Exhibit 10.3

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is made and
entered into on December 29, 2017, by and between Floors-N-More, LLC, a Nevada
limited liability company (the “Company”) and Steven Chesin (the “Executive”),
and shall become effective on January 1, 2018.

WHEREAS, the Executive and the Company previously entered into that certain
Employment Agreement (the “Employment Agreement”) dated as of April 14, 2014;

WHEREAS, the Company is the wholly owned subsidiary of ALJ Regional Holdings,
Inc. (the “Parent”); and

WHEREAS, the Compensation, Nominating and Corporate Governance Committee of the
Board of Directors of the Parent and the Executive believe it is in the best
interests of the Company to amend the Employment Agreement in the manner
reflected herein.

NOW THEREFORE, in consideration of the continuing mutual covenants and
agreements set forth herein and in the Employment Agreement and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

1.

Section 1.1—Employment, Duties shall be amended and restated in its entirety to
read and provide as follows:

The Company hereby employs the Executive for the Term (as defined in Section
2.1), to render exclusive and full-time services to the Company as the President
and Chief Executive Officer of the Company, or in such other executive position
as may be mutually agreed upon by the Board of Directors (including the
Compensation, Nominating and Corporate Governance Committee thereof, the
“Board”) of ALJ Regional Holdings, Inc. (the “Parent”) and the Executive, and to
perform such other duties consistent with such position or as may be assigned to
the Executive by the Board.

2.

Section 2.1—Term of Employment shall be amended and restated in its entirety to
read and provide as follows:

 

The term of the Executive’s employment under this Employment Agreement (the
“Term”) shall commence on January 1, 2018 (the “Effective Date”), and shall
continue until January 1, 2019, subject to earlier termination pursuant to
Section 4.  Notwithstanding the foregoing, both the Company and the Executive
agree that the Executive’s employment is “at will” and may be terminated by
either the Company or the Executive at any time and for any reason; provided,
however, that upon certain terminations of employment, the Executive may be
entitled to severance as is specified in Section 4.4 below.

3.

Section 3.2—Incentive Compensation shall be amended and restated in its entirety
to read and provide as follows:

Commencing with the 2018 calendar year, the Executive shall be eligible to earn
a bonus with respect to such calendar year ending during the Term computed in
accordance with the provisions hereafter (an “Annual Bonus”). The Annual Bonus,
if any, shall be equal to the sum of (i) five percent (5%) of the Pre-Bonus
Earnings in excess of one million five hundred thousand dollars ($1,500,000) but
not more than five million dollars ($5,000,000) and (ii) two and half percent
(2.5%) of the Pre-Bonus Earnings in excess of five million dollars ($5,000,000)
for such year. The “Pre-Bonus Earnings” amount shall equal the EBITDA (as
defined below) of the Company before any bonus amount owed to the Executive but
after all other bonus amounts.

 

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An Annual Bonus, if earned in accordance with this Agreement, shall be paid no
later than the fifteenth day of the third month following the year with respect
to which such bonus was earned, provided that, except as otherwise specifically
provided for in this Agreement (including, without limitation, Sections 4.1, 4.2
and 4.4), as a condition precedent to any bonus entitlement the Executive must
remain in employment with the Company at the time that the Annual Bonus is paid.
Notwithstanding the foregoing, to the extent that Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), may be applicable, such Annual
Bonus shall be subject to, and contingent upon, such shareholder approval as is
necessary to cause the Annual Bonus to qualify as “performance-based
compensation” under Section 162(m) of the Code and the regulations promulgated
thereunder as well as any other required approvals.

Notwithstanding anything to the contrary contained herein, if the Board or any
other relevant committee or person, including the Executive Chairman of Parent,
determines that any restatement, revision or change requires a change in the
calculation of EBITDA for any particular fiscal year of the Company, the Board
may require reimbursement from the Executive of any excess Annual Bonus paid to
the Executive as a result of the recalculated EBITDA for such particular fiscal
year of the Company.

For the purposes of this Agreement, “EBITDA” means for any fiscal year of the
Company, consolidated operating income for such fiscal year of the Company plus,
without duplication and to the extent reflected as a charge in the statement of
such operating income for such fiscal year, the sum of (i) depreciation and
amortization expense (excluding amounts of prepaid incentives under customer
contracts), (ii) any extraordinary non-cash expenses or losses, (iii) all
restructuring costs (as defined under U.S. generally accepted accounting
principles (“GAAP”)), (iv) fees paid to the Company’s external advisors in
connection with acquisitions for the business (whether or not consummated) and
(v) effects of changes in accounting policy and GAAP, in the case of clauses
(i) through (iii) above, solely with respect to the Company, and minus without
duplication and to the extent included in the statement of such operating income
for such period, the sum of (a) any extraordinary or non-recurring non-cash
income or gains (including, whether or not otherwise includable as a separate
item in the statement of such operating income for such period, gains on the
sales of assets outside of the ordinary course of business), (b) effects of
changes in accounting policy and GAAP, and (c) any cash payments made during
such period in respect of items described in clause (ii) above subsequent to the
fiscal quarter in which the relevant non-cash expenses or losses were reflected
as a charge in the statement of operating income, in the case of clauses
(a) through (c) above, solely with respect to the Company, all as determined on
a consolidated basis, all of the foregoing to be determined by the Board or any
other relevant committee or person, including the Executive Chairman of the
Parent.

