Document:

aljj-ex101_12.htm

 

Exhibit 10.1

 

THIRD AMENDMENT 
TO FINANCING AGREEMENT

THIRD AMENDMENT, dated as of October 2, 2017 (this "Amendment"), to the Financing Agreement, dated as of August 14, 2015, as amended, restated, supplemented or otherwise modified from time to time (as so amended, the "Financing Agreement"), by and among ALJ Regional Holdings, Inc., a Delaware corporation (the "Parent"), Faneuil, Inc., a Delaware corporation ("Faneuil"), Floors-N-More, LLC, a Nevada limited liability company ("FNM"), Phoenix Color Corp., a Delaware corporation ("PCC", and together with the Parent, Faneuil, FNM and each other Person that executes a joinder agreement and becomes a "Borrower" thereunder, each a "Borrower" and collectively, the "Borrowers"), each subsidiary of the Parent listed as a "Guarantor" on the signature pages thereto (together with each other Person that executes a joinder agreement and becomes a "Guarantor" thereunder or otherwise guaranties all or any part of the Obligations (as hereinafter defined), each a "Guarantor" and collectively, the "Guarantors"), the lenders from time to time party thereto (each a "Lender" and collectively, the "Lenders"), Cerberus Business Finance, LLC, a Delaware limited liability company ("CBF"), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Collateral Agent"), and PNC Bank, National Association ("PNC"), as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Administrative Agent" and together with the Collateral Agent, each an "Agent" and collectively, the "Agents").

WHEREAS, the Borrowers, the Guarantors, the Agents and the Lenders wish to amend certain terms and provisions of the Financing Agreement as hereafter set forth.

NOW THEREFORE, in consideration of the premises and other good and valuable consideration, the parties hereto hereby agree as follows:

1.   Definitions.  All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned to them in the Financing Agreement.

2.   Amendments.

(a)   New Definitions.  Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions, in appropriate alphabetical order:

""Moore-Langen" means Moore-Langen Printing Company, Inc., an Indiana corporation."

""Moore-Langen Acquisition" means the acquisition of all of the "Transferred Assets" pursuant to, and as defined in, the Moore-Langen APA."

""Moore-Langen Acquisition Collateral Assignment" means the Collateral Assignment of Acquisition Documents, dated as of the Third Amendment Effective Date, and in 

			
	
DOC ID - 26568100.8 
	
 
	
 

 

 

 

form and substance satisfactory to the Collateral Agent, made by PCC in favor of the Collateral Agent."

""Moore-Langen APA" means the Asset Purchase Agreement, dated as of September 20, 2017, between PCC, as buyer, Moore-Langen, as seller, and LSC Communications, Inc., as parent."

""Moore-Langen Disbursements" has the meaning specified thereof in Section 6.01(s)."

""Third Amendment" means the Third Amendment to Financing Agreement, dated as of October 2, 2017, among the Borrowers, the Guarantors, the Agents and the Lenders party thereto."

""Third Amendment Disbursement Letter" means a disbursement letter, in form and substance reasonably satisfactory to the Collateral Agent, by and among the Loan Parties, the Agents, the Lenders and the other Persons party thereto, and the related funds flow memorandum describing the sources and uses of all cash payments in connection with the transactions contemplated to occur on the Third Amendment Effective Date."

""Third Amendment Effective Date" has the meaning specified therefor in Section 5 of the Third Amendment."

""Term A Loan Indebtedness" has the meaning specified therefor in Section 2.01(a)(v)."

""Term A-1 Lender" means a Lender making a Term A-1 Loan."

""Term A-1 Loan" means the Term A-1 Loans made by the Term A-1 Lenders to the Borrowers on the Third Amendment Effective Date pursuant to Section 2.01(a)(iv)."

""Term A-1 Loan Commitment" means, with respect to each Term A-1 Lender, the commitment of such Lender to make its respective Term A-1 Loan to the Borrowers on the Third Amendment Effective Date in the amount set forth in Schedule 1.01(A-2) hereto or in the Assignment and Acceptance pursuant to which such Lender became a Lender under this Agreement, as such commitment may be terminated or reduced from time to time in accordance with the terms of this Agreement."

""Term A-1 Loan Disbursements" shall have the meaning specified therefor in Section 6.01(s)."

""Term A-1 Loan First Period" means the period of time after the Third Amendment Effective Date up to and including the date that is the first anniversary of the Third Amendment Effective Date."

""Term A-1 Loan Second Period" means the period of time after the Term A-1 Loan First Period up to and including the date that is the second anniversary of the Third Amendment Effective Date.

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""Total Term A-1 Loan Commitment" means the sum of the amounts of the Term A-1 Lenders' Term A-1 Loan Commitments."

(b)   Existing Definitions.

(i)The definition of "Adjusted Consolidated EBITDA" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

""Adjusted Consolidated EBITDA" means, with respect to any period, the Consolidated EBITDA of the Parent and its Subsidiaries, after giving effect to (i) adjustments set forth in a due diligence quality of earnings report prepared by Crowe Horwath received by the Agents prior to the Effective Date and (ii) any other adjustments agreed to by the Parent and the Agents (such acceptance to be evidenced in writing). For purposes of this Agreement, monthly Adjusted Consolidated EBITDA for the following fiscal months shall deemed to be as follows to give full pro forma effect to the Color Optics Acquisition, Vertex Acquisition and Moore-Langen Acquisition (as if the Color Optics Acquisition, the Vertex Acquisition and Moore-Langen Acquisition had occurred prior to such fiscal months):  (A) fiscal month ended October 31, 2016, $2,848,350, (B) fiscal month ended November 30, 2016, $2,319,089, (C) fiscal month ended December 31, 2016, $3,227,811, (D) fiscal month ended January 31, 2017 $2,552,246 (E) fiscal month ended February 28, 2017, $3,189,925, (F) fiscal month ended March 31, 2017, $3,452,091, (G) fiscal month ended April 30, 2017, $2,716,401, (H) fiscal month ended May 31, 2017, $3,571,156, (I) fiscal month ended June 30, 2017, $3,205,295 and (J) fiscal month ended July 31, 2017, $2,792,599; provided, further, that monthly Adjusted Consolidated EBITDA for the fiscal month ended August 31, 2017, for the fiscal month ended September 30, 2017 and the stub period from October 1, 2017 through October 2, 2017 shall also be deemed to give full pro forma effect to the Moore-Langen Acquisition (as if the Moore-Langen Acquisition had occurred prior to such fiscal month or stub period, as applicable)."

(ii)The definition of "Applicable Margin" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

""Applicable Margin" means, as of any date of determination, with respect to the interest rate of (a) a Reference Rate Loan or any portion thereof, 5.75% and (b) a LIBOR Rate Loan or any portion thereof, 6.75%."

