annum for the first 12 months following the Closing Date and an interest rate of 8.0% per annum for the remaining term of the Notes. The Notes will mature on the date that is 36 months following
the Closing Date. The Notes are secured by a first-priority security interest on all of the assets of the Company and its subsidiaries, subject to certain exceptions, and the obligations of the Company under the Notes are guaranteed by its
subsidiaries.
The Notes will convert automatically into Common Stock and/or Preferred Stock (as defined below) upon the earlier of (i) the time that
is immediately prior to the Effective Time and (ii) the time that is immediately prior to consummation of a Superior Transaction (as defined in the Note Purchase Agreement), and each Note is convertible into Common Stock and/or Preferred Stock,
as applicable, at the option of the relevant holder, at any time on or after (iii) the date on which closing of an Alternative Transaction (as defined in the Note Purchase Agreement) occurs, which encompasses, among other things, certain
changes relating to the beneficial ownership, indebtedness and solvency of the Company, (iv) a determination by the Companys Board of Directors that the Company is no longer pursuing a process to sell itself, and (v) April 30,
2019 (each of (i) through (v), a Trigger Date).
On or after any Trigger Date, the Notes automatically convert or at the election of the
holder are convertible, as applicable, into either (i) to the extent that the Companys Common Stock remains listed on the Nasdaq Stock Market and if such Trigger Date is prior to the date on which Company stockholder approval of the
conversion of the Notes into shares of Common Stock under the rules of the Nasdaq Stock Market becomes effective (such effectiveness date, the Stockholder Approval Date), an aggregate of 6,068,940 shares of Common Stock and 1,781,807
shares of Company 6.0% Series A Preferred Stock, par value $0.01 per share (Preferred Stock) (or, in the case of the Parent Note, 5,354,947 shares of Common Stock and 1,572,183 shares of Preferred Stock), which Preferred Stock will be
convertible into shares of Common Stock following the Stockholder Approval Date, or (ii) if such Trigger Date is on or after the Stockholder Approval Date, an aggregate of 14,977,974 shares of Common Stock (or, in the case of the Parent Note,
13,215,859 shares of Common Stock). Share figures are based on outstanding shares of the Company on an
as-converted
basis as of October 31, 2018.
Subject to the terms and conditions of the Note Purchase Agreement, the Notes are convertible into Common Stock at a conversion price of $2.27 per share
(subject to adjustment as provided in the Notes). For so long as any Notes (or Preferred Stock issued upon conversion of the Notes) remain outstanding or any Investor holding at least 10% of the then-aggregate unpaid principal amount of the Notes
owns Common Stock comprising at least 50% of the shares issuable upon conversion of its Notes, if there is a termination of the Merger Agreement by the Company other than for cause and Parent then holds at least 80% of its initial principal amount
of Notes (or shares issued upon conversion), a majority of the Companys Board of Directors will resign effective immediately and Parent will have the right to designate directors to fill such vacancies (provided that one director so appointed
by Parent shall be an independent director designated by Loeb Holding Corporation) and the right to appoint the Chief Executive Officer of the Company.
The foregoing descriptions of the Note Purchase Agreement and the Notes do not purport to be complete and are qualified in their entirety by the Note Purchase
Agreement (which includes the Form of Note as an exhibit thereto) attached hereto as Exhibit 99.2 which is incorporated herein by reference.
Rollover
and Tender and Support Agreements
Concurrently with the execution of the Merger Agreement, the Notes and the Note Purchase Agreement, WC SACD entered
into Contribution and Assignment Agreements (the Contribution and Assignment Agreements), dated as of the date of the Merger Agreement, with the Rollover Holders pursuant to which the Rollover Holders will contribute, immediately
following the consummation of the Offer, the Rollover Shares to Parent in exchange for equity interests in WC SACD. During the period prior to consummation of the Offer (or an earlier stockholder vote in respect of the Merger Agreement), the
Rollover Holders, on the one hand, and WC SACD, on the other hand, have agreed to work in good faith to, among other things, (i) finalize a stockholders agreement for WC SACD (with rollover terms materially consistent with those attached
to the Contribution and Assignment Agreements) and (ii) finalize an amended and restated certificate of incorporation and bylaws for WC SACD. As set forth in Schedule I to each Rollover Holders Contribution and Assignment Agreement,
(i) Loeb Holding Corporation has agreed to roll 8,801,702 shares of Common Stock (which assumes conversion of the Note held by Loeb Holding Corporation into 1,321,586 shares of Common Stock), (ii) David A. McGough has agreed to roll
800,000 shares of Common Stock (which assumes conversion of the Note held by David A. McGough into 440,529 shares of Common Stock), (iii) Michael R. Stanfield has agreed to roll 922,154 shares of Common Stock, and (iv) Stanfield Family
Investments LLC has agreed to roll 577,846 shares of Common Stock.
Concurrently with the execution of the Merger Agreement and the Contribution and
Assignment Agreements, Parent also entered into Tender and Support Agreements (the Tender and Support Agreements), dated as of the date of the Merger Agreement and the Note Purchase Agreement, with the Rollover Holders, pursuant to which
each of the Rollover Holders has