Item 4 — Purpose of Transaction
The disclosure in Item 4 is supplemented by adding the following: Reference is made to the disclosure set forth in Items 3, 5, and 6 of this Amendment No. 3, which is incorporated herein by reference. The purpose of the issuance of the July Penny Warrants was to incentivize the holders thereof (or their affiliates) to invest in the Issuer pursuant to the Purchase Agreement and to enter into the Limited Waiver and Amendment No. 3 to Financing Agreement (the "Third Amendment") in respect of the Financing Agreement, dated as of June 6, 2025 (as amended by the Third Amendment, and as further amended, amended and restated, supplemented, revised, or otherwise modified from time to time, the "Financing Agreement"), by and among the Issuer, the guarantors party thereto, and TCW Asset Management Company LLC, as administrative agent and collateral agent and the other parties signatory thereto. The Third Amendment amends the Financing Agreement to, among other things, (i) provide a covenant holiday through December 31, 2027 with respect to the Issuer's compliance with the Total Leverage Ratio and Fixed Charge Coverage Ratio (each as defined in the Financing Agreement) financial covenants, (ii) modify the terms of the minimum liquidity requirement, (iii) increase certain fees applicable to prepayments, (iv) provide that if the Purchase Agreement is terminated, the Cash Investment is deemed to be a secured obligation under the Financing Agreement and subject to repayment, together with a $15.0 million fee, upon repayment or satisfaction of the obligations (or earlier acceleration thereof), (v) provide for an additional $5.0 million in aggregate principal amount of Delayed Draw Term Loans (as defined in the Financing Agreement), subject to satisfaction of certain borrowing conditions, and (vi) convert the revolving loan facility under the Financing Agreement into an asset-based revolver with related changes to the borrowing conditions and covenants. If stockholder approval is not obtained for the Issuance, (i) the Cash Investment will automatically be deemed to be an Obligation (as defined in the Financing Agreement) under the Financing Agreement, and (ii) the Issuer will be required to pay a fee in an amount equal to $15.0 million to TCW Asset Management Company LLC, as administrative agent under the Financing Agreement, to be allocated among the Investors in accordance with the amounts funded by such Investors. Such amount shall be fully earned, non-refundable, and due on such date of termination, and payable in full in cash on the earliest to occur of (i) the final maturity date under the Financing Agreement; (ii) the date on which all Obligations that are then due and payable are indefeasibly paid in full, in cash; (iii) the date on which all or any portion of the Obligations is accelerated; or (iv) the date on which any of the Obligations is satisfied, released, paid, restructured, reorganized, replaced, reinstated, defeased or compromised, including through foreclosure (whether by judicial proceeding or otherwise), a deed in lieu of foreclosure, or a distribution of any kind made to TCW Asset Management Company LLC, as administrative agent under the Financing Agreement, or the lenders in full or partial satisfaction of the Obligations. Pursuant to the Purchase Agreement, if the Issuance occurs, the reporting person will be deemed to beneficially own an aggregate of 30,959 shares of Series A Preferred Stock to be issued directly to TCW Rescue Financing and TCW Direct Lending. Once issued, the Series A Preferred Stock will be initially convertible into shares of Common Stock at a rate of 2,000 shares of Common Stock per $1,000 of stated value (equivalent to a conversion price of $0.50 per share), subject to adjustment for stock splits and other customary anti-dilution provisions. The closing of the Issuance has not yet occurred, and the Series A Preferred Stock is not currently outstanding and has not yet been issued. Pursuant to the Purchase Agreement, the Issuer and the Investors also agreed that certain warrants previously issued to investors, including affiliates of the reporting person, will, effective as of, and contingent upon the closing of the Issuance, automatically be cancelled and extinguished. These warrants include the Premium Warrants, the Super Premium Warrants, and the December Premium Warrants. The governance arrangements entered into in connection with the Purchase Agreement, as further described in Item 6 below, provide TCW Asset Management Company LLC, an affiliate of the reporting person, with the right to designate up to two directors (the "Preferred Directors") of the Issuer's board of directors and that certain committees shall include at least one Preferred Director, subject to the terms and conditions described therein.