21. Subsequent Events

Working Capital Revolver Loan - On January 17, 2017, we and each of our subsidiaries signatory thereto entered into the Third Amended and Restated Loan and Security Agreement (the “Working Capital Revolver Loan Amendment”), with certain identified lenders and Wells Fargo Capital Finance, LLC (“Wells Fargo”), as the arranger and administrative agent. The Working Capital Revolver Loan Amendment amends and restates our existing senior secured revolving credit facility (as so amended and restated, the “Working Capital Revolver Loan”).

We and all of our existing subsidiaries, other than Zena, are co-borrowers (“Borrowers”) under the Working Capital Revolver Loan. The revolver commitment is for $50 million (formerly $100 million), but provides an ability to expand the commitment an additional $25 million. Interest accrues on outstanding borrowings under the Working Capital Revolver Loan at a rate equal to, at our election, either (a) LIBOR for an interest period selected by us plus an applicable margin equal to 1.50% per annum or 1.75% per annum, depending on borrowing availability under the Working Capital Revolver Loan or (b) Wells Fargo’s prime rate plus an applicable margin equal to 0.50% per annum or 0.75% per annum, depending on borrowing availability under the Working Capital Revolver Loan. In addition, unused line fees in an amount equal to 0.25% per annum on the average daily balance of the unused revolver commitments under the Working Capital Revolver Loan are payable by us, as well as customary fees in respect of letters of credit. At January 31, 2017, the interest rate was 4.25% based on LIBOR. Interest is paid monthly, if applicable.

Advances under the Working Capital Revolver Loan are based on specified percentages of eligible accounts receivable and inventories. The Working Capital Revolver Loan provides for a subfacility for the issuances of up to letters of credit in an aggregate amount not to exceed to $10 million, with the outstanding amount of any such letters of credit reducing availability for borrowings under the Working Capital Revolver Loan. At January 31, 2017, the amount available for borrowing under the Working Capital Revolver was $40.5 million.

The maturity date of the Working Capital Revolver Loan is January 17, 2022, with a springing earlier maturity date (the “Springing Maturity Date”) that is 90 days prior to the maturity date of our Senior Secured Notes, to the extent the Senior Secured Notes are not refinanced or repaid prior to the Springing Maturity Date. The Working Capital Revolver Loan does not include any amortization, and all borrowings under the Working Capital Revolver Loan are due on the relevant maturity date.

The Working Capital Revolver Loan Amendment also provides for a springing financial covenant (the “Financial Covenant”), which requires that, if the borrowing availability is less than or equal to the greater of 10.0% of the total revolver commitments and $5 million, then the borrowers must maintain (a) with respect to relevant periods ending on or prior to September 30, 2017, a minimum EBITDA in the amount set forth in the Working Capital Revolver Loan Amendment and (b) with respect to relevant periods ending after September 30, 2017, a minimum fixed charge coverage ratio of not less than 1.00 to 1.00. The Financial Covenant, if triggered, is tested monthly.

21. Subsequent Events (continued)

The Working Capital Revolver Loan Amendment permits the Borrowers to make any investment as long as the borrowing availability is 20% of the revolver commitment, or $10 million.

The Working Capital Revolver Loan Amendment contains covenants that, among other things, limit the Borrowers’ ability, without consent of the lender and with certain exceptions, to:

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incur additional indebtedness;

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create liens on, sell or otherwise dispose of our assets;

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engage in certain fundamental corporate changes or changes to our business activities;

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make certain material acquisitions;

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make other restricted payments;

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repay certain indebtedness;

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engage in certain affiliate transactions;

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declare dividends and distributions;

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engage in mergers, consolidations or other forms of recapitalization; or

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dispose assets.

The Working Capital Revolver Loan Amendment allows each of the Borrowers to perform certain transactions when specified criteria are met. The criteria includes that there is no default under the Working Capital Revolver Loan and both immediately before and after giving effect to any of the following transactions, availability, as defined by the Working Capital Revolver Loan Amendment, is equal to or greater than the greater of 20% of the maximum revolver commitment or (y) $10 million,

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distributions, dividends, purchase, acquire, redeem or retire its stock with respect to amounts in excess of $0.5 million during each fiscal year;

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certain hedging agreements and;

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certain investments, including, among others, investments in joint ventures in an aggregate amount not exceeding $35.0 million; and

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certain additional indebtedness.

The Working Capital Revolver Loan Amendment includes customary events of default, including events of default relating to nonpayment of principal and other amounts owing under the Working Capital Revolver Loan from time to time, any material misstatement or misrepresentation and breaches of representations and warranties made, violations of covenants, cross-payment default to indebtedness in excess of $10 million, cross-acceleration to indebtedness in excess of $10 million, bankruptcy and insolvency events, certain unsatisfied judgments, certain liens, and certain assertions of, or actual invalidity of, certain loan documents. Upon the occurrence of events of default, the obligations under the Working Capital Revolver Loan may be accelerated and the revolver commitments may be terminated.

Obligations under the Working Capital Revolver Loan are secured by a first priority security interest in substantially all of the borrowers’ current assets, including accounts receivable and inventory, with exceptions set forth in the Amendment and related loan documents. The Working Capital Revolver Loan allows the Borrowers and subsidiaries under the Senior Secured Notes to guarantee those notes.