(iii)The definition of "Applicable Premium" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

""Applicable Premium" means

(a)as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (c), (d) or (e) of the definition thereof:

(1)with respect to Original Term Loans and Revolving Loans:

(i)during the Initial First Period, an amount equal to 3.0% times the aggregate amount equal to the sum of (A) the principal amount of all Original Term 

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Loans outstanding, (B) the principal amount of all Revolving Loans outstanding and (C) the amount of the undrawn Total Revolving Credit Commitment, in each case, on the date of such Applicable Premium Trigger Event;

(ii)during the Initial Second Period, an amount equal to 2.0% times the aggregate amount equal to the sum of (A) the principal amount of all Original Term Loans outstanding, (B) the principal amount of all Revolving Loans outstanding and (C) the amount of the undrawn Total Revolving Credit Commitment, in each case, on the date of such Applicable Premium Trigger Event; 

(iii)during the (y) Initial Third Period, an amount equal to 1.0% times the aggregate amount equal to the sum of (A) the principal amount of all Original Term Loans outstanding, (B) the principal amount of all Revolving Loans outstanding and (C) the amount of the undrawn Total Revolving Credit Commitment, in each case, on the date of such Applicable Premium Trigger Event; and

(iv)thereafter, zero; 

(2)with respect to Term A Loans:

(i)during the Term A Loan First Period, an amount equal to 3.0% times the principal amount of all Term A Loans outstanding on the date of such Applicable Premium Trigger Event;

(ii)during the Term A Loan Second Period, an amount equal to 2.0% times the principal amount of all Term A Loans outstanding on the date of such Applicable Premium Trigger Event;

(iii)during the Term A Loan Third Period, an amount equal to 1.0% times the principal amount of all Term A Loans outstanding on the date of such Applicable Premium Trigger Event; and

(iv)thereafter, zero; and

(3)with respect to the Term A-1 Loans:

(i)during the Term A-1 Loan First Period, an amount equal to 3.0% times the principal amount of all Term A-1 Loans outstanding on the date of such Applicable Premium Trigger Event; 

(ii)during the Term A-1 Loan Second Period, an amount equal to 2.0% times the principal amount of all Term A-1 Loans outstanding on the date of such Applicable Premium Trigger Event; and

(iii)thereafter, zero;

(b)as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (a) of the definition thereof:

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(i)during the Initial First Period, an amount equal to 3.0% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date;

(ii)during the Initial Second Period, an amount equal to 2.0% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date; 

(iii)during the Initial Third Period, an amount equal to 1.0% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date; and

(iv)thereafter, zero;

(c)as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (b) of the definition thereof:

(1)with respect to Original Term Loans:

(i)during the Initial First Period, an amount equal to 3.0% times the principal amount of the Original Term Loan being paid on such date;

(ii)during the Initial Second Period, an amount equal to 2.0% times the principal amount of the Original Term Loan being paid on such date;

(iii)during the Initial Third Period, an amount equal to 1.0% times the principal amount of the Original Term Loan being paid on such date; and

(iv)thereafter, zero; 

(2)with respect to Term A Loans:

(i)during the Term A Loan First Period, an amount equal to 3.0% times the principal amount of the Term A Loans being paid on such date;

(ii)during the Term A Loan Second Period, an amount equal to 2.0% times the principal amount of the Term A Loans being paid on such date;

(iii)during the Term A Loan Third Period, an amount equal to 1.0% times the principal amount of the Term A Loans being paid on such date; and

(iv)thereafter, zero; and

(3)with respect to Term A-1 Loans:

(i)during the Term A-1 Loan First Period, an amount equal to 3.0% times the principal amount of the Term A-1 Loans being paid on such date;

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(ii)during the Term A-1 Loan Second Period, an amount equal to 2.0% times the principal amount of the Term A-1 Loans being paid on such date; and

(iv)thereafter, zero."

(iv)The definition of "Excess Cash Flow" in Section 1.01 of the Financing Agreement is hereby amended by adding the following proviso immediately prior to the end of the definition: 

"; provided, further, that solely for purposes of calculating the Excess Cash Flow for Fiscal Year 2018, the Moore-Langen Disbursements shall be excluded from the deductions set forth in this clause (b) without duplication."

(v)The definition of "Loan Document" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows: 

""Loan Document" means this Agreement, the PCC Acquisition Collateral Assignment, the Color Optics Acquisition Collateral Assignment, any Control Agreement, the Disbursement Letter, the First Amendment Disbursement Letter, the Fee Letter, any Guaranty, the Intercompany Subordination Agreement, any Joinder Agreement, any Letter of Credit Application, the Moore-Langen Acquisition Collateral Assignment, any Mortgage, the Third Amendment Disbursement Letter, any Security Agreement, any UCC Filing Authorization Letter, the Vertex Acquisition Collateral Assignment, any landlord waiver, any collateral access agreement, any Perfection Certificate and any other agreement, instrument, certificate, report and other document executed and delivered pursuant hereto or thereto or otherwise evidencing or securing any Loan, any Letter of Credit Obligation or any other Obligation."

(vi)The definition of "Term Loans" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

""Term Loans" means (i) the Original Term Loans made by the Term Loan Lenders to the Borrowers on the Effective Date pursuant to Section 2.01(a)(ii), (ii) the Term A Loans made by the Term A Lenders on the First Amendment Effective Date pursuant to Section 2.01(a)(iii), (iii) the Term A-1 Loans made by the Term A-1 Lenders on the Third Amendment Effective Date pursuant to Section 2.01(a)(iv) and (iv) after the date on which any additional Incremental Term Loans are made by the applicable Term Loan Lenders to the Borrowers pursuant to Section 2.13, such Incremental Term Loans."

(vii)The definition of "Term Loan Commitment" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

""Term Loan Commitment" means, with respect to each Lender, the Original Term Loan Commitment, the Term A Loan Commitment, and/or the Term A-1 Loan Commitment of such Lender."

(viii)The definition of "Total Term Loan Commitment" in Section 1.01 of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

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""Total Term Loan Commitment" means the sum of (i) the amount of the Lenders' Original Term Loan Commitments, (ii) the amount of the Lenders' Term A Loan Commitments and (iii) the amount of the Lenders' Term A-1 Loan Commitments."

(c)   Section 2.01(a) (Commitments).  Section 2.01(a) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

"Section 2.01.  Commitments.  (a) Subject to the terms and conditions and relying upon the representations and warranties herein set forth:

(i)each Revolving Loan Lender severally agrees to make Revolving Loans to the Borrowers at any time and from time to time during the term of this Agreement, in an aggregate principal amount of Revolving Loans at any time outstanding not to exceed the amount of such Lender's Revolving Credit Commitment; 

(ii)each Term Loan Lender severally agrees to make the Original Term Loan to the Borrowers on the Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Original Term Loan Commitment;

(iii)each Term A Lender severally agrees to make the Term A Loan to the Borrowers on the First Amendment Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Term A Loan Commitment; 

(iv)each Term A-1 Lender severally agrees to make the Term A-1 Loan to the Borrowers on the Third Amendment Effective Date, in an aggregate principal amount not to exceed the amount of such Lender's Term A-1 Loan Commitment; and

(v)notwithstanding anything to the contrary contained in this Section 2.01(a), the Loan Parties hereby acknowledge, confirm and agree that (1) immediately prior to the Third Amendment Effective Date, the outstanding principal amount of the Original Term Loan is equal to $82,179,218.53 (such Indebtedness being hereinafter referred to as the "Original Term Loan Indebtedness"), (2) such Original Term Loan Indebtedness shall not be repaid on the Third Amendment Effective Date, but rather shall be continued and re-evidenced by this Agreement as a portion of the Term Loans outstanding hereunder, (3) immediately prior to the Third Amendment Effective Date, the outstanding principal amount of the Term A Loan is equal to $8,838,682.47 (such Indebtedness being hereinafter referred to as the "Term A Loan Indebtedness"), (4) such Term A Loan Indebtedness shall not be repaid on the Third Amendment Effective Date, but rather shall be continued and re-evidenced by this Agreement as a portion of the Term Loans outstanding hereunder, (5) the Term A-1 Loan made on the Third Amendment Effective Date shall be an amount equal to the Total Term A-1 Loan Commitment, and (6) for all purposes of this Agreement and the other Loan Documents, the sum of the Original Term Loan Indebtedness immediately prior to the Third Amendment Effective Date ($82,179,218.53), the Term A Loan Indebtedness immediately prior to the Third Amendment Effective Date ($8,838,682.47) and the Term A-1 Loan made on the Third Amendment Effective Date ($7,500,000) shall constitute the Term Loan outstanding on the Third Amendment Effective Date in the principal amount of $98,517,901.00."  

