UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Filed by a Party other than the Registrant ( )
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( )Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ALJ Regional Holdings, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
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ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON September 6, 2019
July 23, 2019
Dear Stockholder:
You are invited to attend the Annual Meeting of Stockholders of ALJ Regional Holdings, Inc. (the “Company”, “we” or “our”), which will be held at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022 on September 6, 2019 at 10:00 a.m. Eastern Time.
We discuss the matters to be acted upon at the meeting in more detail in the attached notice of annual meeting and proxy statement (the “Proxy Statement”). There are two specific items for which you are being asked to vote:
| 1. | To elect Michael C. Borofsky, Jess M. Ravich, Anna Van Buren, Robert Scott Fritz, Marc Reisch, and John Scheel as directors to hold office until the Company’s 2020 Annual Meeting of Stockholders or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal. |
| 2. | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. |
Our Board of Directors recommends that you vote:
| 1. | “FOR” the six (6) individuals nominated for election to the Board of Directors. |
| 2. | “FOR” ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. |
We encourage you to read our annual report for the year ended September 30, 2018 on Form 10-K (the “Annual Report”) filed with the SEC on December 17, 2018, which may be found on the SEC’s EDGAR database at www.sec.gov. It includes our audited financial statements and information about our operations, markets and products.
You can vote by following the instructions included in the Proxy Statement and the enclosed proxy card. Please read these instructions carefully.
We hope that you can attend the Annual Meeting. You may be requested to present valid, government-issued photo identification to gain admission to the Annual Meeting. Whether or not you plan to attend, you can be sure that your shares are represented at the meeting by promptly voting by one of the methods provided. Any record stockholder attending the Annual Meeting may vote in person, even if that stockholder has returned a proxy or voted by telephone or the Internet. Your vote is important, whether you own a few shares or many.
Thank you for your continued support of ALJ Regional Holdings, Inc.
Very truly yours,
/s/ Jess Ravich
Jess Ravich
Executive Chairman
This document is dated July 23, 2019 and is being first mailed to stockholders of ALJ Regional Holdings, Inc. on or about July 23, 2019.
244 Madison Avenue, PMB #358
New York, NY 10016
Telephone: (888) 486-7775
www.aljregionalholdings.com
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON September 6, 2019
TO THE STOCKHOLDERS OF ALJ REGIONAL HOLDINGS, INC.:
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ALJ Regional Holdings, Inc., a Delaware corporation (the “Company”, “we” or “our”), will be held on September 6, 2019 at 10:00 a.m. Eastern Time (the “Annual Meeting”) at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022 for the following purposes:
1.To elect Michael C. Borofsky, Jess M. Ravich, Anna Van Buren, Robert Scott Fritz, Marc Reisch, and John Scheel as directors to hold office until the Company’s 2020 Annual Meeting of Stockholders or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal.
2.To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019.
3.To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement accompanying this notice (the “Proxy Statement”).
The Board of Directors of the Company has fixed the close of business on July 15, 2019 as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. For ten days prior to the Annual Meeting, a complete list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder, for any purpose relating to the Annual Meeting, during ordinary business hours at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022.
All stockholders are cordially invited to attend the Annual Meeting in person. Whether or not you expect to attend the Annual Meeting in person, please vote as promptly as possible by following the instructions included in the Proxy Statement and the enclosed proxy card in order to ensure your representation and the presence of a quorum at the Annual Meeting. If you send in your proxy card or vote by telephone or the Internet, you may still decide to attend the Annual Meeting and vote your shares in person.
By Order of the Board of Directors,
/s/ Jess M. Ravich
Executive Chairman and Chairman of the Board
Los Angeles, CA
July 23, 2019
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held on September 6, 2019
INFORMATION CONCERNING SOLICITATION AND VOTING
General
The Board of Directors (the “Board”) of ALJ Regional Holdings, Inc., a Delaware corporation (the “Company”), is soliciting proxies for use at the Annual Meeting of Stockholders to be held on September 6, 2019 at 10:00 a.m. Eastern Time (the “Annual Meeting”), or at any adjournment or postponement thereof, for the purposes set forth in this proxy statement (the “Proxy Statement”) and in the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will be held at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022.
Important Notice Regarding the Availability of Proxy Materials for the Stockholders’ Meeting to Be Held on September 6, 2019
Our Annual Report and Proxy Statement are available at www.voteproxy.com, the SEC’s EDGAR database at www.sec.gov and www.aljregionalholdings.com. You are encouraged to access and review all of the important information contained in the proxy materials before voting.
QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND OUR ANNUAL MEETING
Q: | What is the purpose of the Annual Meeting? |
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A: | To vote on the following proposals: |
| •Proposal 1: To elect Michael C. Borofsky, Jess M. Ravich, Anna Van Buren, Robert Scott Fritz, Marc Reisch, and John Scheel as directors to hold office until the Company’s 2020 Annual Meeting of Stockholders or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal. •Proposal 2: To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. •To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
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Q: | What are the Board’s recommendations? |
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A: | The Board recommends a vote: |
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| •“FOR” the six (6) individuals nominated for election to the Board. •“FOR” ratification of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. |
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Q: | Who is entitled to vote at the meeting? |
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| Based on the instructions provided by the broker, bank or other holder of record of their shares, street name stockholders may generally vote by one of the following methods: |
| •By Mail. You may vote by signing, dating and returning your voting instruction card in the enclosed pre-addressed envelope. |
| •By Methods Listed on the Voting Instruction Card. Please refer to your voting instruction card or other information forwarded by your bank, broker or other holder of record to determine whether you may vote by the Internet, telephone, mail or fax, and follow the instructions on the voting instruction card or other information provided by the record holder. |
| •In Person with a Legal Proxy from the Record Holder. A street name stockholder who wishes to vote at the Annual Meeting will need to obtain a legal proxy from his or her bank or brokerage firm. Please consult the voting instruction card sent to you by your bank or broker to determine how to obtain a legal proxy in order to vote in person at the Annual Meeting. |
Q: | If I sign a proxy, how will it be voted? |
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A: | When proxies are properly delivered, the shares represented by such proxies will be voted at the Annual Meeting in accordance with the instructions of the stockholder. However, if no specific instructions are given, the shares will be voted in accordance with the above recommendations of our Board. If any matters not described in the Proxy Statement are properly presented at the Annual Meeting, the proxy holders will use their own judgment to determine how to vote your shares. If the Annual Meeting is adjourned, the proxy holders can vote your shares on the new meeting date as well, unless you have revoked your proxy instructions, as described below under “Can I change my vote?” |
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Q: | What should I do if I get more than one set of voting materials? |
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A: | Stockholders may receive more than one set of voting materials, including multiple voting instruction cards. For example, stockholders who hold shares in more than one brokerage account may receive a separate voting instruction card for each brokerage account in which shares are held. Stockholders of record whose shares are registered in more than one name will receive more than one set of voting materials. You should vote in accordance with the instructions in each set of voting materials you receive relating to our Annual Meeting to ensure that all of your shares are voted. |
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Q: | Can I change my vote? |
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A: | Record Stockholders: You may change your vote at any time prior to the vote at the Annual Meeting. Your vote may be revoked by filing with the Company’s counsel, Shearman & Sterling LLP, located at 1460 El Camino Real, 2nd Floor, Menlo Park, CA 94025, Attention: Christopher M. Forrester, a written notice of revocation, or it may be revoked by a later-dated vote, by mail, by Internet or by telephone, or by attending the meeting and voting in person. Only a stockholder’s latest proxy received by 11:59 p.m. Eastern Time on September 5, 2019 will be counted. Attendance at the meeting will not, by itself, revoke a proxy. Street Name Stockholders: If you hold your shares through a broker, bank or other nominee, please follow the instructions provided by your broker, bank or other nominee as to how you may change your vote or obtain a “legal proxy” to vote your shares if you wish to cast your vote in person at the Annual Meeting. |
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Q: | What happens if I decide to attend the Annual Meeting but I have already voted or submitted a proxy covering my shares? |
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You may attend the meeting and vote in person even if you have already voted or submitted a proxy. Please be aware that attendance at the Annual Meeting will not, by itself, revoke a proxy. If a bank, broker or other nominee holds your shares and you wish to attend the Annual Meeting and vote in person, you must obtain a “legal proxy” from the record holder of the shares giving you the right to vote the shares.
