UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
 

CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): March 2, 2022


Kaspien Holdings Inc.
(Exact name of registrant as specified in its charter)
 

New York
0-14818
14-1541629
     
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
 
2818 N. Sullivan Road, Suite #130,
Spokane Valley, Washington 99216
 
(Address of Principal Executive Offices, and Zip Code)
 
(855) 300-2710
 
(Registrant’s Telephone Number, Including Area Code)
 
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
  ☐
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
  ☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
  ☐
Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
  ☐
Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). 

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which
registered
Common shares, $0.01 par value per share
KSPN
NASDAQ Stock Market

Item 1.01
Entry into a Material Definitive Agreement.

Amendment No. 4 to Loan and Security Agreement

On March 2, 2022, Kaspien Holdings Inc. (f/k/a Trans World Entertainment Corporation) (the “Company”) and KASPIEN INC (f/k/a Etailz Inc.) (“Kaspien” and together with the Company, the “Loan Parties”), a wholly-owned subsidiary of the Company, entered into that certain Amendment No. 4 to Loan and Security Agreement (“Amendment No. 4”) with Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC) (“Eclipse”), as administrative agent, and the lenders party thereto, pursuant to which the parties thereto amended the Loan and Security Agreement, dated as of February 20, 2020 and amended as of March 30, 2020, April 13, 2021 and as of September 16, 2021, between the Company, Kaspien, Eclipse and the lenders party thereto.

Pursuant to Amendment No. 4, among other things, the Loan and Security Agreement was amended to permit the incurrence of the Additional Subordinated Loan (as defined below) under the Subordinated Loan Agreement (as defined below).

The Loan Parties paid certain customary fees and expenses in connection with Amendment No. 4.

The foregoing description of the Amendment is qualified in its entirety by reference to the complete text thereof, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and is incorporated herein by reference.

Amendment No. 2 to Subordinated Loan and Security Agreement

On March 2, 2022, the Loan Parties entered into that certain Amendment No. 2 to Subordinated Loan and Security Agreement (“Amendment No. 2”) with the lenders party thereto from time to time (the “Lenders”) and TWEC Loan Collateral Agent, LLC (“Collateral Agent”), as collateral agent for the Lenders, pursuant to which the parties thereto amended the Subordinated Loan and Security Agreement, dated as of March 30, 2020 and amended as of September 16, 2021 between the Company, Kaspien, the Collateral Agent and the Lenders (as amended by Amendment No. 2, the “Subordinated Loan Agreement”).

Pursuant to Amendment No. 2, among other things, Alimco Re Ltd. (the “Tranche B Lender”) made an additional $5,000,000.00 secured term loan (the “Additional Subordinated Loan”) with a scheduled maturity date of March 31, 2024, which is the same maturity date as the existing loans under the Subordinated Loan Agreement.
  
Interest on the Additional Subordinated Loan accrues, subject to certain terms and conditions under the Subordinated Loan Agreement, at the rate of fifteen percent (15.0%) per annum, compounded on the last day of each calendar quarter by becoming a part of the principal amount of the Additional Subordinated Loan.
  
The proceeds from the Additional Subordinated Loan will be used by Kaspien for working capital purposes and to pay certain transaction expenses.

The Additional Subordinated Loan is also secured by a second priority security interest in substantially all of the assets of the Loan Parties, including inventory, accounts receivable, cash and cash equivalents and certain other collateral of the borrowers and guarantors under the Subordinated Loan Agreement. The Company will provide a limited guarantee of Kaspien’s obligations under the Additional Subordinated Loan.

Among other things, the Subordinated Loan Agreement limits the Loan Parties’ ability to incur additional indebtedness, create liens, make investments, make restricted payments or specified payments and merge or acquire assets.

The Subordinated Loan Agreement contains customary events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, customary ERISA defaults, certain events of bankruptcy and insolvency, judgment defaults, the invalidity of liens on collateral, change in control, cessation of business or the liquidation of material assets of the borrowers and guarantors thereunder taken as a whole and the occurrence of an uninsured loss to a material portion of collateral.

The Loan Parties paid certain customary fees and expenses in connection with the Additional Subordinated Loan and Amendment No. 2.

The foregoing description of Amendment No. 2 and the Subordinated Loan Agreement does not purport to be complete and is qualified in its entirety by reference to Amendment No. 2, a copy of which is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.

Common Stock Purchase Warrants

On March 2, 2022, the Company entered into Common Stock Purchase Warrants (the “Warrants”) with the Tranche B Lender under the Subordinated Loan Agreement pursuant to which the Company issued to the Tranche B Lender, in the aggregate, warrants to purchase up to 320,000 shares of common stock of the Company (subject to adjustment in accordance with the terms of the Warrants, the “Warrant Shares”) at an exercise price of $0.01 per share.  The Warrants are exercisable during the period commencing on March 2, 2022 and ending on the earlier of (a) 5:00 p.m. Eastern Standard Time on the five (5)-year anniversary thereof, or if such day is not a business day on the next succeeding business day, or (b) the occurrence of certain consolidations, mergers or similar extraordinary events involving the Company.

The Warrants provide for certain adjustments that may be made to the number of Warrant Shares issuable upon exercise due to customary anti-dilution provisions based on future corporate events.  In addition, in connection with certain consolidations, mergers or similar extraordinary events involving the Company, immediately prior to any such event, each Warrant will be automatically converted into the right to receive the number of shares of common stock of the Company for which such Warrant is exercisable at such time.

The foregoing description of the Warrants does not purport to be complete and is qualified in its entirety by reference to the Warrants, copies of which are attached as Exhibit 4.1 to this Current Report on Form 8-K and incorporated herein by reference.

Registration Rights Agreement

On March 2, 2022, the Company and the Tranche B Lender entered into a Registration Rights Agreement (the “Registration Rights Agreement”). Pursuant to the terms of the Registration Rights Agreement, the Tranche B Lender has been granted customary demand and piggyback registration rights with respect to the Warrant Shares.

The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.

Contingent Value Rights Agreement

On March 2, 2022, the Company entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with the Tranche B Lender under the Subordinated Loan Agreement, pursuant to which the Tranche B Lender received contingent value rights (“CVRs”) representing the contractual right to receive cash payments from the Company in an amount equal, in the aggregate, to 9.0% of the proceeds received by the Company in respect of certain distributions by the Company or Kaspien; recapitalizations or financings of the Company or Kaspien (with appropriate carve out for trade financing in the ordinary course); repayment of intercompany indebtedness owing to the Company by Kaspien; or sale or transfer of any stock of the Company or Kaspien.

The CVRs terminate upon the earlier to occur of (i) certain consolidations, mergers or similar extraordinary events involving Kaspien (and, if applicable, the making of a cash payment by the Company to the Lenders pursuant to the CVR Agreement in connection therewith) and (ii) March 2, 2032.

The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable except in the limited circumstances specified in the CVR Agreement. The CVRs will not be evidenced by certificates or any other instruments and will not be registered with the Securities and Exchange Commission.  The CVRs will not have any voting or dividend rights and will not represent any equity or ownership interest in the Company.  No interest will accrue on any amounts payable in respect of the CVRs.  The CVR will constitute a liability of the Company or Kaspien, as applicable, to the Tranche B Lender, payable prior to any dividends, liquidation preferences or other amounts owing to any stockholder of the Company or Kaspien, respectively.

The foregoing description of the CVR Agreement does not purport to be complete and is qualified in its entirety by reference to the CVR Agreement, a copy of which is attached as Exhibit 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 (under the headings “Amendment No. 4 to Loan and Security Agreement,” “Amendment No. 2 to Subordinated Loan and Security Agreement,” and “Contingent Value Rights Agreement”) of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02
Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 (under the heading “Common Stock Purchase Warrant”) of this Current Report on Form 8-K is incorporated herein by reference.

Item 5.03
Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

Item 5.03(a)(i).
Amendment to Certificate of Incorporation.

On March 8, 2022, the Company filed with the State of New York Department of State a Certificate of Amendment of its Certificate of Incorporation, amending such certificate to exclude the Warrants issued by the Company to the Tranche B Lender from certain transfer restrictions intended to prevent an ownership change that could substantially reduce tax benefits associated with the Company’s net operating losses under Section 382 of the Internal Revenue Code of 1986, as amended, after the Board approved such amendments and the shareholders of the Company approved by the written consent of a majority of the Company’s shareholders.

The Certificate of Amendment is filed as Exhibit 3.1 hereto and is incorporated herein by reference.

Item 5.03(a)(ii).
Amendment to By-Laws.

Effective March 8, 2022, the bylaws of the Company were amended to exclude the Warrants issued by the Company to the Tranche B Lender from certain transfer restrictions intended to prevent an ownership change that could substantially reduce tax benefits associated with the Company’s net operating losses under Section 382 of the Internal Revenue Code of 1986, as amended, after the Board approved such amendments.

The amendment to the Bylaws are filed as Exhibit 3.2 hereto and are incorporated herein by reference.

Item 9.01
Financial Statements and Exhibits.

(d)  Exhibits.

Exhibit
No.
 Description
   
Certificate of Amendment of Certificate of Incorporation of Kaspien Holdings Inc., dated March 8, 2022
Amendment No. 3 to Bylaws of Kaspien Holdings Inc., dated March 8, 2022
Common Stock Purchase Warrant
Amendment No. 4 to Loan and Security Agreement
Amendment No. 2 to Subordinated Loan and Security Agreement
Registration Rights Agreement
Contingent Values Rights Agreement

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
KASPIEN HOLDINGS INC.
     
 
/s/ Kunal Chopra
Date: March 8, 2022
    
     
 
Name  Kunal Chopra


Title  Principal Executive Officer
  


Exhibit 3.1

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
KASPIEN HOLDINGS INC.
 
Under Section 805 of the Business Corporation Law
 
THE UNDERSIGNED, Kunal Chopra, being the Principal Executive Officer of Kaspien Holdings Inc., hereby certifies:
 

 1.
The current name of the corporation is Kaspien Holdings Inc. (the “Corporation”). The Corporation was originally incorporated under the name of Trans-World Music Corp.
 

2.
The Certificate of Incorporation of the Corporation was filed by the Department of State on February 7, 1972, and has been amended at various times by action of the Board of Directors and shareholders of the Corporation.
 

3.
The amendment effected by this certificate of amendment is as follows:
 
Paragraph ELEVENTH of the Certificate of Incorporation is hereby amended to read in its entirety as follows:
 
ELEVENTH: Restrictions on Transfers.
 
(a)          Definitions.  For purposes of this ELEVENTH paragraph, the following terms shall have the following meanings:
 
“Acquiring Person” shall mean any Person who or which is or becomes a Five-Percent Stockholder (other than by reason of Treasury Regulation Section 1.382-2T(j)(3)(i) or solely as a result of a transaction in which no “5-percent shareholder” (as defined in Section 382 of the Code and Treasury Regulations thereunder) experiences an increase in its percentage stock ownership interest of the Corporation, as determined in accordance with Treasury Regulation Sections 1.382-2(a), 1.382-2T(g), (h), (j) and (k), 1.382-3(a) and (j) and 1.382-4(d)), whether or not such Person continues to be a Five-Percent Shareholder, but shall not include (i) any Grandfathered Person and (ii) any Person who or which the Board of Directors of the Corporation determines, in its sole discretion, has inadvertently become a Five-Percent Shareholder (or has inadvertently failed to continue to qualify as a Grandfathered Person), so long as such Person promptly enters into, and delivers to the Corporation, an irrevocable commitment promptly to divest and thereafter promptly divests (without exercising or retaining any power, including voting, with respect to such securities), sufficient Corporation Securities so that such Person’s Percentage Stock Ownership is less than 5% (or, in the case of any Person who or which has inadvertently failed to continue to qualify as a Grandfathered Person, the Corporation Securities that caused such Person to so fail to qualify as a Grandfathered Person).
 
“Agent” shall mean an agent designated by the Board of Directors of the Corporation.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Corporation Securities” shall mean (i) shares of Common Stock, (ii) shares of Preferred Stock (other than preferred stock described in Section 1504(a)(4) of the Code), (iii) options (within the meaning of Treasury Regulations Section l.382-4(d)(9)) to purchase Corporation Securities, and (iv) any other interests that would be treated as “stock” of the Corporation pursuant to Treasury Regulations Section 1.382-2T(f)( 18), or any successor provision.
 
“Effective Date” shall mean March 31, 2020.
 
“Excess Securities” shall mean the Corporation Securities which are the subject of the Prohibited Transfer.
 
“Five-Percent Shareholder” shall mean (i) a Person or group of Persons that is identified as a “5-percent shareholder” of the Corporation pursuant to Treasury Regulation Section l.382-2T(g) or (ii) a Person that is a “first tier entity” or “higher tier entity” (as such terms are defined in Treasury Regulations Section 1.382-2T(f)) of the Corporation if (A) that Person has a “public group” or individual, or (B) a “higher tier entity” of that Person has a “public group” or individual, that, in each case, is treated as a “5-percent shareholder” of the Corporation pursuant to Treasury Regulations Section l .382-2T(g).
 
“Grandfathered Person” shall mean (i) any Person who would otherwise qualify as an Acquiring Person as of immediately prior to the Effective Date, unless and until such Person’s Percentage Stock Ownership shall be increased by more than one percentage point over such Person’s Percentage Stock Ownership immediately prior to the Effective Date or, if lower, such Person’s Percentage Stock Ownership thereafter, other than any increase pursuant to or as a result of (A) the exercise of any option, warrant or convertible instrument to purchase Corporation Securities that such Person held as of immediately prior to the Effective Date, (B) a stock dividend, stock split, reverse stock split or similar transaction effected by the Corporation or (C) any redemption or repurchase of Corporation Securities by the Corporation; and (ii) any Person who would otherwise qualify as an Acquiring Person as a result of a redemption or repurchase of Corporation Securities by the Corporation, unless and until such Person’s Percentage Stock Ownership shall be increased by more than one percentage point over such Person’s lowest Percentage Stock Ownership on or after the date of such redemption or repurchase, other than any increase pursuant to or as a result of (A) a stock dividend, stock split, reverse stock split or similar transaction effected by the Corporation or (B) any redemption or repurchase of Corporation Securities by the Corporation subsequent to the original redemption or repurchase.
 
“New Warrant” shall mean the warrant issued to Alimco Re Ltd. on March 2, 2022.
 
“Percentage Stock Ownership” shall mean the percentage stock ownership interest as determined in accordance with Treasury Regulations Sections 1.382-2(a)(3), 1.382-2T(g), (h), (j) and (k), l.382-3(a), 1.382-3(j) and l.382-4(d); provided, however, that for the sole purpose of determining the percentage stock ownership of any entity (and not for the purpose of determining the percentage stock ownership of any other Person), Corporation Securities held by such entity shall not be treated as no longer owned by such entity pursuant to Treasury Regulations Section 1.382-2T(h)(2)(i)(A).
 
“Person” shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, trust, syndicate, estate, association, joint venture or similar organization, other entity, or group of persons making a “coordinated acquisition” of Corporation Securities or otherwise treated as an “entity” within the meaning of Treasury Regulations Section l.382-3(a) or otherwise, and includes, without limitation, an unincorporated group of persons who, by formal or informal agreement or arrangement (whether or not in writing), have embarked on a common purpose or act, and also includes any successor (by merger or otherwise) of any such individual or entity.

“Prohibited Distributions” shall mean any dividends or other distributions that were paid by the Corporation and received by a Purported Transferee with respect to the Excess Securities.
 
“Prohibited Transfer” shall mean any purported Transfer of Corporation Securities to the extent that such Transfer is prohibited and/or void under this ELEVENTH paragraph
 
“Purported Transferee” shall mean the purported transferee of a Prohibited Transfer.
 
“Restriction Release Date” shall mean the earlier of (i) the repeal of Section 382 of the Code (and any comparable successor provision) and (ii) the earliest date on which the Board of Directors determines that (1) an ownership change (within the meaning of Section 382 of the Code) would not result in a substantial limitation on the ability of the Corporation (or a direct or indirect subsidiary of the Corporation) to use otherwise available Tax Benefits, or (2) no significant value attributable to the Tax Benefits would be preserved by continuing the Transfer restrictions herein.
 
“Tax Benefits” shall mean the net operating loss carryovers, capital loss carryovers, general business credit carryovers, alternative minimum tax credit carryovers and foreign tax credit carryovers, as well as any “net unrealized built-in loss” within the meaning of Section 382 of the Code, of the Corporation or any direct or indirect subsidiary thereof.
 
“Transfer” shall mean, subject to the last sentence of this definition, any direct or indirect sale, transfer, assignment, conveyance, pledge, or other disposition and shall also include the creation or grant of an option (within the meaning of Treasury Regulations Section l.382- 4(d)(9)). A Transfer shall not include an issuance or grant of Corporation Securities by the Corporation, the modification, amendment or adjustment of an existing option by the Corporation, the exercise by an employee of the Corporation of any option to purchase Corporation Securities granted to such employee pursuant to contract or any stock option plan or other equity compensation plan of the Corporation, and the exercise of a Warrant, but only to the extent that there has not been a change in the direct or indirect ownership of such Warrant after the Effective Date, the exercise of the New Warrant, or any sale, transfer or other disposition of Corporation Securities issued upon exercise of the New Warrant.
 
“Treasury Regulation” shall mean the income tax regulations (whether temporary or final) promulgated under the Code and any successor regulations. References to any subsection of such regulations include references to any successor subsection thereof.
 
“Warrant” shall mean any of the warrants issued to Alimco Re Ltd., RJHDC, LLC, Kick-Start III, LLC or Kick-Start IV, LLC, on March 30, 2020.
 
(b)          Restrictions on Transfer.  In order to preserve the Tax Benefits, subject to sub-section (c) of this ELEVENTH paragraph, any attempted Transfer of Corporation Securities prior to the Restriction Release Date, or any attempted Transfer of Corporation Securities pursuant to an agreement entered into prior to the Restriction Release Date, shall be prohibited and void ab initio to the extent that, as a result of such Transfer (or any series of Transfers of which such Transfer is a part), any Person or group of Persons shall become an Acquiring Person. Notwithstanding the foregoing, nothing in this ELEVENTH paragraph shall prevent a Person that is a member of a public group of the Corporation (as defined in Treasury Regulation Section 1.382-2T(f)(13)) from transferring Corporation Securities to a new or existing public group of the Corporation.

(c)          Certain Exceptions.
 
i.          The restrictions set forth in sub-section (b) of this ELEVENTH paragraph shall not apply to a proposed Transfer of Corporation Securities if the transferor or the transferee obtains the written approval of the Board of Directors of the Corporation, which approval may be granted or denied in accordance with the procedures set forth in this sub-section (c) of ELEVENTH paragraph. In connection therewith, and to provide for effective policing of such restrictions, prior to the date of any proposed Transfer of Corporation Securities that, in the absence of the approval of the Board of Directors pursuant to this sub-section (c) of ELEVENTH paragraph, would be a Prohibited Transfer, either (a) the proposed transferee of such Corporation Securities (a “Restricted Transferee”) or (b) the proposed transferor of such Corporation Securities (a “Restricted Transferor”) shall request in writing (a “Request”) that the Board of Directors review the proposed Transfer of Corporation Securities and authorize or not authorize such proposed Transfer in accordance with this sub-section (c) of ELEVENTH paragraph.
 
ii.         A request shall be mailed or delivered to the Secretary of the Corporation at the Corporation’s principal place of business, or telecopied to the Corporation’s telecopier number at its principal place of business. Such Request shall be deemed to have been received by the Corporation when actually received by the Corporation.
 
iii.        A request shall include: (A) the name, address and telephone number of the Restricted Transferee; (B) a description of the Restricted Transferee’s existing direct or indirect ownership of Corporation Securities; (C) a description of the Corporation Securities that are proposed to be Transferred to the Restricted Transferee; (D) the date on which such proposed Transfer is expected to take place (or, if such Transfer is proposed to be made in a transaction on a national securities exchange or any national securities quotation system, a statement to that effect); (E) the name, address and telephone number of the Restricted Transferor (or, if such Transfer is proposed to be made in a transaction on a national securities exchange or any national securities quotation system, a statement to that effect); and (F) a request that the Board of Directors authorize, if appropriate, such Transfer pursuant to this sub-section (c) of ELEVENTH paragraph.
 
iv.        The Board of Directors shall use reasonable best efforts to make a determination to authorize or deny any Request on or before the tenth business day (or, if necessary to permit the Restricted Transferee and/or Restricted Transferor to provide the information requested pursuant to this sub-section (c) of ELEVENTH paragraph, such later date as reasonably determined by the Board of Directors in consultation with the Restricted Transferor or Restricted Transferee that made such Request) following receipt of the Request by the Corporation.
 
 v.         The Board of Directors may authorize a Transfer of Corporation Securities to a Restricted Transferee, if it determines, in its sole discretion that, after taking into account the preservation of the Tax Benefits, such Transfer of Corporation Securities would be in the best interests of the Corporation and its shareholders. For purposes of this determination, the Board of Directors may consider, among other items, the following: (i) the total owner shift under Section 382 of the Code, (ii) all other pending proposed Transfer requests, (iii) whether the proposed Transfer is structured to minimize the resulting owner shift, and (iv) any reasonably foreseeable events of which the Board of Directors has knowledge that would constitute additional owner shifts. Any determination by the Board of Directors not to authorize a proposed Transfer of Corporation Securities to a Restricted Transferee shall cause such proposed Transfer to be deemed a Prohibited Transfer. The Board of Directors may impose any conditions that it deems reasonable and appropriate in connection with such approval, including, without limitation, restrictions on the ability of any Restricted Transferee to Transfer Corporation Securities acquired through a Transfer. Approvals of the Board of Directors hereunder may be given prospectively or retroactively.
 
vi.        In addition, the Board of Directors may, in its sole discretion, require (A) such representations from the Restricted Transferee and/or Restricted Transferor as to such matters as the Board of Directors may determine or (B) at the expense of the Restricted Transferor and/or Restricted Transferee, an opinion of counsel selected by the Board of Directors that the Transfer will not result in the application of any Section 382 limitation on the use of the Tax Benefits under Section 382 of the Code; provided that the Board of Directors may grant such approval notwithstanding the effect of such approval on the Tax Benefits if it determines that the approval is in the best interests of the Corporation and its shareholders. Any Restricted Transferee and/or Restricted Transferor who makes a Request to the Board of Directors shall reimburse the Corporation, on demand, for all costs and expenses (including, without limitation, expenses of counsel and/or tax advisors) incurred by the Corporation with respect to any proposed Transfer of Corporation Securities, including, without limitation, such costs and expenses incurred in determining whether to authorize the proposed Transfer.
 
vii.       The Corporation shall promptly notify the Restricted Transferee and the Restricted Transferor of the Board of Directors’ determination to authorize or deny the Transfer described in the Request.
 
viii.      If the Board of Directors authorizes the Transfer of Corporation Securities, the Restricted Transferee and Restricted Transferor shall be permitted to consummate such Transfer described in the Request.
 