(d)   Section 2.01(b) (Commitments).  Section 2.01(b)(ii) is hereby amended and restated in its entirety as follows:

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"(ii)The aggregate principal amount of the Original Term Loan made on the Effective Date shall not exceed the Total Original Term Loan Commitment.  The aggregate principal amount of the Term A Loan made on the First Amendment Effective Date shall not exceed the Total Term A Loan Commitment.  The aggregate principal amount of the Term A-1 Loan made on the Third Amendment Effective Date shall not exceed the Total Term A-1 Loan Commitment.  Any principal amount of the Term Loan which is repaid or prepaid may not be reborrowed."

(e)   Section 2.02(a) (Making the Loans).  Clause (iv) of Section 2.02(a) of the Financing Agreement is hereby amended and restated in its entirety as follows:

"(iv)  the proposed borrowing date, which must be a Business Day, and (1) with respect to the portion of the Term Loan funded pursuant to the Total Original Term Loan Commitment must be the Effective Date, (2) with respect to the portion of the Term Loan funded pursuant to the Total Term A Loan Commitment must be the First Amendment Effective Date and (3) with respect to the portion of the Term Loan funded pursuant to the Total Term A-1 Loan Commitment must be the Third Amendment Effective Date."

(f)   Section 2.03(b) (Repayment of Loans; Evidence of Debt).  The first sentence of Section 2.03(b) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

"(b)  The outstanding principal amount of (i) the Original Term Loans made on the Effective Date pursuant to Section 2.01(a)(ii) shall be repaid in consecutive quarterly installments on the last day of each fiscal quarter beginning on September 30, 2015, each in an amount equal to $1,968,750, (ii) the Term A Loans shall be repaid in consecutive quarterly installments on the last day of each fiscal quarter beginning on September 30, 2016, each in an amount equal to $187,500 and (iii) the Term A-1 Loans shall be repaid in consecutive quarterly installments on the last day of each fiscal quarter beginning on December 31, 2017, each in an amount equal to $140,625; provided, however, that the last such installment with respect to such Term Loans shall be in the amount necessary to repay in full the unpaid principal amount of the Term Loans made pursuant to Section 2.01(a)(ii), (iii) and (iv)."

(g)   Section 2.05(a)(ii) (Reduction of Term Loan Commitments).  Section 2.05(a)(ii) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

"(ii)Term Loan.  The Total Original Term Loan Commitment shall terminate at 5:00 p.m. (New York City time) on the Effective Date.  The Total Term A Loan Commitment shall terminate at 5:00 p.m. (New York City time) on the First Amendment Effective Date.  The Total Term A-1 Loan Commitment shall terminate at 5:00 p.m. (New York City time) on the Third Amendment Effective Date."

(h)   Section 2.13 (Incremental Term Loans).  Section 2.13(b) of the Financing Agreement is hereby amended to replace "$6,900,000 (after giving effect to the funding of the Revolving Loans on the Second Amendment Effective Date)" with "$0 (after giving effect to the funding of the Term A-1 Loan on the Third Amendment Effective Date)".

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(i)   Section 6.01(s) (Use of Proceeds).  Section 6.01(s) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

"(s)Use of Proceeds.  The proceeds of the Loans shall be used (y) on the Effective Date to (i) refinance the Existing Credit Facilities (other than the Specified Existing Credit Facilities), (ii) pay up to $90,000,000 of the Purchase Price (as adjusted by working capital adjustments in accordance with the terms of the PCC Acquisition Agreement) payable pursuant to the PCC Acquisition Documents, (iii) pay fees and expenses in connection with the transactions contemplated hereby and (iv) fund working capital of the Borrowers, (z) on or after the First Amendment Effective Date to (i) fund up to $7,000,000 of the purchase price for the Color Optics Acquisition, (ii) pay up to $1,700,000 in the aggregate for employee severance expenses incurred and Capital Expenditures made in connection with the Color Optics Acquisition, (iii) repay up $1,000,000 in principal amount of Revolving Loans outstanding as of the First Amendment Effective Date to the extent such Revolving Loans were used by the Borrowers to make Parent Buybacks in accordance with the Financing Agreement and (iv) fund general corporate and working capital purposes of the Borrowers and to pay fees and expenses related to the First Amendment (the amounts referred to in clauses (i) through (iv) of this clause (z), the "Term A Loan Disbursements"), (aa) on or after the Second Amendment Effective Date to (i) fund up to $8,100,000 of the purchase price for the Vertex Acquisition, (ii) pay up to $3,000,000 in the aggregate for Capital Expenditures to be made in connection with the Vertex Acquisition and (iii) fund general corporate and working capital purposes of the Borrowers and to pay fees and expenses related to the Second Amendment (the amounts referred to in clauses (ii) and (iii) of this clause (aa), the "Specified Disbursements") and (bb) on or after the Third Amendment Effective Date to (i) fund up to $7,500,000 of the purchase price for the Moore-Langen Acquisition, (ii) pay up to $1,000,000 in the aggregate for employee severance expenses incurred and Capital Expenditures to be made in connection with the Moore-Langen Acquisition and (iii) fund general corporate and working capital purposes of the Borrowers and to pay fees and expenses related to the Third Amendment (the amounts referred to in clauses (ii) and (iii) of this clause (bb), the "Moore-Langen Disbursements").  After the Effective Date, the First Amendment Effective Date, the Second Amendment Effective Date and the Third Amendment Effective Date, the proceeds of the Revolving Loans, the Incremental Term Loans (if any) and the Letters of Credit will be used for general corporate and working capital purposes of the Borrowers.

(j)   Schedules to Financing Agreement.  Schedule 1.01(A-2) is hereby added to the Financing Agreement in the form attached as Annex I hereto.  Certain Schedules to the Financing Agreement and Security Agreement are hereby amended and restated and replaced in their entirety with the Schedules attached as Annex II and Annex III, respectively, hereto.

3.   Reaffirmation of Security Agreement.  Each of the Loan Parties reaffirms the grant of security interests in the Collateral (as defined in the Security Agreement) and the grant of the Liens pursuant to the terms of the Security Agreement to the Collateral Agent for the benefit of the Secured Parties, which grant of security interest and Liens shall continue in full force and effect during the term of Financing Agreement, as amended by this Amendment, and any renewals or extensions thereof and shall continue to secure the Obligations.  The Schedules to the Security Agreement are hereby amended and restated and replaced in their entirety with the Schedules attached as Annex III hereto.

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4.   Representations and Warranties.  Each Loan Party hereby represents and warrants to the Agents and the Lenders as follows:

(a)   Organization, Good Standing, Etc.  Each Loan Party (i) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing under the laws of the state or jurisdiction of its organization or formation, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated and, in the case of the Borrowers, to make the borrowings hereunder, and to execute and deliver this Amendment, and to consummate the transactions contemplated hereby and by the Financing Agreement, as amended hereby, and (iii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary, except (solely for the purposes of this subclause (iii)) where the failure to be so qualified and in good standing would not reasonably be expected to have a Material Adverse Effect.

(b)   Authorization, Etc.  The execution and delivery by each Loan Party of this Amendment, and the performance by each Loan Party of this Amendment and the Financing Agreement, as amended hereby (i) have been duly authorized by all necessary action, (ii) do not and will not contravene (A) any of such Loan Party's Governing Documents, (B) any applicable material Requirement of Law or (C) any material Contractual Obligation binding on or otherwise affecting such Loan Party or any of its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Loan Document) upon or with respect to any of its properties, and (iv) do not and will not result in any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable such Loan Party operations or any of its properties, except, in the case of clause (iv), to the extent where such contravention, default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal could not reasonably be expected to have a Material Adverse Effect.

(c)   Governmental Approvals.  No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required in connection with the due execution and delivery of this Amendment by any Loan Party, and the performance by any Loan Party of this Amendment and the Financing Agreement, as amended hereby.

(d)   Enforceability of Amendment.  This Amendment is, and each other Loan Document to which any Loan Party is or will be a party is (or, if applicable, when delivered pursuant hereto, and as amended hereby, will be) a legal, valid and binding obligation of such Person, enforceable against such Person in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity.

