ALJJ ALJ Regional Holdings Inc

PROPOSAL 1: THE PHOENIX COLOR SALE PROPOSAL

General Description of the Phoenix Color Sale

Pursuant to the Stock Purchase Agreement, dated as of February 3, 2022, by and between ALJ and Lakeside,  ALJ has agreed to sell to Lakeside 100 shares of the Class A Common Stock, par value $0.01 per share, of Phoenix Color, representing 100% of the outstanding shares of capital stock of Phoenix Color.

The purchase price for the Phoenix Color Sale will be an amount equal to $134,775,000, minus (A) the amount of indebtedness of Phoenix Color and its subsidiaries as of the Closing Date, minus (B) the amount, if any, by which $9,818,269 exceeds the working capital of Phoenix Color and its subsidiaries as of the Closing Date, plus (C) the amount, if any, by which the working capital of Phoenix Color and its subsidiaries as of the Closing Date exceeds $9,818,269, minus (D) the amount of transaction expenses of Phoenix Color and its subsidiaries as of the Closing Date. If the Closing takes place after April 15, 2022, but on or before May 15, 2022, then the purchase price will be reduced by $1,000,000.  If the Closing takes place after May 15, 2022, then the purchase price will be reduced by $2,000,000.

See “Proposal 1: The Phoenix Color Sale Proposal—The Stock Purchase Agreement” beginning on page 47 of this proxy statement for more information. A copy of the Stock Purchase Agreement is attached to this proxy statement as Annex A. We encourage you to read the Stock Purchase Agreement and the Voting and Support Agreement in their entireties.

The Parties to the Phoenix Color Sale

ALJ

ALJ is a holding company consisting of the following wholly owned subsidiaries:

On December 21, 2021, the Company entered into the Asset Purchase Agreement with TTEC, TTEC Holdings, Inc., a Delaware corporation, and Faneuil, pursuant to which TTEC agreed, subject to the terms and conditions set forth in the Asset Purchase Agreement, to acquire the assets of Faneuil’s tolling and transportation vertical and health benefit exchange vertical.  As of the date of this proxy statement, the Faneuil Transaction has not closed.  We expect, but cannot guarantee, that the Faneuil Transaction will close within 30 days of the date of this proxy statement.

ALJ’s common stock is publicly traded on NASDAQ under the symbol “ALJJ.”  Our executive offices are located at 244 Madison Avenue, PMB #358, New York, NY 10016, and our telephone number is (888) 486-7775.

Phoenix Color

Phoenix Color is a Delaware corporation headquartered in Hagerstown, Maryland.  The Company acquired Phoenix Color in August 2015.

Phoenix Color is a premier full-service, full-color printer with over 40 years of superior printing experience.  Drawing on a broad spectrum of materials and decorative technologies, Phoenix Color produces memorable, value-added components, heavily illustrated books, and specialty commercial products. Book publishers generally design book components to enhance the sales appeal of their books. The production of book components requires specialized equipment, materials, and finishes and often demands high-quality, intricate work. As a result,

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many leading publishers rely on specialty printers such as Phoenix Color to supply high-quality book components. This same philosophy applies to labels, packaging, and specialty commercial products, where Phoenix Color customers require the knowledge and expertise of a printer that can enhance their products for sale into the commercial marketplace. Phoenix Color has been servicing the publishing industry within the United States since 1979 and has formed lasting relationships with many of the biggest names in book publishing.

As a domestic manufacturer, Phoenix Color offers extensive, in-house digital pre-press capabilities and its technologically advanced UV printing platform supports an array of printing and finishing options.  Phoenix Color innovative special effects include foil stamping, UV embellishments, and laminations, as well as its trademarked products LithoFoil^®, MetalTone™, Look of Leather™, and VibraColor™.

Phoenix Color’s principal executive offices are located at 18249 Phoenix Dr, Hagerstown, MD 21742, and its telephone number is (301) 733-0018.

Lakeside

Lakeside is a Delaware limited liability company headquartered in Warrenville, Illinois, and a direct wholly owned subsidiary of LSC Communications LLC  (“LSC”), a Delaware limited liability company and indirect wholly owned subsidiary of funds managed by Atlas Holdings LLC (“Atlas”), which acquired substantially all of the assets of LSC Communications, Inc. in December 2020.

Lakeside operates the book division of LSC and is the largest book manufacturer in the United States. In addition to book manufacturing, Lakeside provides warehousing, distribution, sales, marketing services and fulfillment services, as well as IP and brand protection technology for book publishers and others requiring premium quality print and distribution-related services.  Lakeside also operates a publishing group that publishes books under the Dover Publications and REA imprints.  With approximately 5,400 associates, Lakeside operates across more than 15 facilities throughout the United States.

LSC is a global leader in print and digital media solutions and offers a range of services and products that serve the needs of publishers, merchandisers and retailers around the world through a number of business units in addition to Lakeside.

Lakeside’s executive offices are located at 4101 Winfield Road, Warrenvile, IL 60555, and its telephone number is (844) 572-5720.

Recommendation of our Board of Directors with respect to the Phoenix Color Sale Proposal

Our Board of Directors, at a special meeting held on February 2, 2022, after due consideration, unanimously (i) determined that the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement is advisable, fair, expedient and for the best interests of the Company and its stockholders, (ii) approved the Stock Purchase Agreement and the consummation by the Company of the transactions contemplated by the Stock Purchase Agreement, and (iii) directed that the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement be submitted for consideration by our stockholders at a special meeting of stockholders. Our Board of Directors has unanimously approved the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement and unanimously recommends that stockholders vote “FOR” the Phoenix Color Sale Proposal.

Vote Required

The affirmative vote of the holders of a majority of the outstanding shares of our common stock entitled to vote thereon is required for the approval of the Phoenix Color Sale (the “Company Stockholder Approval”). This means that, of the shares of common stock entitled to vote on the proposal (regardless of whether the holders of such shares are present in person or by proxy at the special meeting), a majority must vote in favor of the proposal to approve the Phoenix Color Sale in order for the Phoenix Color Sale to be approved. Abstentions and broker non-votes will have the effect of a vote against this proposal.

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Under the Voting and Support Agreement, Mr. Ravich, our Chairman and Chief Executive Officer and the Company’s largest stockholder, has agreed to vote or cause to be voted all of the shares of the Company’s common stock owned by him beneficially or of record (other than any shares that he is required to vote in accordance with that certain Voting Agreement, dated as of September 6, 2019, by and between Mr. Ravich and the Company (the “Existing Voting Agreement”)) in favor of the Phoenix Color Sale, and that the Voting and Support Agreement terminates in the event of an Adverse Recommendation Change by our Board of Directors.

Members of our Board of Directors who beneficially owned an aggregate of approximately 43.4% of the outstanding shares of common stock as of March 16, 2022 have indicated that they intend to vote in favor of Phoenix Color Sale.

Interests of Our Directors and Officers

In considering the recommendation of our Board of Directors with respect to the Phoenix Color Sale Proposal, you should be aware that certain of our directors and executive officers may have interests in the Phoenix Color Sale that are different from, or in addition to, your interests as a stockholder and that such interests may present actual or potential conflicts of interest. Our Board of Directors was aware of these interests prior to the execution of the Stock Purchase Agreement and considered them, among other matters, in approving the Stock Purchase Agreement and in determining to recommend that the stockholders adopt the Stock Purchase Agreement. Such interests include, among other matters, potential bonus payments to our executive officers, entitlement of the executive officers to receive severance benefits under their respective employment agreements upon a qualifying termination of employment following the completion of the Phoenix Color Sale and certain rights to continued indemnification and insurance coverage. In addition, the number of shares of our common stock owned by our directors and executive officers as of March 16, 2022, appears below under “Proposal 1: The Phoenix Color Sale Proposal—Security Ownership of Certain Beneficial Owners and Management” beginning on page 67 of this proxy statement.