(d)          Treatment of Excess Securities.
 
i.          No officer, director, employee or agent of the Corporation shall record any Prohibited Transfer, and a Purported Transferee shall not be recognized as a shareholder of the Corporation for any purpose whatsoever in respect of Excess Securities. Until the Excess Securities are acquired by another Person in a Transfer that is not a Prohibited Transfer, the Purported Transferee shall not be entitled with respect to such Excess Securities to any rights of shareholders of the Corporation, including, without limitation, the right to vote such Excess Securities or to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any, and the Excess Securities shall be deemed to remain with the transferor unless and until the Excess Securities are transferred to the Agent pursuant to sub-section (d)(iii) of this ELEVENTH paragraph or until approval is obtained under sub-section (c) of this ELEVENTH paragraph. Once the Excess Securities have been acquired in a Transfer that is not a Prohibited Transfer, the Securities shall cease to be Excess Securities. For this purpose, any Transfer of Excess Securities not in accordance with the provision of this sub-section (d)(i) or Section (d)(iii) shall also be a Prohibited Transfer.
 
ii.         The Corporation may require as a condition to the registration of the Transfer of any Corporation Securities or the payment of any distribution on any Corporation Securities that the proposed transferee or payee furnish the Corporation all information reasonably requested by the Corporation with respect to all the direct and indirect ownership interests in such Corporation Securities. The Corporation may make such arrangements or issue such instructions to its stock transfer agent as may be determined by the Board of Directors to be necessary or advisable to implement ELEVENTH paragraph, including, without limitation, authorizing such transfer agent to require an affidavit from a Purported Transferee regarding such Person’s actual and constructive ownership of Corporation Securities and other evidence that a Transfer will not be prohibited by sub-section (b) of this ELEVENTH paragraph as a condition to registering any Transfer.
 
iii.        If the Board of Directors determines that a Transfer of Corporation Securities constitutes a Prohibited Transfer then, upon written demand by the Corporation, the Purported Transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the Purported Transferee’s possession or control, together with Prohibited Distributions, to the Agent. The Agent shall thereupon sell to a buyer or buyers, which may include the Corporation, the Excess Securities transferred to it in one or more arm’s-length transactions (on the public securities market on which the Corporation Securities may be traded, if possible, or otherwise privately); provided, however, that any such sale must not constitute a Prohibited Transfer and provided, further, that the Agent shall effect such sale or sales in an orderly fashion and shall not be required to effect any such sale within any specific time frame if, in the Agent’s discretion, such sale or sales would disrupt the market for the Corporation Securities or otherwise would adversely affect the value of the Corporation Securities. If the Purported Transferee has resold the Excess Securities before receiving the Corporation’s demand to surrender the Excess Securities to the Agent, the Purported Transferee shall be deemed to have sold the Excess Securities for the Agent, and shall be required to transfer to the Agent any Prohibited Distributions and proceeds of such sale, except to the extent that the Corporation grants written permission to the Purported Transferee to retain a portion of such sales proceeds not exceeding the amount that the Purported Transferee would have received from the Agent pursuant to sub-section (d)(iv) of this ELEVENTH paragraph if the Agent rather than the Purported Transferee had resold the Excess Securities.
 
iv.        The Agent shall apply any proceeds of a sale by it of Excess Securities, and if the Purported Transferee had previously resold the Excess Securities, any amounts received by the Agent from a Purported Transferee, as follows:
 
(A)          first, such amounts shall be paid to the Agent to the extent necessary to cover its costs and expenses incurred in connection with its duties hereunder;
 
(B)          second, any remaining amounts shall be paid to the Purported Transferee, up to the amount paid by the Purported Transferee for the Excess Securities (or their fair market value at the time of the Transfer, in the event the purported Transfer of the Excess Securities was, in whole or in part, a gift, inheritance, or similar Transfer) which amount shall be determined at the discretion of the Board of Directors; and
 
(C)          third, any remaining amounts, subject to the limitations imposed by the following proviso, shall be paid to one or more organizations qualifying under Section 50l(c)(3) of the Code (or any comparable or successor provision) selected by the Board of Directors; provided, however, that if the Excess Securities (including, without limitation, any Excess Securities arising from a previous Prohibited Transfer not sold by the Agent in a prior sale or sales) represent a 5-percent or greater Percentage Stock Ownership interest in the Corporation, then such remaining amounts shall be paid to two or more organizations qualifying under Section 50l(c)(3) selected by the Board of Directors such that no organization qualifying under Section 501(c)(3) of the Code shall possess Percentage Stock Ownership in the Corporation in excess of 5-percent. The Purported Transferee’s sole right with respect to such Corporation Securities shall be limited to the amount payable to the Purported Transferee pursuant to this sub-section (d)(iv) of ELEVENTH paragraph. In no event shall the proceeds of any sale of Excess Securities pursuant to this ELEVENTH paragraph inure to the benefit of the Corporation.
 
(e)          Board Determinations.
 
i.          The Board of Directors of the Corporation shall have the power to determine all matters necessary for determining compliance with this ELEVENTH paragraph, including, without limitation:
 
(A)       the identification of Five-Percent Shareholders;
 
(B)       whether a Transfer is a Prohibited Transfer;
 
(C)       the Percentage Stock Ownership in the Corporation of any Five-Percent Shareholder;
 
(D)      whether an instrument constitutes a Corporation Security;
 
(E)       the amount (or fair market value) due to a Purported Transferee pursuant to clause (B) of sub-section (d)(iv) of this ELEVENTH paragraph;
 
(F)       whether compliance with any restriction or limitation on stock ownership and transfers set forth in this ELEVENTH paragraph is no longer required; and
 
(G)       any other matters which the Board of Directors determines to be relevant; and the determination of the Board of Directors on such matters shall be conclusive and binding for all the purposes of this ELEVENTH paragraph.
 
ii.         Nothing contained in this ELEVENTH paragraph shall limit the authority of the Board of Directors to take such other action to the extent permitted by law as it deems necessary or advisable to protect the Corporation and its shareholders in preserving the Tax Benefits, including without limitation implementing and enforcing the provisions of this ELEVENTH paragraph. Without limiting the generality of the foregoing, in the event of a change in law making one or more of the following actions necessary or desirable, the Board of Directors may, subject to Section 601 of the New York Business Corporation Law, by adopting a written resolution, (A) modify the ownership interest percentage in the Corporation or the Persons or groups covered by this ELEVENTH paragraph, provided that, such ownership interest percentages may only be modified to the extent necessary to reflect changes to Section 382 and the applicable Treasury Regulations, (B) modify the definitions of any terms set forth in this ELEVENTH paragraph, or (C) modify the terms of this ELEVENTH paragraph as appropriate, in each case, in order to prevent an ownership change for purposes of Section 382 of the Code as a result of any changes in applicable Treasury Regulations or otherwise. Shareholders of the Corporation shall be notified of such determination through a filing with the Securities and Exchange Commission or such other method of notice as the Secretary of the Corporation shall deem appropriate; provided, further notwithstanding the first sentence of this sub-section (e)(ii) of ELEVENTH paragraph, the Corporation shall not be entitled to modify the terms of this ELEVENTH paragraph in order to accelerate or extend the Restriction Release Date.

 iii.       In the case of an ambiguity in the application of any of the provisions of this ELEVENTH paragraph, including, without limitation, any definition used herein, the Board of Directors shall have the power to determine the application of such provisions with respect to any situation based on its reasonable belief, understanding or knowledge of the circumstances. In the event this ELEVENTH paragraph requires an action by the Board of Directors but fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of this ELEVENTH paragraph. All such actions, calculations, interpretations and determinations which are done or made by the Board of Directors in good faith shall be conclusive and binding on the Corporation, the Agent, and all other parties for all purposes of this ELEVENTH paragraph. The Board of Directors may delegate all or any portion of its duties and powers under this ELEVENTH paragraph to a committee of the Board of Directors as it deems necessary or advisable and, to the fullest extent permitted by law, may delegate the authority granted by this ELEVENTH paragraph through duly authorized officers or agents of the Corporation. Nothing in this ELEVENTH paragraph shall be construed to limit or restrict the Board of Directors in the exercise of its fiduciary duties under applicable law.
 
(f)          Securities Exchange Transactions.  Nothing in this ELEVENTH paragraph (including, without limitation, any determinations made, or actions taken, by the Board of Directors pursuant to sub-section (c) of ELEVENTH paragraph) shall preclude the settlement of any transaction entered into through the facilities of a national securities exchange or any national securities quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this ELEVENTH paragraph and any Purported Transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this ELEVENTH paragraph.
 
(g)          Legal Proceedings.  If the Purported Transferee fails to surrender the Excess Securities or the proceeds of a sale thereof to the Agent within thirty days from the date on which the Corporation makes a written demand, then the Corporation may promptly take all cost effective actions which it believes are appropriate to enforce the provisions hereof, including, without limitation, the institution of legal proceedings to compel the surrender. Nothing in this section shall (a) be deemed inconsistent with any Transfer of the Excess Securities provided in this ELEVENTH paragraph being void ab initio or (b) preclude the Corporation in its discretion from immediately bringing legal proceedings without a prior demand. The Board of Directors may authorize such additional actions as it deems advisable to give effect to the provisions of this ELEVENTH paragraph.
 
(h)          Liability.  To the fullest extent permitted by law, any shareholder subject to the provisions of this ELEVENTH paragraph who knowingly violates the provisions of this ELEVENTH paragraph and any Persons controlling, controlled by or under common control with such shareholder shall be jointly and severally liable to the Corporation for, and shall indemnify and hold the Corporation harmless against, any and all damages suffered as a result of such violation, including but not limited to damages resulting from a reduction in, or elimination of, the Corporation’s ability to utilize its Tax Benefits, and attorneys’ and auditors’ fees incurred in connection with such violation.
 
(i)          Certificates.  All certificates representing Corporation Securities on or after the Effective Date shall, until the Restriction Release Date, bear a conspicuous legend in substantially the following form:
 
THE TRANSFER OF SECURITIES REPRESENTED HEREBY IS SUBJECT TO RESTRICTION PURSUANT TO THE ELEVENTH PARAGRAPH OF THE CERTIFICATE OF INCORPORATION (AS AMENDED) AND SECTION 6.7 OF THE BY-LAWS OF KASPIEN HOLDINGS INC., AS AMENDED AND IN EFFECT FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED FROM THE CORPORATION UPON REQUEST.
 
(j)           Reliance.  To the fullest extent permitted by law, the Corporation and the members of the Board of Directors shall be fully protected in relying in good faith upon the information, opinions, reports or statements of the chief executive officer, the chief financial officer, the chief accounting officer or the corporate controller of the Corporation or of the Corporation’s legal counsel, independent auditors, transfer agent, investment bankers or other employees and agents in making the determinations and findings contemplated by this ELEVENTH paragraph, and the members of the Board of Directors shall not be responsible for any good faith errors made in connection therewith. For purposes of determining the existence and identity of, and the amount of any Corporation Securities owned by, any stockholder, the Corporation is entitled to rely on the existence and absence of filings of Schedule 13D or 13G under the Securities and Exchange Act of 1934, as amended (or similar filings), as of any date, subject to its actual knowledge of the ownership of Corporation Securities.
 
(k)          Benefits of ELEVENTH paragraph.  Nothing in this ELEVENTH paragraph shall be construed to give to any Person other than the Corporation or the Agent any legal or equitable right, remedy or claim under this ELEVENTH paragraph. This ELEVENTH paragraph shall be for the sole and exclusive benefit of the Corporation and the Agent.
 
(l)           Severability.  The purpose of this ELEVENTH paragraph is to facilitate the Corporation’s ability to maintain or preserve its Tax Benefits. If any provision of this ELEVENTH paragraph or the application of any such provision to any Person or under any circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this ELEVENTH paragraph.
 
(m)         Waiver.  With regard to any power, remedy or right provided herein or otherwise available to the Corporation or the Agent under this ELEVENTH paragraph, (i) no waiver will be effective unless expressly contained in a writing signed by the waiving party; and (ii) no alteration, modification or impairment will be implied by reason of any previous waiver, extension of time, delay or omission in exercise, or other indulgence.
 

 4.
The foregoing amendments to the Certificate of Incorporation were authorized by the vote of the Board of Directors followed by the written consent of a majority of all outstanding shares entitled to vote thereon at a meeting of shareholders.
 
 
/s/ Kunal Chopra
 
Name: Kunal Chopra
 
Title: Chief Executive Officer


Exhibit 3.2

AMENDMENT NO. 3 TO
BY-LAWS OF
KASPIEN HOLDINGS INC.

The By-Laws of Kaspien Holdings Inc., a New York corporation, are hereby amended, effective March 8, 2022, by:


 1.
Replacing the definition of “Transfer” in Section 6.7(a) (Restrictions on Transfers; Definitions) in its entirety with the following:

“Transfer” shall mean, subject to the last sentence of this definition, any direct or indirect sale, transfer, assignment, conveyance, pledge, or other disposition and shall also include the creation or grant of an option (within the meaning of Treasury Regulations Section l.382- 4(d)(9)). A Transfer shall not include an issuance or grant of Corporation Securities by the Corporation, the modification, amendment or adjustment of an existing option by the Corporation, the exercise by an employee of the Corporation of any option to purchase Corporation Securities granted to such employee pursuant to contract or any stock option plan or other equity compensation plan of the Corporation, and the exercise of a Warrant, but only to the extent that there has not been a change in the direct or indirect ownership of such Warrant after the Effective Date, the exercise of the New Warrant, or any sale, transfer or other disposition of Corporation Securities issued upon exercise of the New Warrant.


 2.
Adding the following definition to Section 6.7(a) (Restrictions on Transfers; Definitions):

“New Warrant” shall mean the warrant issued to Alimco Re Ltd. on March 2, 2022.
Exhibit 4.1

Execution Version
NEITHER THIS WARRANT NOR THE SECURITIES AS TO WHICH THIS WARRANT MAY BE EXERCISED HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.   IN ADDITION, EXERCISE OF THIS WARRANT IS SUBJECT TO LIMITATIONS SPECIFIED IN THIS WARRANT.

COMMON STOCK PURCHASE WARRANT
KASPIEN HOLDINGS INC.

Warrant Shares: 320,000
Date of Issuance: March 2, 2022 (the “Issuance Date”)

THIS COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received (in connection with Alimco Re Ltd. providing a $5,000,000.00 loan to KASPIEN INC (“Kaspien”), a subsidiary of Kaspien Holdings Inc. (the “Company”)), Alimco Re Ltd. (including its permitted and registered assigns, the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date of issuance hereof, to purchase from the Company up to 320,000 shares of Common Stock (as defined below) (the “Warrant Shares”) at the Exercise Price per share. The number of Warrant Shares for which this Warrant may be exercised is subject to adjustment in accordance with the terms hereof.

Capitalized terms used in this Warrant shall have the meanings set forth in the body of this Warrant or in Section 20 below. For purposes of this Warrant, the term “Exercise Price” shall mean $0.01 per Warrant Share, and the term “Exercise Period” shall mean the period commencing on the Issuance Date and ending on the earlier of (a) 5:00 p.m. Eastern Standard Time on the five (5)-year anniversary thereof, or if such day is not a Business Day on the next succeeding Business Day, or (b) the occurrence of a Fundamental Transaction.

1.          EXERCISE OF WARRANT.
 
(a)          Mechanics of Exercise. Subject to the terms and conditions hereof, the rights represented by this Warrant may be exercised in whole or in part at any time or times during the Exercise Period by delivery of a written notice on any Business Day, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant. The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased.  On or before the fifth (5th) Business Day (the “Warrant Share Delivery Date”) following the date on which the Company receives the Exercise Notice (which must be received by the Company prior to 5 p.m. Eastern Standard Time to count as received on such date) and payment of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which all or a portion of this Warrant is being exercised (the “Aggregate Exercise Price”, and together with the Exercise Notice, the “Exercise Deliveries”) in cash or by wire transfer of immediately available funds (or by cashless exercise, in which case there shall be no Aggregate Exercise Price provided), the Company may (or may direct its transfer agent to) deliver, to the address specified in the Exercise Notice, a notice indicating the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise, or otherwise provide confirmation of such entitlement. Upon delivery of the Exercise Deliveries, but subject to Section 1(c), the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the notice in respect of such Warrant Shares. If this Warrant is submitted in connection with any exercise and the number of Warrant Shares represented by this Warrant is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than five (5) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 5) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares with respect to which this Warrant is exercised.
 
(b)          Cashless Exercise. In the event of a Fundamental Transaction, the Holder shall, and at any time during the Exercise Period the Holder may at its option, elect to receive, pursuant to a cashless exercise in lieu of a cash exercise, Warrant Shares equal to the value of this Warrant determined in the manner described below (or of any portion thereof being exercised) by surrender of this Warrant and an Exercise Notice, in which event the Company shall issue to Holder a number of Warrant Shares computed using the following formula:
 
Y(A – B)
X          =                A
Where:

X          =          the number of Warrant Shares to be issued to the Holder;
Y          =          the total number of Warrant Shares for which the Holder has elected to exercise this Warrant pursuant to Section 1(a);
A          =          the fair market value of one Warrant Share at the time of exercise of this Warrant as herein provided; and
B          =          the Exercise Price.

 
(c)          Fair Market Value. For purposes of this Section 1, the fair market value of a Warrant Share means, as of any particular date: (a) the volume weighted average of the closing sales prices of the Common Stock for such day on all domestic securities exchanges on which the Common Stock may at the time be listed; (b) if there have been no sales of the Common Stock on any such exchange on any such day, the average of the highest bid and lowest asked prices for the Common Stock on all such exchanges at the end of such day; (c) if on any such day the Common Stock is not listed on a domestic securities exchange, the closing sales price of the Common Stock as quoted on the Financial Industry Regulatory Authority OTC Bulletin Board electronic interdealer quotation system (the “OTC Bulletin Board”), the OTC Markets Group Inc. electronic inter-dealer quotation system (including OTCQX, OTCQB and OTC Pink) (the “Pink OTC Markets”) or similar quotation system or association for such day; or (d) if there have been no sales of the Common Stock on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association on such day, the average of the highest bid and lowest asked prices for the Common Stock quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association at the end of such day; in each case, averaged over twenty (20) consecutive Business Days ending on the Business Day immediately prior to the day as of which "fair market value" is being determined; provided that if the Common Stock is listed on any domestic securities exchange, the term "Business Day" as used in this sentence means Business Days on which such exchange is open for trading.  If at any time the Common Stock is not listed on any domestic securities exchange or quoted on the OTC Bulletin Board, the Pink OTC Markets or similar quotation system or association, the "fair market value" of a Warrant Share shall be the fair market value per share as determined jointly by the board of directors of the Company and the Holder; provided, that if the board of directors of the Company and the Holder are unable to agree on the fair market value of a Warrant Share within a reasonable period of time (not to exceed thirty (30) days from the Company's receipt of the Exercise Notice), such fair market value shall be determined by a nationally recognized investment banking, accounting or valuation firm jointly selected by the board of directors of the Company and the Holder. The determination of such firm shall be final and conclusive, and the fees and expenses of such valuation firm shall be borne pro rata by the Company and the Holder based on the amount by which each party’s calculation of fair market value is different from the fair market value as determined by such valuation firm.  Notwithstanding anything to the contrary herein, this Warrant may not be exercised, and no Warrant Shares shall be issued in respect of hereof, until the fair market value of the Warrant Shares has been finally determined in accordance with this Section 1(c).
 
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(d)          Holder’s Exercise Limitations. The Holder shall not have the right to exercise any portion of this Warrant, and the Company shall not effect any exercise of this Warrant, to the extent that after giving effect to the issuance of Warrant Shares as set forth in the applicable Exercise Notice, the Warrant Shares so issued, together with any and all Warrant Shares previously issued pursuant to a partial exercise of this Warrant, would exceed twelve and 84/100 percent (12.84%) of the issued and outstanding Common Stock (such amount, the “12.84% Exercise Limitation”). The determination of whether the 12.84% Exercise Limitation applies, and the extent to which it applies, shall be in the sole discretion of the Holder, and the submission of an Exercise Notice shall be deemed to be the Holder’s determination of the extent to which this Warrant is exercisable.  Notwithstanding anything to the contrary herein, the Company shall have no obligation to determine whether the 12.84% Exercise Limitation has been exceeded at any particular time and, unless otherwise notified in writing by the Holder prior to the applicable date of determination, the Company shall be permitted to assume that the 12.84% Exercise Limitation has not been exceeded.  Upon the written request of the Holder, the Company shall, within two (2) Business Days, confirm to the Holder the number of shares of Common Stock then outstanding.
 
(e)        Anti-Dilution. If, at any time after the date hereof while this Warrant is outstanding, the Company sells or issues, any shares of Common Stock for less than the fair market value of the Common Stock on the date of such sale or issuance (as determined in good faith by the board of directors of the Company), such that the Warrant Shares (taking into account any such Warrant Shares issuable or previously issued) represent less than the 12.84% Exercise Limitation (taking into account such sale or issuance, as applicable, and based on the number of shares of Common Stock actually outstanding), then the number of Warrant Shares purchasable under this Warrant shall (at the time of exercise of this Warrant) be adjusted upwards to an amount equal to the 12.84% Exercise Limitation, computed at the time of such issuance; provided, however, that such adjustment shall be rounded down to the nearest whole share of Common Stock; provided further that anything herein to the contrary notwithstanding, there shall be no adjustment to the number of Warrant Shares issuable upon exercise of this Warrant with respect to any Excluded Issuance.  For purposes of this Section 1(e), the following terms have the following meanings:
 
“Convertible Securities” means any securities (directly or indirectly) convertible into or exchangeable for Common Stock, but excluding Options.
 
“Excluded Issuances” means any issuance or sale (or deemed issuance or sale) by the Company after the date hereof of: (a) shares of Common Stock issued upon the exercise of this Warrant; (b) shares of Common Stock issued directly or upon the exercise of Options to directors, officers, employees, or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company, in each case authorized by the board of directors of the Company and issued pursuant to any of the Company’s equity incentive plans from time to time (including all such shares of Common Stock and Options outstanding prior to the date hereof); (c) shares of Common Stock issued upon the conversion or exercise of Options (other than Options covered by clause (b) above) issued prior to the date hereof, provided that such securities are not amended after the date hereof to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof; (d) shares of Common Stock, Options or Convertible Securities issued (i) to persons in connection with a joint venture, strategic alliance or other commercial relationship with such person (including persons that are customers, suppliers and strategic partners of the Company) relating to the operation of the Company's business and not for the primary purpose of raising equity capital, (ii) in connection with a transaction in which the Company, directly or indirectly, acquires another business or its tangible or intangible assets, or (iii) to lenders as equity kickers in connection with debt financings of the Company, in each case where such transactions have been approved by the board of directors of the Company; (e) shares of Common Stock in an offering for cash for the account of the Company that is underwritten on a firm commitment basis and is registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended; or (f) shares of Common Stock, Options or Convertible Securities issued to the lessor or vendor in any office lease or equipment lease or similar equipment financing transaction in which the Company obtains the use of such office space or equipment for its business.
 