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Q: | What is the voting requirement to approve each of the proposals? |
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A: | •Proposal No. 1: Directors are elected by a plurality vote. The six (6) nominees for director who receive the most votes cast in their favor will be elected to serve as directors. •Proposal No. 2: Must be approved by the affirmative vote of the holders of at least a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting. |
Q: | What are “broker non-votes?” |
A: | A broker non-vote occurs when a broker submits a proxy card with respect to shares of common stock held in street name but declines to vote on a particular matter because the broker has not received voting instructions from the beneficial owner. Under the rules that govern brokers who are voting with respect to shares held in street name, brokers have the discretion to vote such shares on certain routine matters, but not on non-routine matters. Proposal Two (ratification of auditor) is considered a routine matter. Proposal One (election of directors) is considered non-routine. Thus, if you hold your shares in street name and you do not instruct your broker how to vote on Proposal One, no votes will be cast on your behalf for such matter. Your broker will, however, have discretion to vote any uninstructed shares on the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. |
Q: | How are abstentions and broker non-votes counted? |
| Abstentions and broker non-votes will be counted for purposes of calculating whether a quorum is present at the Annual Meeting and will be counted for purposes of determining whether proposals requiring approval by the affirmative vote of the holders of at least a majority of the shares having voting power present in person or represented by proxy at the Annual Meeting. Thus, an abstention will be counted as a vote “AGAINST” Proposal 2. Any shares not voted due to abstention or broker non-vote will not affect the election of directors. |
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Q: | What constitutes a quorum? |
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A: | A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if at least a majority of the Company’s outstanding shares entitled to vote are represented at the Annual Meeting, either in person or by proxy. |
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Q: | How are votes counted? |
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A: | All votes will be tabulated by the inspector of elections appointed for the Annual Meeting by the Company, who will tabulate affirmative and negative votes, abstentions and broker non-votes. Votes for and against, abstentions and broker non-votes will each be counted for determining the presence of a quorum. |
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Q: | Who is making this solicitation? |
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A: | This proxy is being solicited on behalf of the Board of ALJ Regional Holdings, Inc. |
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Q: | Who pays for the proxy solicitation process? |
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Q: | How do I obtain a separate set of proxy materials or request a single set for my household? |
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A: | We have adopted a procedure approved by the SEC called “householding.” Under this procedure, if you share an address with another stockholder, have the same last name, and do not participate in electronic delivery of proxy materials, you will receive only one set of proxy materials (including our Annual Report and Proxy Statement). If you wish to receive a separate set of proxy materials at this time, please request the additional copy by contacting our transfer agent, American Stock Transfer & Trust Company, LLC, by telephone at (800) 937-5449. You may also request to receive a separate Annual Report and a separate Proxy Statement by contacting our Corporate Secretary at (888) 486-7775, or by writing to Corporate Secretary at 244 Madison Avenue, PMB #358, New York, NY 10016. |
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Q: | What if I have questions about lost stock certificates or need to change my mailing address? |
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A: | You may contact our transfer agent, American Stock Transfer & Trust Company, LLC, by telephone at (800) 937-5449 if you have lost your stock certificate or need to change your mailing address. |
IMPORTANT |
Whether or not you expect to attend the Annual Meeting in person, please vote as promptly as possible by following the instructions included in this Proxy Statement and the enclosed proxy card. This will not limit your rights to attend or vote at the Annual Meeting.
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PROPOSAL 1
ELECTION OF DIRECTORS
The number of directors constituting the entire Board is currently fixed at nine (9). Until the 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”), the members of the Board were divided into three (3) classes, with one class of directors elected at each annual meeting of stockholders. Because the proposal to declassify the Board was approved at the 2018 Annual Meeting, the Board is no longer classified. The nominees, if elected, will serve for a one-year term, rather than a three-year term, and until their successors are elected and qualified, subject to earlier resignation or removal.
At the Annual Meeting, six (6) directors will be elected by the stockholders to serve until the 2020 Annual Meeting of Stockholders or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal. Michael C. Borofsky, Jess M. Ravich, Anna Van Buren, Robert Scott Fritz, Marc Reisch, and John Scheel have been nominated by the Board for election as directors. If any nominee is unable or unwilling to serve as a director, proxies may be voted for a substitute nominee designated by the present Board. The Board has no reason to believe that the nominees will be unable or unwilling to serve as a nominee or as a director if elected. Proxies received will be voted “FOR” the election of the nominees unless otherwise directed.
Directors are elected by a plurality vote. The six (6) director nominees who receive the most votes cast in their favor will be elected to serve as directors. If no contrary indication is made, proxies in the accompanying form are to be voted for the election of Michael C. Borofsky, Jess M. Ravich, Anna Van Buren, Robert Scott Fritz, Marc Reisch, and John Scheel as the Board’s nominees or, in the event any such nominee is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), for any nominee who shall be designated by the Board to fill such vacancy.
Information Regarding Directors
Biographical information concerning each of the directors whose term as director will continue after the Annual Meeting and the director nominees as of the date of this Proxy Statement is set forth below.
Name |
| Age |
| Position | Year in Which Term Will Expire |
Robert Scott Fritz |
| 62 |
| Director and Nominee | 2020* |
Marc Reisch |
| 63 |
| Director and Nominee | 2020* |
John Scheel |
| 64 |
| Director, Nominee and Vice Chairman of the Board | 2020* |
Michael C. Borofsky |
| 47 |
| Director and Nominee | 2020* |
Jess M. Ravich |
| 61 |
| Executive Chairman, Chairman of the Board and Director and Nominee | 2020* |
Anna Van Buren |
| 61 |
| Director and Nominee | 2020* |
Hal G. Byer |
| 62 |
| Director | 2020 |
Rae G. Ravich |
| 28 |
| Director | 2020 |
Margarita Paláu-Hernández |
| 62 |
| Director | 2020 |
*Term expiration assuming reelection
Jess M. Ravich. Mr. Ravich has served as a director of the Company since June 26, 2006 and the Chairman of the Board since August 31, 2006 and has served as the Executive Chairman and senior executive officer of the Company since February 20, 2013. Mr. Ravich served as Group Managing Director of The TCW Group from December 2012 to June 2019 and as a member of its board of directors from December 2017 to October 2018. Prior to that, Mr. Ravich was Managing Director at Houlihan Lokey since December 2009. Prior to that, Mr. Ravich was Chairman and Chief Executive Officer of Libra Securities, LLC (“Libra Securities”), a Los Angeles-based investment banking firm that focused on capital raising and financial advisory services for middle market corporate clients and the sales and trading of debt and equity securities for institutional investors. Prior to founding Libra Securities in 1991, Mr. Ravich was an Executive Vice President at Jefferies & Co., Inc. and a Senior Vice President at Drexel Burnham Lambert. Mr. Ravich has served on the board of directors of Cherokee Inc. (Nasdaq GS: CHKE)
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since May 1995 and the board of directors of A-Mark International since 2014. In addition to his professional responsibilities, Mr. Ravich has also served on the Undergraduate Executive Board of the Wharton School and the Board of Trustees of the Archer School for Girls. Mr. Ravich has both a B.S and M.S. from the Wharton School and a J.D. from Harvard University. Among other qualifications, Mr. Ravich brings to the Board executive leadership experience, experience serving on the board of a public company, extensive financial expertise and a financial services industry background.
Hal G. Byer. Mr. Byer has served as a director of the Company since January 30, 2003. Mr. Byer was formerly a Director at Houlihan Lokey in their Financial Sponsors Coverage Group until his retirement in 2017. From May 2001 to November 2009, Mr. Byer was a Senior Vice President of Libra Securities, a broker-dealer registered with the SEC and an NASD member. From 1995 to 2003, Mr. Byer was Chief Executive Officer of Byer Distributing Co., a snack food distribution company. From 2000 to 2003, Mr. Byer was also the Chief Operating Officer of eGreatcause.com, an internet start-up involved in fundraising for charitable and non-profit organizations that is no longer active. Mr. Byer brings to the board executive leadership experience, financial expertise and a background in corporate strategy and operations.
Robert Scott Fritz. Mr. Fritz has served as a director of the Company since January 30, 2003. Since May 1982, Mr. Fritz has served as the President of Robert Fritz and Sons Sales Company, a food broker and paper distributor that he owns in New Jersey. Mr. Fritz holds a B.S. in Business from Fairleigh Dickinson University. Mr. Fritz brings to the Board executive leadership experience, along with financial expertise and industry knowledge.