Employment Agreements with Executive Officers

Employment Agreement with Mr. Ravich

The Company is party to an amended and restated employment agreement with Mr. Jess Ravich, its Chief Executive Officer, dated as of June 21, 2020 (the “Ravich Employment Agreement”).  Under the Ravich Employment Agreement, if Mr. Ravich’s employment is terminated by the Company without “cause” or by Mr. Ravich with “good reason,” Mr. Ravich will be entitled to (1) continued payment of his base salary until the earlier of one year from his date of termination and the end of the initial term (September 30, 2022) or any additional two-year term (such period, the “Ravich Severance Period”), (2) a pro-rated annual bonus payment for the year of termination, calculated based on actual performance for the year of termination and (3) continued medical plan coverage during the Ravich Severance Period at no cost to Mr. Ravich. In addition, under the Ravich Employment Agreement, Mr. Ravich is entitled to a Realization Bonus (the “Realization Bonus”) upon the Closing of the Phoenix Color Sale equal to 5% of the gross sales price (excluding expenses of the Phoenix Color Sale) less the sum of (1) the gross purchase price of Phoenix Color and any of its subsidiaries and (2) any growth capital expenditures incurred after the Closing of the purchase of Phoenix Color. Pursuant to the Ravich Employment Agreement, Mr. Ravich has agreed to restrictions on the use of confidential information and, for a period of one year following his termination of employment, not to compete with the Company, not to solicit its customers, clients or suppliers to cease doing business with the Company and not to solicit or encourage to cease providing services to the Company, or to hire, any individual providing services to the Company in the six-month period preceding the solicitation or hire.

Employment Agreement with Mr. Hartman

The Company is party to an amended and restated employment agreement with Mr. Brian Hartman, its Chief Operating Officer, dated as of August 20, 2021 (the “Hartman Employment Agreement”).  Under the Hartman Employment Agreement, if Mr. Hartman’s employment is terminated by the Company without “cause” or by Mr. Hartman with “good reason,” Mr. Hartman will be entitled to (1) continued payment of his base salary for six months, plus one additional month of base salary for every year of service completed, for a maximum of 12 months

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(2) continued health care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) at active employee rates, (3) the annual bonus for the year in which his termination of employment occurs, if Mr. Hartman would have otherwise been entitled to receive such bonus had he been employed at the time that the annual bonuses are paid and (4) the annual bonus for the year prior to the year in which his termination of employment occurs, if Mr. Hartman had otherwise earned an annual bonus payment for such prior year and said bonus had not yet been paid. Pursuant to the Hartman Employment Agreement, Mr. Hartman has agreed to restrictions on the use of confidential information and, for a period of one year following his termination of employment, not to compete with the Company, not to solicit its customers, clients or suppliers to cease doing business with the Company and not to solicit or encourage to cease providing services to the Company, or to hire, any individual providing services to the Company in the six-month period preceding the solicitation or hire.

Employment Agreements with Other Key Employees

Employment Agreement with Mr. Reisch

Phoenix Color is party to an amended and restated employment agreement with Mr. Marc Reisch, its Chairman, dated as of December 17, 2021 (the “Reisch Employment Agreement”).  Pursuant to the Reisch Employment Agreement, Mr. Reisch is entitled to an annual bonus equal to $200,000 (the “Base Bonus”), an annual bonus equal to 10% of the adjusted EBITDA of Phoenix Color for the fiscal year to the extent the adjusted EBITDA is between $17,500,000 and $27,000,000, plus 5% of the adjusted EBITDA above $27,000,000 (the “Annual Bonus”) and a retention bonus (the “Retention Bonus”) equal to $5,000,000.  The remaining portions of the Retention Bonus will vest and become payable as follows: 50% on September 15, 2022 and 50% on September 15, 2023.  Under the Reisch Employment Agreement, if Mr. Reisch’s employment is terminated by Phoenix Color without “cause” or by Mr. Reisch with “good reason,” Mr. Reisch will be entitled to any unpaid portion of the Retention Bonus (including any portion that had not yet vested as of the date of Mr. Reisch’s termination). Pursuant to the Reisch Employment Agreement, Mr. Reisch has agreed to restrictions on the use of confidential information and, for one year following his termination of employment, not to compete with Phoenix Color, not to solicit its customers, clients or suppliers to cease doing business with Phoenix Color and not to solicit or encourage to cease providing services to Phoenix Color, or to hire, any individual providing services to Phoenix Color in the six-month period preceding the solicitation or hire.

Pursuant to the Reisch Employment Agreement, upon the Closing of the Phoenix Color Sale, Mr. Reisch will be entitled to a bonus (the “Reisch Sale Bonus”), equal to five percent (5%) of the amount by which the net sale price exceeds $85,000,000. In addition, Mr. Reisch will receive a pro-rata portion of the Base Bonus and Annual Bonus (with the Annual Bonus calculated using a trailing twelve month adjusted EBITDA as of the last day of the fiscal quarter preceding the quarter in which the Phoenix Color Sale occurs).  The Reisch Sale Bonus, as well as the pro-rated portions of the Base Bonus and Annual Bonus, will be paid to Mr. Reisch in a lump sum on the first payroll period following the Closing of the Phoenix Color Sale.

Prior to the Closing Date, the Company, Mr. Reisch and Phoenix Color will enter into an amendment and novation of the Reisch Employment Agreement (the “Reisch Novation Agreement”), pursuant to which the Company will assume all obligations of Phoenix Color under the Reisch Employment Agreement and will permit Mr. Reisch to provide services to Phoenix Color as a consultant for up to 10 hours a week for a period of three months following the Closing Date.

Definition of “Cause”

Under each employment agreement, “cause” means generally (1) continued neglect by the executive of the executive’s duties, (2) continued incompetence or unsatisfactory attendance, (3) conviction of any felony, (4) violation of the rules, regulations, procedures or instructions relating to the conduct of employees, directors, officers or consultants of the Company (in the case of Mr. Reisch, Phoenix Color), (5) willful misconduct by the executive in connection with the performance of any material portion of the executive’s duties, (6) breach of fiduciary obligation owed to the Company (in the case of Mr. Reisch, Phoenix Color) or commission of any act of fraud, embezzlement, disloyalty or defalcation, or usurpation of a Company opportunity, (7) breach of any provision of the applicable employment agreement, including any non-competition, non-solicitation or confidentiality provisions, (8) any act that has a material adverse effect upon the reputation of or the public confidence in the Company (in the

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case of Mr. Reisch, Phoenix Color), (9) failure to comply with a reasonable order, policy or rule that constitutes material insubordination, (10) engaging in any discriminatory or sexually harassing behavior or (11) using, possessing or being impaired by or under the influence of illegal drugs or the abuse of controlled substances or alcohol on the premises of the Company (in the case of Mr. Reisch, Phoenix Color) or any of its subsidiaries or affiliates or while working or representing the Company (in the case of Mr. Reisch, Phoenix Color) or any of its subsidiaries or affiliates.