“Options” means any warrants or other rights or options to subscribe for or purchase Common Stock or Convertible Securities.
 
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2.         FUNDAMENTAL TRANSACTIONS.  If, at any time while this Warrant is outstanding, (a) the Company effects any merger of the Company with or into another entity and the Company is not the surviving entity (such surviving entity, the “Successor Entity”), (b) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (c) any tender offer or exchange offer (whether by the Company or by another individual or entity, and approved by the Company) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares of Common Stock for other securities, cash or property and the holders of at least 50% of the Common Stock accept such offer, or (d) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (other than as a result of a subdivision or combination of shares of Common Stock) (in any such case, a “Fundamental Transaction”), then immediately prior to the occurrence of such Fundamental Transaction, this Warrant shall automatically be converted into the right to receive the number of shares of Common Stock of the Company for which this Warrant is exercisable at such time (assuming a cashless exercise).
 
3.         FRACTIONAL SHARES. The Company shall not be required to issue fractions of shares upon exercise of this Warrant or to distribute certificates which evidence fractional shares. In lieu of fractional shares, the Company may make payment to the Holder, at the time of exercise of this Warrant as herein provided, in an amount in cash equal to such fraction multiplied by the fair market value (as determined in accordance with Section 1(c)) of one Warrant Share at the time of exercise of this Warrant as herein provided.
 
4.         WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided herein, this Warrant, in and of itself, shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.

5.          REISSUANCE.
 
(a)          Lost, Stolen or Mutilated Warrant.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and upon delivery of an indemnity reasonably satisfactory to it (it being understood that a written indemnification agreement or affidavit of loss of the Holder shall be a sufficient indemnity) and, in case of mutilation, upon surrender of such Warrant for cancellation to the Company, the Company shall execute and deliver to the Holder, in lieu hereof, a new Warrant of like denomination and tenor and exercisable for an equivalent number of Warrant Shares as the Warrant so lost, stolen, mutilated or destroyed.
 
(b)          Issuance of New Warrants.  Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant shall be of like tenor with this Warrant, and shall have an issuance date, as indicated on the face of such new Warrant which is the same as the Issuance Date.

6.          TRANSFER.
 
(a)          Notice of Transfer.  Subject to compliance with applicable securities laws and the transfer conditions referred to in the legend endorsed hereon or otherwise set forth herein, this Warrant and all rights hereunder are transferable, in whole or in part, by the Holder, upon surrender of this Warrant to the Company at its then principal executive offices with a properly completed and duly executed Assignment of Warrant (in the form attached hereto as Exhibit B) and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  By acceptance of this Warrant, the Holder agrees to give written notice to the Company before transferring this Warrant or transferring any Warrant Shares of such Holder’s intention to do so, describing briefly the manner of any proposed transfer. As a condition to such transfer, the prospective transferee or purchaser shall execute an Assignment of Warrant attached hereto as Exhibit B and such other documents and make such representations, warranties, and agreements as may be reasonably required by the Company solely to comply with the exemptions relied upon by the Company for the transfer or disposition of this Warrant or the Warrant Shares.  Upon such compliance, surrender, delivery and, if required, such payment pursuant to this Section 6(a), the Company shall execute and deliver a new Warrant or Warrants in the name of the transferee or transferees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant, if any, not so assigned and this Warrant shall promptly be cancelled.  For the avoidance of doubt, any transferee and any subsequent transferee shall be subject to the 12.84% Exercise Limitation.
 
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(b)          The Holder, by acceptance of this Warrant, agrees to comply in all respects with the restrictive legend requirements set forth on the face of this Warrant and further agrees that it shall not offer, sell or otherwise dispose of this Warrant or any Warrant Shares to be issued upon exercise hereof except under circumstances that will not result in a violation of the Securities Act of 1933, as amended (the “Securities Act”).  Notwithstanding anything to the contrary, this Warrant may not be transferred or exercised unless (i) the transferor, transferee, exercising Holder or its designated recipient of Common Stock issuable on the exercise of such Warrant and the Company, as applicable, have completed and submitted all filings, registrations or other notifications to any governmental entity that may be required pursuant to applicable law in connection with such transfer or exercise, (ii) all necessary approvals or waivers, as the case may be, of any governmental entity that may be required pursuant to applicable law in connection with such transfer or exercise have been obtained, and (iii) any waiting periods required by applicable law for the consummation of such transfer or exercise have expired or been terminated.
 
7.          COVENANTS OF THE COMPANY.
 
(a)        Covenants as to Shares. The Company shall procure that all Warrant Shares that may be issued upon the exercise of the rights represented by this Warrant are, upon issuance, validly issued and outstanding, fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issuance thereof. The Company shall, at all times during the Exercise Period, have authorized and reserved, free from preemptive rights, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant (without regard to any limitations on exercise). If at any time during the Exercise Period the number of authorized but unissued shares of Common Stock are not sufficient to permit the full exercise of this Warrant, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number as is sufficient for such purposes. During the Exercise Period, the Company shall not at any time increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect.

(b)         Notices of Record Date. In the event of (i) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution; (ii) the effectiveness of a registration statement on Form S-1 filed with the Securities and Exchange Commission and/or (iii) the consummation of a Fundamental Transaction, then the Company shall provide to the Holder, at least five (5) Business Days prior to the date of any such event, a notice pursuant to Section 11, specifying the date on which any such action is expected to be taken or any such event is expected to occur.

8.          REPRESENTATIONS AND WARRANTIES.
 
(a)          The Company hereby represents and warrants to the Holders as of the Issuance Date as follows:
 

 (1)
The Company has all necessary power, capacity and authority to execute and deliver this Warrant, to perform its obligations hereunder, and to consummate the transactions contemplated hereby. This Warrant has been duly and validly executed and delivered by the Company and, assuming the due execution and delivery by the Holder, constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally.
 

 (2)
All corporate actions on the part of the Company necessary for the issuance of this Warrant have been taken on or prior to the date hereof. The execution and delivery by the Company of this Warrant do not require any filing with or approval from any governmental authority, except for filings with the United States Securities and Exchange Commission or otherwise required under Federal or state securities laws and filings made pursuant to the rules and regulations of any stock exchange.
 
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 (3)
The authorized capital of the Company consists, immediately prior to the Issuance Date, of 5,000,0000 shares of preferred stock, $0.01 par value (none of which are outstanding), and 200,000,000 shares of common stock, $0.01 par value (2,492,568 of which are issued and outstanding (excluding, for the avoidance of doubt, treasury stock)).  The number of Warrant Shares for which this Warrant may be exercised is, as of the Issuance Date, equal to twelve and 84/100 percent (12.84%) of the issued and outstanding Common Stock, which number is subject to adjustment in accordance with the terms hereof.
 
(b)          The Holder hereby represents and warrants to the Company by acceptance of this Warrant as of Issuance Date (or such other date on which such Holder becomes a Holder hereunder) as follows:
 

 (1)
The Holder is an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act.  The Holder is acquiring this Warrant and the Warrant Shares to be issued upon exercise hereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of this Warrant or the Warrant Shares, except pursuant to sales registered o exempted under the Securities Act.
 

 (2)
The Holder understands and acknowledges that this Warrant and the Warrant Shares to be issued upon exercise hereof are "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances.  In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
 

 (3)
The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Warrant and the Warrant Shares. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Warrant and the business, properties, prospects and financial condition of the Company.
 
9.        TERMINATION OF WARRANT. This Warrant shall expire and shall no longer be exercisable upon the earlier of (a) the expiration of the Exercise Period and (b) the exercise in full hereof.
 
10.       RESTRICTIVE LEGEND. The Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.    IN ADDITION, EXERCISE OF THE WARRANT IS SUBJECT TO LIMITATIONS SPECIFIED IN THE WARRANT.
 
6
11.        NOTICES.  Any notice or other communication to be given under this Warrant shall be in writing and may either be delivered by hand, made by facsimile transmission, sent by electronic mail transmission, disclosed in all material respects and filed on EDGAR pursuant to the Securities Exchange Act of 1934, sent by overnight courier, or sent by registered mail, return receipt requested, postage prepaid, as follows: (a) if to the Holder, at the Holder’s address, facsimile number or electronic mail address set forth on the signature page hereof, or at such other address as the Holder shall have furnished to the Company in writing; and (b) if to the Company, at the Company’s address, facsimile number or electronic mail address set forth on the signature page hereof, or at such other address as the Company shall have furnished to the Holder in writing.
 
12.       AMENDMENT AND WAIVER.  The terms of this Warrant may be amended or waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder.
 
13.       GOVERNING LAW; JURISDICTION.  This Warrant and all actions arising out of or in connection with this Warrant shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of law (whether of the State of New York or any other jurisdiction). EACH PARTY HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, STATE OF NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS WARRANT SHALL BE LITIGATED IN SUCH COURTS.  EACH PARTY HERETO EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS.
 
14.    JURY TRIAL WAIVER.  THE COMPANY AND THE HOLDER HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS WARRANT.
 
15.        ACCEPTANCE.  Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.
 
16.        RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT.  Unless otherwise provided in this Warrant, the rights and obligations of the Company, of the Holder and of the holder of the Warrant Shares issued upon exercise of this Warrant hereunder shall survive the exercise of this Warrant.
 
17.       SUCCESSORS AND ASSIGNS.  The terms and provisions of this Warrant shall inure to the benefit of, and be binding upon, the Company, the Holder and their respective permitted successors and assigns.
 
18.       TITLES AND SUBTITLES.  The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant.
 
19.        SEVERABILITY.  In the event any one or more of the provisions of this Warrant shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Warrant shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.
 
20.        CERTAIN DEFINITIONS.  For purposes of this Warrant, the following terms shall have the following meanings:
 
(a)          “Business Day” means all days other than Saturdays, Sundays and any other days on which commercial banks in New York City are authorized or required by law to be closed for business.
 
(b)           “Common Stock” means the Company’s common stock, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
 
(c)          “Required Consents” means the material filings, registrations, notifications, approvals, waivers or expiration or termination of any waiting periods that are necessary or required, as set forth in Section 6(b).

21.      WARRANT REGISTER.  The Company shall keep and properly maintain at its principal executive offices books for the registration of the Warrant and any transfers thereof.  The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any assignment, division, combination or other transfer of the Warrant effected in accordance with the provisions of this Warrant.
 
[Signature page follows]

7
IN WITNESS WHEREOF, the Company has caused this Common Stock Purchase Warrant to be duly executed as of the Issuance Date set forth above.

 
KASPIEN HOLDINGS INC.
   
 
By:
/s/ Kunal Chopra
  
 
Name: Kunal Chopra
  
 
Title: Principal Executive Officer
  
     
 
Address:
Kaspien Holdings Inc.2818 N. Sullivan Road,
 
 
Suite #130 Spokane Valley, WA 99216  
  Attention:
Edwin Sapienza  
 
Facsimile:
    
 
Email:
esapienza@kaspien.com
  

 
Agreed & Accepted:
  
     
 
ALIMCO RE LTD.
  
     
 
By:
/s/ Jonathan Marcus
  
 
Name: Jonathan Marcus
  
 
Title: CEO
  
     
 
Address:
Alimco Re Ltd.2336 SE Ocean Blvd., #400 Stuart, FL 34996
  
 
Attention:
Jonathan Marcus, Chief Executive Officer
  
 
Facsimile:
    
 
Email:
jon@limadvisory.com
  

EXHIBIT A

EXERCISE NOTICE

(To be executed by the registered holder to exercise this Common Stock Purchase Warrant)

The Undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Kaspien Holdings Inc., a Delaware corporation (the “Company”), evidenced by the attached copy of the Warrant (as defined below). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Common Stock Purchase Warrant (the “Warrant”), dated as of March 2, 2022, issued by the Company.

1.
Form of Exercise Price.  The Holder intends that payment of the Exercise Price shall be made as (check one):

  ☐
a cash exercise with respect to _________________ Warrant Shares; or
  ☐
by cashless exercise pursuant to Section 1(b) of the Warrant for _________ Warrant Shares.

2.
Payment of Exercise Price.  If a cash exercise is selected above, the Aggregate Exercise Price in the sum of $___________________ has been wire transferred to the Company in accordance with the terms of the Warrant.

3.
Confirmation.  The undersigned hereby represents and warrants that the Required Consents have been made or obtained, as applicable.

4.
Delivery of Warrant Shares.  The Company shall deliver to the holder __________________ Warrant Shares in accordance with the terms of the Warrant.

Date:
   
   
 (Print Name of Registered Holder)
  
   
 By:
    
 Name:
  
 Title:
   


Exhibit A
8
EXHIBIT B

ASSIGNMENT OF WARRANT

(To be signed only upon authorized transfer of the Warrant)

For Value Received, the foregoing Common Stock Purchase Warrant and all rights evidenced thereby are hereby assigned to          .  By accepting such transfer, the transferee acknowledges that it has reviewed the within Common Stock Purchase Warrant and has agreed to be bound in all respects by its terms and conditions; and such transferee represents and warrants that it is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended.

   
Holder
  
   
Date:
   
   
 
  
(Signature) *
  
   

 
(Name)
  
   

 
(Address)
  
   

 
(Social Security or Tax Identification No.)
  

* The signature on this Assignment of Warrant must correspond to the name as written upon the face of the Common Stock Purchase Warrant in every particular without alteration or enlargement or any change whatsoever. When signing on behalf of a corporation, partnership, trust or other entity, please indicate your position(s) and title(s) with such entity.

Transferee
  
   
Date:
   
   
   

 
(Signature)
  
   

 
(Name)
  
   

 
(Address)
  
   
   


Exhibit B
Exhibit 10.1

Execution Version

AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT

THIS AMENDMENT NO. 4 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of March 2, 2022, by and among KASPIEN INC, a Washington corporation (f/k/a Etailz Inc.) (the “Borrower”), KASPIEN HOLDINGS INC., a New York corporation (f/k/a Trans World Entertainment Corporation) (the “Parent”), the Lenders party hereto, and ECLIPSE BUSINESS CAPITAL LLC (f/k/a Encina Business Credit, LLC), as agent for the Lenders (in such capacity, the “Agent”).  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement (as defined below), as amended hereby.

RECITALS

WHEREAS, the Parent, the Borrower, the Lenders and Agent are parties to that certain credit facility provided by the Agent and the Lenders to the Borrower pursuant to that certain Loan and Security Agreement, dated as of February 20, 2020 (as amended, modified, supplemented, extended, renewed, restated, or replaced from time to time, the “Loan Agreement”);

WHEREAS, the Parent and the Borrower have informed the Agent and Lenders that the Parent and Borrower wish to amend the Alimco Subordinated Loan Agreement in accordance with that certain Amendment No. 2 to Subordinated Loan and Security Agreement Alimco (the “Alimco Second Amendment”), to be dated the date hereof, by and among the Borrower, the Parent, the Alimco Subordinated Lenders, and TWEC Loan Collateral Agent, LLC, as collateral agent for the Alimco Subordinated Lenders, which will, among other things, increase the amount of Alimco Subordinated Debt; and

WHEREAS, the Parent and the Borrower have requested that the Agent and Lenders consent to the Alimco Second Amendment, and the transactions contemplated thereby, and make certain other modifications to the Loan Agreement as set forth herein, and the Agent and the Lenders are willing to provide such consent and the other proposed modifications, subject to the terms and conditions set forth herein; and

NOW THEREFORE, in consideration of the foregoing premises and the mutual benefits to be derived by the Borrower, the Agent, and the Lenders from a continuing relationship under the Loan Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrower, the Agent and the Lenders hereby agree as follows:

1.
Amendment to Loan Agreement.
 

 a.
Section 1.1 (Certain Defined Terms) of the Loan Agreement is hereby amended as follows:
 

 i.
The definition of “Alimco Subordinated Debt” is hereby deleted in its entirety and following is substituted therefor:
 
“ “Alimco Subordinated Debt” means that certain Indebtedness evidenced by the Alimco Subordinated Loan Agreement and the other Alimco Subordinated Debt Documents, which Indebtedness has an outstanding principal balance of $9,825,623.00 (including interest paid in kind by capitalizing such interest to principal) as of the Amendment No. 4 Effective Date, after giving effect to the transactions to occur on or about the Amendment No. 4 Effective Date.”
 

ii.
The definition of “Alimco Subordinated Loan Agreement” is hereby deleted in its entirety and the following is substituted therefor:
 
““Alimco Subordinated Loan Agreement” means that certain Subordinated Loan and Security Agreement, dated as of the Amendment No. 1 Effective Date, and issued by Borrowers in favor of the Alimco Subordinated Lenders, as amended, modified, supplemented or restated from time to time, in accordance with the terms of this Agreement and the Alimco Subordinated Debt Subordination Agreement.”
 

 iii.
The definition of “Permitted Indebtedness” is hereby amended by deleting clause (f) thereof in its entirety and subsisting the following therefor:
 
“(f) the Alimco Subordinated Debt owing by Borrowers in an aggregate amount not exceeding $9,825,623.00 plus the amount of all accrued interest on the Alimco Subordinated Debt (including interest paid in kind by capitalizing such interest to principal) at any time outstanding and then solely to the extent the Alimco Subordinated Debt is subject to, and permitted by, the Alimco Subordinated Debt Subordination Agreement; and”
 

 iv.
The following new definition of “Amendment No. 4 Effective Date” is added in its correct alphabetical position:
 
“ “Amendment No 4. Effective Date” means March 2, 2022.”
 
2.
Consent to Amendment to Alimco Subordinated Debt Documents.  The Agent and the Lenders hereby consent to the amendments to the Alimco Subordinated Debt Documents referenced in Section 4(b) below.  For the avoidance of doubt this consent shall also be applicable to Section 3.2 of the Alimco Subordinated Debt Subordination Agreement.
 
3.
Representations and Warranties.  Each of the Parent and the Borrower hereby represents and warrants that, after giving effect to this Amendment: (i) no Default or Event of Default exists under the Loan Agreement or any other Loan Document, (ii) each of the Parent and the Borrower has the full power and authority to execute, deliver, and perform its respective obligations under, the Loan Agreement and the other Loan Documents, as amended by this Amendment and the amendments to the other Loan Documents, and (iii) the representations and warranties contained or referred to in Section 7 of the Loan Agreement and the other Loan Documents are true and accurate in all material respects as of the date of this Amendment (or, to the extent any such representations or warranties are expressly made solely as of an earlier date, such representations and warranties are true and correct as of such earlier date).
 
4.
Conditions to Effectiveness.  This Amendment shall not be effective until each of the following conditions precedent have been fulfilled to the satisfaction of the Agent (or waived by Agent):
 

 a.
The Agent shall have received counterparts of this Amendment duly executed by each of the parties hereto.
 

 b.
The Agent shall have received fully executed copies of (i) the Alimco Second Amendment, (ii) that certain Promissory Note made by the Borrower in favor of Alimco Re Ltd., and (iii) that certain Common Stock Purchase Warrant (Kaspien Holdings Inc.) by and among the Borrower as the company and Alimco Re Ltd. as the holder, in each case dated as of March 2, 2022 and in form and substance satisfactory to the Agent and the Lenders.

2

 c.
On or before the Amendment No. 4 Effective Date, at least $4,500,000 of the proceeds of the Alimco Subordinated Debt shall be deposited in a Blocked Account.
 

 d.
All action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Amendment shall have been duly and effectively taken.
 

 e.
The Borrower shall have paid all reasonable costs and expenses (including, without limitation, the reasonable costs and expenses of Agent’s counsel) incurred by Agent in connection with the preparation of this Amendment.
 
5.
Post-Closing Matters.  Within 30 days of the date hereof, or such later date to be determined by Agent at its sole option, Borrower shall:
 

 a.
shall assign each of the trademarks set forth on Exhibit A hereto, or otherwise change the name of the owner of such trademark to KASPIEN Inc.;
 

 b.
shall assign each of the copyrights set forth on Exhibit A hereto, or otherwise change the name of the owner of such copyright to KASPIEN Inc.
 
6.
Release.  In consideration of the agreements of the Agent and the Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parent, the Borrower and each Loan Party Obligor hereby releases and forever discharges the Agent and each Lender and their respective directors, officers, employees, agents, attorneys, affiliates, subsidiaries, successors and assigns from any and all liabilities, obligations, actions, contracts, claims, causes of action, damages, demands, costs and expenses whatsoever (collectively “Claims”), of every kind and nature, however evidenced or created, whether known or unknown, directly arising out of, connected with or related to the Loan Agreement (as amended hereby) or any other Loan Document, or any act, event or transaction related or attendant thereto, other than Claims arising out of fraud or willful misconduct, arising prior to or on the date hereof, including, but not limited to, any Claims involving the extension of credit under the Loan Agreement or the other Loan Documents, as each may be amended, the Obligations incurred by the Parent, the Borrower or any Loan Party Obligor or any other transactions evidenced by or related to the Loan Agreement or any of the other Loan Documents
 
7.
Miscellaneous.
 

 a.
This Amendment shall be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed therein without regard to conflict of law principles.  Further, the law of the State of New York shall apply to all disputes or controversies arising out of or connected to or with this Amendment without regard to conflict of law principles. All parts of the Loan Agreement not affected by this Amendment are hereby ratified and affirmed in all respects, provided that if any provision of the Loan Agreement shall conflict or be inconsistent with this Amendment, the terms of this Amendment shall supersede and prevail. Upon the execution of this Amendment, unless expressly indicated otherwise, all references to the Loan Agreement in that document, or in any related document, shall mean the Loan Agreement as amended by this Amendment. Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Loan Agreement, and, except as specifically provided in this Amendment, the Loan Agreement shall remain in full force and effect.
 

 b.
This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  This Amendment and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.  Delivery of an executed counterpart of a signature page to this Amendment by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Amendment.
 
 
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
 
3
IN WITNESS WHEREOF, each of the Borrower, the Parent, the Agent and the Lenders, in accordance with the Loan Agreement, has caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date set forth in the preamble on page one of this Amendment.
 
 
BORROWER:
  
     
 
KASPIEN INC (f/k/a Etailz Inc.)
  
