock at an exercise price of $4.22. The warrants are exercisable at any time from March 5, 2018 until the seven-year anniversary of the initial issuance date, may be exercised in cash or on a “cashless” basis, and are subject to customary adjustments in the event of stock dividends or other distributions, stock splits, or mergers, reclassifications or similar transactions.

Certain terms of the Concurrent Financing and the Committed Financing with respect to each of the Company’s directors, officers and large stockholders participating therein are as follows:


Name of Investor, Relationship with the Company	No. of Shares Purchased in Concurrent Financing	No. of Shares Subject to Warrant Issued in Concurrent Financing	Aggregate Purchase Price of Shares Purchased in Concurrent Financing		Aggregate Purchase Price of Shares That May Be Purchased in Committed Financings		Aggregate Purchase Price of all Shares(1)
Jess Ravich, Director	473,934	237,834	$	2,000	$	4,015	$	6,015

Robert Galvin, Chairman of the Board	23,697	5,924	$	100	$	100	$	200

Howard Siegel, President, Chief Operating Officer	23,697	—	$	100	$	—	$	100

Cove Street Capital, LLC Significant Stockholder	236,967	59,241	$	1,000	$	1,000	$	2,000

Other Investors	189,575	23,696	$	800	$	400	$	1,200

(1) Assumes the purchase by each investor of its maximum commitment in the Committed Financings.

Ravich Loan

As of June 5, 2017, the Company and the lender of the Ravich Loan mutually agreed to extend the maturity date of the amounts owed thereunder to July 31, 2017, and as of August 11, 2017, the Company and the lender of the Ravich Loan mutually agreed to further extend the maturity date of the amounts owed thereunder to February 28, 2018. As a result, borrowings under the Ravich Loan were $1,500 as of April 29, 2017 and as of the date hereof.