Definition of “Good Reason”

Under each employment agreement, “good reason” means generally, without the advance written consent of the specified executive officer: (1) a reduction in base salary (unless such reduction is made generally to other senior executives of the Company), or, in the case of Mr. Reisch, Phoenix Color, a reduction in base salary, Base Bonus, Annual Bonus, Retention Bonus or Reisch Sale Bonus, or (2) a material reduction in the executive’s title or responsibilities, provided, that a change in reporting responsibilities or a reduction in responsibilities that occurs solely by virtue of the Company (in the case of Mr. Reisch, Phoenix Color) being acquired and made part of a larger entity will not by itself constitute “good reason.” A termination by the executive for “good reason” will be effective only if the executive provides the Company or Phoenix Color, as applicable, with written notice specifying the event which constitutes “good reason” within 30 days (15 days under the Ravich Employment Agreement) following the occurrence of such event or date the executive became aware or should have become aware of such event, and the Company or Phoenix Color, as applicable, fails to cure the circumstances giving rise to “good reason” within 30 days (15 days under the Ravich Employment Agreement).

Transaction Bonus for Mr. Hartman

Upon the closing of the Phoenix Color Sale, Mr. Hartman will be entitled to a transaction bonus equal to $200,000 (the “Hartman Sale Bonus”), which will be paid to Mr. Hartman in a lump sum on the first payroll period following the closing of the Phoenix Color Sale.  

Indemnification and Insurance

Pursuant to the terms of the Stock Purchase Agreement, Phoenix Color’s non-employee directors and executive officers will be entitled to certain indemnification protections by Lakeside following the Phoenix Color Sale, as further described in “Proposal 1: The Phoenix Color Sale Proposal—The Stock Purchase Agreement—Other Covenants” beginning on page 60 of this proxy statement, and will be entitled to ongoing indemnification and coverage under certain of our directors’ and officers’ liability insurance policies following the Transaction.

        As permitted in accordance with Section 2-418(k) of the Maryland General Corporation Law, the Company maintains a directors and officers liability insurance policy providing insurance for the directors and officers of the Company against certain liabilities asserted against them or incurred by them, including liabilities under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.

Quantification of Potential Payments and Benefits to the Company’s Named Executive Officers in Connection with the Transaction

In accordance with Item 402(t) of Regulation S-K, the table below sets forth the compensation that is based on or otherwise relates to the Phoenix Color Sale that may become payable to each of the Company’s named executive officers in connection with the Phoenix Color Sale.  For additional details regarding the terms of the payments described below, see the discussion in “Proposal 1: The Phoenix Color Sale Proposal—Interests of Our Directors and Officers” beginning on page 31 of this proxy statement.

The amounts indicated in the table below are estimates of the amounts that would be payable assuming, solely for purposes of this table, that the Phoenix Color Sale was consummated on March 1, 2022, the Faneuil Transaction has closed and that the employment of each of the named executive officers was immediately terminated by the Company without “cause” or by the executive for “good reason” on such date. In addition to the assumptions regarding the consummation date of the Phoenix Color Sale and the termination of employment, these estimates assume that the purchase price for the Phoenix Color Sale will be $134,775,000 and that the Company purchased

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Phoenix Color for aggregate consideration of $104.6 million (which amount represents the sum of the gross purchase price of Phoenix Color and any of its subsidiaries and any growth capital expenditures incurred after the Closing of the purchase of Phoenix Color). In addition, the amounts shown below do not attempt to quantify any reduction that may be applied to avoid application of the excise tax under Section 280G of the Code; therefore, actual payments to the named executive officers may be less than the amounts indicated below. Accordingly, the actual values to be received by a named executive officer in connection with the Phoenix Color Sale may differ from the amounts set forth below.

Background of the Transaction

Lakeside is the largest producer of books in the United States and one of Phoenix Color’s largest customers.  Since December 2020, Lakeside has been a direct wholly owned subsidiary of LSC, a Delaware limited liability company and a portfolio company of Atlas.

Early in the second quarter of 2021, Marc Reisch, Chairman and Chief Executive Officer of Phoenix Color, had lunch with Dave McCree, Lakeside’s Chief Executive Officer.  At that meeting, Mr. McCree asked if ALJ would consider a possible transaction with Lakeside involving Phoenix Color.  Mr. Reisch responded that, depending on the proposed terms, ALJ would be open to discussions regarding such a transaction.

On May 24, 2021, Tim Fazio, managing partner and co-founder of Atlas, and member of the Board of Managers of ACR III Global LSC Holdings LLC, an affiliate of Atlas which indirectly wholly owns LSC and Lakeside, sent an email to Mr. Reisch and Jess Ravich, our Chairman and Chief Executive Officer, requesting a call to discuss Phoenix Color.  Mr. Reisch and Mr. Ravich then had two phone calls with Mr. Fazio, on June 18 and July 6, 2021, to discuss their preliminary views of possible transactions that the parties might engage in with respect to Phoenix Color.  During this time, Mr. Fazio suggested that the parties should sign a confidentiality agreement to enable the sharing of additional information regarding their businesses.

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Following the discussions with Mr. Fazio, the Company engaged Shearman & Sterling LLP (“Shearman”), the Company’s longtime external legal counsel, to represent it in connection with a possible transaction involving Phoenix Color.

On August 13, 2021 and August 18, 2021, Mr. Reisch had phone calls with representatives of Atlas and Lakeside to provide a high-level business overview of Phoenix Color.

On August 20, 2021, Atlas delivered a letter to the Company (the “August 20 letter”), addressed to Mr. Ravich, indicating Atlas’s interest in acquiring, directly or indirectly through one of its affiliates, the assets of Phoenix Color (the “Phoenix Color assets”) and combining them with Lakeside. The August 20 letter stated that, based on certain assumptions set forth in the letter and subject to due diligence and the negotiation of definitive documentation, Atlas or one of its affiliates was prepared to purchase the Phoenix Color assets on a cash-free, debt-free basis for a purchase price in the range of $120 million to $140 million.

On August 23, 2021, the Company entered into a confidentiality agreement with Atlas, pursuant to which each of the Company and Atlas agreed to disclose confidential information to the other to enable them to further evaluate a possible negotiated transaction involving the acquisition of Phoenix Color.

On August 24 and September 2, 2021, representatives of Phoenix Color, Lakeside and Atlas had phone calls to discuss the scope of the financial diligence and to answer additional questions regarding Phoenix Color’s business.

On September 3, 2021, the Company provided to Atlas and Lakeside and their respective representatives the requested financial information regarding Phoenix Color, including several years of its historical financial statements and details regarding its historical and planned capital expenditures.  On September 10, 2021, representatives of Phoenix Color and Atlas had a phone call to discuss the financial information that had been provided and next steps.

On September 14, 2021, Atlas delivered a revised letter to the Company (the “September 14 letter”), indicating Atlas’ continued interest in acquiring, directly or indirectly through one of its affiliates, the Phoenix Color assets and combining them with Lakeside.  The September 14 letter stated that, based on the same assumptions set forth in the August 20 letter and subject to completion of its due diligence and the negotiation of definitive documentation, Atlas or one of its affiliates was prepared to purchase the Phoenix Color assets on a cash-free, debt-free basis for a purchase price in the range of $130 million.

On September 20, 2021, representatives of ALJ and Phoenix Color, including Mr. Reisch, had a phone call with representatives of Atlas and Lakeside to discuss a proposed process for additional due diligence of Phoenix Color.

Beginning on October 1, 2021, representatives of Lakeside were given access to an electronic data room containing additional non-public information regarding Phoenix Color to enable them to conduct further due diligence on Phoenix Color.  In addition, throughout the months of October and November 2021, representatives of Phoenix Color and the Company, including Mr. Reisch and Brian Hartman, Chief Financial Officer of the Company, participated in more than a dozen diligence calls with representatives of Atlas and/or Lakeside.

On October 8, 2021, the Company entered into an Engagement Letter with Lincoln to provide a fairness opinion in connection with the Transaction.