   
 
 
By:
/s/ Kunal Chopra
  
 
Name:
Kunal Chopra
  
 
Title:
Chief Executive Officer
  
       
 
PARENT:
  
     
 
KASPIEN HOLDINGS INC. (f/k/a Trans World Entertainment Corporation)
       
 
By:
/s/ Kunal Chopra
  
 
Name:
Kunal Chopra
  
 
Title:
Principal Executive Officer
  

[Signature Page to Amendment No. 4 to Loan and Security Agreement]
 
 
AGENT:
  
     
 
ECLIPSE BUSINESS CAPITAL LLC
  
       
 
By:
/s/ Daniel Ross
  
 
Name:
Daniel Ross
  
 
Title:
Authorized Signatory
  
       
       
 
LENDER:
  
     
 
ECLIPSE BUSINESS CAPITAL SPV, LLC
  
   
 
 
By:
/s/ Daniel Ross
  
 
Name:
Daniel Ross
  
 
Title:
Authorized Signatory
  


[Signature Page to Amendment No. 4 to Loan and Security Agreement]
Exhibit 10.2

Execution Version

AMENDMENT NO. 2 TO SUBORDINATED LOAN AND SECURITY AGREEMENT
 
THIS AMENDMENT NO. 2 TO SUBORDINATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into as of March 2, 2022 (“Effective Date”), by and among KASPIEN INC, a Washington corporation (f/k/a Etailz Inc.) (the “Borrower”), KASPIEN HOLDINGS INC., a New York corporation (f/k/a Trans World Entertainment Corporation) (the “Parent” and, together with the Borrower, the “Loan Parties”), the lenders party hereto (the “Lenders”), and TWEC LOAN COLLATERAL AGENT, LLC, as collateral agent for the Lenders (in such capacity, the “Collateral Agent”). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement (as defined below), as amended hereby.
 
RECITALS
 
WHEREAS, the Parent, the Borrower, the Lenders and the Collateral Agent are parties to that certain Subordinated Loan and Security Agreement, dated as of March 30, 2020 (as amended, modified, supplemented, extended, renewed, restated, or replaced from time to time, the “Loan Agreement”); and
 
WHEREAS, the Parent and the Borrower have requested that the Lenders make an additional Loan (the “Tranche B Loan”) in aggregate principal amount of $5,000,000 and one of the Lenders is willing to provide such Loan, subject to the terms and conditions set forth herein.
 
NOW THEREFORE, in consideration of the foregoing premises and the mutual benefits to be derived by the Borrower and the Lenders from a continuing relationship under the Loan Agreement and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Loan Parties, Collateral Agent, and Lenders hereby agree as follows:
 
1.
Amendments to Loan Agreement. Upon satisfaction of the conditions set forth in Section 2 hereof, and in reliance upon the representations and warranties of each of the Borrower and Parent set forth in the Loan Agreement and this Amendment, the Loan Parties, Lenders and Collateral Agent agree as follows:
 

 a.
The Loan Agreement, other than the Schedules and Exhibits thereto, is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the bolded and underlined text (indicated textually in the same manner as the following example: bolded and underlined text) as set forth in the Loan Agreement attached hereto as Annex I.
 

 b.
Schedule 2.1 of the Loan Agreement is hereby amended and restated in its entirety as set forth in Annex II to this Amendment.
 

 c.
Schedule 8.6 of the Loan Agreement is hereby amended and restated in its entirety as set forth in Annex III to this Amendment.
 

 d.
The Perfection Certificate attached as Exhibit A to the Loan Agreement is hereby replaced with the Perfection Certificated dated as of the date hereof and attached as Annex IV to this Amendment.
 
2.
Conditions to Effectiveness. This Amendment shall be effective and each Lender shall be obligated to fund its portion of the Tranche B Loan upon satisfaction of the following conditions precedent, all of which must be satisfied in a manner acceptable to the Lenders:
 

 a.
Each Loan Party shall have duly executed and/or delivered, or, as applicable, shall have caused such other applicable persons to have duly executed and or delivered, to the Lenders each of the items listed on the closing checklist attached hereto as Exhibit A.
 

 b.
Since October 30, 2021, no event shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect on any Loan Party.
 

 c.
The Lenders shall have received fully executed copies of an amendment, consent or waiver under the Senior Secured Credit Agreement reflecting consent to this Amendment and the establishment and funding of the Tranche B Loan, pursuant to Section 3.2 of the Intercreditor Agreement, with such amendment, consent or waiver otherwise in form and substance satisfactory to the Lenders.
 

 d.
All action on the part of the Loan Parties necessary for the valid execution, delivery and performance by the Loan Parties of this Amendment shall have been duly and effectively taken.
 

 e.
No Default or Event of Default shall be in existence, both before and after giving effect to this Amendment.
 

 f.
No Default or Event of Default under the Senior Secured Credit Agreement, or any related loan document shall have occurred and be continuing as of the Effective Date, immediately before and after giving effect to the transactions contemplated by this Amendment.
 

 g.
Borrower shall have paid all out-of-pocket expenses of the Collateral Agent and the Lenders incurred in connection with this Amendment and invoiced through the Second Amendment Effective Date, including without limitation, the costs and expenses of counsel.
 
3.
Post-Closing Matters.
 

 a.
Within 30 days of the date hereof, or such later date to be determined by Collateral Agent at its sole option, Borrower shall change the name of the owner on each of the Trademarks and Copyrights set forth in Section 4 of the Perfection Certificate attached as Annex IV hereto to KASPIEN INC via filing with the United States Patent and Trademark Office and United States Copyright Office, respectively, and, upon completion thereof, enter into an amendment to the Trademark Security Agreement dated as of March 30, 2020 by Borrower in favor of Collateral Agent (“Trademark Security Agreement”), which shall be recorded with the United States Patent and Trademark Office as described in the Trademark Security Agreement and the Copyright Security Agreement dated as of March 30, 2020 by Borrower in favor of Collateral Agent (“Copyright Security Agreement”), which shall be recorded with the United States Copyright Office as described in the Copyright Security Agreement.
 
2 of 4

 b.
With 5 Business Days of the date hereof, or such later date to be determined by Collateral Agent in its sole discretion, Parent shall amend its bylaws and articles of incorporation to exclude from its poison pill plan the Common Stock Warrant issued by Parent to Alimco Re Ltd. on the date hereof.
 

 c.
For the avoidance of doubt, the failure to satisfy any such post-closing requirement on or before the date when due (or within such longer period as the Collateral Agent may agree at its sole option) shall be an Event of Default, except as otherwise agreed to by the Collateral Agent at its sole option.
 
4.
Representations and Warranties. Each of the Parent and the Borrower hereby represents and warrants that, after giving effect to this Amendment: (i) no Default or Event of Default exists under the Loan Agreement or any other Loan Document, (ii) each of the Parent and the Borrower has the full power and authority to execute, deliver, and perform its respective obligations under, the Loan Agreement and the other Loan Documents, as amended by this Amendment, and (iii) the representations and warranties contained or referred to in Section 8 of the Loan Agreement and the other Loan Documents are true and accurate in all material respects as of the date of this Amendment (or, to the extent any such representations or warranties are expressly made solely as of an earlier date, such representations and warranties are true and correct as of such earlier date).
 
5.
Release. In consideration of the agreements of the Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parent, the Borrower and each Loan Party Obligor hereby releases and forever discharges each Lender and their respective directors, officers, employees, agents, attorneys, affiliates, subsidiaries, successors and assigns from any and all liabilities, obligations, actions, contracts, claims, causes of action, damages, demands, costs and expenses whatsoever (collectively “Claims”), of every kind and nature, however evidenced or created, whether known or unknown, directly arising out of, connected with or related to the Loan Agreement (as amended hereby) or any other Loan Document, or any act, event or transaction related or attendant thereto, other than Claims arising out of fraud or willful misconduct, arising prior to or on the date hereof, including, but not limited to, any Claims involving the extension of credit under the Loan Agreement or the other Loan Documents, as each may be amended, the Obligations incurred by the Parent, the Borrower or any Loan Party Obligor or any other transactions evidenced by or related to the Loan Agreement or any of the other Loan Documents.
 
3 of 4
6.
Miscellaneous.
 

 a.
This Amendment shall be governed by and construed in accordance with the law of the State of New York applicable to contracts made and to be performed therein without regard to conflict of law principles. Further, the law of the State of New York shall apply to all disputes or controversies arising out of or connected to or with this Amendment without regard to conflict of law principles. All parts of the Loan Agreement not affected by this Amendment are hereby ratified and affirmed in all respects, provided that if any provision of the Loan Agreement shall conflict or be inconsistent with this Amendment, the terms of this Amendment shall supersede and prevail. Upon the execution of this Amendment, unless expressly indicated otherwise, all references to the Loan Agreement in that document, or in any related document, shall mean the Loan Agreement as amended by this Amendment. Except as expressly provided in this Amendment, the execution and delivery of this Amendment does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Loan Agreement, and, except as specifically provided in this Amendment, the Loan Agreement shall remain in full force and effect.
 

 b.
This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Amendment and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Delivery of an executed counterpart of a signature page to this Amendment by telecopy, pdf or other electronic transmission shall be as effective as delivery of a manually executed counterpart of this Amendment.
 
[Remainder of Page Intentionally Left Blank; Signature Pages Follow]
 
4 of 4
IN WITNESS WHEREOF, each of the Borrower, the Parent, the Collateral Agent, and the Lenders, in accordance with the Loan Agreement, has caused this Amendment to be executed and delivered by their respective duly authorized officers as of the date set forth in the preamble on page one of this Amendment.
 
BORROWER:
     

KASPIEN INC (f/k/a Etailz Inc.)
     

By:
/s/ Kunal Chopra
  

Name:
Kunal Chopra
  

Title:
Chief Executive Officer
  
     

PARENT:
     

KASPIEN HOLDINGS INC. (f/k/a Trans World Entertainment Corporation)
     

By:
/s/ Kunal Chopra
  

Name:
Kunal Chopra
  

Title:
Principal Executive Officer
  

[Signature Page to Amendment No. 2 to Subordinated Loan and Security Agreement]

 
COLLATERAL AGENT:
  
       
 
TWEC LOAN COLLATERAL AGENT, LLC
  
       
 
By: ALIMCO RE LTD.
  
 
Its Member
  
       
 
By:
/s/ Jon Marcus
  
 
Name:
Jon Marcus
  
 
Title:
Chief Executive Officer
  
       
 
By: RJHDC, LLC
  
 
Its Member
  
       
 
By:
/s/ Anne Higgins
  
 
Name:
Anne Higgins
  
 
Title:
Sole Member / Manager
  

[Signature Page to Amendment No. 2 to Subordinated Loan and Security Agreement]

 
LENDERS:
  
       
 
ALIMCO RE LTD.
  
       
 
By:
/s/ Jon Marcus
  
 
Name:
Jon Marcus
  
 
Title:
Chief Executive Officer
  

[Signature Page to Amendment No. 2 to Subordinated Loan and Security Agreement]

 
RJHDC, LLC
  
       
 
By:
/s/ Anne Higgins
  
 
Name:
 Anne Higgins  
 
Title:
Manager
  

[Signature Page to Amendment No. 2 to Subordinated Loan and Security Agreement]

 
KICK-START III, LLC
  
       
 
By:
 /s/ Tom Simpson  
 
Name:
 Tom Simpson  
 
Title:
 Managing Member  

 
KICK-START IV, LLC
  
       
 
By:
/s/ Tom Higgins
  
 
Name:
 Tom Simpson  
 
Title:
 Managing Member  

[Signature Page to Amendment No. 2 to Subordinated Loan and Security Agreement]

Annex I
 
Conformed Loan Agreement

This instrument and the rights and obligations evidenced hereby, including any liens granted pursuant thereto, are subordinate in the manner and to the extent set forth in that certain Subordination and Intercreditor Agreement dated as of March 30, 2020 (as amended, restated, supplemented or otherwise modified and in effect from time to time, the “Subordination Agreement”) among (i) TWEC Loan Collateral Agent, LLC, for itself and the other lenders party to the Junior Loan Agreement referred to therein, (ii) each of Alimco Re Ltd., Kick-Start III, LLC, Kick-Start IV, LLC and RJHDC, LLC, as subordinated lenders, (iii) KASPIEN INC (f/k/a Etailz Inc.) and each of the other Borrowers now or hereafter party thereto (the “Borrowers”), (iv) Kaspien Holdings Inc. (f/k/a Trans World Entertainment Corporation) and each of the other Guarantors now or hereafter party thereto (the “Guarantors”), and (v) Eclipse Business Capital SPV, LLC (f/k/a Encina Business Credit, LLC), as Agent (in such capacity, together with its successors and assigns in such capacity, the “Agent”), and the lenders party thereto (the “Senior Lenders”), to (i) the Obligations (as defined in the Loan Agreement referred to therein) owed by the Borrowers pursuant to such Loan Agreement, and to indebtedness refinancing the indebtedness under such agreement as contemplated by the Subordination Agreement, and (ii) the Liens (as defined in such Loan Agreement) granted to the Agent to secure the Obligations, and to the Liens securing the indebtedness refinancing such Obligations; and each holder of this instrument, by its acceptance hereof, irrevocably agrees to be bound by the provisions of the Subordination Agreement.
 
SUBORDINATED LOAN AND SECURITY AGREEMENT
 
This Subordinated Loan and Security Agreement (as may be amended, restated or otherwise modified from time to time, this “Agreement”) is entered into on March 30, 2020, by and among ETAILZKASPIEN INC., a Washington corporation (f/k/a Etailz Inc.) (the “Borrower”), TRANS WORLD ENTERTAINMENT CORPORATIONKASPIEN HOLDINGS INC., a New York corporation (f/k/a Trans World Entertainment Corporation) (the “Parent”), any Loan Party Obligor party hereto from time to time, as Loan Party Obligors, the lendersLenders (as defined below) party hereto from time to time (collectively, the “Lenders”), and TWEC LOAN COLLATERAL AGENT, LLC, as collateral agent for the Lenders (in such capacity, the “Collateral Agent”). The Schedules and Exhibits to this Agreement, as well as the Perfection Certificate attached to this Agreement, are an integral part of this Agreement and are incorporated herein by reference.
 
1.            Definitions.
 
1.1          In addition to those capitalized terms otherwise defined in this Agreement, the following capitalized terms shall have the meanings set forth below:
 
(a)          “Closing Date” shall mean March 30, 2020.
 
(b)        “Collateral Assignment” means the Collateral Assignment of Agreements, dated as of the Closing Date, by EtailzBorrower in favor of the Collateral Agent for the benefit of the Lenders, as amended, supplemented or otherwise modified from time to time.
 
(c)         “Discharge of Senior Indebtedness” shall mean the indefeasible payment in full, in cash of the Senior Credit Facility Obligations (other than unasserted contingent indemnification claims) and the permanent termination or expiration of any commitment to make advances under the Senior Secured Credit Agreement.
 
(d)         “First Amendment” means that certain Amendment No. 1 to Subordinated Loan and Security Agreement dated as of September 16, 2021 by and among Borrower, Parent, and the Lenders.
 
(e)         “Guaranty” shall mean that certain Limited Guaranty dated as of the date hereof made by Parent in favor of Collateral Agent for the benefit of the Lenders, as amended, supplemented or otherwise modified from time to time.
 
(f)          (e) “Insolvency Proceeding” shall mean any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, assignments for the benefit of creditors, or proceedings seeking reorganization, arrangement, or other similar relief
 
(g)         (f) “Intercompany Subordination Agreement” shall mean that certain Intercompany Subordination Agreement dated as of the date hereof between Collateral Agent and Parent, as amended, supplemented or otherwise modified from time to time.
 
(h)         (g) “Intercreditor Agreement” shall mean (a) that certain Subordination and Intercreditor Agreement dated as of the date hereof by and among Borrower, Parent, Senior Agent, Senior Lenders, Collateral Agent, and Lenders and (b) any other subordination agreement in form and substance satisfactory to Collateral Agent between Senior Agent, Collateral Agent and any other holder of the Obligations.
 
(i)           (h) “Lenders” shall mean the Tranche A Lenders and the Tranche B Lenders.
 
(j)          “Loan Documents” shall mean, collectively, this Agreement (including all attachments, schedules and exhibits hereto), the First Amendment, the Second Amendment and all guaranties, security agreements, mortgages, other certificates, pledge agreements, landlord’s agreements, Lock Box and Blocked Account agreements, the Collateral Assignment, the Guaranty, the Pledge Agreement, the Intercompany Subordination Agreement, the Intercreditor Agreement, and all other agreements, documents and instruments now or hereafter executed or delivered by the Borrower, any Loan Party or any Other Obligor in connection with, or to evidence the transactions contemplated by, this Agreement.
 
(k)          (i) “Loans” shall mean, collectively, the Tranche A Loan and the Tranche B Loan.
 
(l)          “Maturity Date” means the earliest of (i) the Scheduled Maturity Date, or (ii) such earlier date as the Obligations may be accelerated in accordance with the terms of this Agreement.
 
(m)        (j) “Obligations” shall mean the LoanLoans and all other debts, liabilities, fees, expenses, obligations, guaranties, covenants, duties and indebtedness at any time owing by the Borrower, any Loan Party or any Obligor to the Collateral Agent or any Lender, whether evidenced by this Agreement, any other Loan Document or otherwise, whether arising from an extension of credit, guaranty, indemnification or otherwise, whether direct or indirect (including those acquired by assignment and any participation by any Lender in any Borrower’s indebtedness owing to others), whether absolute or contingent, whether due or to become due and whether arising before or after the commencement of a proceeding under the Bankruptcy Code or any similar statute.
 
(n)        (k) “Perfection Certificate” shall mean the Perfection Certificate dated as of the Closing Date attached hereto as Exhibit A, together with any updates thereto as contemplated by this Agreement, the Second Amendment, or otherwise.
 
(o)         (l) “Permitted Indebtedness” shall mean: (a) the Obligations; (b) the Senior Credit Facility Obligations; (c) the Indebtedness existing on the date hereof described in Section 7 of the Perfection Certificate; in each case along with extensions, refinancings, modifications, amendments and restatements thereof; provided that, (i) the principal amount thereof is not increased, (ii) if secured by a Permitted Lien, no additional collateral beyond that existing as of the Closing Date is granted to secure such Indebtedness; (iii) if such Indebtedness is subordinated to any or all of the Obligations, the applicable subordination terms shall not be modified without the prior written consent of Collateral Agent and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party; (d) Capitalized Leases and purchase-money Indebtedness secured by Permitted Liens in an aggregate amount not exceeding $250,000 at any time outstanding; (e) Indebtedness incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (f) the Intercompany Subordinated Debt owing by Borrowers in an aggregate principal amount not exceeding $10,356,140.65 at any time following the Closing Date; and (g) any other unsecured Indebtedness in an aggregate amount of up to $1,000,000 outstanding from time to time, so long as such Indebtedness is subject to a subordination agreement in form and substance satisfactory to Collateral Agent in its sole discretion, in each case under this clause (g) along with extensions, refinancings, modifications, amendments and restatements thereof; provided that (i)  the principal amount thereof is not increased, (ii) the final scheduled maturity date is no earlier than 91 days after the Scheduled Maturity Date, (iii) the applicable subordination terms shall not be modified without the prior written consent of Collateral Agent, and (iv) the terms thereof are not modified to impose more burdensome terms upon any Loan Party.
 
(p)          (m) “Permitted Lien” shall mean (a) Liens securing the Senior Credit Facility Obligations or any obligations permitted to be secured on a senior basis pursuant to the Intercreditor Agreement; (b) purchase-money security interests in specific items of Equipment securing Permitted Indebtedness described under clause (d) of the definition of “Permitted Indebtedness”; (c) liens for taxes, fees, assessments, or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such lien) for which adequate reserves in accordance with GAAP are being maintained provided the same have no priority over any of Collateral Agent’s security interests; (d) liens of materialmen, mechanics, carriers, or other similar liens arising in the Ordinary Course of Business and securing obligations which are not delinquent or are being contested in good faith by appropriate proceedings (which proceedings have the effect of preventing the enforcement of such lien) for which adequate reserves in accordance with GAAP are being maintained; (e) liens which constitute banker’s liens, rights of set-off, or similar rights as to deposit accounts or other funds maintained with a bank or other financial institution (but only to the extent such banker’s liens, rights of set-off or other rights are in respect of customary service charges relative to such deposit accounts and other funds, and not in respect of any loans or other extensions of credit by such bank or other financial institution to any Loan Party); (f) cash deposits or pledges of an aggregate amount not to exceed $50,000 to secure the payment of worker’s compensation, unemployment insurance, or other social security benefits or obligations, public or statutory obligations, surety or appeal bonds, bid or performance bonds, or other obligations of a like nature incurred in the Ordinary Course of Business; (g) judgment Liens in respect of judgments that do not constitute an Event of Default; and (h) Liens or rights of setoff against credit balances of Borrower with Credit Card Issuers or Credit Card Processors or amounts owing by such Credit Card Issuers or Credit Card Processors to Borrower in the Ordinary Course of Business, but not Liens on or rights of setoff against any other property or assets of Borrower, pursuant to the Credit Card Agreements to secure the obligations of Borrower to the Credit Card Issuers or Credit Card Processors as a result of fees and chargebacks.
 
(q)          (n) “Pledge Agreement” shall mean that certain Pledge Agreement dated as of the date hereof by Parent in favor of the Collateral Agent for the benefit of the Lenders, as amended, supplemented or otherwise modified from time to time.
 
(r)          (a) “Required Lenders” shall mean at any time Lenders then holding Loans representing more than two-thirds of the Loans then outstanding.
 
(s)        (b) “Restricted Account” shall mean Deposit Accounts (a) established and used (and at all times will be used) solely for the purpose of paying current payroll obligations of Loan Parties or the Parent, payroll taxes, worker’s compensation or unemployment compensation, pension benefits and other similar expenses to or for the benefit of any employees and accrued and unpaid employee compensation (including salaries, wages, benefits and expense reimbursement) (and which do not (and will not at any time) contain any deposits other than those necessary to fund current payroll or expenses to or for the benefit of employees), in each case in the Ordinary Course of Business, (b) maintained (and at all times will be maintained) solely in connection with an employee benefit plan, but solely to the extent that all funds on deposit therein are solely held for the benefit of, and owned by, employees (and will continue to be so held and owned) pursuant to such plan, (c) used specifically and exclusively for taxes required to be collected or withheld (including, without limitation, federal and state withholding taxes (including the employer’s share thereof), taxes owing to any governmental unit thereof, sales, use and excise taxes, customs duties, import duties and independent customs brokers’ charges) for which the Loan Parties or Parent may become liable, (d) which, individually or in the aggregate with all other accounts under this clause (d), does not have an aggregate balance which exceeds $100,000 at any time, or (e) solely with respect to the Parent, used solely in connection with a rabbi trust.
 
(t)           (c) “Scheduled Maturity Date” means May 22, 2023.March 31, 2024.
 
(u)         “Second Amendment” means that certain Amendment No. 2 to Subordinated Loan and Security Agreement dated as of March 2, 2022, by and among Borrower, Parent, the Collateral Agent and the Lenders.
 
(v)          “Second Amendment Effective Date” means March 2, 2022.
 
(w)        (d) “Senior Agent” shall mean Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC), as agent for the lenders under the Senior Secured Credit Agreement, together with its successors and assigns.
 
