The ABL Second Amendment amended the Existing ABL Credit Agreement to (i) extend the maturity date of the term loan provided pursuant to the Existing ABL Credit Agreement to September 30, 2020, (ii) increase the interest rate margin to 7.50% for loans bearing interest based on LIBOR and 6.50% for loans bearing interest based on an alternate base rate, and (iii) make certain other modifications and grant certain waivers with respect to the Existing ABL Credit Agreement.

The foregoing description does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Mutual Termination Agreement attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.

In the Notice, Nasdaq indicated that the Company has 60 calendar days from the date of the Notice (or until May 29, 2020) to submit a plan to regain compliance with Nasdaq’s continued listing requirements. If such a plan is timely submitted by the Company, the Nasdaq staff may grant the Company up to 180 calendar days from the due date of the Transition Report, or until September 23, 2020, to regain compliance.

On March 12, 2020, the Company filed a Form 12b-25 (the “Form 12b-25”) with the SEC disclosing that it was unable to file the Transition Report within the original prescribed time period without unreasonable effort or expense due to a change in the Company’s fiscal year-end and the complexities associated with incorporating two significant acquisitions that closed during the latter portion of the transition period ended December 28, 2019.  Subsequent to the filing of the Form 12b-25, the Company experienced increased challenges associated with the COVID-19 outbreak further complicating the completion of the Transition Report.  For example, the Company’s segments, Buddy’s, Sears Outlet (now combined and rebranded with the Company’s subsidiary, American Freight Group, Inc.), Liberty Tax and Vitamin Shoppe are headquartered in four cities: Orlando, Florida, Hoffman Estates, Illinois, Virginia Beach, Virginia and Secaucus, New Jersey, each of which are subject to statewide stay-at-home orders.  In addition, as a result of a COVID-19 exposure in its Hoffman Estates location, the Company’s Sears Outlet segment’s headquarters was closed for a short period of time which resulted in unanticipated delays in the completion of field work associated with the audit of the Company’s financial statements.  In addition, the Company had curtailed its normal operations practices pursuant to state orders, public health orders and guidelines issued by local authorities which resulted in travel restrictions and most of its staff working remotely, including accounting staff working on the audit.  After consultation with the Staff of the SEC, it was determined that the relief provided by SEC Release No. 34-88318, which grants an exemption to certain companies that are unable to meeting filing deadlines due to circumstances related to COVID-19 (the “Order”), was not available to the Company because the Company failed to meet one of the conditions of the Order due to the fact that the effects of COVID-19 on the completion of the Transition Report had not yet become apparent to the Company at the time of the deadline required by the Order.

At this juncture, the Company is unable to predict how future developments associated with the COVID-19 outbreak may affect the Company’s completion of its audit and the filing of Transition Report. As the Company prioritizes the health and safety of its employees, franchisees, customers and communities, it continues to work diligently to complete its delayed filing with the SEC and to regain compliance with the Rule as soon as possible.

The Company issued a press release on April 3, 2020 disclosing, among other things, receipt of the Notice, a copy of which is attached hereto as Exhibit 99.1.

As part of a planned reorganization of the Company’s Board of Directors (the “Board”), on March 31, 2020, the Company reduced the size of the Board from nine directors to seven. In connection with the reorganization, Kenneth M. Young and Bryant R. Riley voluntarily resigned from the Board, effective immediately. Also, in connection with the reorganization, Matthew Avril was appointed as Chairman of the Board. The Board members now consist of Mr. Avril, Patrick Cozza, Thomas Herskovits, Brian R. Kahn, Andrew M. Laurence, Lawrence Miller and G. William, Minner, Jr.

Reduction in Base Salary of Executive Officers 

On March 30, 2020, the Company announced that in response to the COVID-19 outbreak, the base salary for its Chief Executive Officer, Brian R. Kahn, will be temporarily reduced by 50%. Additionally, the base salary for the other Company executive officers, including its Chief Financial Officer, and its other executive officers, will be temporarily reduced by 30% to 40% of their base salaries.  Further, all of the Company’s executive officers have agreed that any amounts relinquished pursuant to the reduction will not trigger “Good Reason Termination” (as defined in their respective employment agreements with the Company (collectively “Employment Agreements”)) and will not entitle any of them to receive termination benefits contemplated in such Employment Agreements at this time. These reductions in base salaries became effective as of April 1, 2020.