On October 12, 2021, a videoconference meeting of our Board of Directors was held to discuss, among other things, the status of the proposed sale of Phoenix Color.  At the meeting, representatives of Shearman described the terms of the draft Stock Purchase Agreement that it was preparing, in consultation with the Company’s management, to deliver to Lakeside and its counsel, and answered the directors’ questions relating thereto.  Representatives of Shearman also reviewed with the Board of Directors their fiduciary duties in connection with the proposed transaction.

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On October 15, 2021, Shearman delivered to Willkie Farr & Gallagher LLP (“Willkie”), Lakeside’s external legal counsel for the proposed transaction, an initial draft of the Stock Purchase Agreement that contemplated, among other things: a transaction structured as a purchase of all of the outstanding capital stock of Phoenix Color, not just the Phoenix Color assets; a base purchase price of $130 million; and non-survival of the parties’ representations and warranties, and certain covenants following the Closing.

On October 21, 2021, Shearman delivered to Willkie an initial draft of the Voting and Support Agreement.

On November 1, 2021, Willkie delivered to Shearman a revised draft of the Stock Purchase Agreement that, among other things: identified Lakeside as the intended purchaser; significantly expanded the representations, warranties and covenants to be made by the Company; provided for the survival of the representations, warranties and covenants of the Company following the Closing; and proposed an indemnity by the Company to Lakeside for damages arising from any breaches of certain representations and warranties, and covenants of the Company.  Willkie also informed Shearman that the structure of the proposed transaction was still under consideration by its client, which preferred an asset purchase rather than a stock purchase, and that the base purchase price had not yet been agreed pending completion of due diligence.  In response to this markup, representatives of the Company advised representatives of Lakeside that the Company did not intend to provide Lakeside with an indemnity in the proposed transaction and expected that Lakeside would obtain a representations and warranties insurance policy for such purposes.

On November 2, 2021, a videoconference meeting of our Board of Directors was held to discuss, among other things, the status of the proposed sale of Phoenix Color.  At the meeting, representatives of Shearman described the principal business and legal issues raised by Willkie’s November 1 revised draft of the Stock Purchase Agreement.

During November 2021, the parties continued to work on the due diligence and, in early December 2021, representatives of Lakeside provided to the Company Lakeside’s updated position on material transactions terms, which included the following: absence of a post-Closing indemnity for any breaches of the Company’s representations, warranties and covenants and that Lakeside would obtain a representations and warranties insurance policy for such purposes; the proposed transaction would be structured as an acquisition of all of the outstanding capital stock of Phoenix Color, not just the Phoenix Color assets, provided that the Company would make a Section 336(e) Election resulting in the Transaction being deemed an asset sale for United States federal income tax purposes; and Lakeside would pay a base purchase price of $125 million.

On December 20, 2021, Mr. Ravich and Mr. Fazio discussed by phone Lakeside’s updated positions on material transaction terms for the Phoenix Color Sale, including the Company’s view that the revised purchase price proposed by Lakeside was too low. On their call, no agreement was reached on the purchase price, and Mr. Ravich informed Mr. Fazio that the Company would defer further negotiations with Lakeside while the Company focused on the completion of the Company’s separate negotiations with TTEC for the sale of the assets of Faneuil’s tolling and transportation vertical and health benefit exchange vertical.

On December 23, 2021, the Company announced its entry into the Asset Purchase Agreement for the Faneuil Transaction.

In early January 2022, the parties continued discussions regarding the proposed Phoenix Color Sale, exchanging several emails and conducting two phone calls, on January 12 and January 26, 2022, to further negotiate the purchase price and related transaction terms.  On January 16, 2022, the parties reached a tentative understanding that Lakeside would pay a base purchase price of $135 million, provided that the Company would make a Section 336(e) Election and that purchase price would be reduced by $1 million if the Transaction did not close by April 15, 2022 and by an additional $1 million if the Transaction did not close by May 15, 2022.  They also agreed that the purchase price would be reduced at the Closing for any then outstanding amounts related to the purchase and installation by the Company of certain new equipment in its Hagerstown and Terre Haute facilities.

Following the tentative understanding on purchase price reached on January 16, 2022, the parties and their respective representatives resumed negotiation of the terms of the Stock Purchase Agreement and the Voting and Support Agreement during the next two weeks.  These negotiations focused on, among other things:  the working

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capital target; Lakeside and the Company’s obligations to obtain clearance of the Transaction under the HSR Act, including certain restrictions on Lakeside’s ability to acquire businesses similar to Phoenix Color prior to obtaining such clearance; the ability of Lakeside and Phoenix Color to make claims under insurance policies of the Company following the Closing; the ability of our Board of Directors to make an Adverse Recommendation Change under certain circumstances; and whether the Voting and Support Agreement would terminate in the event of an Adverse Recommendation Change.

On January 20, 2022, a videoconference meeting of our Board of Directors was held to discuss, among other things, the status of the proposed sale of Phoenix Color.  At the meeting, representatives of Shearman summarized the status of the Company’s negotiations with Lakeside, including the tentative understanding on purchase price reached by the parties on January 16, 2022.

On January 25, 2022, another videoconference meeting of our Board of Directors was held to discuss, among other things, the status of the proposed sale of Phoenix Color.  At the meeting, representatives of Shearman provided an update on the negotiations of the Stock Purchase Agreement with Willkie and Lakeside and again reviewed with the Board of Directors their fiduciary duties in connection with the proposed transaction.

On February 2, 2022, a videoconference meeting of our Board of Directors was held to consider and approve the proposed sale of Phoenix Color.  At the meeting, representatives of Shearman described the latest changes to the draft Stock Purchase Agreement, which was then in substantially final form, and answered the directors’ questions relating thereto.  Representatives of Lincoln then gave a presentation to the directors regarding the financial analyses performed by Lincoln and, following discussion thereof, Lincoln orally rendered its opinion to our Board of Directors that, as of that date, and upon and subject to the qualifications, procedures, limitations and assumptions set forth therein, the consideration to be received by the Company in the Transaction pursuant to, and subject to the adjustments described in, the Stock Purchase Agreement, was fair, from a financial point of view, to the Company. Next, Mr. Ravich reviewed with the Board of Directors the few remaining transaction issues outstanding between the parties and advised the Board that the Company might need to agree to a reduction of the purchase price by up to $500,000 to settle those remaining issues.  After further discussion, the directors unanimously (i) determined that the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement is advisable, fair, expedient and for the best interests of the Company and its stockholders, (ii) approved the Stock Purchase Agreement (including any amendments thereto to resolve the remaining issues) and the consummation by the Company of the transactions contemplated by the Stock Purchase Agreement, and (iii) directed that the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement be submitted for consideration by our stockholders at a special meeting of stockholders.

Later on February 2, 2022, representatives of the Company and Phoenix Color, including Mr. Ravich and Mr. Reisch, and representatives of Lakeside held a videoconference meeting to resolve the remaining issues in the Stock Purchase Agreement and the Voting and Support Agreement.  Following the meeting, representatives of the Company agreed with representatives of Lakeside that the base purchase price would be reduced by $225,000, to $134,775,000, to settle certain of those remaining issues.  Over the next 24 hours, Shearman and Willkie worked to finalize the drafting in the Stock Purchase Agreement and the Voting and Support Agreement to reflect the parties’ resolution of the remaining issues, including the revised base purchase price.

In the morning of February 3, 2022, Lincoln was informed of the revised base purchase and was provided a near-final draft of the Stock Purchase Agreement.  Lincoln then delivered its written opinion to our Board of Directors that, as of that date, and upon and subject to the qualifications, procedures, limitations and assumptions set forth therein, the consideration to be received by the Company in the Transaction pursuant to, and subject to certain adjustments as described in, the Stock Purchase Agreement, was fair, from a financial point of view, to the Company.