5.   Conditions to Effectiveness.  This Amendment shall become effective only upon satisfaction in full (or waiver by the Agents), in a manner satisfactory to the Agents, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being herein called the "Third Amendment Effective Date"):

(a)   The Agents shall have received this Amendment, duly executed by the Loan Parties, each Agent and each Lender.

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(b)   The representations and warranties contained in this Amendment, in the Financing Agreement and in each other Loan Document, certificate or other writing delivered to any Agent or any Lender pursuant hereto or thereto on or prior to the date hereof are true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality or "Material Adverse Effect" in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification) on and as of the Third Amendment Effective Date as though made on and as of the Third Amendment Effective Date, except to the extent that any such representation or warranty expressly relates solely to an earlier date (in which case such representation or warranty shall be true and correct in all material respect on and as of such earlier date (except that such materiality qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to materiality or "Material Adverse Effect" in the text thereof, which representations and warranties shall be true and correct in all respects subject to such qualification)).

(c)   No Default or Event of Default shall have occurred and be continuing on the Third Amendment Effective Date or would result from this Amendment becoming effective in accordance with its terms.

(d)   After giving pro forma effect to the Term A-1 Loans to be made on the Third Amendment Effective Date and the payment of all fees (including the fees payable pursuant to Section 2.06 and Section 12.04 of the Financing Agreement), costs and expenses in connection with this Amendment, Availability shall not be less than $10,000,000 and (ii) all liabilities of the Loan Parties shall be current.  The Administrative Borrower shall deliver to the Collateral Agent a certificate of the chief financial officer of the Administrative Borrower certifying as to the matters set forth in clauses (i) and (ii) above and containing a reasonably detailed calculation of Availability. 

(e)   All consents, authorizations and approvals of, and filings and registrations with, and all other actions in respect of, any Governmental Authority or other Person required in connection with the making of the Term A-1 Loans on the Third Amendment Effective Date shall have been obtained and shall be in full force and effect.

(f)   There shall exist no claim, action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority which relates to the Loans or which could reasonably be expected to have a Material Adverse Effect.

(g)   The Agents and the Lenders shall have received all documentation and other information reasonably requested prior to the Third Amendment Effective Date that is required by bank regulatory authorities under applicable "know-your-customer" and anti-money laundering rules and regulations, including the Patriot Act, and all such documentation and other information shall be in form and substance reasonably satisfactory to the Agents and the Lenders.

(h)   The Collateral Agent shall have determined, in its reasonable discretion, that no event or development shall have occurred since June 30, 2017 which could reasonably be expected to have a Material Adverse Effect.

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(i)   The making of the Term A-1 Loans on the Third Amendment Effective Date shall not contravene any law, rule or regulation applicable to any Secured Party (it being understood that as of the date hereof, the Agents and the Lenders do not have knowledge of any applicable law, rule or regulation that would cause the Loans to be made or issued by the Agents and the Lenders to be in contravention of any law, rule or regulation applicable to any Agent or any Lender).

(j)   The Borrowers shall have paid on or before the Third Amendment Effective Date all fees, costs, expenses and taxes then payable pursuant to Section 2.06 of the Financing Agreement and Section 12.04 of the Financing Agreement.

(k)   The Agents shall have received evidence, in form and substance reasonably satisfactory to them, that not less than $2,500,000 has been contributed by the Parent in the form of cash equity contributions (which shall be in the form of common stock or preferred stock constituting Qualified Equity Interests) (the "Moore-Langen Equity Contribution").  The proceeds of the Moore-Langen Equity Contribution and the Term A-1 Loans made on the Third Amendment Effective Date shall be sufficient to consummate the Moore-Langen Acquisition and pay all related fees and expenses.

(l)   The Collateral Agent shall have received on or before the Third Amendment Effective Date the following, each in form and substance reasonably satisfactory to the Collateral Agent and, unless indicated otherwise, dated the Third Amendment Effective Date: 

(i)the Third Amendment Disbursement Letter, duly executed by the Agents, the Lenders and the Loan Parties;

(ii)the results of searches for any effective UCC financing statements, tax Liens or judgment Liens filed against any Loan Party or its property, which results shall not show any such Liens (other than Permitted Liens); 

(iii)a certificate of an Authorized Officer of each Loan Party, certifying (A) as to copies of the Governing Documents of such Loan Party, together with all amendments thereto (including, without limitation, a true and complete copy of the charter, certificate of formation, certificate of limited partnership or other publicly filed organizational document of each Loan Party certified as of a recent date not more than 30 days prior to the Third Amendment Effective Date by an appropriate official of the jurisdiction of organization of such Loan Party which shall set forth the same complete name of such Loan Party as is set forth herein and the organizational number of such Loan Party, if an organizational number is issued in such jurisdiction), (B) as to a copy of the resolutions of such Loan Party authorizing (1) the borrowings hereunder and the transactions contemplated by this Amendment and the other Loan Documents to which such Loan Party is or will be a party, and (2) the execution, delivery and performance by such Loan Party of this Amendment and each other Loan Document to which such Loan Party is or will be a party and the execution and delivery of the other documents to be delivered by such Person in connection herewith and therewith, (C) the names and true signatures of the representatives of such Loan Party authorized to sign each Loan Document (in the case of a Borrower, including, without limitation, Notices of Borrowing, LIBOR Notices and all other notices under this Amendment and the other Loan Documents) to which such Loan Party is or will 

12

 

be a party and the other documents to be executed and delivered by such Loan Party in connection herewith and therewith, together with evidence of the incumbency of such authorized officers and (D) as to the matters set forth in Sections 5(b) and 5(c) of this Amendment; 

(iv)a certificate of the chief financial officer of the Parent certifying compliance with the covenants set forth in Section 7.03 of the Financing Agreement, as amended hereby;

(v)a certificate of the appropriate official(s) of the jurisdiction of organization and, except to the extent such failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, each jurisdiction of foreign qualification of each Loan Party certifying as of a recent date not more than 30 days prior to the Third Amendment Effective Date as to the subsistence in good standing of, and the payment of taxes by, such Loan Party in such jurisdictions; 

(vi)an opinion of (A) Shearman & Sterling LLP, counsel to the Loan Parties and (B) McDonald Carano LLP and Gordon Feinblatt LLC, each acting as local counsel to the Loan Parties, in each case, as to such matters as the Collateral Agent may reasonably request;

(vii)a certificate of the chief financial officer of the Parent, certifying as to the solvency of the Loan Parties, taken as a whole (after giving effect to the Loans made on the Third Amendment Effective Date), which certificate shall be substantially in the form of the certificate delivered on the Effective Date pursuant to Section 5.01(d)(xi); 

(viii)fully executed copies of the Moore-Langen APA and the Moore-Langen Acquisition Collateral Assignment, each in form and substance satisfactory to the Collateral Agent; 

(ix)(A) a termination of security interest in Intellectual Property for each assignment for security recorded by any Person at the United States Patent and Trademark Office or the United States Copyright Office and covering any intellectual property of Moore-Langen that constitutes Transferred Assets (as defined in the Moore-Langen APA), and (B) UCC-3 termination statements for all UCC-1 financing statements filed by any Person and covering any portion of the Collateral that includes Transferred Assets; and

(x)a Notice of Borrowing pursuant to Section 2.02 of the Financing Agreement.

6.   Conditions Subsequent to Effectiveness.  The Loan Parties agree that, in addition to all other terms, conditions and provisions set forth in this Amendment, including, without limitation, those conditions to the Third Amendment Effective Date set forth herein, the Loan Parties shall satisfy the conditions subsequent set forth below (it being understood that (i) the failure by the Loan Parties to perform or cause to be performed any such condition subsequent shall constitute an immediate Event of Default (without giving effect to any grace periods set forth in the Financing Agreement) and (ii) to the extent that the existence of any such condition subsequent would otherwise cause any representation, warranty or covenant in this Amendment or any other Loan Document to be breached, the Agents and the Required Lenders hereby waive 

13

 

such breach for the period from the Third Amendment Effective Date until the date on which such condition subsequent is required to be fulfilled pursuant to this section):

(a)   not later than the date that is 60 days after the Third Amendment Effective Date (or such later date as agreed to in writing by the Collateral Agent in its sole discretion), the Collateral Agent shall have received the Real Property Deliverables (including a Phase I ESA and reliance letter prepared by a company reasonably satisfactory to the Collateral Agent (it being agreed that SCS Engineers is satisfactory to the Collateral Agent)) with respect to the New Facility acquired by PCC pursuant to the Moore-Langen APA.