Rae G. Ravich. Ms. Ravich has served as a director of the Company since June 4, 2014. Ms. Ravich is currently the founder of a startup in the health and wellness space, which she started in July 2016. From July 2015 to July 2016, Ms. Ravich was an Associate in the direct lending group at TCW Financial Planning LLC. From July 2013 to July 2015, Ms. Ravich was a Financial Analyst at Houlihan Lokey. Ms. Ravich has dual B.S. degrees from the Wharton School and the Nursing School at the University of Pennsylvania. Ms. Ravich is the daughter of Jess Ravich, the Company’s Executive Chairman and Chairman of the Board. Ms. Ravich brings to the Board her experience and background in the financial services industry.
John Scheel. Mr. Scheel has served as a director of the Company since September 13, 2006 and Vice Chairman of the Board since December 16, 2016. From August 31, 2006 to February 20, 2013, Mr. Scheel was the President and Chief Executive Officer of the Company. He served as the plant manager for the Company’s former subsidiary Kentucky Electric Steel’s (“KES”) steel mini-mill in Ashland, Kentucky (the “Mill”) and managed the operations of KES on our behalf from January 2004 until its sale to Optima on February 5, 2013. Following such sale, Mr. Scheel not only continued to manage the Mill for Optima as its general manager, but also managed the melt shop and caster for Warren Steel Holdings in Warren, Ohio, which was also managed by Optima. In 2016, Mr. Scheel joined Keystone Consolidated Industries as the plant manager of its Keystone Bar Products, Inc. mill. Following a sale of the company, he continues as the Vice President and General Manager of Liberty Bar Products, Inc. Prior to joining Pinnacle, Mr. Scheel held various positions of increased responsibility at AK Steel, Nucor Corporation and Birmingham Steel Management. Mr. Scheel holds both B.S. and M.S. degrees in Metallurgical Engineering from Purdue University and a Master of Business Administration in Finance and International Business from Xavier University. Mr. Scheel’s executive management experience and expertise in the manufacturing industry provides valuable insight to our Board in evaluating potential acquisitions and operating our subsidiaries.
Anna Van Buren. Ms. Van Buren has served as a director of the Company since November 2013. Ms. Van Buren was appointed President and Chief Executive Officer of Faneuil, Inc. (“Faneuil”), in April 2009, after previously serving as President and Chief Operating Officer from 2007 to 2009, as Vice President and Managing Director of Faneuil’s Government Services Division from 2005 to 2007, and as its Vice President of Business Development from 2004 to 2005. Prior to her association with Faneuil, Ms. Van Buren founded Capital Initiatives, a consulting service for clients seeking visibility among federal lawmakers with the objective of encouraging legislative action, and operated numerous government services and marketing companies. Ms. Van Buren has served in leadership roles for many civic and business organizations including chairmanship of the United Way of the Virginia Peninsula, the Peninsula Chamber of Commerce and the NASA Aeronautics Support Team. She is the recipient of numerous awards including the Women in Business Achievement Award by Inside Business Magazine, the Presidential Citizenship Award from Hampton University and the NCCJ Humanitarian Award. Ms. Van Buren holds
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a degree from Hollins University and the University of Virginia Executive School. Ms. Van Buren brings to the Board extensive executive leadership experience and deep industry expertise.
Michael C. Borofsky. Mr. Borofsky has served as a director of the Company since September 27, 2013. In January 2019, Mr. Borofsky joined Pohlad Companies as Chief Operating & Strategy Officer. Mr. Borofsky was formerly Senior Vice President of MacAndrews & Forbes. Prior to joining MacAndrews & Forbes in 2003, Mr. Borofsky was with the law firm of Skadden, Arps, Slate, Meagher & Flom LLP, where he specialized in mergers & acquisitions, and before that he was an analyst at Goldman Sachs. Mr. Borofsky has a B.A. from Yale University and a J.D. from Columbia University School of Law. Mr. Borofsky brings to the Board a valuable perspective due to his dual background in business and law.
Marc Reisch. Mr. Reisch was appointed Chairman of Phoenix Color Corp. (“Phoenix”) in August 2015 and has served as a director of the Company since that time. Mr. Reisch has served as Chairman of the Board, Chief Executive Officer and President of Visant Corp. and Visant Holding Corp. (“Visant”) from October 2004 to November 2015. Prior to joining Visant, he served as Senior Advisor to Kohlberg Kravis Roberts & Co. and has over 35 years of experience in the printing and publishing industries. Mr. Reisch holds a Bachelor of Science Degree and a Master of Business Administration degree from Cornell University. Mr. Reisch brings to the Board extensive executive leadership experience and deep industry expertise.
Margarita Paláu-Hernández. Ms. Paláu-Hernández has served as a director of the Company since November 25, 2015. Ms. Paláu-Hernández is a Principal and Founding Partner of Hernández Ventures, a privately held entity engaged in the acquisition and management of a variety of business interests. She has served in this capacity since 1988. Ms. Paláu-Hernández also serves as a director of Herbalife Nutrition Ltd., a publicly traded company (NYSE: HLF) based in Los Angeles, operating in over 90 countries. In September 2018, Ms. Paláu-Hernández was nominated by President Donald Trump to become, and served as, United States Representative to the United Nations General Assembly 73rd Session with the rank of Ambassador. Prior to founding Hernández Ventures, Ms. Paláu-Hernández was an attorney with the law firm of McCutcheon, Black, Verleger & Shea, where she focused on domestic and international business and real estate transactions. In addition to her professional responsibilities, Ms. Paláu-Hernández is a member of the UCLA School of Law Board of Advisors, the Pacific Council on International Policy, the Commission on Building a Secure and Competitive U.S.-Mexico Border and the Smithsonian National Latino Board and serves as Co-Chair of the Yale School of Management Council of Global Advisors. Previously Ms. Paláu-Hernández served on the University of San Diego Board of Trustees. Ms. Paláu-Hernández has a B.A. from the University of San Diego and a J.D. from UCLA School of Law. Ms. Paláu-Hernández brings to the Board her experience as the founder of a business and her background in law.
Board Independence
The Board has determined that the below directors have met the requirements for independence under the applicable rules and regulations of the SEC and the NASDAQ Global Market (“NASDAQ”), as applicable:
| - | Hal G. Byer |
| - | Michael Borofsky |
| - | Robert Scott Fritz |
| - | Margarita Paláu-Hernández |
| - | John Scheel |
Board Leadership Structure
Our Board retains flexibility to select its Chairman of the Board and our Executive Chairman in the manner that it believes is in the best interests of our stockholders. Accordingly, the Chairman of the Board and the Executive Chairman positions may be filled by one individual or two. The Board currently believes that having
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Mr. Ravich serve as both Executive Chairman and Chairman of the Board is in the best interests of the stockholders given Mr. Ravich’s extensive knowledge of, years of service to and experience with, the Company. The Board does not currently have a lead independent director, but has appointed Mr. Scheel, an independent director, as Vice Chairman of the Board.
Board Committees
The Board has a standing audit committee (the “Audit Committee”) and compensation, nominating and corporate governance committee (the “Compensation, Nominating and Corporate Governance Committee”). The composition and responsibilities of each committee are described below. Members will serve on these committees until their resignation or until otherwise determined by the Board.
The Board has determined that the composition and functioning of the Board and all of our committees comply with all applicable requirements of the Sarbanes-Oxley Act, and NASDAQ and SEC rules and regulations. The Audit Committee and the Compensation, Nominating and Corporate Governance Committee each operate under a written charter approved by the Board. Each committee will review and reassess the adequacy of its charter periodically. The charters of both committees are available in the Corporate Governance section of the Company’s website, www.aljregionalholdings.com.
The following chart details the current membership of each committee:
Name of Director |
| Audit Committee |
| Compensation, Nominating and Corporate Governance Committee |
Hal G. Byer |
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| M |
Michael Borofsky |
| M |
| C |
Robert Scott Fritz |
| M |
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Margarita Paláu-Hernández |
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| M |
John Scheel |
| C* |
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M = Member |
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C = Chair * = Audit Committee Financial Expert |
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Audit Committee
Our Audit Committee consists of Messrs. Scheel, Borofsky and Fritz, with Mr. Scheel chairing this committee. All members of our Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and NASDAQ. Our Board has determined that Mr. Scheel is an “audit committee financial expert” as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of NASDAQ. All the members of our Audit Committee are independent directors as defined under the applicable rules and regulations of the SEC and NASDAQ. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and NASDAQ.
The Audit Committee’s responsibilities include, among other responsibilities:
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| appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm; |
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| pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm; |
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| reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures; |
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| coordinating the oversight and reviewing the adequacy of our internal control over financial reporting; |
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| establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns; and |
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| preparing the Audit Committee report required by SEC rules to be included in our annual proxy statement. |
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee of the Board.