(x)          (e) “Senior Credit Facility Obligations” shall mean the Obligations as defined in the Senior Secured Credit Agreement.
 
(y)          (f) “Senior Secured Credit Agreement” shall mean that certain Loan and Security Agreement entered into on February 20, 2020, by and among the Borrower, the Loan Party Obligors party thereto from time to time, the lenders party thereto from time to time, and Senior Agent, as amended, restated or otherwise modified from time to time.
 
(z)          (g) “Senior Secured Loan Documents” shall mean the Loan Documents as defined in the Senior Secured Credit Agreement.
 
(aa)        (h) “Termination Date” means the date on which all of the Obligations (other than contingent obligations for which no claims have been made) have been paid in full in cash.
 
(bb)        (i) “Tranche A Lender” shall mean each Lender with a “Tranche A Commitment” on Schedule 2.1 hereto and each successor and assign thereof.
 
(cc)         “Tranche B Lender” shall mean each Lender with a “Tranche B Commitment” on Schedule 2.1 hereto and each successor and assign thereof.
 
(dd)        “Tranche A Loan” has the meaning set forth in Section 2.1(a).
 
(ee)         “Tranche B Loan” has the meaning set forth in Section 2.1(b).
 
(ff)          “Voting Agreement” means that certain Voting Agreement, dated as of the Closing Date, by and among the Parent and certain shareholders of the Parent.
 
1.2          Other Definitional Provisions.
 
(a)          With respect to each capitalized term used but not otherwise defined herein (including any capitalized term used in any definition or Section that is incorporated into this Agreement mutatis mutandis), the definition for such capitalized term as set forth in Section 1.1 (Certain Defined Terms) of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
(b)       Unless otherwise defined herein, the following terms are used herein as defined in the UCC: Accounts, Account Debtor, Certificated Security, Chattel Paper, Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Financing Statement, Fixtures, General Intangibles, Goods, Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible, Proceeds, Secured Party, Securities Accounts, Security Agreement, Supporting Obligations and Tangible Chattel Paper.
 
1.3        Other Definitional Provisions and References.  Sections 1.2 (Accounting Terms and Determinations) and 1.3 (Other Definitional Provisions and References) of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
2.            LoanLoans and Use of Proceeds.
 
2.1          Loans.

(a)         2.1 Tranche A Loan. Subject to the satisfaction of the terms and conditions hereof, each Tranche A Lender agrees to make a loan in Dollars to the Borrower on the Closing Date in a principal amount equal to the Tranche A commitment set forth opposite such Tranche A Lender’s name on Schedule 2.1 (collectively, the “Tranche A Loan”), and each Tranche A Lender shall deposit, via wire-transfer or direct deposit, into an account or accounts designated by Borrower an amount equal to the net proceeds of its portion of the Tranche A Loan; provided that no Tranche A Lender shall be liable for the failure of any other Tranche A Lender to fund any portion of the Tranche A Loan and no Tranche A Lender will be required to fund any portion of the Tranche A Loan amount in excess of the commitment set forth opposite such Tranche A Lender’s name on Schedule 2.1.  Amounts repaid or prepaid on the Tranche A Loan may not be reborrowed.
 
(b)         Tranche B Loan.  Subject to the satisfaction of the terms and conditions hereof and of the Second Amendment, each Tranche B Lender agrees to make a loan in Dollars to the Borrower on the Second Amendment Effective Date in a principal amount equal to the Tranche B commitment set forth opposite such Tranche B Lender’s name on Schedule 2.1 (collectively, the “Tranche B Loan”), and each Tranche B Lender shall deposit, via wire-transfer or direct deposit, into an account or accounts designated by Borrower an amount equal to the net proceeds of its portion of the Tranche B Loan; provided that no Tranche B Lender shall be liable for the failure of any other Lender to fund any portion of the Tranche B Loan and no Tranche B Lender will be required to fund any portion of the Tranche B Loan amount in excess of the commitment set forth opposite such Tranche B Lender’s name on Schedule 2.1.  Amounts repaid or prepaid on the Tranche B Loan may not be reborrowed.
 
2.2          Use of Proceeds.  The Borrower hereby agrees that (a) it shall not use the proceeds of suchthe Tranche A Loan for any purpose other than to (i) repay a portion of the amount due under the Intercompany Subordinated Note and to(ii) pay transaction expenses (including attorneys fees and expenses) payable to the Collateral Agent or the Lenders in connection with this Agreement and the other Loan Documents or as otherwise allowed by the following sentence., and (b) it shall not use the proceeds of the Tranche B Loan for any purpose other than (i) to pay the fees, costs, and expenses incurred in connection with this Agreement, the other Loan Documents, including but not limited to the Second Amendment, and the transactions contemplated hereby and thereby, and (ii) for Borrower’s working capital purposes. The Parent agrees to use all proceeds received on account of the LoanLoans to (i) fund the Parent’s operating expenses and/or, to the extent permitted under the Senior Secured Credit Agreement and the Intercreditor Agreement, contribute any proceeds not used to fund Parent’s operating expenses back to the Borrower, and the Borrower may immediately prepay the Obligations in the amount of such contributed amounts.  All proceeds of the LoanLoans will be used solely for lawful business purposes.
 
3.            Interest.
 
(a)          (ai)        Interest on the LoanTranche A Loans shall accrue at the rate of twelve percent (12.0%) per annum, and (ii) interest on the Tranche B Loans shall accrue at the rate of fifteen percent (15.0%) per annum, in each case, calculated on the basis of number of days elapsed in a 360-day year; provided, that upon the occurrence and during the continuation of an Event of Default, the Loan and all other monetary Obligations shall bear interest at a rate per annum equal to two (2) percentage points (2.00%) in excess of the rate otherwise applicable thereto.  Accrued interest shall be compounded on the last day of each calendar quarter and automatically paid in kind by becoming a part of the principal amount of the LoanLoans.  The deposit of the proceeds of the Tranche A Loan and Tranche B Loan under this Agreement in the account designated by the Borrower on the Closing Date and Second Amendment Effective Date, respectively, shall be prima facie evidence of Borrower’s indebtedness to the Lenders for such Loan, and interest shall begin to accrue on the principal amount of such Loan on the Business Day following such deposit.
 
(b)         (b)Collateral Agent shall maintain a loan account for Borrowers reflecting the LoanLoans, along with interest accrued thereon and such other items reflected therein (the “Loan Account”), which Loan Account shall be deemed accurate and complete absent manifest error.  However, Collateral Agent’s failure to maintain the Loan Account shall not affect the legality or binding nature of any of the Obligations.
 
4.            Payment; Prepayment.
 
4.1         Payments Generally.  All outstanding monetary Obligations shall be payable in full in cash Dollars on the Maturity Date to such account or accounts as each Lender may designate in writing to the Borrower from time to time.  The Borrower may, at any time or from time to time, subject to the terms of the Intercreditor Agreement, prepay the LoanLoans in whole or in part without premium or penalty. Payments of all amounts due hereunder shall be made on a Business Day.  Any payment due on a day that is not a Business Day shall be made on the next Business Day, together with all interest (if any) accrued in the interim.
 
4.2          Application of Payments; Sharing of Payments. Subject to the terms of the Intercreditor Agreement, any payment made under this Agreement and any proceeds of the Collateral realized by the Collateral Agent shall be applied as follows: (i) first, to pay any expenses then due to the Collateral Agent under this Agreement or any other Loan Document, until paid in full, (ii) second, pro rata to pay any expenses then due to any Lender under this Agreement or any Loan Document, until paid in full, (iii) third, pro rata to pay any accrued and unpaid interest then due to any Lender on the LoanLoans, until paid in full, (iii) fourth, pro rata to pay the unpaid principal amount of the LoanLoans due to each Lender, until paid in full, (iv) fifth, pro rata to pay any other Obligations, until paid in full, and (v) sixth, to Borrower (to an account designated by the Borrower) or such other Person entitled thereto under applicable law. For purposes of the foregoing, (a) “pro rata” means each Lender’s share of the aggregate Loans, and (b) “paid in full” means payment of all amounts owing under the Loan Documents according to the terms thereof, including attorneys fees, other professional fees, interest (and specifically including interest accrued after the commencement of any Insolvency Proceeding), default interest, interest on interest, and expense reimbursements, whether or not the same would be or is allowed or disallowed in whole or in part in any Insolvency Proceeding, but excluding contingent obligations for which no claims have been made.  Each Lender hereby agrees that to the extent it receives any payment or proceeds of any Collateral in excess of its pro rata share as contemplated by this Section 4.2, such Lender agrees to promptly turn over any such excess amount to the Collateral Agent or the other Lenders, as applicable.
 
4.3          Obligations Unconditional; Reversal of Payments; Notes; Joint and Several Liability.  Sections 2.7(a) (other than the last sentence thereof), 2.7(c), 2.8, 2.9 and 2.12 of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
5.            Security.
 
5.1        Grant of Security Interest.  To secure the full payment and performance of all of the Obligations, each Loan Party Obligor and the Parent hereby assigns to the Collateral Agent, a continuing security interest in all property of each such Loan Party Obligor and the Parent, whether tangible or intangible, real or personal, now or hereafter owned, existing, acquired or arising and wherever now or hereafter located, including: (a) all Accounts and Credit Card Receivables and all Goods whose sale, lease or other disposition by any Loan Party Obligor or the Parent has given rise to Accounts and have been returned to, or repossessed or stopped in transit by, any Loan Party Obligor or the Parent; (b) all Chattel Paper (including Electronic Chattel Paper), Instruments, Documents, and General Intangibles (including all patents, patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, copyright applications, registrations, licenses, software, franchises, customer lists, tax refund claims, claims against carriers and shippers, guaranty claims, contracts rights, payment intangibles, security interests, security deposits and rights to indemnification); (c) all Inventory; (d) all Goods (other than Inventory), including Equipment, vehicles, and Fixtures; (e) all Investment Property, including all rights, privileges, authority, and powers of each Loan Party Obligor and the Parent as an owner or as a holder of Pledged Equity, including all economic rights, all control rights, authority and powers, and all status rights of each Loan Party Obligor and the Parent as a member, equity holder or shareholder, as applicable, of each Issuer; (f) all Deposit Accounts, bank accounts, deposits, money and cash; (g) all Letter-of-Credit Rights; (h) all Commercial Tort Claims (if any); (i) all Supporting Obligations; (j) all Intellectual Property; (k) any other property (including, without limitation, the Intercompany Subordinated Note) of any Loan Party Obligor or the Parent now or hereafter in the possession, custody or control of the Senior Agent, the Collateral Agent or any bailee, agent or any parent, Affiliate or Subsidiary of the Collateral Agent, for any purpose (whether for safekeeping, deposit, collection, custody, pledge, transmission or otherwise); and (l) all additions and accessions to, substitutions for, and replacements, products and Proceeds of the foregoing property, including proceeds of all insurance policies insuring the foregoing property (including hazard, flood and credit insurance), and all of each Loan Party Obligor’s books and records relating to any of the foregoing and to any Loan Party’s business (collectively, the “Collateral”).  Notwithstanding anything to the contrary contained in clauses (a) through (l) above, the security interest created by this Agreement shall not extend to, and the term “Collateral” shall not include, any Excluded Property.
 
5.2          Possessory Collateral. Promptly, but in any event no later than thirty (30) days after any Loan Party Obligor’s or Parent’s receipt of any portion of the Collateral in an amount in excess of $100,000 in the aggregate evidenced by an agreement, Instrument or Document, including any Tangible Chattel Paper and any Investment Property consisting of certificated securities, subject to the Discharge of Senior Indebtedness, such Loan Party Obligor or the Parent, as applicable, shall deliver the original thereof to Collateral Agent together with an appropriate endorsement or other specific evidence of assignment thereof to Collateral Agent (in form and substance reasonably acceptable to Collateral Agent). If an endorsement or assignment of any such items shall not be made for any reason, Collateral Agent is hereby irrevocably authorized, subject to the Discharge of Senior Indebtedness, as attorney and agent-in-fact (coupled with an interest) for each Loan Party Obligor, to endorse or assign the same on such Loan Party Obligor’s behalf.  Notwithstanding anything to the contrary herein or in any other Loan Document, prior to the Discharge of Senior Indebtedness, the delivery or transfer of any Collateral to, or the control of any Collateral by, the Senior Agent, shall satisfy any delivery, transfer or control requirement herein or in any Loan Document.
 
5.3          Further Assurances.  Each Loan Party Obligor and the Parent shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (and/or use commercially reasonable efforts to cause each other applicable Person to take, execute, acknowledge and deliver) all such further acts, documents, agreements and instruments as Collateral Agent may from time to time reasonably require in order to (a) carry out the intent and purposes of the Loan Documents and the transactions contemplated thereby, (b) establish, create, preserve, protect and perfect a first priority lien (subject only to Permitted Liens) in favor of the Collateral Agent in all the Collateral (wherever located) from time to time owned by the Loan Party Obligors and in all capital stock and other equity from time to time issued by the Loan Parties (other than Parent) constituting Collateral (including appraisals of real property in compliance with FIRREA), (c) cause each domestic Subsidiary of a Borrower to guaranty all of the Obligations, all pursuant to documentation that is in form and substance reasonably satisfactory to the Collateral Agent, and (d) facilitate the collection of the Collateral.  Without limiting the foregoing, each Loan Party Obligor and Parent shall, at its own cost and expense, promptly and duly take, execute, acknowledge and deliver (and/or use commercially reasonable efforts to cause each other applicable Person to take, execute, acknowledge and deliver) to Collateral Agent all promissory notes, security agreements, agreements with landlords, mortgagees and processors and other bailees, subordination and intercreditor agreements, credit card processor agreements, credit card notification agreements and other agreements, instruments and documents, in each case in form and substance reasonably acceptable to Collateral Agent, as Collateral Agent may reasonably request from time to time to perfect, protect and maintain Collateral Agent’s security interests in the Collateral, including the required priority thereof, and to fully carry out the transactions contemplated by the Loan Documents.
 
5.4          UCC Financing Statements.  Each Loan Party Obligor and Parent authorizes Collateral Agent to file, transmit or communicate, as applicable, from time to time, UCC Financing Statements, along with amendments and modifications thereto, in all filing offices selected by Collateral Agent, listing such Loan Party Obligor or Parent, as applicable, as the Debtor and Collateral Agent as the Secured Party, and describing the collateral covered thereby in such manner as Collateral Agent may elect, including using descriptions such as “all personal property of debtor” or “all assets of debtor,” or words of similar effect, in each case without such Loan Party Obligor’s signature.
 
5.5         Release.  Section 5.5 (Releases) of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
6.           Certain Provisions Regarding Accounts, Inventory, and Collections.
 
6.1         Deposit Accounts and Lockboxes.  Each Loan Party Obligor and the Parent hereby represents and warrants that all Deposit Accounts and all other depository and other accounts maintained by each Loan Party Obligor or the Parent as of the ClosingSecond Amendment Effective Date are described in Section 3 of the Perfection Certificate, which description includes for each such account the name of the Loan Party Obligor or Parent maintaining the account, the name of the financial institution at which the account is maintained, the account number and the purpose of the account. After the Closing Date, no Loan Party Obligor or Parent shall open any new Deposit Account or any other depository or other account without the prior written consent of Senior Agent (prior to the Discharge of Senior Indebtedness) or the Collateral Agent and without updating Section 3 of the Perfection Certificate to reflect such Deposit Account or other account and, unless such account is a Restricted Account, entering into a control agreement in favor of the Collateral Agent, which control agreement is in form and substance acceptable to the Collateral Agent. No Deposit Account or other account of any Loan Party Obligor or the Parent shall at any time constitute a Restricted Account other than accounts expressly indicated on Section 3 of the Perfection Certificate as being Restricted Accounts (and each Loan Party Obligor hereby represents and warrants that each such account shall at all times meet the requirements set forth in the definition of “Restricted Account” to qualify as a Restricted Account).  Following the Discharge of Senior Indebtedness, each Loan Party Obligor and Parent will, at its expense, establish (and revise from time to time as the Collateral Agent may reasonably require) procedures acceptable to the Collateral Agent, in the Collateral Agent’s reasonable discretion, for the collection of checks, wire transfers and all other proceeds of all of such Loan Party Obligor’s Accounts and other Collateral (“Collections”), which shall include (a) directing all Account Debtors to send all Account proceeds directly to a post office box designated by the Collateral Agent, either in the name of such Loan Party Obligor (but as to which the Collateral Agent has exclusive access) or, at the Collateral Agent’s option, in the name of the Collateral Agent, as applicable (a “Lock Box”) and (b) depositing all Collections received by such Loan Party Obligor  into one or more bank accounts maintained in the name of such Loan Party Obligor (but as to which the Collateral Agent has exclusive access) or, at the Collateral Agent’s option, in the name of the Collateral Agent, as applicable (each, a “Blocked Account”), under an arrangement reasonably acceptable to the Collateral Agent, in the name of the Collateral Agent, as applicable, with a depository bank reasonably acceptable to the Collateral Agent, pursuant to which all funds deposited into each Blocked Account are to be transferred to the Collateral Agent in such manner, and with such frequency, as the Collateral Agent shall specify, and/or (c) a combination of the foregoing. Following the Discharge of Senior Indebtedness, each Loan Party Obligor agrees to execute, and to cause its depository banks and other account holders to execute, such Lock Box and Blocked Account control agreements and other documentation as the Collateral Agent shall require from time to time in connection with the foregoing, all in form and substance reasonably satisfactory to the Collateral Agent, and in any event such arrangements and documents must be in place on the date hereof with respect to accounts in existence on the date hereof, or prior to any such account being opened with respect to any such account opened after the date hereof, in each case excluding Restricted Accounts.

6.2          Credit Card Processing and Limitations on Accounts.  Clauses (b) and (c) of Section 6.1 (Lock Boxes and Blocked Accounts) of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
6.3        Power of Attorney.  Section 6.4 (Power of Attorney) of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes; provided that each reference to Loan Party Obligors contained therein shall be deemed to include the Parent.
 
6.4         Disputes.  Each Loan Party Obligor shall promptly notify the Collateral Agent of all disputes or claims relating to its Accounts, Credit Card Receivables and Chattel Paper in excess of $50,000. Each Loan Party Obligor agrees that following the Discharge of Senior Indebtedness, it will not, without Collateral Agent’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), compromise or settle any of its Accounts, Credit Card Receivables or Chattel Paper for less than the full amount thereof, grant any extension of time for payment of any of its Accounts, Credit Card Receivables or Chattel Paper, release (in whole or in part) any Account Debtor or other person liable for the payment of any of its Accounts or Chattel Paper or grant any credits, discounts, allowances, deductions, return authorizations or the like with respect to any of its Accounts, Credit Card Receivables or Chattel Paper; except (unless otherwise directed by the Collateral Agent during the existence of a Default or an Event of Default) such Loan Party Obligor may take any of such actions in the Ordinary Course of Business consistent with past practices, provided that Borrower promptly reports the same to the Collateral Agent if the aggregate amount in any month exceeds $10,000.
 
6.5        Invoices. Following the Discharge of Senior Indebtedness, at Collateral Agent’s request after the occurrence and during the continuance of a Default or Event of Default, each Loan Party Obligor will cause all invoices and statements that it sends to Account Debtors or other third parties to be marked and authenticated, in a manner reasonably satisfactory to Collateral Agent, to reflect the Collateral Agent’s security interest therein and payment instructions (including, but not limited to, in a manner to meet the requirements of Section 9-404(a)(2) of the UCC).
 
6.6          Inventory.
 
(a)          Returns. No Loan Party Obligor will accept returns of any Inventory from any Account Debtor except in the Ordinary Course of Business.

(b)        Third Party Locations. No Loan Party Obligor will, without Senior Agent’s prior written consent (or the prior written consent of the Collateral Agent following a Discharge of Senior Indebtedness), at any time, store any Inventory with any warehouseman or other third party other than as set forth in Section 1(d) of the Perfection Certificate.

(c)          Sale on Return, etc. No Loan Party Obligor will, without Senior Agent’s prior written consent (or the written consent of the Collateral Agent following a Discharge of Senior Indebtedness), at any time, sell any Inventory on a sale-or-return, guaranteed sale, consignment, or other contingent basis.

(d)          Fair Labor Standards Act. Each Loan Party Obligor represents, warrants and covenants that, at all times, all of the Inventory of each Loan Party Obligor has been, at all times will be, produced only in accordance with the Fair Labor Standards Act of 1938 and all rules, regulations and orders promulgated thereunder.

7.         Conditions Precedent to Tranche A Loan.  Each Lender’s obligation to fund its portion of the Tranche A Loan under this Agreement is subject to the following conditions precedent (as well as any other conditions set forth in this Agreement or any other Loan Document), all of which must be satisfied in a manner acceptable to such Lender (and as applicable, pursuant to documentation which in each case is in form and substance acceptable to such Lender):
 
7.1        Each Loan Party Obligor and the Parent shall have duly executed and/or delivered, or, as applicable, shall have caused such other applicable Persons to have duly executed and or delivered, to such Lender each of the items listed on closing checklist attached hereto as Exhibit B;
 
7.2         Parent shall have adopted a “poison pill” plan to discourage changes in ownership that would trigger limitations on the use of net operating loss carryforwards pursuant to Section 382 of the Code, in form and substance acceptable to the Lenders;
 
7.3        Since February 2, 2019, no event shall have occurred which has had, or could reasonably be expected to have, a Material Adverse Effect on any Loan Party or the Parent;
 
7.4         The Parent shall have adopted resolutions (i) setting the size of the board of directors of the Parent (the “Board”) at three (3) directors and (ii) taking necessary steps to appoint to the Board, to the extent not already members thereof, the individuals identified in the Voting Agreement;
 
7.5         No Default or Event of Default under the Senior Secured Credit Agreement, or any related loan document shall have occurred and be continuing as of the Closing Date, immediately before and after giving effect to the transactions contemplated by this Agreement and the other Loan Documents;
 
7.6        Each of the representations and warranties set forth in this Agreement and in the other Loan Documents shall be true and correct in all respects as of the date such Tranche A Loan is made (or, to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties shall be true and correct as of such earlier date), both before and after giving effect thereto;
 
7.7          Borrowers shall have paid all out-of-pocket expenses of the Collateral Agent and the Lenders invoiced through the Closing Date; and
 
7.8          No Default or Event of Default shall be in existence, both before and after giving effect thereto.
 
8.            Representations and Warranties and Affirmative Covenants.
 
8.1         Loan Party Obligors and Parent.  To induce the Collateral Agent and the Lenders to enter into this Agreement, the representations, warranties, and covenants made by each Loan Party Obligor and Parent under Section 7 (Representations, Warranties and Affirmative Covenants) of the Senior Secured Credit Agreement (other than Sections 7.4 (Accounts,  Credit Card Receivables and Chattel Paper), 7.5 (Electronic Chattel Paper), 7.13 (Use of Proceeds), 7.15(c) (Financial, Collateral and Other Reporting/Notices), the last sentence of Section 7.23(b), Sections 7.24 (Access to Collateral, Books and Records), 7.25 (Appraisals), 7.27 (Reserved), 7.28 (Reserved) and 7.29 (Post-Closing Matters) thereto) are incorporated herein mutatis mutandis (it being understood and agreed that (a) each such representation and warranty (i) will be made as of the date hereof (except to the extent any such representation or warranty expressly relates only to any earlier or specified date, in which case such representation or warranty will be made as of such earlier or specified date) and (ii) shall not be affected by any knowledge of, or any investigation by, the Collateral Agent, any Lender or the Senior Agent or any lender under the Senior Secured Credit Facility, (b) each such covenant shall continuously apply with respect to all times commencing on the date hereof and continuing until the Termination Date, and (c) Parent’s and each Loan Party Obligor’s obligations hereunder in respect of Section 7.14 (Insurance) of the Senior Secured Credit Agreement, as incorporated herein mutatis mutandis, shall be subject to Section 8.4 hereof.
 