7.   Continued Effectiveness of the Financing Agreement and Other Loan Documents.  Each Loan Party hereby (i) acknowledges and consents to this Amendment, (ii) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and after the Third Amendment Effective Date all references in any such Loan Document to "the Financing Agreement", the "Agreement", "thereto", "thereof", "thereunder" or words of like import referring to the Financing Agreement shall mean the Financing Agreement as amended by this Amendment, and (iii) confirms and agrees that to the extent that any such Loan Document purports to assign or pledge to the Collateral Agent for the benefit of the Secured Parties, or to grant to the Collateral Agent for the benefit of the Secured Parties a security interest in or Lien on, any Collateral as security for the Obligations of the Loan Parties from time to time existing in respect of the Financing Agreement (as amended hereby) and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed in all respects.  This Agreement does not and shall not affect any of the obligations of the Loan Parties, other than as expressly provided herein, including, without limitation, the Loan Parties' obligations to repay the Loans in accordance with the terms of Financing Agreement, or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations shall remain in full force and effect.  Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Agents, any Issuing Lender or any Lender under the Financing Agreement or any other Loan Document, nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.  The amendment of the Financing Agreement pursuant to this Amendment and all other Loan Documents amended and/or executed and delivered in connection with this Amendment do not constitute a novation of the Financing Agreement and the other Loan Documents as in effect prior to the Third Amendment Effective Date.

8.   Revolving Loans.  The Borrowers confirm and acknowledge that as of the close of business on September 29, 2017, the Borrowers were indebted to the Revolving Loan Lenders for Revolving Loan Obligations in the aggregate principal amount of $4,338,063.86 and Letter of Credit Obligations in the aggregate principal amount of $2,700,000, in each case without any deduction, defense, setoff, claim or counterclaim, of any nature, plus all fees, costs and expenses incurred to date in connection with the Financing Agreement and other Loan Documents.

9.   Release.  Each Loan Party hereby acknowledges and agrees that:  (a) neither it nor any of its Affiliates has any claim or cause of action against any Agent or any Lender (or any of their respective Affiliates, officers, directors, employees, attorneys, consultants or agents) 

14

 

and (b) each Agent and each Lender has heretofore properly performed and satisfied in a timely manner all of its obligations to such Loan Party and its Affiliates under the Financing Agreement and the other Loan Documents.  Notwithstanding the foregoing and the Lenders wish (and each Loan Party agrees) to eliminate any possibility that any past conditions, acts, omissions, events or circumstances would impair or otherwise adversely affect any of the Agents' and the Lenders' rights, interests, security and/or remedies under the Financing Agreement and the other Loan Documents.  Accordingly, for and in consideration of the agreements contained in this Amendment and other good and valuable consideration, each Loan Party (for itself and its Affiliates and the successors, assigns, heirs and representatives of each of the foregoing) (collectively, the "Releasors") does hereby fully, finally, unconditionally and irrevocably release and forever discharge each Agent, each Lender and each of their respective Affiliates, officers, directors, employees, attorneys, consultants and agents (collectively, the "Released Parties") from any and all debts, claims, obligations, damages, costs, attorneys' fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case, whether known or unknown, contingent or fixed, direct or indirect, and of whatever nature or description, and whether in law or in equity, under contract, tort, statute or otherwise, which any Releasor has heretofore had or now or hereafter can, shall or may have against any Released Party by reason of any act, omission or thing whatsoever done or omitted to be done on or prior to the Third Amendment Effective Date arising out of, connected with or related in any way to this Amendment, the Financing Agreement or any other Loan Document, or any act, event or transaction related or attendant thereto, or the agreements of any Agent or any Lender contained therein, or the possession, use, operation or control of any of the assets of each Loan Party, or the making of any Loans or other advances, or the management of such Loans or advances or the Collateral on or prior to the Third Amendment Effective Date.

10.   Miscellaneous.

(a)   This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart of this Amendment.  

(b)   Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

(c)   This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.

(d)   Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a "Loan Document" under the Financing Agreement.  Accordingly, it shall be an Event of Default under the Financing Agreement if (i) any representation or warranty made by a Loan Party under or in connection with this Amendment shall have been untrue, false or misleading in any material respect when made, or (ii) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in this Amendment.

15

 

(e)   Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(f)   The Borrowers will pay on demand all reasonable and documented out-of-pocket fees, costs and expenses of the Agents and the Lenders in connection with the preparation, execution and delivery of this Amendment or otherwise payable under the Financing Agreement, including, without limitation, reasonable fees, disbursements and other charges of counsel to the Agents and the Lenders. 

[remainder of page intentionally left blank]

 

16

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written.

	
 
	
BORROWERS:

	
 
	
 

	
 
	
ALJ REGIONAL HOLDINGS, INC.

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Jess Ravich

	
 
	
 
	
 

Name: Jess Ravich

	
 
	
 
	
Title: Executive Chairman

	
 
	
 

	
 
	
 

	
 
	
FANEUIL, INC.

	
 
	
 

	
 
	
 

	
 
	
By:
	
 /s/ Anna Van Buren

	
 
	
 
	
 

Name: Anna Van Buren

	
 
	
 
	
Title: President & CEO

	
 
	
 

	
 
	
 

	
 
	
FLOORS-N-MORE, LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Steve Chesin

	
 
	
 
	
 

Name: Steve Chesin

	
 
	
 
	
Title: CEO

	
 
	
 

	
 
	
 

	
 
	
PHOENIX COLOR CORP.

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Marc Reisch

	
 
	
 
	
 

Name: Marc Reisch

	
 
	
 
	
Title: Chairman

	
 
	
 

	
 
	
 

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
GUARANTORS:

	
 
	
 

	
 
	
FANEUIL TOLL OPERATIONS LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Anna Van Buren

	
 
	
 
	
 

Name: Anna Van Buren

	
 
	
 
	
Title: President & CEO

	
 
	
 
	
 

	
 
	
 

	
 
	
PCC EXPRESS, INC.

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Marc Reisch

 

	
 
	
 
	
Name: Marc Reisch

	
 
	
 
	
Title: Chairman

	
 
	
 
	
 

	
 
	
 

	
 
	
PHOENIX (MD.) REALTY, LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Marc Reisch

	
 
	
 
	
 

	
 
	
 
	
Name: Marc Reisch

	
 
	
 
	
Title: Chairman

	
 
	
 
	
 

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
COLLATERAL AGENT:

	
 
	
 

	
 
	
CERBERUS BUSINESS FINANCE, LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Chief Executive Officer

	
 
	
 

	
 
	
 

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
ADMINISTRATIVE AGENT AND LENDER:

	
 
	
 

	
 
	
PNC BANK, NATIONAL ASSOCIATION

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Jacqueline Mackenzie

	
 
	
 
	
Name: Jacqueline Mackenzie

	
 
	
 
	
Title: VP

	
 
	
 
	
 

	
 
	
 
	
 

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
LENDERS:

 

	
 
	
CERBERUS ASRS FUNDING LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 

	
 
	
CERBERUS AUS LEVERED HOLDINGS LP

	
 
	
By:
	
CAL I GP Holdings LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 

	
 
	
CERBERUS AUS LEVERED II LP

	
 
	
By:
	
CAL II GP LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 

	
 
	
CERBERUS ICQ LEVERED LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 
	
 

	
 
	
CERBERUS ICQ OFFSHORE LEVERED LP

	
 
	
By:
	
Cerberus ICQ Offshore GP LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
CERBERUS KRS LEVERED LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 

	
 
	
CERBERUS LOAN FUNDING XV L.P.