Notwithstanding anything to the contrary set forth in any of the Company’s previous or future filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate filings made by the Company, including this Proxy Statement, in whole or in part, the following Audit Committee Report shall not be deemed to be “soliciting material” or to be incorporated by reference into any prior or future filings made by the Company.
The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for the fiscal year ended September 30, 2018. In addition, the Audit Committee has discussed with the Company’s independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (Communications with Audit Committee). The Audit Committee also has received the written disclosures and the letter as required by the Public Company Accounting Oversight Board Rule 3526 “Communications with Audit Committees Concerning Independence” and the Audit Committee has discussed with the independent auditors the independence of that firm.
Based on the Audit Committee’s review of the matters noted above and its discussions with the Company’s independent auditors and management, the Audit Committee recommended to the Board that the financial statements be included in the Company’s Annual Report.
Respectfully submitted by:
Members of the Audit Committee
John Scheel (Chair)
Michael Borofsky
Robert Scott Fritz
Compensation, Nominating and Corporate Governance Committee
Our Compensation, Nominating and Corporate Governance Committee consists of Messrs. Borofsky and Byer and Ms. Paláu-Hernández, with Mr. Borofsky chairing this committee. All members of this committee meet the requirements for independence under the applicable rules and regulations of the SEC, NASDAQ and the Internal Revenue Code of 1986, as amended (the “Code”), including the rules applicable to members of a listed company’s compensation committee. The Compensation, Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable standards of the SEC and NASDAQ.
The committee’s responsibilities include:
| ● |
| reviewing and approving corporate goals and objectives relevant to compensation of our executive chairman; |
| ● |
| evaluating the performance of our executive chairman in light of such corporate goals and objectives and determining the compensation of our chief executive officer; |
| ● |
| determining the compensation of all our other officers and reviewing periodically the aggregate amount of compensation payable to such officers; |
| ● |
| overseeing and making recommendations to the Board with respect to our incentive-based compensation and equity plans; and |
| ● |
| reviewing and making recommendations to the Board with respect to director compensation. |
As well as:
| ● |
| developing and recommending to the Board the criteria for selecting board and committee membership; |
14
● |
| establishing procedures for identifying and evaluating director candidates including nominees recommended by stockholders; |
| ● |
| identifying individuals qualified to become board members; |
| ● |
| recommending to the Board the persons to be nominated for election as directors and to each of the Board’s committees; and |
| ● |
| overseeing the evaluation of the Board, its committees and management. |
Board’s Role in Risk Oversight
Both the full Board and its committees oversee the various risks faced by the Company. Management is responsible for the day-to-day management of the Company’s risks and provides periodic reports to the Board and its committees relating to those risks and risk-mitigation efforts.
Board oversight of risk is conducted primarily through the standing committees of the Board, the members of which are independent directors. The Audit Committee takes a lead role on overseeing financial risks and in interfacing with management on significant risks or exposures and assessing the steps management has taken to minimize such risks. The Audit Committee also is charged with, among other tasks, oversight of management on the Company’s guidelines and policies with respect to risk monitoring, assessment and management. Members of the Company’s management periodically report to the Audit Committee regarding risks overseen by the Audit Committee, including quarterly reports with respect to the Company’s internal controls over financial reporting.
Director Nominations
The Compensation, Nominating and Corporate Governance Committee evaluates and recommends to the Board director nominees for each election of directors.
In fulfilling its responsibilities, the Compensation, Nominating and Corporate Governance Committee considers the following factors:
| • | the appropriate size of the Board; |
| • | the needs of the Company with respect to the particular talents and experience of its directors; |
| • | the knowledge, skills and experience of nominees, including experience in business, finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board; |
| • | experience with accounting rules and practices; |
| • | applicable regulatory and securities exchange/association requirements; and |
| • | a balance between the benefit of continuity and the desire for a fresh perspective provided by new members. |
The Compensation, Nominating and Corporate Governance Committee’s goal is to assemble a group of directors that brings to the Company a variety of perspectives and skills derived from high quality business and professional experience. In doing so, the Compensation, Nominating and Corporate Governance Committee also considers candidates with appropriate non-business backgrounds.
Other than the foregoing factors, there are no stated minimum criteria for director nominees. However, the Compensation, Nominating and Corporate Governance Committee may also consider such other factors as it may deem are in the best interests of the Company and its stockholders.
The Compensation, Nominating and Corporate Governance Committee identifies nominees by first evaluating the willingness of the current members of the Board to continue in service. Current members of the Board with skills and experience that are relevant to the Company’s business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of the Board with that of obtaining a new perspective. If any member of the Board up for re-election at an upcoming annual meeting of stockholders does not wish to continue in service, the Compensation, Nominating and Corporate Governance
15
Committee identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board will be polled for suggestions as to individuals meeting the criteria of the Board. Research may also be performed to identify qualified individuals. If the Compensation, Nominating and Corporate Governance Committee believes that it requires additional candidates for nomination, the Compensation, Nominating and Corporate Governance Committee may explore alternative sources for identifying additional candidates. This may include engaging, as appropriate, a third party search firm to assist in identifying qualified candidates.
The Compensation, Nominating and Corporate Governance Committee will evaluate any recommendation for a director nominee proposed by a stockholder who gives timely written notice to the Corporate Secretary of the Company. In order to be timely, the notice must be delivered by a nationally recognized courier service or mailed by first class United States mail, postage or delivery charges prepaid, and received by the Company at 244 Madison Avenue, PMB #358, New York, NY 10016 not less than fifty (50) days or more than eighty (80) days prior to the scheduled date of the annual meeting, provided, however, that if fewer than sixty (60) days’ notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so delivered or mailed and received not later than the close of business on the tenth (10th) day following the earlier of (a) the day on which such notice of the date of the meeting was mailed or (b) the day on which such public disclosure was made. Additionally, the Company’s bylaws require that all stockholder notices for director nominations contain the following information:
| • | As to each person whom the stockholder proposes to nominate for election or reelection as a director: |
| o | the name, age, business address and residence address of the person; |
| o | the principal occupation or employment of the person; |
| o | the class, series and number of shares of capital stock of the Company that are owned beneficially by the person on the date of such stockholder’s notice; |
| o | a statement as to the person’s citizenship; and |
| o | any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, including, without limitation, such person’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected. |
| • | As to the stockholder giving the notice: |
| o | the name and address, as such information appears on the Company’s books, of such stockholder and any other stockholders known by such stockholder to be supporting such nominee(s); |
| o | the class, series and number of shares of capital stock of the Company that are owned beneficially by the stockholder and each other stockholder known by such stockholder to be supporting such nominee(s) on the date of such stockholder’s notice; and |
| o | a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice. |
| • | A description of all arrangements or understandings between the stockholder and each nominee and other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder. |
The Board will evaluate recommendations for director nominees submitted by directors, management or qualifying stockholders in the same manner, using the criteria stated above.
16
All directors and director nominees will submit a completed form of directors’ and officers’ questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Board.
Board Meetings
During the fiscal year ended September 30, 2018, the Board met eight times and took action by written consent on two occasions. During the fiscal year ended September 30, 2018, all directors attended at least 75% of the aggregate number of meetings of the Board. The Board encourages the directors to attend the annual meetings of stockholders.
Communications with Directors
If a stockholder wishes to communicate with the Board, they may send their communication in writing to: Corporate Secretary, ALJ Regional Holdings, Inc., 244 Madison Avenue, PMB #358, New York, NY 10016. Such stockholder must include their name and address in the written communication and indicate whether they are a stockholder of the Company. The Corporate Secretary will review any communication received from a stockholder, and all material communications from stockholders will be forwarded to the appropriate director or directors or the Board based on the subject matter.
Director Compensation
In December 2015, the Board approved a director compensation package comprised of (i) an annual retainer of $40,000 in cash, (ii) an annual grant of common stock with a value of $40,000, (iii) an additional $12,500 for the chair and $5,000 for each other member of the Audit Committee, and (iv) an additional $10,000 for the chair and $4,000 for each other member of the Compensation, Nominating and Corporate Governance Committee. Effective July 1, 2017, each director was given the option of how to allocate the payment between cash and common stock.
The following table provides information regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director of the Company for the year ended September 30, 2018. Other than as set forth in the table and described more fully below, the Company did not pay any fees, make any equity or non-equity awards, or pay any other compensation, to its non-employee directors. All compensation paid to its employee directors is set forth in the tables summarizing executive officer compensation below.
