Item 1.01Entry into a Material Definitive Agreement.
Amendment to Stock Purchase Agreement
On April 12, 2022, ALJ Regional Holdings, Inc. (the “Company”), Phoenix Color Corp. (“Phoenix”) and LSC Communications Book LLC (“Lakeside”) entered into that certain Amendment to Stock Purchase Agreement (the “SPA Amendment”), which amended that certain Stock Purchase Agreement, dated February 3, 2022 (the “Original Stock Purchase Agreement,” and as amended by the SPA Amendment, the “Stock Purchase Agreement”), by and among the Company, Phoenix and Lakeside. The SPA Amendment amended certain definitions relating to closing indebtedness adjustments to true-up cash held at Phoenix at the closing of the Phoenix Color Sale (as defined below).
The foregoing description of the SPA Amendment does not purport to be complete and is qualified in its entirety by reference to the SPA Amendment, a copy of which is filed as Exhibit 2.2 hereto and incorporated herein by reference
Novation and Restrictive Covenants Agreement
On April 13, 2022, in connection with the closing of the Phoenix Color Sale, the Company, Phoenix and Marc Reisch entered into that certain Novation and Restrictive Covenants Agreement (the “Novation Agreement”), pursuant to which Phoenix assigned, and the Company assumed, all of Phoenix’s rights, duties and obligations under that certain existing employment agreement, dated December 17, 2021 (the “Reisch Employment Agreement”), by and between Phoenix and Mr. Reisch. In connection with the Novation Agreement, and as a result of the benefits accruing to Mr. Reisch as a result thereof, Mr. Reisch released and discharged Phoenix from all obligations under the Reisch Employment Agreement, consented to the Company assuming such obligations, and provided a general release of Phoenix and its affiliates or subsidiaries from claims relating to the Reisch Employment Agreement and Mr. Reisch’s employment with Phoenix, excluding any claims for accrued but unpaid compensation.
The foregoing description of the Novation Agreement does not purport to be complete and is qualified in its entirety by reference to the Novation Agreement, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference, and to the Reisch Employment Agreement, which was filed as Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on December 20, 2021.
Reisch Sale Bonus Release Agreement
On April 13, 2022, in connection with the entry into the Novation Agreement, the Company and Marc Reisch entered into that certain Sale Bonus Release Agreement (the “Reisch Release Agreement”), pursuant to which the Company agreed to pay to Mr. Reisch a bonus payment in the amount of $1.7 million, less any applicable federal, state and local tax and other withholdings (the “Reisch Sale Bonus”), in full settlement and satisfaction of Mr. Reisch’s rights under Sections 3.3 and 3.5 of the Reisch Employment Agreement (the “Reisch Bonus Provisions”) assumed by the Company. Mr. Reisch acknowledged and agreed that the amounts payable under the Reisch Bonus Provisions were voluntarily waived by him in connection with the payment of the Reisch Sale Bonus and agreed to provide a general release of the Company and its affiliates or subsidiaries from claims relating to the Reisch Bonus Provisions and the Reisch Sale Bonus.
The foregoing description of the Reisch Release Agreement does not purport to be complete and is qualified in its entirety by reference to the Reisch Release Agreement, a copy of which is filed as Exhibit 10.2 hereto and incorporated herein by reference, and to the Reisch Employment Agreement, which was filed as Exhibit 10.13 to the Company’s Annual Report on Form 10-K filed with the SEC on December 20, 2021.
Item 1.02Termination of a Material Definitive Agreement.
In connection with the closing of the Phoenix Color Sale, on April 13, 2022, the Company repaid in full all outstanding indebtedness and terminated its commitments and obligations under that certain Amended and Restated Financing Agreement, dated as of June 29, 2021 (as amended by that certain First Amendment to Amended and Restated Financing Agreement, dated April 1, 2022, the “PNC Credit Agreement”), by and among the Company, Faneuil, Inc., Phoenix, certain other subsidiary guarantors (collectively, the “Loan Parties”), the lenders party thereto from time to
time and PNC Bank, National Association (“PNC”), as administrative agent and collateral agent, subject to certain exceptions. The Company was required to pay certain pre-payment premiums in the amount of $250,000 as a result of the repayment of indebtedness under the PNC Credit Agreement. In connection with the repayment of outstanding indebtedness by the Company, the Loan Parties were automatically and permanently released from all security interests, mortgages, liens and encumbrances under the PNC Credit Agreement, subject to certain exceptions. The material terms of the PNC Credit Agreement are described in the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on July 1, 2021 and April 1, 2022.