	
 
	
By:
	
Cerberus ICQ GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 

	
 
	
CERBERUS LOAN FUNDING XVI LP

	
 
	
By:
	
Cerberus PSERS GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 

	
 
	
CERBERUS LOAN FUNDING XVII LTD.

	
 
	
By:
	
Cerberus ASRS Holdings LLC, its attorney-in-fact

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 
	
 

	
 
	
CERBERUS LOAN FUNDING XVIII L.P.

	
 
	
By:
	
Cerberus LFGP XVIII, LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
CERBERUS LOAN FUNDING XIX L.P.

	
 
	
By:
	
Cerberus LFGP XIX, LLC

	
 
	
Its:
	
General Partner

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
CERBERUS N-1 FUNDING LLC

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 

	
 
	
 

	
 
	
CERBERUS OFFSHORE LEVERED III LP

	
 
	
By:
	
COL III GP Inc.

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 

	
 
	
CERBERUS OFFSHORE LEVERED LOAN OPPORTUNITIES MASTER FUND II, L.P.

	
 
	
By:
	
Cerberus Levered Opportunities Master Fund II GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 
	
 

	
 
	
CERBERUS SWC LEVERED II LLC

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
CERBERUS LEVERED LOAN OPPORTUNITIES FUND III, L.P.

	
 
	
By:
	
Cerberus Levered Opportunities III GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 
	
 

	
 
	
CERBERUS NJ CREDIT OPPORTUNITIES FUND, L.P.

	
 
	
By:
	
Cerberus NJ Credit Opportunities GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 

	
 
	
CERBERUS ASRS HOLDINGS LLC

	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 
	
 

	
 
	
CERBERUS KRS LEVERED LOAN 

OPPORTUNITIES FUND, L.P.

	
 
	
By:
	
Cerberus KRS Levered Opportunities GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

			
	
 
	
Third Amendment to Financing Agreement
	
 

 

 

 

	
 
	
CERBERUS PSERS LEVERED 

LOAN OPPORTUNITIES FUND, L.P.

	
 
	
By:
	
Cerberus PSERS Levered Opportunities GP, LLC

	
 
	
Its:
	
General Partner

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Senior Managing Director

	
 
	
 
	
 

	
 
	
CERBERUS FSBA HOLDINGS LLC

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

	
 
	
 
	
 

	
 
	
CERBERUS ND CREDIT HOLDINGS LLC

	
 
	
 

	
 
	
 

	
 
	
By:
	
/s/ Daniel E. Wolf

	
 
	
 
	
Name: Daniel E. Wolf

	
 
	
 
	
Title: Vice President

 

			
	
 
	
Third Amendment to Financing Agreementaljj-ex102_11.htm

 

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement, dated as of October 2, 2017, is by and between ALJ Regional Holdings, Inc., a Delaware corporation (the “Corporation”), and US Bank FBO Cove Street Capital Small Cap Value Fund (“Purchaser”).

WHEREAS, pursuant to that certain Common Stock Purchase Agreement, dated as of September 20, 2017 (the “Stock Purchase Agreement”), by and between the Corporation and Purchaser, the Corporation has issued and sold to Purchaser 318,471 shares of the Corporation’s common stock, par value $0.01 per share (the “Common Stock”); and

WHEREAS, pursuant to the Stock Purchase Agreement, the Corporation wishes to grant certain registration rights with respect to such shares of Common Stock held by the Purchaser on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and the covenants hereinafter contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows:

1.Definitions.

(a)Unless otherwise defined herein, the terms below shall have the following meanings (such meanings being equally applicable to both the singular and plural form of the terms defined):

“Affiliate” shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.

“Agreement” shall mean this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing.

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks are required or permitted by law to be closed in the City of New York in the State of New York.

“Control” (including the terms “Controlled by” and “under common Control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.

“Holder” shall mean Purchaser, and any transferee of Purchaser to whom Registrable Securities are permitted to be transferred in accordance with the terms of this Agreement, and, in each case, who continues to be entitled to the rights of a Holder hereunder.

 

 

“Person” shall mean any individual, corporation, partnership, joint venture, firm, trust, unincorporated organization, government or any agency or political subdivision thereof or other entity.

“Registrable Securities” shall mean (a) the shares of Common Stock issued pursuant to the Stock Purchase Agreement and held by a Holder and (b) any Securities issuable or issued or distributed in respect of any of the Common Stock identified in clause (a) by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, reorganization, merger, consolidation or otherwise.  For purposes of this Agreement, (i) Registrable Securities shall cease to be Registrable Securities when a Shelf Registration Statement covering the  Registrable Securities has been declared effective under the Securities Act by the SEC and the Registrable Securities have been disposed of pursuant to such effective Shelf Registration Statement and (ii) the Registrable Securities of a Holder shall not be deemed to be Registrable Securities at any time when the entire amount of such Registrable Securities proposed to be sold by such Holder in a single sale constitute less than 1% of the then outstanding shares of Common Stock and are or, in the opinion of counsel satisfactory to the Corporation and such Holder, each in their reasonable judgment, may be, so distributed to the public pursuant to Rule 144 (or any successor provision then in effect) under the Securities Act in any three month period or any such Registrable Securities have been sold in a sale made pursuant to Rule 144 of the Securities Act.

“Securities Act” shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder.

“SEC” shall mean the Securities and Exchange Commission, or any successor thereto.

(b)The following terms have the meanings set forth in the Section set forth opposite such term:

		
	
Term
	
Section

	
Blackout Period
	
3

	
Common Stock
	
Recitals

	
Damages
	
8(a)

	
Holder Indemnified Party
	
8(a)

	
Indemnified Party
	
8(d)

	
Indemnifying Party
	
8(d)

	
Corporation Indemnified Party
	
8(b)

	
Registration Period
	
4(a)

	
Shelf Registration Statement
	
2

	
Stock Purchase Agreement
	
Recitals

	
 
	
 

	
 
	
 

Shelf Registration.

  The Corporation shall, as expeditiously as is possible, but in any event no later than thirty (30) days (excluding any days which occur during a permitted Blackout Period under Section 3 below) after the date hereof, file with the SEC and use its reasonable best efforts to cause to be declared effective, a registration statement registering the resale from time to time by Holders thereof of all of the Registrable Securities (the “Shelf Registration Statement”). The Shelf Registration Statement shall be on Form S-3 or another 

2

 

appropriate form permitting registration of such Registrable Securities for resale by such Holders and any disposition of the Registrable Securities shall be made in accordance with the methods of distribution set forth in the Shelf Registration Statement, provided, that in no event will such method(s) of distribution take the form of an underwritten offering of the Registrable Securities.

Blackout Periods.

 

 The Corporation shall have the right to delay the filing or  effectiveness of the Shelf Registration Statement required pursuant to Section 2 hereof during no more than two (2) periods aggregating to not more than 90 days (a “Blackout Period”) in the event that (i) the Corporation would, in accordance with the advice of its counsel, be required to disclose in the prospectus information that the Corporation has a bona fide business purpose for preserving as confidential and (ii) in the good faith judgment of the Corporation’s Board of Directors, there is a reasonable likelihood that such disclosure or any other action to be taken in connection with the prospectus, would materially and adversely affect or interfere with any financing, acquisition, merger, disposition of assets (not in the ordinary course of business), corporate reorganization or other similar transaction in which the Corporation is engaged or in respect of which the Corporation has taken a substantial step to commence, or there is an event or state of facts relating to the Corporation which is material to the Corporation, the disclosure of which would, in the good faith judgment of the Corporation be adverse to its interests; provided, however, that the Corporation shall delay during such Blackout Period the filing or effectiveness of any Shelf Registration Statement required pursuant to the registration rights of the holders of any Securities of the Corporation.  The Corporation shall have no obligation to include in any such notice any reference to or description of the facts based upon which the Corporation is delivering such notice.