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|
Name |
| Fees |
| Stock |
| Option |
| Non-Equity |
| Nonqualified |
| All other |
| Total ($) |
Hal G. Byer |
| $84,000 |
| - |
| - |
| - |
| - |
| - |
| $84,000 |
Robert Scott Fritz |
| $61,250 |
| $23,750 |
| - |
| - |
| - |
| - |
| $85,000 |
Rae G. Ravich |
| $55,000 |
| $25,000 |
| - |
| - |
| - |
| - |
| $80,000 |
John Scheel |
| $52,500 |
| $40,000 |
| - |
| - |
| - |
| - |
| $92,500 |
Michael Borofsky |
| $55,000 |
| $40,000 |
| - |
| - |
| - |
| - |
| $95,000 |
Margarita Paláu-Hernández |
| $44,000 |
| $40,000 |
| - |
| - |
| - |
| - |
| $84,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) | The following table shows the number of shares subject to outstanding and unexercised stock and option awards held by each non-employee director as of September 30, 2018: |
Name |
| Number of Shares Subject to Outstanding Option Awards |
| Number of Shares Subject to Outstanding Stock Awards |
Hal G. Byer |
| 134,000 |
| 30,684 |
Robert Scott Fritz |
| - |
| 42,806 |
Rae G. Ravich |
| 100,000 |
| 37,890 |
John Scheel |
| - |
| 55,108 |
Michael Borofsky |
| - |
| 47,598 |
Margarita Paláu-Hernández |
| - |
| 37,923 |
17
Required Vote
The six (6) director nominees receiving the highest number of affirmative votes of the shares present and voting at the Annual Meeting in person or by proxy will be elected as directors. Each proxy cannot be voted for a greater number of persons than six.
the BOARD RECOMMENDS A VOTE
“FOR” the election of each nominee listed above.
18
RATIFICATION OF Appointment OF
Independent Registered Public Accounting Firm
The Audit Committee of the Board has determined to appoint Deloitte & Touche LLP (“Deloitte”) as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ending September 30, 2019, subject to completion of a mutually agreeable engagement letter, and has further directed that such appointment be submitted for ratification by the stockholders at the Annual Meeting.
Mayer Hoffman McCann P.C. (“MHM”) was previously the independent registered public accounting firm for the Company and its subsidiaries for the fiscal years ended September 30, 2017 and 2018 and the subsequent interim periods preceding July 1, 2019. Upon completion of MHM’s review of the Company’s interim financials for the interim period ending June 30, 2019, and upon the completion of a mutually agreeable engagement letter with Deloitte, the Audit Committee will dismiss MHM as the independent registered public accounting firm of the Company and its subsidiaries. There were no disagreements between the Company and MHM. The audit reports of MHM on the Company and its subsidiaries’ consolidated financial statements as of and for the fiscal years ended September 30, 2018 and 2017 did not contain any adverse opinion or disclaimer of opinion, and they were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended September 30, 2018 and 2017 and the subsequent interim periods preceding July 1, 2019, there were no (i) disagreements, as defined in Item 304(a)(1)(v) of Regulation S-K, between the Company and MHM, on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, any of which, if not resolved to MHM’s satisfaction, as applicable, would have caused MHM to make reference to the subject matter of any such disagreement in connection with its reports for such year and (ii) “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.
The Company provided MHM with a copy of the foregoing disclosures and requested that MHM furnish to the Company a letter addressed to the SEC stating whether MHM agreed with such disclosures and, if not, stating the respects in which it did not agree. A copy of MHM’s letter, when available, will be filed by the Company with the SEC.
On May 23, 2019, the Audit Committee determined, pending execution of an engagement letter in form and substance satisfactory to the Company, to appoint Deloitte to serve as the Company and its subsidiaries’ independent registered public accounting firm for the fiscal year ending September 30, 2019. During the fiscal years ended September 30, 2018 and 2017 and through the subsequent interim periods preceding such appointment, neither the Company, its subsidiaries, nor anyone on their behalf consulted with Deloitte regarding: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company and its subsidiaries’ financial statements; or (ii) any matter that was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event” (as defined in Item 304(a)(1)(v) of Regulation S-K).
It is expected that representatives of Deloitte will be present at the Annual Meeting and will be given the opportunity to make a statement if they so desire and to respond to appropriate questions. It is not expected that a representative of MHM will participate in the Annual Meeting.
The following table presents sets forth the aggregate fees billed to the Company for fiscal years ended September 30, 2018 and 2017. As part of its duties, the Audit Committee considers whether the provision of services, other than audit services, by MHM is compatible with maintaining the auditor’s independence. All audit fees, including audit fees associated with the audit by MHM of the Company’s consolidated financial statements for the years ended September 30, 2018 and 2017, and audit-related fees that were billed by MHM were approved by the Audit Committee in accordance with SEC requirements.
19
| 2018 |
| 2017 |
| |||
Audit Fees (1) | $ | 711,000 |
| $ | 537,000 |
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| |||||
Audit-Related Fees (2) | $ | – |
| $ | – |
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| |||||
Tax Fees | $ | – |
| $ | – |
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| |||||
All Other Fees | $ | – |
| $ | – |
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|
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| ||
Total Fees | $ | 711,000 |
| $ | 537,000 |
|
|
The decision to appoint Deloitte as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ended September 30, 2019 was approved by the Audit Committee, subject to completion of a mutually agreeable engagement letter. Stockholder ratification of the appointment of Deloitte as the independent registered public accounting firm for the Company and its subsidiaries is not required by the Company’s bylaws or otherwise. However, the Audit Committee is submitting the appointment of Deloitte to the stockholders for ratification as a matter of good corporate governance. If the stockholders fail to ratify the appointment of Deloitte, the Audit Committee will reconsider whether or not to retain Deloitte or engage a different firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
Audit Committee’s Pre-Approval Policies and Procedures
Consistent with policies of the SEC regarding auditor independence and the Audit Committee Charter, the Audit Committee has the responsibility for appointing, setting compensation and overseeing the work of the registered independent public accounting firm (the “Firm”). The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the Firm. Pre-approval is detailed as to the particular service to category of services and is generally subject to a specific budget. The Audit Committee may also pre-approve particular services on a case-by-case basis. In assessing request for services by the Firm, the Audit Committee considers whether such services are consistent with the Firm’s independence, whether the Firm is likely to provide the most effective and efficient service based upon their familiarity with the Company, and whether the service could enhance the Company’s ability to manage or control risk or improve audit quality.
Required Vote
The affirmative vote of at least a majority of the votes cast at the meeting at which a quorum is present, either in person or by proxy, is required to approve Proposal 2.
THE BOARD RECOMMENDS A VOTE “FOR” the ratification of the appointment of DELOITTE & TOUCHE LLP as the independent registered public accounting firm for the COMPANY AND ITS SUBSIDIARIES for the fiscal year ending September 30, 2019.
20
Named Executive Officers and Other Key Employees
The following table sets forth the name and position of our named executive officers and other key employees for the fiscal year ended September 30, 2018.
Name |
| Principal Position |
|
| |
Named Executive Officers |
|
|
Jess M. Ravich |
| Executive Chairman |
|
| |
Anna Van Buren |
| President and Chief Executive Officer, Faneuil |
|
| |
Brian Hartman |
| Chief Financial Officer |
|
| |
Other Key Employees |
|
|
Marc Reisch |
| Chairman, Phoenix |
|
| |
Steve Chesin |
| President and Chief Executive Officer, Carpets |
The information provided below is biographical information about our non-director Named Executive Officers and other key employees. For information concerning our named executive officers and other key employees who are also our directors, see “Information Regarding Directors” above.
Brian Hartman. Mr. Hartman has served as Chief Financial Officer since August 2017. Previously, Mr. Hartman was the Senior Vice President, Chief Financial Officer of Arcade Beauty, a manufacturer of sampling solutions for the beauty, fragrance and skincare segments, having served in such role since March 2012. From April 2005 to March 2012, Mr. Hartman was the Vice President, Corporate Controller of Visant Corporation, a specialty printing and marketing services enterprise. From January 1996 to April 2005, Mr. Hartman was the Controller for Metallurg Inc, a producer and distributor of specialty metals. Prior to this, Mr. Hartman held various accounting and auditing positions at Witco Chemical Corp., a manufacturer of specialty chemicals and Deloitte & Touche, LLP. Mr. Hartman is a certified public accountant and received a Bachelor of Business Administration degree in public accounting and a Master of Business Administration in financial management from Pace University.