8.2         Electronic Chattel Paper.  To the extent that any Loan Party Obligor or Parent obtains or maintains any Electronic Chattel Paper in an aggregate amount in excess of $100,000, such Loan Party Obligor or Parent, as applicable, shall at all times create, store and assign the record or records comprising the Electronic Chattel Paper in such a manner that (a) a single authoritative copy of the record or records exists which is unique, identifiable and except as otherwise provided below, unalterable, (b) the authoritative copy identifies the Senior Agent (or after the Discharge of Senior Indebtedness, the Collateral Agent) as the assignee of the record or records, (c) the authoritative copy is communicated to and maintained by Senior Agent (or after the Discharge of Senior Indebtedness, the Collateral Agent) or its designated custodian, (d) copies or revisions that add or change an identified assignee of the authoritative copy can only be made with the participation of Senior Agent (or after the Discharge of Senior Indebtedness, the Collateral Agent), (e) each copy of the authoritative copy and any copy of a copy is readily identifiable as a copy that is not the authoritative copy and (f) any revision of the authoritative copy is readily identifiable as an authorized or unauthorized revision.
 
8.3        Access to Collateral, Books and Records.  At reasonable times and, so long as no Event of Default has occurred and is continuing, upon reasonable prior notice, Collateral Agent and its representatives or agents shall have the right to inspect the Collateral and to examine and copy each Loan Party’s and the Parent’s books and records. Each Loan Party Obligor and Parent agrees to give Collateral Agent access to any or all of Parent’s, Loan Party Obligor’s, and each of its Subsidiaries’, premises to enable Collateral Agent to conduct such inspections and examinations.  Following an Event of Default, such examinations shall be at the Borrower’s expense.  Upon the occurrence and during the continuance of an Event of Default, subject to the Discharge of Senior Indebtedness, the Collateral Agent may, at Borrowers’ expense, use each Loan Party’s and Parent’s personnel, computer and other equipment, programs, printed output and computer readable media, supplies and premises for the collection, sale or other disposition of Collateral to the extent Collateral Agent, in its reasonable discretion, deems appropriate. Each Loan Party Obligor and Parent hereby irrevocably authorizes all accountants and third parties to disclose and deliver to the Collateral Agent, at Borrowers’ expense, all financial information, books and records, work papers, management reports and other information in their possession regarding the Loan Parties or the Parent.

8.4        Post-Closing Matters.  Loan Party Obligors and the Parent, as applicable, shall satisfy the requirements set forth on Schedule 8.4 hereof on or before the dates specified therein or such later date to be determined by Collateral Agent, at its sole option, each of which shall be completed or provided in form and substance reasonably satisfactory to the Collateral Agent. The failure to satisfy any such requirement on or before the date when due (or within such longer period as the Collateral Agent may agree at its sole option) shall be an Event of Default, except as otherwise agreed to by the Collateral Agent at its sole option.
 
8.5         Voting Agreement.  From and after the first shareholder meeting of Parent held after the Closing Date, the board of the Parent shall consist of three directors appointed in accordance with the terms and provisions of the Voting Agreement.
 
8.6         Warrants or Options.  Except as set forth on Schedule 8.6, as of the ClosingSecond Amendment Effective Date, there are no outstanding contracts, options, warrants, instruments, documents or agreements binding upon the Parent granting to any Person or group of Persons any right to purchase or acquire shares of the Parent’s capital stock.
 
9.            Negative Covenants.
 
9.1         Loan Party Obligors.  The negative covenants set forth in Section 8(a) (Negative Covenants) of the Senior Secured Credit Agreement are incorporated herein mutatis mutandis; provided that, the reference to the “Alimco Subordinated Debt Documents” in Section 8(a)(xxi) shall be deemed to be a reference to the “Senior Secured Loan Documents” for purposes of this Section 9.1 only.
 
9.2          Parent.   The negative covenants set forth in Section 8(b) (Negative Covenants) of the Senior Secured Credit Agreement are incorporated herein mutatis mutandis.
 
10.          Release, Limitation of Liability and Indemnity.  Section 10 (Release, Limitation of Liability and Indemnity) of the Senior Secured Credit Agreement shall be deemed to be incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
11.          Default. Each of the following shall constitute an “Event of Default” under this Agreement:
 
11.1      Payment. If any Loan Party Obligor or Other Obligor fails to pay when due, any principal or interest payment or other monetary Obligation required under this Agreement or any other Loan Document;
 
11.2       Breaches of Representations and Warranties. If any warranty, representation, statement, report or certificate made or delivered to the Collateral Agent or any Lender by or on behalf of any Loan Party or Other Obligor is untrue or misleading in any material respect (except where such warranty or representation is already qualified by Material Adverse Effect, materiality, dollar thresholds or similar qualifications, in which case such warranty or representation shall be accurate in all respects);
 
11.3        Breaches of Covenants.
 
(a)         If any Loan Party defaults in the due observance or performance of any covenant, condition or agreement contained in Sections 2.2, 5.2, 6.1, 6.2, 6.5, 6.6, 8.1 (but solely in respect of Sections 7.2 (limited to the last sentence thereof), 7.3, 7.14 (but subject to Section 8.4 hereof), 7.15 (excluding Section 7.15(c)), and 7.26 of the Senior Secured Credit Agreement that are incorporated by reference therein), 8.3, 8.4, or 9.1 hereto;
 
(b)         If the Parent defaults in the due observance or performance of any covenant, condition or agreement contained in Sections 2.2, 5.2, 6.1, 8.1 (but solely in respect of Sections 7.2 (limited to the last sentence thereof), 7.3, 7.14 (but subject to Section 8.4 hereof), and 7.15 (excluding Section 7.15(c)) of the Senior Secured Credit Agreement that are incorporated by reference therein), 8.4, or 9.2 hereto; or
 
(c)         If any Loan Party or Parent defaults in the due observance or performance of any covenant, condition or agreement contained in any provision of this Agreement or any other Loan Document and not addressed in clauses Sections 11.1, 11.2, 11.3(a), or 11.3(b) hereto, and the continuance of such default unremedied for a period of fifteen (15) Business Days; provided that such fifteen (15) Business Day grace period shall not be available for any default that is not reasonably capable of being cured within such period or for any intentional default;
 
11.4        Judgment. If one or more judgments aggregating in excess of $250,000 is obtained against any Loan Party or Parent which remains unstayed for more than thirty (30) days or is enforced;
 
11.5     Cross-Default. If any default occurs with respect to any Indebtedness (other than the Obligations, the Senior Credit Facility Obligations, or the Intercompany Subordinated Debt) of any Loan Party or Parent in an aggregate principal amount in excess of $250,000 if (i) such default shall consist of the failure to pay such Indebtedness when due, whether by acceleration or otherwise or (ii) the effect of such default is to permit the holder, with or without notice or lapse of time or both, to accelerate the maturity of any such Indebtedness or to cause such Indebtedness to become due prior to the stated maturity thereof (without regard to the existence of any subordination or intercreditor agreements);
 
11.6      Cross Acceleration to Senior Secured Credit Agreement. There occurs any “Event of Default” under the Senior Secured Credit Agreement and the Senior Credit Facility Obligations are declared to be due and payable, or required to be prepaid (other than by a regularly scheduled prepayment or mandatory prepayment in accordance with the terms of the Senior Secured Loan Documents), redeemed, purchased or defeased, in each case, prior to the Scheduled Maturity Date (as defined in the Senior Secured Credit Agreement);
 
11.7        Dissolution; Cessation of Business. The dissolution, termination of existence or suspension or cessation of business as usual of any Loan Party or Parent;
 
11.8       Voluntary Bankruptcy or Similar Proceedings.  If any Loan Party or Other Obligor shall apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its properties, admit in writing its inability to pay its debts as they mature, make a general assignment for the benefit of creditors, be adjudicated a bankrupt or insolvent or be the subject of an order for relief under the Bankruptcy Code or under any bankruptcy or insolvency law of a foreign jurisdiction, or file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or take or permit to be taken any action in furtherance of or for the purpose of effecting any of the foregoing;
 
11.9       Involuntary Bankruptcy or Similar Proceedings. The commencement of an involuntary case or other proceeding against any Loan Party or Other Obligor seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar applicable law or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or if an order for relief is entered against any Loan Party or Other Obligor under any bankruptcy, insolvency or other similar applicable law as now or hereafter in effect; provided that if such commencement of proceedings is involuntary, such action shall not constitute an Event of Default unless such proceedings are not dismissed within sixty (60) days after the commencement of such proceedings;
 
11.10     Revocation or Termination of Guaranty or Security Documents. The actual or attempted revocation or termination of, or limitation or denial of liability under, any guaranty of any of the Obligations, or any security document securing any of the Obligations, by any Loan Party or Other Obligor;
 
11.11      Subordinated Indebtedness.
 
(a)          A Default or Event of Default (as such terms are defined in the Intercompany Subordinated Debt Documents) with respect to the Intercompany Subordinated Debt or the occurrence of any condition or event that results in the Intercompany Subordinated Debt becoming due prior to its scheduled maturity as of the Closing Date or permits any holder or holders of the Intercompany Subordinated Debt or any trustee or agent on its or their behalf to cause the Intercompany Subordinated Debt to become due, or require the prepayment, repurchase, redemption of defeasance thereof, prior to its scheduled maturity as of the Closing Date; or
 
(b)         If any Loan Party makes any payment on account of the Intercompany Subordinated Debt or any Indebtedness or obligation which has been contractually subordinated to the Obligations other than payments which are permitted hereunder or by the applicable subordination provisions pertaining thereto, or if any Person who has subordinated such Indebtedness or obligations attempts to limit or terminate any applicable subordination provisions pertaining thereto, in each case, including the Intercompany Subordination Agreement;
 
11.12     Criminal Indictment or Proceedings. If there is any actual indictment or conviction of any Loan Party or Parent or any of their respective senior officers, under any criminal statute in each case related to a felony committed in the direct conduct of any Loan Party’s or Parent’s business;
 
11.13     Change of Control. If (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Closing Date), other than the Permitted Holders, acquires, or shall be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act as in effect on the Closing Date) of, 35% or more of the outstanding direct or indirect equity interests of Parent on a fully diluted basis unless the Permitted Holders own more than 50% of the outstanding direct or indirect equity interests of Parent on a fully diluted basis, (ii) Parent ceases to possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority of the board of directors (or similar governing body) of Borrower and to direct the management policies and decisions of Borrower, (iii) Parent ceases to directly own and control 100% of each class of the outstanding equity interests of Borrower or (iv) Borrower ceases to, directly or indirectly, own and control 100% of each class of the outstanding equity interests of each other Loan Party;
 
11.14     Change of Management. If (i) Kunal B. Chopra ceases to be employed as, and actively perform the duties of, the chief executive officer of each Loan Party, or (ii) Brock J. Kowalchuk ceases to be employed as, and actively perform the duties of, the chief financial officer of each Loan PartyBorrower, or (iii) Edwin J. Sapienza ceases to be employed as, and actively perform the duties of, the chief financial officer of Parent, in each case unless a successor (or interim successor) is appointed within ninety (90) days after the termination of such individual’s employment and such successor (or interim successor) is reasonably satisfactory to the Senior Agent (or after the Discharge of Senior Indebtedness, the Collateral Agent);
 
11.15      Invalid Liens. If any Lien purported to be created by any Loan Document shall cease to be a valid perfected first priority Lien (subject only to Permitted Liens) on any material portion of the Collateral, or any Loan Party or Parent shall assert in writing that any Lien purported to be created by any Loan Document is not a valid perfected first-priority lien (subject only to Permitted Liens) on the assets or properties purported to be covered thereby, except, in each case, (i) as a result of the sale or other disposition of the applicable Collateral in a transaction permitted under any Loan Document, (ii) the release by Collateral Agent of any Liens on the Collateral pursuant to this Agreement, (iii) as a result of the failure of the Collateral Agent (or, prior to the Discharge of Senior Indebtedness, Senior Agent) to maintain possession of any Collateral or (iv) as a result of the failure of the Collateral Agent to file continuation statements with respect to any financing statement;
 
11.16     Termination of Loan Documents. If any of the Loan Documents shall cease to be in full force and effect (other than as a result of the discharge thereof in accordance with the terms thereof or by written agreement of all parties thereto);
 
11.17     Liquidation Sales. The determination by any Loan Party or Parent to employ an agent or other third party or otherwise engage any Person or solicit proposals for the engagement of any Person (i) in connection with the proposed liquidation of all or a material portion of its assets, or (ii) to conduct any so-called liquidation or “Going-Out-Of-Business” sales;
 
11.18     Loss of Collateral. The (i) uninsured loss, theft, damage or destruction of any of the Collateral in an amount in excess of $250,000 in the aggregate for all such events during any Fiscal Year, or (ii) except as permitted hereby, the sale, lease or furnishing under a contract of service of, any of the Collateral; or
 
11.19      Plans. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or could reasonably be expected to result in liability of any Loan Party or Parent or any Subsidiary under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of $250,000, (ii) the existence of any Lien under Section 430(k) or Section 303(k) or Section 4068 of ERISA on any assets of a Loan Party or Parent, or (iii) a Loan Party or Parent or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount in excess of $250,000.
 
12.          Rights and Remedies upon an Event of Default.
 
12.1       Should any one or more Events of Default occur and continue to exist under this Agreement as provided above, in addition to other rights and remedies provided for herein or otherwise available at law, Collateral Agent may (in its sole discretion), or at the direction of the Required Lenders, shall: (i) accelerate the payments due under, and/or maturity of, this Agreement and insist upon immediate payment in full in cash of the Obligations; and (ii) take any and all other and further actions and avail itself of any and all rights and remedies available to the Lender under this Agreement, any other Loan Document, under law or in equity. Notwithstanding the foregoing sentence, upon the occurrence of any Event of Default described in Section 11.8 or Section 11.9, without notice, demand or other action by Collateral Agent all of the Obligations shall immediately become due and payable whether or not payable on demand prior to such Event of Default.
 
12.2       Section 11.3 (Remedies with Respect to Collateral) of the Senior Secured Credit Agreement is hereby incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
12.3       During the continuance of one or more Events of Default, Collateral Agent may obtain the appointment of a Receiver as contemplated by pursuant to Section 12.2, without notice to, or demand of any Loan Party or any Other Obligor.
 
13.         Loan Guaranty.  Section 12.1 (Loan Guaranty) of the Senior Secured Credit Agreement is hereby incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
14.         Payments Free of Taxes. Section 13 (Payments Free of Taxes; Obligation to Withhold; Payments on Account of Taxes) of the Senior Secured Credit Agreement are hereby incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
15.         Notices.   Unless otherwise provided in this Agreement, all notices relating to this Agreement or any other Loan Document shall be in writing and shall be personally delivered or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as Borrower, any other Loan Party, any Other Obligor, Collateral Agent or any Lender, as applicable, may designate to each other in accordance herewith), or telefacsimile to Borrower, any other Loan Party, any Other Obligor, Collateral Agent or any Lender, as the case may be, at its address set forth below:
 
If to Borrower, any other Loan Party or any Other Obligor:

Etailz Inc.
KASPIEN INC
2818 N. Sullivan Road, Suite #130
Spokane Valley, Washington 99216
Attention: Kunal Chopra, Chief Executive Officer
Email: Kunal@etailzkaspien.com

with a copy to:

Cahill Gordon & Reindel LLP
80 Pine Street
32 Old Slip
New York, NY 10005
Attention: Marc LashbrookDaniel R. Anderson
Email: MLashbrookDAnderson@cahill.com

If to Collateral Agent or any Lender:

Alimco Re Ltd.
2336 SE Ocean Blvd., #400
Stuart, FL 34996
Attention: Jonathan Marcus, Chief Executive Officer
Email: jon@limadvisory.com

with a copy to:

K&L Gates LLP
1717 Main Street, Suite 2800
Attention: Jonathan Vance
Email: jonathan.vance@klgates.com

and

RJHDC, LLC
c/o Independent Family Office, LLC
677 Broadway, 7th Floor
Albany, NY 12207
Tel: (518) 452-8050 ext. 1
Fax: (518) 452-8053

with a copy to:

Schoeneck & King
22 Corporate Woods, Suite 501
Albany, NY 12211
Attention: Jennifer Boll
Email: jboll@bsk.com

and

Kick-Start III, LLC
Kick-Start IV, LLC
1925 S. Stevens
Spokane, WA 99203
Attention: Tom Simpson
Email: tom@nwva.com

Collateral Agent, any Lender, Borrower, any other Loan Party or any Other Obligor may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other parties. All notices or demands sent in accordance with this Section 15, other than notices by Collateral Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail.  Borrower and Parent acknowledge and agree that notices sent by Collateral Agent in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.

16.          Miscellaneous. Sections 15.2 (Severability), 15.3 (Integration), 15.4 (Waivers), 15.6 (Time of Essence), 15.7 (Expenses, Fee and Costs Reimbursement), 15.8 (Benefit of Agreement; Assignability) (it being understood that reference therein to Section 15.9 of the Senior Secured Credit Agreement shall be deemed a reference to Section 18 hereof), 15.10 (Participations), 15.11 (Headings; Construction), 15.12 (USA PATRIOT Act Notification), 15.13 (Counterparts; Fax/Email Signatures), 15.14 (Governing Law), 15.15 (Consent to Jurisdiction; Waiver of Jury Trial; Consent to Service of Process), and 15.17 (Confidentiality) of the Senior Secured Credit Agreement are hereby incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes.
 
17.          Amendments.  No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Loan Documents shall in any event be effective unless the same shall be in writing and acknowledged by the Loan Parties, Parent and the Required Lenders, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided that, no amendment, modification, waiver or consent shall (i) increase the commitment of any Lender without the written consent of such Lender, (ii) extend the date scheduled for payment of any principal of or interest on theany Loan or any fees payable hereunder without the written consent of each Lender directly affected thereby, (iii) reduce the principal amount of any Loan, the rate of interest thereon or any fees payable hereunder, without the consent of each Lender directly affected thereby, or (iv) release any guarantor from its obligations under any Guaranty, other than as part of or in connection with any disposition permitted hereunder or under the Intercreditor Agreement, or release or subordinate its liens on all or any substantial part of the Collateral granted under any of the other Loan Documents (except as permitted pursuant to Section 22(b)), or change the definition of “Required Lenders”, any provision of Section 4.2, any provision of Section 16 (but solely with respect to Section 15.4 of the Senior Secured Credit Agreement incorporated herein mutatis mutandis) or this Section 17, without, in each case set forth in this clause (iv), the written consent of all Lenders. No provision of Section 22 or other provision of this Agreement affecting Collateral Agent in its capacity as such shall be amended, modified or waived without the consent of the Collateral Agent.
 
18.          Assignment.
 
(a)          Subject to (i) the terms and conditions of the Intercreditor Agreement, and (ii) receipt of the prior written consent of the Borrower (which consent shall not be unreasonably withheld or delayed) (provided, that no consent of Borrower shall be required (1) if an Event of Default has occurred and is continuing, (2) in connection with an assignment or a delegation to a Person that is a Lender or an Affiliate (other than natural persons) of a Lender, or (3) such assignment or delegation is required or deemed advisable by any Governmental Authority to which any Lender is subject; provided, further, that Borrower shall be deemed to have consented to a proposed assignment unless it objects thereto by written notice to Lender within five (5) Business Days after having received notice thereof), each Lender may assign and delegate to one or more assignees (each an “Assignee”) all, or any ratable part of all, of the Obligations and the other rights and obligations of such Lender hereunder and under the other Loan Documents; provided, however, that Borrower may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, have been given to Borrower by such Lender and the Assignee, and (ii) such Lender and its Assignee (and Borrower, solely to the extent the Borrower’s consent is required pursuant to this clause (a)) have delivered to Borrower an Assignment and Assumption (with appropriate adjustments thereto to reflect this Agreement and the Obligations) (each, an “Assignment and Assumption”).
 
(b)         From and after the date that (i) Senior Agent’s consent has been obtained in accordance with the terms and conditions of the Intercreditor Agreement, and (ii) the applicable Lender, Assignee, and Borrower (solely to the extent the Borrower’s consent is required pursuant to clause (a) above) execute an Assignment and Assumption, (x) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Assumption, shall have the assigned and delegated rights and obligations of such Lender under the Loan Documents, and (y) such Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned and delegated by it pursuant to such Assignment and Assumption, relinquish its rights (except with respect to rights to indemnification under this Agreement) and be released from its obligations under this Agreement (and in the case of an Assignment and Assumption covering all or the remaining portion of such Lender’s rights and obligations under this Agreement and the other Loan Documents, such Lender shall cease to be a party hereto and thereto), and such assignment shall affect a novation between Borrower and the Assignee.
 
(c)         Immediately upon Borrower’s receipt of the fully executed Assignment and Assumption and other items required by Section 18(b), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the rights and duties of the applicable Lender arising therefrom.
 