Registration Procedures.

    If the Corporation is required by the provisions of Section 2 to use its reasonable best efforts to effect the registration of the Registrable Securities under the Securities Act, the Corporation will, as expeditiously as possible:

(a)prepare and file with the SEC a Shelf Registration Statement with respect to the Registrable Securities and use its commercially reasonable efforts to cause such Shelf Registration Statement promptly to become and remain effective for a period of time required for the disposition of the Registrable Securities by the Holders thereof but not to exceed 180 days (as such time period may be extended pursuant to Section 4(j), the “Registration Period”); provided, however, that before filing such Shelf Registration Statement or any amendments thereto (for purposes of this subsection, amendments shall not be deemed to include any filing that the Corporation is required to make pursuant to the Exchange Act), the Corporation shall furnish the representatives of the Holders referred to in Section 4(k) copies of all documents proposed to be filed, which documents will be subject to the review of such counsel. The Corporation shall not be deemed to have used its commercially reasonable efforts to keep a Shelf Registration Statement effective during the applicable period if it voluntarily takes any action that would result in the Holders of the Registrable Securities not being able to sell the Registrable Securities during that period, unless such action is required under applicable law;

(b)prepare and file with the SEC such amendments and supplements to such Shelf Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Shelf Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of the Registrable Securities until the earlier of such time as all Registrable Securities have been disposed of in a public offering or the expiration of the Registration Period;

3

 

(c)furnish to the selling Holders such number of conformed copies of the Shelf Registration Statement and each such amendment and supplement thereto (including in each case all exhibits, financial statements and schedules), and of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents, as such selling Holders may reasonably request;

(d)use its commercially reasonable efforts to register or qualify the Registrable Securities covered by such Shelf Registration Statement under such other securities or blue sky laws of such jurisdictions within the United States and Puerto Rico as each Holder of such Registrable Securities shall reasonably request, to keep such registration or qualification in effect for so long as such Shelf Registration Statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder (provided, however, that the Corporation shall not be required in connection therewith or as a condition thereto to qualify to do business, subject itself to taxation in or file a general consent to service of process in any jurisdiction wherein it would not but for the requirements of this paragraph (d) be obligated to do so; and provided, further, that the Corporation shall not be required to qualify the Registrable Securities in any jurisdiction in which the securities regulatory authority requires that any Holder submit any shares of its Registrable Securities to the terms, provisions and restrictions of any escrow, lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction unless such Holder agrees to do so), and do such other reasonable acts and things as may be required of it to enable such Holder to consummate the disposition in such jurisdiction of the Registrable Securities covered by such Shelf Registration Statement;

(e)enter into customary agreements and take such other actions as are reasonably required in order to expedite or facilitate the disposition of the Registrable Securities;

(f)otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the SEC, and make earnings statements satisfying the provisions of Section 11(a) of the Securities Act generally available to the Holders no later than 45 days after the end of any twelve-month period (or 90 days, if such period is a fiscal year), beginning with the first month of the Corporation’s first fiscal quarter commencing after the effective date of the Shelf Registration Statement, which statements shall cover said twelve-month periods;

(g)use its commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange or quotation system on which similar securities issued by the Corporation are listed or traded;

(h)give written notice to the Holders:

(i)when such Shelf Registration Statement or any amendment thereto has been filed with the SEC and when such Shelf Registration Statement or any post-effective amendment thereto has become effective;

(ii)of any request by the SEC for amendments or supplements to such Shelf Registration Statement or the prospectus included therein or for additional information;

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(iii)of the issuance by the SEC of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation of any proceedings for that purpose;

(iv)of the receipt by the Corporation or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(v)of the happening of any event that requires the Corporation to make changes in such Shelf Registration Statement or the prospectus in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made);

(i)use its commercially reasonable efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of such Shelf Registration Statement at the earliest possible time;

(j)upon the occurrence of any event contemplated by Section 4(h)(v) above, promptly prepare a post-effective amendment to such Shelf Registration Statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  If the Corporation notifies the Holders in accordance with Section 4(h)(v) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Holders shall suspend use of such prospectus and use their commercially reasonable efforts to return to the Corporation all copies of such prospectus other than permanent file copies then in such Holder’s possession, and the period of effectiveness of such Shelf Registration Statement provided for above shall be extended by the number of days from and including the date of the giving of such notice to the date Holders shall have received such amended or supplemented prospectus pursuant to this Section 4(j);

(k)promptly make available for inspection by the representatives of the Holders and any attorney, accountant or other agent retained by such Holder or representative all relevant financial and other records, pertinent corporate documents and properties of the Corporation as the Holder may reasonably request and cause the Corporation’s officers, directors and employees to supply all relevant information reasonably requested by such representative or attorney, accountant or agent in connection with the registration; and

(l)use commercially reasonable efforts to procure the cooperation of the Corporation’s transfer agent in settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry form in accordance with any procedures reasonably requested by the Holders.

Furnish Information.

  It shall be a condition precedent to the obligation of the Corporation to take any action pursuant to this Agreement in respect of the Registrable Securities which are to be registered that such Holder shall furnish to the Corporation such information regarding the Registrable Securities held by such Holder and the intended method of 

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disposition thereof as the Corporation shall reasonably request and as shall be required to effect the registration of such Holder’s Registrable Securities.

Expenses.

  All expenses incurred in connection with the Shelf Registration Statement pursuant to Section 2 of this Agreement, including without limitation all registration, filing and qualification fees, word processing, duplicating, printers’ and accounting fees (including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance), fees of the Financial Industry Regulatory Authority, Inc. or listing fees, messenger and delivery expenses, all fees and expenses of complying with state securities or blue sky laws and fees and disbursements of counsel for the Corporation shall be paid by the Corporation, except that:

(a)all such expenses in connection with any amendment or supplement to a Shelf Registration Statement or Prospectus filed after the Registration Period because any Holder has not effected the disposition of the Registrable Securities shall be paid by such Holder; and

(b)the Holders shall bear and pay any fees and expenses incurred in respect of counsel or other advisors to the Holders.

Rule 144 Information.

  With a view to making available the benefits of Rule 144 under the Securities Act and any other rules and regulations of the SEC that may at any time permit the sale of the Registrable Securities to the public without registration, the Corporation agrees to:

(a)make and keep adequate current public information available, as those terms are understood and defined in Rule 144 under the Securities Act;

(b)file with the SEC in a timely manner all reports and other documents (i) required of the Corporation under the Securities Act and the Exchange Act, for so long as the Corporation remains subject to such requirements, and (ii) required for sales under Rule 144;

(c)submit electronically and post on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T; and

(d)furnish promptly to each Holder of Registrable Securities upon request (i) to the extent accurate, a written statement by the Corporation that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act and (ii) such other information as may be reasonably requested to permit such Holder to sell Registrable Securities pursuant to Rule 144 without registration.

8.Indemnification and Contribution.

(a)The Corporation shall indemnify and hold harmless each Holder, such Holder’s  directors and officers, each Person who participates in any offering of the Registrable Securities and each Person, if any, who Controls such Holder or participating Person (each a “Holder Indemnified Party”), against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based upon: (i) 

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any untrue or alleged untrue statement of any material fact contained in the Shelf Registration Statement on the effective date thereof (including any prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (such losses, claims, damages and liabilities, “Damages”) and the Corporation shall reimburse each Holder Indemnified Party for any legal or other expenses reasonably incurred by such Holder Indemnified Party (but not in excess of expenses incurred in respect of one counsel for all such Holder Indemnified Parties unless there is an actual conflict of interest between any Holder Indemnified Parties, which Holder Indemnified Parties may be represented by separate counsel) in connection with investigating or defending any claim or proceeding from which Damages may result; provided, however, that the indemnity agreement contained in this Section 8(a) shall not apply to amounts paid in settlement of any such Damages if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld); provided, further, that the Corporation shall not be liable to any Holder Indemnified Party for any Damages to the extent that such Damages arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with the Shelf Registration Statement, preliminary or final prospectus, or amendments or supplements thereto in reliance upon and in conformity with written information furnished by or on behalf of a Holder Indemnified Party expressly for use in connection with such registration by any such Holder Indemnified Party.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Holder Indemnified Party.