In the evening of February 3, 2022, the Company, Lakeside and Phoenix Color executed the Stock Purchase Agreement, and Lakeside and Mr. Ravich concurrently executed the Voting and Support Agreement.  The Transaction was publicly announced the next morning, on February 4, 2022.

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Reasons for Recommending the Phoenix Color Sale

Our Board of Directors (i) determined that the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement is advisable, fair, expedient and for the best interests of the Company and its stockholders, (ii) approved the Stock Purchase Agreement and the consummation by the Company of the transactions contemplated by the Stock Purchase Agreement, and (iii) directed that the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement be submitted for consideration by our stockholders at a special meeting of stockholders. Our Board of Directors unanimously recommends that the Company’s stockholders vote “FOR” the approval of the Phoenix Color Sale on the terms and conditions of the Stock Purchase Agreement.

In evaluating the Phoenix Color Sale, our Board of Directors discussed the proposed transaction with the Company’s management and legal and financial advisors and considered a variety of factors, including the positive factors set forth below, each of which our Board of Directors believed supported its determination:

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Our Board of Directors also considered a variety of risks and potentially negative factors concerning the Phoenix Color Sale and the Stock Purchase Agreement, including the following:

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The factors listed above as supporting our Board of Directors’ decisions were determined by our Board of Directors to outweigh the countervailing considerations and risks.  The foregoing discussion of our Board of Directors’ reasons for its recommendation is not meant to be exhaustive, but addresses the material factors considered by our Board of Directors in connection with its recommendation.  In view of the wide variety of factors considered by our Board of Directors in connection with its evaluation of the Phoenix Color Sale and the complexity of these matters, our Board of Directors did not find it practicable to, and did not, quantify or otherwise assign relative weights to the specific factors considered in reaching its determination and recommendation.  Rather, our Board of Directors made its determination and recommendation based on the totality of the information presented to it, and the judgments of individual members of our Board of Directors may have been influenced to a greater or lesser degree by different factors. The factors, potential risks and uncertainties contained in this section contain information that is forward-looking in nature and should be read in conjunction with the factors discussed in “Special Note Regarding Forward-Looking Statements” beginning on page 19 of this proxy statement.

Phoenix Color Financial Projections

As a matter of course, Phoenix Color does not develop or publicly disclose long-term projections or internal projections of its future performance and is wary of making projections for extended periods due to the unpredictability of the underlying assumptions and estimates. However, in connection with the Phoenix Color Sale, our management prepared certain non-public, unaudited financial projections for Phoenix Color (the “Phoenix Color Projections”) and provided the projections to our Board of Directors to assist them in evaluating a possible transaction with Lakeside. The Phoenix Color Projections were also provided to Lincoln, who were authorized to use and rely upon such projections in providing advice to our Board of Directors.

The Phoenix Color Projections were based on Phoenix Color information as of December 31, 2021 and reflect numerous judgments, estimates and assumptions with respect to industry performance, general business, economic, market and financial conditions and other future events, as well as matters specific to Phoenix Color, all of which are inherently uncertain, difficult to predict and many of which are beyond our control. In addition, certain

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assumptions were based on information derived from third parties. Our management believes the Phoenix Color Projections were prepared on a reasonable basis and reflected the best then-currently available estimates and judgments of our management at the time that the projections were prepared. The Phoenix Color Projections are subjective in many respects and are subject to change based on actual experience and business developments. As such, Phoenix Color Projections constitute forward-looking information and are subject to risks and uncertainties that could cause actual results to differ materially from the results forecasted, including the various risks set forth in ALJ’s periodic reports. For additional information regarding these risks, see “Special Note Regarding Forward-Looking Statements” beginning on page 19 of this proxy statement. There can be no assurance that the projected results will be realized or that actual results will not be significantly higher or lower than projected. The Phoenix Color Projections should not be considered a reliable predictor of future results. The Phoenix Color Projections cover multiple years and such information by its nature becomes less predictive with each successive year.

The Phoenix Color Projections were based upon various assumptions which relate only to the periods presented. The Phoenix Color Projections do not take into account any circumstances or events occurring after the date they were prepared, including the announcement of the Phoenix Color Sale.

The Phoenix Color Projections were not prepared with a view toward public disclosure or toward complying with generally accepted accounting principles, the published guidelines of the SEC regarding projections or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. All of the Phoenix Color Projections (excluding industry projections prepared by third parties) were estimates prepared by our management. In addition, the Phoenix Color Projections are unaudited and neither ALJ’s independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the Phoenix Color Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and they assume no responsibility for, and disclaim any association with, the Phoenix Color Projections. Readers of this document are urged not to place undue reliance on the unaudited Phoenix Color Projections set forth below.

The inclusion of the Phoenix Color Projections in this proxy statement is not deemed an admission or representation by ALJ or any other person that it considered, or now considers, the Phoenix Color Projections as material information or necessarily predictive of actual future results or events. The Phoenix Color Projections are not included in this proxy statement in order to influence any ALJ stockholder with respect to the approval of the proposal to approve the Phoenix Color Sale, but because the Phoenix Color Projections were provided to our Board of Directors to assist them in evaluating a possible transaction with Lakeside and to Lincoln who were authorized to use and rely upon such projections in providing advice to our Board of Directors. ALJ DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE PHOENIX COLOR PROJECTIONS INCLUDED IN THIS PROXY STATEMENT TO REFLECT CIRCUMSTANCES EXISTING SINCE ITS PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE UNDERLYING ASSUMPTIONS ARE SHOWN TO BE IN ERROR, OR TO REFLECT CHANGES IN GENERAL ECONOMIC OR INDUSTRY CONDITIONS.

Set forth below is a summary of the Phoenix Color Projections:

⁽¹⁾ ALJ defines adjusted EBITDA for a segment as segment net loss before depreciation and amortization, interest expense, net, acquisition/disposition-related expenses, restructuring and cost reduction initiatives, stock-based compensation, gain on disposal of assets, net, bank fees accreted to term loans, loan amendment expenses, and provision for income taxes.

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Opinion of Lincoln International LLC

Lincoln orally rendered its opinion to our Board of Directors, subsequently confirmed in writing, by delivery of Lincoln’s written opinion addressed to the Board of Directors dated February 3, 2022, that, as of the date of such opinion, and upon and subject to the qualifications, procedures, limitations and assumptions set forth therein, the Consideration to be received by ALJ in the Transaction pursuant to, and subject to the adjustments described in, the Stock Purchase Agreement, is fair, from a financial point of view, to ALJ.

Lincoln’s opinion was directed to our Board of Directors (in its capacity as such) and only addressed the fairness, from a financial point of view, to ALJ of the Consideration to be received by ALJ in the Transaction pursuant to the Stock Purchase Agreement and did not address any other aspect or implication of the Transaction, any related transaction or any other agreement, arrangement or understanding entered into in connection therewith or otherwise. The summary of Lincoln’s opinion in this proxy statement is qualified in its entirety by reference to the full text of its written opinion, which is attached as Annex C to this proxy statement and which describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken and other matters considered by Lincoln in connection with the preparation of its opinion. Neither Lincoln’s opinion nor the summary of its opinion and the related analyses set forth in this proxy statement are intended to be, and do not constitute, advice or a recommendation to our Board of Directors, any security holder of ALJ, or any other person as to how to act or vote on any matter relating to the Transaction or otherwise.