Steve Chesin. Mr. Chesin has served as the Chief Executive Officer of Carpets since August 2007. From 2002 to 2007, Mr. Chesin served as the Executive Vice President of Carpets. From 1995 to 2001, Mr. Chesin served as the Senior Vice President and the Chief Operating Officer of Carpet Barn Inc., a subsidiary of Nations Flooring Inc. Mr. Chesin attended University of Nevada, Las Vegas.
Each executive officer is chosen by the Board and holds office until a successor has been elected and qualified or until such officer’s earlier death, resignation or removal.
Summary Compensation Table
The following table sets forth the total compensation paid or accrued by the Company to the named executive officers and other key employees for services rendered during the last two fiscal years ended September 30, 2018 and 2017. No other executive officers received total annual compensation exceeding $100,000 during such fiscal years.
21
Name and Principal |
| Year Ended |
| Salary |
|
| Bonus |
|
| Stock |
|
| Option(2) |
|
| Non-equity Incentive Plan Compensation ($) |
| All other |
|
| Total |
| |||||||
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| ||||||||||||||||||||
Named Executive Officers |
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|
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|
|
|
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| |
Jess Ravich |
| 2018 |
|
| - |
|
|
| - |
|
|
| 225,000(3) |
|
|
| - |
|
| - |
|
| - |
|
|
| 225,000 |
| |
Executive Chairman |
| 2017 |
|
| 93,750 |
|
|
| - |
|
|
| 131,250(3) |
|
|
| - |
|
| - |
|
| - |
|
|
| 225,000 |
| |
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Anna Van Buren |
| 2018 |
|
| 520,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| 330,380 | (5) |
| 31,147 | (6) |
|
| 881,527 |
| |
President and Chief Executive Officer, Faneuil |
| 2017 |
|
| 520,000 |
|
|
| - |
|
|
| - |
|
|
| 244,196 |
(4) |
| 798,872 | (5) |
| 30,463 | (6) |
|
| 1,593,531 |
| |
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| ||||||||||||||||||||
Brian Hartman |
| 2018 |
|
| 307,222 |
|
|
| 191,000 | (9) |
|
| - |
|
|
| 161,659 | (11) |
| - |
|
| - |
|
|
| 659,881 |
| |
Chief Financial Officer |
| 2017 |
|
| 45,769 | (8) |
|
| 175,000 | (10) |
|
| - |
|
|
| 239,063 | (12) |
| - |
|
| - |
|
|
| 459,832 |
| |
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| ||||||||||||||||||||
Other Key Employees |
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| |
Marc Reisch |
| 2018 |
|
| 200,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| 294,442 | (7) |
| - |
|
|
| 494,442 |
| |
Chairman, Phoenix |
| 2017 |
|
| 200,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| - |
|
| - |
|
|
| 200,000 |
| |
Steve Chesin |
| 2018 |
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| - |
|
| 46,582 |
(13) |
|
| 346,582 |
| |
President and Chief Executive Officer, Carpets |
| 2017 |
|
| 300,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
| - |
|
| 75,220 |
(14) |
|
| 375,220 |
|
| (1) | This column represents the aggregate fair value of common stock awards calculated in accordance with Accounting Standards Codification (“ASC”) Topic 718, “Compensation – Stock Compensation” (“ASC Topic 718”). Fair value is the closing price of the common stock as listed on the NASDAQ Global Market on the issuance date. |
| (2) | This column represents the aggregate grant date fair value of option awards calculated in accordance with ASC Topic 718. Assumptions used in the calculation of this amount are included in Note 2, Summary of Significant Accounting Policies, of the Consolidated Financial Statements in “Part IV, Item 15. Exhibits, Financial Statement Schedules.” |
| (3) | Represents the aggregate fair value of common stock earned as ALJ’s Executive Chairman. |
| (4) | Represents an option to purchase 150,000 shares of ALJ’s common stock at an exercise price of $3.33 per share. Options vest in three equal annual installments on August 11, 2018, August 11, 2019, and August 11, 2020.
|
| (5) | Represents an annual bonus amount equal to ten percent (10%) of Faneuil’s defined EBITDA, before any bonus amount owed to Ms. Van Buren, in excess of $5.0 million in calendar 2016, $6.25 million in calendar 2017, and $7.5 million in calendar 2018. Ms. Van Buren’s bonus is based on a calendar year. The amounts included in the table above are estimates based on ALJ’s fiscal year and are subject to adjustments. |
| (6) | Represents health care insurance premiums. |
| (7) | Represents an annual bonus amount equal to ten percent (10%) of Phoenix’s defined EBITDA, in excess of $20.0 million, with a step down to 5% in excess of $27.0 million. Mr. Reisch’s bonus is based on a calendar year. The amounts included in the table above are estimates based on ALJ’s fiscal year and are subject to adjustments. |
| (8) | Mr. Hartman’s base salary from his hire date, August 8, 2017, through September 30, 2017.
|
| (9) | Represents performance bonus. |
22
| (10) | Includes $75,000 sign-on bonus and $100,000 performance bonus. |
| (11) | Represents an option to purchase 150,000 shares of ALJ common stock at an exercise price of $2.10 per share. Options vest in three equal annual installments on August 8, 2019, August 8, 2020, and August 8, 2021.
|
| (12) | Represents an option to purchase 150,000 shares of ALJ’s common stock at an exercise price of $3.26 per share. Options vest in three equal annual installments on August 8, 2018, August 8, 2019, and August 8, 2020.
|
| (13) | Represents health care insurance premiums of $3,848, personal time off payouts of $28,248, and car lease payments and other of $14,486.
|
| (14) | Represents health care insurance premiums of $11,443, personal time off payouts of $48,133, and car lease payments and other of $15,644. |
Employment Arrangements with Named Executive Officers and Other Key Employees
Named Executive Officers
Jess M. Ravich. Mr. Ravich has served as our Executive Chairman since February 2013. During the last two fiscal years, Mr. Ravich has received total annual compensation of $225,000. From October 2015, through June 2017, Mr. Ravich elected to receive $125,000 in cash and $100,000 in common stock. Effective July 2017, Mr. Ravich elected to receive his entire annual compensation of $225,000 in common stock.
Anna Van Buren. In October 2013, concurrent with ALJ’s acquisition of Faneuil, Faneuil entered into an employment agreement with Ms. Van Buren through December 2018. In August 2017, Faneuil and Ms. Van Buren entered into an amended employment agreement (the “Van Buren Amended Employment Agreement”), which extended the term to December 2021. Pursuant to the Van Buren Amended Employment Agreement, Ms. Van Buren receives an annual base salary of $520,000 and is eligible to earn an incentive bonus equal to 10% of Faneuil EBITDA, as defined in the Van Buren Amended Employment Agreement, before any bonus amount owed to Ms. Van Buren, in excess of $6,250,000 for calendar year 2017 and $7,500,000 thereafter, subject to further adjustment by ALJ Compensation, Nominating and Corporate Governance Committee from time to time in its discretion, with a step down to 5% of pre-bonus Faneuil EBITDA at $2,000,000 total compensation.
As of September 30, 2018, if Ms. Van Buren’s employment is terminated by Faneuil without cause, or by Ms. Van Buren for good reason, Ms. Van Buren is entitled to receive: (i) the lesser of one-year base salary or pro-rated base salary for the remaining term; (ii) continuation of group health plan benefits, with the cost of the regular premium for such benefits paid in full by Faneuil; (iii) full annual bonus for the year of termination if otherwise entitled to receive the bonus; and (iv) the annual bonus for the previous year if such bonus has been earned but not yet paid at time of termination.
Brian Hartman. In connection with ALJ’s appointment of Mr. Hartman to serve as its Chief Financial Officer in August 2017, ALJ entered into an employment agreement with Mr. Hartman through August 2018, subject to one-year renewals. Pursuant to the employment agreement, Mr. Hartman received an annual base salary of $300,000, a one-time sign-on bonus of $75,000, a cash bonus of $100,000 for the calendar year 2017, and an individual bonus target of 50% of annual base salary effective January 2018.
In August 2018, ALJ and Mr. Hartman entered into the First Amended and Restated Employment Agreement, which (i) extended the term through August 2019, subject to further one-year renewals; (ii) increased the base salary to $350,000; and (iii) amended the bonus to add a target of up to 25% of annual base salary based on the achievement of performance goals set by the Compensation, Nominating and Corporate Governance Committee with regards to the performance of Carpets.