(b)Each Holder severally and not jointly shall indemnify and hold harmless the Corporation, each of its directors and officers, each Person, if any, who Controls the Corporation, and each agent for the Corporation (within the meaning of the Securities Act) (each, a “Corporation Indemnified Party”) against any Damages, joint or several, to which a Corporation Indemnified Party may become subject, under the Securities Act or otherwise, insofar as such Damages (or proceedings in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Shelf Registration Statement  on the effective date thereof (including any prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto) or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in the Shelf Registration Statement, preliminary or final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished by or on behalf of such Holder expressly for use in connection with such registration; and each such Holder shall reimburse each Corporation Indemnified Party for any legal or other expenses reasonably incurred by such Corporation Indemnified Party (but not in excess of expenses incurred in respect of one counsel for all of the Corporation Indemnified Parties unless there is an actual conflict of interest between any Corporation Indemnified Parties, which Corporation Indemnified Parties may be represented by separate counsel) in connection with investigating or defending any claim or proceeding from which Damages may result; provided, however, that the indemnity agreement contained in this Section 8(b) shall not apply to amounts paid in settlement of any such Damages if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld), and provided further, that the liability of each Holder hereunder shall be limited to the proportion of any such loss, claim, damage, liability or expense which is equal to the proportion that the net proceeds from the sale of the Registrable Securities sold by such Holder under the Shelf 

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Registration Statement bears to the total net proceeds from the sale of all securities sold thereunder, but not in any event to exceed the net proceeds received by such Holder from the sale of Registrable Securities covered by the Shelf Registration Statement.

(c)If the indemnification provided for in this Section 8 from an indemnifying party is unavailable to an indemnified party hereunder in respect of any Damages referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Damages in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such Damages, as well as any other relevant equitable considerations.  The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that, in any such case no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The amount paid or payable by a party as a result of the Damages referred to above shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. If the allocation provided in this paragraph (c) is not permitted by applicable law, the parties shall contribute based upon the relevant benefits received by the Corporation from the initial offering of the Registrable Securities on the one hand and the net proceeds received by the Holders from the sale of Registrable Securities on the other.  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(c) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 7(c).

(d)Any Person entitled to indemnification hereunder (the “Indemnified Party”) agrees to give prompt written notice to the party owing indemnification obligations to such Person (the “Indemnifying Party”) after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, that the failure so to notify the Indemnifying Party shall not relieve the Indemnifying Party of any liability that it may have to the Indemnified Party hereunder unless such failure is materially prejudicial to the Indemnifying Party.  If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party.  The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action, or (iii) the named parties to any such action (including any impleaded parties) have been advised by such counsel that either (A) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (B) there are one or more legal defenses available to it which are substantially different from or additional to those available to the 

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Indemnifying Party.  No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld.

(e)The agreements contained in this Section 8 shall survive the transfer of the Registrable Securities by any Holder and sale of all of the Registrable Securities pursuant to the Shelf Registration Statement and shall otherwise survive the termination of this Agreement and remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or such director, officer or participating or Controlling Person.

Certain Additional Limitations on Registration Rights.

  Notwithstanding the other provisions of this Agreement, the Corporation shall not be obligated to register the Registrable Securities of any Holder if such Holder shall fail to furnish to the Corporation necessary information in respect of the distribution of the Registrable Securities. 

No Inconsistent Agreements.

  The Corporation will not hereafter enter into any agreement with respect to its securities, which is inconsistent in any material respects with the rights granted to the Holders in this Agreement.

11.Miscellaneous.

(a)Specific Performance.  The parties hereto agree that irreparable damage would occur in the event any provision of the Agreement was not performed in accordance with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity.

(b)Amendments and Waivers; Assignment.  

(i)Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by the Corporation and a majority in interest of the Holders or, in the case of a waiver, by the party or parties against whom the waiver is to be effective; provided, however, that waiver by the Holders shall require the consent of a majority in interest of the Holders.

(ii)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of time specified herein) shall operate as a waiver thereof and no single or partial exercise thereof shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

(c)Notice Generally.  All notices, request, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified by notice given in accordance with this Section 11(c):

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(i)If to any Holder, at its last known address appearing on the books of the Corporation maintained for such purpose.

(ii)If to the Corporation, at

ALJ Regional Holdings, Inc.

Attn: Executive Chairman

244 Madison Avenue

PMB #358 

New York, New York 10016

with a copy (which shall not constitute notice) to:

Shearman & Sterling LLP
1460 El Camino Real, Floor 2

Menlo Park, CA 94025
Attn:  Chris Forrester
Email: chris.forrester@shearman.com
Facsimile No.: 650-838-5173

or at such other address as may be substituted by notice given as herein provided.

(d)Successors and Assigns; Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and the successors and permitted assigns of the parties hereto as hereinafter provided.  No party hereto may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other party; provided, however, that the registration rights of any Holder with respect to any Registrable Securities shall be transferred to any Person who is the transferee of the Registrable Securities.  All of the obligations of the Corporation hereunder shall survive any such transfer.  No assignment shall relieve the assigning party of any of its obligations hereunder.  Except as provided in Section 8, no Person other than the parties hereto and their respective successors and permitted assigns is intended to be a beneficiary of this Agreement and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever.

(e)Headings.  The headings and subheadings in this Agreement are included for convenience and identification only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision hereof.

(f)Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware.

(i)Any claim, action, suit or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be heard and determined in any state or federal court sitting in the State of Delaware, and each of the parties hereto hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom in any such claim, action, suit or proceeding) and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of 

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any such claim, action, suit or proceeding in any such court or that any such claim, action, suit or proceeding that is brought in any such court has been brought in an inconvenient forum.

(ii)Subject to applicable law, process in any such claim, action, suit or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity.  WITH RESPECT TO ANY SUCH CLAIM, ACTION, SUIT OR PROCEEDING IN ANY SUCH COURT, EACH OF THE PARTIES IRREVOCABLY WAIVES AND RELEASES TO THE OTHER ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING.

(g)Severability.  If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party.  Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

(h)Entire Agreement.  This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. 

(i)Cumulative Remedies.  The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies.  Said rights and remedies are given in addition to any other rights the parties may have by law, statute, ordinance or otherwise.

(j)Construction.  Each party hereto acknowledges and agrees it has had the opportunity to draft, review and edit the language of this Agreement and that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any Dispute relating to, in connection with or involving this Agreement.  Accordingly, the parties hereto hereby waive the benefit of any rule of Law or any legal decision that would require, in cases of uncertainty, that the language of a contract should be interpreted most strongly against the party who drafted such language.

(k)Counterparts; Effectiveness.  This Agreement may be signed in any number of counterparts (including by facsimile or PDF), each of which shall be an original with the same effect as if the signatures thereto were upon the same instrument.  This Agreement shall become effective when each party shall have received a counterpart hereof signed by the other party.

[Signatures appear on next page]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

US Bank FBO Cove Street Capital Small Cap Value Fund

 

	
 
	
By:
	
/s/ Jeffrey Bronchick
Name: Jeffrey Bronchick
Title: Principal

 

 

ALJ Regional Holdings, Inc.

 

 

	
 
	
By:
	
/s/ Jess Ravich
Name: Jess Ravich
Title: Executive Chairman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Registration Rights Agreement]

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