In connection with this Opinion, Lincoln, among other things:

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For purposes of its analysis and opinion, Lincoln relied upon and assumed the accuracy and completeness of all the financial, accounting, legal, tax and other information Lincoln reviewed, and Lincoln did not assume any responsibility for the independent verification of any of such information. With respect to the financial forecasts, Lincoln assumed that they were reasonably prepared in good faith on a basis reflecting the best then-currently available estimates and judgments of the applicable parties who prepared them. Lincoln assumed no responsibility for the assumptions, estimates and judgments on which such forecasts were based. In addition, Lincoln was not requested to make, and did not make, an independent evaluation or appraisal of the assets or liabilities (contingent, derivative, off-balance sheet or otherwise) of Phoenix Color or any of its subsidiaries, nor was Lincoln furnished with any such evaluations or appraisals. With regard to the financial, accounting, legal, tax and other information provided to Lincoln by the Company, Lincoln relied upon the assurances of management of the Company and Phoenix Color that they were unaware of any facts or circumstances that would make such information materially incomplete or misleading. Lincoln also assumed that there had been no material change in the assets, liabilities, business, condition (financial or otherwise), results of operations or prospects of Phoenix Color since the date of the most recent financial statements made available. Lincoln also assumed that in the course of obtaining any necessary regulatory and third party consents, approvals and agreements for the Transaction, no modification, delay, limitation, restriction or condition would be imposed that would have an adverse effect on the Company or the Transaction, and that the Transaction would be consummated in accordance with the terms of the Stock Purchase Agreement, without waiver, modification or amendment of any term, condition or agreement therein that was material to Lincoln’s opinion or financial analyses related thereto. Lincoln also relied upon and assumed, without independent verification, at the direction of the Company, that any adjustments to the Consideration pursuant to the Stock Purchase Agreement would not be material to its opinion or its financial analyses underlying its opinion.

Representatives of the Company advised Lincoln, and Lincoln further assumed, that the final terms of the Stock Purchase Agreement would not vary materially from those set forth in the copies or drafts, as applicable, reviewed by Lincoln. Lincoln’s opinion was necessarily based on financial, economic, market and other conditions as they existed on and the information made available to Lincoln as of February 3, 2022. Although subsequent developments may affect Lincoln’s opinion, Lincoln does not have any obligation to update, revise or reaffirm its opinion.

Lincoln’s opinion only addressed the fairness from a financial point of view to the Company of the Consideration to be received by the Company in the Transaction pursuant to the Stock Purchase Agreement and does not address any other terms, aspects or implications of the Transaction, or any agreements, arrangements or understandings entered into in connection with the Transaction or otherwise. In addition, Lincoln’s opinion does not address the relative merits of the Transaction as compared to other transaction structures, transactions or business strategies that may have been available to the Company or the Board, nor does it address or constitute a recommendation to the Board, any security holder or any other party as to how to act or vote with respect to any matter relating to the Transaction or otherwise. The issuance of the opinion was approved by an opinion committee of Lincoln. Lincoln’s opinion does not indicate that the consideration to be received was the best possibly attainable under any circumstances; instead, it merely states whether the consideration to be received by the Company in the Transaction was within a range suggested by certain financial analyses. The decision as to whether to proceed with the Transaction or any related transaction depends on an assessment of factors unrelated to the financial analyses on which Lincoln’s opinion was based. Lincoln’s opinion does not constitute advice or a recommendation to ALJ as to how it should act on any matter relating to the Transaction. Lincoln expressed no opinion about the amount or nature of the compensation to the Company’s officers, directors or employees, or class of such persons, in connection with the Transaction relative to the Consideration in the Transaction.

Set forth below is a summary of the material financial analyses reviewed by Lincoln with our Board of Directors on February 2, 2022 in connection with rendering its opinion. The following summary, however, does not purport to be a complete description of the analyses performed by Lincoln. The order of the analyses described and the results of these analyses do not represent relative importance or weight given to these analyses by Lincoln. Except as otherwise noted, the following quantitative information, to the extent that it is

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based on market data, is based on market data that existed on or before February 3, 2022 and is not necessarily indicative of then-current market conditions.

The following summary of Lincoln’s financial analyses includes information presented in tabular format. Several financial analyses were employed and no one method of analysis should be regarded as critical to the overall conclusion reached. Each analytical technique has inherent strengths and weaknesses, and the nature of the available information may further affect the value of particular techniques. Each of the analyses conducted was carried out to provide a particular perspective of the Consideration. In order to fully understand the analyses, the tables must be read together with the full text of each summary. The tables are not intended to stand-alone and alone do not constitute a complete description of Lincoln’s financial analyses. Considering the tables below without considering the full narrative description of Lincoln’s financial analyses, including the methodologies and assumptions underlying such analyses, could create a misleading or incomplete view of such analyses. Lincoln did not form a conclusion as to whether any individual analysis, when considered in isolation, supported or failed to support its opinion as to the fairness of Consideration. Lincoln did not place any specific reliance on any individual analysis, but instead, concluded that its analyses, taken as a whole, supported its opinion.

Discounted Cash Flow Analysis

As part of its valuation analysis, Lincoln performed a discounted cash flow (“DCF”) analysis utilizing the Phoenix Color Financial Projections, which provided a financial forecast for the fiscal years 2022 through 2025, and other financial information provided by Management. A discounted cash flow analysis is a valuation methodology used to derive an intrinsic valuation of a company by calculating the present value of its estimated future cash flows.

Lincoln performed a discounted cash flow analysis of the projected unlevered free cash flows of Phoenix Color for the fiscal years 2022 through 2025. Lincoln defined “free cash flow” as cash generated by Phoenix Color that is available either to reinvest, service debt, or distribute to security holders. The discounted cash flow analysis was used to determine the net present value of projected unlevered free cash flows utilizing an appropriate cost of capital for the discount rate.

Lincoln calculated Phoenix Color’s projected unlevered free cash flows by taking Projected Adjusted EBITDA, subtracting tax deductible depreciation and amortization, subtracting estimated taxes using a 26.0% tax rate, adding back tax deductible depreciation and amortization, and subtracting capital expenditures and changes in net working capital.

Lincoln determined the net present value of the projected unlevered free cash flows using an appropriate cost of capital for the discount rate, which reflects the relative risk associated with the Phoenix Color Financial Projections cash flows as well as the rates of return that investors could expect to realize on alternative investment opportunities with similar risk profiles to Phoenix Color. Lincoln selected discount rates for Phoenix Color which ranged from 10.25% to 12.25%, which were selected based on the application of Lincoln’s professional judgment and experience and were calculated using a capital asset pricing model and information derived from the selected public companies and using a 26.0% tax rate, as provided by Management. Lincoln calculated Phoenix Color’s terminal value using the Gordon Growth perpetuity growth formula assuming a 1.5% terminal growth rate and the aforementioned range of discount rates.

Based on these assumptions, Lincoln’s discounted cash flow analysis indicated an estimated enterprise value for Phoenix Color of $119.0 million to $143.0 million.

Selected Public Companies Analysis

Lincoln performed a selected public company analysis for Phoenix Color. Lincoln reviewed and compared certain financial information of Phoenix Color to corresponding financial multiples, metrics, and ratios for several

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publicly traded companies in the commercial printing industry. Lincoln used certain publicly available historical financial data for the selected public companies. This analysis produced valuation multiples of selected financial metrics which Lincoln utilized to estimate the enterprise value of Phoenix Color.

Although none of the selected public companies are directly comparable to Phoenix Color, Lincoln selected these companies based on a comparative analysis that considered, among other things, their relative size, end markets addressed, historical and projected growth and profitability, capital intensity, revenue and earnings composition and other financial performance metrics, to that of Phoenix Color. As a result, a complete valuation analysis cannot be limited to a quantitative review of the selected public companies, but also requires complex considerations and judgments concerning differences in financial and operating characteristics of such companies, as well as other factors that could affect their value relative to that of Phoenix Color.