19.        Interpretation.  This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
 
20.         Savings Clause.  Notwithstanding any provision to the contrary contained in this Agreement or any other Loan Document, the Borrower shall not be required to pay, and no Lender shall be permitted to contract for, take, reserve, charge or receive, any compensation which constitutes interest under applicable law in excess of the maximum amount of interest permitted by law (“Excess Interest”).  If any Excess Interest is provided for or determined by a court of competent jurisdiction to have been provided for in this Agreement or in any other Loan Document or otherwise contracted for, taken, reserved, charged or received, then in such event:  (a) the provisions of this Section 20 shall govern and control; (b) the Borrower shall not be obligated to pay any Excess Interest; (c) any Excess Interest that any Lender may have contracted for, taken, reserved, charged or received hereunder shall be, at such Lenders’ option, (i) applied as a credit against the outstanding principal balance of the Obligations or accrued and unpaid interest (not to exceed the maximum amount permitted by law) owed to such Lender, (ii) refunded to the payor thereof, or (iii) any combination of the foregoing; (d) the interest provided for shall be automatically reduced to the maximum lawful rate allowed from time to time under applicable law (the “Maximum Rate”), and this Agreement and the other Loan Documents shall be deemed to have been, and shall be, reformed and modified to reflect such reduction; and (e) the Borrower shall have no action against the Collateral Agent or any Lender for any damages arising due to any Excess Interest.  If for any period of time interest on any Obligations is calculated at the Maximum Rate rather than the applicable rate under this Agreement, and thereafter such applicable rate becomes less than the Maximum Rate, the rate of interest payable on such Obligations owed to any Lender shall remain at the Maximum Rate until such Lender shall have received the amount of interest which such Lender would have received during such period on such Obligations had the rate of interest not been limited to the Maximum Rate during such period.  All sums paid or agreed to be paid hereunder or under the other Loan Documents for the use, forbearance or detention of sums due shall, to the extent permitted by applicable law, be amortized, pro‑rated, allocated and spread throughout the full term of the Obligations until payment in full so that the rate or amounts of interest on account of the Obligations does not exceed the Maximum Rate.  The terms of this Section 20 shall be deemed incorporated into each other Loan Document, whether or not specific reference to this Section 20 is made.
 
21.          Intercreditor Agreement.  Notwithstanding anything herein to the contrary, the Obligations evidenced by this Agreement and the other Loan Documents, the Liens and security interests granted to the Collateral Agent pursuant to the terms hereof and thereof and the exercise of any right or remedy by the Collateral Agent or any Lender hereunder or thereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and any other Loan Document, the terms of the Intercreditor Agreement shall govern. Notwithstanding anything that may be contained herein to the contrary, all of the provisions of the Loan Documents, including without limitation, the covenants of the Loan Parties and Parent contained herein and therein and all of the rights, remedies and powers for herein and therein, are subject to the provisions of the Intercreditor Agreement.
 
22.          Collateral Agent.
 
(a)         Each of the Lenders hereby irrevocably appoints the Collateral Agent as its agent and authorizes the Collateral Agent to take such actions on its behalf, including execution of the other Loan Documents, and to exercise such powers as are delegated to the Collateral Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, Collateral Agent shall have the sole and exclusive authority to (a) [reserved]; (b) execute and deliver as Collateral Agent, each Loan Document, including any intercreditor or subordination agreement, and accept delivery of each Loan Document; (c) act as collateral agent for Lenders for purposes of perfecting and administering Liens under the Loan Documents, and for all other purposes stated therein and execute or file any and all financing or similar statements or notices, amendments, renewals, supplements, documents, instruments, proofs of claim, notices and other written agreements with respect to the Loan Documents; (e) manage, supervise or otherwise deal with Collateral; (f) exclusively receive, apply, and distribute payments and proceeds of the Collateral as provided in the Loan Documents, (g) open and maintain such bank accounts and cash management arrangements as Collateral Agent deems necessary and appropriate in accordance with the Loan Documents, (h) take any enforcement action or otherwise exercise any rights or remedies with respect to any Collateral or under any Loan Documents, applicable law or otherwise, and (i) incur and pay such expenses as Collateral Agent may deem necessary or appropriate for the performance and fulfillment of its functions and powers pursuant to the Loan Documents, whether or not any Loan Party is obligated to reimburse Collateral Agent or Lenders for such expenses pursuant to the Loan Documents or otherwise.  The provisions of this Section 22 are solely for the benefit of Collateral Agent and the Lenders, and the Loan Parties and the Parent shall not have rights as a third-party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” as used herein or in any other Loan Documents (or any similar term) with reference to the Collateral Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law.  Instead, such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties.
 
(b)         The Lenders irrevocably authorize Collateral Agent, at its option and in its discretion, (a) to release any Lien granted to or held by Collateral Agent under any Loan Document (i) as required pursuant to the Intercreditor Agreement, (ii) upon payment in full of all Loans and all other Obligations (other than contingent obligations for which no claims have been made); (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted hereunder (including the release of any guarantor); or (iii) subject to Section 17 above, if approved, authorized or ratified in writing by the Required Lenders; or (b) to subordinate its interest in any Collateral to any holder of a Lien on such Collateral which is permitted by clause (a) or (b) of the definition of “Permitted Liens” (it being understood that the Collateral Agent may conclusively rely on a certificate from Borrower in determining whether the Indebtedness secured by any such Lien is permitted hereunder). Upon request by Collateral Agent at any time, the Lenders will confirm in writing Agent’s authority to release, or subordinate its interest in, particular types or items of Collateral pursuant to this Section 22(b). Collateral Agent may, and at the direction of Required Lenders shall, subject to the Intercreditor Agreement, give blockage notices in connection with the Intercompany Subordinated Debt and each Lender hereby authorizes the Collateral Agent to give such notices. Each Lender further agrees that it will not act unilaterally to deliver such notices.
 
(c)          Sections 14.3 (Duties and Obligations), 14.4 (Reliance), 14.5 (Sub-Agents), 14.6 (Resignation), 14.7(a) (Non-Reliance), 14.8 (Not Partners or Co-Venturers; Collateral Agent as Representative of the Secured Parties) (other than the last sentence of Section 14.8(a)); 14.9 (Credit Bidding), 14.11 (Restrictions on Actions by Lenders), 14.12 (Expenses); 14.13 (Notice of Default or Event of Default), and 14.14 (Liability of Agent) of the Senior Secured Credit Agreement are hereby incorporated into this Agreement, mutatis mutandis, as a part hereof for all purposes (for the avoidance of doubt, with references to “Agent” in such provisions (and defined terms used in such provisions) being deemed for all purposes hereof to refer to Collateral Agent).
 
[Signatures on following page]
 
Annex II
 
Schedule 2.1
 
Lender
Tranche A Commitment
Tranche B Commitment
     
Alimco Re Ltd.
$2,718,000
$5,000,000
     
RJHDC, LLC
$2,006,800
$0
     
Kick-Start III, LLC
$300,000
$0
     
Kick-Start IV, LLC
$200,000
$0
     


Annex II
Exhibit 10.3

Execution Version

REGISTRATION RIGHTS AGREEMENT
 
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of March 2, 2022, is made and entered into by and between Kaspien Holdings Inc. (the “Company”) and Alimco Re Ltd. (the “Holder”).
 
RECITALS
 
WHEREAS, for value received in connection with the Holder providing a $5,000,000.00 loan to KASPIEN INC, a subsidiary of the Company, pursuant to that certain Amendment No. 2 to Subordinated Loan and Security Agreement dated as of even date herewith, the Company issued to the Holder that certain Common Stock Purchase Warrant (the “Warrant”) to purchase from the Company up to 320,000 shares of Common Stock (as defined below) (the “Warrant Shares”); and
 
WHEREAS, in connection with the issuance of the Warrant, the Company and the Holder desire to enter into this Agreement in order to provide the Holder with registration rights on the terms set forth herein.
 
NOW, THEREFORE, in consideration of the representations covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
 
ARTICLE I
DEFINITIONS
 
1.1          Definitions. The terms defined in this Article I  shall, for all purposes of this Agreement, have the respective meanings set forth below:
 
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the principal executive officer or principal financial officer of the Company or the Board, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona fide business purpose for not making such information public.
 
“Agreement” shall have the meaning given in the Preamble.
 
“Board” shall mean the Board of Directors of the Company.
 
“Business Day” shall mean any day, other than a Saturday or a Sunday, that is neither a legal holiday nor a day on which banking institutions are generally authorized or required by law or regulation to close in the City of New York, New York.
 
“Commission” shall mean the Securities and Exchange Commission.
 
“Common Stock” shall mean the Company’s shares of Common Stock, par value $0.01 per share.
 
“Company” shall have the meaning given in the Preamble.
 
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
 
“Form S-1” shall have the meaning given in Section 2.1.1.
 
“Form S-3” shall have the meaning given in Section 2.1.1.
 
“Holder” shall have the meaning given in the Preamble.
 
“Maximum Number of Securities” shall have the meaning given in Section 2.1.4.
 
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus (in the light of the circumstances under which they were made) not misleading.
 
“Piggyback Registration” shall have the meaning given in Section 2.2.1.
 
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
 
“Registrable Securities” shall mean (a) the Warrant Shares, and (b) any other equity security of the Company or any of its subsidiaries issued or issuable with respect to any securities referenced in clause (a) above by way of a stock dividend or stock split or in connection with a recapitalization, merger, consolidation, spin-off, reorganization or similar transaction; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities upon the earliest to occur of: (A) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement by the Holder; (B) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 or any successor rule promulgated under the Securities Act (but with no volume or other restrictions or limitations including as to manner or timing of sale); and (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction. For the purposes of the immediately preceding sentence, “beneficial ownership” shall be determined in accordance with Section 13(d) of the Exchange Act and Rule 13d-3 thereunder.
 
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“Registration” shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
 
“Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
 
(A)          all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange on which the Common Stock are then listed;
 
(B)         fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
 
(C)          printing, messenger, telephone and delivery expenses;
 
(D)          reasonable fees and disbursements of counsel for the Company;
 
(E)         reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
 
(F)          reasonable fees and expenses of one (1) legal counsel selected by the Holder in initiating a Demand Registration to be registered for offer and sale in the applicable Registration.
 
(G)        Notwithstanding the foregoing, under no circumstances shall the Company be obligated to pay any fees, discounts and/or commissions to any Underwriter or broker with respect to the Registrable Securities.
 
“Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
 
“Rule 144” shall mean Rule 144 promulgated under the Securities Act (or any successor rule then in effect).
 
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
 
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
 
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“Underwritten Registration” or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
 
“Warrant” shall have the meaning given in the Recitals hereto.
 
“Warrant Shares” shall have the meaning given in the Recitals hereto.
 
ARTICLE II
REGISTRATIONS
 
2.1          Demand Registration.
 
2.1.1     Request for Registration. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and from time to time following the date of this Agreement, the Holder may make a written demand for Registration of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be included in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand Registration”).  Under no circumstances shall the Company be obligated to effect more than an aggregate of one (1) Registrations pursuant to a Demand Registration under this subsection 2.1.1 with respect to any or all Registrable Securities; provided, however, that a Registration shall not be counted for such purposes unless a Form S-1 or any similar long-form registration statement that may be available at such time (“Form S-1”) has become effective and at least 50% of the Registrable  Securities requested by the Holder to be registered in such Form S-1 Registration have been sold, in accordance with Section 3.1 of this Agreement.
 
2.1.2     Effective Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed with the Commission with respect to a Registration pursuant to a Demand Registration has been declared effective by the Commission and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, further, that if, after such Registration Statement has been declared effective, an offering of Registrable Securities in a Registration pursuant to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency the Registration Statement with respect to such Registration shall be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) the Holder thereafter affirmatively elects to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company shall not be obligated or required to file another Registration Statement until the Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.
 
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2.1.3     Underwritten Offering. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, if the Holder so advise the Company as part of their Demand Registration that the offering of the Registrable Securities pursuant to such Demand Registration shall be in the form of an Underwritten Offering, then the right of the Holder to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten Offering to the extent provided herein. The Holder, having proposed to distribute its Registrable Securities through an Underwritten Offering under this subsection 2.1.3, shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Holder, with the consent of the Company (not to be unreasonably withheld).
 
2.1.4     Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Registration pursuant to a Demand Registration, in good faith, advises the Company and the Holder in writing that the dollar amount or number of Registrable Securities that the Holder desires to sell, taken together with all other Common Stock or other equity securities that the Company desires to sell and the Common Stock, if any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities of the Holder that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities and that can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities.
 
2.1.5      Demand Registration Withdrawal. The Holder, pursuant to a Registration under subsection 2.1.1 shall have the right to withdraw from a Registration pursuant to such Demand Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to the Registration of its Registrable Securities pursuant to such Demand Registration. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Registration pursuant to a Demand Registration prior to its withdrawal under this subsection 2.1.5.
 
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2.2          Piggyback Registration.
 
2.2.1      Piggyback Rights. If, at any time on or after the date of this Agreement, the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company (or by the Company and by the stockholders of the Company including, without limitation, pursuant to Section 2.1 hereof), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed filing to the Holder as soon as practicable but not less than three (3) Business Days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to the Holder the opportunity to register the sale of such number of Registrable Securities as the Holder may request in writing within five (5) days after receipt of such written notice (such Registration a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holder pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. The Holder, proposing to distribute its Registrable Securities through an Underwritten Offering under this subsection 2.2.1, shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
 
2.2.2      Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration, in good faith, advises the Company and the Holder in writing that the dollar amount or number of shares of Common Stock that the Company desires to sell, taken together with (i) the shares of Common Stock, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holder, (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Common Stock, if any, as to which Registration has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:
 
(A)          If the Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holder exercising it right to register it Registrable Securities pursuant to subsection 2.2.1 hereof and Common Stock, if any, as to which Registration has been requested pursuant to written contractual piggy-back registration rights of other stockholders of the Company (pro rata based on the respective number of Registrable Securities that each stockholder holds prior to such Underwritten Registration), which can be sold without exceeding the Maximum Number of Securities;
 
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(B)          If the Registration is pursuant to a request by persons or entities other than the Holder, then the Company shall include in any such Registration (A) first, Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holder, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holder exercising its right to register its Registrable Securities pursuant to subsection 2.2.1 and Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities (pro rata based on the respective number of Registrable Securities that each stockholder holds prior to such Underwritten Registration), which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities.
 
2.2.3      Piggyback Registration Withdrawal. The Holder shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3.
 
2.2.4    Unlimited Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.
 
2.2.5      Right to Terminate Registration. The Company shall have the right to terminate or withdraw any Registration initiated by it under this Section 2.2 prior to the effectiveness of such Registration whether or not the Holder of Registrable Securities has elected to include securities in such Registration.
 
2.3          Registrations on Form S-3. The Holder may at any time, and from time to time, request in writing that the Company, pursuant to Rule 415 under the Securities Act (or any successor rule promulgated thereafter by the Commission if so requested), register the resale of any or all of their Registrable Securities on Form S-3 or any similar short form registration statement that may be available at such time (“Form S-3”). As soon as practicable thereafter, but not more than thirty(30) days after the Company’s initial receipt of such written request for a Registration on Form S-3, the Company shall register all or such portion of the Holder’s Registrable Securities as are specified in such written request; provided, however, that the Company shall not be obligated to effect any such Registration pursuant to Section 2.3 hereof if a Form S-3 is not available for such offering
 
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Any request for an underwritten offering pursuant to a Form S-3 shall follow the procedures of Section 2.1 (including Section 2.1.4) but shall not count against the number of long form Demand Registrations that may be made pursuant to Section 2.1.1; provided, further, however, that the Company shall not be obligated to effect such request through an Underwritten Offering unless the Holder of Registrable Securities, propose to sell the Registrable Securities and such other equity securities (if any) at any aggregate price to the public of less than $1,000,000.
 
2.4         Restrictions on Registration Rights If (A) during the period starting with the date forty-five (45) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date one hundred and twenty (120) days after the effective date of, a Company initiated Registration and provided that the Company has delivered written notice to the Holder prior to receipt of a Demand Registration pursuant to subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable efforts to cause the applicable Registration Statement to become effective; (B) the Holder has requested an Underwritten Registration and the Company and the Holder are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment of the Board, such Registration would be seriously detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to the Holder a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board it would be seriously detrimental to the Company for such Registration Statement to be filed in the near future and that it is therefore essential to defer the filing of such Registration Statement. In such event, the Company shall have the right to defer such filing for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner more than twice in any 12-month period.
 
ARTICLE III
COMPANY PROCEDURES
 
3.1         General Procedures. If, at any time, the Company is required to effect the Registration of Registrable Securities, the Company shall use its reasonable best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible but no more than sixty (60) days following delivery of a Demand Registration:
 
3.1.1      prepare and file with the Commission as soon as reasonably practicable a Registration Statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement have been sold; provided that the Company shall not be required to file such Registration Statement until such time as it has received any necessary information from the Holders;
 
3.1.2     prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be requested by the Holder or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
 
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3.1.3     prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holder, and the Holder’s legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holder or the legal counsel for the Holder may request in order to facilitate the disposition of the Registrable Securities owned by the Holder;
 
3.1.4     prior to any public offering of Registrable Securities, use its reasonable best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holder included in such Registration Statement (in light of its intended plan of distribution) may request and (ii) take reasonable such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all reasonable other acts and things that may be necessary or advisable to enable the Holder to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
 
3.1.5     cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;
 
3.1.6      provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
 
3.1.7      advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
 
3.1.8     at least three (3) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or Prospectus, furnish a copy thereof to the Holder of such Registrable Securities or its counsel;
 
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3.1.9      notify the Holder at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
 
3.1.10    permit a representative of the Holder, the Underwriters, if any, and any attorney or accountant retained by the Holder or Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
 
3.1.11    obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Registration, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request;
 
3.1.12    on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters; provided, however, that counsel for the Company shall not be required to provide any opinions with respect to any Holder,;
 
3.1.13    in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering; provided that such underwriting agreement shall not require the Company or any of its directors and officers to be locked up for any period of time following the date of the underwriting agreement.
 
3.1.14    make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission); and
 
3.1.15    otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holder, in connection with such Registration, including, without limitation, making available senior executives of the Company to participate in any due diligence sessions that may be reasonably requested by the Underwriter in any Underwritten Offering.
 
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3.2         Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holder that the Holder shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holder.
 
3.3          Requirements for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.
 
3.4         Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, the Holder shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holder, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than ninety (90) days, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holder agrees to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holder of the expiration of any period during which it exercised its rights under this Section 3.4.
 
3.5          Reporting Obligations. As long as the Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act and to promptly furnish the Holder with true and complete copies of all such filings (unless such filings are otherwise available on EDGAR). The Company further covenants that it shall take such further action as the Holder may reasonably request, all to the extent required from time to time to enable the Holder to sell shares of Common Stock held by the Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing any legal opinions.
 
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ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
 
4.1          Indemnification.
 
4.1.1      The Company agrees to indemnify, to the extent permitted by law, the Holder, its officers and directors and each person who controls the Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by the Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
 
4.1.2      In connection with any Registration Statement in which the Holder is participating, the Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by the Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among the Holder, and the liability of the Holder shall be in proportion to and limited to the net proceeds received by the Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holder shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
 
4.1.3      Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld, conditioned or delayed). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
 
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4.1.4     The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and the Holder also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or the Holder’s indemnification is unavailable for any reason.
 
4.1.5      If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of the Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by the Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
 
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ARTICLE V
MISCELLANEOUS
 
5.1          Notices. Any notice or communication under this Agreement must be in writing and given by (i) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (ii) delivery in person or by courier service providing evidence of delivery, or (iii) transmission by hand delivery, electronic mail, telecopy, telegram or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail, telecopy, telegram or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company, to the Company’s address, facsimile number or electronic mail address set forth on the signature page hereof, or at such other address as the Company shall have furnished to the Holder in writing, and, if to any Holder, at such Holder’s address or contact information as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
 
5.2          Assignment; No Third Party Beneficiaries.
 
5.2.1      This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
 
5.2.2      The Holder may, with prior written notice to the Company, assign or delegate the Holder’s rights, duties or obligations under this Agreement, in whole or in part, to a purchaser or transferee of Registrable Securities who agrees to become bound by the rights, duties or obligations set forth in this Agreement; provided that in the case of such transfer of less than 100% of Registrable Securities where there would be more than one (1) Holder hereunder, the Company and the Holder and any additional holder agree to act in good-faith to revise this Agreement to include customary provisions for registration rights agreements of this type with multiple holders (including with respect to pro rata reductions in Registrable Securities and rights that must be exercised by a majority-in-interest of holders instead of each individual holder (including, without limitation registration demands and employment of one counsel for all holders)) and no assignment shall expand the obligations of the Company hereunder or increase the number of demand registrations that the Company is required to undertake.
 
5.2.3     This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holder.
 
5.2.4     This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.1  hereof.
 
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5.2.5      No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section  5.1  hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.1  shall be null and void.
 
5.3          Counterparts. This Agreement may be executed in multiple counterparts and delivered electronically (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced. The words “execution,” “signed,” “signature” and words of like import in this Agreement or in any other certificate, agreement or document related to this Agreement shall include images of manually executed signatures transmitted by facsimile or other electronic format (including, without limitation, “pdf,” “tif” or “jpg”) and other electronic signatures (including, without limitation, DocuSign and AdobeSign). The use of electronic signatures and electronic records (including, without limitation, any contract or other record created, generated, sent, communicated, received or stored by electronic means) shall be of the same legal effect, validity and enforceability as a manually executed signature or use of a paper-based record-keeping system to the fullest extent permitted by applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act and any other applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act or the Uniform Commercial Code.
 
5.4         Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT (I) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION AND (II) THE VENUE FOR ANY ACTION TAKEN WITH RESPECT TO THIS AGREEMENT SHALL BE ANY STATE OR FEDERAL COURT LOCATED WITHIN THE BOROUGH OF MANHATTAN, CITY OF NEW YORK, STATE OF NEW YORK.
 
5.5      Trial By Jury. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
 
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5.6          Amendments and Modifications. Upon the written consent of the Company and the Holder (or in the case where there are multiple holders under this Agreement, the majority-in-interest of all of the holders), compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified. No course of dealing between the Holder or the Company and any other party hereto or any failure or delay on the part of the Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of the Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible that is valid and enforceable. This Agreement (including all agreements entered into pursuant hereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written.
 
5.7         Term. This Agreement shall terminate upon the earlier of (i) the fifth anniversary of the date of this Agreement or (ii) the date as of which (A) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder (or any successor rule promulgated thereafter by the Commission)) or (B) the Holder is permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions of Section 3.5 and Article IV shall survive any termination.
 
Signature Page Follows]

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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
 
 
COMPANY:
   
KASPIEN HOLDINGS INC.
  

 

By:
/s/ Kunal Chopra
  
 
Name:
Kunal Chopra
 
Title:
Principal Executive Officer

   
 
Address:
2818 N. Sullivan Road, Suite #130
  
   
Spokane Valley, WA 99216
  
  Attenion:
Edwin Sapienza
  
 
Facsimile:

  
 
Email:
esapienza@kaspien.com
  

[Signature Page to Registration Rights Agreement]

HOLDER:

ALIMCO RE LTD.
  

 

By:
/s/ Jonathan Marcus
  
 
Name:
Jonathan Marcus
  

Title:
CEO
  

[Signature Page to Registration Rights Agreement]
Exhibit 10.4

Execution Version

CONTINGENT VALUE RIGHTS AGREEMENT
 
THIS CONTINGENT VALUE RIGHTS AGREEMENT (this “Agreement”), dated as of March 2, 2022 (the “Effective Date”), is entered into by and among KASPIEN HOLDINGS INC., a New York corporation (f/k/a TRANS WORLD ENTERTAINMENT CORPORATION) (the “Parent”), and ALIMCO RE LTD., a Bermuda limited corporation (“Holder”). Parent and Holder are sometimes referred to herein collectively as the “Parties.”
 