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As of September 30, 2018, if Mr. Hartman’s employment is terminated by ALJ without cause, or by Mr. Hartman for good reason, Mr. Hartman is entitled to receive: (i) one year of base salary; (ii) continuation of group health plan benefits with the cost of the regular premium for such benefits shared in the same relative proportion by ALJ and Mr. Hartman as in effect on the date of termination; (iii) full annual bonus for the year of termination if otherwise entitled to receive the bonus; and (iv) the annual bonus for the previous year if such bonus has been earned but not yet paid at time of termination.
Other Key Employees
Marc Reisch. In August 2015, concurrent with ALJ’s acquisition of Phoenix, Phoenix entered into an employment agreement with Mr. Reisch through December 2018. In March 2018, Phoenix entered into a new employment agreement with Mr. Reisch (the “New Reisch Employment Agreement”), which superseded and terminated the August 2015 employment agreement, and extended the term to December 2021. Under the New Reisch Employment Agreement, Mr. Reisch receives an annual base salary of $200,000 and is eligible to earn an annual bonus equal to 10% of any pre-bonus EBITDA of Phoenix in excess of $20,000,000, with a step down to 5% of any pre-bonus EBITDA of Phoenix in excess of $27,000,000, in each case before any bonus amount owed to Mr. Reisch and the Chief Operating Officer of Phoenix. In the event of a material restatement, revision, or change to Phoenix’s financial statements requiring a recalculation of EBITDA for any particular fiscal year, the Compensation, Nominating and Corporate Governance Committee of ALJ may require reimbursement from Mr. Reisch of any excess bonus paid to Mr. Reisch as a result of the recalculated EBITDA for such particular fiscal year.
As of September 30, 2018, if Mr. Reisch’s employment is terminated by Phoenix without cause, or by Mr. Reisch for good reason, Mr. Reisch is entitled to receive, for each calendar year remaining during the employment term, an annual bonus calculated and paid in the same manner as if Mr. Reisch’s employment had continued.
Steve Chesin. During April 2014, concurrent with ALJ’s acquisition of Carpets, Carpets entered into an employment agreement with Mr. Chesin through December 2017. In December 2017, Carpets and Mr. Chesin entered into an amended employment agreement (the “New Chesin Employment Agreement”), which extended the term to January 2019. Under the New Chesin Employment Agreement, Mr. Chesin receives an annual base salary of $300,000 and is eligible to earn an annual bonus equal to the sum of (i) 5% of any pre-bonus EBITDA of Carpets in excess of $1,500,000 and less than $5,000,000, and (ii) 2.5% of any pre-bonus EBITDA of Carpets in excess of $5,000,000.
As of September 30, 2018, if Mr. Chesin’s employment is terminated by Carpets without cause, or by Mr. Chesin for good reason, Mr. Chesin is entitled to receive: (i) one year of base salary paid in 12 equal installments; (ii) continuation of group health plan benefits, with the cost of the regular premium for such benefits paid in full by Carpets; (iii) full annual bonus for the year of termination if otherwise entitled to receive the bonus; and (iv) the annual bonus for the previous year if such bonus has been earned but not yet paid at time of termination.
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Outstanding Equity Awards at Fiscal 2018 Year-End
The following table sets forth certain information regarding outstanding equity awards as of September 30, 2018 by the named executive officers and other key employees.
Option Awards | ||||||||||||||||||||
Name |
| Option Grant Date |
| Number of Securities Underlying Unexercised Options (#) Exercisable |
|
| Number of Securities Underlying Unexercised Options (#) Unexercisable |
|
| Total Number of Securities Underlying Unexercised Options |
|
| Option Exercise Price |
|
| Option Expiration Date | ||||
Named Executive Officer: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jess M. Ravich, Executive Chairman |
| 8/3/2015 |
|
| 350,000 |
|
|
| — |
|
|
| 350,000 |
|
| $ | 4.00 |
|
| 8/3/2022 |
Anna Van Buren, President and CEO, Faneuil |
| 8/11/2017 |
|
| 50,000 |
|
|
| 100,000 |
| (1) |
| 150,000 |
|
| $ | 3.33 |
|
| 8/9/2027 |
Brian Hartman, CFO |
| 8/8/2017 |
|
| 50,000 |
|
|
| 100,000 |
| (2) |
| 150,000 |
|
| $ | 3.26 |
|
| 8/8/2027 |
|
| 8/9/2018 |
|
| — |
|
|
| 150,000 |
| (3) |
| 150,000 |
|
| $ | 2.10 |
|
| 8/9/2028 |
Other Key Employees: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc Reisch, Chairman, Phoenix |
| 8/14/2015 |
|
| 166,667 |
|
|
| 83,333 |
| (4) |
| 250,000 |
|
| $ | 4.27 |
|
| 8/13/2025 |
Steve Chesin, President and CEO, Carpets |
| 12/7/2017 |
|
| — |
|
|
| 10,000 |
| (5) |
| 10,000 |
|
| $ | 3.21 |
|
| 12/7/2027 |
(1) | Vests in two equal annual installments on August 11, 2019 and August 11, 2020. |
(2) | Vests in two equal annual installments on August 8, 2019 and August 8, 2020. |
(3) | Vests in three equal annual installments on August 9, 2019, August 9, 2020, and August 9, 2021. |
(4) | Vested on October 1, 2018. |
(5) | Vests in three equal annual installments on December 7, 2018, December 7, 2019, and December 7, 2020. |
Compensation Committee Report
The Compensation, Nominating and Corporate Governance Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management, and based on that review and discussion, the Compensation, Nominating and Corporate Governance recommended to the Board that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement for the 2019 Annual Meeting of Stockholders.
Respectfully submitted,
Members of the Compensation, Nominating and Corporate Governance Committee
Michael Borofsky (Chair)
Hal G. Byer
Margarita Paláu-Hernández
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, the beneficial ownership of common stock with respect to (i) each person who was known by the Company to own beneficially more than 5% of the outstanding shares of common stock, (ii) each director, (iii) each of the Company’s current executive officers and (iv) all directors and executive officers as a group. As of the Record Date, the Company had 38,026,435 shares of common stock issued and outstanding, which was the only class of voting securities outstanding. Unless otherwise indicated, the address for each stockholder listed in the following table is c/o ALJ Regional Holdings, Inc., 244 Madison Avenue, PMB #358, New York, NY 10016.
|
|
|
|
| |
Name and Address of Beneficial Owner |
| Amount and Nature of |
| Percent of Class | |
|
|
| |||
Executive Officers and Directors |
|
|
|
| |
Jess M. Ravich, Executive Chairman and Chairman of the Board |
| 14,503,410 (2) |
| 37.7% | |
|
|
| |||
Anna Van Buren, Director c/o Faneuil, Inc. 2 Eaton Street, Suite 1002 Hampton, VA 23669 |
| 1,565,021 (3) |
| 4.1% | |
|
|
| |||
John Scheel, Director and Vice Chairman of the Board |
| 858,811 |
| 2.3% | |
|
|
| |||
Robert Scott Fritz, Director |
| 646,011 (5) |
| 1.7% | |
|
|
|
|
| |
Marc Reisch, Director c/o Phoenix Color Corp. 16th Floor, 350 7th Ave New York, NY 10001 |
| 750,000 (4) |
| 2.0% | |
|
|
| |||
Hal G. Byer, Director
|
| 164,684 (6) |
| *% | |
|
|
| |||
Rae G. Ravich, Director
|
| 137,890 (7) |
| *% | |
|
|
| |||
Margarita Paláu-Hernández, Director
| 87,923 (8) |
|
| *% | |
|
|
|
|
| |
Michael C. Borofsky, Director |
| 47,598 |
| *% | |
|
|
|
|
| |
Brian Hartman, Chief Financial Officer
|
| 50,000 (3) |
| *% | |
Other Key Employees |
|
|
|
| |
Steve Chesin, Chief Executive Officer, Carpets c/o Carpets N’ More 4580 West Teco Avenue Las Vegas, NV 89118 | 153,333 (9) |
|
| *% | |
|
|
| |||
All current directors, executive officers and other key employees as a group | 18,964,681 (10) |
|
| 48.6% | |
|
|
| |||
5% Stockholders |
|
|
|
|
26
* Denotes holders of less than 1%.
(1) Consistent with SEC regulations, shares of common stock issuable upon exercise of derivative securities by their terms exercisable within 60 days of the Record Date are deemed outstanding for purposes of computing the percentage ownership of the person holding such securities but are not deemed outstanding for computing the percentage ownership of any other person. Unless otherwise indicated below, to the knowledge of the Company, the persons and entities named in this table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable.
(2) Includes 4,853,804 shares held by the Exemption Trust under the Ravich Revocable Trust of 1989 and 350,000 shares of common stock issuable upon exercise of currently vested options.
(3) Includes 50,000 shares of common stock issuable upon exercise of currently vested options.
(4) Includes 250,000 shares of common stock issuable upon exercise of currently vested options.
(5) Includes 431,088 shares held by The Ravich Children Permanent Trust, for which Mr. Fritz is the sole trustee. Mr. Fritz disclaims all economic ownership of such shares.
(6) Includes 134,000 shares of common stock issuable upon exercise of currently vested options and 10,014 restricted shares held by the Hal Byer and Marihelene Byer Revocable Trust.
(7) Includes 100,000 shares of common stock issuable upon exercise of currently vested options.
(8) Includes 50,000 shares of common stock held by the Hernandez Family Trust, dated February 11, 1993.
(9) Includes 3,333 shares of common stock issuable upon exercise of options that vest within 60 days from the date hereof.
(10) Includes 937,333 shares of common stock issuable upon the exercise of options that are either vested or will vest within 60 days from the date hereof.
Equity Compensation Plan Information
On July 11, 2016, ALJ shareholders approved ALJ’s Omnibus Equity Incentive Plan (the “2016 Plan”), which allows ALJ and its subsidiaries to grant securities of ALJ to officers, employees, directors or consultants. ALJ believes that equity-based compensation is fundamental to attracting, motivating and retaining highly-qualified dedicated employees who have the skills and experience required to achieve business goals. Further, ALJ believes the 2016 Plan aligns the compensation of directors, officers, and employees with shareholder interest.
The 2016 Plan is administered by ALJ’s Compensation, Nominating and Corporate Governance Committee. The maximum aggregate number of common stock shares that may be granted under the 2016 Plan is 2,000,000. The 2016 Plan generally provides for the grant of qualified or nonqualified stock options, restricted stock and restricted stock units, unrestricted stock, stock appreciation rights, performance awards and other awards. The Compensation, Nominating, and Corporate Governance Committee has full discretion to set the vesting criteria. The exercise price of a stock option may not be less than 100% of the fair market value of ALJ’s common stock on the date of grant. The 2016 Plan prohibits the repricing of outstanding stock options without prior shareholder approval. The term of stock options granted under the 2016 Plan may not exceed ten years. Awards are subject to accelerated vesting upon a change in control in the event the acquiring company does not assume the awards. The Board may amend, alter, or discontinue the 2016 Plan, but shall obtain shareholder approval of any amendment as required by applicable law or stock exchange listing requirements.
The following table sets forth certain information concerning shares of our common stock authorized for issuance under the Company’s existing equity compensation plans as of September 30, 2018:
27
|
| Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) |
|
| Weighted average exercise price of outstanding options, warrants and rights (b) |
| Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
| |||||
Equity compensation plans approved by security holders |
|
| 740,000 |
|
| $ | 3.02 |
|
| 1,260,000 |
| ||
Equity compensation plans not approved by security holders |
|
| 934,000 |
|
|
| 3.67 |
|
| — |
| ||
Total |
|
| 1,674,000 |
|
| $ | 3.38 |
|
| 1,260,000 |
|
Certain Relationships and Related Transactions
Harland Clarke Holdings Corp. (“Harland Clarke”), a stockholder who owns ALJ shares in excess of five percent, is a counterparty to Faneuil in two contracts. One contract provides call center services to support Harland Clarke’s banking-related products and renews annually every April. The other contract provided managed print services and concluded September 30, 2018. Faneuil recognized revenue from Harland Clarke totaling $0.3 million and $1.0 million for the years ended September 30, 2018 and 2017, respectively. The associated cost of revenue was $0.3 million and $0.9 million for the years ended September 30, 2018 and 2017, respectively. All revenue from Harland Clarke contained similar terms and conditions as for other transactions of this nature entered into by ALJ. Total accounts receivable from Harland Clarke was less than $0.1 million and $0.1 million at September 30, 2018 and 2017, respectively.
On November 28, 2018, in connection with the Fourth Amendment, the Company entered into a Backstop Letter Agreement with Jess Ravich, the Company’s Executive Chairman. Pursuant to the Backstop Letter Agreement, Mr. Ravich will provide a “backstop” that would enable the Company to satisfy the Alternative Financing Requirement by agreeing, if the Company is unable to locate alternative financing on terms, conditions and timing reasonably acceptable to it, and if required by the Collateral Agent. In consideration of Mr. Ravich entering into such backstop arrangement, the Company’s Audit Committee and independent directors reviewed, approved and agreed to a backstop fee package, pursuant to which the Company would (i) pay to Mr. Ravich’s trust a one-time backstop fee of $0.1 million, and (ii) if the purchase of such subordinated debt is required by the Collateral Agent and the Company has failed to secure a financing alternative more advantageous to the Company, issue to Mr. Ravich’s trust a five-year warrant (the “Warrant”) to purchase 1.5 million shares of ALJ common stock at an exercise price equal to the average closing price of the Company’s common stock as reported on The Nasdaq Stock Market for the 30 trading days preceding the warrant issuance date. On February 28, 2019, the Company determined the conditions set forth in the Backstop Letter Agreement requiring the issuance of the Warrant by the Company to Mr. Ravich’s trust were not met and that the Company shall have no further obligations under the Backstop Letter Agreement with regards to the Warrant.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file. Based upon a review of those forms and representations regarding the need for filing Forms 5, we believe that each of our directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements. In making this statement, we have relied upon examination of the copies of Forms 3, 4 and 5, and amendments thereto, provided to us and the written representations of our directors and executive officers.
OTHER MATTERS
If any other matters are properly brought before the meeting, it is the intention of the persons named in the proxy to vote on such matters in accordance with their best judgment.
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All stockholders are urged to vote by following the instructions included in this Proxy Statement and the enclosed proxy card.
By Order of the Board of Directors,
/s/ Jess M. Ravich
Executive Chairman and Chairman of the Board
July 23, 2019
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Signature of Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. 1. To elect Michael C. Borofsky, Jess M. Ravich, Anna Van Buren, Robert Scott Fritz, Marc Reisch, and John Scheel as directors to hold office until the Company’s 2020 Annual Meeting of Stockholders or until their respective successors are elected and duly qualified, or until their respective earlier resignation or removal. O Michael C. Borofsky O Jess M. Ravich O Anna Van Buren O Robert Scott Fritz O Marc Reisch O John Scheel 2. To ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2019. 3. To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting. This proxy when properly executed will be voted as directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted FOR ALL NOMINEES in Proposal 1, and FOR Proposal 2. FOR ALL NOMINEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: JOHN SMITH 1234 MAIN STREET APT. 203 NEW YORK, NY 10038 NOMINEES: ANNUAL MEETING OF STOCKHOLDERS OF ALJ REGIONAL HOLDINGS, INC. September 6, 2019 INTERNET - Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-718-921-8500 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON - You may vote your shares in person by attending the Annual Meeting. GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. PROXY VOTING INSTRUCTIONS Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" IN PROPOSAL 1, AND "FOR" PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x ------------------ ---------------- 20630000000000001000 5 090619 COMPANY NUMBER ACCOUNT NUMBER NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS: The Notice of Meeting, Proxy Statement, Proxy Card and Annual Report on Form 10-K are available at http://www.astproxyportal.com/ast/10808/ MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. FOR AGAINST ABSTAIN
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0 ------------------ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ---------------- 14475 ALJ REGIONAL HOLDINGS, INC. Proxy for Annual Meeting of Stockholders on September 6, 2019 This Proxy is Solicited on Behalf of the BOARD OF DIRECTORS As an alternative to completing this form, you may enter your voting instructions by telephone at 1-800-PROXIES, or via the Internet at WWW.VOTEPROXY.COM and follow the simple instructions. Use the Company Number and Account Number shown on your proxy card. The undersigned hereby appoints Jess M. Ravich, Executive Chairman, with full power of substitution, as proxy to vote all the shares of Common Stock which the undersigned would be entitled to vote if personally present and acting at the Annual Meeting of Stockholders of ALJ Regional Holdings, Inc., to be held on September 6, 2019 at 10:00 a.m. Eastern Time at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, NY 10022, and at any adjournments or postponements thereof, as follows: (Continued and to be signed on the reverse side) 1.1
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