The table below summarizes certain observed multiples of the selected public companies as of January 28, 2022.

⁽¹⁾ LTM: Latest twelve months for which financial information was available.

⁽²⁾ EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization.

M&A Transactions Analysis

Lincoln reviewed publicly available information related to the precedent acquisition transactions involving companies in the commercial printing industry listed in the table below. The selection of these transactions was based on, among other things, the target company’s industry, the relative size of the transaction, and the availability of public information related to the selected transaction.

The selected transactions indicated (i) enterprise value to LTM EBITDA multiples ranging from 5.0x to 8.5x, with a mean of 6.9x and a median of 7.1x, and (ii) enterprise value to LTM revenue multiples ranging from 0.24x to 1.60x, with a mean of 0.93x and a median of 0.67x.

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None of the selected public companies or the target companies in the M&A transactions analysis is identical to Phoenix Color and Lincoln does not have access to non-public information regarding those companies.

Summary of Selected Public Companies / M&A Transactions Analyses

In order to estimate a range of enterprise values for Phoenix Color, Lincoln applied valuation multiples to (i) Adjusted EBITDA (as defined below) for Phoenix Color for the last twelve months ended December 31, 2021, (ii) Projected EBITDA for Phoenix Color for the fiscal year 2022, (iii) Adjusted EBIT for Phoenix Color for the last twelve months ended December 31, 2021, and (iv) Projected EBIT for Phoenix Color for the fiscal year 2022, as follows:

Adjusted EBITDA, for purposes of this analysis, was defined as Projected EBITDA adjusted to exclude non-recurring items. Such non-recurring items include (i) restructuring charges, (ii) executive bonus normalization, (iii) intangible asset impairment, (iv) merger and acquisition related expenses, and (v) loss/gain on sale of assets.

Valuation multiples were selected, in part, by taking into consideration business comparability and historical and projected financial performance metrics of Phoenix Color relative to such metrics of the selected public companies and selected transactions, including, but not limited to, the size of Phoenix Color on a revenue and Adjusted EBITDA basis, historical, estimated and projected Adjusted EBITDA margins compared to the selected public companies, and historical, estimated and projected revenue and Adjusted EBITDA growth compared to the selected public companies.

Based on these selected valuation multiples, the enterprise value indication of Phoenix Color ranged from $127.0 million to $150.0 million.

Summary of Financial Analysis

The range of indicated enterprise values for Phoenix Color that Lincoln derived from its discounted cash flow analysis and its selected public companies/M&A transactions analysis was $123.0 million to $147.0 million. Lincoln then subtracted $0.5 million of CARES Act Deferred Payroll Taxes liability, a range of $2.6 to $2.7 million for the present value of executive bonus payments, after tax, added $0.5 million of estimated cash and cash equivalents and $0.7 million for an estimated excess working capital adjustment to conclude a valuation range of $121.1 million to $145.0 million for the equity of Phoenix Color compared to the total consideration of approximately $135 million under the Stock Purchase Agreement.

Miscellaneous

Lincoln and its affiliates provide a range of investment banking and financial services and, in that regard, Lincoln and its affiliates have provided, and may in the future provide, investment banking and other financial services to the Company and each of its affiliates, for which Lincoln and its affiliates would expect to receive compensation.  Within the prior two years, Lincoln was retained by the Company to act as its exclusive investment banking financial advisor in connection with the refinancing of the Company’s capital structure on December 14, 2020 as well as provide a fairness opinion on its sale of certain operating divisions of its subsidiary, Faneuil, Inc., on December 21, 2021 for which Lincoln was indemnified, paid customary professional fees, and expense

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reimbursements. Lincoln and the Company entered into an Engagement Letter, dated as of October 8, 2021, to provide a fairness opinion in connection with the Transaction. The Board of Directors of the Company selected Lincoln as its financial advisor in connection with the Transaction based on the qualifications and reputation of Lincoln as well as its substantial experience in similar transactions. Lincoln is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings, and valuations for corporate and other purposes. No portion of Lincoln’s fee in connection with the delivery of its opinion is contingent upon either the conclusion reached in its opinion or the consummation of the Transaction. 

Certain United States Federal Income Tax Consequences of the Phoenix Color Sale

The Phoenix Color Sale will be treated for United States federal income tax purposes as a taxable sale upon which we will recognize a gain or loss. An election pursuant to Section 336(e) of the Code (“Section 336(e) Election”) will be made with respect to the Phoenix Color Sale.  The Section 336(e) Election will result in a deemed sale, for United States federal income tax purposes, by Phoenix Color of all of its assets to a hypothetical unrelated party in exchange for the “aggregate deemed asset disposition price” (as defined by the Treasury Regulations). The amount of gain or loss we recognize will be measured by the difference between the aggregate deemed asset disposition price and the tax basis in Phoenix Color’s assets. We may reduce or eliminate such gain by use of our net operating losses.

Certain Accounting Consequences of the Phoenix Color Sale

Under generally accepted accounting principles, upon completion of the Phoenix Color Sale, we will remove the net assets sold and liabilities assumed from our consolidated balance sheet. We will record a gain, net of any applicable taxes, on the Phoenix Color Sale equal to the difference between (i) the consideration received, less transaction expenses, and (ii) the net book value of the assets sold when the transaction is completed. Beginning with the three months ended March 31, 2022, we will reclassify Phoenix Color as held for sale and discontinued operations for all periods presented in order to match the current held-for-sale and discontinued operations classifications.

No Dissenters’ Rights

Holders of our common stock are not entitled to dissenting stockholders’ appraisal rights, rights of objecting stockholders or other similar rights in connection with the Phoenix Color Sale or any of the transactions contemplated by the Stock Purchase Agreement. The DGCL does not provide for appraisal rights or other similar rights to stockholders of a corporation in connection with a sale of substantially all of its assets.

The Stock Purchase Agreement

The following is a summary of the material terms and conditions of the Stock Purchase Agreement. This summary does not purport to be complete and may not contain all of the information about the Stock Purchase Agreement that is important to you. The description of the Stock Purchase Agreement in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Stock Purchase Agreement, a copy of which is attached to this proxy statement as Annex A and is incorporated by reference into this proxy statement. We encourage you to read the Stock Purchase Agreement carefully in its entirety because it is the primary contractual document that governs the Transaction.

Explanatory Note Regarding the Stock Purchase Agreement

The Stock Purchase Agreement and this summary of its terms have been included to provide you with information regarding the terms of the Stock Purchase Agreement. The Stock Purchase Agreement is not intended to be a source of factual, business or operational information about the Company or Lakeside, and the following summary of the Stock Purchase Agreement and the copy thereof attached hereto as Annex A are not intended to modify or supplement any factual disclosure about the Company in any documents it publicly files with the SEC. The representations, warranties and covenants made in the Stock Purchase Agreement by the Company and

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Lakeside were made solely for the benefit of the parties to the Stock Purchase Agreement and are qualified and subject to important limitations agreed to by the Company and Lakeside in connection with negotiating the terms of the Stock Purchase Agreement. In particular, in your review of the representations and warranties contained in the Stock Purchase Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Stock Purchase Agreement may have the right not to close the transactions if the representations and warranties of the other party prove to be untrue in any material respect, and allocating risk between the parties to the Stock Purchase Agreement, rather than establishing matters as facts.