RECITALS
 
WHEREAS, Holder has made a $5,000,000 loan (the “Loan”) to KASPIEN INC (f/k/a Etailz, Inc.), a subsidiary of Parent (“Borrower”), pursuant to Amendment No. 2 to Subordinated Loan and Security Agreement dated as of the date hereof (as further amended, modified, supplemented or restated from time to time the “Loan Agreement”); and
 
WHEREAS, in consideration for value received in connection with the Loan, Parent desires to grant to Holder certain contingent value rights, as hereinafter described (collectively, the “CVRs”).
 
NOW, THEREFORE, for and in consideration of the premises and the consummation of the transactions referred to above, it is mutually covenanted and agreed as follows:
 
AGREEMENT
 
1.            Definitions. In addition to those capitalized terms otherwise defined in this Agreement, the following capitalized terms shall have the meanings set forth below.  All capitalized terms used but not otherwise defined herein have the meanings given to them in the Loan Agreement, as in effect on the date hereof (and regardless of whether such agreement is then in effect as of any date of determination).

(a)         “Borrower Dividend” means (a) a dividend, capital distribution or other distribution made by Borrower to Parent, whether in cash, property, or securities of Borrower and whether by liquidating distribution or otherwise; provided that none of the following shall be a Borrower Dividend: (i) any subdivision (by a split of shares or otherwise) or any combination (by a reverse split of shares or otherwise) of any outstanding shares or (ii) any dividend or other distribution by Borrower to Parent permitted under Section 8(a)(xi)(2) of Senior Secured Credit Agreement, as in effect on the date hereof (and regardless of whether such agreement is then in effect as of any date of determination).
 
(b)          “Business Day” means a day other than a Saturday or Sunday or any other day on which banks in New York are authorized to close.
 
(c)         “Change of Control” means the acquisition by any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Effective Date), other than the Permitted Holders (as defined in the Loan Agreement), of 35% or more of the outstanding direct or indirect equity interests of Parent on a fully diluted basis unless the Permitted Holders own more than 50% of the outstanding direct or indirect equity interests of Parent on a fully diluted basis.
 
(d)          “CVR Payment Amounts” means the amounts payable to Holder pursuant to Section 4(a) of this Agreement.
 
(e)          “CVR Payment Date” means the date on which any CVR Payment Amount is paid pursuant to Section 7 hereof.
 
(f)          “Disposal” means (a) the sale, transfer, grant of an option or other interest in, or other disposal of, all or substantially all of the business or assets of Borrower, whether by one transaction or a series of related transactions or arrangements; provided, however, that any transaction or series of related transactions or arrangements in which Parent owns 100% of the voting stock of the acquiring corporation or parent of the acquiring corporation following such transaction shall not be considered a Disposal; and (b) the sale, transfer, grant of an option or other interest in, or other disposal of, all or substantially all of the business or assets of Parent, whether by one transaction or a series of related transactions or arrangements.
 
(g)         “Dividend Payment Amount” means, with respect to any Parent Dividend Event, the amount equal to (x) the total payment made or to be made, by Parent in connection with such Event consisting solely of (i) cash paid by Parent in connection with such Event, (ii) equity securities issued by Parent in connection with such Event, and (iii) any other non-cash property distributed in connection with such Event, minus (y) the aggregate amount of all Event Expenses.
 
(h)          “Dispute Notice” shall have the meaning given in Section 6(a) of this Agreement.
 
(i)          “Event” means a Proceeds Event or Parent Dividend Event as the context requires.
 
(j)          “Event Expenses” means the aggregate amount of all fees, costs, expenses, liabilities, obligations and other amounts (including, without limitation, investment banking fees, advisory or consultant fees, accountant’s or attorney’s fees, transfer or similar taxes or other taxes imposed by any jurisdiction, reimbursement of expenses and indemnity payments) incurred or payable (or estimated in good faith to be incurred or payable) by Parent or its subsidiaries in connection with any Event.
 
(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
(l)          “Note Payment” means the receipt by Parent of Proceeds of a payment by, or on behalf of, Borrower on the promissory note dated February 20, 2020, from Borrower in favor of Parent in an original principal amount of $13,956,001.82.
 
(m)         “Notice” shall have the meaning given in Section 5 of this Agreement.
 
(n)          “Parent Dividend” means a dividend, capital distribution or other distribution made by Parent to its stockholders, whether in cash, property, or securities of Parent and whether by liquidating distribution or otherwise; provided that any subdivision (by a split of shares or otherwise) or any combination (by a reverse split of shares or otherwise) of any outstanding shares shall not be a Parent Dividend; provided further that, with respect to all non-cash distributions paid or to be paid by Parent, such non-cash distributions (or any portion thereof, as determined by the board of directors of Parent in its sole discretion) will be either, as determined by the board of directors of Parent in its sole discretion, (i) valued in good faith by the board of directors of Parent (and the value so determined will be treated as Parent Dividends as of the date such non-cash distributions were paid by Parent) or (ii) excluded from Parent Dividends until converted into or exchanged for cash, or otherwise actually paid by Parent in cash.
 
(o)          “Parent Dividend Event” means any payment by Parent of any Parent Dividend.
 
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(p)         “Proceeds” means, with respect to any Proceeds Event, the amount equal to (x) the total proceeds received and to be received, by Parent after the Effective Date in connection with such Event consisting solely of (i) cash actually received by Parent as a result of such Event; (ii) notes, debt or other obligations issued to Parent in connection with such Event and payable in installments or otherwise deferred (“Deferred Obligations”), including amounts held in escrow, but excluding, for purposes of this definition of Deferred Obligations, Earn-Out Payments as defined below; (iii) equity securities and other non-cash property; and (iv) contingent payments related to future earnings or operations (“Earn-Out Payments”)) (but excluding, for the avoidance of doubt, the amount of any decrease, repayment or extinguishment of, or assumption by an acquiring party in an acquisition of assets or equity of, any indebtedness of Parent or its affiliates (including, without limitation, the Borrower)), minus (y) the aggregate amount of all Event Expenses; provided that, with respect to all non-cash proceeds (including, without limitation, Deferred Obligations, Earn-Out Payments, amounts held in escrow and other contingent payments) received or to be received by Parent in connection with an Event, such non-cash proceeds (or any portion thereof, as determined by the board of directors of Parent in its sole discretion) will either, as determined by the board of directors of Parent in its sole discretion, be (i) valued in good faith by the board of directors of Parent (and the value so determined will be treated as Proceeds as of the date such non-cash proceeds were received by Parent) or (ii) excluded from Proceeds until converted into or exchanged for or disposed of by Parent for cash, or otherwise actually paid to Parent in cash.
 
(q)        “Proceeds Event” means any (i) Note Payment, (ii) receipt by Parent of Proceeds in respect of its shares of Borrower in connection with any Disposal, Borrower Dividend, Sale, or Winding-Up of Borrower, or (iii) receipt by Parent of Proceeds in respect of any Disposal, Sale or Winding Up of Parent.
 
(r)         “Sale” means (a) any transaction or series of related transactions or arrangements pursuant to which any person(s), firm(s) or company(ies), whether acting alone or together (the “Acquiror"), acquires (whether by purchase, transfer, renunciation, subscription, option or otherwise) an interest, whether direct or indirect, in any shares in the capital of Borrower; provided, however, that the following shall not be considered a Sale: (i) a bona fide equity financing in which Borrower is the surviving corporation and not more than 50% of the stock of Borrower is issued to unrelated third parties in such transaction, or (ii) a transaction or series of related transactions or arrangements in which Parent owns 100% of the voting stock of the surviving corporation or parent of the surviving corporation following the transaction; or (b) any transaction or series of related transactions or arrangements pursuant to which any Acquiror acquires (whether by purchase, transfer, renunciation, subscription, option or otherwise) an interest, whether direct or indirect, in any shares in the capital of Parent the result of which is a Change of Control.
 
(s)          “Securities Act” means the Securities Act of 1933, as amended.
 
(t)          “Transaction Documents” shall have the meaning given in Section 5 of this Agreement.
 
(u)         “Winding-Up” means the making of an order or the passing of a resolution for the winding-up of Borrower or Parent for any purpose whatsoever; provided, however, that any recapitalization or other transaction or series of related transactions or arrangements in which Parent owns 100% of the voting stock of the surviving corporation or parent of the surviving corporation following such transaction shall not be considered a Winding-Up.
 
2.            Grant of CVRs. Parent hereby grants to Holder the CVRs described herein, which represent the rights of such Holder to receive contingent payments, if any, pursuant to Section 4 of this Agreement.
 
3.            No Certificate.  The CVRs shall not be evidenced by certificates or other instruments.
 
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4.            Payment Events; Increase; Termination.
 
(a)          Payment Events.
 

 (i)
Proceeds Events. If a Proceeds Event shall occur prior to the date that is ten (10) years after the Effective Date (the “CVR Termination Date”), then on the date that is thirty (30) days following the date of such Event (or such longer period as may be agreed in writing between Parent and Holder), Alimco shall be entitled to receive, and Parent shall be obligated to pay, an amount equal to nine percent (9%) of the Proceeds received by Parent from such Event payable in accordance with the terms of this Agreement.  For the avoidance of doubt, the aggregate CVR Payment Amounts payable pursuant to this Agreement shall not in any event exceed nine percent (9%) of the of the Proceeds received by Parent from Proceeds Events.
 

 (ii)
Parent Dividend Event. If a Parent Dividend Event shall occur prior to the CVR Termination Date, then on the date that is thirty (30) days following the date of such Parent Dividend Event (or such longer period as may be agreed in writing between Parent and Holder), Alimco shall be entitled to receive, and Parent shall be obligated to pay, an amount equal to nine percent (9%) of the Dividend Payment Amount paid by Parent for such Event payable in accordance with the terms of this Agreement.
 
(b)         Termination.  Notwithstanding anything to the contrary herein, the CVRs and the rights of Holder to CVR Payment Amounts shall terminate, be extinguished and have no further force and effect, and this Agreement shall terminate and be of no further force or effect, and the Parties shall have no liability hereunder, upon the earlier to occur of (i) a Disposal, Sale or Winding-Up and the payment of the CVR Payment Amounts, if any, in connection therewith in accordance with Section 4(a) and (ii) the CVR Termination Date.
 
5.           Notice.  Parent shall, within five (5) Business Days following the occurrence of an Event (or, in the case of an Event in the form of a Borrower Dividend or Parent Dividend, within five (5) Business Days following the declaration of the Borrower Dividend or Parent Dividend, respectively), deliver a notice to Holder (the “Notice”), together with (subject to receipt by Parent of any requested customary confidentiality agreements in form and substance reasonably satisfactory to Holder) a copy of each material written agreement entered into between Parent and its counterparty or counterparties that sets out the terms and conditions of such Event or, in the case of an Event in the form of a Borrower Dividend or Parent Dividend, the applicable corporate resolutions of Borrower or Parent, respectively (the “Transaction Documents”). The Notice shall specify, in reasonable detail, Parent’s calculations of (i) the Proceeds or Parent Dividend, as applicable, including the amount and calculation of Event Expenses, and (ii) the CVR Payment Amounts.
 
6.            Valuation Dispute.
 
(a)         Within ten (10) Business Days following Holder’s receipt from Parent of the Notice and the Transaction Documents, Holder may, in the event they have a good faith dispute with any of Parent’s valuations or other amounts set forth in the Notice, provide written notice of, and the grounds for, such dispute to Parent, accompanied by the information setting forth the grounds for such dispute in reasonable detail (a “Dispute Notice”). In the event the Holder does not deliver such Dispute Notice during such ten (10) Business Day period, Parent’s valuations and amounts set forth in the Notice shall be considered final and binding on the Parties.
 
(b)         In the event the Holder delivers a Dispute Notice, the Holder and Parent shall seek in good faith to resolve any dispute identified therein as promptly as practicable within thirty (30) calendar days following Parent’s receipt thereof. In the event Holder and Parent resolve the dispute, the Notice, including such revisions as agreed by the Holder and Parent pursuant to this Section 6(b), shall be final and binding on the Parties.
 
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(c)         In the event Holder delivers a Dispute Notice and Holder and Parent are unable to reach an agreement within thirty calendar (30) days thereafter, any such dispute shall be settled by an independent third party experienced in valuation matters that is mutually acceptable to Holder and Parent. The determination of such third party shall, absent manifest error, be binding on each Party and the fees and expenses of such third party shall be borne pro rata by Parent and Holder based on the amount by which Parent’s and the Holder’s respective valuations are different from the valuation as determined by such third party.
 
(d)         Notwithstanding anything to the contrary herein, in the event that any Dispute Notice is delivered in connection with a Disposal, Sale or Winding-Up, the Parties shall use their commercially reasonable efforts to agree and implement substitute dispute resolution procedures to the extent necessary or advisable to ensure that resolution of such dispute set forth in such Dispute Notice does not impede or delay the timely consummation of such Disposal, Sale or Winding-Up.
 
7.            Satisfaction of CVR Payment Amounts.
 
(a)          Within ten (10) Business Days after the date the CVR Payment Amounts are determined in accordance with Section 6(b) or (c), Parent shall transfer to each Holder (or arrange for the transfer to each Holder of) an amount equal to the applicable CVR Payment Amount payable to such Holder less any amounts withheld pursuant to Section 8 of this Agreement; provided, however, that any portion of any CVR Payment Amount consisting of non-cash Proceeds valued by the board of directors of Parent in accordance with this Agreement shall be payable to Holder in the form such non-cash proceeds are paid to Parent, or in the case of a Parent Dividend Event, such non-cash distributions are paid by Parent.
 
(b)          If an Event is to occur in connection with any Disposal or Sale, Parent shall use its commercially reasonable efforts to ensure that any Transaction Documents entered into in connection with such Disposal or Sale provide for the payment to Holder of the CVR Payment Amounts, if any, payable in connection with such Event and in accordance with the terms of this Agreement.  If, despite Parent’s efforts, such Transaction Documents do not provide for the payment to Holder of the CVR Payment Amounts, if any, payable in connection with such Event and in accordance with the terms of this Agreement, such CVR Payment Amounts, while held by Parent, shall be held in trust by Parent for the benefit of Holder until paid to Holder in accordance with the terms of this Agreement.
 
(c)          Notwithstanding anything else to the contrary herein, other than the distribution of non-cash proceeds in accordance with the terms hereof, Parent shall not be required to pay, and no amounts shall be considered, CVR Payment Amounts to the extent Parent does not actually receive such amounts in cash or if such amounts are not permitted to be paid pursuant to applicable law.
 
8.
Withholding.
 
(a)         Parent shall be entitled to deduct and withhold, or cause to be deducted or withheld from, each CVR Payment Amount otherwise payable pursuant to this Agreement such amounts as Parent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended, the Treasury regulations promulgated thereunder or any provision of state, local or foreign tax law.
 
(b)         To the extent that amounts so withheld pursuant to Section 8(a) above are paid over to or deposited with the relevant governmental entity, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Holder in respect of which such deduction and withholding was made.
 
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9.            No Voting, Dividends or Interest; No Equity or Ownership Interest; Subordination of Equity Interests.
 
(a)          The CVRs shall not have any voting or dividend rights, and interest shall not accrue on any amounts payable on the CVRs to Holder.
 
(b)         The CVRs shall not represent any equity or ownership interest in Parent or any of its affiliates (including, without limitation, the Borrower). Nothing contained in this Agreement shall be construed as conferring upon any Holder, by virtue of the CVRs, any rights or obligations of any kind or nature whatsoever as a stockholder of Parent, the Borrower or any of their respective subsidiaries, as applicable, either at law or in equity. The rights of Holder and the obligations of Parent and its affiliates and their respective officers, directors and controlling Persons are contract rights limited to those expressly set forth in this Agreement.
 
(c)        Parent and Borrower agree that any CVR Payment Amounts shall constitute a liability of the Parent or Borrower, as applicable, to Holder payable prior to any dividends, liquidation preferences or other amounts owing to any stockholder of Parent or Borrower, respectively.
 
10.          Ability to Abandon CVR.
 
Any Holder may at any time, at its option, abandon all of its remaining rights in a CVR by an instrument in writing transferring such CVR to Parent without consideration therefor. Nothing in this Agreement is intended to prohibit Parent from offering to acquire any CVR from any Holder for consideration in its sole discretion.
 
11.
Miscellaneous.
 
(a)       Successors and Assigns; Transferability.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the Parties.  Nothing in this Agreement, express or implied, is intended to confer upon any person other than the Parties hereto or their respective permitted successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.  Without the prior written consent of Parent, neither the CVRs (or any interest therein) nor any of the other rights, duties or obligations of Holder hereunder may be sold, assigned, pledged, encumbered, delegated, sublicensed or in any other manner transferred or disposed of, in whole or in part, other than through a Permitted Transfer.  For purposes of this Section 11(a), a “Permitted Transfer” means (i) a transfer made pursuant to a court order (including in connection with a bankruptcy or liquidation), and (ii) if the applicable Holder is a corporation, partnership or limited liability company, a distribution by the transferring corporation, partnership or limited liability company to its stockholders, partners or members, as applicable (provided that (A) such distribution does not subject the CVRs to a requirement of registration under the Securities Act or the Exchange Act and (B) in the case of a transferring corporation, Parent shall have reasonably determined after consultation with counsel that such distribution does not subject the CVRs to a requirement of registration under the Securities Act or the Exchange Act ).
 
(b)          Governing Law; Arbitration.
 
(i)          This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law.
 
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(ii)           Prior to any arbitration pursuant to Section 11(b)(iii), Parent and Holder shall negotiate in good faith for a period of thirty (30) calendar days to resolve any controversy or claim arising out of or relating to this Agreement or the breach hereof (other than any dispute with any of Parent’s valuations or other amounts set forth in the Notice, which shall be governed by the procedures set forth in Section 6 instead of this Section 11(b)).
 
(iii)          After expiration of the 30-day period contemplated by Section 11(b)(ii), such controversy or claim, including any claims for breach of this Agreement, shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.  Parent and Holder may initiate an arbitration for any matter relating to this Agreement; provided that any dispute with any of Parent’s valuations or other amounts set forth in the Notice shall be governed by the procedures set forth in Section 6 instead of this Section 11(b).  The number of arbitrators shall be three (3). Within fifteen (15) calendar days after the commencement of arbitration, each of Parent and Holder shall select one (1) person to act as arbitrator, and the two (2) selected shall select a third arbitrator within fifteen (15) calendar days of their appointment. If the arbitrators selected by Parent and Holder are unable or fail to agree upon the third arbitrator, the third arbitrator shall be selected by the American Arbitration Association. The place of the arbitration shall be New York, New York. The arbitrators shall be lawyers or retired judges with experience in the industry of Parent and the Borrower and with mergers and acquisitions. Except as may be required by law, neither a Party nor an arbitrator may disclose the existence, content or results of any arbitration hereunder without the prior written consent of Parent and Holder.  Parent shall pay all fees and expenses incurred in connection with any arbitration, including the costs and expenses billed by the arbitrators in connection with the performance of their duties described herein; provided, however, that if the arbitrator rules in favor of Parent, the arbitrator’s fees and expenses shall be offset against the CVR Payment Amounts, if any.
 
(c)        Counterparts; Facsimile Execution.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the Parties that execute such counterparts, and all of which together shall constitute one instrument. A facsimile, telecopy, PDF or other reproduction of this Agreement may be executed by one or more Parties hereto and delivered by such Party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such Party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any Parties hereto, all Parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.
 
(d)         Titles and Headings.  The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” will mean “sections” to this Agreement.
 
(e)         Amendments and Waivers.  Any term of this Agreement may be amended, terminated or waived only with the written consent of Parent and Holder. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance. No waiver granted under this Agreement as to any one provision herein shall constitute a subsequent waiver of such provision or of any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
 
(f)          Severability.  If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the Parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement; provided that the Parties hereto shall use their good faith reasonable efforts to find and employ an alternative means to achieve the same or substantially the same economic or other result as that contemplated by such provision.
 
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(g)        Delays or Omissions.  No delay or omission to exercise any right, power or remedy accruing to any Party under this Agreement, upon any breach or default of any other Party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting Party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party of any breach or default under this Agreement, or any waiver on the part of any Party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any Party, shall be cumulative and not alternative.
 
(h)       Entire Agreement.  This Agreement constitutes the entire agreement and understanding of the Parties with respect to the subject matter of this Agreement, and supersedes any and all prior understandings and agreements, whether oral or written, between or among the Parties hereto with respect to the specific subject matter hereof.
 
(i)         Notices.  Any notice or other communication to be given under this Agreement shall be in writing and may either be delivered by hand, made by facsimile transmission, sent by electronic mail transmission, disclosed in all material respects and filed on EDGAR pursuant to the Exchange Act , sent by overnight courier, or sent by registered mail, return receipt requested, postage prepaid, as follows: (a) if to any Holder, at such Holder’s address, facsimile number or electronic mail address set forth on the signature page hereof, or at such other address as such Holder shall have furnished to the other Parties in writing; and (b) if to Parent, at Parent’s address, facsimile number or electronic mail address set forth on the signature page hereof, or at such other address as Parent shall have furnished to Holder in writing.
 
(j)         Further Assurances.  At any time or from time to time after the date hereof, the Parties agree to cooperate with each other, and at the request of any other Party, to execute and deliver any further instruments or documents and to take all such further action as the other Party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the Parties hereunder.
 
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on its behalf by its duly authorized officers as of the day and year first above written.

 
KASPIEN HOLDINGS INC.
   
 
By:
/s/ Kunal Chopra
 
Name:
Kunal Chopra
 
Title:
Principal Executive Officer
   
 
Kaspien Holdings Inc.
 
2818 N. Sullivan Road, Suite #130
 
Spokane Valley, WA 99216
 
Attention: Edwin Sapienza
 
Email: esapienza@kaspien.com
   
 
with a copy to:
   
 
Cahill Gordon & Reindel LLP
 
80 Pine Street
 
New York, NY 10005
 
Attention: Kimberly Petillo-Décossard
 
Email: kpetillo-decossard@cahill.com

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ALIMCO RE LTD.
   
 
By:
 /s/ Jonathan Marcus
   
 
Name:
Jonathan Marcus
   
 
Title:
CEO
   
 
Alimco Re Ltd.
 
2336 SE Ocean Blvd., #400
 
Stuart, FL 34996
 
Attention: Jonathan Marcus, Chief Executive Officer
 
Email: jon@limadvisory.com
   
 
with a copy to:
   
 
K&L Gates LLP
 
1717 Main Street, Suite 2800
 
Attention: Jonathan Vance
 
Email: jonathan.vance@klgates.com

[Signature Page to Contingent Value Rights Agreement]