4.

The fourth sentence in Section 3.5—Paid Time Off is hereby deleted in its
entirety.

5.

Section 3.6—Benefits is hereby amended by inserting the following sentences
immediately after the first sentence of such section:

In addition, during the Term, the Company shall pay for (i) the Executive’s key
man life insurance premiums, which the Company shall be the sole beneficiary of
any such key man life insurance policy, and neither the Executive nor the heirs
or personal representatives of the Executive shall have any interest in or to
any proceeds associated with such policy; and (ii) the premiums for a one
million dollar ($1,000,000) life insurance policy for the Executive, provided
that the Executive shall be responsible for all tax related expenses associated
with such policy.    

6.

The second sentence in Section 4.1—Death shall be amended and restated in its
entirety to read and provide as follows:

The Company shall pay to the Executive’s estate: (i) any Base Salary earned but
not paid; (ii) a pro-rated Annual Bonus for the year in which the Executive
dies, based on the number of days of the fiscal year worked by the Executive,
which pro-rated Annual Bonus will be paid at the time and in the

 

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manner such Annual Bonus would have been paid to the Executive had he not died;
and (iii) an Annual Bonus for the year prior to the year in which the Executive
dies if at the time of death the Executive has otherwise earned an Annual Bonus
payment for such prior year and has not yet been paid such Annual Bonus, which
prior year Annual Bonus will be paid at the time and in the manner such prior
year Annual Bonus would have been paid to the Executive had he not died.

7.

The second sentence in Section 4.2—Disability shall be amended and restated in
its entirety to read and provide as follows:

If the Company elects to terminate the Agreement by reason of Disability, the
Company shall pay to the Executive promptly after the notice of termination:
(i) any Base Salary earned but not paid, (ii) a pro-rated Annual Bonus for the
year in which the Executive is terminated, based on the number of days of the
fiscal year worked by the Executive until the date of the notice of termination,
which pro-rated Annual Bonus will be paid at the time and in the manner such
Annual Bonus would have been paid to Executive had he not been terminated, and
(iii) an Annual Bonus for the year prior to the year in which the Executive is
terminated if at the time of termination the Executive has otherwise earned an
Annual Bonus payment for such prior year and has not yet been paid such Annual
Bonus, which prior year Annual Bonus will be paid at the time and in the manner
such prior year Annual Bonus would have been paid to the Executive had he not
been terminated, in each case less any other benefits payable to the Executive
under any disability plan provided for hereunder or otherwise furnished to the
Executive by the Company.

8.

The first sentence in Section 4.4—Termination by Company without Cause or by the
Executive for Good Reason shall be amended and restated in its entirety to read
and provide as follows:

If the Executive’s employment is terminated prior to the end of the Term by the
Company without Cause (other than by reason of death or Disability) or by the
Executive for Good Reason (as defined below), the Executive shall receive (i)
any Base Salary earned but not paid and (ii) as severance pay,(a) one-times Base
Salary, which shall be payable in substantially equal installments for the
12-month period following the Executive’s termination of employment (the
“Severance Period”) and in accordance with the Company’s normal payroll
practices, (b) continuation for the Severance Period of group health plan
benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et
seq. (commonly known as “COBRA”), with the cost of the regular premium for such
benefits paid in full by the Company (provided that the Company shall not be
required to pay any portion of the premium if such payment would result in
additional taxes imposed on the Company), (c) an Annual Bonus for the year in
which termination occurred (which, for the avoidance of doubt, shall not be
pro-rated and shall be based on the entire year) if the Executive would have
been otherwise entitled to receive such bonus hereunder had the Executive been
employed at the time such Annual Bonus is normally paid, which Annual Bonus will
be paid at the time and in the manner such Annual Bonus would have been paid to
the Executive had the Executive not been terminated, and (d) an Annual Bonus for
the year prior to the year in which the Executive is so terminated if, at the
time of termination, the Executive has otherwise earned an Annual Bonus payment
for such prior year and has not yet been paid such bonus due to such
termination, which prior year Annual Bonus will be paid at the time and in the
manner such prior year Annual Bonus would have been paid to the Executive had
such Executive not been terminated.

9.

The last sentence in Section 5.2 shall be amended and restated in its entirety
to read and provide as follows:

The “Restricted Period” is that period commencing on the Effective Date,
continuing during the Term and for any period the Executive is employed by the
Company after the Term (including after expiration of this Agreement) and
continuing through, and expiring on the expiration of the Severance Period, if
any, in the event the Executive’s employment is terminated by the Company or any
successor without Cause or by the Executive for Good Reason.

 

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10.

The address for Shearman & Sterling LLP in Section 8—Notices is hereby deleted
and replaced with the following:

 

1460 El Camino Real, 2nd Floor

Menlo Park, CA  94025

11.

All other provisions of the Employment Agreement shall remain in full force and
effect.

 

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have executed this Amendment to the Employment
Agreement on December 29, 2017.

 

FLOORS-N-MORE, LLC

 

 

 

 

By:

/s/ T. Robert Christ

Name:

T. Robert Christ

Title:

Chief Financial Officer

 

 

 

 

 

 

EXECUTIVE

 

 

 

/s/ Steven Chesin

 

Steven Chesin