The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to stockholders and reports and documents filed with the SEC and in some cases were qualified by confidential disclosures that were made by each party to the other, which disclosures are not reflected in the Stock Purchase Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Stock Purchase Agreement, and subsequent developments or new information that may affect the accuracy of a representation or warranty may or may not be fully reflected in this proxy statement or the Company’s public disclosures. Accordingly, you should not rely on the representations and warranties as being accurate or complete or characterizations of the actual state of facts as of any specified date.

Effect of the Phoenix Color Sale

Pursuant to the Stock Purchase Agreement, the Company has agreed to sell to Lakeside all of the outstanding shares of capital stock of Phoenix Color. The Phoenix Color Sale may constitute a sale of substantially all of the assets of the Company under Delaware law.

Closing of the Phoenix Color Sale

The closing of the Phoenix Color Sale will take place at 10:00 a.m., New York City time, on the third (3rd) business day following the satisfaction or waiver of the conditions to closing (other than those conditions that by their nature will not be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions) or at such other time and place as may be agreed upon between the Company and Lakeside in writing. For more information on the conditions to the closing, see “Proposal 1: The Phoenix Color Sale Proposal—The Stock Purchase Agreement—Conditions to the Closing” beginning on page 61 of this proxy statement.

Purchase Price

The purchase price for the Phoenix Color Sale will be an amount equal to $134,775,000, minus (A) the amount of indebtedness of Phoenix Color and its subsidiaries as of the Closing Date, minus (B) the amount, if any, by which $9,818,269 exceeds the working capital of Phoenix Color and its subsidiaries as of the Closing Date, plus (C) the amount, if any, by which the working capital of Phoenix Color and its subsidiaries as of the Closing Date exceeds $9,818,269, minus (D) the amount of transaction expenses of Phoenix Color and its subsidiaries as of the Closing Date. If the Closing takes place after April 15, 2022, but on or before May 15, 2022, then the purchase price will be reduced by $1,000,000.  If the Closing takes place after May 15, 2022, then the purchase price will be reduced by $2,000,000.

Representations and Warranties

The Stock Purchase Agreement contains representations and warranties made by the Company and Lakeside to each other.

The representations and warranties made by the Company to Lakeside relate to, among other things, the following:

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Certain of the Company’s representations and warranties are qualified as to, among other things, “materiality” or “material adverse effect.” For purposes of the Stock Purchase Agreement, “material adverse effect” means any change, circumstance, condition, event, fact, development, effect or occurrence that individually or in the aggregate with all other changes, circumstance, conditions, events, facts, developments, effects or occurrences:

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unless, in the cases of clauses (i), (ii), (iv), (v) or (vii) above, such changes would reasonably be expected to have a materially disproportionate adverse impact on the assets, liabilities, business, financial condition or results of operations of Phoenix Color and its subsidiaries, taken as a whole, relative to other affected participants in the industries in which Phoenix Color and its subsidiaries conduct business; or

The representations and warranties made by Lakeside to the Company relate to, among other things, the following:

•due organization;

•corporate authority relative to the Stock Purchase Agreement;

•no conflicts;

•required consents and approvals;

•litigation;

•absence of brokers;

•financing;

•investment qualifications;

•solvency; and

•information supplied for this proxy statement.

Conduct of Business Prior to Closing

The Stock Purchase Agreements provides for certain restrictions on Phoenix Color’s and its subsidiaries’ activities until the Closing Date. In general, except as set forth in the Company’s confidential disclosure schedules, as expressly set forth in the Stock Purchase Agreement, as required by applicable law or any agreement or arrangement disclosed in the Company’s confidential disclosure schedules or as consented to in writing by Lakeside (which consent may not be unreasonably withheld, conditioned or delayed), the Company is required to cause Phoenix Color and its subsidiaries to (i) use reasonable best efforts to conduct their respective businesses in the ordinary course of business consistent with past practice and in all material respects, in compliance with applicable Law, (ii) use commercially reasonable efforts to preserve and maintain their respective business organizations and goodwill in accordance with past practice, and to preserve and maintain, in all material respects, their present relationships with customers, suppliers, distributors, licensors, licensees and others having business dealings with them and maintain their assets, properties, machinery, rights, operations and equipment in accordance with past practice, good repair, as applicable, and operating condition (subject to normal wear and tear), (iii) use commercially reasonable efforts to keep available the services of their respective officers and key employees, (iv) prior to and as of the Closing, have sufficient cash available to timely make any payments in respect of any uncleared checks and

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drafts written or issued by Phoenix Color and its subsidiaries, and (v) pay, perform and discharge all liabilities and other obligations, including taxes, in the ordinary course of business consistent with past practice.  

In addition, except as set forth in the Company’s confidential disclosure schedules, as expressly set forth in the Stock Purchase Agreement, as required by applicable law or by any agreement or arrangement disclosed in the Company’s confidential disclosure schedule (with respect to clauses (xv) and (xviii) only) or as consented to in writing by Lakeside (which consent may not be unreasonably withheld, conditioned or delayed), the Company is required to not permit Phoenix Color or any of its subsidiaries to:

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Stockholder Meeting

The Stock Purchase Agreement requires the Company to (i) establish a record date for, duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining the Company Stockholder Approval as promptly as reasonably practicable after the SEC confirms that it has no further comments on this proxy statement or advises the Company that it is not reviewing this proxy statement, (ii) use reasonable best efforts to solicit from the Company stockholders proxies for the purposes of obtaining the Company Stockholder Approval and (iii) subject to certain exceptions described below, through our Board of Directors, recommend to its stockholders that they vote in favor of the transactions contemplated by the Stock Purchase Agreement and include such recommendation in this proxy statement.  

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Non-solicitation of Competing Proposals

Under the Stock Purchase Agreement, subject to certain exceptions described below, the Company has agreed that the Company will not and will cause its subsidiaries, directors and officers not to, and will use its reasonable best efforts to cause its outside representatives not to, directly or indirectly, through affiliates, directors, officers, employees, representatives, advisors or other intermediaries:

In addition, under the Stock Purchase Agreement, the Company has agreed that:

Notwithstanding the prohibitions described above, if, prior to obtaining the Company Stockholder Approval, (i) the Company or any of its subsidiaries has received an unsolicited bona fide written Acquisition Proposal from a third party that is not an affiliate of Lakeside that did not result from or arise out of a breach of the Company’s non-solicitation obligations (described above), and (ii) our Board of Directors determines in good faith, after consultation with its financial advisors and outside legal counsel, that such Acquisition Proposal constitutes or is reasonably likely to lead to a Superior Proposal (as defined below) and that the failure to take such action would be inconsistent with its fiduciary duties under applicable law, then the Company and its subsidiaries may (A) furnish information with respect to the Company and its subsidiaries to the person making such Acquisition Proposal and (B) engage in discussions or negotiations with the person making such Acquisition Proposal, provided that the Company:

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As promptly as practicable (and in any event within twenty-four hours) after receipt of any Acquisition Proposal, the Company must notify Lakeside of the receipt or occurrence thereof and, to the extent applicable, provide Lakeside with an initial written notice of such Acquisition Proposal or of any written notice from a third party that it intends to make an Acquisition Proposal, including, as applicable, a summary of such proposal (including the identity of the party making such proposal, the purchase price and a description of the assets to be purchased pursuant to such proposal) and a copy of any draft of a definitive agreement with respect to such Acquisition Proposal provided to the Company related to such Acquisition Proposal. In addition, the Company will, as promptly as reasonably practicable (and in any event within twenty-four hours), keep Lakeside reasonably currently informed of all material modifications regarding, and the status of, any such Acquisition Proposal and any related discussions or negotiations.

An “Acquisition Proposal” for purposes of the Stock Purchase Agreement (and as used herein) means: