株探米国株
英語
エドガーで原本を確認する
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i found
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________
FORM 10-K
_____________________________________

(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024

Or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to
Commission File Number 001-37503
_____________________________________
B. RILEY FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 27-0223495
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
 Identification No.)
11100 Santa Monica Blvd., Suite 800
Los Angeles, CA
 90025
(Address of principal executive offices) (Zip Code)
(310) 966-1444
(Registrant’s telephone number, including area code)
_____________________________________

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 Stock, par value $0.0001 per share RILY
NASDAQ Global Market
Depositary Shares, each representing a 1/1000th
 fractional interest in a 6.875% share of Series A
 Cumulative Perpetual Preferred Stock		 RILYP
NASDAQ Global Market
Depositary Shares, each representing a 1/1000th
 fractional interest in a 7.375% share of Series B
 Cumulative Perpetual Preferred Stock		 RILYL
NASDAQ Global Market
6.375% Senior Notes due 2025 RILYM
NASDAQ Global Market
5.00% Senior Notes due 2026 RILYG
NASDAQ Global Market
5.50% Senior Notes due 2026 RILYK
NASDAQ Global Market
6.50% Senior Notes due 2026 RILYN
NASDAQ Global Market
5.25% Senior Notes due 2028 RILYZ
NASDAQ Global Market
6.00% Senior Notes due 2028 RILYT
NASDAQ Global Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes: o No x
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes: o No x
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer x
Non-accelerated filer o Smaller reporting company o
Emerging growth company o
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. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x
The aggregate market value of the registrant’s common stock held by non-affiliates, based on the closing price of the registrant’s common stock as reported on the NASDAQ Global Market on June 30, 2024, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $337.1 million. For purposes of this calculation, it has been assumed that all shares of the registrant’s common stock held by directors, executive officers and stockholders beneficially owning ten percent or more of the registrant’s common stock are held by affiliates. The treatment of these persons as affiliates for purposes of this calculation is not conclusive as to whether such persons are, in fact, affiliates of the registrant.
As of September 16, 2025, there were 30,597,066 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.


Auditor Name: Marcum LLP Auditor Location: Melville, New York Auditor Firm ID: 688

Table of Contents
B. RILEY FINANCIAL, INC.
INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024
Page
i
Table of Contents
PART I
This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “may,” “will,” “should,” “could,” “future,” “likely,” “predict,” “project,” “potential,” “continue,” “estimate” and similar expressions are generally intended to identify forward-looking statements but are not exclusive means of identifying forward-looking statements in this Annual Report. You should not place undue reliance on such forward-looking statements, which are based on the information currently available to us and speak only as of the date on which this Annual Report was filed with the Securities and Exchange Commission (the “SEC”). Because these forward-looking statements involve known and unknown risks and uncertainties, there are important factors that could cause actual results, events or developments to differ materially from those expressed or implied by these forward-looking statements, including our plans, objectives, expectations and intentions and other factors discussed in “Part I—Item 1A. Risk Factors” contained in this Annual Report. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Except as otherwise required by the context, references in this Annual Report to “the Company,” “B. Riley,” “B. Riley Financial,” “we,” “us” or “our” refer to the combined business of B. Riley Financial, Inc. and all of its subsidiaries.
Item 1. BUSINESS
Overview
B. Riley Financial, Inc. (NASDAQ: RILY) (the “Company”) is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. We operate through several consolidated subsidiaries (collectively, “B. Riley”) that provide investment banking, brokerage, wealth management, asset management, direct lending, and business advisory services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.
The Company also opportunistically invests in and acquires companies or assets with attractive risk-adjusted return, with a focus on making operational improvements within these companies in an effort to maximize free cash flow. However, during 2024 and continuing into 2025, our focus has been on reducing indebtedness, including through the net proceeds from a number of strategic asset dispositions or other monetizations as described in additional detail below under “—Disposition and Monetization Transactions”. The Company has reduced its total outstanding indebtedness from $2.4 billion at December 31, 2023 to $1.8 billion at December 31, 2024. The Company anticipates that reduction of indebtedness, including potentially through additional asset disposition or monetization transactions, will remain a key priority for the foreseeable future.

We refer to B. Riley as a “platform” because of the unique composition of our business and diversification of its operations. Our platform is comprised of more than 2,500 affiliated professionals, including employees and independent contractors. We are headquartered in Los Angeles, California and maintain offices throughout the U.S., including in New York, Chicago, Atlanta, Boston, Dallas, Metro Detroit, Houston, Memphis, Miami, San Francisco, Boca Raton, and West Palm Beach, as well as additional offices located in Canada, Europe, Asia, and Australia.

B. Riley was founded in 1997 by our Co-Chief Executive Officers Bryant Riley and Tom Kelleher, incorporated in Delaware in 2009, and became publicly listed through its strategic combination with Great American Group, Inc. in 2014.

Disposition and Monetization Transactions
During 2024 and through the date of this report, we have completed the following disposition and monetization transactions:

•Brands Transaction: In October 2024, the Company entered into a transfer and contribution agreement pursuant to which, among other things, B. Riley Brand Management transferred and contributed to a subsidiary and securitization financing vehicle the limited liability company interests held by B. Riley Brand Management in the entities that held certain assets related to six consumer brands and equity method investments for Hurley, Justice and Scotch & Soda. In connection with this transaction, that subsidiary and securitization financing vehicle issued notes and preferred stock secured by those limited liability company interests to a third party purchaser, the proceeds of which were used to fund an upfront payment to the Company of approximately $189.3 million.
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•In addition, in October 2024, bebe stores, inc., a majority owned subsidiary of the Company (“bebe”), sold its limited liability company interests in entities that held certain brand assets to a third party purchaser for approximately $46.6 million in net cash proceeds. Upon closing of the bebe Brands sale, proceeds of $22.2 million was used to pay off the outstanding balance of the bebe Credit Agreement in full and $224 of loan-related pay off expenses. The remaining amount of the proceeds were paid as a dividend to the Company.
•Great American Group: In November 2024, the Company completed a transaction in which (1) it and certain of its subsidiaries contributed all of the interests in the Company’s Appraisal and Valuation Services, Retail, Wholesale & Industrial Solutions and Real Estate businesses to Great American NewCo. and (2) third party investors received all of the outstanding class A preferred limited liability units of Great American NewCo and 52.6% of the class A common limited liability units of Great American NewCo for a purchase price of approximately $203.0 million. After amounts paid to minority stockholders and certain transaction expenses, approximately $167.1 million was distributed to the Company.
•Atlantic Coast Recycling Transaction: In March 2025, the Company sold all of the issued and outstanding membership interests in subsidiaries engaged in a recycling business to a third party purchaser for a purchase price of approximately $102.5 million, subject to certain adjustments resulting in cash proceeds of $68.6 million to the Company after adjustments for amounts allocated to non-controlling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction.
•Wealth Management: In April 2025, the Company sold a portion of the Company's (W-2) Wealth Management business to Stifel Financial Corp. ("Stifel") for net cash consideration of $26.0 million.
•GlassRatner and Farber: In June 2025, the Company sold all of the membership interests of GlassRatner Advisory & Capital Group, LLC and B. Riley Farber Advisory Inc., for cash consideration of approximately $117.8 million.
•Others: The Company also engaged in the sale of certain investments and collection of proceeds from loans receivable to create additional liquidity and facilitate the repayment of debt.

Our Business Segments

We report our activities in six reportable business segments: Capital Markets, Wealth Management, Financial Consulting, Communications, Consumer Products segment, and E-Commerce Segment. The descriptions below illustrate the businesses that comprise our segments.

Capital Markets Segment

We provide investment banking and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors; fund and asset management services to institutional and high-net-worth individual investors; and direct lending services to middle market companies.

In addition, we trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. We maintain an investment portfolio comprised of public and private equities and debt securities. We also opportunistically provide loans to our clients and other borrowers. Our investment approach is value-oriented and represents a core competency of our capital markets strategy. We act as an advisor to our clients, which at times involves complex transactions consistent with our value-oriented investment philosophy. We often provide consulting, capital raising, or investment banking services for companies in which B. Riley may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

Investment Banking

We provide a full suite of capital markets and financial advisory services for small- and mid-cap companies and issuers and middle market financial sponsors, as well as larger companies in industries where we have particular expertise.

Our equity capital markets team provides an array of financing and sector-specific corporate finance solutions focused on the execution of public and private equity offerings. We source, structure, price and allocate underwritten public offerings and private placements spanning initial public offerings (“IPOs”), secondary and follow-on offerings, at-the-market offerings (“ATMs”), Rule 144A offerings (pre-public private placements), block trades, and corporate equity repurchase programs.
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Our debt capital markets capabilities include the structuring and sourcing of debt financing solutions in public and private capital markets including acting as an underwriter of preferred stock and unsecured notes offerings, convertible and mezzanine debt offerings, and leveraged loans.

Our investment banking advisory professionals blend deep industry and transaction expertise to execute financial transactions for healthy companies pursuing growth, and for stakeholders of financially distressed companies, both in bankruptcy proceedings and out-of-court transactions. We provide financial advisory and execution services in support of M&A, restructuring, and recapitalization.

Equity Research

We are widely recognized for our proprietary and thematic approach to equity research. Our research primarily focuses on small- and mid-cap equities that are under-followed by Wall Street. We maintain research coverage for a variety of companies and industry sectors, focused on in-depth analyses of earnings, cash flow, balance sheet strength, and industry outlook involving extensive discussions with key management, competitors, channel partners, and customers.

Institutional Sales and Trading

Our institutional equity sales and trading team distributes our proprietary equity research products and communicates our investment recommendations to our client base of institutional investors, executes equity trades on behalf of clients, sells the securities of companies for which we act as an underwriter, and makes a market in over 1,500 securities. We maintain active trading relationships with over 1,000 institutional money managers.

Securities Lending

We engage in securities-based lending which involves the borrowing and lending of equity and fixed income securities.

Proprietary Trading

We also engage in proprietary trading for strategic investment purposes and to facilitate the execution of client transactions by utilizing the firm’s capital.

Direct Lending

Certain of our affiliates originate and underwrite senior secured loans, second lien secured loan facilities, and unsecured loans to asset-rich middle market public and private U.S. companies. We periodically participate in loans and financing arrangements for entities in which the Company has an equity ownership and representation on the board of directors (or similar governing body). B. Riley may also provide consulting services or investment banking services to raise capital for these companies.

Loan Origination and Underwriting
From time to time, we provide loans to clients and other borrowers. The loans encompass senior secured loans, second lien secured loan facilities, and unsecured loans primarily to middle market public and private companies. We may also participate in loans and financing arrangements for entities in which the Company has an equity ownership or board representation.
Our underwriting process for originating loans involves a review of the borrower’s business, capital structure, asset base, collateral, and relevant financial information, as appropriate. As part of this process, the underwriting may also include an analysis of liquidity, historical financial performance, and forecasted cash flow to determine the borrower’s ability to meet repayment obligations. For loans that are primarily collateralized by assets, we perform an assessment of the underlying collateral and its potential recovery value relative to the loan amount. These factors are taken into consideration in determining the loan amount, interest rate, maturity date, payment terms and other loan terms.
We regularly monitor the loans, which may include conducting quarterly financial and collateral reviews, discussions with management, and compliance with covenants. We also analyze the borrower’s liquidity projections to evaluate their ability to repay.
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Loan terms may be adjusted to reflect changes in borrower's creditworthiness, which may be the result of these factors, industry dynamics or macroeconomic conditions.
Investing

Part of our overall strategy includes identifying attractive investment opportunities where we may seek to control or influence the operations of the companies in which we invest in order to deliver financial and operational improvements designed to maximize free cash flow and, therefore, returns to our shareholders. Our team concentrates on opportunities presented by distressed companies or divisions that exhibit challenging market dynamics. Representative transactions include acquisitions of receivable portfolios, recapitalizations, direct equity investments, debt investments, active minority investments, and buyouts.

Wealth Management Segment

We provide retail brokerage, investment management, and insurance, and tax preparation services to individuals and families, small businesses, non-profits, trusts, foundations, endowments, and qualified retirement plans through a boutique private wealth and investment management firm to meet the individual financial needs and goals of our customers.

Our experienced financial advisors provide investment management, retirement planning, education planning, wealth transfer and trust coordination, and lending and liquidity solutions. Our investment strategists provide strategies and real-time market views and commentary to help our clients make important and informed financial and investment decisions. Assets under management ("AUM") in our wealth management segment totaled approximately $20.7 billion as of December 31, 2024. On April 4, 2025, we completed the sale of a portion of our (W-2) wealth management business representing 36 financial advisors whose managed accounts represented approximately $4.0 billion in AUM as of December 31, 2024. Following the transaction, the Company’s Wealth Management business continues to have approximately 231 financial advisors and $14.4 billion in AUM.

Financial Consulting Segment

We provide a variety of specialized advisory services spanning bankruptcy, restructuring, turnaround management, forensic accounting, crisis and litigation support, and operations management.

Our financial consulting clients include companies, financial institutions, lenders, financial sponsors, boards of directors, shareholders, creditors, government agencies, municipalities, regulatory agencies, and legal and professional services firms.

Bankruptcy Restructuring and Turnaround Management

Professionals in our bankruptcy restructuring and turnaround management group provide restructuring advisory services spanning strategic and operational advisory, turnaround management, Chief Restructuring Officer and interim management, and fiduciary and receivership services. We are often engaged to represent debtors, creditors, committees and lenders in out-of-court restructuring and formal bankruptcy court proceedings. We also act as court-appointed fiduciaries and trustees in chapter 11 and chapter 7 bankruptcy proceedings.

Forensic Accounting and Litigation Support

Our services support highly complex, sensitive matters spanning antitrust, competition and class action lawsuits, commercial litigation and construction disputes, valuation disputes, fraud, and internal investigations. We are often called on to assist government agencies such as the Department of Justice, and various state and municipalities to investigate allegations and provide expert analyses related to lost profits and financial damages, data analytics, and to provide expert witness testimony in court proceedings.
On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests of its wholly owned subsidiary, GlassRatner Advisory & Capital Group, LLC, a Delaware limited liability company (“GlassRatner”), and B. Riley Farber Advisory Inc., an Ontario corporation (“Farber”). The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117.8 million, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date. In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.

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Communications Segment

Our communications portfolio of companies consists of related businesses that we have acquired for attractive risk-adjusted investment return characteristics. We may pursue future acquisitions to expand this portfolio of businesses which currently includes: Lingo Management, LLC (“Lingo” or “Lingo Management”), a global cloud/unified communications (“UC”) and managed service provider that includes the operations of BullsEye Telecom, Inc. (“BullsEye”), a single source communications and cloud technology provider previously merged into Lingo; Marconi Wireless Holdings, LLC (“Marconi Wireless”), a mobile virtual network operator (“MVNO”) that provides mobile phone voice, text, and data services and devices; magicJack VoIP Services, LLC, (“magicJack”), a VoIP cloud-based technology and communications provider that offers related devices and subscription services; and United Online, Inc. (“UOL”), an Internet access provider that offers dial-up, mobile broadband and digital subscriber line (“DSL”) services under the NetZero and Juno brands.

Consumer Products Segment

The Consumer Products segment is comprised of Tiger US Holdings, Inc. Group (“Targus”), which is a multinational company that, together with its subsidiaries, designs, manufactures, and sells consumer and enterprise productivity products with a large business-to-business (B2B) customer client base and global distribution in over 100 countries. The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories. We acquired Targus on October 18, 2022.
E-Commerce Segment
The E-Commerce segment is comprised of Nogin, Inc.'s ("Nogin's") operations for the period from the acquisition date on May 3, 2024 through December 31, 2024, which is a technology platform operating e-commerce stores that delivers Commerce-as-a-Service (“CaaS”) solutions for apparel brands and other retailers. The Company manages clients’ front-to-back-end operations of the e-commerce stores and also provides marketing services to their clients. The Company’s business model is based on providing a comprehensive e-commerce solution to its customers on a revenue sharing basis.
As discussed in Note 10 to the consolidated financial statements, we recognized an impairment charge to Nogin goodwill of $57,664 during the year ended December 31, 2024. At December 31, 2024, due to the size of the impairment charge, Nogin met the 10% segment profit test and is required to be reported as a separate reportable segment. On March 31, 2025, we signed a Deed of Assignment for the Benefit of Creditors, (i) pursuant to which all of the assets of Nogin were transferred to an assignee for the benefit of Nogin’s creditors, and (ii) which provides the assignee the right to, among other things, sell or dispose of such assets and settle all claims against Nogin. We no longer control or own the assets of Nogin and the results of operations will no longer be reported in our financial statements after March 31, 2025.
Recent Developments
Conn’s and FRG
The Company’s results during the year ended December 31, 2024 were negatively impacted by a significant non-cash markdown of $287.0 million related to its investment in Freedom VCM Holdings, LLC (“Freedom VCM”), the indirect parent entity for Franchise Group (“FRG”). Freedom VCM’s strategy, which included the potential divestiture or monetization of certain assets, was materially negatively impacted by the unexpected announcement in November 2023 concerning FRG’s former CEO and his alleged involvement in fraudulent schemes despite the fact that these allegations are unrelated to FRG and its businesses. In the meantime, the consumer facing portion of the U.S. economy has deteriorated. On November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed voluntary petitions for relief (the “FRG Chapter 11 Cases”) under chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"). As a result, on November 4, 2024, we concluded that we were required to record an impairment (in addition to prior impairments) with respect to the Freedom VCM Investment and the Vintage Loan Receivable. The additional non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable are $118.0 million in the aggregate as of November 4, 2024. As a result of such additional impairments, we have ascribed no value to the Freedom VCM Investment and the Vintage Loan Receivable was valued at $2.1 million at December 31, 2024, which approximates the fair value of the underlying collateral for this loan which is primarily comprised of other securities. Subsequent to December 31, 2024, the fair value of the underlying collateral for this loan, which is comprised of other public securities, decreased to a fair value of $1.3 million at September 16, 2025.
Additionally, on July 23, 2024, Conn’s, Inc. (“Conn’s”) and certain of its subsidiaries filed voluntary petitions for relief (the “Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”).
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FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s in exchange for the sale of its Badcock Home Furniture & more business to Conn’s. The commencement of the Chapter 11 Cases constitutes an event of default that accelerated the obligations under the Term Loan and Security Agreement, dated as of December 18, 2023 (the “Conn’s Term Loan”), among Conn’s, W.S. Badcock LLC, as borrowers, and an affiliate of the Company, as administrative agent, collateral agent, and lender. As of the date of the filing of the Chapter 11 Cases, $93.0 million in outstanding borrowings existed under the Conn’s Term Loan. Any efforts to enforce payment obligations under the Conn’s Term Loan are automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of the Conn’s Term Loan are subject to the applicable provisions of the Bankruptcy Code. The fair value adjustment on the Conn’s loan receivable was $(71.7) million for the year ended December 31, 2024.
Wealth Management

On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel for estimated net consideration based on the number of advisors that join Stifel at closing, among other things. Upon closing the transaction on April 4, 2025, the sale was completed for net cash consideration of $26.0 million, representing 36 financial advisors whose managed accounts represent approximately $4.0 billion, or 19.3%, of AUM as of December 31, 2024.
Debt Financing and Repayment of Nomura Credit Facility
On February 26, 2025, the Company and the Company’s wholly owned subsidiary, BR Financial Holdings, LLC (the “BRFH Borrower”), entered into a new credit agreement with a group of funds indirectly or directly controlled by Oaktree Capital Management, L.P. with Oaktree Fund Administration, LLC, acting as the administrative agent and collateral agent. The new credit agreement provided for (i) a three-year $125.0 million secured term loan credit facility (the “Initial Term Loan Facility”) and (ii) a four-month $35.0 million secured delayed draw term loan credit facility (the “Delayed Draw Facility” and, together with the Initial Term Loan Facility, the “Credit Facility”). The proceeds from the Initial Term Loan Facility were primarily used (a) to repay the existing indebtedness under the Nomura Credit agreement discussed in Note 13, to the consolidated financial statements (b) for working capital and general corporate purposes and (c) to pay transaction fees and expenses. The proceeds of the Delayed Draw Facility were used (a) to fund obligations relating to the liquidation of substantially all of the assets of JOANN, Inc. and its subsidiaries and (b) for working capital and general corporate purposes.
Borrowings accrue interest at the adjusted term Secured Overnight Financing Rate ("SOFR") rate as defined in the Credit Facility with an applicable margin of 8.00%. In addition to paying interest on outstanding borrowings under the Credit Facility, the Company was required to pay (i) a closing fee of 3.00% of the aggregate principal amount of the loans under the Initial Term Loan Facility and 2.00% of the aggregate principal amount of the loans under the Delayed Draw Facility, and (ii) an exit fee upon the prepayment or repayment of the Credit Facility of 5.00% of the aggregate principal amount of such loans repaid, provided, that the Initial Term Loan Facility exit fee shall not be payable if the share price for the Company's common stock exceeds a certain threshold. The Credit Facility also contains a provision where the final $62.5 million of repayment of principal on the Initial Term Loan may be subject to an additional prepayment premium, as defined in the Credit Facility, if the prepayment occurs before the second anniversary date of the Credit Facility.
The Company issued warrants to certain affiliates of Oaktree Capital Management, L.P. in connection with the Credit Facility to purchase approximately 1,832,290 shares (or 6% on a fully diluted basis) of the Company’s common stock at an exercise price of $5.14 per share. The warrants contain certain anti-dilution provisions pursuant to which, under certain circumstances, the warrant holders would be entitled to exercise the warrants for up to 19.9% of the then-outstanding shares of the Company’s common stock.
Subject to certain eligibility requirements, certain assets of the BRFH Borrower are placed into a borrowing base (the “Borrowing Base”), which serves to limit the borrowings under the Credit Facility. The sale of an asset in the Borrowing Base requires the BRFH Borrower to make a prepayment in an amount equal to the proceeds of such disposition multiplied by the percentage “credit” that is assigned to such asset in the Borrowing Base. The BRFH Borrower may be obligated to prepay the loans or post cash in a controlled account in the event the Borrowing Base falls below a certain level as defined in the Credit Facility. The Credit Facility contains covenants that, among other things, limit the Company’s, the BRFH Borrower’s and the BRFH Borrower’s subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
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Redemption of Senior Notes
On February 28, 2025, we redeemed all the issued and outstanding 6.375% Senior Notes due February 28, 2025 (the "6.375% 2025 Notes"). The redemption price was equal to 100% of the aggregate principal amount, plus any accrued interest and unpaid interest up to, but excluding, the redemption date The total redemption payment included approximately $0.7 million accrued interest. In connection with the full redemption, the 6.375% 2025 Notes, which were listed on NASDAQ under the ticker symbol “RILYM,” were delisted from NASDAQ and ceased trading on the redemption date.
Sale of Atlantic Coast Recycling
On March 3, 2025, the Company and BR Financial Holdings, LLC, a wholly owned subsidiary of the Company (“BR Financial”), B. Riley Environmental Holdings, LLC and other indirect subsidiaries of the Company which included Atlantic Coast Recycling, LLC (“Atlantic Coast Recycling”), Atlantic Coast Recycling of Ocean County, LLC, (“Atlantic Coast Recycling of Ocean County” and, together with Atlantic Coast Recycling, the “Atlantic Companies”), entered into a Membership Interest Purchase Agreement, dated as of March 1, 2025 (the “MIPA”). Pursuant to the MIPA, on March 3, 2025, all of the issued and outstanding membership interests in each of the Atlantic Companies (the “Interests”) owned by BR Financial and the minority holders were sold to a third party. The Interests were sold to the third party on March 3, 2025 for a purchase price of $102.5 million, subject to certain adjustments and a holdback amount pending receipt of a certain third party consent, resulting in cash proceeds of $68.6 million to the Company after adjustments for amounts allocated to non-controlling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction. Of the $68.6 million of cash proceeds received by the Company, approximately $22.6 million was used to pay interest, fees, and principal on the Credit Facility discussed above. A gain of $52.7 million was recognized in the first quarter of 2025 from this sale.
B. Riley Securities Holdings, Inc. Equity Issuance
On March 10, 2025, the Company’s wholly-owned subsidiary B. Riley Securities Holdings, Inc. (“BRSH”) which is comprised of the broker dealer operations within the Capital Markets segment merged with a shell corporation and issued 0.6% of the equity in BRSH to certain investors in the shell corporation and upon completion of the transaction became minority stockholders of BRSH. Simultaneously with the merger with the shell corporation, BRSH approved the BRSH Stock Incentive Plan (the “BRSH Stock Plan”) and issued restricted stock awards to employees and officers of BRSH which represented 10.0% of the equity of BRSH that vest over a period of four to five years. Assuming the full issuance of the restricted stock awards, the Company continues to own 89.4% of BRSH.
Exchange of Senior Notes
On March 26, 2025, the Company completed a private exchange transaction with an institutional investor pursuant to which the investor exchanged $86.3 million of aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026 Notes and $36.7 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026 owned by it for approximately $87.8 million aggregate principal amount of newly-issued 8.00% Senior Secured Second Lien Notes due 2028 (the “New Notes”), whereupon the exchanged notes were cancelled.
On April 7, 2025, the Company completed a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $22.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for approximately $10.0 million aggregate principal amount of the New Notes.
On May 21, 2025, the Company completed a private exchange transaction with certain institutional investors pursuant to which such investors exchanged approximately $139.1 million aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026, 5.00% Senior Notes due December 2026 and 6.00% Senior Notes due January 2028 for approximately $93.1 million aggregate principal amount of the New Notes.
On June 30, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $28.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $13.0 million aggregate principal amount of the New Notes.
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On July 11, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $42.8 million aggregate principal amount of the Company’s 6.50% Senior Notes due September 2026, 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $24.6 million aggregate principal amount of the New Notes.
In connection with these exchange transactions, the Company issued to such investors warrants to purchase a total of approximately 914,000 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), at an exercise price of $10.00 per share. In connection with the issuance of such warrants, the Company entered into registration rights agreements with such investors, pursuant to which the Company has granted such investors (i) certain shelf registration rights whereby the Company will register resales of the shares of Common Stock issued upon exercise of the warrants and (ii) certain piggyback registration rights, in each case subject to the terms and conditions set forth in the registration rights agreement.
The New Notes were issued pursuant to an Indenture, dated as of March 26, 2025 (the “Indenture”), between the Company, certain subsidiaries of the Company, as guarantors, and GLAS Trust Company LLC, a New Hampshire limited liability company, as trustee and collateral agent (in such capacities, the “Trustee”), and the New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries (collectively, the “Guarantors”). The New Notes are secured on a second lien basis, junior to the obligations under the Company’s Credit Facility, by substantially all of the assets of the Company and the Guarantors. The New Notes are subordinated in right of payment to the payment in full of the obligations under the Company’s Credit Facility.
The New Notes accrue interest at a rate of 8.00% per annum, payable semi-annually in arrears on April 30 and October 31, starting October 31, 2025. The New Notes mature on January 1, 2028. The Company may redeem the New Notes (i) at any time, in whole or in part, before March 26, 2026, at a redemption price equal to 100% of the aggregate principal amount being redeemed, plus a customary make-whole premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date; and (ii) at any time, in whole or in part, after March 26, 2026, at a redemption price equal to 100% of the aggregate principal amount being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The New Notes contain change of control provisions, whereby the holders of the New Notes have the right to require the Company to repurchase all or a portion of the New Notes at a purchase price, in cash, equal to 101% of the principal amount thereof, plus accrued and unpaid interest. In addition, if the Company or its restricted subsidiaries engage in certain asset sales and do not invest such proceeds or permanently reduce certain debt within a specified period of time, the Company will be required to use a portion of the proceeds of such asset sales above a specified threshold to make an offer to purchase the New Notes at a price equal to 100% of the principal amount of the New Notes being purchased, plus accrued and unpaid interest. The Indenture contains certain covenants that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
Nogin
On March 31, 2025, the Company signed a Deed of Assignment for the Benefit of Creditors, (i) pursuant to which all of the assets of Nogin were transferred to an assignee for the benefit of Nogin’s creditors, and (ii) which provides the assignee the right to, among other things, sell or dispose of such assets and settle all claims against Nogin. The Company no longer controls or owns the assets of Nogin and the results of operations will no longer be reported in the Company’s financial statements after March 31, 2025.
Sale of GlassRatner and Farber
On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber. The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117.8 million, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date.
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In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.
Targus/FGI Credit Agreement
On August 20, 2025, Targus (the "Targus Borrower") and certain of the Targus Borrowers' direct and indirect subsidiaries (the “FGI Loan Parties”) entered into a Revolving Credit, Receivables Purchase, Security and Guaranty Agreement (the “Targus/FGI Credit Agreement”) with FGI Worldwide LLC (“FGI”), as agent and for a three-year $30.0 million revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement with PNC. The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028.
The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term SOFR for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee.
The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Targus Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement.
As required under the Targus/FGI Credit Agreement, B. Riley Commercial Capital, LLC ("BRCC"), a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.
Our Customers
We serve retail, corporate, capital providers and individual customers across our services lines. We are primarily engaged for our financial services by corporate customers, including publicly held and privately owned companies, financial institutions, institutional investors, lenders and other capital providers, and legal and other professional services firms.
We maintain client relationships with companies and service providers to the consumer goods, industrials, energy, financial services, healthcare, real estate, and technology industries. We provide fund and asset management services and products to institutional, high-net-worth and individual investors.
Our communications and consumer products businesses primarily provide services and related consumer products to individual customers.
Competition
We face intense competition across all our business lines. While some competitors are unique to specific service offerings, some competitors cross multiple service offerings.
The industry trend toward continued consolidation among financial services companies has significantly increased the capital base and geographic reach of many of our competitors. We compete with other investment banks, bank holding companies, brokerage firms, merchant banks, and financial advisory firms. Our focus on our target industries also subjects us to direct competition from several specialty firms and smaller investment banking boutiques that specialize in providing services to these industries.
Larger, more diversified and better-capitalized competitors may be better positioned to respond to industry changes, to recruit and retain skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally.
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Many of these firms may offer a wider range of services and products, which may enhance their competitive position relative to us. These firms can also support services and products with other financial services revenues to gain market share, which could result in downward pricing pressure in our businesses.
As it relates to our communications businesses, the U.S. market for Internet and broadband services is highly competitive. We compete with numerous providers of broadband services, as well as other dial-up Internet access providers, wireless and satellite service providers, cable service providers, and broadband resellers. We face competition from other manufacturers of smart phones, tablets and other handheld wireless devices. Also, we compete against established alternative voice communication providers, and may face competition from other large, well-capitalized Internet companies.
Our Targus business competes with companies that own other brands and trademarks, and other consumer brands as these companies could enter into similar licensing arrangements with domestic and international retailers and wholesalers.
Existing and potential clients across our businesses can choose from a variety of qualified service providers and products. In a cost-sensitive environment, such competitive arrangements may prevent us from acquiring new clients or new engagements with existing clients. Some of our competitors may be able to negotiate secure alliances with clients and affiliates on more favorable terms and devote greater resources to marketing and promotional campaigns or to the development of technology systems than us. In addition, new technologies and the expansion of existing technologies with respect to the online auction business may increase competitive pressures, including for the services of skilled professionals. There can be no assurance that we will be able to compete successfully against current or future competitors, and these competitive pressures could harm our business, operating results and financial condition.
Regulation
As a financial services provider, we are subject to complex and extensive regulation of most aspects of our business by U.S. federal and state regulatory agencies, self-regulatory organizations and securities exchanges. The laws, rules, and regulations comprising the regulatory framework are constantly changing, as are the interpretation and enforcement of existing laws, rules, and regulations. The effect of any such changes cannot be predicted and may direct the manner of our operations and affect our profitability.
Our broker-dealer subsidiaries are subject to regulations governing every aspect of the securities business, including the execution of securities transactions; capital requirements; record-keeping and reporting procedures; relationships with customers, including the handling of cash and margin accounts; the experience of and training requirements for certain employees; and business interactions with firms that are not members of regulatory bodies.
Our broker-dealer subsidiaries are registered with the SEC and are members of Financial Industry Regulatory Authority (“FINRA”). FINRA is a self-regulatory body composed of members such as our broker-dealer subsidiaries that have agreed to abide by the rules and regulations of FINRA. FINRA may expel, fine, and otherwise discipline member firms and their employees. Our broker-dealer subsidiaries are licensed as broker-dealers in all 50 states in the U.S., requiring us to comply with the laws, rules and regulations of each such state. Each state may revoke the license to conduct securities business, fine, and otherwise discipline broker-dealers and their employees. We are also registered with NASDAQ and must comply with its applicable rules.
Our broker-dealer subsidiaries are also subject to the SEC’s Uniform Net Capital Rule, Rule 15c3-1, which may limit our ability to make withdrawals of capital from our broker-dealer subsidiaries. The Uniform Net Capital Rule sets the minimum level of net capital a broker-dealer must maintain and also requires that a portion of its assets be relatively liquid. In addition, our broker-dealer subsidiaries are subject to certain notification requirements related to withdrawals of excess net capital.
The SEC requires broker-dealers to act in the best interest of their customers, and in December 2022, the SEC issued a proposed rule that would establish a best execution standard for broker-dealers and require broker-dealers to, among other things, establish, maintain, and enforce written policies and procedures reasonably designed to comply with the best execution standard.
We are also subject to the USA PATRIOT Act of 2001 (the Patriot Act), which imposes obligations regarding the prevention and detection of money-laundering activities, including the establishment of customer due diligence and customer verification, and other compliance policies and procedures. The conduct of research analysts is also the subject of rulemaking by the SEC, FINRA and the federal government through the Sarbanes-Oxley Act.
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These regulations require certain disclosures by, and restrict the activities of, research analysts and broker-dealers, among others. Failure to comply with these requirements may result in monetary, regulatory and, in the case of the USA Patriot Act, criminal penalties.
Our asset management subsidiaries are SEC-registered investment advisers, and accordingly subject to regulation by the SEC. Requirements under the Investment Advisors Act of 1940 include record-keeping, advertising and operating requirements, and prohibitions on fraudulent activities.
We are subject to federal and state consumer protection laws, including regulations prohibiting unfair and deceptive trade practices.
Our communications businesses are subject to a number of international, federal, state, and local laws and regulations, including, without limitation, those relating to taxation, bulk email or “spam” advertising, user privacy and data protection, consumer protection, antitrust, export, and unclaimed property. In addition, proposed laws and regulations relating to some or all of the foregoing, as well as to other areas affecting our businesses, are continuously debated and considered for adoption in the U.S. and other countries, and such laws and regulations could be adopted in the future. For additional information, see “Risk Factors,” which appears in Item 1A of this Annual Report on Form 10-K.
Our communications companies provide numerous communication services, including broadband telephone services, mobile phone and data services, global cloud technology/unified communications, mobile broadband and digital subscriber lines. In the United States, the Federal Communications Commission (“FCC” or the “Commission”) has asserted limited statutory jurisdiction and regulatory authority over the operations and offerings of providers of such services. The scope of the FCC regulations applicable to magicJack’s, Lingo Management's, Marconi Wireless' and UOL's services may change. Some of these operations are also subject to regulation by state public utility commissions.
Our Targus business conducts operations in a number of countries and is subject to a variety of laws and regulations which vary from country to country. Such laws and regulations include, in addition to environmental regulations described below, tax, import/export and anti-corruption laws, varying accounting, auditing and financial reporting standards, import or export restrictions or licensing requirements, trade protection measures, custom duties, tariffs, import or export duties, and other trade barriers, restrictions and regulations.

Our Targus business and its respective contract manufacturers are subject to regulation under various federal, state, local, and foreign laws concerning the environment, including laws addressing governing the manufacturing use and distribution of materials and chemical substances in products, their safe use, and laws restricting the presence of certain substances in electronics products. We could incur costs, including fines and civil or criminal sanctions, and third-party damage or personal injury claims, if we or our contract manufacturers were to violate or become liable under environmental laws.

We have established systems that facilitate our products’ compliance with applicable laws and regulations relating to testing, sourcing, traceability, and reporting obligations on a product basis. We require all contract manufacturers to attest to the compliance of the products they manufacture for such laws and regulations, and that the materials they utilize are as specified and tested. By signing a Supplier Hazardous Substance Free Declaration of Conformity to Targus, or other relevant Declaration of Conformity by product type, contract manufacturers confirm that they, and all components utilized in the products they manufacture for us, are in compliance with applicable regulations.
Human Capital
As of December 31, 2024, we had 2,056 full time employees, with over 500 additional affiliated associates active across our business and industry verticals.
We have a world-class team of colleagues across B. Riley. We recognize that our people are our most valuable asset and remain committed to providing the direction, support and resources necessary for our teams to succeed both professionally and personally. We operate in a highly collaborative, competitive, and fast-paced environment with an entrepreneurial culture that empowers our professionals to grow their own way and to succeed through mentorship opportunities. We strive to attract quality talent with the expertise to lead in their respective fields, innovative and independent thinkers who can collaborate on creative ways to better serve our clients and customers, and individuals with the agility to thrive in a fast-paced environment. We believe access to leadership is a critical part of mentoring our associates and the future leaders of our profession across all practices and sectors.
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We offer competitive compensation and benefits to support our employees’ wellbeing and reward strong performance. Our pay-for-performance compensation philosophy is designed to reward employees for achievement and to align employee interests with the firm’s long-term growth. Our benefits program includes healthcare, wellness initiatives, retirement offerings, paid time off, and flexible leave arrangements. We also offer all employees access to our employee assistance program, physical health and mental wellness programs and whenever possible, support flexible employment arrangements, such as remote work, that provide personal flexibility without sacrificing productivity and client service.
Workplace health and safety is vital to the successful operation of our business. The safety and protection of our employees, visitors, and event attendees is our utmost priority and an integral part of any function or service we provide. We continue to enhance our business continuity program to address how we respond to threats, while ensuring that we can continue to provide quality service to our clients and shareholders at all times.
Available Information
We maintain a website at www.brileyfin.com. The information on our website is not a part of, or incorporated in, this Annual Report. We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements, among other reports and filings, with the SEC, and make available, free of charge, on or through our website, such reports and filings and amendments thereto filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The public may obtain copies of these reports and filings and any amendments thereto at www.sec.gov.

Our Board of Directors (“Board” or “Board of Directors”) has adopted a Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. The Code of Business Conduct and Ethics is available for review on our website at https://ir.brileyfin.com/governance. Each of our directors, employees and officers, including our Chief Executive Officers, Chief Financial Officer, Chief Accounting Officer, and all of our other principal executive officers, are required to comply with the Code of Business Conduct and Ethics. Any changes to or waiver of our Code of Business Conduct and Ethics for senior financial officers, executive officers or Directors will be made available on our investor relations website.
Item 1A. Risk Factors.
Given the nature of our operations and services we provide, and as described in more detail below, a wide range of factors could materially affect our operations and profitability. The risks and uncertainties described below are not the only risks and uncertainties facing us. Additional risks and uncertainties not presently known or that are currently considered to be immaterial may also materially and adversely affect our business operations or stock price.

Summary Risk Factors

Some of the factors that could materially and adversely affect our business, financial condition, results of operations and cash flows include, but are not limited to, the following:

•Our revenues and results of operations are volatile and difficult to predict and have been impacted by recent divestiture transactions.
•Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition.

•Our exposure to legal liability is significant and could lead to substantial damages.

•Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price.
•We may incur losses as a result of ineffective risk management processes and strategies.
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•If we cannot meet our future capital requirements, we may be unable to develop and enhance our services, take advantage of business opportunities and respond to competitive pressures.
•We may suffer losses if our reputation is harmed.

•Our failure to maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our financial condition, results of operations and business and the price of our common stock and other securities.

•We may enter into new lines of business, make strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties for our business.

•Our corporate finance and strategic advisory engagements are singular in nature and do not generally provide for subsequent engagements.
•We are subject to net capital and other regulatory capital requirements; failure to comply with these rules would significantly harm our business.

•We have made and may make investments in relatively high-risk, illiquid assets that often have significantly leveraged capital structures, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount we invest in these activities.

•We are exposed to credit risk from a variety of our activities, including loans, lines of credit, guarantees and backstop commitments, and we may not be able to fully realize the value of the collateral securing certain of our loans.

•We have had and may experience write downs of our investments and other losses related to the valuation of our investments and volatile and illiquid market conditions.

•We depend on financial institutions as primary clients for our financial consulting business. Consequently, the loss of any financial institutions as clients may have an adverse impact on our business.
•If we are unable to attract and retain qualified personnel, we may not be able to compete successfully in our industry.

•Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our business, and could subject us to liability or reputational damage.
•Our Chairman and Co-Chief Executive Officer is a party to a credit agreement pursuant to which he has pledged as collateral the substantial majority of his common stock in our Company to a bank, and any foreclosure on such stock or the sale or attempted sale of such common stock, could adversely impact the price of our common stock and result in negative publicity.

•We did not pay dividends with respect to shares of our preferred stock and common stock and may not pay dividends regularly or at all in the future.

•Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.
•Our publicly traded senior notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future.
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•The indenture under which our senior notes were issued contains limited protection for holders of our publicly traded senior notes.
•We have and may continue to issue additional notes.
•The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, or 6.00% 2028 Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
Risks Related to Global and Economic Conditions and International Operations

Our revenues and results of operations are volatile and difficult to predict and have been impacted by recent divestiture transactions.

Our revenues and results of operations fluctuate significantly from quarter to quarter, due to a number of factors. These factors include, but are not limited to, the following:

•Our ability to attract new clients and obtain additional business from our existing client base;

•The number, size and timing of M&A transactions, capital raising transactions and investment banking engagements;

•The extent to which we acquire assets for resale, or guarantee a minimum return thereon, and our ability to resell those assets at favorable prices;

•Variability in the mix of revenues from the Financial Consulting businesses;

•The rate of decline we experience from our dial-up and DSL Internet access pay accounts in our UOL business as customers continue to migrate to broadband access which provides faster Internet connection and download speeds offered by our competitors;

•The rate of growth of new service areas;

•The types of fees we charge clients, or other financial arrangements we enter into with clients; and

•Changes in general economic and market conditions, including increased inflation and rising interest rates.

We have limited or no control over some of the factors set forth above and, as a result, may be unable to forecast our revenues accurately. For example, our investment banking revenues are typically earned upon the successful completion of a transaction, the timing of which is uncertain and beyond our control. A client’s acquisition transaction may be delayed or terminated because of a failure to agree upon final terms with the counterparty, failure to obtain necessary regulatory consents or board or stockholder approvals, failure to secure necessary financing, adverse market conditions or unexpected financial or other problems in the business of a client or a counterparty. If the parties fail to complete a transaction on which we are advising or an offering in which we are participating, we will earn little or no revenue from the contemplated transaction.

We rely on projections of revenues in developing our operating plans for the future and will base our expectations regarding expenses on these projections and plans. If we inaccurately forecast revenues and/or earnings, or fail to accurately project expenses, we may be unable to adjust our spending in a timely manner to compensate for these inaccuracies and, as a result, may suffer operating losses and such losses could have a negative impact on our financial condition and results of operations. If, for any reason, we fail to meet company, investor or analyst projections of revenue, growth or earnings, the market price of the common stock could decline and you may lose all or part of your investment.

Conditions in the financial markets and general economic conditions have impacted and may continue to impact our ability to generate business and revenues, which may cause significant fluctuations in our stock price.

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•Our opportunity to act as underwriter or placement agent could be adversely affected by a reduction in the number and size of capital raising transactions or by competing sources of equity.

•The number and size of M&A transactions or other strategic advisory services where we act as adviser could be adversely affected by continued uncertainties in valuations related to asset quality and creditworthiness, volatility in the equity markets, and diminished access to financing.

•Market volatility could lead to a decline in the volume of transactions that we execute for our customers and, therefore, to a decline in the revenue we receive from commissions and spreads.

•We have experienced and may experience in the future losses in securities trading activities, or as a result of write-downs in the value of securities that we own, as a result of deteriorations in the businesses or creditworthiness of the issuers of such securities.

•We have experienced and may experience in the future losses or write downs in the realizable value of our proprietary investments due to the inability of companies we invest in to repay their borrowings.

•Our access to liquidity and the capital markets could be limited, preventing us from making proprietary investments and restricting our sales and trading businesses.

•We have incurred, and may incur in the future, unexpected costs or losses as a result of the bankruptcy or other failure of companies for which we have performed investment banking services to honor ongoing obligations such as indemnification or expense reimbursement agreements, or in whom we have invested or to whom we have extended credit.

•Sudden sharp declines in market values of securities can result in illiquid markets and the failure of counterparties to perform their obligations, which could make it difficult for us to sell securities, hedge securities positions, and invest funds under management.

•As an introducing broker to clearing firms, we are responsible to the clearing firm and could be held liable for the defaults of our customers, including losses incurred as the result of a customer’s failure to meet a margin call. When we allow customers to purchase securities on margin, we are subject to risks inherent in extending credit. This risk increases when a market is rapidly declining and the value of the collateral held falls below the amount of a customer’s indebtedness. If a customer’s account is liquidated as the result of a margin call, we are liable to our clearing firm for any deficiency.

•Competition in our investment banking, sales, and trading businesses could intensify as a result of the increasing pressures on financial services companies and larger firms competing for transactions and business that historically would have been too small for them to consider.

•Market volatility often results in lower prices for securities, which results in reduced management fees calculated as a percentage of assets under management.

•Market declines could increase claims and litigation, including arbitration claims from customers.

•Our industry could face increased regulation as a result of legislative or regulatory initiatives. Compliance with such regulation may increase our costs and limit our ability to pursue business opportunities.

•Government intervention may not succeed in improving the financial and credit markets and may have negative consequences for our business.

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Global economic and political uncertainty could adversely affect our revenue and results of operations.

As a result of the international nature of our business, we are subject to the risks arising from adverse changes in global economic and political conditions. An unpredictable or volatile political environment in the United States or globally, reductions in government spending, concerns related to the U.S. debt ceiling, the imposition of tariffs and retaliatory responses, and uncertainty about the effects of current and future economic and political conditions, including acts of war, aggression or terrorism, on us, our customers, suppliers and partners, makes it difficult for us to forecast operating results and to make decisions about future investments. Deterioration in economic conditions in any of the countries in which we do business could result in reductions in sales of our products and services and could cause slower or impaired collections on accounts receivable, which may adversely impact our liquidity and financial condition.

As was observed during the COVID-19 pandemic, a significant outbreak of a contagious disease or other severe public health crisis could negatively impact the availability of key personnel necessary to conduct our business, and the business and operations of our third-party service providers who perform critical services for our business. Pandemics, epidemics, future highly infectious or contagious diseases, or other severe public health crisis could cause a material adverse effect on our business, financial condition, results of operations and cash flow.

We focus principally on certain sectors of the economy in our investment banking operations, and deterioration in the business environment in these sectors or a decline in the market for securities of companies within these sectors could harm our business.

Volatility in the business environment in the industries in which our clients operate or in the market for securities of companies within these industries could adversely affect our financial results and the market value of our preferred stock, common stock and senior notes. The business environment for companies in some of these industries has been subject to high levels of volatility in recent years, and our financial results have consequently been subject to significant variations from year to year. For example, the consumer goods and services sectors are subject to consumer spending trends, which have been volatile, to mall traffic trends, which have been down, to the availability of credit, and to broader trends such as the rise of Internet retailers. Emerging markets have driven the growth of certain consumer companies but emerging market economies are fragile, subject to wide swings in GDP, and subject to changes in foreign currencies. The technology industry has been volatile, driven by evolving technology trends, by technological obsolescence, by enterprise spending, and by changes in the capital spending trends of major corporations and government agencies around the world.

Our investment banking operations focus on various sectors of the economy, and we also depend significantly on private company transactions for sources of revenues and potential business opportunities. Most of these private company clients are initially funded and controlled by private equity firms. To the extent that the pace of these private company transactions slows or the average transaction size declines due to a decrease in private equity financings, difficult market conditions in our target industries or other factors, our business and results of operations may be harmed.

Underwriting and other corporate finance transactions, strategic advisory engagements and related sales and trading activities in our target industries represent a significant portion of our investment banking business. This concentration of activity in our target industries exposes us to the risk of declines in revenues in the event of downturns in these industries, such as those due to rising inflation and interest rates.

Our businesses may be adversely affected by the disruptions in the credit markets, including reduced access to credit and liquidity and higher costs of obtaining credit.

In the event existing internal and external financial resources do not satisfy our needs, we would have to seek additional outside financing. The availability of outside financing will depend on a variety of factors, such as our financial condition and results of operations, the availability of acceptable collateral, market conditions, the general availability of credit, the volume of trading activities, and the overall availability of credit to the financial services industry, all of which are under increased pressure due to the continuing inflationary environment and increased interest rates.

Widening credit spreads, as well as significant declines in the availability of credit, could adversely affect our ability to borrow on an unsecured basis. Disruptions in the credit markets could make it more difficult and more expensive to obtain funding for our businesses. If our available funding is limited or we are forced to fund our operations at a higher cost, these conditions may require us to curtail our business activities and increase our cost of funding, both of which could reduce our profitability, particularly in our businesses that involve investing and taking principal positions.

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Liquidity, or ready access to funds, is essential to financial services firms, including ours. Failures of financial institutions have often been attributable in large part to insufficient liquidity. Liquidity is of particular importance to our sales and trading business, and perceived liquidity issues may affect the willingness of our clients and counterparties to engage in sales and trading transactions with us. Our liquidity could be impaired due to circumstances that we may be unable to control, such as a general market disruption or an operational problem that affects our sales and trading clients, third parties, or us. Further, our ability to sell assets may be impaired if other market participants are seeking to sell similar assets at the same time.

Our clients engaging us with respect to M&A often rely on access to the secured and unsecured credit markets to finance their transactions. The lack of available credit and the increased cost of credit could adversely affect the size, volume and timing of our clients’ merger and acquisition transactions-particularly large transactions-and adversely affect our investment banking business and revenues.

Climate change could have a material negative impact on us and our customers and counterparties, and our efforts to address concerns relating to climate change could result in damage to our reputation.

Our business, as well as the operations and activities of our customers and counterparties, could be negatively impacted by climate change. Climate change presents both immediate and long-term risks to us and our customers and these risks are expected to increase over time. Climate change may cause extreme weather events that disrupt operations at one or more of our primary locations, which may negatively affect our ability to service and interact with our clients, adversely affect the value of our investments, and reduce the availability of insurance. Climate change and the transition to a less carbon-dependent economy may also have a negative impact on the operations or financial condition of our clients and counterparties, which may decrease revenues from those clients and counterparties and increase the credit risk associated with loans and other credit exposures to those clients and counterparties. In addition, climate change may impact the broader economy, including through disruptions to supply chains.

Climate change also exposes us to transition risks associated with the transition to a less carbon-dependent economy. Transition risks may result from changes in policies; laws and regulations; technologies; and/or market preferences to address climate change. Such changes could materially, negatively impact our business, results of operations, financial condition and/or our reputation, in addition to having a similar impact on our customers and counterparties.

For example, our reputation and client relationships may be damaged as a result of our involvement, or our clients’ involvement, in certain industries or projects associated with causing or exacerbating climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations relating to climate change.

New regulations or guidance relating to climate change, as well as the perspectives of regulators, stockholders, employees and other stakeholders regarding climate change, may affect whether and on what terms and conditions we engage in certain activities or offer certain products. The risks associated with, and the perspective of regulators, shareholders, employees and other stakeholders regarding, climate change are continuing to evolve rapidly and in some cases greatly diverge, which can make it difficult to assess the ultimate impact on us of climate change-related risks and uncertainties, and we expect that climate change-related risks will increase over time.

Our third-party contract manufacturers are located across several countries in Asia, which could expose us to risks associated with doing business in those geographic areas.

All of our production is performed by third-party contract manufacturers, including original design manufacturers, in Taiwan, China, Thailand, Vietnam, Cambodia, India, South Korea and Philippines.

Our global manufacturing suppliers in Asia and other countries could be adversely affected by changes in the interpretation and enforcement of legal standards, strains on available labor pool, changes in labor costs and other employment dynamics, high turnover among skilled employees, infrastructure issues, import-export issues, cross-border intellectual property and technology restrictions, currency transfer restrictions, natural disasters, regional or global pandemics, conflicts or disagreements between the United States and some other countries, labor unrest, and other trade customs and practices that are dissimilar to those in the United States and Europe.

We depend on overseas third-party suppliers for the manufacture of Targus and magicJack products, and our reputation and results of operations would be harmed if these manufacturers or suppliers fail to meet our requirements.

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Our manufacturers supply substantially all of the raw materials and provide all facilities and labor required to manufacture our products. Within Asia, except for India, the majority of raw materials are from China. If these companies were to terminate their arrangements with us or fail to provide the required capacity and quality on a timely basis, either due to actions of the manufacturers; earthquakes, typhoons, tsunamis, fires, floods, or other natural disasters; COVID-19 or other pandemics; wars or armed conflicts; strains on infrastructure; available labor pools or manufacturing capacity; or the actions of their respective governments, we would be unable to manufacture our products until replacement contract manufacturing services could be obtained. To qualify a new contract manufacturer, familiarize it with our products, quality standards and other requirements, and commence volume production is a costly and time-consuming process.

Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for an input component, and supplier capacity. From time to time, we have experienced component shortages and extended lead times on semiconductors and other input products used in our finished products. Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results. While we work to address and mitigate such risks, we are exposed to the risks of supply chain disruption which could negatively impact our business. Any material interruption in the manufacture of our products could likely result in delays in shipment, lost sales and revenue, and damage to our reputation in the market, all of which would harm our business and results of operations.

Changes in trade policy and regulations in the United States and other countries, including changes in trade agreements and the imposition of tariffs, retaliatory measures and the resulting consequences, may have adverse impacts on our business, results of operations, and financial condition.

In recent years, the U.S. government has instituted or proposed changes to international trade policy through the renegotiation, and potential termination, of certain existing bilateral or multilateral trade agreements and treaties with, and the imposition of tariffs on a wide range of products and other goods from China, EMEA, and other countries. Given our contract manufacturing and logistic providers in those countries, policy or regulations changes in the United States or other countries present particular risks for us.

The new administration has imposed, and has indicated it plans to continue to impose, tariffs on various U.S. trading partners, and those trading partners have retaliated or threatened to retaliate with tariffs on U.S. goods. New or increased tariffs, retaliatory tariffs and resulting trade wars could adversely affect many of our products. We cannot predict future trade policy and regulations in the United States and other countries, the terms of any renegotiated trade agreements or treaties, or tariffs and their impact on our business. An escalated trade war could have a significant adverse effect on world trade and the world economy. To the extent that trade tariffs and other restrictions imposed by the United States or other countries increase the price of, or limit the amount of, our products or components or materials used in our products imported into the United States or other countries, or create adverse tax consequences, the sales, cost, or gross margin of our products may be adversely affected and the demand from our customers for products and services may be diminished. Uncertainty surrounding international trade policy and regulations as well as disputes and protectionist measures could also have an adverse effect on consumer confidence and spending. If we deem it necessary to alter all or a portion of our activities or operations in response to such policies, agreements, or tariffs, our capital and operating costs may increase.

Our financial performance is subject to risks associated with fluctuations in currency exchange rates.

While the majority of our business is conducted in U.S. Dollars, we face some exposure to movements in currency exchange rates. For manufacturing, our components are sourced mainly in U.S. Dollars.

Our primary exposure to movements in currency exchange rates relates to non-U.S. Dollar-denominated sales and operating expenses worldwide. The weakening of currencies relative to the U.S. Dollar adversely affects the U.S. Dollar value of our non-U.S. Dollar-denominated sales and earnings. If we raise international pricing to compensate, it could potentially reduce demand for our products, adversely affecting our sales and potentially having an adverse impact on our market share. Margins on sales of our products in non-U.S. Dollar-denominated countries and on sales of products that include components obtained from suppliers in non-U.S. Dollar-denominated countries could be adversely affected by currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the U.S. Dollar’s strengthening, which would adversely affect the U.S. Dollar value of our non-U.S. Dollar-denominated sales and earnings. Competitive conditions in the markets in which we operate may also limit our ability to increase prices in the event of fluctuations in currency exchange rates. Conversely, strengthening of currency rates may also increase our product component costs and other expenses denominated in those currencies, adversely affecting operating results.
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As a result, fluctuations in currency exchange rates could and have in the past adversely affected our business, operating results and financial condition.

Risks Related to Legal Liability, Risk Management, Finance and Accounting

Our exposure to legal liability is significant, and could lead to substantial damages.

We face significant legal risks in our businesses. These risks include potential liability under securities laws and regulations in connection with our capital markets, asset management and other businesses. The volume and amount of damages claimed in litigation, arbitrations, regulatory enforcement actions and other adversarial proceedings against financial services firms have increased in recent years. We also are subject to claims from disputes with our employees and our former employees under various circumstances. Risks associated with legal liability often are difficult to assess or quantify and their existence and magnitude can remain unknown for significant periods of time, making the amount of legal reserves related to these legal liabilities difficult to determine and subject to future revision. Legal or regulatory matters involving our directors, officers or employees in their individual capacities also may create exposure for us because we may be obligated or may choose to indemnify the affected individuals against liabilities and expenses they incur in connection with such matters to the extent permitted under applicable law. In addition, like other financial services companies, we may face the possibility of employee fraud or misconduct. The precautions we take to prevent and detect this activity may not be effective in all cases and there can be no assurance that we will be able to deter or prevent fraud or misconduct.

Exposures from and expenses incurred related to any of the foregoing actions or proceedings could have a negative impact on our results of operations and financial condition. In addition, future results of operations could be adversely affected if reserves relating to these legal liabilities are required to be increased or legal proceedings are resolved in excess of established reserves.

Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price.

On August 21, 2023, we completed the FRG take-private transaction. In November 2023, we learned from news reports that Mr. Kahn was identified as an unindicted co-conspirator in criminal and civil charges of securities fraud against the executive of an unrelated hedge fund.

While we had no involvement with, or knowledge of, any of the alleged misconduct concerning that hedge fund (and each of the separate review and investigations undertaken by the Audit Committee of our Board of Directors confirmed this), as a result of these matters we have experienced and will likely continue to experience adverse impacts on our business, results of operations, reputation, and/or stock price. These adverse impacts have arisen and will likely continue to arise out of current and future legal proceedings initiated since the November 2023 news reports, the many continuing unfounded allegations by short sellers and others, the substantial short pressure on our stock price (for further information, see the Risk Factor “—The price of our securities may be adversely affected by third parties who raise allegations about our Company” below), and the resulting damage to certain business relationships and employee morale and increased employee attrition, among others. We have incurred and will continue to incur expenses in connection with these matters and any future legal proceedings arising out of these matters, which expenses may be material and, in some cases, are not or will not be covered by insurance.

In addition, on November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under chapter 11 of the Bankruptcy Code. As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the Freedom VCM Investment and the Vintage Loan Receivable. As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024 and a value of $1.3 million to the Vintage Loan Receivable as of September 16, 2025. For the year ended December 31, 2024, non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivables were $221.0 million and $222.9 million respectively.

Prior to the filing of the FRG Chapter 11 Cases in November 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief (the “Conn's Chapter 11 Cases”) under chapter 11 of the Bankruptcy Code. FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s, and in December 2023, the Company loaned $108.0 million to Conn’s subsequently reduced to $93.0 million due to principal repayments.
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The fair value of this loan receivable was $19.1 million at December 31, 2024.

We expect that the Company may be subject to lawsuits and other claims related to the FRG Chapter 11 Cases and the Conn's Chapter 11 Cases (see "Recent Developments - Conn's and FRG"). These events and developments have exacerbated, and they and additional similar events and developments including additional litigation and claims will continue to exacerbate, the risk that we will continue to: (i) incur expenses in connection with these matters, which expenses may be material and, in some cases, are not or will not be covered by insurance; (ii) harm our reputation and negatively impact employee morale, retention and hiring; (iii) lose customers or negatively impact on our ability to attract new customers and increased competition for new clients and business; and (iv) result in additional write-downs, which may be material.

We may incur losses as a result of ineffective risk management processes and strategies.

We seek to monitor and control our risk exposure through operational and compliance reporting systems, internal controls, management review processes and other mechanisms. Our investing and trading processes seek to balance our ability to profit from investment and trading positions with our exposure to potential losses. While we employ limits, hedging transactions, and other risk mitigation techniques, those techniques and the judgments that accompany their application cannot anticipate economic and financial outcomes or the specifics and timing of such outcomes. Thus, we may, in the course of our investment and trading activities, incur losses, which may be significant.

In addition, we are investing our own capital in our funds and funds of funds as well as principal investing activities, and limitations on our ability to withdraw some or all of our investments in these funds or liquidate our investment positions, whether for legal, reputational, illiquidity or other reasons, may make it more difficult for us to control the risk exposures relating to these investments.

Our risk management policies and procedures may leave us exposed to unidentified or unanticipated risks.

Our risk management strategies and techniques may not be fully effective in mitigating our risk exposure in all market environments or against all types of risk. We seek to manage, monitor and control our operational, legal and regulatory risk through operational and compliance reporting systems, internal controls, management review processes and other mechanisms; however, there can be no assurance that our procedures will be fully effective. Further, our risk management methods may not effectively predict future risk exposures, which could be significantly greater than the historical measures indicate. In addition, some of our risk management methods are based on an evaluation of information regarding markets, clients and other matters that are based on assumptions that may no longer be accurate. A failure to adequately manage our growth, or to effectively manage our risk, could materially and adversely affect our business and financial condition.
We are exposed to the risk that third parties that owe us money, securities or other assets will not perform their obligations. These parties may default on their obligations to us due to bankruptcy, lack of liquidity, operational failure, and breach of contract or other reasons. We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances. As an introducing broker, we could be held responsible for the defaults or misconduct of our customers. These may present credit concerns, and default risks may arise from events or circumstances that are difficult to detect, foresee or reasonably guard against. In addition, concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions, which in turn could adversely affect us. If any of the variety of instruments, processes and strategies we utilize to manage our exposure to various types of risk are not effective, we may incur losses.

Our failure to deal appropriately with conflicts of interest could damage our reputation and adversely affect our business.

We confront potential conflicts of interest relating to our and our funds’ and clients’ investment and other activities. Certain of our funds have overlapping investment objectives, including funds which have different fee structures, and potential conflicts may arise with respect to our decisions regarding how to allocate investment opportunities among ourselves and those funds. For example, a decision to acquire material non-public information about a company while pursuing an investment opportunity for a particular fund gives rise to a potential conflict of interest when it results in our having to restrict the ability of the Company or other funds to take any action.

In addition, there may be conflicts of interest regarding investment decisions for funds in which our officers, directors and employees, who have made and may continue to make significant personal investments in a variety of funds, are personally invested.
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Similarly, conflicts of interest may exist or develop regarding decisions about the allocation of specific investment opportunities between the Company and the funds.

We also have potential conflicts of interest with our investment banking and institutional clients including situations where our services to a particular client or our own proprietary or fund investments or interests conflict or are perceived to conflict with a client. It is possible that potential or perceived conflicts could give rise to investor or client dissatisfaction or litigation or regulatory enforcement actions. Appropriately dealing with conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to deal appropriately with one or more potential or actual conflicts of interest. Regulatory scrutiny of, or litigation in connection with, conflicts of interest would have a material adverse effect on our reputation, which would materially adversely affect our business in a number of ways, including as a result of redemptions by our investors from our hedge funds, an inability to raise additional funds and a reluctance of counterparties to do business with us.

Financial services firms have been subject to increased scrutiny over the last several years, increasing the risk of financial liability and reputational harm resulting from adverse regulatory actions.

Firms in the financial services industry have been operating in a difficult regulatory environment which we expect may become even more stringent in light of recent well-publicized failures of regulators to detect and prevent fraud. The industry has experienced increased scrutiny from a variety of regulators, including the SEC, the NYSE, FINRA and state attorneys general. Penalties and fines sought by regulatory authorities have increased substantially over the last several years. This regulatory and enforcement environment has created uncertainty with respect to a number of transactions that had historically been entered into by financial services firms and that were generally believed to be permissible and appropriate. We may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of financial services, including, but not limited to, the authority to fine us and to grant, cancel, restrict or otherwise impose conditions on the right to carry on particular businesses. For example, a failure to comply with the obligations imposed by the Exchange Act on broker-dealers and the Investment Advisers Act of 1940 on investment advisers, including record-keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities, or by the Investment Company Act of 1940, could result in investigations, sanctions and reputational damage. We also may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or foreign governmental regulatory authorities or FINRA or other self-regulatory organizations that supervise the financial markets. Substantial legal liability or significant regulatory action against us could have adverse financial effects on us or cause reputational harm to us, which could harm our business prospects.

In addition, financial services firms are subject to numerous conflicts of interests or perceived conflicts. The SEC and other federal and state regulators have increased their scrutiny of potential conflicts of interest. We have adopted various policies, controls and procedures to address or limit actual or perceived conflicts and regularly review and update our policies, controls and procedures. However, appropriately addressing conflicts of interest is complex and difficult and our reputation could be damaged if we fail, or appear to fail, to appropriately address conflicts of interest. Our policies and procedures to address or limit actual or perceived conflicts may also result in increased costs and additional operational personnel. Failure to adhere to these policies and procedures may result in regulatory sanctions or litigation against us. For example, the research operations of investment banks have been and remain the subject of heightened regulatory scrutiny which has led to increased restrictions on the interaction between equity research analysts and investment banking professionals at securities firms. Several securities firms in the U.S. reached a global settlement in 2003 and 2004 with certain federal and state securities regulators and self-regulatory organizations to resolve investigations into the alleged conflicts of interest of research analysts, which resulted in rules that have imposed additional costs and limitations on the conduct of our business.

Asset management businesses have experienced a number of highly publicized regulatory inquiries which have resulted in increased scrutiny within the industry and new rules and regulations for mutual funds, investment advisors and broker-dealers. Our subsidiary, B. Riley Capital Management, LLC, is registered as an investment advisor with the SEC and regulatory scrutiny and rulemaking initiatives may result in an increase in operational and compliance costs or the assessment of significant fines or penalties against our asset management business, and may otherwise limit our ability to engage in certain activities. In recent years, the Company has experienced significant pricing pressures on trading margins and commissions in debt and equity trading. In the equity and fixed income markets, regulatory requirements and the increased use of electronic trading and alternative trading systems has resulted in greater price transparency, leading to increased price competition and decreased trading margins. The trend toward using alternative trading systems is continuing to grow, which may result in decreased commission and trading revenue, reduce our participation in the trading markets and our ability to access market information, and lead to the creation of new and stronger competitors.
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In the equity markets, we utilize certain market centers to execute orders on our behalf in exchange for payment for our order flow. Market centers are selected based on their ability to provide liquidity, price improvement, and timely execution for client orders. Increased regulatory scrutiny of payment for order flow may result in a decrease in this type of revenue. Institutional clients also have pressured financial services firms to alter "soft dollar" practices under which brokerage firms bundle the cost of trade execution with research products and services. Some institutions separate (or “unbundle”) payments for research products or services from sales commissions. Institutions subject to MiFID II were required to unbundle such payments commencing January 3, 2018. The SEC’s decision to no longer extend regulatory relief from certain arrangements required by MiFID II will increase competitive pressures from those clients which have yet to unbundle payments for research products or services from sales commissions. Should we be unable to reach agreement regarding the terms of unbundling arrangements with institutional clients who are actively seeking such arrangements, this could result in the loss of those clients, which would likely reduce the level of institutional commissions. We believe that price competition and pricing pressures in these and other areas will continue as institutional investors continue to reduce the amounts they are willing to pay, including reducing the number of brokerage firms they use, and some of our competitors seek to obtain market share by reducing fees, commissions or margins. In addition, Congress is currently considering imposing new requirements on entities that securitize assets, which could affect our credit activities. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the proposals will become law. Compliance with any new laws or regulations could make compliance more difficult and expensive and affect the manner in which we conduct business.

If we cannot meet our future capital requirements, we may be unable to develop and enhance our services, take advantage of business opportunities and respond to competitive pressures.

We may need to raise additional funds in the future to grow our business internally, invest in new businesses, expand through acquisitions, enhance our current services or respond to changes in our target markets. If we raise additional capital through the sale of equity or equity derivative securities, the issuance of these securities could result in dilution to our existing stockholders. If additional funds are raised through the issuance of debt securities, the terms of that debt could impose additional restrictions on our operations or harm our financial condition. Additional financing may be unavailable on acceptable terms.

Our ability to use net loss carryovers to reduce our taxable income may be limited.

The Company may be limited to the amount of net operating loss carryforwards that may be utilized in future taxable years depending on the Company’s actual taxable income. As of December 31, 2024, the Company has recorded a valuation allowance for what it believes that its net operating loss carryforwards that are available to be utilized in future tax periods since it is more likely than not that future taxable earnings will be sufficient to utilize the net operating loss carryforwards before they expire.

Changes in tax laws or regulations, or to interpretations of existing tax laws or regulations, to which we are subject could adversely affect our financial condition and cash flows.

We are subject to taxation in the United States and in some foreign jurisdictions. Our financial condition and cash flows are impacted by tax policy implemented at each of the federal, state, local and international levels. We cannot predict whether any changes to tax laws or regulations, or to interpretations of existing tax laws or regulations, will be implemented in the future or whether any such changes would have a material adverse effect on our financial condition and cash flows. However, future changes to tax laws or regulations, or to interpretations of existing tax laws or regulations, could increase our tax burden or otherwise adversely affect our financial condition and cash flows.

We have identified material weaknesses in our internal control over financial reporting, and these material weaknesses, or our failure or inability to remediate them, or our failure to otherwise design and maintain effective internal control over financial reporting, exposes us to additional risks and uncertainties and could result in loss of investor confidence, shareholder litigation or governmental proceedings or investigations, any of which could cause the market value of our securities to decline or impact our ability to access the capital markets.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act and the Dodd-Frank Act and are required to prepare our financial statements according to the rules and regulations required by the SEC. In addition, the Exchange Act requires that we file annual, quarterly and current reports. Our failure to prepare and disclose this information in a timely manner or to otherwise comply with applicable law could subject us to penalties under federal securities laws, expose us to lawsuits and restrict our ability to access financing.
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In addition, the Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting and disclosure purposes. Internal control over financial reporting is complex and may be revised over time to adapt to changes in our business, or changes in applicable accounting rules. As reported in Item 9A, Controls and Procedures of this Annual Report, we have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis.

As a result of these material weaknesses, we are subject to additional risks and uncertainties. For example, we cannot assure you that the measures we have taken to date and that we intend to continue to take will be sufficient to remediate the internal control deficiencies that led to our material weaknesses, that the material weaknesses will be remediated on a timely basis, or that additional material weaknesses will not be identified in the future. If the steps we take do not remediate the outstanding material weaknesses in a timely manner, there could continue to be a possibility that these control deficiencies or others could result in a material misstatement of our annual or interim consolidated financial statements. Moreover, remediation efforts place a significant burden on management and add increased pressure to our financial resources and processes. If we are unable to successfully remediate our existing, or any future, material weaknesses or other deficiencies in our internal control over financial reporting or disclosure controls and procedures, or we failure to otherwise design and maintain effective internal control over financial reporting, investors may lose confidence in our financial reporting and the accuracy and timing of our financial reporting and disclosures and our business, reputation, results of operations, financial condition, price of our securities, and ability to access the capital markets through equity or debt issuances could be adversely affected. In addition, we may be subject to governmental investigations and penalties and litigation as a result of these control deficiencies.

We may suffer losses if our reputation is harmed.

Our ability to attract and retain customers and employees may be diminished to the extent our reputation is damaged. If we fail, or are perceived to fail, to address various issues that may give rise to reputational risk, we could harm our business prospects. These issues include, but are not limited to, appropriately dealing with market dynamics, potential conflicts of interest, legal and regulatory requirements, ethical issues, customer privacy, record-keeping, sales and trading practices, and the proper identification of the legal, reputational, credit, liquidity and market risks inherent in our products and services. Failure to appropriately address these issues could give rise to loss of existing or future business, financial loss, and legal or regulatory liability, including complaints, claims and enforcement proceedings against us, which could, in turn, subject us to fines, judgments and other penalties. In addition, our Capital Markets operations depend to a large extent on our relationships with our clients and reputation for integrity and high-caliber professional services to attract and retain clients. As noted above under, “Recent events and developments related to our investment in Freedom VCM and our prior business relationship with Brian Kahn and related to the SEC subpoenas we received have had and may continue to have adverse effects on our business, results of operations, reputation, and stock price”, damage to our reputation from the matters described in that risk factor have led to negative impacts on our business relationships particularly in B. Riley Securities, Inc.'s ("BRS'") Capital Markets segment and could continue to have a negative impact on our business relationships. As a result, if a client is not satisfied with our services, it may be more damaging in our business than in other businesses.

Misconduct by our employees or by the employees of our business partners could harm us and is difficult to detect and prevent.

There have been a number of highly publicized cases involving fraud or other misconduct by employees in the financial services industry in recent years, and we run the risk that employee misconduct could occur at our firm. For example, misconduct could involve the improper use or disclosure of confidential information, which could result in regulatory sanctions and serious reputational or financial harm. It is not always possible to deter misconduct and the precautions we take to detect and prevent this activity may not be effective in all cases. Our ability to detect and prevent misconduct by entities with which we do business may be even more limited. We may suffer reputational harm for any misconduct by our employees or those entities with which we do business.

We may enter into new lines of business, make strategic investments or acquisitions or enter into joint ventures, each of which may result in additional risks and uncertainties for our business.

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We may enter into new lines of business, make future strategic investments or acquisitions and enter into joint ventures. As we have in the past, and subject to market conditions, we may grow our business by increasing assets under management in existing investment strategies, pursue new investment strategies, which may be similar or complementary to our existing strategies or be wholly new initiatives, or enter into strategic relationships, or joint ventures. In addition, opportunities may arise to acquire or invest in other businesses that are related or unrelated to our current businesses.

To the extent we make strategic investments or acquisitions, enter into strategic relationships or joint ventures or enter into new lines of business, we will face numerous risks and uncertainties, including risks associated with the required investment of capital and other resources and with combining or integrating operational and management systems and controls and managing potential conflicts. Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business generates insufficient revenues, or produces investment losses, or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected, and our reputation and business may be harmed. In the case of joint ventures, we are subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to, systems, controls and personnel that are not under our control.

Risks Related to BRS' Capital Markets Activities

Our corporate finance and strategic advisory engagements are singular in nature and do not generally provide for subsequent engagements.

Our investment banking clients generally retain us on a short-term, engagement-by-engagement basis in connection with specific corporate finance, merger and acquisition transactions (often as an advisor in company sale transactions) and other strategic advisory services, rather than on a recurring basis under long-term contracts. As these transactions are typically singular in nature and our engagements with these clients may not recur, we must seek new engagements when our current engagements are successfully completed or are terminated. As a result, high activity levels in any period are not necessarily indicative of continued high levels of activity in any subsequent period. If we are unable to generate a substantial number of new engagements that generate fees from new or existing clients, our business, results of operations and financial condition could be adversely affected.

Our Capital Markets operations are highly dependent on communications, information and other systems and third parties, and any systems failures could significantly disrupt our capital markets business.

Our data and transaction processing, custody, financial, accounting and other technology and operating systems are essential to our capital markets operations. A system malfunction (due to hardware failure, capacity overload, security incident, data corruption, etc.) or mistake made relating to the processing of transactions could result in financial loss, liability to clients, regulatory intervention, reputational damage and constraints on our ability to grow. We outsource a substantial portion of our critical data processing activities, including trade processing and back office data processing. We also contract with third parties for market data and other services. In the event that any of these service providers fails to adequately perform such services or the relationship between that service provider and us is terminated, we may experience a significant disruption in our operations, including our ability to timely and accurately process transactions or maintain complete and accurate records of those transactions.

Adapting or developing our technology systems to meet new regulatory requirements, client needs, expansion and industry demands also is critical for our business. Introduction of new technologies present new challenges on a regular basis. We have an ongoing need to upgrade and improve our various technology systems, including our data and transaction processing, financial, accounting, risk management and trading systems. This need could present operational issues or require significant capital spending. It also may require us to make additional investments in technology systems and may require us to reevaluate the current value and/or expected useful lives of our technology systems, which could negatively impact our results of operations.

Secure processing, storage and transmission of confidential and other information in our internal and outsourced computer systems and networks also is critically important to our business. We take protective measures and endeavor to modify them as circumstances warrant. However, our computer systems and software are subject to unauthorized access, computer viruses or other malicious code, inadvertent, erroneous or intercepted transmission of information (including by e-mail), and other events that have had an information security impact. If one or more of such events occur, this potentially could jeopardize our or our clients’ or counterparties’ confidential and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our, our clients’, our counterparties’ or third parties’ operations.
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We may be required to expend significant additional resources to modify our protective measures or to investigate and remediate vulnerabilities or other exposures, and we may be subject to litigation and financial losses that are either not insured against or not fully covered through any insurance maintained by us.
A disruption in the infrastructure that supports our business due to fire, natural disaster, health emergency (for example, the COVID-19 pandemic), power or communication failure, act of terrorism or war may affect our ability to service and interact with our clients. If we are not able to implement contingency plans effectively, any such disruption could harm our results of operations.

The growth of electronic trading and the introduction of new technology in the markets in which our market-making business operates may adversely affect this business and may increase competition.

The continued growth of electronic trading and the introduction of new technologies is changing our market-making business and presenting new challenges. Securities, futures and options transactions are increasingly occurring electronically, through alternative trading systems. We expect that the trend toward alternative trading systems will continue to accelerate. This acceleration could further increase program trading, increase the speed of transactions and decrease our ability to participate in transactions as principal, which would reduce the profitability of our market-making business. Some of these alternative trading systems compete with our market-making business and with our algorithmic trading platform, and we may experience continued competitive pressures in these and other areas. Significant resources have been invested in the development of our electronic trading systems, which includes our at-the-market business, but there is no assurance that the revenues generated by these systems will yield an adequate return on the investment, particularly given the increased program trading and increased percentage of stocks trading off of the historically manual trading markets.

Pricing and other competitive pressures may impair the revenues of our sales and trading business.

We derive a significant portion of our revenues for our investment banking operations from our sales and trading business. There has been intense price competition and trading volume reduction in this business in recent years. In particular, the ability to execute trades electronically and through alternative trading systems has increased the downward pressure on per share trading commissions and spreads. We expect these trends toward alternative trading systems and downward pricing pressure in the business to continue. We experience competitive pressures in these and other areas in the future as some of our competitors seek to obtain market share by competing on the basis of price or by using their own capital to facilitate client trading activities. In addition, we face pressure from our larger competitors, many of whom are better able to offer a broader range of complementary products and services to clients in order to win their trading business. These larger competitors may also be better able to respond to changes in the research, brokerage and investment banking industries, to compete for skilled professionals, to finance acquisitions, to fund internal growth and to compete for market share generally. As we are committed to maintaining and improving our comprehensive research coverage in our target sectors to support our sales and trading business, we may be required to make substantial investments in our research capabilities to remain competitive. If we are unable to compete effectively in these areas, the revenues of our sales and trading business may decline, and our business, results of operations and financial condition may be harmed.

Some of our large institutional sales and trading clients in terms of brokerage revenues have entered into arrangements with us and other investment banking firms under which they separate payments for research products or services from trading commissions for sales and trading services, and pay for research directly in cash, instead of compensating the research providers through trading commissions (referred to as “soft dollar” practices). In addition, we have entered into certain commission sharing arrangements in which institutional clients execute trades with a limited number of brokers and instruct those brokers to allocate a portion of the commission directly to us or other broker-dealers for research or to an independent research provider. If more of such arrangements are reached between our clients and us, or if similar practices are adopted by more firms in the investment banking industry, we expect that would increase the competitive pressures on trading commissions and spreads and reduce the value our clients place on high quality research. Conversely, if we are unable to make similar arrangements with other investment managers that insist on separating trading commissions from research products, volumes and trading commissions in our sales and trading business also would likely decrease.

Larger and more frequent capital commitments in our trading and underwriting businesses increase the potential for significant losses.

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Certain financial services firms make larger and more frequent commitments of capital in many of their activities. For example, in order to win business, some investment banks increasingly commit to purchase large blocks of stock from publicly traded issuers or significant stockholders, instead of the more traditional marketed underwriting process in which marketing is typically completed before an investment bank commits to purchase securities for resale. We have participated in this activity and expect to continue to do so and, as a result, we are subject to increased risk. Conversely, if we do not have sufficient regulatory capital to so participate, our business may suffer. Furthermore, we may suffer losses as a result of the positions taken in these transactions even when economic and market conditions are generally favorable for others in the industry.

We may commit our own capital as part of our trading business to facilitate client sales and trading activities. The number and size of these transactions may adversely affect our results of operations in a given period. We may also incur significant losses from our sales and trading activities due to market fluctuations and volatility in our results of operations. To the extent that we own assets, i.e., have long positions, in any of those markets, a downturn in the value of those assets or in those markets could result in losses. Conversely, to the extent that we have sold assets we do not own, i.e., have short positions, in any of those markets, an upturn in those markets could expose us to potentially large losses as we attempt to cover our short positions by acquiring assets in a rising market.

Our underwriting and market making activities may place our capital at risk.

We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sell securities we purchased as an underwriter at the anticipated price levels. As an underwriter, we also are subject to heightened standards regarding liability for material misstatements or omissions in prospectuses and other offering documents relating to offerings we underwrite. Further, even though underwriting agreements with issuing companies typically include a right to indemnification in favor of the underwriter for these offerings to cover potential liability from any material misstatements or omissions, indemnification may be unavailable or insufficient in certain circumstances, for example if the issuing company has become insolvent. As a market maker, we may own large positions in specific securities, and these undiversified holdings concentrate the risk of market fluctuations and may result in greater losses than would be the case if our holdings were more diversified.

We are subject to net capital and other regulatory capital requirements; failure to comply with these rules would significantly harm our business.

Our broker-dealer subsidiaries are subject to the net capital requirements of the SEC, FINRA, and various self-regulatory organizations of which they are members. These requirements typically specify the minimum level of net capital a broker-dealer must maintain and also mandate that a significant part of its assets be kept in relatively liquid form. Failure to maintain the required net capital may subject a firm to limitation of its activities, including suspension or revocation of its registration by the SEC and suspension or expulsion by FINRA and other regulatory bodies, and ultimately may require its liquidation. Failure to comply with the net capital rules could have material and adverse consequences, such as:

•limiting our operations that require intensive use of capital, such as underwriting or trading activities; or

•restricting us from withdrawing capital from our subsidiaries when our broker-dealer subsidiaries have more than the minimum amount of required capital. This, in turn, could limit our ability to implement our business and growth strategies, pay interest on and repay the principal of our debt and/or repurchase our shares.

In addition, a change in the net capital rules or the imposition of new rules affecting the scope, coverage, calculation, or amount of net capital requirements, or a significant operating loss or any large charge against net capital, could have similar adverse effects.

Furthermore, our broker-dealer subsidiaries are subject to laws that authorize regulatory bodies to block or reduce the flow of funds from it to B. Riley Financial, Inc. As a holding company, B. Riley Financial, Inc. depends on dividends, distributions and other payments from its subsidiaries to fund dividend payments, if any, and to fund all payments on its obligations, including debt obligations. As a result, regulatory actions could impede access to funds that B. Riley Financial, Inc. needs to make payments on obligations, including debt obligations, or dividend payments. In addition, because B. Riley Financial, Inc. holds equity interests in the firm’s subsidiaries, its rights as an equity holder to the assets of these subsidiaries may not materialize, if at all, until the claims of the creditors of these subsidiaries are first satisfied.

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Risks Related to our Investment Activities

We have made and may make investments in relatively high-risk, illiquid assets that often have significantly leveraged capital structures, and we may fail to realize any profits from these activities for a considerable period of time or lose some or all of the principal amount we invest in these activities.

From time to time, we use our capital, including on a leveraged basis, in proprietary investments in both private company and public company securities that may be illiquid and volatile. The equity securities of a privately-held entity in which we make a proprietary investment are likely to be restricted as to resale and are otherwise typically highly illiquid. In the case of fund or similar investments, our investments may be illiquid until such investment vehicles are liquidated. We expect that there will be restrictions on our ability to resell the securities that we acquire for a period of up to one year after we acquire those securities. Thereafter, a public market sale may be subject to volume limitations or dependent upon securing a registration statement for an initial and potentially secondary public offering of the securities. We may make investments that are significant relative to the overall capitalization of the investee company and resales of significant amounts of these securities might be subject to significant limitations and adversely affect the market and the sales price for the securities in which we invest. In addition, our investments may involve entities or businesses with capital structures that have significant leverage. The large amount of borrowing in the leveraged capital structure increases the risk of losses due to factors such as rising inflation, interest rates, downturns in the economy or deteriorations in the condition of the investment or its industry. In the event of defaults under borrowings, the assets being financed would be at risk of foreclosure, and we could lose our entire investment.

Even if we make an appropriate investment decision based on the intrinsic value of an enterprise, we cannot assure you that general market conditions will not cause the market value of our investments to decline. For example, a further increase in inflation, interest rates, a general decline in the stock markets, such as the recent declines in the stock markets due to the anticipated rising interest rate environment, or other market and industry conditions adverse to companies of the type in which we invest and intend to invest could result in a decline in the value of our investments or a total loss of our investment.

In addition, some of these investments are, or may in the future be, in industries or sectors which are unstable, in distress or undergoing some uncertainty. Further, the companies in which we invest may rely on new or developing technologies or novel business models, or concentrate on markets which are or may be disproportionately impacted by pressures in the financial services and/or mortgage and real estate sectors, have not yet developed and which may never develop sufficiently to support successful operations, or their existing business operations may deteriorate or may not expand or perform as projected. Such investments may be subject to rapid changes in value caused by sudden company-specific or industry-wide developments. Contributing capital to these investments is risky, and we may lose some or all of the principal amount of our investments. There are no regularly quoted market prices for a number of the investments that we make. The value of our investments is determined using fair value methodologies described in valuation policies, which may consider, among other things, the nature of the investment, the expected cash flows from the investment, bid or ask prices provided by third parties for the investment and the trading price of recent sales of securities (in the case of publicly-traded securities), restrictions on transfer and other recognized valuation methodologies. The methodologies we use in valuing individual investments are based on estimates and assumptions specific to the particular investments. Therefore, the value of our investments does not necessarily reflect the prices that would actually be obtained by us when such investments are sold. Realizations, if any, at values significantly lower than the values at which investments have been reflected on our balance sheet would result in losses of potential incentive income.

We are exposed to credit risk from a variety of our activities, including loans, lines of credit, guarantees and backstop commitments, and we may not be able to fully realize the value of the collateral securing certain of our loans.

We are generally exposed to the risk that third parties that owe us money, securities or other assets will fail to meet their obligations to us due to numerous causes, including bankruptcy, lack of liquidity, or operational failure, among others. Additionally, when we guarantee or backstop the obligations of third parties, we are exposed to the risk that our guarantee or backstop may be called by the holder following a default by the primary obligor, which could cause us to incur significant losses, and, when our obligations are secured, expose us to the risk that the holder may seek to foreclose on collateral pledged by us.

We incur credit risk through loans, lines of credit, guarantees and backstop commitments issued to or on behalf of businesses and individuals, and other loans collateralized by a variety of assets, including securities. We have experienced credit losses and bear increased credit risk because we have made loans and commitments to borrowers or issuers engaged in emerging businesses or who lack access to conventional financing who, as a group, may be uniquely or disproportionately affected by economic or market conditions.
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For example, we have made loans to borrowers in the cryptocurrency industry and have incurred losses as cryptocurrency prices have declined and participants in the cryptocurrency industry have experienced liquidity issues and we expect to incur further losses in the event that the cryptocurrency market experiences further volatility or liquidity issues or further declines or fails to recover. Our credit risk and credit losses can further increase if our loans or investments are concentrated among borrowers or issuers engaged in the same or similar activities, industries, or geographies. The deterioration of an individually large exposure, for example due to natural disasters, health emergencies or pandemics (like the COVID-19 pandemic), acts of terrorism or war, severe weather events or other adverse economic events, could lead to additional loan loss provisions and/or charges-offs, or credit impairment of our investments, and subsequently have a material impact on our net income and regulatory capital.

The amount and duration of our credit exposures have been increasing over the past year, as have the breadth and size of the entities to which we have credit exposures.

We permit our clients to purchase securities on margin. During periods of steep declines in securities prices, the value of the collateral securing client margin loans may fall below the amount of the purchaser’s indebtedness. If clients are unable to provide additional collateral for these margin loans, we may incur losses on those margin transactions. This may cause us to incur additional expenses defending or pursuing claims or litigation related to counterparty or client defaults.

Although a substantial amount of our loans to counterparties are protected by holding security interests in the assets or equity interests of the borrower, we may not be able to fully realize the value of the collateral securing our loans due to one or more of the following factors:

•Our loans may be unsecured, therefore our liens on the collateral, if any, are subordinated to those of the senior secured debt of the borrower, if any. As a result, we may not be able to control remedies with respect to the collateral.

•The collateral may not be valuable enough to satisfy all of the obligations under our secured loan, particularly after giving effect to the repayment of secured debt of the borrower that ranks senior to our loan.

•Bankruptcy laws may limit our ability to realize value from the collateral and may delay the realization process.

•Our rights in the collateral may be adversely affected by the failure to perfect security interests in the collateral.

•The need to obtain regulatory and contractual consents could impair or impede how effectively the collateral would be liquidated and could affect the value received.

•Some or all of the collateral may be illiquid and may have no readily ascertainable market value. The liquidity and value of the collateral could be impaired as a result of changing economic conditions, competition, and other factors, including the availability of suitable buyers.
For example, in December 2023, the Company loaned $108.0 million to Conn’s which loan amount was subsequently reduced to $93.0 million due to principal repayments. The fair value of this loan receivable was $19.1 million at December 31, 2024 given that in July 2024, Conn’s and certain of its subsidiaries filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code.
In addition, on November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under chapter 11 of the Bankruptcy Code. As a result, on November 4, 2024, we concluded that we were required to record an additional impairment with respect to the Freedom VCM Investment and the Vintage Loan Receivable. As a result of such additional impairment, we have ascribed no value to the Freedom VCM Investment as of December 31, 2024 and a value of $1.3 million to the Vintage Loan Receivable as of September 16, 2025. For the year ended December 31, 2024, non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable were $221.0 million and $222.9 million, respectively.

We have had and may experience write downs of our investments and other losses related to the valuation of our investments and volatile and illiquid market conditions.
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In our proprietary investment activities, our concentrated holdings, illiquidity and market volatility may make it difficult to value certain of our investment securities. We have experienced, and may continue to experience in light of factors then prevailing, such as rising interest rates, general economic and market conditions or changes in the financial condition of the applicable issuer, significant downward adjustments in subsequent valuations of securities on our balance sheet. In addition, at the time of any sales and settlements of these securities, the price we ultimately realize will depend on the demand and liquidity in the market at that time and may be materially lower than their current fair value. Any of these factors could require us to take write downs in the value of our investment and securities portfolio, which may have an adverse effect on our results of operations in future periods.

A substantial portion of our cash flows and net income are dependent upon payments from our investments in consumer finance receivables.

We have a related party loan receivable with a fair value of approximately $2.2 million as of December 31, 2024, from home-furnishing retailer W.S. Badcock Corporation (“Badcock”) that is collateralized by consumer finance receivables of Badcock. These consumer finance receivables were acquired from Badcock in multiple purchases beginning in December 2021. On December 18, 2023, Badcock was sold by Freedom VCM to Conn’s and now operates as a wholly owned subsidiary of Conn’s. This continues to be reported as a related party loan receivable due to the Company’s related party relationship with Freedom VCM and Freedom VCM’s ability to exercise influence over Conn’s as a result of the equity consideration Freedom VCM received from the sale of Badcock to Conn’s on December 18, 2023.

The Company also has a related party loan receivable from a Freedom VCM affiliate with a fair value of approximately $3.9 million as of December 31, 2024, the Freedom Receivables Note (see Part I, Item 1 above). The Freedom Receivables Note resulted from the sale of BRRII to a Freedom VCM affiliate and the collateral for this note includes the collection of certain consumer finance receivables by the Freedom VCM affiliate. The collectability and repayment of the principal balance and interest on these loans receivable, which total $45.8 million, are a function of many factors including the ultimate collection of the consumer finance receivables that collateralize the loans, criteria used to select the consumers that were issued credit, the pricing of the credit products, the lengths of the relationships, general economic conditions, the rate at which consumers repay their accounts or become delinquent, and the rate at which consumers borrow funds. Deterioration in these factors would adversely impact our business. In addition, to the extent we have over-estimated collectability, in all likelihood we have over-estimated our financial performance. Some of these concerns are discussed more fully below.

Our investment in these loans is not diversified and primarily originates from consumers whose creditworthiness is considered less than prime. Our reliance on these receivables may in the future negatively impact our performance.

Economic slowdowns increase our credit losses. During periods of economic slowdown or recession, we generally experience an increase in rates of delinquencies and frequency and severity of credit losses. Our actual rates of delinquencies and frequency and severity of credit losses may be comparatively higher during periods of economic slowdown or recession.

Because a significant portion of our reported interest income is based on management’s estimates of the future performance of receivables that collateralize $6.1 million of loans receivable, at fair value as of December 31, 2024, differences between actual and expected performance of the receivables may cause fluctuations in interest income. The fair value of these loans and the interest income we report are based on management’s estimates of cash flows we expect to receive on receivables that collateralize the loan receivable. The expected cash flows are based on management’s estimates of future default rates, payment rates, servicing costs, and charge-offs from the receivables portfolio. These estimates are based on a variety of factors, many of which are not within our control. Substantial differences between actual and expected performance of the receivables can occur and cause fluctuations in the interest income we record. For instance, higher than expected rates of delinquencies and losses from the receivables portfolio could cause interest income to be lower than expected.

Our past and ongoing investment in consumer credit receivables may not be indicative of our ability to grow such receivables in the future. Additionally, even if such receivables continue to increase, the rate of such growth could decline. If we cannot manage the growth in receivables effectively, it could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows. Furthermore, reliance upon our relationship with a single retailer may adversely affect our revenues and operating results from our receivables portfolio.

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Changes to consumer protection laws or changes in their interpretation may impede collection efforts or otherwise adversely impact us or the originator of our receivables.

Federal and state consumer protection laws regulate the creation and enforcement of consumer receivables and other loans. Many of these laws (and the related regulations) are focused on non-prime lenders and are intended to prohibit or curtail industry-standard practices as well as non-standard practices. For instance, Congress enacted legislation that regulates loans to military personnel through imposing interest rate and other limitations and requiring new disclosures, all as regulated by the Department of Defense. Similarly, in 2009, Congress enacted legislation that required changes to a variety of marketing, billing, and collection practices, and the Federal Reserve adopted significant changes to a number of practices through its issuance of regulations. Badcock originated the transactions that underlie our receivables investments and any others we may make. Furthermore, we rely on Badcock to service our receivables portfolio. We depend on Badcock to comply with all applicable laws and regulations applicable to our receivables portfolio, and for Badcock to adapt to changing laws and regulations. Furthermore, if Badcock becomes unable or unwilling to continue to service our receivables portfolio, we will likely need to engage another third party to provide such services, which could cause us to incur unanticipated costs. Changes in the consumer protection laws could result in the following:

•receivables not originated in compliance with law (or revised interpretations) could become unenforceable and uncollectible under their terms against the obligors;

•the servicer may be required to credit or refund previously collected amounts, resulting in a reduction in amounts paid to us;

•certain fees and finance charges could be limited, prohibited, or restricted, reducing the profitability of certain investments in receivables;

•certain collection methods could be prohibited, forcing the parties that service our receivables portfolio to revise their practices or adopt more costly or less effective practices;

•limitations on the servicer's ability to recover on charged-off receivables regardless of any act or omission on their or our part;

•some credit products and services could be banned in certain states or at the federal level;

•federal or state bankruptcy or debtor relief laws could offer additional protections to consumers seeking bankruptcy protection, providing a court greater leeway to reduce or discharge amounts owed; and

• a reduction in our ability or willingness to invest in receivables arising under loans to certain consumers, such as military personnel.

Risks Related to our Wealth Management Business

Poor investment performance may decrease assets under management and reduce revenues from and the profitability of our asset management business.

Revenues from our asset management business are primarily derived from asset management fees. Asset management fees are generally comprised of management and incentive fees. Management fees are typically based on assets under management, and incentive fees are earned on a quarterly or annual basis only if the return on our managed accounts exceeds a certain threshold return, or “highwater mark,” for each investor. We will not earn incentive fee income during a particular period, even when a fund had positive returns in that period, if we do not generate cumulative performance that surpasses a highwater mark. If a fund experiences losses, we will not earn incentive fees with regard to investors in that fund until its returns exceed the relevant highwater mark.

In addition, investment performance is one of the most important factors in retaining existing investors and competing for new asset management business. Investment performance may be poor as a result of the current or future difficult market or economic conditions, including changes in interest rates or inflation, acts of war, aggression or terrorism, widespread outbreaks of disease, such as the COVID-19 pandemic or similar pandemics, or political uncertainty, our investment style, the particular investments that we make, and other factors.
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Poor investment performance may result in a decline in our revenues and income by causing (i) the net asset value of the assets under our management to decrease, which would result in lower management fees to us, (ii) lower investment returns, resulting in a reduction of incentive fee income to us, and (iii) investor redemptions, which would result in lower fees to us because we would have fewer assets under management.

To the extent our future investment performance is perceived to be poor in either relative or absolute terms, the revenues and profitability of our asset management business will likely be reduced and our ability to grow existing funds and raise new funds in the future will likely be impaired.

The historical returns of our funds may not be indicative of the future results of our funds.

The historical returns of our funds should not be considered indicative of the future results that should be expected from such funds or from any future funds we may raise. Our rates of returns reflect unrealized gains, as of the applicable measurement date, which may never be realized due to changes in market and other conditions not in our control that may adversely affect the ultimate value realized from the investments in a fund. The returns of our funds may have also benefited from investment opportunities and general market conditions that may not repeat themselves, and there can be no assurance that our current or future funds will be able to avail themselves of profitable investment opportunities. Furthermore, the historical and potential future returns of the funds we manage also may not necessarily bear any relationship to potential returns on our common stock.

We are subject to risks in using custodians.

Our asset management subsidiary and its managed funds depend on the services of custodians to settle and report securities transactions. In the event of the insolvency of a custodian, our funds might not be able to recover equivalent assets in whole or in part as they will rank among the custodian’s unsecured creditors in relation to assets which the custodian borrows, lends or otherwise uses. In addition, cash held by our funds with the custodian will not be segregated from the custodian’s own cash, and the funds will therefore rank as unsecured creditors in relation thereto.

We manage debt investments that involve significant risks.

We have and may invest in secured and unsecured debt issued by companies that have or may incur additional debt that is senior to the such debt. In the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of any such borrower, the owners of senior secured debt (i.e., the owners of first priority liens) generally will be entitled to receive proceeds from any realization of the secured collateral until they have been reimbursed. At such time, the owners of junior secured debt (including, in certain circumstances, the Company or an affiliate) will be entitled to receive proceeds from the realization of the collateral securing such debt. There can be no assurances that the proceeds, if any, from the sale of such collateral would be sufficient to satisfy the loan obligations secured by subordinate debt instruments. To the extent that the Company or an affiliate owns secured debt that is junior to other secured debt, the Company or such affiliate may lose the value of its entire investment in such debt.

In addition, the Company may invest in loans that are secured by a second lien on assets. Second lien loans have been a developed market for a relatively short period of time, and there is limited historical data on the performance of second lien loans in adverse economic circumstances. In addition, second lien loan products are subject to intercreditor arrangements with the holders of first lien indebtedness, pursuant to which the second lien holders have waived many of the rights of a secured creditor, and some rights of unsecured creditors, including rights in bankruptcy, which can materially affect recoveries. While there is broad market acceptance of some second lien intercreditor terms, no clear market standard has developed for certain other material intercreditor terms for second lien loan products. This variation in key intercreditor terms may result in dissimilar recoveries across otherwise similarly situated second lien loans in insolvency or distressed situations. While uncertainty of recovery in an insolvency or distressed situation is inherent in all debt instruments, second lien loan products carry more risks than certain other debt products.

Risks Related to Our Communications Businesses

Dial-up and DSL pay accounts may decline faster than expected and adversely impact our business.

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A significant portion of UOL’s revenues and profits come from dial-up Internet and DSL access services and related services and advertising revenues. UOL’s dial-up and DSL Internet access pay accounts and revenues have been declining and are expected to continue to decline due to the continued maturation of the market for dial-up and DSL Internet access, competitive pressures in the industry and limited sales efforts. Consumers continue to migrate to broadband access, primarily due to the faster connection and download speeds provided by broadband access. Advanced applications such as online gaming, music downloads and videos require greater bandwidth for optimal performance, which adds to the demand for broadband access. The pricing for basic broadband services has been declining as well, making it a more viable option for consumers. In addition, the popularity of accessing the Internet through tablets and mobile devices has been growing and may accelerate the migration of consumers away from dial-up Internet access. The number of dial-up Internet access pay accounts has been adversely impacted by both a decrease in the number of new pay accounts signing up for UOL’s services, as well as the impact of subscribers canceling their accounts, which we refer to as “churn.” Churn has increased from time to time and may increase in the future. If we experience a higher than expected level of churn, it will make it more difficult for us to increase or maintain the number of pay accounts, which could adversely affect our business, financial condition, results of operations, and cash flows.

We expect UOL’s dial-up and DSL Internet access pay accounts to continue to decline. As a result, related services revenues and the profitability of this segment may decline. The rate of decline in these revenues may continue to accelerate.

We may not be able to consistently make a high level of expense reductions in the future. Continued declines in revenues relating to the UOL business, particularly if such declines accelerate, will materially and adversely impact the profitability of this business.

Our marketing efforts for our communications businesses may not be successful or may become more expensive, either of which could increase our costs and adversely impact our business, financial condition, results of operations, and cash flows.

We rely on relationships with a wide variety of third parties, including Internet search providers such as Google, social networking platforms such as Facebook, Internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, and direct marketers, to source new customers and to promote or distribute our services and products. In addition, in connection with the launch of new services or products for our communications businesses, we may spend a significant amount of resources on marketing. With any of our brands, services, and products, if our marketing activities are inefficient or unsuccessful, if important third-party relationships or marketing strategies, such as Internet search engine marketing and search engine optimization, become more expensive or unavailable, or are suspended, modified, or terminated, for any reason, if there is an increase in the proportion of consumers visiting our websites or purchasing our services and products by way of marketing channels with higher marketing costs as compared to channels that have lower or no associated marketing costs, or if our marketing efforts do not result in our services and products being prominently ranked in Internet search listings, our business, financial condition, results of operations, and cash flows could be materially and adversely impacted.

Our communications businesses are dependent on the availability of telecommunications services and compatibility with third-party systems and products.

Our communications businesses substantially depend on the availability, capacity, affordability, reliability, and security of telecommunications networks operated by third parties. Only a limited number of telecommunications providers offer the network and data services we currently require for our services, and we purchase most of our telecommunications services from a few providers. Some of our telecommunications services are provided pursuant to short-term agreements that the providers can terminate or elect not to renew. In addition, some telecommunications providers may cease to offer network services for certain less populated areas, which would reduce the number of providers from which we may purchase services and may entirely eliminate our ability to purchase services for certain areas.

Currently, the mobile network service of our Marconi Wireless business is entirely dependent upon services acquired from one service provider. If we are unable to maintain, renew or obtain a new agreement with the telecommunications provider on acceptable terms, or the provider discontinues its services, our business, financial condition, results of operations, and cash flows could be materially and adversely affected.

Our dial-up Internet access services of our UOL business also rely on their compatibility with other third-party systems, products and features, including operating systems. Incompatibility with third-party systems and products could adversely affect our ability to deliver our services or a user’s ability to access our services and could also adversely impact the distribution channels for our services.
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Our dial-up Internet access services are dependent on dial-up modems and an increasing number of computer manufacturers, including certain manufacturers with whom we have distribution relationships, do not pre-load their new computers with dial-up modems, requiring the user to separately acquire a modem to access our services. We cannot assure you that, as the dial-up Internet access market declines and new technologies emerge, we will be able to continue to effectively distribute and deliver our services.

Government regulations could adversely affect our business or force us to change our business practices.

The services we provide are subject to varying degrees of international, federal, state and local laws and regulation, including, without limitation, those relating to taxation, bulk email or “spam,” advertising (including, without limitation, targeted or behavioral advertising), user privacy and data protection, consumer protection, antitrust, export, and unclaimed property. Compliance with such laws and regulations, which in many instances are unclear or unsettled, is complex. New laws and regulations, such as those being considered or recently enacted by certain states, the federal government, or international authorities related to automatic-renewal practices, spam, user privacy, targeted or behavioral advertising, and taxation, could impact our revenues or certain of our business practices or those of our advertisers. Moreover, distribution partners or customers may require us, or we may otherwise deem it necessary or advisable, to alter our products to address actual or anticipated changes in the regulatory environment. Our inability to alter our products to address these requirements and any regulatory changes could have a material adverse effect on our business, financial condition, and operating results.

The current regulatory environment for broadband telephone services is developing and therefore uncertain. The United States and other countries have begun to assert regulatory authority over broadband telephone service and are continuing to evaluate how broadband telephone service will be regulated in the future. Both the application of existing rules to us and our competitors and the effects of future regulatory developments are uncertain. Future legislative, judicial or other regulatory actions could have a negative effect on our business, which may involve significant compliance costs and require that we restructure our service offerings, exit certain markets, or increase our prices to recover our regulatory costs, any of which could cause our services to be less attractive to customers.

Regulatory and governmental agencies may determine that we should be subject to rules applicable to certain broadband telephone service providers or seek to impose new or increased fees, taxes, and administrative burdens on broadband telephone service providers. We also may change our product and service offerings in a manner that subjects us to greater regulation and taxation. We are faced, and may continue to face, difficulty collecting such charges from our customers and/or carriers, and collecting such charges may cause us to incur legal fees. We may be unsuccessful in collecting all of the regulatory fees owed to us. The imposition of any such additional regulatory fees, charges, taxes and regulations on VoIP communications services could materially increase our costs and may limit or eliminate our competitive pricing advantages.

We offer our magicJack products and services in other countries, and therefore could also be subject to regulatory risks in each such foreign jurisdiction, including the risk that regulations in some jurisdictions will prohibit us from providing our services cost-effectively or at all, which could limit our growth. Currently, there are several countries where regulations prohibit us from offering service. In addition, because customers can use our services almost anywhere that a broadband Internet connection is available, including countries where providing broadband telephone service is illegal, the governments of those countries may attempt to assert jurisdiction over us. Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our employees, and prohibitions on the conduct of our business. Any such violations could include prohibitions on our ability to offer our products and services in one or more countries, could delay or prevent potential acquisitions, expose us to significant liability and regulation and could also materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain employees, our business and our operating results. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties.

Broadband Internet access is currently classified by the FCC as an “information service.” While this classification means that broadband Internet access services are not subject to Universal Service Fund (“USF”) contributions, Congress or the FCC may expand the USF contribution obligations to include broadband Internet access services. If broadband Internet access providers become subject to USF contribution obligations, it would likely raise the effective cost of our services to customers, which could adversely affect customer satisfaction and have an adverse impact on our revenues and profitability.

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We are faced, and may continue to face, difficulty collecting regulatory charges from our customers and/or carriers and collecting such charges may cause us to incur legal fees. We may be unsuccessful in collecting all the regulatory fees owed to us. The imposition of any such additional regulatory fees, charges, taxes and regulations on our services could materially increase our costs and may limit or eliminate our competitive pricing advantages.

Failure to remit regulatory fees, charges and taxes mandated by federal and state regulations; failure to maintain proper state tariffs and certifications; failure to comply with federal, state or local laws and regulations; failure to obtain and maintain required licenses, franchises and permits; imposition of burdensome license, franchise or permit requirements for us to operate in public rights-of-way; and imposition of new burdensome or adverse regulatory requirements could limit the types of services we provide or the terms on which we provide these services.

We cannot predict the outcome of any ongoing legislative initiatives or administrative or judicial proceedings or their potential impact upon the communications and information technology industries generally or upon our communications businesses specifically. Any changes in the laws and regulations applicable to our communications businesses, the enactment of any additional laws or regulations, or the failure to comply with, or increased enforcement activity by regulators of, such laws and regulations, could significantly impact our services and products, our costs, or the manner in which we or our advertisers conduct business, all of which could adversely impact our business, financial condition, results of operations, and cash flows and cause our business to suffer.

The FCC and some states require us to obtain prior approval of certain major merger and acquisition transactions, such as the acquisition of control of another telecommunications carrier. Delays in obtaining such approvals could affect our ability to close proposed transactions in a timely manner and could increase our costs and increase the risk of non-consummation of some transactions.

Increases in credit card processing fees and high chargeback costs would increase our operating expenses and adversely affect our results of operations, and an adverse change in, or the termination of, our relationship with any major credit card company would have a severe, negative impact on our business.

A significant number of our communications customers purchase their products through our websites and pay for our communications products and services using credit or debit cards. The major credit card companies or the issuing banks may increase the fees that they charge for transactions using their cards. An increase in those fees would require us to either increase the prices we charge for our products, or suffer a negative impact on our profitability, either of which could adversely affect our business, financial condition and results of operations.

We have potential liability for chargebacks associated with the transactions we process, or that are processed on our behalf by merchants selling our products. If a customer returns his or her products at any time, or claims that our product was purchased fraudulently, the returned product is “charged back” to magicJack or its bank, as applicable. If we or our sponsoring banks are unable to collect the chargeback from the merchant’s account, or, if the merchant refuses or is financially unable, due to bankruptcy or other reasons, to reimburse the merchant’s bank for the chargeback, we bear the loss for the amount of the refund paid.

We are vulnerable to credit card fraud, as we sell communications products and services directly to customers through our website. Card fraud occurs when a customer uses a stolen card (or a stolen card number in a card-not-present-transaction) to purchase merchandise or services. In a traditional card-present transaction, if the merchant swipes the card, receives authorization for the transaction from the card issuing bank and verifies the signature on the back of the card against the paper receipt signed by the customer, the card issuing bank remains liable for any loss. In a fraudulent card-not-present transaction, even if the merchant or we receive authorization for the transaction, we or the merchant are liable for any loss arising from the transaction. Because sales made directly from our websites are card-not-present transactions, we are more vulnerable to customer fraud. We are also subject to acts of consumer fraud by customers that purchase our products and services and subsequently claim that such purchases were not made.

In addition, as a result of high chargeback rates or other reasons beyond our control, the credit card companies or issuing bank may terminate their relationship with us, and there are no assurances that it will be able to enter into a new credit card processing agreement on similar terms, if at all. Upon a termination, if our credit card processor does not assist it in transitioning its business to another credit card processor, or if we were not able to obtain a new credit card processor, the negative impact on the liquidity of our communications businesses likely would be significant. The credit card processor may also prohibit us from billing discounts annually or for any other reason. Any increases in the credit card fees paid by our communications businesses could adversely affect our results of operations, particularly if we elect not to raise our service rates to offset the increase.
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The termination of our ability to process payments on any major credit or debit card, due to high chargebacks or otherwise, would significantly impair our ability to operate our business.

Flaws in our technology and systems could cause delays or interruptions of service, damage our reputation, cause us to lose customers and limit our growth.

Our communications services could be disrupted by problems with our technology and systems, such as malfunctions in our software or other facilities and overloading of our servers. Our customers could experience interruptions in the future as a result of these types of problems. Interruptions could in the future cause us to lose customers, which could adversely affect our revenue and profitability. In addition, because our systems and our customers’ ability to use our services are Internet-dependent, our services may be subject to “hacker attacks” from the Internet, which could have a significant impact on our systems and services. If service interruptions adversely affect the perceived reliability of our service, it may have difficulty attracting and retaining customers and our brand reputation and growth may suffer.

We rely on independent retailers to sell the magicJack devices, and disruption to these channels would harm our business.

Because we sell a significant amount of the magicJack devices, other devices and certain services to independent retailers, we are subject to many risks, including risks related to their inventory levels and support for magicJack’s products. In particular, magicJack’s retailers may maintain significant levels of our products in their inventories. If retailers attempt to reduce their levels of inventory or if they do not maintain sufficient levels to meet customer demand, our sales could be negatively impacted.

The retailers who sell magicJack products also sell products offered by its competitors. If these competitors offer the retailers more favorable terms, those retailers may de-emphasize or decline to carry magicJack’s products. In the future, we may not be able to retain or attract a sufficient number of qualified retailers. If we are unable to maintain successful relationships with retailers or to expand our distribution channels, our business will suffer.

To continue this method of sales, we will have to allocate resources to train vendors, systems integrators and business partners as to the use of our products, resulting in additional costs and additional time until sales by such vendors, systems integrators and business partners are made feasible. Our business depends to a certain extent upon the success of such channels and the broad market acceptance of our products. To the extent that our channels are unsuccessful in selling our products, our revenues and operating results will be adversely affected.

If magicJack fails to maintain relationships with these channels, fails to develop new channels, fails to effectively manage, train, or provide incentives to existing channels or if these channels are not successful in their sales efforts, sales of magicJack’s products may decrease and our operating results would suffer.

The success of our business relies on customers’ continued and unimpeded access to broadband service. Providers of broadband services may be able to block our services or charge their customers more for also using our services, which could adversely affect our revenue and growth.

Our customers must have broadband access to the Internet in order to use our service. Providers of broadband access, some of whom are also competing providers of broadband voice services, may take measures that affect their customers’ ability to use our service, such as degrading the quality of the data packets they transmit over their lines, giving those packets low priority, giving other packets higher priority than ours, blocking our packets entirely or attempting to charge their customers more for also using our services.

In December 2017, the FCC rescinded rules that, among other things, prohibited broadband Internet access providers from blocking, throttling, or otherwise degrading the quality of data packets, or attempting to extract additional fees from edge service providers.

In October 2019, the D.C. Circuit largely upheld the FCC decision. Although some states, most notably California, have adopted prohibitions similar to those rescinded by the FCC, if broadband providers block, throttle or otherwise degrade the quality of our data packets or attempt to extract additional fees from us or our customers, it could adversely impact our business.

Risks Related to Our Consumer Products Segment
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If Targus fails to innovate and develop new products in a timely and cost-effective manner for its new and existing product categories, our business and operating results could be adversely affected.

Targus product categories are characterized by short product life cycles, intense competition, frequent new product introductions, rapidly changing technology, dynamic consumer demand and evolving industry standards. As a result, we must continually innovate in our new and existing product categories, introduce new products and technologies, and enhance existing products in order to remain competitive.

The success of our product portfolio depends on several factors, including our ability to:

•Identify new features, functionality and opportunities;

•Anticipate technology, market trends and consumer preferences;

•Develop innovative, high-quality, and reliable new products and enhancements in a cost-effective and timely manner;

•Distinguish our products from those of our competitors; and

•Offer our products at prices and on terms that are attractive to our customers and consumers.

If we do not execute on these factors successfully, products that we introduce or technologies or standards that we adopt may not gain widespread commercial acceptance, and our business and operating results could suffer. In addition, if we do not continue to differentiate our products through distinctive, technologically advanced features, designs, and services that are appealing to our customers and consumers, as well as continue to build and strengthen our brand recognition and our access to distribution channels, our business could be adversely affected.

The development of new products and services can be very difficult and requires high levels of innovation. The development process also can be lengthy and costly. There are significant initial expenditures for research and development, tooling, manufacturing processes, inventory, and marketing, and we may not be able to recover those investments. If we fail to accurately anticipate technological trends or our users’ needs or preferences, are unable to complete the development of products and services in a cost-effective and timely fashion, or are unable to appropriately increase production to fulfill customer demand, we will be unable to successfully introduce new products and services into the market or compete with other providers. Even if we complete the development of our new products and services in a cost-effective and timely manner, they may not be competitive with products developed by others, they may not achieve acceptance in the market at anticipated levels or at all, they may not be profitable or, even if they are profitable, they may not achieve margins as high as our expectations or as high as the margins we have achieved historically.

As we introduce new or enhanced products, integrate new technology into new or existing products, or reduce the overall number of products offered, we face risks including, among other things, disruption in customers’ ordering patterns, excessive levels of new and existing product inventories, revenue deterioration in our existing product lines, insufficient supplies of new products to meet customers’ demand, possible product and technology defects, and a potentially different sales and support environment. Premature announcements or leaks of new products, features or technologies may exacerbate some of these risks by reducing the effectiveness of our product launches, reducing sales volumes of current products due to anticipated future products, making it more difficult to compete, shortening the period of differentiation based on our product innovation, straining relationships with our partners or increasing market expectations for the results of our new products before we have had an opportunity to demonstrate the market viability of the products. Our failure to manage the transition to new products and services or the integration of new technology into new or existing products and services could adversely affect our business, results of operations, operating cash flows and financial condition.

We rely on third parties to sell and distribute our products, and we rely on their information to manage our business.

Targus primarily sells products to a network of distributors, retailers and e-tailers (together with our direct sales channel partners). We are dependent on those direct sales channel partners to distribute and sell our products to indirect sales channel partners and ultimately to consumers. The sales and business practices of all such sales channel partners, their compliance with laws and regulations, and their reputations - of which we may or may not be aware - may affect our business and our reputation.
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Our sales channel partners also sell products offered by our competitors and in the case of retailer house brands and original equipment manufacturers, may also be our competitors. If product competitors offer our sales channel partners more favorable terms, have more products available to meet their needs, or utilize the leverage of broader product lines sold through the channel, or if our sales channel partners show preference for their own house brands, our sales channel partners may de-emphasize or decline to carry our products. In addition, certain of our sales channel partners could decide to de-emphasize the product categories that we offer in exchange for other product categories that they believe provide them with higher returns. If we are unable to maintain successful relationships with these sales channel partners or to maintain our distribution channels, our business will suffer.

As we expand into new product categories and markets in pursuit of growth, we will have to build relationships with new channel partners and adapt to new distribution and marketing models. These new partners, practices, and models may require significant management attention and operational resources and may affect our accounting, including revenue recognition, gross margins, and the ability to make comparisons from period to period. Entrenched and more experienced competitors will make these transitions difficult. If we are unable to build successful distribution channels or successfully market our products in these new product categories, we may not be able to take advantage of the growth opportunities, and our business and our ability to grow our business could be adversely affected.

We reserve for cooperative marketing arrangements, incentive programs, and pricing programs with our sales channel partners. These reserves are based on judgments and estimates, using historical experience rates, inventory levels in distribution, current trends, and other factors. There could be significant differences between the actual costs of such arrangements and programs and our estimates.

We use sell-through data, which represents sales of our products by our direct retailer and e-tailer customers to consumers, and by our distributor customers to their customers, along with other metrics, to assess consumer demand for our products. Sell-through data is subject to limitations due to collection methods and the third-party nature of the data and thus may not be an accurate indicator of actual consumer demand for our products. The customers supplying sell-through data vary by geographic region and from period to period, but typically represent a majority of our retail sales. In addition, we rely on channel inventory data from our sales channel partners. If we do not receive this information on a timely and accurate basis, if this information is not accurate, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.

Targus’ business is heavily reliant on the general demand for IT and personal computer-related devices.

Targus' business of selling products that relate primarily to the computer accessory markets makes our business performance sensitive to the general demand for IT and personal computer-related devices. As such, declines in the overall demand for personal computers and tablet devices can directly impact the demand for our accessory products as often our products are sold as an attachment to the original equipment manufacturer device that is being sold. The Company performs interim and year end impairment assessments of goodwill and intangible assets utilizing qualitative and quantitative analyses surrounding Targus' financial performance, market conditions in which it operates in, and other financial and non-financial factors. As a result of these assessments, the Company has recognized aggregate impairments to goodwill and intangible assets of $31.7 million and $68.6 million for the years ended December 31, 2024 and 2023, respectively.

Risks Related to Competition

We operate in highly competitive industries. Some of our competitors may have certain competitive advantages, which may cause us to be unable to effectively compete with or gain market share from our competitors.

We face competition with respect to all of our service and product areas. The level of competition depends on the particular service or product area.

Some of our competitors may be able to devote greater financial resources to marketing and promotional campaigns, secure merchandise from sellers on more favorable terms, adopt more aggressive pricing or inventory availability policies and devote more resources to website and systems development than we are able to do. Any inability on our part to effectively compete could have a material adverse effect on our financial condition, growth potential and results of operations.
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We compete with specialized investment banks to provide financial and investment banking services to small and middle-market companies. Middle-market investment banks provide access to capital and strategic advice to small and middle-market companies in our target industries. We compete with those investment banks on the basis of a number of factors, including client relationships, reputation, the abilities of our professionals, transaction execution, innovation, price, market focus and the relative quality of our products and services. We have experienced intense competition over obtaining advisory mandates in recent years, and we may experience pricing pressures in our investment banking business in the future as some of our competitors seek to obtain increased market share by reducing fees. Competition in the middle-market may further intensify if larger Wall Street investment banks expand their focus to this sector of the market. Increased competition could reduce our market share from investment banking services and our ability to generate fees at historical levels.

We also face increased competition due to a trend toward consolidation. In recent years, there has been substantial consolidation and convergence among companies in the financial services industry. This trend was amplified in connection with the unprecedented disruption and volatility in the financial markets during the past several years, and, as a result, a number of financial services companies have merged, been acquired or have fundamentally changed their respective business models. Many of these firms may have the ability to support investment banking, including financial advisory services, with commercial banking, insurance and other financial services in an effort to gain market share, which could result in pricing pressure in our businesses.

The businesses in our communications segment compete with numerous communications providers, many of whom are large and have significantly more financial and marketing resources. The principal competitors for UOL’s mobile broadband and DSL services include, among others, local exchange carriers, wireless and satellite service providers, and cable service providers.

magicJack, Lingo, and BullsEye compete with the traditional telephone service providers, which provide telephone service using the public switched telephone network. Certain of these traditional providers have also added, or are planning to add, broadband telephone services to their existing telephone and broadband offerings. We also face, or expect to face, competition from cable companies, which offer broadband telephone services to their existing cable television and broadband offerings. Further, wireless providers offer services that some customers may prefer over wireline-based service. In the future, as wireless companies offer more minutes at lower prices, their services may become more attractive to customers as a replacement for broadband or wireline-based phone service. We face competition on magicJack device sales from manufacturers of smart phones, tablets and other handheld wireless devices. Also, we compete against established alternative voice communication providers, and may face competition from other large, well-capitalized Internet companies. In addition, we compete with independent broadband telephone service providers.

Our Consumer Products segment competes with companies that make consumer retail products and/or own other brands and trademarks. Targus operates in an intensely competitive marketplace along with many other makers of consumer and enterprise productivity products. Competitors to our Consumer Products segment may be able to respond more quickly to changes in retailer, wholesaler and consumer preferences and devote greater resources to brand acquisition, development and marketing.

In addition, our competitors may be larger, more diversified, better funded, and have access to more advanced technology, including artificial intelligence (AI). These competitive advantages may enable our competition to innovate better and more quickly, to compete more effectively on quality and price, causing us to lose business and profitability. Burgeoning interest in AI may increase our competition and disrupt our business model. AI may lower barriers to entry in our industry and we may be unable to effectively compete with the products or services offered by new competitors. AI-related changes to the products and services on offer may affect our customers’ expectations, requirements, or tastes in ways we cannot adequately anticipate or adapt to, causing our business to lose sales, market share, or the ability to operate profitably and sustainably.

If we are unable to attract and retain qualified personnel, we may not be able to compete successfully in our industry.

Our future success depends to a significant degree upon the continued contributions of senior management and the ability to attract and retain other highly qualified management personnel. We face competition for management from other companies and organizations; therefore, we may not be able to retain our existing personnel or fill new positions or vacancies created by expansion or turnover at existing compensation levels.
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Although we have entered into employment agreements with key members of the senior management team, there can be no assurances such key individuals will remain with us. Recently, we have failed to retain the services of certain key personnel which may adversely affect our business and prospects. The loss of any of our executive officers or other key management personnel would disrupt our operations and divert the time and attention of our remaining officers and management personnel which could have an adverse effect on our results of operations and potential for growth.

We also face competition for highly skilled employees with experience in the industries in which we operate, and some of which requires a unique knowledge base. We may be unable to recruit or retain existing technical, sales and client support personnel that are critical to our ability to execute our business plan, with such difficulties exacerbated by the labor shortages that arose during the COVID-19 pandemic and persist throughout the economy.

Risks Related to Data Security and Intellectual Property

Significant disruptions of information technology systems, breaches of data security, or unauthorized disclosures of sensitive data or personally identifiable information could adversely affect our business, and could subject us to liability or reputational damage.

Our business is increasingly dependent on critical, complex, and interdependent information technology (“IT”) systems, including Internet-based systems, some of which are managed or hosted by third parties, to support business processes as well as internal and external communications. The size and complexity of our IT systems make us vulnerable to, and we have experienced, IT system breakdowns, malicious intrusion, and computer viruses, which may result in the impairment of our ability to operate our business effectively.

In addition, our systems and the systems of our third-party providers and collaborators are potentially vulnerable to data security breaches which may expose sensitive data to unauthorized persons or to the public. Such data security breaches could lead to the loss of confidential information, trade secrets or other intellectual property, or could lead to the public exposure of personal information (including personally identifiable information) of our employees, customers, business partners, and others. In addition, the increased use of social media by our employees and contractors could result in inadvertent disclosure of sensitive data or personal information, including but not limited to, confidential information, trade secrets and other intellectual property.

Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. Federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations. Because of the rapidly moving nature of technology and the increasing sophistication of cybersecurity threats, our measures to prevent, respond to and minimize such risks may be unsuccessful.

In addition, the European Parliament and the Council of the European Union adopted a comprehensive general data privacy regulation (“GDPR”) in 2016 that took effect in 2018 and governs the collection and use of personal data in the European Union. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification requirements and the use of third party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union to the United States, enhances enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the infringer, whichever is greater. In addition, the California Consumer Privacy Act ("CCPA") effective since January 1, 2020 applies to for-profit businesses that conduct business in California and meet certain revenue or data collection thresholds. The CCPA established new requirements regarding handling of personal data to entities serving or employing California residents, and gave consumers the right to request disclosure of information collected about them, and whether that information has been sold or shared with others, the right to request deletion of personal information (subject to certain exceptions), the right to opt out of the sale of the consumer’s personal information, and the right not to be discriminated against for exercising these rights. Such rights were expanded under the California Privacy Rights Act (“CPRA”) which went into effect on January 1, 2023. In addition, similar laws have and may be adopted by other states where the Company does business.
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The impact of the CCPA and other state privacy laws on the Company’s business is yet to be determined.

We may be unsuccessful in protecting our proprietary rights or may have to defend ourselves against claims of infringement, which could impair or significantly affect our business.

Our future success depends in part on our proprietary technology, technical know-how, and other intellectual property. We rely on a combination of patent, trade secret, copyright, trademark and other intellectual property laws, and confidentiality procedures and contractual provisions such as nondisclosure terms and licenses, to protect our intellectual property.

We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries.

Our means of protecting our proprietary rights may not be adequate and our competitors may independently develop technology that is similar to ours. Legal protections afford only limited protection for our technology. The laws of many countries do not protect our proprietary rights to as great an extent as do the laws of the United States. Despite our efforts to protect our proprietary rights, unauthorized parties have in the past attempted, and may in the future attempt, to copy aspects of our products or to obtain and use information that it regards as proprietary. Third parties may also design around our proprietary rights, which may render our protected products less valuable if the design around is favorably received in the marketplace. In addition, if any our products or the technology underlying our products is covered by third-party patents or other intellectual property rights, we could be subject to various legal actions.

We cannot assure you that our products do not infringe intellectual property rights held by others or that they will not in the future. Third parties may assert infringement, misappropriation, or breach of license claims against us from time to time. Such claims could cause us to incur substantial liabilities and to suspend or permanently cease the use of critical technologies or processes or the production or sale of major products. Litigation may be necessary to enforce our intellectual property rights, to protect our trade secrets, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity, misappropriation, or other claims. Any such litigation could result in substantial costs and diversion of our resources, which in turn could materially adversely affect our business and financial condition. Moreover, any settlement of or adverse judgment resulting from such litigation could require us to obtain a license to continue to use the technology that is the subject of the claim, or otherwise restrict or prohibit our use of the technology. Any required licenses may not be available to us on acceptable terms, if at all. If we attempt to design around the technology at issue or to find another provider of suitable alternative technology to permit it to continue offering applicable software or product solutions, our continued supply of software or product solutions could be disrupted or our introduction of new or enhanced software or products could be significantly delayed.

Risks Related to our Securities and Ownership

Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control and could also limit the market price of our stock.

Our amended and restated certificate of incorporation and our bylaws, as amended, contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Our amended and restated certificate of incorporation provides that our board of directors will be authorized to issue from time to time, without further stockholder approval, up to 1,000,000 shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions of the shares of each series, including the dividend rights, dividend rates, conversion rights, voting rights, rights of redemption, including sinking fund provisions, redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of any series. Such shares of preferred stock could have preferences over our common stock with respect to dividends and liquidation rights. We may issue additional preferred stock in ways which may delay, defer or prevent a change of control of our company without further action by our stockholders. Such shares of preferred stock may be issued with voting rights that may adversely affect the voting power of the holders of our common stock by increasing the number of outstanding shares having voting rights, and by the creation of class or series voting rights.

We are also governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. The foregoing and other provisions in our amended and restated certificate of incorporation, our bylaws, as amended, and Delaware law could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors, including delaying or impeding a merger, tender offer, or proxy contest or other change of control transaction involving our company.
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Any delay or prevention of a change of control transaction or changes in our board of directors could prevent the consummation of a transaction in which our stockholders could receive a substantial premium over the then current market price for their shares.

Because of their significant stock ownership, some of our existing stockholders will be able to exert control over us and our significant corporate decisions.

Our executive officers, directors and their affiliates own or control, in the aggregate, approximately 31.0% of our outstanding common stock as of December 31, 2024. In particular, our Chairman and Co-Chief Executive Officer, Bryant R. Riley, owns or controls, in the aggregate, 6,914,063 shares of our common stock or 22.8% of our outstanding common stock as of December 31, 2024. These stockholders are able to exercise influence over matters requiring stockholder approval, such as the election of directors and the approval of significant corporate transactions, including transactions involving an actual or potential change of control of the company or other transactions that non-controlling stockholders may not deem to be in their best interests. This concentration of ownership may harm the market price of our common stock by, among other things:

•delaying, deferring, or preventing a change in control of our company;

•impeding a merger, consolidation, takeover, or other business combination involving our company;

•causing us to enter into transactions or agreements that are not in the best interests of all stockholders; or

•discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company.
Our Chairman and Co-Chief Executive Officer is a party to a credit agreement pursuant to which he has pledged as collateral the substantial majority of his common stock in our Company to a bank, and any foreclosure on such stock or the sale or attempted sale of such common stock, could adversely impact the price of our common stock and result in negative publicity.
As reported by Mr. Riley in his Schedule 13D filed with the SEC, he has pledged as collateral the substantial majority of his shares of Company common stock beneficially owned by him as well as other personal assets in favor of a bank lender (the “Lender”), pursuant to a Credit Agreement and Pledge Agreement, each dated as of March 19, 2019, as amended (collectively, the “Loan Agreements”). Pursuant to the Loan Agreements, Mr. Riley has pledged a total of 5,804,124 shares of Company common stock in exchange for a loan of $21.4 million (as of September 16, 2025) which loan is currently due on April 1, 2026. The Loan Agreements permit the Lender, under certain specified circumstances (including upon the occurrence and during the continuance of an event of default), to exercise its rights to foreclose on, and dispose of, the pledged shares and other collateral, in each case, in accordance with the Loan Agreements. An event of default may occur if, upon the satisfaction of loan-to-collateral value ratios including as a result of a decline in our stock price, Mr. Riley was unable to pre-pay a requisite portion of the loan amount or post additional collateral. Any such foreclosure or disposition of shares of our common stock, or any attempt by the Lender to exercise such remedies, could cause the price of our common stock to decline and result in negative publicity for the Company.
Our common stock price may fluctuate substantially, and your investment could suffer a decline in value.

The market price of our common stock may be volatile and could fluctuate substantially due to many factors, including, among other things:

•actual or anticipated fluctuations in our results of operations;

•announcements of significant contracts and transactions by us or our competitors;

•sale of common stock or other securities in the future;

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•the trading volume of our common stock;

•changes in our pricing policies or the pricing policies of our competitors; and

•general economic conditions

In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. These broad market factors may materially harm the market price of our common stock, regardless of our operating performance.

The trading price of our common shares is subject to volatility.

Trading of our common stock has in the past been highly volatile and the market price of shares of our common stock could continue to fluctuate substantially. Additionally, if we are not able to maintain our listing on NASDAQ, then our common stock will be quoted for trading on an over-the-counter quotation system and may be subject to more significant fluctuations in stock price and trading volume and large bid and ask price spreads.

We may not pay dividends regularly or at all in the future.

During 2024, we suspended paying dividends on our preferred stock and common stock, and we may not pay dividends in the near future. Even if we were to reinitiate dividends, our Board of Directors may reduce or discontinue dividends at any time for any reason it deems relevant and there can be no assurances that we will continue to generate sufficient cash to pay dividends, or that we will continue to pay dividends with the cash that we do generate. The determination regarding the payment of dividends is subject to the discretion of our Board of Directors and compliance with applicable laws, and there can be no assurances that we will generate sufficient cash to pay dividends, or that we will pay dividends in future periods.

Our level of indebtedness, and restrictions under such indebtedness, could adversely affect our operations and liquidity.

Together with our subsidiaries, we have a significant amount of indebtedness and substantial debt service requirements. As of December 31, 2024, we had approximately $1.8 billion of outstanding indebtedness. The terms of the instruments governing such indebtedness contain various restrictions and covenants regarding the operation of our business, including, but not limited to, restrictions on our ability to merge or consolidate with or into any other entity. We may also secure additional debt financing in the future in addition to our current debt. Our level of indebtedness generally could adversely affect our operations and liquidity, by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund working capital, capital expenditures, acquisitions and other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.

We may not be able to generate sufficient cash flow to pay the interest on our debt, and future working capital, borrowings or equity financing may not be available to pay or refinance such debt. If we are unable to generate sufficient cash flow to pay the interest on our debt, we may have to delay or curtail our operations. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking additional equity capital. These alternative strategies may not be affected on satisfactory terms, if at all, and they may not yield sufficient funds to make required payments on our indebtedness. During 2024 and the first half of 2025, we engaged in a number of assets sales the proceeds of which were largely used to repay indebtedness. If, for any reason, we are unable to meet our debt service and repayment obligations, we would be in default under the terms of the agreements governing our debt, which could allow our creditors at that time to declare certain outstanding indebtedness to be due and payable or exercise other available remedies, which may in turn trigger cross acceleration or cross default rights in other agreements. If that should occur, we may not be able to pay all such debt or to borrow sufficient funds to refinance it. Even if new financing were then available, it may not be on terms that are acceptable to us.
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Our publicly traded senior notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future.

Our publicly traded senior notes are not secured by any of our assets or any of the assets of our subsidiaries. As a result, our senior notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. The indenture governing our senior notes does not prohibit us or our subsidiaries from incurring additional secured (or unsecured) indebtedness in the future. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of our senior notes.

Our publicly traded senior notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.

Our publicly traded senior notes are obligations exclusively of the Company and not of any of our subsidiaries. None of our subsidiaries is a guarantor of our senior notes, and our senior notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. Therefore, in any bankruptcy, liquidation or similar proceeding, all claims of creditors (including trade creditors) of our subsidiaries will have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of our senior notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, our senior notes will be structurally subordinated to all indebtedness and other liabilities (including trade payables and the New Notes) of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish as financing vehicles or otherwise. The indenture governing our senior notes does not prohibit us or our subsidiaries from incurring additional indebtedness in the future. In addition, future debt and security agreements entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the transfer by our subsidiaries of assets pledged as collateral.

On March 26, 2025, the Company completed a private exchange transaction with an institutional investor pursuant to which the investor exchanged approximately $86.3 million aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026 and approximately $36.7 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026 owned by it for approximately $87.8 million aggregate principal amount of New Notes, whereupon the exchanged notes were cancelled. The New Notes were issued pursuant to the Indenture between the Company, certain subsidiaries of the Company, as guarantors, and the Trustee, GLAS Trust Company LLC, a New Hampshire limited liability company, and the New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries (collectively, the "Guarantors"). The New Notes are secured on a second lien basis, junior to the obligations under the Company’s credit agreement, by substantially all of the assets of the Company and the Guarantors. The New Notes are subordinated in right of payment to the payment in full of the obligations under the Company’s credit agreement, dated as of February 26, 2025, with Oaktree Fund Administration, LLC, as administrative agent and as collateral agent, as amended. On April 7, 2025, the Company completed a private exchange transaction with a certain institutional investor pursuant to which the such investor exchanged approximately $22.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for approximately $10.0 million aggregate principal amount of the New Notes. On May 21, 2025, the Company completed a private exchange transaction with certain institutional investors pursuant to which such investors exchanged approximately $139.1 million aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026, 5.00% Senior Notes due December 2026 and 6.00% Senior Notes due January 2028 for approximately $93.1 million aggregate principal amount of the New Notes. On June 30, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $28.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $13.0 million aggregate principal amount of the New Notes. On July 11, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $42.8 million aggregate principal amount of the Company’s 6.50% Senior Notes due September 2026, 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $24.6 million aggregate principal amount of the New Notes.

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The indenture under which our senior notes were issued contains limited protection for holders of our publicly traded senior notes.

The indenture under which our publicly traded senior notes were issued offers limited protection to holders of such senior notes. The terms of the indenture and our senior notes do not restrict our or any of our subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on the holders of our senior notes. In particular, the terms of the indenture and our senior notes do not place any restrictions on our or our subsidiaries’ ability to:

•issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to our senior notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to our senior notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to our senior notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to our senior notes with respect to the assets of our subsidiaries;

•pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to our senior notes;

•sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);

•enter into transactions with affiliates;

•create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;

•make investments; or

•create restrictions on the payment of dividends or other amounts to us from our subsidiaries.

In addition, the indenture does not include any protection against certain events, such as a change of control, a leveraged recapitalization or “going private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or similar transactions. Furthermore, the terms of the indenture and our senior notes do not protect holders of our senior notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow, or liquidity. Also, an event of default or acceleration under our other indebtedness would not necessarily result in an event of default under our senior notes.

Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of our senior notes may have important consequences for the holders of our senior notes, including making it more difficult for us to satisfy our obligations with respect to our senior notes or negatively affecting the trading value of our senior notes.

Other current debt contain, or debt we may issue or incur in the future could contain, more protections for its holders than the indenture and our senior notes, including additional covenants and events of default. The additional issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of our senior notes.

An increase in market interest rates could result in a decrease in the value of our senior notes and increase our future borrowing costs.

In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value. The increase in market interest rates over the last several years contributed to the decline in the market value of our senior notes. We cannot predict the future level of market interest rates, but to the extent market interest rates rise, the market value of our existing senior notes can be expected to further decline.
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Additionally, if interest rates rise, we may be required to refinance existing lower interest rate indebtedness with indebtedness bearing a higher rate of interest, and our issuance of new indebtedness at higher interest rates would likely cause the market value of our existing indebtedness that we do not refinance to decline. We cannot predict the future level of market interest rates.

An active trading market for our senior notes may not develop, which could limit the market price of our senior notes or the ability of our senior note holders to sell them.

The 5.00% 2026 Notes are quoted on NASDAQ under the symbol “RILYG,” the 5.25% 2028 Notes are quoted on NASDAQ under the symbol “RILYZ,” the 6.50% 2026 Notes are quoted on NASDAQ under the symbol “RILYN,” the 5.50% 2026 Notes are quoted on the NASDAQ under the symbol “RILYK” and the 6.00% 2028 Notes are quoted on NASDAQ under the symbol “RILYT”. We cannot provide any assurances that an active trading market will develop for our senior notes or that our senior note holders will be able to sell their senior notes. Since issuance, our senior notes have traded at times at a discount from their initial offering price due to prevailing interest rates, the market for similar securities, our credit ratings, general economic conditions, our financial condition, performance and prospects and other factors. We cannot assure our senior note holders that a liquid trading market will develop for our senior notes, that our senior note holders will be able to sell our senior notes at a particular time or that the price our senior note holders receive when they sell will be favorable. To the extent an active trading market does not develop, the liquidity and trading price for our senior notes may be harmed. Accordingly, our senior note holders may be required to bear the financial risk of an investment in our senior notes for an indefinite period of time.

We have and may continue to issue additional notes.

Under the terms of the indenture governing our senior notes, we may from time to time without notice to, or the consent of, the holders of our senior notes, create and issue additional notes which will be equal in rank to our senior notes. We will not issue any such additional notes unless such issuance would constitute a “qualified reopening” for U.S. federal income tax purposes.
From March 26, 2025 through July 11, 2025, the Company completed five private exchange transactions with certain institutional investors pursuant to which the investors exchanged approximately $355.0 million of our outstanding publicly traded senior notes for approximately $228.4 million aggregate principal amount of the New Notes. The New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries and are secured on a second lien basis, junior to the obligations under the Company’s credit agreement, by substantially all of the assets of the Company and the Guarantors.
The rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, or 6.00% 2028 Notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.

We have obtained a rating for the 5.00% 2026 Notes, 5.25% 2028 Notes, 6.50% 2026 Notes, 5.50% 2026 Notes, and 6.00% 2028 Notes (collectively, the “Rated Notes”). Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold any of the Rated Notes. Ratings do not reflect market prices or suitability of a security for a particular investor and the rating of the Rated Notes may not reflect all risks related to us and our business, or the structure or market value of the Rated Notes. We may elect to issue other securities for which we may seek to obtain a rating in the future. If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or the market value of the Rated Notes.

There is no established market for the Depositary Shares and the market value of the Depositary Shares could be substantially affected by various factors.

The Depositary Shares are an issue of securities with no established trading market. Although the shares are trading on the NASDAQ Global Market, an active trading market on the NASDAQ Global Market for the Depositary Shares may not develop or last, in which case the trading price of the Depositary Shares could be adversely affected. If an active trading market does develop on the NASDAQ Global Market, the Depositary Shares may trade at prices higher or lower than their initial offering price. The trading price of the Depositary Shares also depends on many factors, including, but not limited to:
•prevailing interest rates;
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•the market for similar securities;

•general economic and financial market conditions; and

•the Company’s financial condition, results of operations and prospects.

The Company has been advised by some of the underwriters that they intend to make a market in the Depositary Shares, but they are not obligated to do so and may discontinue market-making at any time without notice.

The Existing Preferred Stock and the Depositary Shares rank junior to all of the Company’s indebtedness and other liabilities and are effectively junior to all indebtedness and other liabilities of the Company’s subsidiaries.

In the event of a bankruptcy, liquidation, dissolution or winding-up of the affairs of the Company, the Company’s assets will be available to pay obligations on the 6.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”) and the 7.375% Series B Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock” and, together with the Series A Preferred Stock, the “Existing Preferred Stock”), which ranks in parity with the Series A Preferred Stock, only after all of the Company’s indebtedness and other liabilities have been paid. The rights of holders of the Existing Preferred Stock to participate in the distribution of the Company’s assets will rank junior to the prior claims of the Company’s current and future creditors and any future series or class of preferred stock the Company may issue that ranks senior to the Existing Preferred Stock. In addition, the Existing Preferred Stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others) the Company’s existing subsidiaries and any future subsidiaries. The Company’s existing subsidiaries are, and any future subsidiaries would be, separate legal entities and have no legal obligation to pay any amounts to the Company in respect of dividends due on the Existing Preferred Stock. If the Company is forced to liquidate its assets to pay its creditors, the Company may not have sufficient assets to pay amounts due on any or all of the Existing Preferred Stock then outstanding. The Company and its subsidiaries have incurred and may in the future incur substantial amounts of debt and other obligations that will rank senior to the Existing Preferred Stock. The Company may incur additional indebtedness and become more highly leveraged in the future, which could harm the Company’s financial position and potentially limit cash available to pay dividends. As a result, the Company may not have sufficient funds remaining to satisfy its dividend obligations relating to the Existing Preferred Stock if the Company incurs additional indebtedness. In January 2025, the Company suspended payment of cash dividends on its 6.875% Series A and 7.375% Series B preferred shares.

Future offerings of debt or senior equity securities may adversely affect the market price of the Depositary Shares. If the Company decides to issue debt or senior equity securities in the future, it is possible that these securities will be governed by an indenture or other instrument containing covenants restricting the Company’s operating flexibility. Additionally, any convertible or exchangeable securities that the Company issues in the future may have rights, preferences and privileges more favorable than those of the Existing Preferred Stock and may result in dilution to owners of the Depositary Shares. The Company and, indirectly, the Company’s shareholders, will bear the cost of issuing and servicing such securities. Because the Company’s decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond the Company’s control, the Company cannot predict or estimate the amount, timing or nature of the Company’s future offerings. Thus, holders of the Depositary Shares will bear the risk of the Company’s future offerings reducing the market price of the Depositary Shares and diluting the value of their holdings in the Company.

The Company may issue additional shares of the Existing Preferred Stock and additional series of preferred stock that rank on a parity with the Existing Preferred Stock as to dividend rights, rights upon liquidation or voting rights.

The Company is allowed to issue additional shares of Existing Preferred Stock and additional series of preferred stock that would rank on a parity with the Existing Preferred Stock as to dividend payments and rights upon the Company’s liquidation, dissolution or winding up of the Company’s affairs pursuant to the Company’s certificate of incorporation and the certificate of designation for the Existing Preferred Stock without any vote of the holders of the Existing Preferred Stock. The Company’s certificate of incorporation authorizes the Company to issue up to 1,000,000 shares of preferred stock in one or more series on terms determined by the Company’s Board of Directors. However, the use of depositary shares enables the Company to issue significant amounts of preferred stock, notwithstanding the number of shares authorized by the Company’s certificate of incorporation. The issuance of additional shares of Existing Preferred Stock and additional series of parity preferred stock could have the effect of reducing the amounts available to the Existing Preferred stockholders upon the Company’s liquidation or dissolution or the winding up of the Company’s affairs.
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It also may reduce dividend payments on the Existing Preferred Stock issued and outstanding if the Company does not have sufficient funds to pay dividends on all Existing Preferred Stock outstanding and other classes of stock with equal priority with respect to dividends.

In addition, although holders of the Depositary Shares are entitled to limited voting rights (discussed further below), the holders of the Depositary Shares will vote separately as a class along with all other outstanding series of the Company’s preferred stock that the Company may issue upon which like voting rights have been conferred and are exercisable. As a result, the voting rights of holders of the Depositary Shares may be significantly diluted, and the holders of such other series of preferred stock that the Company may issue may be able to control or significantly influence the outcome of any vote.

Future issuances and sales of parity preferred stock, or the perception that such issuances and sales could occur, may cause prevailing market prices for the Depositary Shares and the Company’s common stock to decline and may adversely affect the Company’s ability to raise additional capital in the financial markets at times and prices favorable to the Company. Such issuances may also reduce or eliminate the Company’s ability to pay dividends on the Company’s common stock.

Holders of Depositary Shares have extremely limited voting rights.

The voting rights of holders of Depositary Shares are limited. The Company’s common stock is the only class of the Company’s securities that carries full voting rights. Voting rights for holders of Depositary Shares exist primarily with respect to the ability to elect (together with the holders of other outstanding series of the Company’s preferred stock, or Depositary Shares representing interests in the Company’s preferred stock, or additional series of preferred stock the Company may issue in the future and upon which similar voting rights have been or are in the future conferred and are exercisable) two additional directors to the Company’s Board of Directors in the event that six quarterly dividends (whether or not declared or consecutive) payable on the Existing Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s certificate of incorporation or certificate of designation (in some cases voting together with the holders of other outstanding series of the Company’s preferred stock as a single class) that materially and adversely affect the rights of the holders of Depositary Shares (and other series of preferred stock, as applicable) or create additional classes or series of the Company’s stock that are senior to the Existing Preferred Stock, provided that in any event adequate provision for redemption has not been made. Other than the limited circumstances described in this prospectus supplement, holders of Depositary Shares will not have any voting rights.

The Depositary Shares have not been rated.

The Existing Preferred Stock and the Depositary Shares have not been rated and may never be rated. It is possible, however, that one or more rating agencies might independently decide to assign a rating to the Depositary Shares or that the Company may elect to obtain a rating of the Depositary Shares in the future. Furthermore, the Company may elect to issue other securities for which the Company may seek to obtain a rating. If any ratings are assigned to the Depositary Shares in the future or if the Company issues other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for, or the market value of, the Depositary Shares.
Ratings reflect the views of the issuing rating agency or agencies, and such ratings could at any time be revised downward, placed on negative outlook or withdrawn entirely at the discretion of the issuing rating agency or agencies. Furthermore, a rating is not a recommendation to purchase, sell or hold any particular security, including the Depositary Shares. Ratings do not reflect market prices or the suitability of a security for a particular investor, and any future rating of the Depositary Shares may not reflect all risks related to the Company and its business, or the structure or market value of the Depositary Shares.

The conversion feature may not adequately compensate the holders, and the conversion and redemption features of the Existing Preferred Stock and the Depositary Shares may make it more difficult for a party to take over the Company and may discourage a party from taking over the Company.

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Upon the occurrence of a Delisting Event or Change of Control (each as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively), holders of the Depositary Shares will have the right (unless, prior to the Delisting Event Conversion Date or Change of Control Conversion Date (each as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively), as applicable, the Company has provided or provide notice of the Company’s election to redeem such series of Existing Preferred Stock) to direct the depositary to convert some or all of such series of Existing Preferred Stock underlying their Depositary Shares into the Company’s common stock (or equivalent value of alternative consideration), and under these circumstances the Company will also have a special optional redemption right to redeem such series of Existing Preferred Stock. Upon such a conversion, the holders will be limited to a maximum number of shares of the Company’s common stock equal to the Share Cap (as defined in the certificate of designation for each series of the Existing Preferred Stock, respectively) multiplied by the number of shares of such series of Existing Preferred Stock converted. If the common stock price is less than $11.49 in the case of the Series A Preferred Stock (which is approximately 50% of the closing sale price per share of the Company’s common stock on October 1, 2019) or $13.39 in the case of the Series B Preferred Stock (which is approximately 50% of the closing sale price per share of the Company’s common stock on August 31, 2020), subject to adjustment, the holders will receive a maximum number of shares of the Company’s common stock per depositary share, which may result in a holder receiving value that is less than the liquidation preference of the Depositary Shares. In addition, those features of the Existing Preferred Stock and Depositary Shares may have the effect of inhibiting a third party from making an acquisition proposal for the Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of the Company’s common stock and Depositary Shares with the opportunity to realize a premium over the then-current market price or that shareholders may otherwise believe is in their best interests.

The market price of the Depositary Shares could be substantially affected by various factors.

The market price of the Depositary Shares will depend on many factors, which may change from time to time, including:
•prevailing interest rates, increases in which may have an adverse effect on the market price of the Depositary Shares;

•the annual yield from distributions on the Depositary Shares as compared to yields on other financial instruments;

•general economic and financial market conditions;

•government action or regulation;

•the financial condition, performance and prospects of the Company and its competitors;

•changes in financial estimates or recommendations by securities analysts with respect to the Company, its competitors or the industry in which the Company operates;

•the Company’s issuance of additional preferred equity or debt securities; and

•actual or anticipated variations in quarterly operating results of the Company and its competitors.

As a result of these and other factors, investors who purchase the Depositary Shares may experience a decrease, which could be substantial and rapid, in the market price of the Depositary Shares, including decreases unrelated to the Company’s operating performance or prospects.

The price of our securities may be adversely affected by third parties who raise allegations about our Company.

Short sellers and others who raise allegations regarding the legality of our business activities, some of whom are positioned to profit if the price of our securities decline, have negatively affected the price of our securities and may continue to do so. For example, in early 2023, a short-focused research firm raised allegations regarding our investment portfolio, accounting practices, and other matters, and announced that they had taken a significant short position regarding our common stock, leading to public scrutiny and significant volatility in the price of our securities. This firm, as well as additional short sellers, have raised additional allegations over the course of 2023 and 2024, particularly around our relationship with Brian Kahn and the FRG take-private transaction. These reports and allegations have caused and may continue to cause significant volatility in the price of our common stock and other securities that may cause the value of a securityholder’s investment to decline rapidly.

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We have received, and may continue to receive, a high degree of media coverage that is published or otherwise disseminated by third parties, including on X, other forms of social media, articles, message boards and other media. This includes coverage that is not attributable to statements made by our directors, officers, employees or agents. Information provided by third parties may not be reliable or accurate and has materially impacted, and may continue to materially impact, the trading price of our common stock and other securities which could cause investors to lose their investments.

A “short squeeze” due to a sudden increase in demand for our securities that largely exceeds supply has led to, and may continue to lead to, extreme price volatility in our securities.

Investors may purchase our common stock and other securities to hedge existing exposure or to speculate on the price of our common stock and other securities. Speculation on the price of our securities may involve long and short exposures. To the extent aggregate short exposure exceeds the number of securities available for purchase on the open market, investors with short exposure may have to pay a premium to repurchase our securities for delivery to lenders of our securities. Those repurchases may, in turn, dramatically increase the price of our securities until additional securities are available for trading or borrowing. This is often referred to as a “short squeeze.”

A large proportion of our common stock has been and may continue to be traded by short sellers which may increase the likelihood that our common stock will be the target of a short squeeze. It is also possible that such a short squeeze could develop with respect to our other securities. A short squeeze could lead to volatile price movements in our securities that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the securities necessary to cover their short positions, the price of our securities may rapidly decline. Securityholders that purchase securities that are the subject of the short squeeze during such short squeeze may lose a significant portion of their investment.
Item 1B. UNRESOLVED STAFF COMMENTS
None.
Item 1C. CYBERSECURITY

We have processes in place for assessing, identifying, and managing material risks from potential unauthorized occurrences on or through our electronic information systems that could adversely affect the confidentiality, integrity, or availability of our information systems or the information residing on those systems.

These processes include internal and external vulnerability management systems, security grading systems, scanning systems, firewalls and breach alert systems, among others. Such systems and processes are designed to prevent, detect, or mitigate data loss, theft, misuse, unauthorized access, or other security incidents or vulnerabilities affecting the data. The data include confidential, proprietary, and business and personal information that we collect, process, store, and transmit as part of our business, including on behalf of third parties. As part of our risk management process, we conduct monthly vulnerability scans, annual penetration testing, phishing tests, annual risk assessments, and ad-hoc application security assessments. We also maintain a variety of playbooks for our incident response plan that are utilized when incidents are detected. We require employees with access to information systems, including all corporate employees, to undertake data protection and cybersecurity and compliance training at least annually.

In addition, we engage certain third-party security providers to assist with assessing, identifying, and managing cybersecurity risks. Such services include but are not limited to managed security providers, assessors, consultants, auditors, and penetration testers. We also use a third party vendor management software to assess the security posture of other material third party vendors to reduce the impact of a security incident from such vendors. As discussed below, we rely on notifications from third-parties and other external alert systems to identify material risks that may exist with such parties.

Our cybersecurity team is led by our chief information security officer, who is responsible for implementing and maintaining cybersecurity and data protection practices at the Company in close coordination with senior management and other teams across the Company. The chief information security officer provides regular updates to the Cybersecurity Committee (discussed further below) of which he is also a member. Our chief information security officer has extensive cybersecurity knowledge and skills gained from over 20 years of experience at the Company as chief information security officer and chief information officer where he has been responsible for implementing and maintaining cybersecurity and data protection practices, implementing complex technology solutions, and managing large groups of technology professionals. He holds multiple cybersecurity industry focused certifications and reports directly to the Co-Chief Executive Officer.
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Cybersecurity incidents come to the attention of the Company from the cybersecurity team which may be notified of such incidents from internal vulnerability monitoring systems, third-party vendors, government or industry alerts, media broadcasts, or employee self-reporting. Risk assessment and mitigation efforts related to cybersecurity incidents are subject to oversight by the Cybersecurity Committee, which monitors the prevention, detection, and remediation of such incidents. The Cybersecurity Committee, which is comprised of directors from different divisions within the Company, as well as members of the cybersecurity team and the chief information security officer, oversees Company policies and procedures for protecting cybersecurity infrastructure and for compliance with applicable data protection and security regulations, and related risks. The Cybersecurity Committee meets at least quarterly or whenever a material cybersecurity incident is identified at the Company. Material cybersecurity incidents, as well as mitigation efforts related to such incidents, are promptly reported to senior management.

Our cybersecurity risks and associated mitigation efforts are continuously monitored and evaluated by senior management as part of the Company’s overall risk management process. In addition, a report prepared by the chief information security officer outlining any material cyber risks as well as any mitigation efforts is presented by the chief information security officer to the Audit Committee of our Board of Directors on a quarterly basis as part of the Company’s enterprise risk assessment.

The Company is not aware of any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition. Additional information about cybersecurity risks we face is discussed in Item 1A of Part I, “Risk Factors,” under the heading “Risks Related to Data Security and Intellectual Property,” which should be read in conjunction with the information above.
Item 2. PROPERTIES
Our headquarters are located in Los Angeles, California in a leased facility. We believe that this facility and our other existing facilities are suitable and adequate for the business conducted therein, appropriately used and have sufficient capacity for their intended purpose.
Item 3. LEGAL PROCEEDINGS
The Company is subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In addition to such legal and other claims, reviews, investigations, and proceedings, the Company and its subsidiaries are subject to the risk of unasserted claims, including, among others, as it relates to matters related to Mr. Kahn and our investment in Freedom VCM. For example, in light of Mr. Kahn’s alleged involvement with the alleged misconduct concerning Prophecy Asset Management LP, the Company can provide no assurances that it will not be subject to claims asserting an interest in the Freedom VCM equity interests owned by Mr. Kahn, including those that collateralize the Amended and Restated Note. If a claim were successful, it would diminish the value of the collateral which could impact the carrying value of the loan. If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit.
On July 11, 2025, the Company’s subsidiary, BRS, received a demand letter from certain parties that invested in a special purpose entity (the “SPV”) that in turn invested in the going private transaction (the “Transaction”) in August 2023 of FRG. The letter alleges that BRS failed to disclose certain material facts regarding FRG and the Transaction in violation of certain securities and other laws. Such investors seek rescission of the aggregate investment amount of $37.5 million. The Company believes such claims are meritless and intends to defend such claims.
On February 14, 2025, a stockholder derivative complaint was filed by Michael Marchner in the Delaware Chancery Court on behalf of the Company and against the members of the Company’s Board of Directors. The complaint alleges that certain of the Company's officers and the board of directors (i) breached their fiduciary duties related to the Company’s involvement with Brian Kahn and subsequent legal issues, (ii) engaged in misconduct, and (iii) wasted corporate assets, including the approval of improper compensation. The Company believes that these claims are meritless and intends to defend this action.

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On January 22, 2025, a stockholder derivative complaint was filed by James Smith in the Superior Court for Los Angeles County against the Company, certain of the Company’s executive officers and the members of the Company’s Board of Directors. The complaint alleges that certain of the Company's officers and directors (i) breached their fiduciary duties related to the Company’s involvement with Brian Kahn and subsequent legal issues, (ii) engaged in a waste of corporate assets, and (iii) received unjust enrichment. The Company believes that these claims are meritless and intends to defend this action.

On July 9, 2024, a putative class action was filed by Brian Gale, Mark Noble, Terry Philippas and Lawrence Bass in the Delaware Chancery Court against Freedom VCM, Mr. Kahn, Andrew Laurence, Matthew Avril and the Company. This complaint alleges that former shareholders of FRG suffered damages due to alleged breaches of fiduciary duties by officers, directors and other participants in the August 2023 management-led take private transaction of FRG and that the Company aided and abetted those alleged breaches of fiduciary duties. The claim seeks an award of unspecified damages, rescissory damages and/or quasi-appraisal damages, disgorgement of profits, attorneys’ fees and expenses, and interest thereon. The Company believes these claims are meritless and intends to defend this action.
On July 3, 2024, each of the Company and Bryant Riley, Chairman and Co-Chief Executive Officer, received a subpoena from the U.S. Securities and Exchange Commission (the “SEC”) requesting the production of certain documents and other information primarily related to (i) the Company’s business dealings with Brian Kahn, (ii) certain transactions in an unrelated public company’s securities, and (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries. On November 22, 2024, each of the Company and Mr. Riley received an additional SEC subpoena requesting the production of certain additional documents and information relating to Franchise Group, Inc. (including its holding company, Freedom VCM Holdings, LLC) as well as Mr. Riley’s personal loan and his pledge of shares of the Company’s common stock as collateral for such loan. As previously disclosed on April 23, 2024, the Audit Committee of the Company’s Board of Directors, with the assistance of Sullivan & Cromwell LLP, the Company’s legal counsel, conducted an internal review, and separately the Audit Committee retained Winston & Strawn LLP, independent legal counsel, to conduct an independent investigation, to review transactions among Mr. Kahn (and his affiliates) and the Company (and its affiliates). The review and the investigation both confirmed that the Company and its executives, including Mr. Riley, had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates. The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have occurred. Both the Company and Mr. Riley are responding to the subpoenas and are fully cooperating with the SEC.
On May 2, 2024 a putative class action was filed Ted Donaldson in the Superior Court for the State of California, County of Los Angeles on behalf of all persons who acquired the Company’s senior notes pursuant to the shelf registration statement filed with the SEC on Form S-3 dated January 28, 2021, and the prospectuses filed and published on August 4, 2021 and December 2, 2021 (the “Offerings”). The action asserts claims under §§ 11, 12, and 15 of the Securities Act of 1933 against the Company, some of the Company's current and former officers and directors, and the financial institutions that served as underwriters and book runners for the Offerings. An amended complaint was filed on September 27, 2024. The amended complaint alleges that the offering documents failed to advise investors that Brian Kahn and/or one or more of his controlled entities was engaged in illicit business activities, that the Company, despite the foregoing, continued to finance transactions for Kahn, eventually enabling him and others to take FRG private, and that the foregoing was reasonably likely to draw regulatory scrutiny and reputational harm to the Company. The Company believes these claims are meritless and intends to defend this action.

On January 24, 2024, a putative securities class action complaint was filed by Mike Coan in U.S. Federal District Court, Central District of California, against the Company, Mr. Riley, Tom Kelleher and Phillip Ahn. The purported class includes persons and entities that purchased shares of the Company’s common stock between May 10, 2023 and November 9, 2023. A second putative class action lawsuit was filed on March 15, 2024 by the KL Kamholz Joint Revocable Trust (“Kamholz”). On August 8, 2024, this matter was consolidated with the Kamholz matter and an amended complaint was then filed on April 21, 2025. The amended complaint alleges that the Company failed to disclose to investors material financial details concerning a going private transaction involving FRG, and that the Company made false or misleading statements concerning the Company’s lending practices, its high concentration of risk in transactions involving Mr. Kahn and his affiliates, the condition and composition of the Company’s loan portfolio, the Company’s due diligence and risk management procedures, and the Company’s level of concern and internal scrutiny concerning Mr. Kahn after it learned he was potentially implicated in a fraud involving an unrelated third party. The amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Company cannot estimate the amount of potential liability, if any, that could arise from these matters and believes these claims are meritless and intends to defend these actions.

On September 21, 2023, the Company’s wholly owned subsidiary, B. Riley Commercial Capital, LLC (“BRCC”), received a demand alleging that certain payments to BRCC in the aggregate amount of approximately $32.2 million made by Sorrento Therapeutics, Inc. (“Sorrento”), a chapter 11 debtor in the Bankruptcy Court, pursuant to that certain Bridge Loan Agreement dated September 30, 2022 between Sorrento and BRCC, are avoidable as preferential transfers (the “Alleged Preferences”).
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On June 16, 2025, the liquidating trustee on behalf of the Sorrento Liquidating Trust filed a complaint with the Court in an adversary proceeding seeking to avoid and recover the Alleged Preferences. On September 12, 2025, the Court denied BRCC’s motion to dismiss. The Company believes that the liquidating trustee’s claims lack merit and intends to continue to assert its statutory defenses to defeat such claims.

In light of the significant factual issues to be resolved with respect to the asserted claims and other proceedings described above and uncertainties regarding unasserted claims described above, at the present time reasonably possible losses cannot be estimated with respect to the asserted and unasserted claims described in the preceding paragraphs.
Item 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Stock Market and Other Information
Our common stock is traded on the NASDAQ Global Market under the symbol: “RILY”. From July 16, 2015 to November 15, 2016, our common stock was traded on the NASDAQ Capital Market under the symbol “RILY”.
As of September 16, 2025, there were approximately 129 holders of record of our Common Stock. This number does not include beneficial owners holding shares through nominees or in “street” name.

On June 4, 2025 and August 20, 2025, the Company received notices (the “Notices”) from the NASDAQ Stock Market LLC (“NASDAQ”), which stated that, as a result of the Company’s delays in filing its Annual Report on Form 10-K for the period ended December 31, 2024, its Quarterly Reports on Form 10-Q for the periods ended March 31, and June 30, 2025 (the "Delayed Quarterly Reports" (collectively, the "Delayed SEC Periodic Reports"), the Company was not in compliance with NASDAQ Listing Rule 5250(c)(1) (the “Rule”), which requires NASDAQ-listed companies to timely file all required periodic financial reports with the U.S. Securities and Exchange Commission (the “SEC”). The Notices state that based on NASDAQ’s further review and the materials submitted by the Company on June 2, 2025, the Staff determined to grant an exception to enable the Company to regain compliance with the Rule. This exception allowed the Company to remain listed while it worked to regain compliance with all delinquent filings. This exception presently expires on September 29, 2025. The Notices had no immediate effect on the listing of the Company’s securities on NASDAQ.

On September 4 and 19, 2025, the Company provided updates to its plan of compliance to the Staff. More specifically in the September 19 update, the Company determined that it would be unable to file the Delayed Quarterly Reports by September 29, 2025. While the Company is hopeful that the Staff will leave the terms of the exception in place through September 29, 2025, it is possible that the Staff will truncate the exception period, which would result in the issuance of a Staff Determination Letter.
Upon receipt of a Staff Determination Letter, the Company has the right under NASDAQ rules to request a hearing before a NASDAQ Hearings Panel. The Company intends to request such a hearing once it receives a Staff Determination Letter. Within the hearing request letter, the Company must explain why continued listing of its securities is appropriate pending the hearing.
Given the Company’s efforts to address the Delayed SEC Periodic Reports, its priority to remain transparent and disclose on a timely basis all material information via Current Report, as required by SEC rules, and the filing of the 2024 Form 10-K, the Company is hopeful that a NASDAQ Hearings Panel will both grant its request to continue trading pending the hearing and then grant the Company additional time to remain listed on NASDAQ until such time as it again becomes current in the SEC periodic public filings; however, we cannot provide any assurances that NASDAQ will do so.
Dividend Policy
We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our Board of Directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our Board of Directors may deem relevant.
Recent Repurchases of Equity Securities
None.

Share Performance Graph
The following graph and table compares the cumulative total shareholder return on our common share with the cumulative total return on the Russell 2000 Financial Index and S&P 500 index for the period from December 31, 2019 to December 31, 2024.
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The graph and table below assume that $100 was invested on the starting date and dividends, if any, were reinvested on the date of payment without payment of any commissions. The performance shown in the graph and table represents past performance and should not be considered an indication of future performance.
2531

As of December 31, 2019 2020 2021 2022 2023 2024
B. Riley Financial, Inc. $ 100  $ 351  $ 844  $ 351  $ 243  $ 55 
Russell 2000 $ 100  $ 146  $ 166  $ 131  $ 150  $ 165 
Russell 2000 Financial $ 100  $ 114  $ 144  $ 118  $ 128  $ 145 
S&P 500 $ 100  $ 150  $ 190  $ 153  $ 190  $ 235 

The information provided above under the heading “Share Performance Graph” shall not be considered “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act of 1933, as amended or the Exchange Act.
Item 6. RESERVED
None.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “future,” “intend,” “seek,” “likely,” “potential” or “continue,” the negative of such terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we, nor any other person,
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assumes responsibility for the accuracy and completeness of the forward-looking statements. Except as required by law, we are under no obligation to update any of the forward-looking statements after the filing of this Annual Report to conform such statements to actual results or to changes in our expectations.
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Annual Report. Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation the disclosures made in Item 1A of Part II of this Annual Report under the caption “Risk Factors.”

Factors that could cause actual results to differ from those contained in the forward-looking statements include, but are not limited to: volatility in our revenues and results of operations; changing conditions in the financial markets; matters related to our investment in Freedom VCM Holdings, LLC (“Freedom VCM”) and developments related to our prior business relationship with Brian Kahn (the former CEO of Freedom VCM); the receipt by the Company and Bryant Riley of subpoenas from the SEC; material weaknesses in internal control over financial reporting; our ability to generate sufficient revenues to achieve and maintain profitability; our exposure to credit risk; the short term nature of our engagements; failure to successfully compete in any of our businesses; our dependence on communications, information and other systems and third parties; the potential loss of financial institution clients; the illiquidity of, and additional potential losses from, our proprietary investments; changing economic and market conditions, including inflation and any actions by the Federal Reserve to address inflation, and the possibility of recession or an economic downturn; the effects of tariffs and other governmental initiatives, and related impacts including supply chain disruptions, labor shortages and increased labor costs; potential liability and harm to our reputation if we were to provide an inaccurate appraisal or valuation; potential mark-downs in inventory in connection with purchase transactions; loss of key personnel; our ability to borrow under our credit facilities; failure to comply with the terms of our credit agreements or senior notes; the level of our indebtedness; our ability to meet future capital requirements; our ability to realize the benefits of our completed acquisitions, including our ability to achieve anticipated opportunities and cost savings, and accretion to reported earnings estimated to result from completed and proposed acquisitions in the time frame expected by management or at all; the diversion of management time on divestiture -related issues; the impact of legal proceedings, including in respect of matters related to Freedom VCM and Brian Kahn; the activities of short sellers and their impact on our business and reputation; and the effect of geopolitical instability, including wars, conflicts and terrorist attacks, including the impacts of Russia’s invasion of Ukraine and conflicts in the Middle East. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Except as otherwise required by the context, references in this Annual Report to the “Company,” “B. Riley,” “B. Riley Financial,” “we,” “us” or “our” refer to the combined business of B. Riley Financial, Inc. and all of its subsidiaries.
Overview
Description of the Company
B. Riley Financial, Inc. (NASDAQ: RILY) (the “Company”) is a diversified financial services platform that delivers tailored solutions to meet the strategic, operational, and capital needs of its clients and partners. We operate through several consolidated subsidiaries (collectively, “B. Riley”) that provide investment banking, brokerage, wealth management, asset management, direct lending, business advisory services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals.
The Company also opportunistically invests in and acquires companies or assets with attractive risk-adjusted return, with a focus on making operational improvements within these companies in an effort to maximize free cash flow. However, during 2024 and continuing into 2025, our focus has been on reducing indebtedness, including through the net proceeds from a number of strategic asset dispositions or other monetizations as described in additional detail under “—Disposition and Monetization Transactions”. The Company has reduced its total indebtedness from $2.4 billion at December 31, 2023 to $1.8 billion at December 31, 2024. The Company anticipates that reduction of indebtedness, including potentially through additional asset disposition or monetization transactions, will remain a key priority for the foreseeable future.


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Our Business Segments

We report our activities in six reportable business segments: Capital Markets, Wealth Management, Financial Consulting, Communications, Consumer segment and E-Commerce segment. The descriptions below illustrate the businesses that comprise our segments.

We maintain a diverse composition of businesses that operate in six reportable segments. Management evaluates many different financial and non-financial metrics to assess the individual performance of each of these various businesses. However, across most businesses, management primarily assesses each business’s financial performance based upon each of the businesses revenues and operating profits generated excluding non-cash charges and the impact of gains and losses related to securities and other investments held. Management believes that gains and losses on individual investments are generally impacted by individual characteristics specific to each investment and although this has an impact on our overall financial performance the impact of these gains and losses may not be indicative of the overall strength or weakness in each of our business operations. Additionally, in evaluating the financial performance of each of our businesses, management monitors the increase or decrease in operating results from period to period while factoring in the relative volatility inherent in each industry in which these businesses operate. Management recognizes that some of the Company’s businesses exhibit more volatile results.

Capital Markets – We provide investment banking, equity research and institutional brokerage services to publicly traded and privately held companies, institutional investors, and financial sponsors; fund and asset management services to institutional and high-net-worth individual investors; and direct lending services to middle market companies. We also trade equity securities as a principal for our account, including investments in funds managed by our subsidiaries. We maintain an investment portfolio comprised of public and private equities and debt securities. We also opportunistically provide loans to our clients and we engage in securities-based lending which involves the borrowing and lending of equity and fixed income securities.

Our investment approach is value-oriented and represents a core competency of our capital markets strategy. We act as an advisor to our clients, which at times involves complex transactions consistent with our value-oriented investment philosophy. We often provide consulting, capital raising, or investment banking services for companies in which B. Riley may have significant influence through equity ownership, representation on the board of directors (or similar governing body), or both.

In our Capital Markets segment we have a portfolio of loans receivable that consisted of the following at December 31, 2024 and December 31, 2023 (dollars in thousands):
Fair Value Adjustments on Loans
Loans Receivable, at Fair Value Year Ended
December 31,
Industry or Type of Loan December 31,
2024		 December 31,
2023		 2024 2023 2022
Related Party Loans:
Vintage Capital Management, LLC Retail / consumer $ 2,057  $ 200,506  $ (222,911) $ —  $ — 
Freedom VCM Receivables, Inc. Consumer receivable portfolio 3,913  42,183  (13,874) —  — 
Conn's, Inc. Retail / consumer 38,826  104,760  (71,724) 494  — 
W.S. Badcock Corporation Consumer receivable portfolio 2,169  20,624  (5,339) (7,940) — 
Other related party loans Services, Oil & Gas and Industrial 4,937  10,695  (14,823) (29,342) (1,603)
Total related party 51,902  378,768  (328,671) (36,788) (1,603)
Exela Technologies, Inc. Technology 32,136  50,296  (701) 21,028  (20,191)
Core Scientific, Inc. Technology —  45,509  8,473  34,696  (34,791)
Other loans Various 6,065  57,846  (4,599) 1,289  2,251 
Total $ 90,103  $ 532,419  $ (325,498) $ 20,225  $ (54,334)
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The fair value adjustments on loans receivable for the years ended December 31, 2024, 2023 and 2022, were $(325.5) million, $20.2 million, and $(54.3) million, respectively. During the years ended December 31, 2024, 2023 and 2022, fair value adjustments for loans receivable from related parties totaled $(328.7) million, $(36.8) million, and $(1.6) million, respectively. During the years ended December 31, 2024, 2023 and 2022, fair value adjustments for other loans receivable totaled $3.2 million, $57.0 million, and $(52.7) million respectively.

During the year ended December 31, 2024, fair value adjustments for the loan receivable for Vintage Capital Management, LLC were $(222.9) million. The fair value adjustments are related primarily to the decline in the equity fair value of Freedom VCM which, along with certain guarantees, is the primary collateral for this loan. The decline in the equity fair value of Freedom VCM is primarily due to Freedom VCM’s filing of voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024 as a result of increases in net debt, a decrease in the operational performance of Freedom VCM various business units during 2024, and a decline in the equity value of Freedom VCM’s investment in Conn’s, Inc. common stock which was impacted by the Chapter 11 Cases under chapter 11 the Bankruptcy Code in the Bankruptcy Court.

During the year ended December 31, 2024, we recorded $(13.9) million of fair value adjustments to the loan receivable for Freedom VCM Receivables, Inc., primarily due to higher projected charge offs of receivables on the consumer receivable portfolio that are serviced by Conn's, Inc. which was impacted by the Chapter 11 Cases under chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

During the years ended December 31, 2024 and 2023, we recorded $(71.7) million and $0.5 million of fair value adjustments to the loan receivable for Conn’s, Inc., respectively. The fair value adjustments are primarily related to Conn’s Inc. July 23, 2024 Chapter 11 Cases. The filing of the Chapter 11 Cases impacted the operational performance of the stores operated by Conn’s, Inc. and the additional expenses projected to be incurred in the Chapter 11 Cases resulted in a decline in the projected recovery value of the collateral for the Conn’s Inc. loan receivable.

During the years ended December 31, 2024 and 2023, fair value adjustments for the loan receivable from W.S. Badcock Corporation were $(5.3) million and $(7.9) million, respectively. The fair value adjustment of $(5.3) million during the year ended December 31, 2024, was primarily due to higher projected charge offs of receivables on the consumer receivable portfolio resulting from Conn’s, Inc. bankruptcy and estimated costs and losses from the projected liquidation of the consumer receivable portfolio. The fair value adjustment of $(7.9) million during the year ended December 31, 2023, was primarily due to changes in an increase in projected charge-offs due to a slowdown in the economy that impacted customer collections on the individual consumer loans in the portfolio.

During the years ended December 31, 2024, 2023 and 2022, fair value adjustments for the loan receivable from Exela Technologies, Inc. were $(0.7) million, $21.0 million, and $(20.2) million, respectively. The fair value adjustment of $21.0 million was primarily due to the payment of promissory note in full during year ended December 31, 2023 The fair value adjustment of $(20.2) million for the year ended December 31, 2022, was primarily due to deterioration in the collateral for the loan.

During the years ended December 31, 2024, 2023 and 2022, fair value adjustments for the loan receivable from Core Scientific, Inc. were $8.5 million, $34.7 million, and $(34.8) million, respectively. Core Scientific, Inc. provides digital infrastructure for bitcoin mining and high-performance computing. Core Scientific, Inc. filed Chapter 11 bankruptcy in 2022, leading to a significant mark down of the loan receivable in the fourth quarter of 2022. Subsequent to the Chapter 11 restructuring, and during the first quarter of 2023, there was a significant rebound in bitcoin prices resulting in significant growth and value assumptions. The $45.5 million of loans receivable from Core Scientific, Inc. (“Core Scientific”) at December 31, 2023 included a loan in the amount of $42.1 million that was settled in full upon Core Scientific’s exit from Chapter 11 bankruptcy in January 2024.

Wealth Management – We provide retail brokerage, investment management, and insurance, and tax preparation services to individuals and families, small businesses, non-profits, trusts, foundations, endowments, and qualified retirement plans through a boutique private wealth and investment management firm to meet the individual financial needs and goals of our customers. Our experienced financial advisors provide investment management, retirement planning, education planning, wealth transfer and trust coordination, and lending and liquidity solutions. Our investment strategists provide strategies and real-time market views and commentary to help our clients make important and informed financial and investment decisions. Wealth management revenues are comprised of the following:
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Year Ended
December 31,
2024 2023 2022
Revenues - Services and fees
Brokerage revenues $ 91,488  $ 88,866  $ 112,837 
Advisory revenues 77,307  73,904  85,768 
Other 28,673  30,717  32,130 
Total services and fees revenue
 197,468  193,487  230,735 
Trading income 3,278  4,758  3,522 
Total revenues
 $ 200,746  $ 198,245  $ 234,257 
Total assets under management were approximately $20.7 billion, $25.4 billion, and $23.9 billion at December 31, 2024, 2023, and 2022, respectively. Of these amounts, advisory assets under management totaled approximately $6.9 billion at December 31, 2024, and $8.0 billion at December 31, 2023, and $7.2 billion at December 31, 2022. Advisory revenues were 0.25%, 0.24%, and 0.32% of average advisory assets under management during the years ended December 31, 2024, 2023, and 2022, respectively. The average revenues earned on advisory assets under management are not expected to fluctuate significantly from period to period as a percentage of advisory assets under management. Broker revenues are primarily comprised of commissions and fees earned from trading activities from brokerage client assets. Other revenues are primarily comprised of tax service fees and management fees earned from comprehensive client focused services performed.

Financial Consulting Segment - We provide a variety of specialized advisory services spanning bankruptcy, restructuring, turnaround management, forensic accounting, crisis and litigation support, and operations management. On November 15, 2024, as more fully described in “—Recent Developments”, the Company entered into a transaction whereby approximately 52.6% of the common equity interests of a newly formed subsidiary that included the Company’s appraisal and valuation and real estate advisory services operations along with the Company’s auction and liquidations operations was sold to an investment management firm. These operations are included in discontinued operations as discussed in Note 4 to the accompanying consolidated financial statements and will be deconsolidated in future periods since B. Riley no longer has control and owns a non-controlling equity investment ownership interest of 44.2% in the business. On June 27, 2025, as more fully described in “—Recent Developments”, the Company signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber. The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117.8 million, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date. In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.

Communications Segment – We own a number of businesses that comprises our Communications Segment that we have acquired for attractive risk-adjusted investment return characteristics. We may pursue future acquisitions to expand this portfolio of businesses which currently includes: Lingo Management, LLC ("Lingo Management"), a global cloud/unified communications and managed service provider that includes the operations of BullsEye Telecom, Inc. ("BullsEye"), a single source communications and cloud technology provider previously merged into Lingo; Marconi Wireless Holdings, LLC ("Marconi Wireless"), a mobile virtual network operator that provides mobile phone voice, text, and data services and devices; magicJack VoIP Services, LLC ("magicJack"), a VoIP cloud-based technology and communications provider that offers related devices and subscription services; and United Online, Inc. ("UOL"), an Internet access provider that offers dial-up, mobile broadband and digital subscriber line services under the NetZero and Juno brands.

Consumer Products Segment – This segment is comprised of Tiger US Holdings, Inc. ("Targus"), which we acquired on October 18, 2022 and is a multinational company that, together with its subsidiaries, designs, manufactures, and sells consumer and enterprise productivity products with a large business-to-business (B2B) customer client base and global distribution in over 100 countries. The Targus product line includes laptop and tablet cases, backpacks, universal docking stations, and computer accessories.

E-Commerce Segment – This segment is comprised of Nogin, Inc. ("Nogin"), which is a technology platform operating e-commerce stores that delivers CaaS solutions for apparel brands and other retailers. The Company manages clients’ front-to-back-end operations of the e-commerce stores and also provides marketing services to their clients. The Company’s business model is based on providing a comprehensive e-commerce solution to its customers on a revenue sharing basis.
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Our operating results are primarily comprised of the operations of these businesses within our six reportable operating segments. However, we also generate revenues from other businesses that we may acquire with the goal to expand their operations, drive growth, and create operational efficiencies to improve cash flows to reinvest across other business operations in our platform. These businesses are typically in fragmented markets and include the operations of a regional environmental services business, and bebe which operates rent-to-own stores.

In prior years, we also generated operating revenues from an entity that was then a majority owned subsidiary of ours which licensed the trademarks and intellectual properties from ownership of six brands: Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore. We also generated other income from dividends we received from our then equity ownership of investments that ranged from 10% to 50% in companies that license the trademark and intellectual property of the Hurley, Justice, and Scotch & Soda brands as well as from our majority owned subsidiary bebe stores, inc. which owns the bebe and Brookstone brands. We also reported fair value adjustments from these equity investments since we elected to account for these equity investments using the fair value method of accounting. As of December 31, 2024, B. Riley no longer has control over these operations and are included as discontinued operations in the consolidated financial statements as of December 31, 2023, and for the years ended December 31, 2024, 2023, and 2022.

Securities and Other Investments Owned Portfolio – We have a portfolio of securities and other investments owned that consists of public equity securities, private securities, partnership interests and other investments, corporate bonds and other fixed income securities as follows at December 31, 2024 and 2023:

December 31,
2024		 December 31,
2023
Public Equity Securities:
Badcock & Wilcox Enterprises, Inc. - common stock $ 45,012  $ 40,072 
Badcock & Wilcox Enterprises, Inc. - preferred stock 1,528  6,386 
Alta Equipment Group, Inc. - common stock —  44,653 
Double Down Interactive Co., Ltd - common stock 43,706  30,439 
Synchronoss Technologies, Inc. - common stock 7,200  8,780 
Other public equities 27,446  64,211 
Total public equity securities 124,892  194,541 
Private Equity Securities:
Freedom VCM Holdings, LLC —  287,043 
Other private equities 107,616  229,993 
Total private equity securities 107,616  517,036 
Total equity securities 232,508  711,577 
Corporate bonds 29,027  59,287 
Other fixed income securities 4,923  2,989 
Partnership interest and other 15,867  35,196 
Total securities and other investments owned $ 282,325  $ 809,049 

Securities and other investments owned was $282.3 million and $809.0 million as of December 31, 2024 and December 31, 2023, respectively. Of this amount, the fair value of equity securities totaled $232.5 million and $711.6 million as of December 31, 2024 and December 31, 2023. Of these amounts, public equity securities totaled $124.9 million and $194.5 million as of December 31, 2024 and December 31, 2023, and private equity securities totaled $107.6 million and $517.0 million as of December 31, 2024 and December 31, 2023.

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The fair value of Badcock & Wilcox Enterprises, Inc. - common stock held as of held as of December 31, 2024 and December 31, 2023 was $45.0 million and $40.1 million, respectively. The change in fair value for the year ended December 31, 2024 is primarily related to an increase in the public share price during the period.

The fair value of Alta Equipment Group, Inc. common stock held as of December 31, 2023 was $44.7 million, and the Company sold the entire position in the first quarter of 2024 and recorded a loss of $(3.5) million. The sale was executed to raise additional capital to fund operating activities.

The fair value of our Double Down Interactive Co., Ltd common stock held as of December 31, 2024 and December 31, 2023 was $43.7 million and $30.4 million, respectively. The change in fair value for the year ended December 31, 2024 is primarily related to an increase in the public share price during the period.

The fair value of our investment in Freedom VCM Holdings, LLC, held as of December 31, 2024 and December 31, 2023 was zero and $287.0 million, respectively. During the year ended December 31, 2024, we recorded fair value adjustments of $(221.0) million primarily due to increases in net debt, declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc. common stock and impact of Conn's bankruptcy filing on July 23, 2024, and a decrease in the operational performance of Freedom VCM Holdings, LLC’s various business segments. The investment in Freedom VCM Holdings, LLC was also impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.

Realized and Unrealized Gains (Losses)
Year Ended
December 31,
2024 2023 2022
Other Income (Expense) - Realized & Unrealized Gains (Losses)
Public Equity Securities:
Babcock & Wilcox Enterprises, Inc. - common stock $ 1,181  $ (84,244) $ (49,583)
Babcock & Wilcox Enterprises, Inc. - preferred stock 1,830  (2,204) (9,105)
Alta Equipment Group, Inc. - common stock (3,537) 3,502  13,617 
Double Down Interactive Co., Ltd - common stock 11,977  (4,260) (26,662)
Synchronoss Technologies, Inc. - common stock 6,368  (3,392) — 
Franchise Group, Inc. - common stock —  —  (775)
Arena Group Holdings, Inc. - common stock —  (31,041) (6,101)
Other public equities (2,163) (15,634) (157,466)
Subtotal 15,656  (137,273) (236,075)
Private Equity Securities:
Freedom VCM Holdings, LLC (221,042) 4,542  — 
Other private equities (58,903) (30,334) (9,074)
Subtotal (279,945) (25,792) (9,074)
Corporate bonds 898  1,224  (3,671)
Partnership interest and other (295) (212) 1,280 
Total $ (263,686) $ (162,053) $ (247,540)

During the years ended December 31, 2024, 2023, and 2022, realized and unrealized losses of $(263.7) million, $(162.1) million, and $(247.5) million were recorded to other income as realized and unrealized losses on investments, respectively. These realized and unrealized losses are made up of realized and unrealized gains (losses) recorded to public equity securities, private equity securities, corporate bonds, and partnership interest and other investments. The majority of realized and unrealized (losses) gains on investments are related to public equity securities (equity securities that trade on major exchanges), and private equity securities.

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During the years ended December 31, 2024, 2023, and 2022, $15.7 million, $(137.3) million, and $(236.1) million of realized and unrealized gains (losses) were recorded for public equity securities to other income as realized and unrealized gains (losses) on investments. During the years ended December 31, 2024, 2023, and 2022, we recorded $1.2 million, $(84.2) million, and $(49.6) million, respectively, to realized and unrealized gains (losses) related to Babcock & Wilcox Enterprises, Inc. ("B&W") - common stock, primarily due to public share price movements during these periods.

During the years ended December 31, 2024, 2023, and 2022, we recorded $12.0 million, $(4.3) million, and $(26.7) million, respectively, to realized and unrealized gains (losses) related to Double Down Interactive Co., Ltd. primarily related to public share price movements during these periods.

During the years ended December 31, 2024, 2023, and 2022, $(279.9) million, $(25.8) million, and $(9.1) million of realized and unrealized losses were recorded for private equity securities to other income as realized and unrealized losses on investments. During the year ended December 31, 2024, we recorded $(221.0) million to realized and unrealized losses related to our investment in Freedom VCM Holdings, LLC. The entirety of the balances were related to fair value adjustments due primarily to increases in net debt as well as significant declines in Freedom VCM Holdings, LLC’s investment in Conn’s, Inc. common stock and impact of Conn's, Inc. bankruptcy filing on July 23, 2024, and a decrease in the operational performance of Freedom VCM Holdings, LLC’s various business segments. The investment in Freedom VCM Holdings, LLC was also impacted due to the filing of Freedom VCM’s voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024.
Recent Developments
Conn’s and FRG
The Company’s results during the year ended December 31, 2024 were negatively impacted by a significant non-cash markdown of $287.0 million related to its investment in Freedom VCM, the indirect parent entity for FRG. Freedom VCM’s strategy, which included the potential divestiture or monetization of certain assets, was materially negatively impacted by the unexpected announcement in November 2023 concerning FRG’s former CEO and his alleged involvement in fraudulent schemes despite the fact that these allegations are unrelated to FRG and its businesses. In the meantime, the consumer facing portion of the U.S. economy has deteriorated. On November 3, 2024, FRG, its operating businesses, and certain other affiliates, including Freedom VCM, filed the FRG Chapter 11 Cases under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. As a result, on November 4, 2024, we concluded that we were required to record an impairment (in addition to prior impairments) with respect to the Freedom VCM Investment and the Vintage Loan Receivable. The additional non-cash impairments of the Freedom VCM Investment and the Vintage Loan Receivable are $118.0 million in the aggregate as of November 4, 2024. As a result of such additional impairments, we have ascribed no value to the Freedom VCM Investment and the Vintage Loan Receivable was valued at $2.1 million at December 31, 2024, which approximates the fair value of the underlying collateral for this loan which is primarily comprised of other securities. Subsequent to December 31, 2024, the fair value of the underlying collateral for this loan, which is comprised of other public securities, decreased to a fair value of $1.3 million at September 16, 2025.
Additionally, on July 23, 2024, Conn’s and certain of its subsidiaries filed the Chapter 11 Cases under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. FRG, pursuant to a transaction consummated in January 2024, acquired a substantial equity investment in Conn’s in exchange for the sale of its Badcock Home Furniture & more business to Conn’s. The commencement of the Chapter 11 Cases constituted an event of default that accelerated the obligations under the Conn’s, among Conn’s, W.S. Badcock LLC, as borrowers, and an affiliate of the Company, as administrative agent, collateral agent, and lender. As of the date of the filing of the Chapter 11 Cases, $93.0 million in outstanding borrowings existed under the Conn’s Term Loan. Any efforts to enforce payment obligations under the Conn’s Term Loan were automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of the Conn’s Term Loan are subject to the applicable provisions of the Bankruptcy Code. The fair value of the Conn's loans receivable was $38.8 million as of December 31, 2024. The fair value adjustment on the Conn’s loan receivable was $(71.7) million for the year ended December 31, 2024.
Wealth Management

On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel for estimated net consideration based on the number of advisors that join Stifel at closing, among other things. Upon closing the transaction on April 4, 2025, the sale was completed for net cash consideration of $26.0 million, representing 36 financial advisors whose managed accounts represent approximately $4.0 billion, or 19.3%, of AUM as of December 31, 2024.
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Debt Financing and Repayment of Nomura Credit Facility
On February 26, 2025, the Company and the Company’s wholly owned subsidiary, BR Financial Holdings, LLC (the “BRFH Borrower”), entered into a new credit agreement with a group of funds indirectly or directly controlled by Oaktree Capital Management, L.P. with Oaktree Fund Administration, LLC, acting as the administrative agent and collateral agent. The new credit agreement provided for (i) a three-year $125.0 million secured term loan credit facility (the “Initial Term Loan Facility”) and (ii) a four-month $35.0 million secured delayed draw term loan credit facility (the “Delayed Draw Facility” and, together with the Initial Term Loan Facility, the “Credit Facility”). The proceeds from the Initial Term Loan Facility were primarily used (a) to repay the existing indebtedness under the Nomura Credit agreement discussed in Note 13, (b) for working capital and general corporate purposes and (c) to pay transaction fees and expenses. The proceeds of the Delayed Draw Facility were used (a) to fund obligations relating to the liquidation of substantially all of the assets of JOANN, Inc. and its subsidiaries and (b) for working capital and general corporate purposes.
Borrowings accrue interest at the adjusted term Secured Overnight Financing Rate ("SOFR") rate as defined in the Credit Facility with an applicable margin of 8.00%. In addition to paying interest on outstanding borrowings under the Credit Facility, the Company was required to pay (i) a closing fee of 3.00% of the aggregate principal amount of the loans under the Initial Term Loan Facility and 2.00% of the aggregate principal amount of the loans under the Delayed Draw Facility, and (ii) an exit fee upon the prepayment or repayment of the Credit Facility of 5.00% of the aggregate principal amount of such loans repaid, provided, that the Initial Term Loan Facility exit fee shall not be payable if the share price for the Company's common stock exceeds a certain threshold. The Credit Facility also contains a provision where the final $62.5 million of repayment of principal on the Initial Term Loan may be subject to an additional prepayment premium, as defined in the Credit Facility, if the prepayment occurs before the second anniversary date of the Credit Facility.
The Company issued warrants to certain affiliates of Oaktree Capital Management, L.P. in connection with the Credit Facility to purchase approximately 1,832,290 shares (or 6% on a fully diluted basis) of the Company’s common stock at an exercise price of $5.14 per share. The warrants contain certain anti-dilution provisions pursuant to which, under certain circumstances, the warrant holders would be entitled to exercise the warrants for up to 19.9% of the then-outstanding shares of the Company’s common stock.
Subject to certain eligibility requirements, certain assets of the BRFH Borrower are placed into a borrowing base (the “Borrowing Base”), which serves to limit the borrowings under the Credit Facility. The sale of an asset in the Borrowing Base requires the BRFH Borrower to make a prepayment in an amount equal to the proceeds of such disposition multiplied by the percentage “credit” that is assigned to such asset in the Borrowing Base. The BRFH Borrower may be obligated to prepay the loans or post cash in a controlled account in the event the Borrowing Base falls below a certain level as defined in the Credit Facility. The Credit Facility contains covenants that, among other things, limit the Company’s, the BRFH Borrower’s and the BRFH Borrower’s subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
Redemption of Senior Notes
On February 28, 2025 we redeemed all the issued and outstanding 6.375% 2025 Notes. The redemption price was equal to 100% of the aggregate principal amount, plus any accrued interest and unpaid interest up to, but excluding, the redemption date The total redemption payment included approximately $0.7 million accrued interest. In connection with the full redemption, the 6.375% 2025 Notes, which were listed on NASDAQ under the ticker symbol “RILYM,” were delisted from NASDAQ and ceased trading on the redemption date.
Sale of Atlantic Coast Recycling
On March 3, 2025, the Company and BR Financial, B. Riley Environmental Holdings, LLC and other indirect subsidiaries of the Company, which included the Atlantic Companies, entered into the MIPA. Pursuant to the MIPA, on March 3, 2025, the Interests owned by BR Financial and the minority holders were sold to a third party. The Interests were sold to the third party on March 3, 2025 for a purchase price of $102.5 million, subject to certain adjustments and a holdback amount pending receipt of a certain third party consent, resulting in cash proceeds of $68.6 million to the Company after adjustments for amounts allocated to non-controlling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction. Of the $68.6 million of cash proceeds received by the Company, approximately $22.6 million was used to pay interest, fees, and principal on the Credit Facility discussed above.
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A gain of $52.7 million was recognized in the first quarter of 2025 from this sale.
B. Riley Securities Holdings, Inc. Equity Issuance
On March 10, 2025, the Company’s wholly-owned subsidiary B. Riley Securities Holdings, Inc. ("BRSH") which is comprised of the broker dealer operations within the Capital Markets segment merged with a shell corporation and issued 0.6% of the equity in BRSH to certain investors in the shell corporation and upon completion of the transaction became minority stockholders of BRSH. Simultaneously with the merger with the shell corporation, BRSH approved the BRSH Stock Plan and issued restricted stock awards to employees and officers of BRSH which represented 10.0% of the equity of BRSH that vest over a period of four to five years. Assuming the full issuance of the restricted stock awards, the Company continues to own 89.4% of BRSH.
Exchange of Senior Notes
On March 26, 2025, the Company completed a private exchange transaction with an institutional investor pursuant to which the investor exchanged $86.3 million of aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026 and $36.7 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026 owned by it for approximately $87.8 million aggregate principal amount of 8.00% Senior Secured Second Lien Notes due 2028 (the "New Notes"), whereupon the exchanged notes were cancelled. In addition, on April 7, 2025, the Company completed a private exchange transaction with a certain institutional investor pursuant to which the investor exchanged approximately $22.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for approximately $10.0 million aggregate principal amount of the New Notes. On May 21, 2025, the Company completed a private exchange transaction with a certain institutional investor to exchange principal amounts of approximately $29.5 million, $75.0 million, and $34.5 million of the Company's 5.50% Senior Notes due March 2026, 5.00% Senior Notes due December 2026, and 6.00% Senior Notes due January 2028, respectively, for approximately $93.1 million aggregate principal amount of the New Notes. On June 30, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $28.0 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $13.0 million aggregate principal amount of the New Notes. On July 11, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $42.8 million aggregate principal amount of the Company’s 6.50% Senior Notes due September 2026, 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $24.6 million aggregate principal amount of the New Notes.
The New Notes were issued pursuant to an indenture, dated as of March 26, 2025 (the “Indenture”), between the Company, certain subsidiaries of the Company, as guarantors, and GLAS Trust Company LLC, a New Hampshire limited liability company, as trustee and collateral agent (in such capacities, the “Trustee”), and the New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries (collectively, the “Guarantors”). The New Notes are secured on a second lien basis, junior to the obligations under the Company’s Credit Facility, by substantially all of the assets of the Company and the Guarantors. The New Notes are subordinated in right of payment to the payment in full of the obligations under the Company’s Credit Facility.
The New Notes accrue interest at a rate of 8.00% per annum, payable semi-annually in arrears on April 30 and October 31, starting October 31, 2025. The New Notes mature on January 1, 2028. The Company may redeem the New Notes (i) at any time, in whole or in part, before March 26, 2026, at a redemption price equal to 100% of the aggregate principal amount being redeemed, plus a customary make-whole premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date; and (ii) at any time, in whole or in part, after March 26, 2026, at a redemption price equal to 100% of the aggregate principal amount being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The New Notes contain change of control provisions, whereby the holders of the New Notes have the right to require the Company to repurchase all or a portion of the New Notes at a purchase price, in cash, equal to 101% of the principal amount thereof, plus accrued and unpaid interest. In addition, if the Company or its restricted subsidiaries engage in certain asset sales and do not invest such proceeds or permanently reduce certain debt within a specified period of time, the Company will be required to use a portion of the proceeds of such asset sales above a specified threshold to make an offer to purchase the New Notes at a price equal to 100% of the principal amount of the New Notes being purchased, plus accrued and unpaid interest.
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The Indenture contains certain covenants that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
Nogin
On March 31, 2025, the Company signed a Deed of Assignment for the Benefit of Creditors, (i) pursuant to which all of the assets of Nogin were transferred to an assignee for the benefit of Nogin’s creditors, and (ii) which provides the assignee the right to, among other things, sell or dispose of such assets and settle all claims against Nogin. The Company no longer controls or owns the assets of Nogin and the results of operations will no longer be reported in the Company’s financial statements after March 31, 2025.
Sale of GlassRatner and Farber
On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests GlassRatner and Farber. The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117.8 million, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date. In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.
Targus/FGI Credit Agreement
On August 20, 2025, Targus (the "Targus Borrower") and certain of the Targus Borrowers' direct and indirect subsidiaries (the “FGI Loan Parties”) entered into a Revolving Credit, Receivables Purchase, Security and Guaranty Agreement (the “Targus/FGI Credit Agreement”) with FGI Worldwide LLC (“FGI”), as agent and for a three-year $30.0 million revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement with PNC. The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028.
The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term SOFR for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee.
The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Targus Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement.
As required under the Targus/FGI Credit Agreement, B. Riley Commercial Capital, LLC, a wholly owned subsidiary of the Company ("BRCC"), entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.

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Results of Operations
The following period to period comparisons of our financial results are not necessarily indicative of future results.

Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
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Consolidated Statements of Operations
(Dollars in thousands)
Year Ended
December 31, 2024		 Year Ended
December 31, 2023		 Change
Amount % Amount % Amount %
Revenues:
Services and fees $ 875,480  104.3  % $ 898,750  61.3  % $ (23,270) (2.6) %
Trading (loss) income (57,007) (6.8) % 21,603  1.5  % (78,610) n/m
Fair value adjustments on loans (325,498) (38.8) % 20,225  1.4  % (345,723) n/m
Interest income - loans 54,141  6.5  % 123,244  8.4  % (69,103) (56.1) %
Interest income - securities lending 70,862  8.5  % 161,652  11.0  % (90,790) (56.2) %
Sale of goods 220,619  26.3  % 240,303  16.4  % (19,684) (8.2) %
Total revenues 838,597  100.0  % 1,465,777  100.0  % (627,180) (42.8) %
Operating expenses:
Direct cost of services 213,901  25.5  % 214,065  14.6  % (164) (0.1) %
Cost of goods sold 167,634  20.0  % 172,836  11.8  % (5,202) (3.0) %
Selling, general and administrative expenses 759,777  90.6  % 764,926  52.2  % (5,149) (0.7) %
Restructuring charge 1,522  0.2  % 2,131  0.1  % (609) (28.6) %
Impairment of goodwill and other intangible assets
 105,373  12.6  % 70,333  4.8  % 35,040  49.8  %
Interest expense - Securities lending and loan participations sold 66,128  7.9  % 145,435  9.9  % (79,307) (54.5) %
Total operating expenses 1,314,335  156.8  % 1,369,726  93.4  % (55,391) (4.0) %
Operating (loss) income (475,738) (56.8) % 96,051  6.6  % (571,789) n/m
Other income (expense):
Interest income 3,621  0.4  % 3,875  0.3  % (254) (6.6) %
Dividend income 4,462  0.5  % 12,747  0.9  % (8,285) (65.0) %
Realized and unrealized losses on investments (263,686) (31.4) % (162,053) (11.1) % (101,633) 62.7  %
Change in fair value of financial instruments and other 4,614  0.6  % (3,998) (0.3) % 8,612  n/m
Gain on bargain purchase —  —  % 15,903  1.1  % (15,903) (100.0) %
Income (loss) from equity method investments 31  —  % (152) —  % 183  (120.4) %
Loss on extinguishment of debt (18,725) (2.2) % (5,409) (0.4) % (13,316) n/m
Interest expense (133,308) (15.9) % (156,240) (10.7) % 22,932  (14.7) %
Loss from continuing operations before income taxes (878,729) (104.8) % (199,276) (13.6) % (679,453) n/m
 (Provision for) benefit from income taxes (22,125) (2.6) % 39,115  2.7  % (61,240) (156.6) %
Loss from continuing operations (900,854) (107.4) % (160,161) (10.9) % (740,693) n/m
Income from discontinued operations, net of income taxes 125,915  15.0  % 54,530  3.7  % 71,385  130.9  %
Net loss (774,939) (92.4) % (105,631) (7.2) % (669,308) n/m
Net loss attributable to noncontrolling interests (10,665) (1.3) % (5,721) (0.4) % (4,944) 86.4  %
Net loss attributable to B. Riley Financial, Inc. (764,274) (91.1) % (99,910) (6.8) % (664,364) n/m
Preferred stock dividends 8,060  1.0  % 8,057  0.5  % 3  —  %
Net loss available to common shareholders $ (772,334) (92.1) % $ (107,967) (7.4) % $ (664,367) n/m
n/m - Not applicable or not meaningful.
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Revenues
The table below and the discussion that follows are based on how we analyze our business.
Year Ended
December 31, 2024		 Year Ended
December 31, 2023		 Change
Amount % Amount % Amount %
Services and fees:
Capital Markets segment $ 192,499  22.8  % $ 249,036  17.0  % $ (56,537) (22.7) %
Wealth Management segment 197,468  23.5  % 193,487  13.2  % 3,981  2.1  %
Financial Consulting segment 92,176  11.0  % 77,283  5.3  % 14,893  19.3  %
Communications segment 289,435  34.5  % 330,952  22.6  % (41,517) (12.5) %
E-Commerce segment 13,855  1.7  % —  —  % 13,855  100.0  %
All Other 90,047  10.7  % 47,992  3.3  % 42,055  87.6  %
Subtotal 875,480  104.2  % 898,750  61.4  % (23,270) (2.6) %
Trading (loss) income:
Capital Markets segment (60,285) (7.2) % 16,845  1.1  % (77,130) n/m
Wealth Management segment 3,278  0.4  % 4,758  0.3  % (1,480) (31.1) %
Subtotal (57,007) (6.8) % 21,603  1.4  % (78,610) n/m
Fair value adjustments on loans:
Capital Markets segment (325,498) (38.8) % 20,225  1.4  % (345,723) n/m
Interest income - loans:
Capital Markets segment 54,141  6.5  % 123,244  8.4  % (69,103) (56.1) %
Interest income - securities lending:
Capital Markets segment 70,862  8.5  % 161,652  11.0  % (90,790) (56.2) %
Sale of goods:
Communications segment 5,589  0.7  % 6,737  0.5  % (1,148) (17.0) %
Consumer Products segment 202,597  24.2  % 233,202  15.9  % (30,605) (13.1) %
E-Commerce segment 10,646  1.3  % —  —  % 10,646  100.0  %
All Other 1,787  0.2  % 364  —  % 1,423  n/m
Subtotal 220,619  26.4  % 240,303  16.4  % (19,684) (8.2) %
Total revenues $ 838,597  100.0  % $ 1,465,777  100.0  % $ (627,180) (42.8) %
n/m - Not applicable or not meaningful.
Total revenues decreased approximately $627.2 million to $838.6 million during the year ended December 31, 2024 from $1.5 billion during the year ended December 31, 2023. The decrease in revenues during the year ended December 31, 2024 was primarily due to a decrease in fair value adjustments on loans of $345.7 million, decrease in interest income from securities lending of $90.8 million, higher trading losses of $78.6 million, decrease in interest income from loans of $69.1 million, lower revenue from services and fees of $23.3 million, and lower revenue from sale of goods of $19.7 million. The $345.7 million decrease in fair value adjustments related to loans was primarily driven by unfavorable changes in fair value adjustments of $222.9 million related to the loan to Vintage Capital Management, LLC, $72.2 million related to the loan to Conn’s, $26.2 million related to Core Scientific, Inc., $13.9 million related to the loan to Freedom VCM, and the remaining decrease in fair value adjustments of $10.5 million related to other loans.
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The decrease in revenue from services and fees of $23.3 million was primarily due to decreases of $56.5 million in the Capital Markets segment and $41.5 million in the Communications segment, partially offset by increases of $42.1 million in All Other, $14.9 million in the Financial Consulting segment, $13.9 million in the E-Commerce segment and $4.0 million in the Wealth Management segment.
Revenues from services and fees in the Capital Markets segment decreased approximately $56.5 million, to $192.5 million during the year ended December 31, 2024 from $249.0 million during the year ended December 31, 2023. The decrease in revenues was primarily due to decreases in revenue of $36.1 million in corporate finance, consulting, and investment banking fees, $9.5 million in commission fees, $6.7 million in dividends, $3.0 million in interest income and $2.0 million in other income, partially offset by an increase of $0.7 million in asset management fees.
Revenues from services and fees in the Wealth Management segment increased $4.0 million, to $197.5 million during the year ended December 31, 2024 from $193.5 million during the year ended December 31, 2023. The increase in revenues was primarily due to increases in revenue of $3.2 million from wealth and asset management fees, and $1.3 million in other income, partially offset by a decrease of $0.5 million in commission fees.

Revenues from services and fees in the Financial Consulting segment increased $14.9 million, to $92.2 million during the year ended December 31, 2024 from $77.3 million during the year ended December 31, 2023. The increase in revenues was primarily due to an increase of $21.0 million from the bankruptcy and restructuring, forensic and litigation, C&W, Interface Consulting and Farber divisions, partially offset by a decrease in revenues of $6.1 million from the automotive restructuring and finance and valuations divisions.
Revenues from services and fees in the Communications segment decreased $41.5 million to $289.4 million during the year ended December 31, 2024 from $331.0 million during the year ended December 31, 2023. The decrease in revenues was primarily due to a decrease of $40.4 million in subscription services partially due to $18.8 million from the Lingo/Bullseye carrier business which was divested in the third quarter of 2024 and other revenue of $1.1 million. We expect Communications segment revenue to continue to decline year over year.
Revenues from services and fees in the E-Commerce segment were $13.9 million during the year ended December 31, 2024. These revenues include commission fees from Nogin, which we acquired in the second quarter of 2024,
Revenues from services and fees in All Other increased by $42.1 million to $90.0 million during the year ended December 31, 2024 from $48.0 million during the year ended December 31, 2023. These revenues include merchandise rental fees and sales from bebe in which we acquired a controlling interest during the fourth quarter of 2023, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022. Revenues from services and fees in All Other increased by approximately $39.3 million related to merchandise rental fees from bebe, $10.1 million related to the operations of the regional environmental services business, and $0.6 million in other income, partially offset by a decrease of $8.0 in revenues from the landscaping business, which was sold in the third quarter of 2023.
Trading (loss) income decreased $78.6 million to a loss of $57.0 million during the year ended December 31, 2024 compared to income of $21.6 million during the year ended December 31, 2023. This was primarily due to decreases of $77.1 million in the Capital Markets segment and $1.5 million in the Wealth Management segment. The loss of $57.0 million during the year ended December 31, 2024 was primarily due to $64.6 million in realized loss on Freedom VCM.
The decrease in fair value adjustment of $345.7 million on our loans receivable during the year ended December 31, 2024 was primarily driven by unfavorable changes in fair value adjustments of $222.9 million related to the loan to VCM, $72.2 million related to the loan to Conn’s, $26.2 million related to Core Scientific, Inc., $13.9 million related to the loan to Freedom VCM, and the remaining decrease in fair value adjustments of $10.5 million related to other loans.
Interest income from loans decreased $69.1 million to $54.1 million during the year ended December 31, 2024 from $123.2 million during the year ended December 31, 2023. The decrease was due to a reduction in loan receivable balances from $532.4 million as of December 31, 2023 to $90.1 million as of December 31, 2024.
Interest income from securities lending decreased $90.8 million to $70.9 million during the year ended December 31, 2024 from $161.7 million during the year ended December 31, 2023. The decrease was due to a decrease in the securities borrowed balance from $2.9 billion as of December 31, 2023 to $43.0 million as of December 31, 2024 and business decline due to counterparties constraining their business activity with the Company.
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Revenues from the sale of goods decreased $19.7 million, to $220.6 million during the year ended December 31, 2024 from $240.3 million during the year ended December 31, 2023. The decrease in revenues from sale of goods was primarily due to decreases of $30.6 million from the Consumer Products segment due to a decrease in computer and peripheral sales worldwide and a decrease of $1.1 million from the Communications segment, partially offset by increases of $10.6 million from the E-Commerce segment, consisting of sale of goods from Nogin, which we acquired in the second quarter of 2024 and $1.4 million from All Other, consisting of sale of goods from bebe, in which we acquired a controlling interest and consolidated during the fourth quarter of 2023.
Operating Expenses
Direct cost of services
Direct costs decreased $0.2 million, to $213.9 million during the year ended December 31, 2024 from $214.1 million during the year ended December 31, 2023. The decrease in direct costs of services was primarily attributable to a decrease of $18.7 million in the Communications segment, mostly offset by increases of $12.1 million in All Other, primarily from bebe which we acquired a controlling interest and consolidated during the fourth quarter of 2023, and $6.4 million in the E-Commerce segment from Nogin, which we acquired in the second quarter of 2024.
Cost of goods sold
Cost of goods sold during the year ended December 31, 2024 decreased by $5.2 million to $167.6 million, from $172.8 million during the year ended December 31, 2023. The decrease of $5.2 million is primarily comprised of a decrease in cost of goods sold of $12.0 million in the Consumer Products segment and $1.8 million in the Communications segment, partially offset by increases of $7.0 million from the E-Commerce segment consisting of Nogin, which we acquired in the second quarter of 2024, and $1.6 million from All Other and consisting of bebe, which we acquired a controlling interest and consolidated during the fourth quarter of 2023.
Selling, general and administrative expenses
Selling, general and administrative expenses during the years ended December 31, 2024 and 2023 were comprised of the following:
Year Ended
December 31, 2024		 Year Ended
December 31, 2023		 Change
Amount % Amount % Amount %
Capital Markets segment $ 181,699  24.0  % $ 228,991  30.0  % $ (47,292) (20.7) %
Wealth Management segment 194,316  25.6  % 195,087  25.5  % (771) (0.4) %
Financial Consulting segment 74,578  9.8  % 64,366  8.4  % 10,212  15.9  %
Communications segment 94,084  12.4  % 109,583  14.3  % (15,499) (14.1) %
Consumer Products segment 69,515  9.1  % 77,147  10.1  % (7,632) (9.9) %
E-Commerce segment
 25,310  3.3  % —  —  % 25,310  100.0  %
Corporate and Other 120,275  15.8  % 89,752  11.7  % 30,523  34.0  %
Total selling, general & administrative expenses $ 759,777  100.0  % $ 764,926  100.0  % $ (5,149) (0.7) %
Total selling, general and administrative expenses decreased $5.1 million to $759.8 million during the year ended December 31, 2024 from $764.9 million during the year ended December 31, 2023. The decrease of $5.1 million in selling, general and administrative expenses was due to decreases of $47.3 million in the Capital Markets segment, $15.5 million in the Communications segment, $7.6 million in the Consumer Products segment, and $0.8 million in the Wealth Management segment, mostly offset by increases of $25.3 million in the E-Commerce segment, $30.5 million in Corporate and Other, and $10.2 million in the Financial Consulting segment.
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Capital Markets
Selling, general and administrative expenses in the Capital Markets segment decreased by $47.3 million to $181.7 million during the year ended December 31, 2024 from $229.0 million during the year ended December 31, 2023. The decrease was primarily due to decreases of $31.0 million in employee compensation and benefits, which primarily related to decreases in share based compensation, salaries, commissions and bonuses, $15.0 million in professional services, of which $12.9 million related to an advisory agreement which ended in August of 2023, $3.3 million in clearing and execution charges, $2.8 million in investment banking deal expenses, and $1.1 million in occupancy and related expenses, partially offset by an increase of $4.9 million in change in fair value of contingent consideration and increase of $1.0 million in foreign currency fluctuations.
An advisory agreement was terminated in August 2023 in connection with the FRG take private transaction, as more fully described in Note 2(t) to the consolidated financial statements, and there was no expense during the year ended December 31, 2024 as compared to the prior year when the expense totaled $12.9 million. For any given reporting period in 2023, the advisory agreement would result in an expense being reported in selling, general and administrative expenses when realized and unrealized gains on certain invested balances in the Company’s broker-dealer subsidiary exceeded a minimum return on the invested balances during such period; in addition, a decrease in the invested balance in value during such reporting period would result in the reporting of a credit to selling, general and administrative expense. During the year ended December 31, 2023, the Company recorded an advisory fee of $12.9 million in accordance with the advisory agreement due to the realized and unrealized gains earned.
Wealth Management
Selling, general and administrative expenses in the Wealth Management segment decreased by $0.8 million to $194.3 million during the year ended December 31, 2024 from $195.1 million during the year ended December 31, 2023. The decrease was primarily due to decreases of $2.5 million in occupancy and related expenses, $2.1 million in other expenses, and $0.6 million in change in fair value of contingent consideration, partially offset by an increase of $4.4 million in employee compensation and benefits, primarily related to commissions paid.
Financial Consulting
Selling, general and administrative expenses in the Financial Consulting segment increased by $10.2 million to $74.6 million during the year ended December 31, 2024 from $64.4 million during the year ended December 31, 2023. The increase was due to increases of $6.8 million in employee compensation and benefits, related to a business acquired in the third quarter of 2023, an increase in headcount, and an increase in variable compensation, $1.4 million in change in fair value of contingent consideration, $1.1 million in other expenses, and $0.9 million in legal settlements.
Communications
Selling, general and administrative expenses in the Communications segment decreased by $15.5 million to $94.1 million during the year ended December 31, 2024 from $109.6 million during the year ended December 31, 2023. The decrease was primarily due to decreases of $9.7 million in employee compensation and benefits, due to lower headcount, $4.4 million in depreciation and amortization expenses due to items being fully amortized, $1.8 million in regulatory taxes due to receiving credits, and $1.7 million in occupancy and related expenses, partially offset by an increase of $1.3 million in professional services and $0.8 million in other expenses. The decrease in employee compensation and benefits and other expenses was primarily due to cost savings in 2024 resulting from the implementation of cost savings programs in the second half of 2023 that included a reduction in headcount and other operating expenses and sale of the Lingo carrier business in the third quarter of 2024.
Consumer Products
Selling, general and administrative expenses in the Consumer Products segment decreased by $7.6 million to $69.5 million during the year ended December 31, 2024 from $77.1 million during the year ended December 31, 2023. The decrease was primarily due to decreases of $1.9 million in depreciation and amortization expense due to items being fully amortized, $1.5 million in professional services, $1.4 million in employee compensation and benefits due to reduced headcount and a reversal of performance based shares in the prior year, $0.7 million in travel and entertainment expenses, and $0.7 million in marketing costs, and $1.4 million in other expenses.
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E-Commerce
Selling, general and administrative expenses for the E-Commerce segment increased by $25.3 million during the year ended December 31, 2024 from Nogin which was acquired in the second quarter of 2024.
Corporate and Other
Selling, general and administrative expenses for the Corporate and Other category increased $30.5 million to $120.3 million during the year ended December 31, 2024 from $89.8 million during the year ended December 31, 2023. The increase was primarily due to increases of $16.6 million in professional services, of which $2.2 million was attributable to new acquisitions, and $6.7 million in occupancy related expenses, of which $6.6 million was attributable to new acquisitions, partially offset by a decrease of $1.2 million in employee compensation and benefits, of which $16.0 million primarily related to decreases in share based compensation and other variable compensation, mostly offset by an increase of $14.8 million attributable to new acquisitions. Other selling, general and administrative expenses increased $7.6 million from bebe, which we acquired a controlling interest and consolidated during the fourth quarter of 2023, $2.1 million from the regional environmental services business, $3.9 million in transaction costs, $1.7 million in legal settlements, and $0.6 million in other expenses. These increases in other selling, general and administrative expenses were partially offset by $2.1 million related to the landscaping business that was sold in 2023, decreases of $4.1 million in foreign currency fluctuations, and a $1.3 million change in the fair value of contingent consideration.
Impairment of goodwill and other intangible assets. We recognized impairment charges of $105.4 million during the year ended December 31, 2024. We performed an interim impairment test as of June 30, 2024 and annual impairment tests as of December 31 2024, as further discussed in Note 10 of the consolidated financial statements. Based on the results of the impairment tests, we recorded non-cash impairment charges of $26.7 million related to goodwill and $5.0 million related to tradenames in the Consumer Products segment and $57.7 million related to goodwill and $16.0 million related to other intangible assets in the E-Commerce segment. We recognized impairment charges of $70.3 million during the year ended December 31, 2023. We performed an interim impairment test as of September 30, 2023 and a year-end impairment test as of December 31, 2023, as further discussed in Note 10 of the consolidated financial statements. Based on the results of the impairment tests, we recorded a non-cash impairment charge of $68.6 million consisting of a goodwill impairment charge of $53.1 million and a tradename impairment charge of $15.5 million in the Consumer Products segment. We previously recognized $1.7 million in impairment in the second quarter of 2023 for a tradename in the Capital Markets segment that we no longer use.
Interest expense - Securities lending and loan participations sold. Interest expense - Securities lending and loan participation sold decreased $79.3 million to $66.1 million during the year ended December 31, 2024 from $145.4 million during the year ended December 31, 2023. The decrease was due to a decrease in the securities loaned and loan participations sold balances from $2.9 billion as of December 31, 2023 to $33.9 million as of December 31, 2024 as a result of a decline in our securities lending activities due to counterparties constraining their business activity with the Company.
Other Income (Expense). Other income included interest income of $3.6 million during the year ended December 31, 2024 compared to $3.9 million during the year ended December 31, 2023. Dividend income was $4.5 million during the year ended December 31, 2024 compared to $12.7 million during the year ended December 31, 2023, due to sales of securities investments, $5.4 million of which was related to Synchronoss Technologies, Inc. ("Synchronoss") as more fully discussed in Note 2(t) to the consolidated financial statements. Realized and unrealized losses on investments were $263.7 million during the year ended December 31, 2024 compared to $162.1 million during the year ended December 31, 2023. The change was primarily due to a decrease in overall values of our investments. Change in fair value of financial instruments and other in the amount of $4.6 million during the year ended December 31, 2024 was primarily due to $2.5 million of gain on the sale of a retail location. Change in fair value of financial instruments and other in the amount of $4.0 million during the year ended December 31, 2023 was primarily due to losses on remeasurement of the bebe equity method investment of $12.9 million recorded in the third quarter of 2023, partially offset by a $9.3 million gain on the sale of certain assets related to our landscaping business in 2023. Gain on bargain purchase of $15.9 million during the year ended December 31, 2023 was related to the acquisition of a majority interest in bebe in the fourth quarter of 2023. Income from equity method investments was zero during the year ended December 31, 2024 compared to a loss of $0.2 million during the year ended December 31, 2023. Loss on extinguishment of debt was $18.7 million during the year ended December 31, 2024 compared to $5.4 million during the year ended December 31, 2023. The loss on extinguishment of debt was primarily from accelerated paydowns of the Nomura facility.
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Interest expense was $133.3 million during the year ended December 31, 2024 compared to $156.2 million during the year ended December 31, 2023. The decrease in interest expense was due to lower debt balances during the year ended December 31, 2024. The decreases in interest expense primarily consisted of $14.4 million from the Capital Markets segment, $2.3 million from the Communications segment, $3.7 million from the Consumer Products segment and $3.7 million from Corporate and other, partially offset by an increase of $1.1 million from the E-Commerce segment.
Loss from Continuing Operations Before Income Taxes. Loss from continuing operations before income taxes increased $679.5 million to a loss of $878.7 million during the year ended December 31, 2024 from a loss of $199.3 million during the year ended December 31, 2023. The change was primarily due to a decrease in revenues of approximately $627.2 million, a change in realized and unrealized losses on investments and fair value adjustments of $101.6 million, a 2023 gain on bargain purchase of $15.9 million, a decrease in dividend income of $8.3 million, and a decrease in interest income of $0.3 million, partially offset by a decrease in operating expenses of $55.4 million, a decrease in interest expense of $22.9 million, an increase to change in fair value of financial instruments and other of $8.6 million and an increase in income from equity method investments of $0.2 million.
(Provision for) Benefit from Income Taxes. Provision for income taxes was $22.1 million during the year ended December 31, 2024 compared to a benefit from income taxes of $39.1 million during the year ended December 31, 2023. The effective income tax rate was expense of 2.5% during the year ended December 31, 2024 as compared to a benefit of 19.6% during the year ended December 31, 2023.The provision for income taxes and the effective income tax rate were unfavorably impacted as a result of an increase in the valuation allowance for deferred tax assets in 2024.
Loss from Continuing Operations. Loss from continuing operations was $900.9 million during the year ended December 31, 2024 compared to loss of $160.2 million during the year ended December 31, 2023. The change was due to a change in operating (loss) income of $571.8 million, an increase in realized and unrealized losses on investments of $101.6 million, a change in provision for income taxes of $61.2 million, a 2023 gain on bargain purchase of $15.9 million, a decrease of $8.3 million in dividend income, and a decrease of $0.3 million in interest income, partially offset by a decrease in interest expense of $22.9 million, an increase to change in fair value of financial instruments and other of $8.6 million and an increase in income from equity method investments of $0.2 million.

Income from Discontinued Operations, Net of Income Taxes. On October 25, 2024, we and our subsidiary bebe have completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds. The results have been presented as discontinued operations for the year ended December 31, 2024. Loss from discontinued operations, net of tax for Brands Transaction was $109.6 million during the year ended December 31, 2024 compared to income from discontinued operations of $48.6 million during the year ended December 31, 2023. The loss from discontinued operations is primarily due to realized and unrealized losses incurred on the brand equity investments during the year ended December 31, 2024 from the planned securitization transaction and sale of equity investments by the Company’s majority owned subsidiary bebe, as more fully discussed in Note 4 to the consolidated financial statements.
On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the year ended December 31, 2024. Income from discontinued operations, net of tax, for Great American Group was $235.6 million for the year ended December 31, 2024, compared to income from discontinued operations, net of tax, of $6.0 million during the year ended December 31, 2023. The $229.6 million favorable variance was primarily driven by the $258.3 million gain recognized from the sale of the Great American Group, partially offset by a $31.8 million decrease in operating income driven by lower sales of goods. Refer to Note 4 to the consolidated financial statements for additional information.
Net Loss Attributable to Noncontrolling Interest and Redeemable Noncontrolling Interests. Net loss attributable to noncontrolling interests and redeemable noncontrolling interests represents the proportionate share of net income generated by membership interests of partnerships that we do not own. The net loss attributable to noncontrolling interests and redeemable noncontrolling interests was $10.7 million during the year ended December 31, 2024 compared to loss of $5.7 million during the year ended December 31, 2023.
Net Loss Attributable to the Company. Net loss attributable to the Company during the year ended December 31, 2024 was $764.3 million compared to net loss attributable to the Company of $99.9 million during the year ended December 31, 2023. The change was primarily due to a decrease in operating income of $571.8 million, a change in realized and unrealized losses on investments and fair value adjustments of $101.6 million, a change in the provision for income taxes of $61.2 million, a 2023 gain on bargain purchase of $15.9 million, a decrease in dividend income of $8.3 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $4.9 million, and a decrease in interest income of $0.3 million, partially offset by a decrease in interest expense of $22.9 million, an increase in change in fair value of financial instruments and other of $8.6 million, and an increase in income from equity method investments of $0.2 million.
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Preferred Stock Dividends. Preferred stock dividends were $8.1 million during the years ended December 31, 2024 and 2023. Dividends on the Series A preferred paid during the years ended December 31, 2024 and 2023 were $0.4296875 per depository share. Dividends on the Series B preferred paid during the years ended December 31, 2024 and 2023 were $0.4609375 per depository share. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A and B Preferred Stock. Unpaid dividends will accrue until paid in full.
Net Loss Available to Common Shareholders. Net loss available to common shareholders during the year ended December 31, 2024 was $772.3 million compared to net loss available to common shareholders of $108.0 million during the year ended December 31, 2023. The change was primarily due to a decrease in operating income of $571.8 million, a change in realized and unrealized losses on investments of $101.6 million, a change in the provision for income taxes of $61.2 million, a 2023 gain on bargain purchase of $15.9 million, a decrease in dividend income of $8.3 million, a change in net loss attributable to noncontrolling interests and redeemable noncontrolling interests of $4.9 million, and a decrease in interest income of $0.3 million, partially offset by a decrease in interest expense of $22.9 million, an increase in change in fair value of financial instruments and other of $8.6 million, and an increase in income from equity method investments of $0.2 million.

Results of Operations
The following period to period comparisons of our financial results are not necessarily indicative of future results.

Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
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Consolidated Statements of Operations
(Dollars in thousands)
Year Ended
December 31, 2023		 Year Ended
December 31, 2022		 Change
Amount % Amount % Amount %
Revenues:
Services and fees $ 898,750  61.3  % $ 815,951  86.9  % $ 82,799  10.1  %
Trading income (loss) 21,603  1.5  % (148,294) (15.8) % 169,897  (114.6) %
Fair value adjustments on loans 20,225  1.4  % (54,334) (5.8) % 74,559  (137.2) %
Interest income - loans 123,244  8.4  % 157,669  16.8  % (34,425) (21.8) %
Interest income - securities lending 161,652  11.0  % 83,144  8.8  % 78,508  94.4  %
Sale of goods 240,303  16.4  % 85,347  9.1  % 154,956  181.6  %
Total revenues 1,465,777  100.0  % 939,483  100.0  % 526,294  56.0  %
Operating expenses:
Direct cost of services 214,065  14.6  % 118,535  12.6  % 95,530  80.6  %
Cost of goods sold 172,836  11.8  % 60,754  6.5  % 112,082  184.5  %
Selling, general and administrative expenses 764,926  52.2  % 654,826  69.7  % 110,100  16.8  %
Restructuring charge 2,131  0.1  % 9,011  1.0  % (6,880) (76.4) %
Impairment of goodwill and other intangible assets 70,333  4.8  % —  —  % 70,333  100.0  %
Interest expense - Securities lending and loan participations sold 145,435  9.9  % 66,495  7.1  % 78,940  118.7  %
Total operating expenses 1,369,726  93.4  % 909,621  96.9  % 460,105  50.6  %
Operating income 96,051  6.6  % 29,862  3.1  % 66,189  n/m
Other income (expense):
Interest income 3,875  0.3  % 2,735  0.3  % 1,140  41.7  %
Dividend income 12,747  0.9  % 7,851  0.8  % 4,896  62.4  %
Realized and unrealized losses on investments (162,053) (11.1) % (247,540) (26.3) % 85,487  (34.5) %
Change in fair value of financial instruments and other (3,998) (0.3) % 10,188  1.1  % (14,186) (139.2) %
Gain on bargain purchase 15,903  1.1  % —  —  % 15,903  100.0  %
(Loss) income from equity method investments (152) —  % 3,570  0.4  % (3,722) (104.3) %
Loss on extinguishment of debt (5,409) (0.4) % —  —  % (5,409) 100.0  %
Interest expense (156,240) (10.7) % (141,003) (15.0) % (15,237) 10.8  %
Loss from continuing operations before income taxes (199,276) (13.6) % (334,337) (35.6) % 135,061  (40.4) %
Benefit from income taxes 39,115  2.7  % 65,252  6.9  % (26,137) (40.1) %
Loss from continuing operations (160,161) (10.9) % (269,085) (28.6) % 108,924  (40.5) %
Income from discontinued operations, net of income taxes 54,530  3.7  % 112,491  12.0  % (57,961) (51.5) %
Net loss (105,631) (7.2) % (156,594) (16.7) % 50,963  (32.5) %
Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests (5,721) (0.4) % 3,235  0.3  % (8,956) n/m
Net loss attributable to B. Riley Financial, Inc. (99,910) (6.8) % (159,829) (17.0) % 59,919  (37.5) %
Preferred stock dividends 8,057  0.5  % 8,008  0.9  % 49  0.6  %
Net loss available to common shareholders $ (107,967) (7.4) % $ (167,837) (17.9) % $ 59,870  (35.7) %
n/m - Not applicable or not meaningful.
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Revenues
The table below and the discussion that follows are based on how we analyze our business.
Year Ended
December 31, 2023		 Year Ended
December 31, 2022		 Change
Amount % Amount % Amount %
Services and fees:
Capital Markets segment $ 249,036  17.0  % $ 292,933  31.1  % $ (43,897) (15.0) %
Wealth Management segment 193,487  13.2  % 230,735  24.6  % (37,248) (16.1) %
Financial Consulting segment 77,283  5.3  % 50,357  5.4  % 26,926  53.5  %
Communications segment 330,952  22.6  % 228,129  24.3  % 102,823  45.1  %
All Other 47,992  3.3  % 13,797  1.5  % 34,195  n/m
Subtotal 898,750  61.4  % 815,951  86.9  % 82,799  10.1  %
Trading income (loss):
Capital Markets segment 16,845  1.1  % (151,816) (16.2) % 168,661  (111.1) %
Wealth Management segment 4,758  0.3  % 3,522  0.4  % 1,236  35.1  %
Subtotal 21,603  1.4  % (148,294) (15.8) % 169,897  (114.6) %
Fair value adjustments on loans:
Capital Markets segment 20,225  1.4  % (54,334) (5.8) % 74,559  (137.2) %
Interest income - loans:
Capital Markets segment 123,244  8.4  % 157,669  16.8  % (34,425) (21.8) %
Interest income - securities lending:
Capital Markets segment 161,652  11.0  % 83,144  8.8  % 78,508  94.4  %
Sale of goods:
Communications segment 6,737  0.5  % 7,526  0.8  % (789) (10.5) %
Consumer segment 233,202  15.9  % 77,821  8.3  % 155,381  199.7  %
All Other 364  —  % —  —  % 364  100.0  %
Subtotal 240,303  16.4  % 85,347  9.1  % 154,956  181.6  %
Total revenues $ 1,465,777  100.0  % $ 939,483  100.0  % $ 526,294  56.0  %
n/m - Not applicable or not meaningful.
Total revenues increased approximately $526.3 million to $1.5 billion during the year ended December 31, 2023 from $939.5 million during the year ended December 31, 2022. The increase in revenues during the year ended December 31, 2023 was primarily due to improvement in trading income of $169.9 million, favorable fair value adjustments on loans of $74.6 million, an increase in revenue from sale of goods of $155.0 million, an increase in revenue from services and fees of $82.8 million, and an increase in revenue from interest income - securities lending of $78.5 million, offset by a decrease from interest income - loans of $34.4 million. The increase in the fair value of the portfolio of securities and other investments owned during the year ended December 31, 2023 was primarily due to the increase in overall values in the stock market. The increase in revenue from services and fees of $82.8 million was primarily due to increases of $102.8 million in the Communications segment, $26.9 million in the Financial Consulting segment, and $34.2 million in All Other, partially offset by decreases in revenue of $43.9 million in the Capital Markets segment and $37.2 million in the Wealth Management segment.
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Revenues from services and fees in the Capital Markets segment decreased approximately $43.9 million, to $249.0 million during the year ended December 31, 2023 from $292.9 million during the year ended December 31, 2022. The decrease in revenues was primarily due to decreases in revenue of $40.5 million in incentive fees and $8.9 million in commission fees, partially offset by an increase of $5.6 million in interest income. The Capital Markets segment faced a more challenging capital markets merger and acquisitions environment in 2023.
Revenues from services and fees in the Wealth Management segment decreased $37.2 million, to $193.5 million during the year ended December 31, 2023 from $230.7 million during the year ended December 31, 2022. The decrease in revenues was primarily due to decreases in revenue of $27.5 million from wealth and asset management fees, $9.3 million in commission fees, and $0.4 million in other income. The restructuring of the Wealth Management segment in Q3 of 2022 resulted in a reduction in financial advisors, and the decrease in revenues of 2023 has the full year impact of these financial advisors no longer being part of our platform.

Revenues from services and fees in the Financial Consulting segment increased $26.9 million, to $77.3 million during the year ended December 31, 2023 from $50.4 million during the year ended December 31, 2022. The increase in revenues was primarily due to an increase of $32.6 million from the bankruptcy and restructuring, automotive restructuring, Farber and C&W divisions offset by a decrease in revenues of $5.7 million from the risk compliance and forensic and litigation divisions.
Revenues from services and fees in the Communications segment increased $102.8 million to $331.0 million during the year ended December 31, 2023 from $228.1 million during the year ended December 31, 2022. The increase in revenues was primarily due to an increase of $115.4 million in subscription services from inclusion of a full year of operating results from the acquisition of a controlling interest in Lingo in the second quarter of 2022 and the acquisition of BullsEye in the third quarter of 2022, partially offset by decreases in subscription revenue of $10.0 million and other revenue of $2.6 million for UOL, magicJack and Marconi Wireless. We expect UOL, magicJack and Marconi Wireless subscription revenue to continue to decline year over year.
Revenues from services and fees in All Other increased by $34.2 million to $48.0 million during the year ended December 31, 2023 from $13.8 million during the year ended December 31, 2022. These revenues include merchandise rental fees and sales from bebe in which we acquired a controlling interest during the fourth quarter of 2023, and the operations of a regional environmental services business and a landscaping business that we acquired in 2022. Revenues from services and fees in All Other increased by approximately $18.1 million related to the full year operations of a regional environmental services business (which was acquired in September 2022), $12.0 million related to merchandise rental fees from bebe, which was acquired in October 2023, and revenues from the landscaping business. The landscaping business had $8.0 million of revenues in 2023 and was sold in the third quarter of 2023.
Trading income (loss) increased $169.9 million to a gain of $21.6 million during the year ended December 31, 2023 compared to loss of $148.3 million during the year ended December 31, 2022. This was primarily due to increases of $168.7 million in the Capital Markets segment and $1.2 million in the Wealth Management segment. The gain of $21.6 million during the year ended December 31, 2023 was primarily due to realized and unrealized gains on investments made in our proprietary trading accounts.
The increase in fair value adjustment of $74.6 million on our loans receivable during the year ended December 31, 2023 is primarily due to favorable fair value adjustments of $69.5 million for Core Scientific, Inc., $41.2 million for Exela Technologies, Inc., offset by $27.7 million unfavorable adjustments for other related party loans. Core Scientific, Inc. provides digital infrastructure for bitcoin mining and high-performance computing. Core Scientific, Inc. filed Chapter 11 bankruptcy in 2022, leading to a significant mark down of the loan receivable in the fourth quarter of 2022. Subsequent to the Chapter 11 restructuring, and during the first quarter of 2023, there was a significant rebound in bitcoin prices resulting in significant growth and value assumptions. The fair value adjustment for Exela Technologies, Inc. was primarily due to paydowns on the term loan and revolver, relative to the underlying collateral coverage by the publicly traded XELA 2026 Senior Notes.
Interest income from loans decreased $34.4 million to $123.2 million during the year ended December 31, 2023 from $157.7 million during the year ended December 31, 2022. The decrease was due to paydowns on our Badcock Receivables I loan receivable portfolio.
Interest income from securities lending increased $78.5 million to $161.7 million during the year ended December 31, 2023 from $83.1 million during the year ended December 31, 2022. The increase in interest income from securities lending was primarily due to increased interest rates.
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Revenues from the sale of goods increased $155.0 million, to $240.3 million during the year ended December 31, 2023 from $85.3 million during the year ended December 31, 2022. The increase in revenues from sale of goods was primarily due to increases of $155.4 million from the acquisition of Targus in the fourth quarter of 2022.
Operating Expenses
Direct Cost of Services
Direct costs increased $95.5 million, to $214.1 million during the year ended December 31, 2023 from $118.5 million during the year ended December 31, 2022. The increase in direct costs of services was primarily attributable to increases of $75.3 million in the Communications segment from the acquisitions of a controlling interest in Lingo during the second quarter of 2022 and BullsEye during the third quarter of 2022, and $20.2 million in All Other due to other acquisitions made during 2023 and subsequent to the first quarter of 2022.
Cost of goods sold
Cost of goods sold during the year ended December 31, 2023 increased by $112.1 million to $172.8 million, from $60.8 million during the year ended December 31, 2022. The increase of $112.1 million is primarily comprised of an increase in cost of goods sold in the Consumer Products segment of $112.5 million, which was primarily due to owning Targus for the full year 2023 as compared to 2022 when we acquired Targus in October 2022.
Selling, General and Administrative Expenses
Selling, general and administrative expenses during the years ended December 31, 2023 and 2022 were comprised of the following:
Year Ended
December 31, 2023		 Year Ended
December 31, 2022		 Change
Amount % Amount % Amount %
Capital Markets segment $ 228,991  30.0  % $ 179,498  27.4  % $ 49,493  27.6  %
Wealth Management segment 195,087  25.5  % 263,622  40.3  % (68,535) (26.0) %
Financial Consulting segment 64,366  8.4  % 46,791  7.1  % 17,575  37.6  %
Communications segment 109,583  14.3  % 84,001  12.8  % 25,582  30.5  %
Consumer Products segment 77,147  10.1  % 17,471  2.7  % 59,676  n/m
Corporate and Other 89,752  11.7  % 63,443  9.7  % 26,309  41.5  %
Total selling, general & administrative expenses $ 764,926  100.0  % $ 654,826  100.0  % $ 110,100  16.8  %
Total selling, general and administrative expenses increased $110.1 million to $764.9 million during the year ended December 31, 2023 from $654.8 million during the year ended December 31, 2022. The increase of $110.1 million in selling, general and administrative expenses was due to increases of $59.7 million in the Consumer Products segment, $49.5 million in the Capital Markets segment, $26.3 million in Corporate and Other, $25.6 million in the Communications segment, and $17.6 million in the Financial Consulting segment, partially offset by a decrease of $68.5 million in the Wealth Management segment.
Capital Markets
Selling, general and administrative expenses in the Capital Markets segment increased by $49.5 million to $229.0 million during the year ended December 31, 2023 from $179.5 million during the year ended December 31, 2022. The increase was primarily due to changes in amounts between years of $78.8 million in professional services, of which $77.3 million related to an advisory agreement which ended in August of 2023, and $1.7 million in change in fair value of contingent consideration, partially offset by decreases of $21.7 million in employee compensation and benefits due to a decrease in fee income in 2023 as compared to 2022 which resulted in lower variable compensation, $4.5 million in depreciation and amortization, and $2.4 million in foreign currency fluctuation and $2.4 million in other expenses.
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Wealth Management
Selling, general and administrative expenses in the Wealth Management segment decreased by $68.5 million to $195.1 million during the year ended December 31, 2023 from $263.6 million during the year ended December 31, 2022. The decrease was primarily due to decreases of $38.9 million in employee compensation and benefits, $13.7 million in legal settlements and penalties, $5.3 million in other expenses, $4.4 million in professional services, $2.9 million in occupancy and related expenses, $2.1 million in clearing charges, and $1.2 million in depreciation and amortization.
Financial Consulting
Selling, general and administrative expenses in the Financial Consulting segment increased by $17.6 million to $64.4 million during the year ended December 31, 2023 from $46.8 million during the year ended December 31, 2022. The increase was primarily due to increases of $13.4 million in employee compensation and benefits, as a result of an increase in headcount from acquisitions, $3.1 million in other expenses, and $1.1 million in travel and entertainment expenses.
Communications
Selling, general and administrative expenses in the Communications segment increased by $25.6 million to $109.6 million during the year ended December 31, 2023 from $84.0 million during the year ended December 31, 2022. The increase was primarily due to increases of $11.1 million in employee compensation and benefits $6.8 million in depreciation and amortization expenses, and $2.7 million in occupancy related costs, all of which were in large part driven by the acquisition of Lingo and BullsEye in the second and third quarters of fiscal year 2022, respectively. Other selling general and administrative expenses increased $11.1 million due to the acquisition Lingo and BullsEye in subsequent to the first quarter of fiscal year 2022. The increase from these acquisitions was partially offset by decreases of $4.4 million in other expenses, $0.9 million in transaction costs, and $0.8 million in marketing expenses.
Consumer Products
Selling, general and administrative expenses in the Consumer Products segment increased by $59.7 million to $77.1 million during the year ended December 31, 2023 from $17.5 million during the year ended December 31, 2022. The increase was primarily due to the inclusion of the full year of results in the current year after the acquisition of Targus in the fourth quarter of 2022.
Corporate and Other
Selling, general and administrative expenses for the Corporate and Other category increased $26.3 million to $89.8 million during the year ended December 31, 2023 from $63.4 million during the year ended December 31, 2022. The increase was primarily due to increases of $10.3 million in professional services, of which $0.7 million was attributable to new acquisitions, $4.7 million in occupancy related costs, of which $3.3 million was attributable to new acquisitions, $4.3 million in employee compensation and benefits driven in large part by acquisitions made subsequent to the first quarter of fiscal year 2022. Other selling general and administrative expenses increased $1.8 million from the acquisition of bebe in which we acquired a controlling interest during the fourth quarter of 2023, $5.4 million in change in fair value of contingent consideration, and $5.2 million in foreign currency fluctuations, partially offset by decreases of $3.8 million from the acquisition of a regional environmental services business and a decrease of $1.6 million in other expenses.
Impairment of goodwill and other intangible assets. We recognized impairment charges of $70.3 million during the year ended December 31, 2023. We performed an interim impairment test as of September 30, 2023 and a year-end impairment test as of December 31, 2023, as further discussed in Note 10 of the consolidated financial statements. Based on the results of the impairment tests, we recorded a non-cash impairment charge of $68.6 million consisting of a goodwill impairment charge of $53.1 million and a tradename impairment charge of $15.5 million in the Consumer Products segment. We previously recognized $1.7 million in impairment in the second quarter of 2023 for a tradename in the Capital Markets segment that we no longer use. There was no impairment recognized during the year ended December 31, 2022.
Interest expense - Securities lending. Interest expense - Securities lending increased $78.9 million to $145.4 million during the year ended December 31, 2023 from $66.5 million during the year ended December 31, 2022. The increase was due to an increase in the securities loaned balances from $2.3 billion as of December 31, 2022 to $2.9 billion as of December 31, 2023.
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Other Income (Expense). Other income included interest income of $3.9 million during the year ended December 31, 2023 compared to $2.7 million during the year ended December 31, 2022. Dividend income was $12.7 million during the year ended December 31, 2023 compared to $7.9 million during the year ended December 31, 2022. Realized and unrealized losses on investments were $162.1 million during the year ended December 31, 2023 compared to $247.5 million during the year ended December 31, 2022. The change was primarily due to a decrease in overall values of our investments. Change in fair value of financial instruments and other in the amount of $4.0 million during the year ended December 31, 2023 was primarily due to losses on remeasurement of the bebe equity method investment of $12.9 million recorded in the third quarter of 2023 and remeasurement of mandatorily redeemable noncontrolling interest in an investment of $0.8 million, partially offset by a $9.3 million gain on the sale of certain assets related to our landscaping business in 2023. Gain on bargain purchase of $15.9 million during the year ended December 31, 2023 was related to the acquisition of a majority interest in bebe in the fourth quarter of 2023. Income from equity method investments was a loss of $0.2 million during the year ended December 31, 2023 compared to income of $3.6 million during the year ended December 31, 2022. Loss on extinguishment of debt was $5.4 million during the year ended December 31, 2023. Interest expense was $156.2 million during the year ended December 31, 2023 compared to $141.0 million during the year ended December 31, 2022. The increase in interest expense was due to higher interest rates due to variable rates on certain of our outstanding debt during the year ended December 31, 2023, which also were responsible for higher interest income as discussed above. The increases in interest expense primarily consisted of $9.1 million from the Capital Markets segment, $6.5 million from the Communications segment, $6.6 million from the Consumer Products segment, partially offset by a $6.9 million increase from Corporate and other.
Loss from Continuing Operations Before Income Taxes. Loss from continuing operations before income taxes decreased $135.1 million to a loss of $199.3 million during the year ended December 31, 2023 from a loss of $334.3 million during the year ended December 31, 2022. The change was primarily due to an increase in revenues of approximately $526.3 million, a change in realized and unrealized losses on investments of $85.5 million, a 2023 gain on bargain purchase of $15.9 million, an increase in dividend income of $4.9 million, and an increase in interest income of $1.1 million, partially offset by an increase in operating expenses of $460.1 million, an increase in interest expense of $15.2 million, a decrease to change in fair value of financial instruments and other of $14.2 million and a decrease in income from equity method investments of $3.7 million.
Benefit from Income Taxes. Benefit from income taxes was $39.1 million during the year ended December 31, 2023 compared to a benefit from income taxes of $65.3 million during the year ended December 31, 2022. The effective income tax rate was a benefit of 19.6% during the year ended December 31, 2023 as compared to a benefit of 19.5% during the year ended December 31, 2022.
Loss from Continuing Operations. Loss from continuing operations was $160.2 million during the year ended December 31, 2023 compared to loss of $269.1 million during the year ended December 31, 2022. The change was due to an increase in operating income of $66.2 million, a change in realized and unrealized losses on investments of $85.5 million, a 2023 gain on bargain purchase of $15.9 million, an increase in dividend income of $4.9 million, and an increase in interest income of $1.1 million, partially offset by an increase in interest expense of $15.2 million, a change in fair value of financial instruments and other of $14.2 million and a decrease in income from equity method investments of $3.7 million.

(Loss) Income from Discontinued Operations, Net of Income Taxes. On October 25, 2024, we and our subsidiary bebe have completed a transaction for our brand assets yielding approximately $236.0 million in cash proceeds. The results have been presented as discontinued operations for the year ended December 31, 2023. Income from discontinued operations, net of tax, for the Brands Transaction was $48.6 million during the year ended December 31, 2023, compared to income from discontinued operations, net of tax, of $88.2 million during the year ended December 31, 2022. Refer to Note 4 to the consolidated financial statements for additional information.
On November 15, 2024, we completed the sale of our Great American Group and its results have been presented as discontinued operations for the year ended December 31, 2023. Income from discontinued operations, net of tax, for Great American Group was $6.0 million during the year ended December 31, 2023, compared to income from discontinued operations, net of tax, of $24.3 million during the year ended December 31, 2022. Refer to Note 4 to the consolidated financial statements for additional information.
Net Loss (Income) Attributable to Noncontrolling Interest and Redeemable Noncontrolling Interests. Net loss (income) attributable to noncontrolling interests and redeemable noncontrolling interests represents the proportionate share of net income generated by membership interests of partnerships that we do not own. The net loss attributable to noncontrolling interests and redeemable noncontrolling interests was $5.7 million during the year ended December 31, 2023 compared to income of $3.2 million during the year ended December 31, 2022.
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Net Loss Attributable to the Company. Net loss attributable to the Company during the year ended December 31, 2023 was $99.9 million compared to net loss attributable to the Company of $159.8 million during the year ended December 31, 2022. The change was primarily due to an increase in operating income of $66.2 million, a change in realized and unrealized losses on investments of $85.5 million, a 2023 gain on bargain purchase of $15.9 million, an increase in dividend income of $4.9 million, a change in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests of $9.0 million, and an increase in interest income of $1.1 million, partially offset by a decrease in benefit from income taxes of $26.1 million, an increase in interest expense of $15.2 million, a decrease in change in fair value of financial instruments and other of $14.2 million, and a decrease in income from equity method investments of $3.7 million.
Preferred Stock Dividends. Preferred stock dividends were $8.1 million during the years ended December 31, 2023 and 2022. Dividends on the Series A preferred paid during the years ended December 31, 2023 and 2022 were $0.4296875 per depository share. Dividends on the Series B preferred paid during the years ended December 31, 2023 and 2022 were $0.4609375 per depository share.
Net Loss Available to Common Shareholders. Net loss available to common shareholders during the year ended December 31, 2023 was $108.0 million compared to net loss available to common shareholders of $167.8 million during the year ended December 31, 2022. The change was primarily due to an increase in operating income of $66.2 million, a change in realized and unrealized losses on investments of $85.5 million, a 2023 gain on bargain purchase of $15.9 million, a change in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests of $9.0 million, an increase in dividend income of $4.9 million, and an increase in interest income of $1.1 million, partially offset by a decrease in benefit from income taxes of $26.1 million, an increase in interest expense of $15.2 million, a decrease in change in fair value of financial instruments and other of $14.2 million, and a decrease in income from equity method investments of $3.7 million.
Liquidity and Capital Resources
Our operations are funded through a combination of existing cash on hand, cash generated from operations, borrowings under our senior notes payable, term loans and credit facilities, and special purposes financing arrangements. During the years ended December 31, 2024 and 2023, we generated net loss attributable to the Company of $764.3 million and net loss attributable to the Company of $99.9 million, respectively. The Company operates a number of businesses in its segments that provide steady cash flows and operating income throughout the year. However, our cash flows and profitability are impacted by capital market engagements.
As of December 31, 2024, we had $154.9 million of unrestricted cash and cash equivalents, $100.5 million of restricted cash, $282.3 million of securities and other investments, at fair value, $90.1 million of loans receivable, at fair value, and $1.8 billion of borrowings outstanding. The borrowings outstanding of $1.8 billion as of December 31, 2024 included $1.5 billion of borrowings from the issuance of the series of senior notes that are due at various dates ranging from February 28, 2025 to August 31, 2028 with interest rates ranging from 5.00% to 6.50%, $199.4 million in term loans borrowed pursuant to the Targus, Lingo, BRPI Acquisition Co LLC (“BRPAC"), and Nomura credit agreements discussed below, $16.3 million of revolving credit facility under the Targus credit facility discussed below, and $28.0 million of notes payable.
As more fully described in Note 25 – Subsequent Events, we entered into a new term loan facility on February 26, 2025 with Oaktree affiliated companies, with a maturity date of February 26, 2028 and the proceeds were primarily used to repay all amounts outstanding under the Nomura Credit Agreement as more fully described in Note 13 – Term Loans and Revolving Credit Facility.

We completed the Brands Transaction in October 2024 and the Great American Group Transaction in November 2024 as more fully discussed in Note 4. The proceeds from these transactions were used for general working capital purposes, make principal payments on the term loan with Nomura, and retire all of the $145.2 million of outstanding 6.375% senior notes due February 28, 2025. We also completed the sale of the Company’s majority owned subsidiary Atlantic Coast Recycling, LLC on March 3, 2025 for proceeds of approximately $68.6 million (the “Atlantic Coast Transaction”) and the sale of part of Wealth Management business for $26.0 million (the “Wealth Transaction”) as more fully described in Note 4 and the sale of the Company’s financial consulting business for $117.8 million on June 27, 2025.
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From March 26, 2025 to July 11, 2025, we completed five private exchange transactions with an institutional investors pursuant to which approximately $115.8 million of aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026, approximately $2.1 million aggregate principal amount of 6.50% Senior Notes due September 2026, approximately $146.4 million aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, approximately $51.1 million aggregate principal amount of the Company’s 6.00% Senior Notes due January 2028, and approximately $39.5 million aggregate principal amount of the Company’s 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $228.4 million aggregate principal amount of New Notes, whereupon the Exchanged Notes were cancelled.

After the completion of the Exchanged Notes described above, we have approximately $100,818 of 5.50% Senior Notes due March 31, 2026 as more fully described in Note 14 – Senior Notes Payable. We believe that the current cash and cash equivalents, securities and other investments owned, funds available under our credit facilities, cash expected to be generated from operating activities and proceeds received from the Atlantic Coast Transaction, the Wealth Management Transaction and the sale of the Company’s financial consulting business will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from issuance date of the accompanying financial statements.
Due to the fact that we are no longer a well-known seasoned issuer and no longer eligible to file a short form registration statement with the SEC, accessing the capital markets could take longer and cost more than would otherwise be the case. We continue to monitor our financial performance to ensure sufficient liquidity to fund operations and execute on our business plan.
Cash Flow Summary
Following is a summary of our cash flows provided by (used in) operating activities, investing activities and financing activities during the years ended December 31, 2024 and 2023. A discussion of cash flows during the year ended December 31, 2022 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Liquidity and Capital Resources” in our Annual Report on Form 10-K during the year ended December 31, 2023, filed with the SEC on April 24, 2024, which is available free of charge on the SEC’s website at www.sec.gov.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Year Ended December 31,
2024 2023
(Dollars in thousands)
Net cash provided by (used in):
Operating activities $ 263,551  $ 24,502 
Investing activities 440,534  301,174 
Financing activities (671,947) (365,923)
Effect of foreign currency on cash (9,301) 3,160 
Net increase (decrease) in cash, cash equivalents and restricted cash $ 22,837  $ (37,087)
Cash provided by operating activities was $263.6 million during the year ended December 31, 2024 compared to cash provided by operating activities of $24.5 million during the year ended December 31, 2023. Cash provided by operating activities during the year ended December 31, 2024 included a net loss of $774.9 million adjusted for noncash items of $323.7 million and changes in operating assets and liabilities of $714.8 million. Noncash items of $323.7 million included fair value adjustments of $327.6 million, impairment of goodwill and tradenames of $105.4 million, depreciation and amortization of $45.4 million, deferred income taxes of $25.9 million, share-based compensation of $19.1 million, loss on extinguishment of debt of $19.2 million, depreciation of rental merchandise of $15.1 million, provision for credit losses of $6.0 million, income allocated to and fair value adjustment for mandatorily redeemable noncontrolling interests of $1.2 million, and dividends from equity method investments of $0.2 million, partially offset by gain on disposal of discontinued operations of $217.5 million, non-cash interest and other of $23.3 million, effect of foreign currency on operations of $0.2 million, and gain on sale of business, disposal of fixed assets, and other of $0.2 million. Cash provided by operating activities during the year ended December 31, 2023 included net loss of $105.6 million adjusted for noncash items of $97.5 million and changes in operating assets and liabilities of $32.7 million.
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Noncash items of $97.5 million included impairment of goodwill and tradenames of $70.3 million, depreciation and amortization of $49.6 million, share-based compensation of $45.1 million, provision for credit losses of $7.1 million, loss on extinguishment of debt of $5.3 million, depreciation of rental merchandise of $4.1 million, income allocated to and fair value adjustment for mandatorily redeemable noncontrolling interests of $1.8 million, dividends from equity method investments of $0.4 million, and income from equity method investments of $0.2 million, partially offset by deferred income taxes of $40.9 million, gain on bargain purchase of $15.9 million, fair value adjustments of $10.7 million, non-cash interest and other of $9.7 million, gain on sale of business, disposal of fixed assets, and other of $9.0 million, and effect of foreign currency on operations of $0.3 million.
Cash provided by investing activities was $440.5 million during the year ended December 31, 2024 compared to cash provided by investing activities of $301.2 million during the year ended December 31, 2023. During the year ended December 31, 2024, cash provided by investing activities consisted of cash received from sale of Brands Interests of $234.1 million, sale of Great American Group of $167.1 million, loans receivable repayment of $149.0 million, sale of loans receivable of $31.0 million, proceeds from loan participations sold of $6.0 million, and proceeds from sale of business and other of $0.3 million, partially offset by cash used for purchases of loans receivable of $118.7 million, acquisition of businesses of $19.1 million, purchases of property and equipment and intangible assets of $8.0 million, and purchases of equity method investments of $1.1 million. During the year ended December 31, 2023, cash provided by investing activities consisted of cash received from loans receivable repayment of $606.7 million, funds received from trust account of subsidiary of $175.8 million, sale of loans receivable of $85.0 million, and proceeds from sale of business and other of $17.5 million, partially offset by cash used for purchases of loans receivable of $545.0 million, acquisition of businesses of $26.2 million, purchases of property and equipment and intangible assets of $7.7 million, and purchases of equity method investments of $4.9 million.
Cash used in financing activities was $671.9 million during the year ended December 31, 2024 compared to cash used in financing activities of $365.9 million during the year ended December 31, 2023. During the year ended December 31, 2024, cash used in financing activities primarily consisted of repayment on our term loans of $444.8 million, redemption of senior notes of $140.5 million, repayment of our revolving line of credit of $116.7 million, payment of dividends on our common shares of $33.7 million, payment for contingent consideration of $12.9 million, distributions to noncontrolling interests of $10.7 million, payment of dividends on our preferred shares of $8.1 million, repayment of our notes payable and other of $6.7 million, payment of debt issuance and offering costs of $3.5 million, and ESPP and payment of employment taxes on vesting of restricted stock of $3.2 million, partially offset by proceeds from revolving line of credit of $89.3 million, proceeds from notes payable of $15.0 million, contributions from noncontrolling interests of $3.9 million and proceeds from exercise of warrants of $0.7 million. During the year ended December 31, 2023, cash used in financing activities primarily consisted of repayment on our term loans of $520.8 million, repayment of our revolving line of credit of $303.0 million, redemption of subsidiary temporary equity and distributions of $175.8 million, payment of dividends on our common shares of $141.1 million, repurchase of our common stock of $69.5 million, redemption of senior notes of $58.9 million, payment of debt issuance costs of $28.0 million, repayment of our notes payable of $13.8 million, payment of dividends on our preferred shares of $8.1 million, payment of employment taxes on vesting of restricted stock of $7.6 million, distribution to noncontrolling interests of $6.5 million, and payment for contingent consideration of $1.9 million, partially offset by proceeds from term loans of $628.2 million, proceeds from revolving line of credit of $219.2 million, proceeds from our offering of common stock of $115.0 million, contributions from noncontrolling interests of $6.1 million, proceeds from our offering of preferred stock of $0.5 million, and proceeds from issuance of senior notes of $0.2 million.
Credit Agreements
Targus Credit Agreement
On October 18, 2022, Targus Borrower, among others, entered into a credit agreement (“Targus Credit Agreement”) with PNC Bank, National Association (“PNC”), as agent and security trustee for a five-year $28.0 million term loan and a five-year $85.0 million revolver loan, which was used to finance part of the acquisition of Targus. The final maturity date is October 18, 2027.
The Targus Credit Agreement was secured by substantially all Targus assets as collateral defined in the Targus Credit Agreement which assets had an aggregate value of approximately $176.6 million including $39.1 million of accounts receivable and $57.5 million of inventory as of December 31, 2024. The Targus Credit Agreement contained certain covenants, including those limiting the Targus Borrower’s ability to incur certain indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.
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If an event of default were to have occurred, the agent would have been entitled to take various actions, including the acceleration of amounts outstanding under the Targus Credit Agreement. On October 31, 2023 and February 20, 2024, the Company entered into Amendment No. 1 and Amendment No. 2 to the Targus Credit Agreement, which, among other things, modified the fixed charge coverage ratio (the “FCCR”) and the minimum earnings before interest, taxes, depreciation, and amortization ("EBITDA") requirements which waived the financial covenant breaches for the periods ended September 30, 2023 and December 31, 2023, respectively. Amendment No. 2 also provided, among other things, with a cure right for the Company to provide a capital contribution to Targus in the event of a financial covenant breach (the "Keepwell"). For the period ended September 30, 2023, the FCCR covenant was not fulfilled in accordance with the Targus Credit Agreement, and for the period ended December 31, 2023, the FCCR and minimum EBITDA covenant was not fulfilled in accordance with the Targus Credit Agreement. However, the amendments to the Targus Credit Agreement and the capital contributions made to the subsidiary cured the covenant breaches. On June 27, 2024 the Company entered into Amendment No. 3 to the Targus Credit Agreement to replace the terminating Canadian benchmark interest rate with the Term CORRA Reference Rate. For the period ended June 30, 2024, the minimum EBITDA covenant was also breached. On August 14, 2024, the Company contributed $1.6 million to Targus to cure a minimum EBITDA financial covenant requirement for the period ended June 30, 2024. For the period ended September 30, 2024, the minimum EBITDA covenant was also breached. On November 7, 2024, the Company entered into Amendment No. 4 to the Targus Credit Agreement, which among other things, reduced revolving loan sub-limits, modified the FCCR covenant, removed the minimum EBITDA requirement, imposed a minimum undrawn availability covenant, and modified the terms of the Keepwell. Amendment No. 4 to the Targus Credit Agreement also waived the September 30, 2024 minimum EBITDA covenant breach. Concurrently with the effectiveness of Amendment No. 4 to the Targus Credit Agreement, the Company repaid the outstanding balance of the term loan in full with $2.1 million of revolver loan advances and $7.5 million of cash from the Company.
On May 9, 2025, the Targus Borrower entered into Amendment No. 5 to the Targus Credit Agreement, which among other things, (i) required quarterly repayments of revolver loan advances in an amount equal to $2.5 million commencing on September 30, 2025 and continuing until the total outstanding amount thereunder is paid in full, (ii) reduced the maximum revolving commitments from $30.0 million to $25.0 million, (iii) required the repayment of $5.0 million of outstanding revolving advances and (iv) requires that the Targus Borrower pay a deferred amendment fee of $1.0 million in the event the Company is unable to refinance the obligations under the Targus Credit Agreement by July 31, 2025. On July 25, 2025, the Targus Borrower entered into Amendment No. 6 to the Targus Credit Agreement, which among other things, (i) reduced the deferred amendment fee of $1.0 million to $0.2 million, due and payable on July 25, 2025, and (ii) requires that the Targus Borrower pay an additional deferred amendment fee of $0.9 million in the event the Company is unable to refinance the Targus Credit Agreement by August 15, 2025. On August 15, 2025, the Targus Borrower entered into Amendment No. 7 to the Targus Credit Agreement, which among other things, (i) required the Targus Borrower to pay an additional deferred amendment fee of $0.1 million in the event the Targus Borrower is unable to refinance the Targus Credit Agreement by August 15, 2025, and (ii) requires the Targus Borrower to pay an additional deferred amendment fee of $0.9 million in the event the Targus Borrower is unable to refinance the Targus Credit Agreement by August 20, 2025.
In connection with the above amendments to the Targus Credit Agreement, the Company entered into Amendment No. 2 to the Keepwell on May 9, 2025, Amendment No. 3 to the Keepwell on July 25, 2025, and Amendment No. 4 to the Keepwell on August 15, 2025, which among other things, modified the conditions under which, if satisfied, the Company would be required to make certain capital contributions to the Targus Borrower.
On August 20, 2025, the Company entered into the new Targus/FGI Credit Agreement to refinance and repay all obligations under the existing Targus Credit Agreement, as more fully described below.
The Company is in compliance with all financial covenants with the Targus Credit Agreement, as amended, and no defaults or events of default, as defined in the credit agreement, were noted as of December 31, 2024.
The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus an applicable margin of 5.75%. The revolver loan consists of base rate loans that bear interest on the outstanding principal amount equal to the base rate plus an applicable margin of 3.00% and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 4.00%.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was zero and $17.8 million (net of unamortized debt issuance costs of $0.4 million), respectively. As of December 31, 2024 and 2023, the outstanding balance on the revolver loan was $16.3 million and $43.8 million, respectively. The average borrowings under the revolver loan was $21.4 million and $56.7 million during the year ended December 31 2024 and 2023, respectively. The amount available for borrowings under the Targus Credit Agreement was $5.4 million and $1.8 million at December 31, 2024, and 2023, respectively.
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Interest expense on these loans during the years ended December 31, 2024, 2023 and 2022 was $4.2 million, $7.3 million, and $1.3 million (including amortization of deferred debt issuance costs and unused commitment fees of $1.0 million, $0.7 million, and $0.2 million), respectively. In connection with the principal payments made on the term loan during the year ended December 31, 2024, we recorded losses of the extinguishment of this debt in the amount of $0.8 million, which was included in the consolidated statements of operations in 2024. The interest rate on the term loan was 10.45%, 10.20% and 8.43% and the interest rate on the revolver loan ranged between 8.44% to 11.25%, between 8.45% to 11.25% and between 6.03% to 9.25% as of December 31, 2024, 2023 and 2022, respectively. The weighted average interest rate on the revolver loan was 10.39%, 8.53% and 6.68% as of December 31, 2024, 2023 and 2022, respectively.
Targus/FGI Credit Agreement
On August 20, 2025, the Targus Borrower and the FGI Loan Parties entered into the Targus/FGI Credit Agreement with FGI, as agent and for a three-year $30.0 million revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement with PNC. The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028.
The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivable purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term SOFR for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee.
The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Targus Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement.
As required under the Targus/FGI Credit Agreement, B. Riley Commercial Capital, LLC, a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5.0 million increasing the aggregate principal amount of such loan from $5.0 million to $10.0 million.
Lingo Credit Agreement
On August 16, 2022, Lingo Management, (the “Lingo Borrower”), entered into a credit agreement (the “Lingo Credit Agreement”) by and among the Lingo Borrower, the Company as the secured guarantor, and Banc of California, N.A. in its capacity as administrative agent and lender, for a five-year $45.0 million term loan. This loan was used to finance part of the purchase of BullsEye by the Lingo Borrower. On September 9, 2022, the Lingo Borrower entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank (the "New Lender") for an incremental term loan of $7.5 million, increasing the principal balance of the term loan to $52.5 million. On November 10, 2022, the Lingo Borrower entered into the Second Amendment to the Lingo Credit Agreement with KeyBank National Association for an incremental term loan of $20.5 million, increasing the principal balance of the term loan to $73.0 million.
The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus a margin of 3.00% to 3.75% per annum, depending on the consolidated total funded debt ratio as defined in the Lingo Credit Agreement, plus applicable spread adjustment. As of December 31, 2024, 2023, and 2022, the interest rate on the Lingo Credit Agreement was 7.91%, 8.70%, and 7.89% respectively.
The Lingo Credit Agreement is guaranteed by the Company and the Lingo Borrower's subsidiaries and secured by certain Lingo assets and equity interests as collateral which totals approximately $228.7 million defined in the Lingo Credit Agreement which includes $12.3 million of accounts receivable. The agreement contains certain covenants, including those limiting the Lingo Borrower's ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of its businesses, engage in transactions with related parties, make certain investments or pay dividends.
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In addition, the Lingo Credit Agreement requires the Lingo Borrower to maintain certain financial ratios. The Lingo Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the Lingo Credit Agreement. We are in compliance with all financial covenants in the Lingo Credit Agreement as of December 31, 2024.
Principal outstanding is due in quarterly installments. The quarterly installments from March 31, 2025 to June 30, 2027 are in the amount of $3.7 million, and the remaining principal balance is due at final maturity on August 16, 2027.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was $52.4 million (net of unamortized debt issuance costs of $0.6 million) and $63.2 million (net of unamortized debt issuance costs of $0.7 million), respectively. Interest expense on the term loan during the years ended December 31, 2024 was $5.8 million (including amortization of deferred debt issuance costs of $0.5 million), $6.4 million (including amortization of deferred debt issuance costs of $0.3 million) and $1.6 million (including amortization of deferred debt issuance costs of $0.1 million), respectively.
On January 6, 2025, as discussed below BRPAC entered into an amended and restated credit agreement (the “BRPAC Amended Credit Agreement”) with the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time. A portion of the proceeds from the BRPAC Amended Credit Agreement were used to pay all outstanding principal amounts and accrued interest under the Lingo Credit Agreement and the Lingo Credit Agreement was effectively terminated upon repayment on January 6, 2025.
bebe Credit Agreement
As a result of the Company obtaining a majority ownership interest in bebe on October 6, 2023, bebe's credit agreement with SLR Credit Solutions (the “bebe Credit Agreement”) for a $25.0 million five-year term loan with a maturity date of August 24, 2026 is included in the Company's long-term debt. The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 5.50% to 6.00% per annum, depending on the total fixed charge coverage ratio as defined in the bebe Credit Agreement. As of December 31, 2023, the interest rate on the bebe Credit Agreement was 11.14%.
The bebe Credit Agreement is collateralized by a first lien on all bebe assets and pledges of capital stock including equity interests. The agreement contains certain covenants, including those limiting the borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition the agreement requires bebe to maintain certain financial ratios. The agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was zero (net of unamortized debt issuance costs of zero) and $22.5 million (net of unamortized debt issuance costs of $0.6 million), respectively. Interest expense on the term loan during the year ended December 31, 2024 and 2023 was $2.7 million (including amortization of deferred debt issuance costs of $0.6 million and allocated to income from discontinued operations, net of income taxes in the consolidated statement of operations) and $0.7 million (including amortization of deferred debt issuance costs of $0.1 million), respectively. Principal outstanding is due in quarterly installments through June 30, 2026 in the amount of $0.3 million per quarter and the remaining principal balance of $20.0 million is due at final maturity on August 24, 2026.
On October 25, 2024, upon the closing of the Brands Transaction, as described in Note 4 – Discontinued Operation, proceeds of $22.2 million was used to pay off the then outstanding balance of the loan in full and $0.2 million of loan payoff expenses.

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Nomura Credit Agreement
The Company and its wholly owned subsidiaries, BR Financial Holdings, LLC, and BR Advisory & Investments, LLC had entered into a credit agreement dated June 23, 2021 (as amended, the “Prior Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, for a four-year $300.0 million secured term loan credit facility (the “Prior Term Loan Facility”) and a four-year $80.0 million secured revolving loan credit facility (the “Prior Revolving Credit Facility”) with a maturity date of June 23, 2025.
On August 21, 2023, the Company and its wholly owned subsidiary, BR Financial Holdings, LLC, and certain direct and indirect subsidiaries of the BRFH Borrower (the “BRFH Guarantors”), entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, for a four-year $500.0 million secured term loan credit facility (the “New Term Loan Facility”) and a four-year $100.0 million secured revolving loan credit facility (the “New Revolving Credit Facility” and together, the “New Credit Facilities”). The purpose of the Credit Agreement was to (i) fund the Freedom VCM equity investment, (ii) prepay in full the Prior Term Loan Facility and Prior Revolving Credit Facility with an aggregate outstanding balance of $347.9 million, which included $342.0 million in principal and $5.9 million in interest and fees, (iii) fund a dividend reserve in an amount not less than $65.0 million, (iv) pay related fees and expenses, and (v) for general corporate purposes. We recorded a loss on extinguishment of debt related to the Prior Credit Agreement of $5.4 million, which was included in the consolidated statements of operations for the year ended December 31, 2023.
SOFR rate loans under the New Credit Facilities accrued interest at the adjusted term SOFR rate plus an applicable margin of 6.00%. In addition to paying interest on outstanding borrowings under the New Revolving Credit Facility, we were required to pay a quarterly commitment fee based on the unused portion, which was determined by the average utilization of the facility for the immediately preceding fiscal quarter.
The Credit Agreement was secured on a first priority basis by a security interest in the equity interests of the BRFH Borrower and each of the BRFH Borrower’s subsidiaries (subject to certain exclusions) and a security interest in substantially all of the assets of the BRFH Borrower and the BRFH Guarantors. The borrowing base as defined in the Credit Agreement consisted of a collateral pool that included certain of the Company's loans receivables in the amount of $112.5 million (which is included in the total loans receivable, at fair value balance of $90.1 million reported in our consolidated balance sheet at December 31, 2024) and $375.8 million (which is included in the total loans receivable, at fair value balance of $532.4 million reported in our consolidated balance sheet at December 31, 2023) and investments in the amount of $228.3 million (which is included in the total securities and other investments owned, at fair value of $282.3 million reported in our consolidated balance sheet at December 31, 2024) and $786.7 million (which is included in the total securities and other investments owned, at fair value of $809.0 million reported in our consolidated balance sheet at December 31, 2023) as of December 31, 2024 and 2023, respectively.
The Credit Agreement contained certain affirmative and negative covenants customary for financings of this type that, among other things, limited the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests. The Credit Agreement contained customary events of default, including with respect to a failure to make payments under the credit facilities, cross-default, certain bankruptcy and insolvency events and customary change of control events. We were in compliance with all financial covenants in the Credit Agreement as of December 31, 2024. On September 17, 2024, the Company entered into Amendment No. 4 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fourth Amendment”). On September 17, 2024, the Company made a payment of $85.9 million which consisted of a principal payment of $85.1 million and accrued interest of $0.7 million. Loan fees incurred in connection with the Fourth Amendment totaled $5.9 million of which $3.5 million was added to the principal balance of the term loan. After giving effect to these amounts, the outstanding principal balance on the term loan was reduced from $469.8 million to $388.1 million. In connection with the Fourth Amendment, the revolving credit facility in the amount of $100.0 million which had no balance outstanding at September 17, 2024 was terminated and the Company was required to reduce the principal amount of the term loan to be no greater than $100.0 million on or prior to September 30, 2025. The scheduled maturity date of the term loan was August 21, 2027.
The Fourth Amendment contained certain provisions related to borrowing base, including specific treatment for certain assets in the calculation of borrowing base and also included mandatory prepayment provisions regarding asset sales.
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Interest on the term loan increased to SOFR loans accrued interest at the adjusted term SOFR plus an applicable margin of 7.00% cash interest or, at the election of the Company, at the adjusted term SOFR determined plus an applicable margin of 6.00% cash interest plus 1.50% paid-in-kind interest; and base rate loans accrued interest at the base rate plus an applicable margin of 6.00% cash interest or, at the election of the Company, at the adjusted term SOFR determined for such day plus an applicable margin of 5.00% cash interest plus 1.50% PIK Interest. On December 9, 2024, the Company entered into Amendment No. 5 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fifth Amendment”). The Fifth Amendment extended the springing maturity date of the term loans if more than $25.0 million aggregate principal amount of the 5.50% 2026 Notes were outstanding to February 3, 2026 and permitted under certain conditions an additional $10.0 million of telecommunications financing. On January 3, 2025, the Company entered into Amendment No. 6 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Sixth Amendment”). The Sixth Amendment agreed to permit under certain conditions the contribution by BRPI of 100% of the equity interests in Lingo to BRPAC in connection with the entry into the BRPAC Amended Credit Agreement. There was no fee charged in connection with the Sixth Amendment.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was $117.3 million (net of unamortized debt issuance costs of $5.2 million) and $475.1 million (net of unamortized debt issuance costs of $18.7 million), respectively. Interest on the term loan during the years ended December 31, 2024, 2023 and 2022 was $23.5 million (including amortization of deferred debt issuance costs of $5.8 million), $11.7 million (including amortization of deferred debt issuance costs of $2.9 million), and $21.3 million (including amortization of deferred debt issuance costs of $2.1 million), respectively. The interest rate on the term loan as of December 31, 2024, 2023 and 2022 was 11.52%, 11.37% and 9.23%, respectively.
We had an outstanding balance of zero and $74.7 million under the revolving facility as of December 31, 2024 and 2023, respectively. Interest on the revolving facility during the years ended December 31, 2024 and 2023 was $1.4 million (including unused commitment fees of $0.7 million and amortization of deferred financing costs of $0.7 million) and $5.9 million (including unused commitment fees of $0.3 million and amortization of deferred financing costs of $0.8 million), and $5.4 million (including unused commitment fees of $0.01 million and amortization of deferred financing costs of $0.6 million), respectively. The interest rate on the revolving credit facility as of December 31, 2024 and 2023 was 11.37%.
In connection with the principal payments made on the term loan and revolving credit facility with Nomura during the year ended December 31, 2024, the Company recorded losses of the extinguishment of this debt in the amount of $18.0 million, which was included in the consolidated statements of operations in 2024.
On February 26, 2025, we entered into a new credit agreement with a group of funds indirectly or directly controlled by Oaktree Capital Management, L.P. with Oaktree Fund Administration, LLC, acting as the administrative agent and collateral agent, as more fully described in Note 25. The new credit agreement provided for (i) a three-year $125.0 million secured term loan credit facility (the “Initial Term Loan Facility”) and (ii) a four-month $35.0 million secured delayed draw term loan credit facility (the “Delayed Draw Facility” and, together with the Initial Term Loan Facility, the “Oaktree Credit Facilities”). The Nomura Credit Agreement discussed above was paid in full and terminated using proceeds from the Initial Term Loan Facility.
BRPAC Credit Agreement
On December 19, 2018, BRPAC, UOL, and YMAX Corporation, Delaware corporations (collectively, the “BRPAC Borrowers”), indirect wholly owned subsidiaries of ours, in the capacity as borrowers, entered into a credit agreement (the “BRPAC Credit Agreement”) with the Banc of California, N.A. in the capacity as agent (the “Agent”) and lender and with the other lenders party thereto (the “Closing Date Lenders”). Certain of the BRPAC Borrowers’ U.S. subsidiaries are guarantors of all obligations under the BRPAC Credit Agreement and are parties to the BRPAC Credit Agreement in such capacity (collectively, the “Secured Guarantors”; and together with the BRPAC Borrowers, the “Credit Parties”). In addition, we and B. Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of ours, are guarantors of the obligations under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares outstanding membership interests of BRPAC are pledged as collateral.
The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties which totals approximately $184.6 million (which includes $3.7 million of accounts receivable and $3.3 million of inventory), including a pledge of (a) 100% of the equity interests of the Credit Parties; (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65% of the equity interests in magicJack VocalTec Ltd., an Israel corporation. Such security interests are evidenced by pledge, security, and other related agreements.
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The BRPAC Credit Agreement contains certain covenants, including those limiting the Credit Parties’ and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the BRPAC Credit Agreement requires the Credit Parties to maintain certain financial ratios. The BRPAC Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the outstanding BRPAC Credit Agreement. We are in compliance with all financial covenants in the BRPAC Credit Agreement as of December 31, 2024.
Through a series of amendments, including the most recent Fourth Amendment to the BRPAC Credit Agreement (the “Fourth Amendment”) on June 21, 2022, the BRPAC Borrowers, the Secured Guarantors, the Agent and the Closing Date Lenders agreed to the following, among other things: (i) the Closing Date Lenders agreed to make a new $75.0 million term loan to the BRPAC Borrowers, the proceeds of which the BRPAC Borrowers’ used to repay the outstanding principal amount of the existing terms loans and optional loans and will use for other general corporate purposes, (ii) a new applicable margin level of 3.50% was established as set forth from the date of the Fourth Amendment, (iii) Marconi Wireless was added to the BRPAC Borrowers, (iv) the maturity date of the term loan was set to June 30, 2027, and (v) the BRPAC Borrowers were permitted to make certain distributions to the parent company of the BRPAC Borrowers.
The borrowings under the amended BRPAC Credit Agreement bear interest equal to the Term SOFR rate plus a margin of 2.75% to 3.50% per annum, depending on the BRPAC Borrowers’ consolidated total funded debt ratio as defined in the BRPAC Credit Agreement. As of December 31, 2024, 2023 and 2022, the interest rate on the BRPAC Credit Agreement was 7.42%, 8.46% and 7.65%, respectively.
Principal outstanding under the Amended BRPAC Credit Agreement is due in quarterly installments. The quarterly installments from March 31, 2025 to December 31, 2026 are in the amount of $3.2 million per quarter, the quarterly installment on March 31, 2027 is in the amount of $2.4 million, and the remaining principal balance is due at final maturity on June 30, 2027.
As of December 31, 2024, and 2023, the outstanding balance on the term loan was $29.8 million (net of unamortized debt issuance costs of $0.3 million) and $46.4 million (net of unamortized debt issuance costs of $0.4 million), respectively. Interest expense on the term loan during the years ended December 31, 2024, 2023, and 2022, was $3.5 million (including amortization of deferred debt issuance costs of $0.3 million), $5.2 million (including amortization of deferred debt issuance costs of $0.3 million), and $3.5 million (including amortization of deferred debt issuance costs of $0.3 million), respectively.
On January 6, 2025 (the “Closing Date”), BRPAC entered into the BRPAC Amended Credit Agreement with certain subsidiaries of the Company, the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time. Our subsidiary Lingo was added as a BRPAC Borrower to the BRPAC Amended Credit Agreement. Pursuant to the BRPAC Amended Credit Agreement, the lenders made a new five-year $80.0 million term loan to the BRPAC Borrowers, the proceeds of which were used to repay in full the obligations under the original BRPAC Credit Agreement dated December 19, 2018 and the Lingo Credit Agreement. In connection with the BRPAC Amended Credit Agreement, the BRPAC Borrowers also made certain distributions to the parent company of the BRPAC Borrowers from existing cash on hand. The BRPAC Amended Credit Agreement also builds in provisions for incremental term loans up to $40.0 million allowing certain distributions to the parent company of the BRPAC Borrowers from the proceeds of such incremental term loans. The BRPAC Borrowers’ U.S. subsidiaries are guarantors of all obligations under the BRPAC Amended Credit Agreement. The obligations under the BRPAC Amended Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the BRPAC Borrowers, including a pledge of (a) 100% of the equity interests of the BRPAC Borrowers; (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65% of the equity interests in magicJack VocalTec Ltd., an Israel corporation. Such security interests are evidenced by pledge, security, and other related agreements.
The borrowings under the BRPAC Amended Credit Agreement bear interest equal to the Term SOFR rate plus a margin of 2.75% to 3.50% per annum, depending on the BRPAC Borrowers consolidated total funded debt ratio as defined in the BRPAC Amended Credit Agreement. The interest rate is subject to a margin level of 3.25%. As of the Closing Date, the outstanding principal amount was $80.0 million with quarterly installments of principal due in the amount of $4.0 million, and any remaining principal balance is due at final maturity on January 6, 2030.
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The BRPAC Amended Credit Agreement contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’, ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the BRPAC Amended Credit Agreement requires the Credit Parties to maintain certain financial ratios. The BRPAC Amended Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of outstanding amounts due under the BRPAC Amended Credit Agreement. The Company obtained a waiver from the lender to allow for an extra 15 days to deliver interim financial statements for the quarter ended March 31, 2025. The Company delivered the interim financial statements within the amended time period.
Senior Note Offerings
During the years ended December 31, 2024 and 2023, we issued zero and $0.2 million, respectively, of senior notes with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with B. Riley Securities, Inc. ("BRS") which governs the program of at-the-market sales of our senior notes. We filed a series of prospectus supplements with the SEC in respect of our offerings of these senior notes.
In June 2023, we entered into note purchase agreements in connection with the 6.75% Senior Notes due 2024 (“6.75% 2024 Notes”) that were issued for the Targus acquisition. The note purchase agreements had a repurchase date of June 30, 2023 on which date we repurchased our 6.75% 2024 Notes with an aggregate principal amount of $58.9 million. The repurchase price was equal to the aggregate principal amount, plus accrued and unpaid interest up to, but excluding, the repurchase date. The total repurchase payment included approximately $0.7 million in accrued interest.
On February 29, 2024, we partially redeemed $115.5 million aggregate principal amount of our 6.75% 2024 Notes pursuant to the seventh supplemental indenture dated December 3, 2021. The redemption price was equal to 100% of the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date. The total redemption payment included approximately $0.6 million in accrued interest.
On May 31, 2024, we redeemed the remaining $25.0 million aggregate principal amount of the 6.75% 2024 Notes. The redemption price was equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the redemption date. The total redemption payment included approximately $0.1 million in accrued interest. In connection with the full redemption, the 6.75% 2024 Notes, which were listed on NASDAQ under the ticker symbol “RILYO,” were delisted from NASDAQ and ceased trading on the redemption date.
On February 28, 2025, we redeemed all the issued and outstanding 6.375% Senior Notes due February 28, 2025 (the "6.375% 2025 Notes"). The redemption price was equal to 100% of the aggregate principal amount, plus any accrued interest and unpaid interest up to, but excluding, the redemption date The total redemption payment included approximately $0.7 million accrued interest. In connection with the full redemption, the 6.375% 2025 Notes, which were listed on NASDAQ under the ticker symbol “RILYM,” were delisted from NASDAQ and ceased trading on the redemption date.
As of December 31, 2024 and 2023, the total senior notes outstanding was $1.5 billion (net of unamortized debt issue costs of $0.1 million and $1.7 billion (net of unamortized debt issue costs of $13.1 million) with a weighted average interest rate of 5.62% and 5.71%, respectively. Interest on the senior notes is payable on a quarterly basis. Interest expense on the senior notes totaled $92.7 million, $103.2 million and $99.9 million during the years ended December 31, 2024, 2023 and 2022, respectively.
From March 26, 2025 to July 11, 2025, we completed five private exchange transactions with institutional investors pursuant to which approximately $115.8 million of aggregate principal amount of our 5.50% Senior Notes due March 2026, approximately $2.1 million aggregate principal amount of 6.50% Senior Notes due September 2026, approximately $146.4 million aggregate principal amount of our 5.00% Senior Notes due December 2026, approximately $51.1 million aggregate principal amount of our 6.00% Senior Notes due January 2028, and approximately $39.5 million aggregate principal amount of our 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $228.4 million aggregate principal amount of New Notes, whereupon the Exchanged Notes were cancelled.
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Dividends
From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations. During the years ended December 31, 2024, and 2023, we paid cash dividends on our common stock of $33.7 million, and $141.1 million, respectively. In August 2024, we announced the suspension of our common stock dividend as we prioritize reducing our debt. The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our Board of Directors.
A summary of our common stock dividend activity during the years ended December 31, 2024 and 2023 was as follows:
Date Declared Date Paid Stockholder Record Date Amount
May 15, 2024 June 11, 2024 May 27, 2024 $ 0.500 
February 29, 2024 March 22, 2024 March 11, 2024 0.500 
November 8, 2023 November 30, 2023 November 20, 2023 1.000 
July 25, 2023 August 21, 2023 August 11, 2023 1.000 
May 4, 2023 May 23, 2023 May 16, 2023 1.000 
February 22, 2023 March 23, 2023 March 10, 2023 1.000 
Holders of Series A Preferred Stock, when and as authorized by our board of directors, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $0.03 million liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends are payable quarterly in arrears. As of December 31, 2024 and 2023, dividends in arrears in respect of the Depositary Shares were $0.8 million. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A Preferred Stock. Unpaid dividends will accrue until paid in full.
Holders of Series B Preferred Stock, when and as authorized by our board of directors, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $0.03 million liquidation preference $25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends are payable quarterly in arrears. As of December 31, 2024 and 2023, dividends in arrears in respect of the Depositary Shares were $0.5 million. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series B Preferred Stock. Unpaid dividends will accrue until paid in full.
A summary of our preferred stock dividend activity during the years ended December 31, 2024 and 2023 was as follows:
Preferred Dividend per Depositary Share
Date Declared Date Paid Stockholder Record Date Series A Series B
October 16, 2024 October 31, 2024 October 28, 2024 $ 0.4296875  $ 0.4609375 
July 9, 2024 July 31, 2024 July 22, 2024 0.4296875  0.4609375 
April 9, 2024 April 30, 2024 April 22, 2024 0.4296875  0.4609375 
January 9, 2024 January 31, 2024 January 22, 2024 0.4296875  0.4609375 
October 10, 2023 October 31, 2023 October 23, 2023 0.4296875  0.4609375 
July 11, 2023 July 31, 2023 July 21, 2023 0.4296875  0.4609375 
April 10, 2023 May 1, 2023 April 21, 2023 0.4296875  0.4609375 
January 9, 2023 January 31, 2023 January 20, 2023 0.4296875  0.4609375 
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Critical Accounting Estimates

The Company’s accounting estimates are essential to understanding and interpreting the financial results on the consolidated financial statements. The significant accounting policies used in the preparation of the Company’s consolidated financial statements are summarized in Note 2 to the consolidated financial statements. Certain of those policies require management to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such reviews, and if deemed appropriate, management’s estimates are adjusted accordingly. Actual results may vary from these estimates and assumptions under different and/or future circumstances.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. We believe the following accounting estimates to be critical to our business operations and the understanding of results of operations and affect the more significant judgements and estimates used in the preparation of our consolidated financial statements.

Fair Value Measurements

The fair value of loan receivables, investments which are included in securities and other investments owned, and securities sold, not yet purchased, are accounted for in accordance with the accounting guidance Accounting Standards Codification ("ASC") 820 – Fair Value Measurements with gains or losses recognized in our consolidated statement of operations. The fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the hierarchy under accounting principles generally accepted in the United States of America (“GAAP”) gives (i) the highest priority to unadjusted quoted prices in active markets for identical, unrestricted assets or liabilities (level 1 inputs), (ii) the next priority to inputs other than level 1 inputs that are observable, either directly or indirectly (level 2 inputs), and (iii) the lowest priority to inputs that cannot be observed in market activity (level 3 inputs).
A significant amount of our assets consist of loan receivables and equity securities for which market quotes are not readily available and a significant degree of judgement is applied to reflect those judgements that a market participant would use in valuing the asset or liability. Absent evidence to the contrary, financial instruments classified in level 3 of the fair value hierarchy are initially valued at transaction price, which is considered the best initial estimate of fair value. Subsequent to the transaction date, these financial instruments that are classified in level 3 of the fair value hierarchy are valued using valuation techniques that incorporate one or more significant unobservable inputs, and therefore involve the greatest degree of management judgements. These judgements include (a) determining the appropriate valuation methodology and/or model for each type of level 3 financial instrument; (b) determining model inputs based on an assessment of relevant empirical market data, including prices evidenced in market transactions, interest rates, credit spreads, volatilities, and correlations; and (c) determining the appropriate valuation adjustments to reflect counterparty credit quality, liquidity considerations, and other observations as it pertains to the individual financial instrument.

See Note 2(v), “Fair Value Measurements,” to the consolidated financial statements for further discussion regarding fair value of financial instruments.
Goodwill and Other Intangible Assets
We account for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.
Goodwill includes the excess of the purchase price over the fair value of net assets acquired in business combinations and the acquisition of noncontrolling interests. ASC 350 – Intangibles - Goodwill and Other, as amended by Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment, permits management to perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its corresponding carrying value. If management determines the reporting unit's fair value is more likely than not less than its carrying value, a quantitative analysis will be performed to compare the fair value of the reporting unit with its corresponding carrying value.
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If the conclusion of the quantitative analysis is that the fair value is in fact less than the carrying value, management will recognize a goodwill impairment charge for the amount by which the reporting unit’s carrying value exceeds its fair value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. We operate six reporting units, which are the same as our reporting segments described in Note 24 – Business Segments: the Capital Markets segment, Wealth Management segment, Financial Consulting segment, Communications segment, and Consumer Products segment and the All Other category. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.
We review the carrying value of our finite-lived amortizable intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair market value.

In performing the annual review of goodwill and other intangible assets at December 31, 2024, qualitative factors indicated it could be more likely than not that the carrying value of goodwill and other intangible assets for the Nogin reporting unit could be impaired and the tradename for the Targus reporting unit could be impaired. For the Targus reporting unit, there were also qualitative factors in performing the interim and annual analysis at June 30, 2024, December 31, 2023 and September 30, 2023 that indicated it could be more likely than not that the carrying value of goodwill and tradename for the Targus reporting unit could be impaired. As more fully described in Note 10, based on the results of these analyses, we recorded non-cash impairment charges of $105.4 million during the year ended December 31, 2024 which included impairment charges related to (a) indefinite lived assets of $84.3 million related to goodwill and $5.0 million related to tradenames and (b) $16.0 million related to finite-lived intangible assets for customer relationships, internally developed software and other intangible assets, and trademarks. We recorded non-cash impairment charges of $70.3 million during the year ended December 31, 2023 which included impairment charges related to (a) indefinite lived assets of $53.1 million related to goodwill and $15.5 million related to tradenames and (b) $1.7 million related to finite-lived tradename in the Capital Markets segment that was no longer used by us. There were no impairments of goodwill or indefinite-lived intangibles identified during the year ended December 31, 2022. During the year ended December 31, 2022, we recognized $4.2 million impairment of finite-lived intangibles representing the carrying amount of tradenames and software development costs as a result of the reorganization and consolidation activities in the Wealth Management segment and the Communications segment, which was included as a restructuring charge in our consolidated statements of operations.
See Note 2(u), “Goodwill and Other Intangible Assets,” to the consolidated financial statements for further discussion regarding goodwill impairment.
Income Taxes
The Company is subject to the income tax laws of the various jurisdictions in which it operates, including U.S. federal, state and local, and non-U.S. jurisdictions. These laws are often complex and may be subject to different interpretations. To determine the financial statement impact of accounting for income taxes, including the provision for income tax expense and unrecognized tax benefits, management must make assumptions and judgments about how to interpret and apply these complex tax laws to numerous transactions and business events, as well as make judgments regarding the timing of when certain items may affect taxable income in the U.S. and non-U.S. tax jurisdictions.

The Company’s interpretations of tax laws in the U.S. and non-U.S. jurisdictions are subject to review and examination by the various taxing authorities in the jurisdictions where the Company operates, and disputes may occur regarding its view on a tax position. Generally, disputes over interpretations with the various taxing authorities may be settled by audit or administrative appeals in the tax jurisdictions in which the Company operates. The Company regularly reviews whether it may be assessed additional income taxes as a result of the resolution of these matters, and the Company records additional unrecognized tax benefits, as appropriate. In addition, the Company may revise its estimate of income taxes due to changes in income tax laws, legal interpretations, and business strategies. It is possible that revisions in the Company’s estimate of income taxes may materially affect the Company’s results of operations in any reporting period.

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Deferred taxes arise from differences between assets and liabilities measured for financial reporting versus income tax return purposes. Deferred tax assets are recognized if, in management’s judgment, their realizability is determined to be more likely than not. Deferred taxes are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized within the provision for income taxes in the period enacted.

The Company has also recognized deferred tax assets in connection with certain tax attributes, including net operating loss (“NOL”), interest expense limitations and capital loss carryforwards. The Company performs regular reviews to ascertain whether its deferred tax assets are realizable. These reviews include management’s estimates and assumptions regarding future taxable income and may incorporate various tax planning strategies, including strategies that may be available to utilize tax attributes before they expire. In connection with these reviews, if it is determined that a deferred tax asset is not realizable, a valuation allowance is established. The valuation allowance may be reversed in a subsequent reporting period if the Company determines that, based on revised estimates of future taxable income or changes in tax planning strategies, it is more likely than not that all or part of the deferred tax asset will become realizable. As of December 31, 2024, management has recorded a valuation allowance for deferred tax assets that the Company has determined it is more likely than not that the deferred tax assets will not be realized.

The Company adjusts its unrecognized tax benefits as necessary when new information becomes available, including changes in tax law and regulations and interactions with taxing authorities. Uncertain tax positions that meet the more-likely-than-not recognition threshold are measured to determine the amount of benefit to recognize. An uncertain tax position is measured at an amount of benefit that management believes is more likely than not to be realized upon settlement. It is possible that the reassessment of unrecognized tax benefits may have a material impact on the Company’s effective income tax rate in the period in which the reassessment occurs. Although the Company believes that its estimates are reasonable, the final tax amount could be different from the amounts reflected in the Company’s income tax provisions and accruals. To the extent that the final outcome of these amounts is different than the amounts recorded, such differences will generally impact the Company’s provision for income taxes in the period in which such a determination is made.

The Company’s provision for income taxes is composed of current and deferred taxes. The current and deferred tax provisions are calculated based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are generally recorded in the period when the tax returns are filed and these adjustments could impact the Company’s effective tax rate.

See Note 16, “Income Taxes,” to the consolidated financial statements for further discussion regarding income taxes.
Recent Accounting Standards
See Note 2(af) to the accompanying financial statements for recent accounting standards we have not yet adopted and recently adopted.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We transact business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. Transaction gains (losses) are included in selling, general and administrative expenses in our consolidated statements of operations.
Interest Rate Risk
We have exposure to interest rate risk which primarily relates to changes in cost of borrowings as a result of changes in interest rates. We utilize borrowings under our senior notes payable and credit facilities to fund costs and expenses incurred in connection with our acquisitions and operations. Borrowings under our senior notes payable are at fixed interest rates and borrowings under our credit facilities bear interest at a floating rates of interest. As of December 31, 2024, approximately 88% of our debt obligations bore interest at fixed rates and not impacted by changes in interest rates. Our interest expense from variable-rate debt obligations is principally affected by changes in the published SOFR rate in connection with our credit facilities. Our variable-rate debt obligations are principally used to provide financing to our operating businesses which are supported by cash flows from operations for those businesses.
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The cash flows of such operating businesses are utilized to help to mitigate any increases in interest expense as a result of an increase in interest rates. Our Nomura credit facility is also a variable rate debt obligation which is collateralized by a portfolio of investment assets and certain operating businesses. Increased interest costs on the Nomura facility as a result of a rise in interest rates are partially offset by variable rate investment assets that are securing the facility as well as cash flows from other businesses securing the facility.
Management monitors the composition of debt obligations and debt investments on a periodic basis, as well as projected net interest income, interest coverage, and sensitivity of interest income changes in interest rates. This exposure is also monitored by our risk management group and reviewed periodically in risk committee meetings. If floating rates of interest had increased by 1% during the year ended December 31, 2024, the rate increase would have resulted in an increase in interest expense of $5.3 million. If conditions existed in which Management would seek to mitigate potential interest rate risk, Management could elect to take steps such as entering into interest rate hedges, and refinancing debt obligations from floating-rate to fixed-rate.
An objective of our investment activities is to preserve capital for the purpose of funding operations while at the same time maximizing the income that we receive from investments without significantly increasing risk. To achieve these objectives, our investments allow us to maintain a portfolio of cash equivalents, short-term investments through a variety of securities owned that primarily includes common stocks, loans receivable, and investments in partnership interests. Our cash and cash equivalents through December 31, 2024 included amounts in bank checking and liquid money market accounts. We may be exposed to interest rate risk through trading activities in convertible and fixed income securities as well as U.S. Treasury securities, however, based on our daily monitoring of this risk, we believe we currently have limited exposure to interest rate risk in these activities.
Foreign Currency Risk
The majority of our operating activities are conducted in U.S. dollars. Revenues generated from our foreign subsidiaries totaled $134.5 million and $154.4 million during the years ended December 31, 2024 and 2023, respectively, or 16.0% and 10.5% of our total revenues of $838.6 million and $1.5 billion during the years ended December 31, 2024 and 2023, respectively. The financial statements of our foreign subsidiaries are translated into U.S. dollars at period-end rates, with the exception of revenues, costs, and expenses, which are translated at average rates during the reporting period. We include gains and losses resulting from foreign currency transactions in income, while we exclude those resulting from translation of financial statements from income and include them as a component of accumulated other comprehensive income (loss). Transaction gains (losses), which were included in our consolidated statements of operations, amounted to a gain of $2.8 million and loss of $2.3 million during the years ended December 31, 2024 and 2023, respectively. We may be exposed to foreign currency risk; however, our operating results during the years ended December 31, 2024 and 2023 included $134.5 million and $154.4 million of revenues, respectively, and $23.1 million and $27.2 million of operating expenses, respectively, from our foreign subsidiaries. A 10% appreciation or depreciation of the U.S. dollar relative to the local currency exchange rates would result in an approximately $0.3 million change in our operating income during the years ended December 31, 2024 and 2023, respectively.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 is submitted as a separate section beginning on page 134 of this Annual Report on Form 10-K (the “Financial Statements”).
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that is designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Co-Chief Executive Officers and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Under the supervision and with the participation of our management, including our Co-Chief Executive Officers and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act. Based upon the foregoing evaluation, our Co-Chief Executive Officers and our Chief Financial Officer concluded that as of December 31, 2024 our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses described in the Report of Management on Internal Control over Financial Reporting.

Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Under the supervision and with the participation of management, including our Co-Chief Executive Officers and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024.

In making our assessment of the Company’s internal control over financial reporting as of December 31, 2024, we excluded from our assessment the internal control over financial reporting at Nogin, Inc. (“Nogin”). On May 3, 2024, B. Riley completed the acquisition of Nogin as result of a debt facility agreement that was subsequently converted to equity.

Management concluded that two of the material weaknesses identified in 2023 are fully remediated. Management has also identified additional material weaknesses for the year ended December 31, 2024, both as fully described below.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis.

Remediation of Previously Reported Material Weaknesses

The following two material weaknesses in internal control over financial reporting that were reported in our Annual Report on Form 10-K for the year ended December 31, 2023, have been remediated as of December 31, 2024. The remediation of our internal control over financial reporting to address the underlying causes of the material weaknesses are summarized below:

•The Company enhanced the precision level of user access management procedures and controls related to the previously identified material weakness relating to IT general controls, specifically user access management controls, in our B. Riley Advisory Holdings, LLC subsidiaries primarily.

•The Company was able to rely on the System and Organization Controls (“SOC”) 1 Type 2 report associated with the utilization of our third-party service organization's hosted IT solution for the processing of customer sales and billing information in our Marconi Wireless Holdings, LLC subsidiary. As a result, management in conjunction with the complementary user entity controls was able to rely on the design and operating effectiveness of the internal control processes performed by the third-party service organization.

Material Weaknesses Identified during the Current Period
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For the period ended December 31, 2024:

•The Company identified two material weaknesses in controls related to information technology general controls (“ITGCs”) at Lingo Management, LLC and Tiger US Holdings, Inc. and subsidiaries in the areas of user access, program change management, and information technology (“IT”) operations over IT systems and the reports generated from these systems used in the execution of controls that support the Company’s financial reporting processes. As a result, business process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted.

•The Company identified a material weakness relating to the design and operating effectiveness of management’s review controls over the investment valuation of Level 3 investments such that management’s review procedures were not operating at a level of precision to prevent or detect a potential material misstatement in the consolidated financial statements.

•The Company identified a material weakness relating to the design and operating effectiveness of management’s review controls over the identification and disclosure of material related party transactions in accordance with Accounting Standards Codification (“ASC”) 850, Related Party Disclosures. Specifically, management’s review procedures were not operating at a level of precision sufficient to prevent or detect a potential material misstatement in the consolidated financial statements.

•The Company identified a material weakness relating to the design and operating effectiveness of management’s review controls over the income tax provision such that management’s review procedures were not operating at a level of precision to prevent or detect a potential material misstatement in the consolidated financial statements.

•The Company identified material weaknesses in controls related to ITGCs at Bebe Stores Inc. in the areas of user access, program change management, and IT operations over IT systems and the reports generated from these systems used in the execution of controls that support the Company’s financial reporting processes. As a result, business process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted. Additionally, the Company did not consistently retain evidence of review, further contributing to the material weakness.

•The Company identified a material weakness in controls due to its inability to rely on the SOC 1 Type 2 reports associated with two third-party service organizations that support significant elements of its financial reporting processes over B. Riley Retail Solutions, LLC. Specifically, the Company did not have adequate ITGCs in place over the IT systems and related reports at these third-party service providers, which are used in the execution of controls supporting the Company’s financial reporting. As a result, business process automated and manual controls that were dependent on these ITGCs at the service organizations could have been adversely impacted.

•The Company identified two material weaknesses relating to the design and operating effectiveness of management’s review controls over goodwill such that management did not adequately evaluate relevant factors and indicators to determine whether it was more likely than not that the fair value of a business segment was less than the carrying amount of goodwill and other intangibles assigned to that reporting unit as well as a lack of appropriate approval in accordance with Company policy over significant decisions involving goodwill.

•The Company identified a material weakness related to the design and operating effectiveness of controls related to journal entry controls. There was a lack of segregation of duties considerations associated within the journal entry approval workflow. The workflow in the system did not systemically prevent individuals who can post journal entries to also approve the same entries. Additionally, the Company did not retain evidence of review of certain journal entries.

Prior to filing this Annual Report on Form 10-K, we completed significant additional procedures for the year ended December 31, 2024. Based on these procedures, management believes that our consolidated financial statements included in this Form 10-K have been prepared in accordance with GAAP. Our Co-Chief Executive Officers and Chief Financial Officer have certified that, based on their knowledge, the financial statements, and other financial information included in this Form 10-K, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this Form 10-K.

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Remediation Plan for Current Period Material Weaknesses

Management has begun to implement and plans to continue implementing measures designed to ensure that the control deficiencies contributing to the material weaknesses, described above, are remediated, such that the controls are designed, implemented, and operating effectively. The remediation actions for the material weaknesses noted above include:

•Prior to December 31, 2024, the Retail Solutions material weakness was remediated through the divestiture of the business in November 2024.

•Implementation and enhancement of its ITGCs and related policies. This includes providing resources, training and support to process owners and reviewers with a specific focus on understanding the risks being addressed by the controls they are performing, as well as requirements for sufficient documentation and evidence in the execution of the controls.

•Updating of its IT policies and procedures to enhance user access, change management, and IT operations processes to ensure timely and accurate assignment of access rights and prompt removal of access for terminated employees, and to ensure appropriate restriction of access rights based on job responsibilities.

•Designing of alternative processes and controls to mitigate the risk of the third-party services providers not producing the SOC 1 Type 2 reports.

•Implementation of measures designed to ensure controls are appropriately designed, implemented, and operating effectively as it relates to the material weakness identified in investment valuations, related party transactions, income taxes, goodwill impairment assessment, and journal entries. The remediation actions include the improvement of the precision level of management review controls, documentation retention and additional resources.

While the foregoing measures are intended to effectively remediate the material weaknesses described in this Item 9A, it is possible that additional remediation steps will be necessary. As such, as we continue to evaluate and implement our plan to remediate the material weaknesses, our management may decide to take additional measures to address the material weaknesses or modify the remediation steps described above. The weaknesses will not be considered remediated, however, until the applicable controls operate for a sufficient period and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of these material weaknesses will be completed by the end of fiscal 2025.

Our independent registered public accounting firm, Marcum LLP (“Marcum”), has audited the consolidated financial statements and has issued an adverse attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2024, as stated in their report which is included in the Financial Statements of this Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

Excluding the above remediation actions of prior disclosed material weaknesses and the identification of new current period material weaknesses as fully described above, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) to which this report relates that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. OTHER INFORMATION
Certain of our officers have made elections to participate in, and are participating in, our employee stock purchase plan and 401(k) plan and have made, and may from time to time make, elections to have shares withheld upon the vesting of restricted stock units ("RSUs") to cover withholding taxes, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1 under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements (as defined in Item 408(c) of Regulation S-K).
On September 18, 2025, the Company’s Board of Directors re-appointed Messrs. Riley, Kelleher, Yessner, Forman and Weitzman as the Company’s executive officers. Mr. Andrew Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc.
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Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our board of directors (the “Board”) are elected annually to a one year term to serve as directors until the next annual meeting of stockholders, or until their respective successors are duly elected and qualified or their earlier death, resignation, or removal. There are no familial relationships between any of our directors and any other director or any of our executive officers. No arrangement or understanding exists between any of our directors and any other person or persons pursuant to which any director was or is to be selected as our director. The following table provides the name, age, and position(s) of each of our directors as of September 18, 2025:

Name Age Committees
Bryant R. Riley 58 None.
Thomas J. Kelleher 57 None.
Robert L. Antin 75 Compensation Committee, Environmental, Social and Corporate Governance Committee
Tammy Brandt 50 None.
Robert D’Agostino 58 Audit Committee, Compensation Committee*
Renée E. LaBran 65 Audit Committee, Environmental, Social and Corporate Governance Committee
Randall E. Paulson 63 Audit Committee*
Michael J. Sheldon 65 Compensation Committee
Mimi K. Walters 62 Environmental, Social and Corporate Governance Committee*
* Chairman of the respective committee.

Bryant R. Riley has served as our Chairman and Co-Chief Executive Officer since June 2014 and July 2018 respectively, and as a director since August 2009. He also previously served as our Chief Executive Officer from June 2014 to July 2018. In addition, Mr. Riley served as the Chairman of B. Riley & Co., LLC since founding the stock brokerage firm in 1997 until its combination with FBR Capital Markets & Co., LLC in 2017 and as Chief Executive Officer of B. Riley & Co., LLC from 1997 to 2006. He also served as Chairman of B. Riley Principal Merger Corp. from April 2019 to February 2020, at which time it completed its business combination with Alta Equipment Group, Inc. (NYSE: ALTG); as Chairman of B. Riley Principal Merger Corp. II from May 2020 to November 2020 at which time it had completed it business combination with Eos Energy Enterprises Inc. (NASDAQ: EOSE); and as Chairman of B. Riley Principa1 150 Merger Corp. from June 2020 to July 2022, at which time it completed its business combination with FaZe Holdings, Inc. (NASDAQ: FAZE). He served as Chairman of B. Riley Principal 250 Merger Corp. from May 2021 until its dissolution in May 2023. Since November 2024, Mr. Riley serves on the board of Great American Holdings, LLC. Mr. Riley served as director of Select Interior Concepts, Inc. from November 2019 until October 2021. He also previously served on the board of Babcock & Wilcox Enterprises, Inc. (NYSE: BW) from April 2019 to September 2020; Sonim Technologies, Inc. (NASDAQ: SONM) from October 2017 to March 2019; and Freedom VCM Holdings, LLC (fka Franchise Group, Inc., a public company (NASDAQ: FRG), with the last day of trading of 8/21/23) from September 2018 through March 2020, rejoining in August of 2023. Freedom VCM Holdings, LLC filed for bankruptcy on November 3, 2024 and Mr. Riley resigned as director in June 2025. Mr. Riley received his B.S. in Finance from Lehigh University. Mr. Riley’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Riley’s extensive experience serving on other public company boards is an important resource for the Board.

Thomas J. Kelleher has served as our Co-Chief Executive Officer since July 2018 and as a member of our board since October 2015. He also previously served as President from August 2014 to July 2018. Mr. Kelleher previously served as Chief Executive Officer of B. Riley & Co., LLC, a position he held from 2006 to 2014. From the firm’s founding in 1997 to 2006, Mr. Kelleher held several senior management positions with B. Riley & Co., LLC, including Chief Financial Officer and Chief Compliance Officer. Mr. Kelleher served on the board of directors of Special Diversified Opportunities Inc. from October 2015 to June 2017. He received his Bachelor of Science in Mechanical Engineering from Lehigh University. Mr. Kelleher’s experience and expertise in the investment banking industry provides the Board with valuable insight into the capital markets. Mr. Kelleher’s executive leadership experience is an important resource for the Board.

Robert L. Antin has served as a member of the Board since June 2017. Mr. Antin was a co-founder of VCA Inc., a national animal healthcare company that provides veterinary services, diagnostic testing and various medical technology products and related services to the veterinary market and was publicly traded (NASDAQ: WOOF) until the company was privately acquired in September 2017. Mr. Antin has served as a Chief Executive Officer and President at VCA Inc. since its inception in 1986. Mr. Antin also served as the Chairman of the Board of VCA, Inc. from inception through the September 2017 acquisition.
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Mr. Antin currently serves on the Board of Directors of Rexford Industrial Realty, Inc. (NYSE: REXR) since July 2013. He previously served on the Board of Heska Corporation (NASDAQ: HSKA) from November 2020 to May 2023. From September 1983 to 1985, Mr. Antin was President, Chief Executive Officer, a director, and co-founder of AlternaCare Corp., a publicly held company that owned, operated and developed freestanding out-patient surgical centers. From July 1978 until September 1983, Mr. Antin was an officer of American Medical International, Inc., an owner and operator of health care facilities. Mr. Antin received his MBA with a certification in hospital and health administration from Cornell University. Mr. Antin’s executive leadership experience provides an important resource to the Board.

Tammy Brandt has served as a member of the Board since December 20, 2021. Since February 2023, Ms. Brandt has served as a senior member of the legal team at Creative Artists Agency (CAA), a leading global entertainment and sports agency. From March 2021 to January 2023, Ms. Brandt served as Chief Legal Officer; Head of Business and Legal Affairs at FaZe Clan Inc. (NASDAQ: FAZE), a leading gaming, lifestyle, and media platform. She has served on the Lambda Legal West Coast Leadership Board from 2019 to December 2024, and has served as a member of the Bluffton University Board of Trustees since July 2023. From 2018 to June 2022, Ms. Brandt served on the Board of Cayton Children’s Museum, including as chair of its Audit Committee and a member of its Nomination and Governance Committee. From May 2017 to May 2021, she served as Chief Legal Officer at Dreamscape Immersive, and previously served as Chief Corporate, Securities, M&A and Alliance Counsel at DXC Technology and its predecessor, Computer Sciences Corporation; and as General Counsel at ServiceMesh, Inc., an enterprise software company in the cloud management space. Ms. Brandt is a graduate of Notre Dame Law School, where she was Managing Editor of the Notre Dame Law Review, and graduated summa cum laude with a Bachelor of Science in economics and business administration from Bluffton University. Ms. Brandt’s business and legal experience provides an important resource to the Board.

Robert D’Agostino has served as a member of the Board since October 2015. Mr. D’Agostino has served as President of Q-mation, Inc. since 1999. Q-mation, Inc. is a leading supplier of software solutions targeted at increasing operational efficiencies and asset performance in manufacturing companies. Mr. D’Agostino joined Q-mation, Inc. in 1990 and held various sales, marketing, and operations management positions prior to his appointment as President. He previously served on the board of Alliance Semiconductor Corp. from July 2005 to February 2012. Mr. D’Agostino graduated from Lehigh University with a B.S. in Chemical Engineering. Mr. D’Agostino’s executive leadership experience provides an important resource to the Board.

Renée E. LaBran has served as a member of the Board since August 11, 2021. Ms. LaBran co-founded Rustic Canyon Partners, a technology venture capital fund launched in 2000, and has served from 2006 to 2021 as Partner with Rustic Canyon/Fontis Partners, an investment fund which is now completed, targeting growth investments and lower middle market buy-outs in media, consumer goods, and business and consumer services industries. During this time, she served as a board director and advisor to multiple portfolio companies while providing oversight of her investment firm’s finance and operations functions. Ms. LaBran currently serves on the board of Idealab, Inc. since March 2015 and Stravos Education, LLC since August 2022. Since December 2024, she also serves as Interim President of FindLaw, recently acquired by Internet Brands, a digital media, marketing services and software company. Ms. LaBran previously served on the boards of Iconic Sports Acquisition Corp (NYSE:ICNC-UN) from October 2021 to October 2023; Sambazon, Inc. from 2009 to 2021; and TomboyX from 2018 to 2019. From March 2015 to December 2020, she served as a governor-appointed non-attorney public member on the Board of Trustees for the State Bar of California. Ms. LaBran is an Adjunct Professor at UCLA Anderson School of Management’s MBA program, earned an M.B.A. with distinction from Harvard Business School, and received an A.B. degree in Economics from UC Berkeley. Ms. LaBran’s board experience, business and financial acumen, and venture capital experience provide an important resource to the Board.

Randall E. Paulson has served as a member of the Board since June 18, 2020. Mr. Paulson currently serves on the Board of Directors of Dash Medical Holdings, LLC. He also served on the board of Testek, Inc. from 2016 to November 2024 when the company was sold. Testek was a portfolio company of Odyssey Investment Partners, LLC where he served as a Managing Principal from 2005 to 2019. Prior to this, Mr. Paulson was Executive Vice President — Acquisitions and Strategic Development at National Financial Partners, a New York based consolidator of independent financial services distribution firms. From 1993 to 2000, Mr. Paulson was at Bear, Stearns & Co. Inc. where he was a Senior Managing Director in the M&A and Corporate Finance groups. Prior to Bear Stearns, Mr. Paulson was a member of GE Capital’s merchant banking group. A native of Minnesota, Mr. Paulson received a BSB in Accounting from the University of Minnesota and his MBA from the Kellogg Graduate School of Management at Northwestern University. Mr. Paulson’s financial services industry and accounting experience will provide an important resource to the Board.

Michael J. Sheldon has served as a member of the Board since July 2017. Mr. Sheldon served as CEO of Deutsch North America, one of the most awarded creative agencies in the United States, from January 2015 until his retirement in December 2019. Mr. Sheldon had also served as CEO of Deutsch’s Los Angeles office from September 1997 to January 2015. Mr. Sheldon received a B.A. degree from Michigan State University in Advertising. Mr. Sheldon’s entrepreneurial skills and marketing experience provide an important resource to the Board.

Mimi K. Walters has served as a member of the Board since July 12, 2019. She served from 2015 to 2019 as the U.S. Representative for California’s 45th Congressional District. She has worked on key legislation, business and policy initiatives related to technology, energy, environmental and healthcare, including the opioid crisis and veterans’ medical services. As a member of House leadership, she served on the Energy and Commerce Committee, the Judiciary Committee and the Transportation and Infrastructure Committee. Ms. Walters represented California’s 37th State Senate District from 2008 to 2014, where she served on the Banking and Financial Institutions Committee and as Vice Chair for the Public Employment and Retirement Committee.
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From 2004 to 2008, she represented California’s 73rd Assembly District. Ms. Walters was a member of the Laguna Niguel City Council from 1996 to 2004, serving as Mayor in 2000, and chair of Laguna Niguel’s Investment and Banking Committee. Previously, Ms. Walters was an investment executive at Drexel Burnham Lambert and, subsequently, Kidder, Peabody & Co. from 1988 to 1995. Currently, Ms. Walters is the Chief Commercial Officer for Leading Edge Power Solutions, LLC since November 2019. In addition, she serves on the Board of Directors of Eos Energy Enterprises, Inc. (NASDAQ: EOSE) since November 2020, and Pacific Specialty Insurance Company since January 2025. Ms. Walters earned a Bachelor of Arts in political science from the University of California, Los Angeles. Ms. Walters extensive political and financial experience provides an important resource to the Board.

Executive Officers

Executive officers are elected by our Board and serve at its discretion. There are no family relationships between any director or executive officer and any other directors or executive officers. Set forth below is information regarding our executive officers as of September 18, 2025.

Name Position Age
Bryant R. Riley Chairman and Co-Chief Executive Officer 58
Thomas J. Kelleher Co-Chief Executive Officer 57
Scott Yessner Executive Vice President and Chief Financial Officer 55
Alan N. Forman Executive Vice President, General Counsel and Secretary 64
Howard Weitzman Senior Vice President, Chief Accounting Officer 63
Bryant Riley and Thomas Kelleher’s biographical information is included above with those of the other members of our Board.

Scott Yessner has served as our Executive Vice President and Chief Financial Officer since June 2025 and has previously served as Chief Financial Officer of Funko, Inc, from 2022 to 2023. Prior to that role, Mr. Yessner served as Chief Financial Officer of California Expanded Metal Products Company (CEMCO), from 2020 to 2022, and as Chief Financial Officer of Universal Technical Institute from 2018 to 2019. Mr. Yessner received a B.A in Economics from the University of California, Los Angeles and is a CPA licensed in California.

Alan N. Forman has served as our Executive Vice President, General Counsel and Secretary since May 2015. Prior to joining us, Mr. Forman served as Senior Vice President and General Counsel of STR Holdings, Inc. from April 2012 until May 2015, and as Vice President and General Counsel from May 2010 to April 2012. Mr. Forman was also a partner at Brown Rudnick LLP from May 1998 to May 2010. Mr. Forman brings extensive experience in corporate and securities law including intellectual property, licensing agreements, financing transactions, corporate governance, and M&A. Mr. Forman holds a B.A. in Economics from Emory University and a J.D. from the George Washington University Law School.

Howard Weitzman has served as our Senior Vice President, Chief Accounting Officer since December 2009. Prior to December 2009, Mr. Weitzman served as a Senior Manager in the SEC Services Group in the audit practice at Moss Adams, LLP and also worked twelve years in public accounting at two “Big 4” accounting firms, most recently as a Senior Manager in the financial services audit practice of Deloitte & Touche, LLP. Mr. Weitzman also held various senior financial management positions, with Banner Holdings, Inc. as the Chief Financial Officer of Central Financial Acceptance Corporation and Controller and Principal Accounting Officer of Central Rents, Inc. Mr. Weitzman also served as a Senior Vice President and Chief Financial Officer of Peoples Choice Financial Corporation. Mr. Weitzman received a B.S. in Accounting from California State University, Northridge and is a California licensed Certified Public Accountant.


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Corporate Governance

Environmental, Social and Governance (“ESG”)

The Company recognizes the increasing importance of ESG initiatives with respect to all stakeholders. In 2021, the Company formed a management committee to assess our ESG and diversity efforts, to develop and execute our strategies, and to track our progress in this endeavor. We strive to expand our efforts in attracting talent from diverse cultural backgrounds to support the expansion of racial and gender diversity, equity, and inclusion within the industries in which we operate. We participate in targeted job fairs and events to seek out diverse talent recruits. We partner with a nonprofit foundation whose mission is to develop industry education programs that support developing diverse leaders as they prepare to embark upon their careers.

Meetings and Committees of the Board

Our Board is responsible for overseeing the management of our business. We keep our directors informed of our business at meetings and through reports and analyses presented to the Board and the committees of the Board. Regular communications between our directors and management also occur apart from meetings of the Board and committees of the Board.

Meeting Attendance

Our Board normally meets quarterly but may hold additional meetings as required. During fiscal year 2024, the Board held three regularly scheduled meetings, and 38 additional meetings. Each of our directors attended at least 75% of the total number of Board meetings and committee meetings of the Board on which he/she served. We do not have a policy requiring that directors attend our annual meeting of stockholders. A majority of our directors attended our 2024 annual meeting of stockholders.

Committees of the Board of Directors

Our Board currently has three standing committees to facilitate and assist the Board in the execution of its responsibilities: the Audit Committee, the Compensation Committee, and the ESG Committee.

Audit Committee

Our Audit Committee is composed of Randall E. Paulson (Chairperson), Renée E. LaBran, and Robert D’Agostino. Our Board has affirmatively determined that each member of the Audit Committee during 2024 was, and each current member is, independent under NASDAQ Marketplace Rule 5605(a)(2), and meets all other qualifications under NASDAQ Marketplace Rule 5605(c) and the applicable rules of the SEC. Our Board has also affirmatively determined that Randall E. Paulson qualifies as an “audit committee financial expert” as such term is defined in Regulation S-K under the Securities Act of 1933. During 2024, the Audit Committee held two regularly scheduled meetings, and 28 additional meetings. The Audit Committee acts pursuant to a written charter, which is available for review on our website at http://ir.brileyfin.com/governance. The responsibilities of the Audit Committee include overseeing, reviewing, and evaluating our financial statements, accounting and financial reporting processes, internal control functions and the audits of our financial statements. The Audit Committee is also responsible for the appointment, compensation, retention, and as necessary, the termination of our independent auditors.

Compensation Committee

Our Compensation Committee is composed of Robert D’Agostino (Chairperson), Robert L. Antin and Michael J. Sheldon. The Board has affirmatively determined that each member of the Compensation Committee during 2024 was, and each current member is, independent as such term is defined under NASDAQ Marketplace Rule 5605(a)(2) and the applicable rules of the SEC. During 2024, the Compensation Committee held four regularly scheduled meetings, and two additional meetings. The Board has adopted a charter for the Compensation Committee (the “Compensation Committee Charter”), which is available for review on our website at http://ir.brileyfin.com/governance. The Compensation Committee reviews and makes recommendations to the Board concerning the compensation and benefits of our executive officers, including the Co-Chief Executive Officers, and directors, oversees the administration of our stock incentive and employee benefits plans and reviews general policies relating to compensation and benefits.

ESG Committee

Our ESG Committee is composed of Mimi K. Walters (Chairperson), Robert L. Antin and Renée E. LaBran. The Board has affirmatively determined that each member of the ESG Committee during 2024 was, and each current member is, independent as such term is defined under NASDAQ Marketplace Rule 5605(a)(2). The ESG Committee evaluates and recommends to the Board nominees for each election of directors. During 2024, the ESG Committee held three regularly scheduled meetings. The Board has adopted a charter for the ESG Committee (the “ESG Committee Charter”), and a copy of that charter is available for review on our website at http://ir.brileyfin.com/governance. The responsibilities of the ESG Committee include making recommendations to the Board with respect to the nominations or elections of directors and providing oversight of our corporate governance policies and practices.
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Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms filed by such person.

Based solely on our review of such forms furnished to us and written representations from our reporting persons, we believe that all filing requirements applicable to our executive officers, directors and more than 10% stockholders were met in a timely manner.

Code of Business Conduct and Ethics

Our Board has adopted a Code of Business Conduct and Ethics that applies to all our directors, officers, and employees. The Code of Business Conduct and Ethics is available for review on our website at http://ir.brileyfin.com/governance, and is also available in print, without charge, to any stockholder who requests a copy by writing to us at B. Riley Financial, Inc., 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025, Attention: Investor Relations. Each of our directors, employees, and officers, including our Co-Chief Executive Officers, Chief Financial Officer, and Chief Accounting Officer, are required to comply with the Code of Business Conduct and Ethics. There have not been any waivers of the Code of Business Conduct and Ethics relating to any of our executive officers or directors in the past year.

Corporate Governance Documents

Our corporate governance documents, including the Audit Committee Charter, Compensation Committee Charter, ESG Committee Charter and Code of Business Conduct and Ethics, are available, free of charge, on our website at https://ir.brileyfin.com/governance. Please note, however, that the information contained on the website is not incorporated by reference in, or considered part of, this Form 10-K. We will also provide copies of these documents, free of charge, to any stockholder upon written request to B. Riley Financial, Inc., 11100 Santa Monica Boulevard, Suite 800, Los Angeles, CA 90025, Attention: Investor Relations.

Changes in Stockholder Nomination Procedures

There have been no material changes to the procedures by which stockholders may recommend individuals for consideration by the ESG Committee as potential nominees for director since such procedures were last described in our annual proxy statement filed with the SEC on May 10, 2024.

Board Leadership Structure

Pursuant to our Corporate Governance Guidelines and Bylaws, the Board may, but is not required to, select a Chairman of the Board on an annual basis. In addition, the positions of Chairman of the Board and Co-Chief Executive Officer may be filled by one individual or two different individuals. Bryant Riley, our Co-Chief Executive Officer, currently serves as Chairman of our Board.

The Board has determined that its current structure, with a combined Chairman and Co-Chief Executive Officer and independent directors as members of each Board committee, is in the best interests of our Company and our stockholders. The Board believes that combining the Chairman and Co-Chief Executive Officer positions is currently the most effective leadership structure for our Company given Mr. Riley’s in-depth knowledge of many of the businesses and industries in which we operate, his ability to formulate and implement strategic initiatives, and his extensive contact with and knowledge of certain of our customers. In addition, as a member of our Board of Directors since 2009, Chairman of B. Riley & Co., LLC since founding the stock brokerage firm in 1997 and Chief Executive Officer of B. Riley & Co., LLC from 1997 to 2006, Mr. Riley provides important continuity in the operation of our business and its oversight by our Board. His knowledge and experience, as well as his role as our Co-Chief Executive Officer, position him to elevate the most critical business issues for consideration by our independent directors.

We believe that the independent nature of the Board committees, as well as the practice of our independent directors regularly meeting in executive session without members of the Board who are also members of management including Bryant Riley and Thomas Kelleher or other members of our management present, ensures that our Board maintains a level of independent oversight of management that we believe is appropriate for our Company. We do not have a lead independent director; however, pursuant to our Corporate Governance Guidelines, the non-management members of the Board may at any time decide to appoint a Presiding Director to provide leadership of executive sessions of the Board and consult with the Chairman with respect to matters to be brought before the Board, should it believe that such an appointment would be beneficial to the Company and its stockholders.
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Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee is or has been an officer or employee of the Company. No member of our Compensation Committee or our Board is or has been in 2024 an executive officer of another entity at which one of our executive officers serves or has in 2024 served on either the board of directors or the Compensation Committee. For information about related person transactions involving members of our Compensation Committee, see “Certain Relationships and Related Transactions.”

Board Role in Risk Management

The Board as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board committees. These committees then provide reports to the full Board. The oversight responsibility of the Board and its committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment, and management of critical risks and management’s risk mitigation strategies. These areas of focus include strategic, operational, cybersecurity, financial and reporting, succession and compensation, and other risks. The Board and its committees oversee risks associated with their respective areas of responsibility, as summarized below. Each committee meets in executive session with key management personnel and representatives of outside advisors as required.

Board/Committee
Primary Areas of Risk Oversight
Full Board Risks and exposures associated with our business strategy and other current matters that may present material risk to our financial performance, operations, prospects, or reputation.
Audit Committee Overall risk management profile and policies with respect to risk assessment and risk management, cybersecurity, material pending legal proceedings involving the Company, other contingent liabilities, as well as other risks and exposures that may have a material impact on our financial statements.
Compensation Committee Risks and exposures associated with management succession planning and executive compensation programs and arrangements, including incentive plans.
ESG Committee
 Risks and exposures associated with director succession planning, corporate governance, and overall board effectiveness.


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COMPENSATION DISCUSSION AND ANALYSIS

The following compensation discussion and analysis provides information regarding our overall compensation philosophy and objectives and the elements of compensation paid to our named executive officers in 2024.

Our named executive officers for 2024, determined in accordance with SEC rules, are:

•Bryant R. Riley, Chairman and Co-Chief Executive Officer
•Thomas J. Kelleher, Co-Chief Executive Officer
•Phillip J. Ahn, Chief Financial Officer and Chief Operating Officer(1)
•Kenneth Young, President(2)
•Andrew Moore, Chief Executive Officer of B. Riley Securities, Inc.(3)
•Alan N. Forman, Executive Vice President, General Counsel and Secretary
(1) Mr. Ahn resigned effective as of June 3, 2025. On June 3, 2025, Mr. Scott Yessner joined the Company as Executive Vice President and Chief Financial Officer.
(2) Mr. Young resigned effective as of September 20, 2024.
(3) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.

Executive Summary

2024 Compensation Philosophy

Our executive compensation program is designed (i) to provide incentives to our executive officers to manage and grow our businesses and (ii) to attract, retain, and motivate top quality, effective executives. In addition to general senior management responsibilities, each of our named executive officers also has revenue production or management responsibilities within our operating subsidiaries. In determining compensation for our named executive officers, the primary emphasis is on our consolidated financial performance, but each individual’s performance and/or business unit performance are considered. The effective implementation of this program plays an integral role in our success.

The Compensation Committee of the Board (the “Compensation Committee”) has responsibility for overseeing our compensation philosophy. The Compensation Committee has the primary authority to determine and recommend to the Board for final approval the compensation of our named executive officers.

Compensation Philosophy and Objectives

A substantial portion of each named executive officer’s total compensation is variable and delivered on a pay-for-performance basis. We believe this model provides a key incentive to motivate management to achieve our business objectives. The executive compensation program provides compensation opportunities contingent upon performance that we believe are competitive with practices of other similar financial services firms. We strongly believe that the components of our compensation programs align the interests of our named executive officers with our stockholders and promote long-term stockholder value creation.

We link rewards to both corporate and individual performance, emphasizing long-term results and alignment with our stockholders’ interests. We align compensation with business strategy and risk and provide a mix of performance and retentive-based compensation. Long-term equity compensation is an integral part of our compensation program with awards of equity subject to vesting requirements, including continued employment. Although we do not have formal equity ownership guidelines for our executive officers and other key leaders of our Company, we encourage our executives to maintain a meaningful ownership interest in our Company, in order to align their interests with those of our stockholders.

Our executives are eligible for the same benefit plans available to all of our employees, and we do not provide any executive perquisites, defined benefit plans, or other retirement benefits (other than the defined contribution plan available to employees generally).

Principles and Objectives of Our Compensation Program

The Compensation Committee has discretionary authority over the compensation of our named executive officers. In developing a compensation program for our named executive officers, the Compensation Committee’s goal is to link compensation decisions to both corporate and individual performance, with a focus on rewarding the achievement of financial results, as well as rewarding the individual performance and accomplishments of our named executive officers in light of their respective duties and responsibilities, the impact of their actions on our strategic initiatives, and their overall contribution to the culture, strategic direction, stability and performance of our Company.
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Our Co-Chief Executive Officers recommend to the Compensation Committee the amount and form of compensation for each of our named executive officers other than themselves, and the amount and form of compensation for our Co-Chief Executive Officers are initially developed by the Chairman of the Compensation Committee with input from the committee’s independent compensation consultant, as necessary, and are then reviewed and approved by the Compensation Committee. Our Compensation Committee retains the discretion to compensate and reward our named executive officers based on a variety of other factors, including subjective or qualitative factors.

Principles

Our compensation program for our named executive officers is designed to attract, retain, and motivate executives and professionals of the highest quality and effectiveness while aligning their interests with the long-term interests of our stockholders. The following five “Principles of Compensation” summarize key categories that our Board, the Compensation Committee, and our management team believe are critical to recognize:

•Company Performance — All compensation decisions are made within the context of overall Company performance. We evaluate Company performance primarily from a financial perspective, but also from a strategic perspective.
•Alignment — We believe that the interests of our employees and stockholders should be aligned. Compensation directly reflects both the annual and longer-term performance of the business.
•Risk Management — Compensation practices and decisions are designed to neither encourage nor reward excessive or inappropriate risk taking.
•Employee Contribution — An individual’s compensation, evaluated within the context of overall Company results, is determined by the individual’s contribution to the business. We consider both financial and non-financial factors. In determining individual compensation, teamwork and unselfish behavior are recognized and appropriately rewarded.
•Quality and Retention of Staff — Total compensation levels are calibrated to the market such that we remain competitive for attracting, motivating, and retaining the very best people in light of our business strategy. We seek to maximize the value of an executive’s compensation through both appropriate pay design and effective communication of pay programs. Compensation is structured to encourage long-term service and loyalty.

Objectives

The Compensation Committee seeks, through our compensation programs, to foster an entrepreneurial, results-focused culture that we believe is critical to the success of our Company and to the long-term growth of stockholder value. In addition to appropriately rewarding individual performance, viewed in light of each named executive officer’s duties, responsibilities and function, the Compensation Committee also believes that it is critical to encourage commitment among the named executive officers to our overall corporate objectives and culture of partnership. A key objective of our overall compensation program is for the named executive officers to have a significant portion of their compensation linked to building long-term value for our stockholders.

Role of Independent Compensation Consultant

In 2024, the Compensation Committee retained Mercer LLC, an independent consulting firm, to assist the Compensation Committee in fulfilling its duties in setting compensation for our Co-Chief Executive Officers and other named executive officers. Mercer was engaged by and is reporting solely to the Compensation Committee, and the Compensation Committee has the sole authority to approve the terms of the engagement. Mercer did not provide any services to the Company in Fiscal 2024 other than executive compensation consulting services provided to the Compensation Committee. Before engaging Mercer, the Compensation Committee determined that Mercer is independent, after taking into account the factors set forth in Rule 10C-1 of the Exchange Act and NASDAQ Marketplace Rule 5605(d)(3). Mercer identified a group of public peer companies to benchmark compensation for our Co-Chief Executive Officers and other named executive officers against peer company Chief Executive Officers and market survey data. Mercer’s analysis considered: (i) base salary; (ii) annual incentive compensation; (iii) total cash compensation; (iv) long-term incentive compensation; and (v) total direct compensation.

Peer Group

As part of its services, in 2023, Mercer compiled data regarding Chief Executive Officer and other named executive officer compensation from the following “peer” companies: BGC Group, Inc., Canaccord Genuity Inc., Cowen Inc., Greenhill & Co. Inc., Houlihan Lokey Inc., Lazard Ltd., Moelis & Company, Oppenheimer Holdings Inc., Perella Weinberg Partners, Piper Sandler Cos and PJT Partners Inc. This peer group includes companies primarily consisting of investment banks and asset managers with revenues and market capitalizations most comparable to ours. Though the Compensation Committee considered the level of compensation paid by the firms in the peer group as a reference point that provides a framework for its decisions regarding compensation for the Co-Chief Executive Officers and other named executive officers, in order to maintain competitiveness and flexibility, the Compensation Committee did not target compensation at a particular level relative to the peer group.
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Similarly, the Compensation Committee did not employ a formal benchmarking strategy or rely upon specific peer-derived targets. This peer group market data is an important factor considered by the Compensation Committee when setting compensation, but it is only one of multiple factors considered by the Compensation Committee, and the amount paid to each named executive officer may be more or less than the composite market median based on individual performance, the roles and responsibilities of the executive, experience level of the individual, internal equity and other factors that the Compensation Committee deems important.

Review of Stockholder Advisory Votes on Our Executive Compensation

Consistent with the preference of our stockholders, which was expressed at our 2019 annual meeting of stockholders held in Beverly Hills, CA, our stockholders currently have the opportunity to cast an advisory vote on our executive compensation once every three years. At our 2022 annual meeting of stockholders, our executive compensation received a favorable advisory vote from 91.24% of the votes cast on the proposal at the meeting (which excludes abstentions and broker non-votes). The Compensation Committee believes this approval affirmed stockholders’ support of our approach to executive compensation, and therefore the Compensation Committee did not significantly change our compensation policies, philosophy, structure, or levels in response to such advisory vote. The Compensation Committee will continue to consider the outcome of stockholder advisory votes on our executive compensation when making compensation decisions for our named executive officers and in respect of our compensation programs generally.

Elements of 2024 Compensation

This section describes the various elements of our compensation program for our named executive officers in 2024, summarized in the table below, and the Compensation Committee’s rationale for including the items in our compensation program. As detailed below, the primary elements of our compensation program during 2024 consisted of base salary, discretionary bonuses, or “at risk,” compensation opportunities, and long-term equity incentive compensation. We also provided benefit programs that apply to all employees. The elements of our executive compensation program are summarized as follows:

Element Description Function
Base Salary
Fixed cash compensation
Provides basic compensation at a level
consistent with competitive practices; reflects role, responsibilities, skills, experience, and performance; encourages retention
Annual Incentive Plan
Annual discretionary bonuses awarded based on individual contribution and Company performance; payable in cash or stock at the discretion of the Compensation Committee
Motivates and rewards for achievement of annual Company financial and non-financial performance goals; rewards excellent performance relative to the duties, responsibilities, and functions of an individual executive officer
Long-Term Equity Incentives
Equity awards granted at the Compensation Committee’s discretion under the 2021
B. Riley Financial, Inc. Stock Incentive Plan (the “2021 Plan”)
Motivates and rewards for financial performance over a sustained period; strengthens mutuality of interests between executives and stockholders; increases retention; rewards creation of shareholder value
Base Salary

The purpose of base salary is to provide a set amount of cash compensation for each named executive officer that is not variable in nature and is generally competitive with market practices. Consistent with our performance-based compensation philosophy, the base salary for each named executive officer is targeted to account for less than half of total direct compensation.

The Compensation Committee seeks to pay our named executive officers a competitive base salary in recognition of their job responsibilities for a publicly-held company by considering several factors, including competitive factors within our industry, past contributions and individual performance of each named executive officer, as well as retention. In setting base salaries, the Compensation Committee is mindful of total compensation and the overall goal of keeping the amount of cash compensation that is provided in the form of base salary substantially lower than the amount of bonus opportunity that is available, assuming that performance targets are met or exceeded.

Base salaries for all of our named executive officers remained unchanged in 2024.
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B. Riley Financial, Inc. Annual Incentive Plan

The Compensation Committee believes performance-based cash compensation is important to focus B. Riley’s executives on, and reward B. Riley’s executives for, achieving key objectives. In furtherance of this, in July 2021, the Compensation Committee approved an annual incentive compensation discretionary bonus plan for our named executive officers, which remained in place for Fiscal 2024. The purpose of the B. Riley discretionary bonus plan is to increase stockholder value and the success of B. Riley by motivating key employees, including B. Riley’s named executive officers, to perform to the best of their abilities and to achieve B. Riley’s objectives. No specific target levels of performance are set by the Compensation Committee to determine the annual incentive compensation of our named executive officers. Instead, the Compensation Committee determines the amount of each named executive officer’s annual incentive compensation based on the Compensation Committee’s subjective assessment of the Company (and in some cases, of a particular business unit) and individual performance relative to the qualitative and quantitative performance indicators used by the Compensation Committee to evaluate performance.

Long-Term Equity Incentive Compensation

The Compensation Committee believes that a significant portion of our named executive officer compensation should be in the form of equity-based awards as a retention tool, and to align further the long-term interests of our named executive officers with those of our other stockholders. In furtherance of that objective, the Compensation Committee makes annual grants of long-term, equity-based incentive compensation awards to our named executive officers.

The Compensation Committee understands that equity incentive compensation can promote high-risk behavior if the incentives it creates for short-term performance are not properly aligned with the interests of our Company over the long-term. The Compensation Committee believes that the structure of our Company’s long-term equity incentive compensation appropriately mitigates the risk by directly aligning the recipients’ interests with those of our Company. We use judgment and discretion rather than relying solely on formulaic results, and do not use highly leveraged incentives that drive risky short-term behavior. Instead, we reward consistent and longer-term performance. Our long-term equity incentive compensation rewards long-term performance on a per share basis.

In March 2024, the Compensation Committee granted time-based restricted stock units ("RSUs") under the 2021 Plan to our named executive officers as a component of their annual compensation for the fiscal year ended December 31, 2024, as further described below in the “Executive Compensation-2024 Summary Compensation Table” and “2024 Grants of Plan-Based Awards.” The RSUs vest ratably over a three-year period beginning on March 15, 2025, subject to the named executive officer’s continued employment with our Company. The Compensation Committee believes that these awards appropriately align the interests of our named executive officers with those of our stockholders and retain, motivate, and reward such executives.

Timing Mix and Level of Equity Compensation Awards

In determining the number and type of equity awards to grant in any fiscal year, the Compensation Committee considers a variety of factors, including the responsibilities and seniority of the named executive officer, the contribution that the named executive officer is expected to make to our Company in the coming years and has made in the past, and the size and terms of prior equity awards granted to the named executive officer. Decisions regarding these equity awards are typically made at the Compensation Committee’s first fiscal quarter meeting at which executive compensation for the coming year is determined. However, the Compensation Committee may also grant equity awards from time to time based on individual and corporate achievements and other factors it deems relevant, such as for retention purposes or to reflect changes in responsibilities or similar events or circumstances.

Change in Control and Post-Termination Severance Benefits

The employment agreements for each of our named executive officers provide them certain benefits if their employment is terminated under specified conditions. The Compensation Committee believes these benefits are important elements of each named executive officer’s comprehensive compensation package, primarily for their retention value and their alignment of the interests of our named executive officers with those of our stockholders. The details and amounts of these benefits are described in the Executive Compensation section under “Payment Due Upon Termination Without Cause, for Death or Disability, or Resignation for Good Reason.”

Anti-Hedging or Pledging Policy

Our insider trading policy prohibits any covered person, including directors, executive officers, and certain other employees, as well as certain immediate family members and entities over which such person exercises control, from entering into the following prohibited transactions with respect to Company securities, unless advance approval is obtained from the Company’s chief compliance officer:

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•Short sales. Covered persons may not sell the Company’s securities short;
•Options trading. Covered persons may not buy or sell puts or calls or other derivative securities on the Company’s securities;
•Trading on margin or pledging. Covered persons may not hold Company securities in a margin account or pledge Company securities as collateral for a loan; and
•Hedging. Covered persons may not enter into hedging or monetization transactions or similar arrangements with respect to Company securities.
•Pledging. Covered persons may not hypothecate or otherwise encumber shares of the Company’s common stock or other equity securities as collateral for indebtedness. This prohibition includes, but is not limited to, holding shares in a margin account.
The Company also requires all directors, executive officers, and certain other persons to refrain from trading without first pre-clearing all transactions in the Company’s securities.

Practices Related to the Grant of Certain Equity Awards

The Company did not grant any stock options, stock appreciation rights or similar option-like instruments during Fiscal 2024. Accordingly, in 2024 the Company did not have any specific policy or practice on the timing of the grant of such options or option-like instruments relative to the Company’s disclosure of material nonpublic information.

Insider Trading Arrangements and Policies

The Company has adopted an insider trading policy governing the purchase, sale and/or other disposition of our securities by our directors and officers, our employees and other covered persons, as well as by the Company, that the Company believes is reasonably designed to promote compliance with insider trading laws, rules and regulations and the NASDAQ listing standards. A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K for the fiscal year ended December 31, 2024.



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Employment Agreements

Amended and Restated Employment Agreements

The Company is party to employment agreements with each of the named executive officers, which agreements were amended and restated on April 11, 2023. Mr. Ahn resigned from the Company, effective as of June 3, 2025, and Mr. Young resigned from the Company, effective as of September 20, 2024, and each such named executive officer’s employment agreement is no longer in effect.

The material terms of the amended and restated employment agreements for each such executive are as follows:

•An initial term of two years with automatic one year renewals unless either party notified the other party of non-renewal at least 90 days prior to the end of the then-current term.
•An annual base salary, subject to review and adjustment on an annual basis, in the amounts of: $700,000 per year for Mr. Riley and Mr. Kelleher, $450,000 per year for Mr. Ahn, $550,000 per year for Mr. Young, $550,000 per year for Mr. Moore and $450,000 per year for Mr. Forman.
•Eligibility for annual performance bonuses based on individual performance and/or Company performance in an amount determined by the Company in its sole discretion, to be paid in cash less applicable withholdings no later than March 15th of the following calendar year subject to the executive’s continued employment through the payment date.
•Eligibility for each fiscal year to receive an annual long-term incentive award under our equity incentive plan with a value determined by the Company in its sole discretion. Each such award will be subject to approval of the Compensation Committee and vest annually over a three-year period.
•Notwithstanding the terms of any existing agreement or plan, all outstanding unvested stock options, RSUs, stock appreciation rights and other unvested equity linked awards granted to such individual during the term of such individual’s employment agreement shall become fully vested upon a Change of Control (as defined in the 2021 Plan) and exercisable for the remainder of their full term.

•Participation in benefit plans for our executives, reimbursement for all reasonable and necessary out-of-pocket expenses incurred by such executive in the performance of such executive’s respective duties and vacation in accordance with our policies.
•A requirement for each party to give twenty (20) days prior written notice to terminate such individual’s employment.
•If such executive is terminated with Cause (as defined in the employment agreements) or resigns without Good Reason (as defined in the employment agreements), such individual receives such individual’s base salary and accrued unused leave through termination.
•If such executive is terminated without Cause, for death or for Disability (as defined in the employment agreements) or resigns for Good Reason, such executive receives, subject to the execution of a general release, a severance payment payable in one lump sum within 60 days of termination in an amount equal to the four (4) times such individual’s base salary for Mr. Riley and Mr. Kelleher, and two (2) times such individual’s base salary for Messrs. Ahn, Young, Moore and Forman. In such circumstances, such individual shall also be eligible for reimbursement for the monthly COBRA premium paid by such executive for himself (and his dependents, if applicable), for a period ending upon the earliest of the twelve (12) month anniversary of such termination and the date on which such executive becomes eligible to receive substantially similar coverage from another employer.
•Restrictive covenants, including non-competition and client non-solicitation covenants that apply while the executive is employed by the Company, an employee non-solicitation covenant that applies while the executive is employed by the Company and for one year thereafter and perpetual confidentiality and non-disparagement covenants.


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Appointment of EVP and CFO - Employment & Stock Option Agreement

Scott Yessner was appointed to serve as Executive Vice President and Chief Financial Officer of the Company, effective June 3, 2025 (the “Commencement Date”).

The material terms of the employment agreement for Mr. Yessner are as follows:

•An initial term of one year, which term shall automatically renew for additional one year term, unless either party notifies the other of non-renewal at least 90 days prior to the end the then-current term.
•An annual base salary, subject to review and adjustment on an annual basis, in the amount of $600,000 per year.
•A signing bonus equal to a total of one million dollars ($1,000,000), one quarter of which shall be paid within ten (10) days following each of (i) the date on which the Company files its Annual Report on Form 10-K for the year ending December 31, 2024 with the Securities & Exchange Commission (the “SEC”), (ii) the date on which the Company files its Quarterly Report on Form 10-Q for the quarter ending June 30, 2025 with the SEC, (iii) the date on which the Company timely files its Quarterly Report on Form 10-Q for the quarter ending September 30, 2025, and (iv) the date on which the Company timely files its Annual Report on Form 10-K for the year ending December 31, 2025. The Executive shall also be paid additional bonuses each equal to one hundred thousand dollars ($100,000) (x) within ten days following the date on which the Company timely files its Quarterly Report on Form 10-Q for the quarter ending June 30, 2025, and (y) upon the Company realizing an aggregate expense reduction of at least $7,500,000 by no later than December 31, 2025. Such bonus payments will be paid in cash by the Company in full, less applicable tax and other authorized withholdings.
•Eligibility to earn a discretionary annual performance bonus based upon his performance and/or the Company’s performance in an amount determined by the Company in its sole discretion; provided however, that the target Annual Bonus shall be one million dollars ($1,000,000) and not less than six hundred thousand dollars ($600,000) nor more than one million two hundred thousand dollars ($1,200,000). Any such annual performance bonus will be paid in cash by the Company in full, less applicable tax and other authorized withholdings, by no later than March 15th of the calendar year following the calendar year in which the services were rendered, subject to continued employment through the payment date.
•Promptly following the Commencement Date, a grant of options to purchase a total of three hundred thousand (300,000) shares of common stock (i) 100,000 of which are exercisable at $7 per share, (ii) 100,000 of which are exercisable at $10 per share, and (iii) 100,000 of which are exercisable at $12.50 per share. The options will vest ratably over three years, subject to continued employment with the Company through each such date.
•Promptly following the Commencement Date, one hundred thousand (100,000) unregistered shares of Common Stock.
•Eligibility each fiscal year, beginning with fiscal year ending December 31, 2026, to receive an annual long-term incentive award under our equity incentive plan with a value determined by the Company in its sole discretion. Each such award will be subject to approval of the Compensation Committee and vest annually over a three-year period.
•Notwithstanding the terms of any existing agreement or plan, all outstanding unvested stock options, RSUs, stock appreciation rights and other unvested equity linked awards granted during the term of Mr. Yessner’s employment agreement shall become fully vested upon a Change of Control (as defined in the 2021 Plan) and exercisable for the remainder of their full term.
•Participation in benefit plans for our executives, reimbursement for all reasonable and necessary out-of-pocket expenses incurred by such executive in the performance of such executive’s respective duties and vacation in accordance with our policies.
•A requirement for each party to give twenty (20) days prior written notice to terminate such individual’s employment.
•If Mr. Yessner is terminated with Cause (as defined in the employment agreement) or resigns without Good Reason (as defined in the employment agreement), he shall be paid his base salary and accrued unused leave, if any, owed through the termination date.

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•If Mr. Yessner is terminated without Cause, for Death or for Disability (as defined in the employment agreement) or resigns for Good Reason, he shall receive, subject to the execution of a general release, a severance payment payable in one lump sum within 60 days of termination in an amount equal to two times his base salary. In such circumstances, he shall also be eligible for reimbursement for the monthly COBRA premium paid by such executive for himself (and his dependents, if applicable), for a period ending upon the earliest of the twelve (12) month anniversary of such termination and the date on which he becomes eligible to receive substantially similar coverage from another employer.

•Restrictive covenants, including non-competition and client non-solicitation covenants that apply while the executive is employed by the Company, an employee non-solicitation covenant that applies while the executive is employed by the Company and for one year thereafter and perpetual confidentiality and non-disparagement covenants.
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COMPENSATION COMMITTEE REPORT

The Compensation Committee of our Board of Directors has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K, which appears elsewhere in Part III of this Annual Report on Form 10-K, with our management. Based on this review and discussion, the Compensation Committee has recommended to our board of directors that the Compensation Discussion and Analysis be included herein.


Respectfully submitted,
THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Robert D’Agostino
Robert L. Antin
Michael J. Sheldon

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Item 11. EXECUTIVE COMPENSATION

The tables below reflect the compensation of our named executive officers for the fiscal year ended December 31, 2024. See “Compensation Discussion and Analysis” for an explanation of our compensation philosophy and program.

2024 Summary Compensation Table

The following table shows information concerning the annual compensation for services provided to us by our named executive officers during fiscal 2024, 2023 and 2022.(1)

Name and Principal Position Year
Salary
($)
Bonus (2) ($)
Stock Awards (3) ($)
Non-Equity Incentive Plan Compensation
($)
All Other Compensation (7)
($)
Total
($)
Bryant R. Riley 2024 700,000  —  1,081,780  —  386,843  2,168,623 
Chairman and Co-Chief Executive Officer 2023 700,000  —  1,889,256  —  2,974,063  5,563,319 
2022 700,000  —  2,118,490  —  548,758  3,367,248 
Thomas J. Kelleher 2024 700,000  —  1,081,780  —  386,843  2,168,623 
Co-Chief Executive Officer 2023 700,000  —  1,889,256  —  2,974,063  5,563,319 
2022 700,000  2,800,000  2,118,490  —  548,758  6,167,248 
Phillip J. Ahn 2024 450,000  —  540,890  —  203,321  1,194,211 
Chief Financial Officer and Chief Operating Officer(4)
 2023 450,000  675,000  944,609  —  1,485,871  3,555,480 
2022 450,000  675,000  1,109,676  —  264,968  2,499,644 
Kenneth Young 2024 423,077  —  —  —  962,634  1,385,711 
President(5)
 2023 550,000  —  708,456  —  2,420,493  3,678,949 
2022 550,000  750,000  1,109,676  —  1,168,749  3,578,425 
Andrew Moore 2024 550,000  950,000  579,520  —  198,146  2,277,666 
Chief Executive Officer, B. Riley Securities, Inc.(6)
 2023 550,000  1,100,000  944,609  —  1,663,877  4,258,486 
2022 550,000  1,100,000  1,109,676  —  289,174  3,048,850 
Alan N. Forman 2024 450,000  675,000  309,082  —  46,370  1,480,452 
Executive Vice President, General Counsel & Secretary 2023 450,000  675,000  283,398  —  611,714  2,020,112 
2022 450,000  675,000  207,309  —  159,475  1,491,784 
(1) The table above summarizes the total compensation earned by each of our named executive officers for the fiscal years ended December 31, 2024, 2023, and 2022. Neither Mr. Riley nor Mr. Kelleher, each of whom were directors during all or a portion of the fiscal years ended December 31, 2024, 2023, and 2022, received any compensation for his services as a director.
(2) Bonus amounts in 2024, 2023, and 2022 were discretionary bonuses for named executive officers approved by the Compensation Committee.
(3) Represents the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718 of restricted stock units ("RSUs") and performance-based restricted stock units (“PRSUs”) granted during the applicable fiscal year. The assumptions used in the calculations for these amounts are described in Note 20 of the Notes to Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended December 31, 2024. For a discussion of the material terms of outstanding RSUs, see the table below entitled “Outstanding Equity Awards at 2024 Fiscal Year-End.”
(4) Mr. Ahn resigned effective as of June 3, 2025.
(5) Mr. Young resigned effective as of September 20, 2024. Mr. Young’s 2024 salary reflects amount actually paid during 2024 through his date of resignation.
(6) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.
(7) The table below shows the components of the All Other Compensation column.
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Name
Dividend Rights Paid Upon 2024 Vesting of RSUs (1)
($)
401k Plan Match (2)
($)
Other (3)
($)
 Total
($)
Bryant R. Riley 381,668  5,175  —  386,843 
Thomas J. Kelleher 381,668  5,175  —  386,843 
Phillip J. Ahn 198,146  5,175  —  203,321 
Kenneth Young 188,917  5,175  768,542  962,634 
Andrew Moore 198,146  —  —  198,146 
Alan N. Forman 41,195  5,175  —  46,370 
(1) Reflects accrued dividend rights paid upon (i) March 15, 2024 vesting of RSUs originally granted on February 24, 2023 and (ii) May 31, 2024 vesting of RSUs originally granted on May 28, 2021 and May 24, 2022, in each case in accordance with award agreements, as approved by the Compensation Committee.
(2) Reflects the maximum 401(k) employer match for 2024 ($5,175), which was received by each of our NEOs who contributed to the 401(k) in 2024. Our executive officers are eligible for the same 401(k) match program as is available to all employees.
(3) Reflects payments to Mr. Young pursuant to a services agreement between one of our wholly owned subsidiaries and Mr. Young for consulting services to B&W. in the capacity of Chief Executive Officer of B&W, and fees for consulting services rendered to B. Riley in 2024 following the cessation of his employment.

2024 Grants of Plan-Based Awards Table

The following table presents information concerning each grant made to our named executive officers in our fiscal year ended December 31, 2024, under any equity or non-equity incentive plan.

Name Grant Date
All Other Stock Awards: Number of Units of Stock (1)
(#)
Grant Date Fair Value (2)
($)
Bryant R. Riley 3/4/2024 83,086  1,081,780 
Thomas J. Kelleher 3/4/2024 83,086  1,081,780 
Phillip J. Ahn(3)
 3/4/2024 41,543  540,890 
Kenneth Young(4)
 —  — 
Andrew Moore(5)
 3/4/2024 44,510  579,520 
Alan N. Forman 3/4/2024 23,739  309,082 
(1)On March 4, 2024, we granted our NEOs RSU awards as a component of their annual compensation for the fiscal year ended December 31, 2024. The RSUs vested one-third on March 15, 2025, will vest one-third on March 15, 2026, and one-third on March 15, 2027, subject to continued employment with our Company through each vesting date. Each RSU represents the right to receive one share of our common stock.
(2) Represents the grant date fair value, which has been computed in accordance with FASB ASC Topic 718.
(3) Mr. Ahn resigned effective as of June 3, 2025.
(4) Mr. Young resigned effective as of September 20, 2024.
(5) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.


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2024 Outstanding Equity Awards at Fiscal Year-End

The following table provides information concerning outstanding equity awards held by our named executive officers as of December 31, 2024.

Name
Number of Units of Stock That Have Not Vested (1)
(#)
Market Value of Units of Stock That Have Not Vested (2)
($)
Bryant R. Riley (3)
 129,932  596,388 
Thomas J. Kelleher (4)
 129,932  596,388 
Phillip J. Ahn (5)
 65,300  299,727 
Kenneth Young (6)
 19,655  90,216 
Andrew Moore (7)
 68,267  313,346 
Alan N. Forman (8)
 30,034  137,856 
(1) Represents awards of RSUs granted under the 2021 Plan.
(2) The market value of awards of RSUs that have not yet vested is based on the number of unvested RSUs as of December 31, 2024, multiplied by the closing sale price of our common shares on December 31, 2024 ($4.59 per share).
(3)Unvested RSUs held by Mr. Riley at December 31, 2024, vest as follows: Subject to continued employment with our Company, 44,109 RSUs vested in full on March 15, 2025, 44,101 RSUs will vest in full on March 15, 2026 and 27,692 RSUs will vest in full on March 15, 2027. Additionally, 14,030 RSUs vested in full on June 2, 2025.
(4)Unvested RSUs held by Mr. Kelleher at December 31, 2024, vest as follows: Subject to continued employment with our Company, 44,109 RSUs vested in full on March 15, 2025, 44,101 RSUs will vest in full on March 15, 2026 and 27,692 RSUs will vest in full on March 15, 2027. Additionally, 14,030 RSUs vested in full on June 2, 2025.
(5)Unvested RSUs held by Mr. Ahn at December 31, 2024, vest as follows: Subject to continued employment with our Company, 22,055 RSUs vested in full on March 15, 2025, 22,050 RSUs will vest in full on March 15, 2026 and 13,846 RSUs will vest in full on March 15, 2027. Additionally, 7,349 RSUs vested in full on June 2, 2025. Mr. Ahn resigned effective as of June 3, 2025. All of Mr. Ahn’s unvested equity awards were forfeited upon such resignation.
(6)Unvested RSUs held by Mr. Young at December 31, 2024 vest as follows: Subject to continued employment with our Company, 6,153 RSUs vested in full on March 15, 2025 and 6,153 RSUs will vest in full on March 15, 2026. Additionally, 7,349 RSUs vested in full on June 2, 2025. Mr. Young resigned effective as of September 20, 2024. Mr. Young’s RSUs will continue to vest following such resignation, subject to continued service to the Company in a consultant role.
(7)Unvested RSUs held by Mr. Moore at December 31, 2024 vest as follows: Subject to continued employment with our Company, 23,044 RSUs vested in full on March 15, 2025, 23,039 RSUs will vest in full on March 15, 2026 and 14,835 RSUs will vest in full on March 15, 2027. Additionally, 7,349 RSUs vested in full on June 2, 2025. Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.
(8)Unvested RSUs held by Mr. Forman at December 31, 2024 vest as follows: Subject to continued employment with our Company, 10,376 RSUs vested in full on March 15, 2025, 10,373 RSUs will vest in full on March 15, 2026 and 7,912 RSUs will vest in full on March 15, 2027. Additionally, 1,373 RSUs vested in full on June 2, 2025.


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2024 Stock Vested

The following table provides information on the value realized by each of our named executive officers as a result of the vesting of RSUs during the fiscal year ended December 31, 2024.

Name
Number of Shares Acquired on Vesting (1) (#)
Value Realized on Vesting
($)
Bryant R. Riley 44,414  982,946 
Thomas J. Kelleher 44,414  982,946 
Phillip J. Ahn(2)
 22,872  507,975 
Kenneth Young(3)
 20,821  471,960 
Andrew Moore(4)
 22,872  507,975 
Alan N. Forman 5,202  111,212 
(1)RSUs of Messrs. Riley, Kelleher, Ahn, Young, Moore and Forman vested on March 15, 2024 as follows: 16,409, 16,409, 8,204, 6,153, 8,204, and 2,462 respectively. The closing price of our common stock on the prior trading date was $17.56 in accordance with the 2021 Plan definition of Fair Market Value (FMV). RSUs of Messrs. Riley, Kelleher, Ahn, Young, Moore and Forman vested on May 31, 2024 as follows: 28,005, 28,005, 14,668, 14,668, 14,668, and 2,740 respectively. The closing price of our common stock on the prior trading date was $24.81.
(2) Mr. Ahn resigned effective as of June 3, 2025.
(3) Mr. Young resigned effective as of September 20, 2024.
(4) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.

Potential Payments Upon Termination or Change in Control

Each of our named executive officers is party to an employment agreement with the Company, the material terms of which are discussed above under “Compensation Discussion and Analysis — Employment Agreements.” Each of the employment agreements provides for a severance payment equal to four (4) times such individual’s base salary for Mr. Riley and Mr. Kelleher, and two (2) times such individual’s base salary for Messrs. Ahn, Young, Moore and Forman. The employment agreements also provide for reimbursement of a portion of the executive’s COBRA premiums for up to twelve months following a qualifying termination. Qualifying terminations include (i) termination without Cause by the Company, (ii) termination due to death or disability and (iii) resignation for Good Reason, as such terms are defined therein. In addition, the employment agreements provide that all outstanding and unvested equity-based awards, including PRSUs, become fully vested upon a change of control.

The tables below provide information about the payments and other benefits to which each of our named executive officers would be entitled upon a certain terminations of employment or in the event of a change in control. The tables below show, for each named executive officer, our estimates of potential cash payments and other benefits that would have been paid to the NEO assuming that (i) a qualifying termination or change in control was effected as of December 31, 2024, and (ii) the market value of RSUs that were unvested as of December 31, 2024 was $4.59 per share, which was the closing price of Company common stock on December 31, 2024. The tables below also assume that all salary amounts earned by each NEO through the date of termination or change in control had already been paid. As a result, all amounts in these tables are only estimates, and the actual amounts that would be paid can only be determined at the time of the event triggering the payments.



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Payments Due Upon Termination Without Cause, for Death or Disability, or Resignation for Good Reason

Name
Cash Payment (1)
($)
Stock Awards (2)
($)
Non-Equity Incentive Plan Compensation
($)
All Other Compensation (3)
($)
Benefits (4)
($)
Total
($)
Bryant R. Riley 2,800,000 596,388 —  262,290 37,441 3,696,119
Thomas J. Kelleher 2,800,000 596,388 —  262,290 37,441 3,696,119
Phillip J. Ahn(5)
 900,000 299,727 —  133,483 22,981 1,356,191
Kenneth Young(6)
 —  —  —  —  —  — 
Andrew Moore(7)
 1,100,000 313,346 —  133,483 35,069 1,581,898
Alan N. Forman 900,000 137,856 —  34,221 —  1,072,077
(1) In the event of involuntary termination without Cause, for death or disability, or resignation for Good Reason, in accordance with their employment agreements, Messrs. Riley and Kelleher shall each receive a severance payment equal to 4x his base salary, and Messrs. Ahn, Young, Moore and Forman shall each receive a severance payment equal to 2x his base salary.
(2) Upon termination without Cause or for death or disability or resignation for Good Reason, in accordance with award agreements, unvested time-based RSUs shall vest.
(3) Upon vesting of RSUs, accrued dividend rights, equivalent to dividends declared and paid per share of common stock from June 1, 2022 through December 31, 2024, are paid for RSUs awarded in 2022 and 2023 in accordance with award agreements.
(4) According to the terms of their employment agreements, executives shall be reimbursed the difference between the cost of health insurance coverage under COBRA and premiums paid by similarly situated employees for 12 months, or until the executive becomes eligible to receive substantially similar coverage from another employer.
(5) Mr. Ahn resigned effective as of June 3, 2025 and did not receive any severance payments or benefits in connection with such resignation.
(6) Mr. Young resigned effective as of September 20, 2024 and did not receive any severance payments or benefits in connection with such resignation.
(7) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.

Payments Due Upon Termination With Cause or Resignation Without Good Reason(1)

Name
Cash Payment
($)
Stock Awards
($)
Non-Equity Incentive Plan Compensation (1)
($)
All Other Compensation
($)
Benefits
($)
Total
($)
Bryant R. Riley —  —  —  —  —  — 
Thomas J. Kelleher —  —  —  —  —  — 
Phillip J. Ahn (2)
 —  —  —  —  —  — 
Kenneth Young(3)
 —  —  —  —  —  — 
Andrew Moore(4)
 —  —  —  —  —  — 
Alan N. Forman —  —  —  —  —  — 
(1) In the event an executive is terminated by the Company with Cause or resigns without Good Reason, the executive shall only be paid his base salary through the effective of termination.
(2) Mr. Ahn resigned effective as of June 3, 2025 and did not receive any severance payments or benefits in connection with such resignation.
(3) Mr. Young resigned effective as of September 20, 2024 and did not receive any severance payments or benefits in connection with such resignation.
(4) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.


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Payments Due Upon Change in Control

Name
Cash Payment
($)
Stock Awards
($)
Non-Equity Incentive Plan Compensation (1)
($)
All Other Compensation(2)
($)
Benefits
($)
Total
($)
Bryant R. Riley —  596,388  —  262,290  —  858,678 
Thomas J. Kelleher —  596,388  —  262,290  —  858,678 
Phillip J. Ahn(3)
 —  299,727  —  133,483  —  433,210 
Kenneth Young(4)
 —  90,216  —  112,973  —  203,189 
Andrew Moore(5)
 —  313,346  —  133,483  —  446,829 
Alan N. Forman —  137,856  —  34,221  —  172,077 
(1) In accordance with executive employment agreements and RSU award agreements, unvested RSUs will vest upon Change in Control.
(2) Upon vesting of RSUs upon a Change in Control, accrued dividend rights, equivalent to dividends declared and paid per share of common stock from June 1, 2022 through December 31, 2024, are paid for RSUs awarded in 2022 and 2023 in accordance with award agreements.
(3) Mr. Ahn resigned effective as of June 3, 2025.
(4) Mr. Young resigned effective as of September 20, 2024.
(5) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.

Risks Related to Compensation Policies and Practices

The Compensation Committee has considered and regularly monitors whether our overall employee compensation program creates incentives for employees to take excessive or unreasonable risks that could materially harm our business. Although risk-taking is a necessary part of building any business, the Compensation Committee focuses on aligning our compensation policies with the long-term interests of the Company and its stockholders and avoiding short-term rewards for management or other employee decisions that could pose long-term risks to the Company. We believe that several features of our compensation policies for management-level employees appropriately mitigate these risks, including a mix of long- and short-term compensation incentives that we believe is properly weighted for a company of our size, in our industry and with our stage of growth, and the uniformity of compensation policies and objectives across our employees. We also believe our internal legal and financial controls appropriately mitigate the probability and potential impact of an individual employee committing us to a harmful long-term business transaction in exchange for short-term compensation benefits.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing disclosure regarding the ratio of annual total compensation of Mr. Riley and Mr. Kelleher, our Co-CEOs, to that of our median employee. Our median employee earned $89,019 in total compensation for 2024. Based upon the total 2024 compensation reported for each of Mr. Riley and Mr. Kelleher of $2,168,622, as reported under each CEO’s “Total” in the Summary Compensation Table, our ratio of Co-CEO pay to median employee pay was 24:1. Our median employee is employed in our B. Riley Wealth Management subsidiary.

Calculation Methodology

To identify our median employee, we identified our total employee population worldwide as of December 31, 2024, excluding our Co-CEOs, in accordance with SEC rules. On December 31, 2024, 81% of our employee population was located in the U.S., with 19% in non-U.S. locations.

We collected full-year 2024 actual gross earnings data for the December 31, 2024 employee population, including cash-based compensation and equity-based compensation that was realized in 2024, relying on our internal payroll records. Compensation was annualized on a straight-line basis for non-temporary new hire employees who did not work with our Company for the full calendar year.

Once we determined the median employee, we calculated total compensation for the median employee in the same manner in which we determine the compensation shown for our named executive officers in the Summary Compensation Table, in accordance with SEC rules.


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Equity Compensation Plan Information

The 2021 Plan, and 2018 Employee Stock Purchase Plan (the “ESPP”)

Information about the 2021 Plan and the ESPP at December 31, 2024 was as follows:

Plan Category
Number Shares to
be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a)
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(2)
(b)
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
(excluding securities reflected
in column (a))
(c)
Equity compensation plans approved by our stockholders:
1,412,305(1)
 — 

2,382,529(3)
Total
1,412,305(1)
 — 

2,382,529(3)
(1)Includes unvested RSU awards granted under the 2021 Plan.
(2)RSU awards listed in column (a) have no associated exercise price.
(3)Includes 2,145,580 shares remaining available for future issuance under the 2021 Plan and 236,949 shares remaining available for issuance under our ESPP.

For more information on our equity compensation plans, see Notes 20 and 21 to the Consolidated Financial Statements in our annual report on Form 10-K for the fiscal year ended December 31, 2024.

DIRECTOR COMPENSATION

We use cash and equity-based compensation to attract and retain qualified candidates to serve on our Board. In setting director compensation, we consider the significant amount of time that members of the Board expend in fulfilling their duties to us, the skill level required of such members and other relevant information. The Compensation Committee and the Board have the primary responsibility for reviewing, considering any revisions to, and approving director compensation. We do not pay our management directors for board service in addition to their regular employee compensation.

Since June 30, 2020, each of our non-employee directors has received annual fees of $75,000 in cash, payable in quarterly installments, and $75,000 in equity in the form of RSUs granted under the 2021 Plan. In 2024, the Compensation Committee approved the granting of such RSUs promptly following the date on which they may be permissibly granted. The RSUs are subject to vesting and will be treated as vested on June 21, 2025, subject to continued service on the Board through such vesting date. In addition, for grants awarded from 2020 through 2023, each of our non-employee directors had the right to receive promptly following the vesting date an amount equal to the product of (i) the number of RSUs vested on such date, multiplied by (ii) the total dividends declared and paid per share of common stock since the date of award. Such vesting is subject to full acceleration in the event of certain change in control transactions for us.

In addition to the foregoing, the chairpersons of the Audit Committee, the Compensation Committee and the ESG Committee receive annual fees of $15,000, $10,000 and $5,000, respectively, and each of our non-employee directors that is a member of the Audit Committee, Compensation Committee and ESG Committee receive annual fees of $5,000, $2,500 and $2,500, respectively.

On August 20, 2024, the Company established a Special Committee to review the take private proposal presented to the Board by Bryant Riley. The Special Committee was comprised of Tammy Brandt, Renée E. LaBran and Mimi K. Walters, each of whom received an initial payment of $30,323 prorated for August/September, followed by a subsequent monthly fee of $15,000. Effective March 3, 2025, the take private proposal was withdrawn by Mr. Riley and shortly thereafter the Special Committee was disbanded.

From time to time, our non-employee directors may receive additional compensation through equity compensation or otherwise at the discretion of the disinterested directors of the Board for extraordinary service relating to their capacity as members of the Board.


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2024 Director Compensation Table

The following table summarizes the total compensation that members of the Board (other than directors who are named executive officers) earned during the fiscal year ended December 31, 2024 for services rendered as members of the Board.

Name(1)
 Fees Earned or Paid in Cash
($)
Stock Awards(2)
($)
All Other Compensation(3)
($)
 Total
($)
Robert L. Antin
 80,000 —  4,993 84,993
Tammy Brandt
 135,323 —  4,993 140,316
Robert D’Agostino
 90,000 —  4,993 94,993
Renée E. LaBran 142,823 —  4,993 147,816
Randall E. Paulson
 90,000 —  4,993 94,993
Michael J. Sheldon
 77,500 —  4,993 82,493
Mimi K. Walters 140,323 —  4,993 145,316
(1)Bryant R. Riley, a member of the Board, our Chairman and Co-Chief Executive Officer, and Thomas J. Kelleher, a member of the Board and our Co-Chief Executive Officer are not included in this table because as employees Messrs. Riley and Kelleher received no additional compensation for services as directors for 2024. The compensation received by Messrs. Riley and Kelleher as our employees is shown in the summary compensation table provided above in “Executive Compensation-Summary Compensation Table.”
(2)Non-employee directors did not receive any stock awards in Fiscal 2024. However, RSU awards were approved on August 6, 2024 by the Compensation Committee in the amount of 3,660 RSUs to Robert Antin, Tammy Brandt, Robert D’Agostino, Renée E. LaBran, Randall Paulson, Michael Sheldon, and Mimi Walters for such directors’ annual stock grant of $75,000 as a non-employee director and will be granted promptly following the date on which the RSUs may be permissibly granted under the 2021 Plan. All awards will be treated as vested on June 21, 2025, subject to continued service on the Board through such vesting date. As of December 31, 2024, D’Agostino, Antin, Brandt, LaBran, Paulson, Sheldon, and Walters have no equity awards outstanding.
(3)Reflects accrued dividend rights paid upon May 23, 2024 vesting of RSUs originally granted on May 23, 2023, in accordance with award agreements, as approved by the Compensation Committee.

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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth information concerning the beneficial ownership of the shares of our common stock as of September 18, 2025, by (i) each person we know to be the beneficial owner of 5% or more of the outstanding shares of our common stock (ii) each named executive officer listed in the Summary Compensation Table; (iii) each of our directors; and (iv) all of our executive officers and directors as a group.
Shares Beneficially Owned(2)
Name or Group of Beneficial Owners(1)
 Number Percent
Directors and Named Executive Officers:
Bryant R. Riley(3)
 6,914,063  22.6  %
Thomas J. Kelleher(4)
 973,409  3.2  %
Phillip J. Ahn(5)
 249,226  *
Scott Yessner(6)
 100,000  *
Kenneth Young(7)
 237,156  *
Andrew Moore(8)
 286,546  *
Alan N. Forman 123,283  *
Robert L. Antin(9)
 295,495  1.0  %
Tammy Brandt 6,195  *
Robert D’Agostino 160,570  *
Renée E. LaBran 6,734  *
Randall E. Paulson 318,979  1.0  %
Michael J. Sheldon 56,677  *
Mimi K. Walters 10,262  *
Executive officers and directors as a group (15 persons):
 9,787,202  32.0  %

(1) Unless otherwise indicated, the business address of each holder is c/o B. Riley Financial, Inc., 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025.
(2) Applicable percentage ownership is based on 30,597,066 shares of our common stock outstanding as of September 18, 2025. Beneficial ownership is determined in accordance with the rules of the SEC and is based on voting and investment power with respect to shares, subject to the applicable community property laws. Shares of our common stock subject to options or other contractual rights currently exercisable, or exercisable within 60 days after September 18, 2025, are deemed outstanding for the purpose of computing the percentage ownership of the person holding such options but are not deemed outstanding for computing the percentage ownership of any other person.
(3) Represents 6,714,994 of our common shares beneficially owned by Mr. Riley directly or jointly with his wife; 70,151 of our common shares beneficially owned by Mr. Riley in custodial accounts for his children; and 128,918 of our common shares held of record by the B. Riley and Co., LLC 401(k) Profit Sharing Plan FBO Bryant Riley, which we refer to as the Riley profit sharing plan. Mr. Riley pledged as collateral 4,389,553 shares in favor of Axos Bank, as approved by our Board of Directors on February 27, 2019, and pursuant to the terms of a Credit Agreement and Pledge Agreement each dated as of March 19, 2019. As disclosed on Form 8K and Schedule 13D amendment filed on October 30, 2024, in 2023 Mr. Riley pledged an additional 1,414,571 shares for a total of 5,804,124 shares pledged. The business address of each of Mr. Riley, and the Riley profit-sharing plan is 11100 Santa Monica Boulevard, Suite 800, Los Angeles, California 90025.
(4) Represents 21,188 of our common shares beneficially owned by Mr. Kelleher, 902,288 of our common shares held of record by Mr. Kelleher and M. Meighan Kelleher as trustees for the Kelleher Family Trust, 34,118 of our common shares held by Mr. Kelleher’s self-directed IRA, Thomas John Kelleher IRA, 5,600 of our common shares held with dispositive power for Mary Meighan Kelleher IRA, 3,405 of our common shares held with dispositive power for Lyndsey Kelleher, 3,405 of our common shares held with dispositive power for Kaitlin Kelleher and 3,405 of our common shares held with dispositive power for Mackenna Kelleher.
(5) Mr. Ahn resigned effective as of June 3, 2025.
(6) Mr. Yessner joined the Company on June 3, 2025 as Executive Vice President and Chief Financial Officer.
(7) Mr. Young resigned effective as of September 20, 2024.
(8) Mr. Moore was not re-appointed as an executive officer of the Company, but continues to serve as the Co-Chief Executive Officer of B. Riley Securities, Inc. effective as of September 18, 2025.
(9) Represents 80,495 of our common shares beneficially owned by Mr. Antin, 200,000 shares held of record by Robert L. Antin and Patti Antin as Trustees for the Robert and Patti Antin Living Trust, and 15,000 shares held of record by The Bob and Patti Antin Family Foundation over which Mr. Antin has voting and dispositive power.

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Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Other than as described below, since the beginning of fiscal year 2024, there were no transactions with respect to which we were a participant or currently proposed transactions with respect to which we are to be a participant in which the amount involved exceeds $120,000 and in which any director, executive officer or beneficial holder of more than 5% of any class of our voting securities or member of such person’s immediate family had or will have a direct or indirect material interest.

John Ahn

The Company is party to an investment advisory services agreement with Whitehawk Capital Partners, L.P. (“Whitehawk”), a limited partnership controlled by John Ahn, who is the brother of Phil Ahn, the Company’s former Chief Financial Officer, and Chief Operating Officer. Mr. Ahn resigned effective as of June 3, 2025. Pursuant to this agreement, Whitehawk provided investment advisory services for GACP I, L.P. and GACP II, L.P., limited partnership vehicles which were subsidiaries of the Company. On February 1, 2024, one of the Company’s loans receivable with a principal amount of $4,521,000 was sold to a fund managed by Whitehawk for $4,584,000. During the year ended December 31, 2024, management fees paid for investment advisory services by Whitehawk were $2,272,000. GACP I, L.P. and GACP II, L.P., were wound down in June 2024 and December 2024, respectively.

Charlie Riley

Charlie Riley is the son of Bryant Riley, the Company’s Chairman and Co-Chief Executive Officer, and is employed by the Company’s subsidiary, B. Riley Principal Investments, LLC as an associate. For 2024, the Company paid Charlie Riley total compensation of $246,129 consisting of salary, bonus, and an award of restricted stock units of 1,460 of our common shares, with a grant date fair value of $24,995, calculated in accordance with FASB ASC 718, that vests ratably over three years beginning on March 15, 2025, subject to continued employment.

Babcock & Wilcox

One of the Company’s wholly owned subsidiaries entered into a services agreement with B&W that provided for the President of the Company to serve as the Chief Executive Officer of B&W until November 30, 2020 (the “Executive Consulting Agreement”), unless terminated by either party with thirty days written notice. The agreement was extended through December 31, 2028. Under this agreement, fees for services provided are $750,000 per annum, paid monthly. In addition, subject to the achievement of certain performance objectives as determined by B&W’s compensation committee of the board, a bonus or bonuses may also be earned and payable to the Company. In March 2022, a $1,000,000 performance fee was approved in accordance with the Executive Consulting Agreement. On September 20, 2024, Kenny Young resigned from his position as the President of the Company, the Executive Consulting Agreement with B&W was terminated, and concurrently, entered into a one-year consulting agreement (“the Agreement”) to provide services to the Company, pursuant to which he will be paid an annual fee of $250,000 paid on a monthly basis, subject to deduction of damages, fees and expenses that he owes the Company pursuant to this agreement.

On January 18, 2024, the Company, entered into a guaranty (the “Axos Guaranty”) in favor of (i) Axos Bank, in its capacity as administrative agent (the “Administrative Agent”) for the secured parties under that certain credit agreement, dated as of January 18, 2024, among B&W, the guarantors party thereto, the lenders party thereto and the Administrative Agent (the “B&W Axos Credit Agreement”), and (ii) the secured parties. Subject to the terms and conditions of the Axos Guaranty, the Company has guaranteed certain obligations of B&W (subject to certain limitations) under the B&W Axos Credit Agreement, including the obligation to repay outstanding loans and letters of credit and to pay earned interest, fees costs and expenses of enforcing the Axos Guaranty, provided however, that the Company’s obligations with respect to the principal amount of credit extensions and unreimbursed letter of credit obligations under the B&W Axos Credit Agreement shall not at any time exceed $150,000,000 in the aggregate, which is the maximum potential amount of future payments under the guaranty. In consideration for the agreements and commitments under the Axos Guaranty and pursuant to a separate fee and reimbursement agreement, B&W has agreed to pay the Company a fee equal to 2.00% of the aggregate revolving commitments (as defined in the B&W Axos Credit Agreement) under the B&W Axos Credit Agreement, payable quarterly and, at B&W’s election, in cash in full or 50% in cash and 50% in the form of penny warrants.

During the year ended December 31, 2024, and year-to-date 2025, the Company earned $3,850,000 and $1,500,000 respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities. On June 18, 2025, an amendment was made to the Axos Guaranty whereby the Company's obligations as guarantor were suspended until January 1, 2027.

Randall E. Paulson

We owned a minority equity interest (purchased on March 2, 2021 for $2,400,000) in Dash Medical Holdings, LLC (“Dash”). On June 13, 2024, the Company sold its equity interest in Dash for $2,760,000. This transaction was reviewed and approved by the Audit Committee of B. Riley with Mr. Paulson excluded. Mr. Paulson is a member of the board of directors of Dash and is a Co-Managing member with his partner.
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Robert D’Agostino

In September 2023, Q-Mation, Inc. (“Q-Mation”) engaged B. Riley Securities, Inc. to act as exclusive financial advisor in connection with a possible sale or recapitalization transaction. In December 2024, B. Riley Securities, Inc. earned an advisory fee of $2,650,000 for services in connection with the sale of Q-mation. Mr. D’Agostino serves as president of Q-Mation.

Procedures for Approval of Related Party Transactions

Under its charter, the Audit Committee is charged with reviewing all potential related party transactions. Our policy has been that the Audit Committee, which is comprised solely of independent directors, reviews and then recommends such related party transactions to the entire Board for further review and approval. All such related party transactions are then required to be reported under applicable SEC rules. Pursuant to our Code of Business Conduct and Ethics, our Audit Committee must review and approve in advance all material related party transactions or business or professional relationships. The Code of Business Conduct and Ethics also requires that any dealings with a related party must be conducted in such a way as to avoid preferential treatment and assure that the terms obtained by the Company are no less favorable than could be obtained from unrelated parties on an arm’s-length basis. Aside from this policy and our Code of Business Conduct and Ethics, we have not adopted additional procedures for review of, or standards for approval of, related party transactions, but instead review such transactions on a case-by-case basis.

Director Independence

Our Board has unanimously determined that seven of our directors — Robert Antin, Tammy Brandt, Robert D’Agostino, Renée E. LaBran, Randall Paulson, Michael Sheldon, and Mimi Walters, a majority of the Board — are “independent” directors as that term is defined by NASDAQ Marketplace Rule 5605(a)(2). In addition, based upon such standards, the Board determined that Bryant Riley and Thomas Kelleher are not “independent” because of their service as employees of the Company.

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Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and All Other Fees

The following table sets forth the aggregate fees for services provided to us by Marcum for the fiscal years ended December 31, 2024 and 2023:
Fiscal 2024 Fiscal 2023
Audit Fees(1)
 $ 10,501,500  $ 8,678,220 
Audit-Related Fees(2)
 1,278,400  — 
Tax Fee —  — 
All Other Fee —  — 
TOTAL $ 11,779,900  $ 8,678,220 
(1)Audit Fees consist of audit and various attest services performed by Marcum and include the following for the years ended December 31, 2024 and 2023: (a) reviews of our financial statements for the quarterly periods ended March 31, June 30, and September 30, and (b) the audit of our financial statements for the year ended December 31.
(2) Audit-Related fees in connection with SEC investigation.

Audit Committee Pre-Approval Policy

As a matter of policy, all audit and non-audit services provided by our independent registered public accounting firm are approved in advance by the Audit Committee, which considers whether the provision of non-audit services is compatible with maintaining such firm’s independence. All services provided by Marcum during fiscal years 2024 and 2023 were pre-approved by the Audit Committee. The Audit Committee has considered the role of Marcum in providing services to us for the fiscal year ended December 31, 2024 and has concluded that such services are compatible with their independence as our auditors.
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PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)The following documents are filed as part of this report:
1.Financial Statements. The Company’s Consolidated Financial Statements required to be filed in the Annual Report on the Form 10-K and the notes thereto, together with the report of the independent auditors on those Consolidated Financial Statements and the effectiveness of internal control over financial reporting of the Company, are hereby filed as part of this report, beginning on page 134.
2.Financial Statement Schedules. Financial Statement Schedules other than those listed above have been omitted because they are either not applicable or the information is otherwise included in the consolidated financial statements or the notes thereto.
The financial statements of Babcock & Wilcox required by Rule 3-09 of Regulation S-X are provided as Exhibit 99.1 to this Form 10-K.
3.Exhibits Required by Item 601 of Regulation S-K. The exhibits listed in the Exhibit Index of the Form 10-K and this Amendment are field with, or incorporated by reference in, this report.
(b)Exhibits and Index to Exhibits, below.
(c)Financial Statement Schedule and Separate Financial Statements of Subsidiaries Not Consolidated and Fifty Percent or Less Owned Persons.
Babcock & Wilcox was deemed a significant equity investee under Rule 3-09 of Regulation S-X for the year ended December 31, 2022. As such, Babcock & Wilcox’s financial statements for its fiscal years ended December 31, 2024, 2023, and 2022 are provided as Exhibit 99.1 to this Form 10-K incorporation by reference to Item 8 and the Financial Statement Schedule – Schedule II - Valuation and Qualifying Accounts included in Item 15 of Babcock & Wilcox Enterprises, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission on March 31, 2025.
(c) Exhibit Index
Incorporated by Reference
Exhibit No. Description Form Exhibit Filing Date
3.1 10-Q 3.1 8/3/2018
3.2 10-Q 3.6 11/6/2014
3.3 8-K 3.1 4/9/2019
3.4 8-K 3.1 10/7/2019
3.5 8-K 3.1 9/4/2020
3.6 10-Q 3.1 2/21/2025
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3.7 10-Q 3.2 2/21/2025
4.1 10-K 4.29 5/16/2023
4.2 10-K 4.1 3/30/2015
4.3 8-K 4.1 5/7/2019
4.4 8-K 4.3 9/23/2019
4.5 8-K 4.3 9/23/2019
4.6 8-K 4.5 1/25/2021
4.7 8-K 4.5 1/25/2021
4.8 8-K 4.6 3/29/2021
4.9 8-K 4.6 3/29/2021
4.10 8-K 4.7 8/6/2021
4.11 8-K 4.7 8/6/2021
4.12 8-K 4.8 12/3/2021
4.13 8-K 4.8 12/3/2021
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4.14 8-K 4.1 10/7/2019
4.15 8-K 4.2 10/7/2019
4.16
Form of Depositary Receipt (NASDAQ: RILYP) (included as Exhibit A to Exhibit 4.1)
 8-K 4.3 10/7/2019
4.17 8-K 4.1 9/4/2020
4.18 8-K 4.2 9/4/2020
4.19
Form of Depositary Receipt (included as Exhibit A to Exhibit 4.1)
 8-K 4.3 9/4/2020
10.1#
 10-Q 10.1 8/11/2015
10.2#
 10-Q 10.2 8/11/2015
10.3#
 10-Q 10.3 8/11/2015
10.4#
 10-Q 10.4 11/1/2019
10.5#
 8-K 10.1 8/18/2015
10.6#
 8-K 10.1 7/31/2018
10.7 8-K 10.1 12/27/2018
10.8 8-K 10.1 2/7/2019
10.9 8-K 10.1 1/6/2021
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10.10 10-K 10.44 2/25/2022
10.11 10-Q 10.1 7/29/2022
10.12 10-Q 10.4 5/15/2024
10.13 10-Q 10.5 5/15/2024
10.14 10-Q 10.1 2/21/2025
10.15 10-Q 10.1 2/21/2025
10.16 10-Q 10.1 2/21/2025
10.17 10-Q 10.1 2/21/2025
10.18 10-Q 10.2 2/21/2025
10.19*
10.20*
10.21 8-K 10.2 12/27/2018
10.22 8-K 10.3 12/27/2018
10.23 8-K 10.3 12/27/2018
10.24 8-K 10.01 6/3/2021
10.25 10-K 10.34 4/24/2024
10.26 8-K 10.3 12/22/2021
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10.27#
 10-K 10.46 2/25/2022
10.28#
 8-K 10.1 4/14/2023
10.29#
 8-K 10.2 4/14/2023
10.30#
 8-K 10.3 4/14/2023
10.31#
 8-K 10.4 4/14/2023
10.32#
 8-K 10.5 4/14/2023
10.33#
 8-K 10.6 4/14/2023
10.34
Kenny Young Consulting Services Agreement, dated as of September 20, 2024
 10-Q 10.20 2/21/2025
10.35 8-K 10.1 1/22/2024
10.36§
 8-K 2.1 10/31/2024
10.37 8-K 2.2 10/31/2024
10.38§
 8-K 2.1 11/21/2024
10.39§*
10.40§*
10.41§*
10.42§*
10.43*
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10.44*
10.45*
10.46*
10.47 10-Q 10.2 1/14/2025
10.48 10-Q 10.16 2/21/2025
10.49 10-Q 10.17 2/21/2025
10.50 10-Q 10.18 2/21/2025
10.51 10-Q 10.19 2/21/2025
10.52*
10.53*
14.1 8-K 14.1 5/30/2023
19.1*
21.1*
31.1*
31.2*
31.3*
32.1**
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32.2**
32.3**
97.1# 10-K 97.10 4/24/2024
99.1***
 10-K 99.1 3/31/2025
101.INS* Inline XBRL Instance Document
101.SCH* Inline XBRL Taxonomy Extension Schema Document
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
_________________________________
* Filed herewith.
** Furnished herewith.
*** Audited consolidated financial statements of Babcock & Wilcox Enterprises, Inc. as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022 (incorporated by reference to the Annual Report on Form 10-K filed by Babcock & Wilcox Enterprises, Inc. for the year ended December 31, 2024).
# Management contract or compensatory plan or arrangement.
§ In accordance with Item 601(a)(5) of Regulation S-K, certain schedules and exhibits have not been filed. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
Item 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
B. Riley Financial, Inc.
Date: September 19, 2025
/s/ SCOTT YESSNER
(Scott Yessner, Executive Vice President and Chief Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated:
Signature Title Date
/s/ BRYANT R. RILEY Co-Chief Executive Officer Chairman of the Board September 19, 2025
(Bryant R. Riley)  (Principal Executive Officer)
/s/ THOMAS J. KELLEHER Co-Chief Executive Officer Director September 19, 2025
(Thomas J. Kelleher)
/s/ SCOTT YESSNER
Executive Vice President Chief Financial Officer
 September 19, 2025
(Scott Yessner)
 (Principal Financial Officer)
/s/ HOWARD E. WEITZMAN Chief Accounting Officer (Principal Accounting Officer) September 19, 2025
(Howard E. Weitzman)
/s/ ROBERT L. ANTIN Director September 19, 2025
(Robert L. Antin)
/s/ ROBERT D’AGOSTINO Director September 19, 2025
(Robert D’Agostino)
/s/ TAMMY BRANDT Director September 19, 2025
(Tammy Brandt)
/s/ RENÉE E. LABRAN Director September 19, 2025
(Renée E. LaBran)
/s/ RANDALL E. PAULSON Director September 19, 2025
(Randall E. Paulson)
/s/ MICHAEL J. SHELDON Director September 19, 2025
(Michael J. Sheldon)
/s/ MIMI K. WALTERS Director September 19, 2025
(Mimi K. Walters)
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B. RILEY FINANCIAL, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of
B. Riley Financial, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of B. Riley Financial, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, equity (deficit) and cash flows for each of the three years in the period ended December 31, 2024 and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2024, based on the criteria established Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated September 19, 2025, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial reporting because of the existence of material weaknesses.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Valuation of Level 3 Investments

Description of the Matter

As discussed in Note 2(v) of the financial statements, the Company estimates the fair value of level 3 investments, which includes equity securities and loans receivable, at fair value. At December 31, 2024, the Company reported equity securities and loans receivable, at fair value of approximately $40.5 million and $90.1 million, respectively.

Management uses judgment to determine the significant assumptions used in valuation models to record level 3 investments at their fair value using level 3 inputs. These level 3 inputs are unobservable, supported by little or no market activity, and are significant to the fair value of level 3 investments. Evaluating management’s significant assumptions to determine the fair value of level 3 investments was complex and required judgment, particularly when evaluating level 3 inputs such as discount rates, projected earnings before interest income, interest expense, income taxes, and depreciation and amortization (“EBITDA”), multiples of EBITDA, multiples of sales, market price of related securities, market interest rates and expected annualized volatility rates.
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These significant assumptions are affected by expectations about future economic and industry factors as well as estimates of the investee’s future growth.

The principal considerations for our determination that performing procedures relating to the valuation of certain level 3 investments is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of certain level 3 investments, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the aforementioned significant unobservable level 3 inputs used in the valuation of level 3 investments, and (iii) the audit effort involved the use of firm employed valuation specialists with specialized skill and knowledge.

How We Addressed the Matter in Our Audit

Our audit procedures related to the valuation of level 3 investments to address this critical audit matter included the following:
•Obtained an understanding of the control environment related to the Company’s process to determine the reasonableness of significant assumptions used in valuation models to record level 3 investments at their fair value and evaluated the design effectiveness of the relevant controls.
•Tested the completeness, accuracy and reliability of level 3 inputs used by management in valuation models.
•Tested the mathematical accuracy of the valuation models used to determine the fair values of level 3 investments.
•With the assistance of firm employed valuation specialists, evaluated the reasonableness of valuation models and significant assumptions and tested level 3 inputs for reasonableness.

Goodwill Impairment Assessment- Capital Markets

Description of the Matter

As discussed in Note 2(u) and Note 10 of the financial statements, the Company annually assesses goodwill for impairment or more frequently if events and circumstances indicate that the estimated fair value may no longer exceed its carrying value. Such factors considered in the Company’s assessment include, but are not limited to, financial performance, macroeconomic conditions, as well as industry and market considerations. When a quantitative impairment test is performed, if the fair value of the reporting unit is less than its carrying amount, goodwill is impaired and the excess of the reporting unit’s carrying value over the fair value is recognized as an impairment loss.

In performing the quantitative impairment test of goodwill for the Capital Markets reporting unit, the Company used a combination of the income and market approaches to estimate the fair value of the Capital Market reporting unit’s fair value. Under the income approach, the Company calculates the fair value of the reporting unit based on discounted estimated future cash flows. Under the market approach, the Company estimates the fair value of the reporting unit based upon a multiple from a selection of comparable publicly traded companies applied to the unit’s earnings before taxes.

The principal considerations for our determination that performing procedures relating to goodwill in the Capital Markets reporting unit is a critical audit matter are (i) the significant judgment by management when evaluating indicators of impairment; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions and (iii) the audit effort involved the use of firm employed valuation specialists with specialized skill and knowledge.

How We Addressed the Matter in Our Audit

Our audit procedures related to the quantitative test for impairment of goodwill in the Capital Markets reporting unit to address this critical audit matter included the following:

•Obtained an understanding of the control environment, evaluating the design effectiveness, and testing the operating effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of the Capital Markets reporting unit, such as controls related to future operating performance, projected cash flows, long term growth rates, discount rates and the selection of comparable publicly traded companies.
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•Evaluated the reasonableness of management’s revenue and cash flow forecasts by comparing management’s forecasts to historical results, and forecasted industry information of companies in its peer group.
•With the assistance of firm employed valuation specialists, evaluated the reasonableness of the valuation technique, corroborated the long term growth rates, discount rates, comparable companies used by testing the underlying source information and tested the mathematical accuracy of the calculations used by management.
•Validated the reasonableness of the internally determined fair value of its reporting units by comparing it to the Company’s market capitalization.
•Compared the carrying value for the Capital Markets reporting unit to the estimated fair value.

/s/ Marcum LLP


Marcum LLP

We have served as the Company’s auditor since 2009.



Melville, NY
September 19, 2025


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Stockholders and Board of Directors of
B. Riley Financial, Inc.

Adverse Opinion on Internal Control over Financial Reporting

We have audited B. Riley Financial, Inc.’s (the "Company") internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material weaknesses described in the subsequent paragraphs on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in the “Report of Management on Internal Control Over Financial Reporting”:

•The Company identified two material weaknesses in controls related to information technology general controls (“ITGCs”) at Lingo Management, LLC and Tiger US Holdings, Inc. and subsidiaries in the areas of user access, program change management, and information technology (“IT”) operations over IT systems and the reports generated from these systems used in the execution of controls that support the Company’s financial reporting processes. As a result, business process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted.

•The Company identified a material weakness relating to the design and operating effectiveness of management’s review controls over the investment valuation of Level 3 investments such that management’s review procedures were not operating at a level of precision to prevent or detect a potential material misstatement in the consolidated financial statements.

•The Company identified a material weakness relating to the design and operating effectiveness of management’s review controls over the identification and disclosure of material related party transactions in accordance with Accounting Standards Codification (“ASC”) 850, Related Party Disclosures. Specifically, management’s review procedures were not operating at a level of precision sufficient to prevent or detect a potential material misstatement in the consolidated financial statements.

•The Company identified a material weakness relating to the design and operating effectiveness of management’s review controls over the income tax provision such that management’s review procedures were not operating at a level of precision to prevent or detect a potential material misstatement in the consolidated financial statements.

•The Company identified material weaknesses in controls related to ITGCs at Bebe Stores Inc. in the areas of user access, program change management, and IT operations over IT systems and the reports generated from these systems used in the execution of controls that support the Company’s financial reporting processes. As a result, business process automated and manual controls that were dependent on the affected ITGCs could have been adversely impacted. Additionally, the Company did not consistently retain evidence of review, further contributing to the material weakness.

•The Company identified a material weakness in controls due to its inability to rely on the SOC 1 Type 2 reports associated with two third-party service organizations that support significant elements of its financial reporting processes over B. Riley Retail Solutions, LLC. Specifically, the Company did not have adequate ITGCs in place over the IT systems and related reports at these third-party service providers, which are used in the execution of controls supporting the Company’s financial reporting. As a result, business process automated and manual controls that were dependent on these ITGCs at the service organizations could have been adversely impacted.

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•The Company identified two material weakness relating to the design and operating effectiveness of management’s review controls over goodwill such that management did not adequately evaluate relevant factors and indicators to determine whether it was more likely than not that the fair value of a business segment was less than the carrying amount of goodwill and other intangibles assigned to that reporting unit as well as a lack of appropriate approval in accordance with Company policy over significant decisions involving goodwill.

•The Company identified a material weakness related to the design and operating effectiveness of controls related to journal entry controls. There was a lack of segregation of duties considerations associated within the journal entry approval workflow. The workflow in the system did not systemically prevent individuals who can post journal entries to also approve the same entries. Additionally, the Company did not retain evidence of review of certain journal entries.

These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal 2024 consolidated financial statements and this report does not affect our report dated September 19, 2025 on those consolidated financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the balance sheets as of December 31, 2024 and 2023 and the related consolidated statements of operations, comprehensive loss, equity(deficit), and cash flows for each of the three years in the period ended December 31, 2024 and our report dated September 19, 2025 expressed an unqualified opinion on those consolidated financial statements.

As described in “Report of Management on Internal Control Over Financial Reporting”, management has excluded its Nogin Inc. subsidiaries, from its assessment of internal control over financial reporting as of December 31, 2024 because these entities were acquired by the Company in purchase business combinations during 2024. We have also excluded Nogin, Inc. from our audit of internal control over financial reporting. These subsidiaries’ combined total assets and total revenues represent approximately 3% and 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

Basis for Opinion

The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Report of Management on Internal Control Over Financial Reporting”. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that degree of compliance with the policies or procedures may deteriorate.


/s/ Marcum LLP


Marcum LLP

Melville, NY
September 19, 2025
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PART IV. FINANCIAL INFORMATION
Item 15. Financial Statements.
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B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except par value)
December 31,
2024		 December 31,
2023
Assets:
Assets:
Cash and cash equivalents $ 154,877  $ 222,690 
Restricted cash 100,475  1,875 
Due from clearing brokers 30,713  51,334 
Securities and other investments owned, at fair value 282,325  809,049 
Securities borrowed 43,022  2,870,939 
Accounts receivable, net of allowance for credit losses of $10,073 and $7,175 as of December 31, 2024 and 2023, respectively
 88,384  101,036 
Due from related parties 162  172 
Loans receivable, at fair value (includes $51,902 and $378,768 from related parties as of December 31, 2024 and 2023, respectively)
 90,103  532,419 
Prepaid expenses and other assets (includes $3,449 and $11,802 from related parties as of December 31, 2024 and 2023, respectively)
 252,344  241,862 
Operating lease right-of-use assets 53,767  87,167 
Property and equipment, net 18,954  25,206 
Goodwill 423,136  466,638 
Other intangible assets, net 146,885  198,245 
Deferred income taxes 13,393  33,631 
Assets held for sale (Note 4) 84,723  — 
Assets of discontinued operations (Note 4) —  438,341 
Total assets $ 1,783,263  $ 6,080,604 
Liabilities and Equity / (Deficit)
Liabilities:
Accounts payable $ 52,564  $ 43,992 
Accrued expenses and other liabilities 203,196  252,876 
Deferred revenue 58,153  70,575 
Deferred income taxes 5,462  — 
Due to related parties and partners 3,404  2,480 
Securities sold not yet purchased 5,675  8,601 
Securities loaned 27,942  2,859,306 
Operating lease liabilities 61,038  98,088 
Notes payable 28,021  19,391 
Loan participations sold 6,000  — 
Revolving credit facility 16,329  43,801 
Term loans, net 199,429  625,151 
Senior notes payable, net 1,530,561  1,668,021 
Liabilities held for sale (Note 4) 41,505  — 
Liabilities of discontinued operations (Note 4) —  28,756 
Total liabilities 2,239,279  5,721,038 
Commitments and contingencies (Note 19)
B. Riley Financial, Inc. stockholders’ equity (deficit):
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 4,563 shares issued and outstanding as of December 31, 2024 and 2023; and liquidation preference of $114,082 as of December 31, 2024 and 2023.
 —  — 
Common stock, $0.0001 par value; 100,000,000 shares authorized; 30,499,931 and 29,937,067 shares issued and outstanding as of December 31, 2024 and 2023, respectively.
 3  3 
Additional paid-in capital 589,387  572,170 
Accumulated deficit (1,070,996) (281,285)
Accumulated other comprehensive loss (6,569) 229 
Total B. Riley Financial, Inc. stockholders’ equity (deficit) (488,175) 291,117 
Noncontrolling interests 32,159  68,449 
Total equity (deficit) (456,016) 359,566 
Total liabilities and equity (deficit) $ 1,783,263  $ 6,080,604 
The accompanying notes are an integral part of these consolidated financial statements.
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B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Dollars in thousands, except share data)
Year Ended December 31,
2024 2023 2022
Revenues:
Services and fees (includes $18,575, $6,143 and $12,432 for the years ended December 31, 2024, 2023 and 2022 from related parties, respectively)
$ 875,480  $ 898,750  $ 815,951 
Trading (loss) income (57,007) 21,603  (148,294)
Fair value adjustments on loans (includes $(328,671), $(36,788) and $(1,603) for the years ended December 31, 2024, 2023 and 2022 from related parties, respectively)
(325,498) 20,225  (54,334)
Interest income - loans (includes $33,186, $26,563 and $7,559 for the years ended December 31, 2024, 2023 and 2022 from related parties, respectively)
54,141  123,244  157,669 
Interest income - securities lending 70,862  161,652  83,144 
Sale of goods 220,619  240,303  85,347 
Total revenues 838,597  1,465,777  939,483 
Operating expenses:
Direct cost of services 213,901  214,065  118,535 
Cost of goods sold 167,634  172,836  60,754 
Selling, general and administrative expenses 759,777  764,926  654,826 
Restructuring charge 1,522  2,131  9,011 
Impairment of goodwill and other intangible assets 105,373  70,333  — 
Interest expense - Securities lending and loan participations sold 66,128  145,435  66,495 
Total operating expenses 1,314,335  1,369,726  909,621 
Operating (loss) income (475,738) 96,051  29,862 
Other income (expense):
Interest income 3,621  3,875  2,735 
Dividend income 4,462  12,747  7,851 
Realized and unrealized losses on investments (263,686) (162,053) (247,540)
Change in fair value of financial instruments and other 4,614  (3,998) 10,188 
Gain on bargain purchase —  15,903  — 
Income (loss) from equity method investments 31  (152) 3,570 
Loss on extinguishment of debt (18,725) (5,409) — 
Interest expense (133,308) (156,240) (141,003)
Loss from continuing operations before income taxes (878,729) (199,276) (334,337)
(Provision for) benefit from income taxes (22,125) 39,115  65,252 
Loss from continuing operations (900,854) (160,161) (269,085)
Income from discontinued operations, net of income taxes 125,915  54,530  112,491 
Net loss (774,939) (105,631) (156,594)
Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests (10,665) (5,721) 3,235 
Net loss attributable to B. Riley Financial, Inc. (764,274) (99,910) (159,829)
Preferred stock dividends 8,060  8,057  8,008 
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Net loss available to common shareholders $ (772,334) $ (107,967) $ (167,837)
     
Basic net (loss) income per common share:
Continuing operations $ (29.67) $ (5.38) $ (9.87)
Discontinued operations $ 4.21  $ 1.69  $ 3.92 
Basic (loss) income per common share $ (25.46) $ (3.69) $ (5.95)
Diluted net (loss) income per common share:
Continuing operations $ (29.67) $ (5.38) $ (9.87)
Discontinued operations $ 4.21  $ 1.69  $ 3.92 
Diluted (loss) income per common share $ (25.46) $ (3.69) $ (5.95)
     
Weighted average basic common shares outstanding 30,336,274  29,265,099  28,188,530 
Weighted average diluted common shares outstanding 30,336,274  29,265,099  28,188,530 
The accompanying notes are an integral part of these consolidated financial statements.
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B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Loss
(Dollars in thousands)
Year Ended December 31,
2024 2023 2022
Net loss $ (774,939) $ (105,631) $ (156,594)
Other comprehensive (loss) income:      
Reclassifications out of accumulated other comprehensive loss into income from discontinued operations (2,244) —  — 
Change in cumulative translation adjustment (4,554) 2,699  (1,390)
Other comprehensive (loss) income, net of tax (6,798) 2,699  (1,390)
Total comprehensive loss (781,737) (102,932) (157,984)
Comprehensive (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests (10,665) (5,721) 3,235 
Comprehensive loss attributable to B. Riley Financial, Inc. $ (771,072) $ (97,211) $ (161,219)
The accompanying notes are an integral part of these consolidated financial statements.
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B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Equity (Deficit)
(Dollars in thousands, except share data)
Preferred Stock Common Stock Additional
Paid-in
Capital 		Retained
Earnings (Accumulated Deficit)		 Accumulated
Other
Comprehensive
Loss 		Noncontrolling
Interests 		Total
Equity (Deficit)
Shares Amount Shares Amount
Balance, January 1, 2021 4,512  $ —  27,591,028  $ 3  $ 413,486  $ 248,862  $ (1,080) $ 43,930  $ 705,201 
Preferred stock issued 33  —  —  —  874  —  —  —  874 
ESPP shares issued and vesting of restricted stock, net of shares withheld for employer taxes —  —  583,624  —  (10,271) —  —  —  (10,271)
Common stock repurchased and retired —  —  (183,257) —  (6,516) —  —  —  (6,516)
Shares issued for acquisitions —  —  532,369  —  35,648  —  —  —  35,648 
Share based payments —  —  —  —  60,890  —  —  —  60,890 
Share based payments in equity of subsidiary —  —  —  —  125  —  —  —  125 
Vesting of shares in equity of subsidiary —  —  —  —  (35) —  —  35  — 
Dividends on common stock ($4.00 per share)
 —  —  —  —  —  (124,891) —  —  (124,891)
Dividends on preferred stock —  —  —  —  —  (8,008) —  —  (8,008)
Net (loss) income —  —  —  —  —  (159,829) —  5,803  (154,026)
Remeasurement of B. Riley Principal 150 and 250 Merger Corporations subsidiary temporary equity —  —  —  —  —  (1,354) —  —  (1,354)
Distributions to noncontrolling interests —  —  —  —  —  —  —  (11,731) (11,731)
Contributions from noncontrolling interests —  —  —  —  —  —  —  21,160  21,160 
Acquisition of noncontrolling interests —  —  —  —  —  —  —  182  182 
Other comprehensive loss —  —  —  —  —  —  (1,390) —  (1,390)
Balance, December 31, 2022 4,545  $ —  28,523,764  $ 3  $ 494,201  $ (45,220) $ (2,470) $ 59,379  $ 505,893 
Common stock issued, net of offering costs —  —  2,090,909  —  114,507  —  —  —  114,507 
Preferred stock issued 18  —  —  —  467  —  —  —  467 
ESPP shares issued and vesting of restricted stock, net of shares withheld for employer taxes —  —  1,445,050  —  (7,591) —  —  —  (7,591)
Common stock repurchased and retired —  —  (2,174,608) —  (69,479) —  —  —  (69,479)
Shares issued for acquisitions —  —  51,952  —  2,111  —  —  —  2,111 
Remeasurement of Lingo redeemable minority interest —  —  —  (6,283) —  —  —  (6,283)
Share based payments —  —  —  —  44,278  —  —  —  44,278 
Share based payments in equity of subsidiary —  —  —  —  216  —  —  —  216 
Vesting of shares in equity of subsidiary —  —  —  —  (257) —  —  257  — 
Dividends on common stock ($4.00 per share)
 —  —  —  —  —  (126,104) —  —  (126,104)
Dividends on preferred stock —  —  —  —  —  (8,057) —  —  (8,057)
Net loss —  —  —  —  —  (99,910) —  (5,575) (105,485)
Remeasurement of B. Riley Principal 250 Merger Corporations subsidiary temporary equity —  —  —  —  —  (1,994) —  —  (1,994)
Distributions to noncontrolling interests —  —  —  —  —  —  —  (8,497) (8,497)
Contributions from noncontrolling interests —  —  —  —  —  —  —  5,592  5,592 
Acquisition of noncontrolling interests —  —  —  —  —  —  —  16,433  16,433 
Other —  —  —  —  —  —  —  860  860 
Other comprehensive income —  —  —  —  —  —  2,699  —  2,699 
Balance, December 31, 2023 4,563  $ —  29,937,067  $ 3  $ 572,170  $ (281,285) $ 229  $ 68,449  $ 359,566 
ESPP shares issued and vesting of restricted stock, and other, net of shares withheld for employer taxes —  —  325,961  —  (3,218) —  —  —  (3,218)
Common stock issued upon exercise of warrants —  —  200,000  —  653  —  —  —  653 
Common stock issued in extinguishment of senior notes —  —  36,903  —  1,011  —  —  —  1,011 
Share based payments —  —  —  —  18,774  —  —  —  18,774 
Share based payments in equity of subsidiary —  —  —  —  140  —  —  —  140 
Vesting of shares in equity of subsidiary —  —  —  —  (143) —  —  143  — 
Dividends on common stock ($1.00 per share), net of forfeitures
—  —  —  —  —  (17,377) —  —  (17,377)
Dividends on preferred stock —  —  —  —  —  (8,060) —  —  (8,060)
Net loss —  —  —  —  —  (764,274) —  (10,665) (774,939)
Distributions to noncontrolling interests —  —  —  —  —  —  —  (9,119) (9,119)
Contributions from noncontrolling interests —  —  —  —  —  —  —  3,947  3,947 
Acquisition of noncontrolling interests —  —  —  —  —  —  —  4,650  4,650 
Disposition of noncontrolling interests —  —  —  —  —  —  —  (25,246) (25,246)
Other comprehensive loss —  —  —  —  —  —  (6,798) —  (6,798)
Balance, December 31, 2024 4,563  $ —  30,499,931  $ 3  $ 589,387  $ (1,070,996) $ (6,569) $ 32,159  $ (456,016)
The accompanying notes are an integral part of these consolidated financial statements.
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B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
Year Ended December 31,
2024 2023 2022
Cash flows from operating activities:
Net loss $ (774,939) $ (105,631) $ (156,594)
Adjustments to reconcile net loss to net cash provided by operating activities:      
Depreciation and amortization 45,405  49,604  39,969 
Provision for credit losses 5,993  7,147  4,214 
Share-based compensation 19,054  45,109  61,140 
Fair value and remeasurement adjustments, non-cash (includes $328,671, $36,788, and $1,603 from related parties in 2024, 2023 and 2022, respectively)
 327,630  (10,699) 34,871 
Non-cash interest and other (includes $(32,256), $(2,926), and $(935) from related parties in 2024, 2023 and 2022, respectively)
 (23,259) (9,652) (3,204)
Depreciation of rental merchandise 15,092  4,070  — 
Effect of foreign currency on operations (247) (310) 754 
Loss (income) from equity method investments (31) 181  (3,570)
Dividends from equity investments 159  434  4,038 
Deferred income taxes 25,888  (40,945) (80,431)
Impairment of goodwill and other intangible assets 105,373  70,333  — 
Gain on disposal of discontinued operations (217,504) —  — 
(Gain) loss on sale of business, disposal of fixed assets, and other (163) (9,034) 4,922 
Gain on bargain purchase —  (15,903) — 
Loss (gain) on extinguishment of debt 19,158  5,294  (1,102)
Gain on equity investment —  —  (6,790)
De-consolidation of BRPM 150 —  —  (8,294)
Income allocated to and fair value adjustment for mandatorily redeemable noncontrolling interests 1,170  1,835  1,119 
Change in operating assets and liabilities:      
Amounts due to/from clearing brokers 20,622  (21,903) (69,172)
Securities and other investments owned 699,616  123,196  390,635 
Securities borrowed 2,827,917  (527,612) (252,361)
Accounts receivable 2,230  26,397  6,599 
Prepaid expenses and other assets (includes $8,353, $10,521, and $564 from related parties in 2024, 2023 and 2022, respectively)
 26,040  737  (54,273)
Accounts payable, accrued payroll and related expenses, accrued expenses and other liabilities (14,120) (79,848) (141,328)
Amounts due to/from related parties and partners (1,250) (1,045) 3,925 
Securities sold, not yet purchased (2,926) 2,704  (22,726)
Deferred revenue (11,993) (15,232) 8,966 
Securities loaned (2,831,364) 525,275  245,346 
Net cash provided by operating activities 263,551  24,502  6,653 
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Year Ended December 31,
2024 2023 2022
Cash flows from investing activities:      
Purchases of loans receivable (includes $(57,615), $(174,753), and $(35,491) from related parties in 2024, 2023 and 2022, respectively)
 (118,721) (544,957) (503,146)
Repayments of loans receivable (includes $74,770, $77,600, and $5,928 from related parties in 2024, 2023 and 2022, respectively)
 149,047  606,716  574,854 
Sales of loans receivable (includes $—, $77,484, and $— from related parties in 2024, 2023 and 2022, respectively)
 31,012  84,984  — 
Proceeds from loan participations sold 5,980  —  — 
Acquisition of businesses and minority interest, net of $604, $8,308, and $50,733 cash acquired in 2024, 2023, and 2022, respectively
 (19,142) (26,240) (261,693)
Purchases of property, equipment and intangible assets (7,952) (7,711) (3,918)
Proceeds from sale of business and other 261  17,490  2 
Sale of Great American Group
 167,064  —  — 
Sale of Brands Interests, net of $(585) cash sold in 2024
 234,050  —  — 
Funds received from trust account of subsidiary —  175,763  172,584 
Purchases of equity and other investments (1,065) (4,871) (10,974)
Net cash provided by (used in) investing activities 440,534  301,174  (32,291)
Cash flows from financing activities:      
Proceeds from revolving line of credit 89,274  219,157  64,878 
Repayment of revolving line of credit (116,746) (303,034) (17,200)
Proceeds from note payable 15,000  —  — 
Repayment of notes payable and other (6,653) (13,806) (530)
Proceeds from term loan —  628,187  324,200 
Repayment of term loan (444,770) (520,803) (96,228)
Proceeds from issuance of senior notes —  185  51,601 
Redemption of senior notes (140,491) (58,924) — 
Payment of debt issuance and offering costs (3,484) (27,993) (8,222)
Payment of contingent consideration (12,921) (1,905) (1,776)
ESPP and payment of employment taxes on vesting of restricted stock (3,218) (7,591) (10,286)
Common dividends paid (33,731) (141,099) (119,454)
Preferred dividends paid (8,060) (8,057) (8,008)
Repurchase of common stock —  (69,479) (6,516)
Distributions to noncontrolling interests (10,747) (6,520) (4,208)
Contributions from noncontrolling interests 3,947  6,055  21,096 
Redemption of subsidiary temporary equity and distributions —  (175,763) (172,584)
Proceeds from issuance of common stock —  115,000  — 
Proceeds from issuance of preferred stock —  467  874 
Proceeds from exercise of warrants 653  —  — 
Net cash (used in) provided by financing activities (671,947) (365,923) 17,637 
Increase (decrease) in cash, cash equivalents and restricted cash 32,138  (40,247) (8,001)
Effect of foreign currency on cash, cash equivalents and restricted cash (9,301) 3,160  (933)
Net increase (decrease) in cash, cash equivalents and restricted cash 22,837  (37,087) (8,934)
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Year Ended December 31,
2024 2023 2022
Cash, cash equivalents and restricted cash from continuing operations, beginning of period 224,565  226,066  266,224 
Cash, cash equivalents and restricted cash from discontinued operations, beginning of period 9,274  44,860  13,636 
Cash, cash equivalents and restricted cash, beginning of year 233,839  270,926  279,860 
Cash, cash equivalents and restricted cash from continuing operations, end of period 256,676  224,565  226,066 
Cash, cash equivalents and restricted cash from discontinued operations, end of period —  9,274  44,860 
Cash, cash equivalents and restricted cash, end of year(1)
 $ 256,676  $ 233,839  $ 270,926 
     
Supplemental disclosures:      
Interest paid $ 239,660  $ 315,309  $ 193,387 
Taxes paid $ 7,130  $ 20,121  $ 49,357 
(1) Includes cash from assets held for sale of $1,324 in 2024.

The accompanying notes are an integral part of these consolidated financial statements.
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B. RILEY FINANCIAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS OPERATIONS
B. Riley Financial, Inc. and its subsidiaries (collectively, the “Company”) provide investment banking, brokerage, wealth management, asset management, direct lending, business advisory, valuation, and asset disposition services to a broad client base spanning public and private companies, financial sponsors, investors, financial institutions, legal and professional services firms, and individuals. The Company also has a portfolio of communication related businesses that provide consumer Internet access and cloud communication services, Tiger US Holdings, Inc. (“Targus”), which designs and sells laptop and computer accessories, and E-Commerce, technology platform provider that delivers Commerce-as-a-Service (“CaaS”) solutions for apparel brands and other retailers.
The Company operates in six reportable operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, research, sales and trading services to corporate and institutional clients; (ii) Wealth Management, through which the Company provides wealth management and tax services to corporate and high-net-worth clients; (iii) Financial Consulting, through which the Company provides bankruptcy, financial advisory, and forensic accounting, (iv) Communications, through which the Company provides consumer Internet access and related subscription services, cloud communication services, and mobile phone voice, text, and data services and devices; (v) Consumer Products, which generates revenue through sales of laptop and computer accessories, and (vi) E-Commerce, which is an e-commerce, technology platform provider that delivers CaaS solutions for apparel brands and other retailers.
Recent Developments
On October 25, 2024, the Company and its majority-owned subsidiary bebe stores, inc. (“bebe”) completed a transaction for their brand assets that included the sale of its equity interests in the assets and intellectual property related to the licenses of the bebe and Brookstone brands and a secured financing transaction for the Company’s interests in the assets and intellectual property related to the licenses of several brands, including Hurley, Justice, Scotch & Soda, Catherine Malandrino, English Laundry, Joan Vass, Kensie, Limited Too and Nanette Lepore (collectively, the “Brands Transaction”). On November 15, 2024, the Company completed the sale of a 52.6% ownership stake in the Appraisal and Valuation Services, Real Estate, and Retail, Wholesale & Industrial Solutions businesses (collectively, the "Great American Group Transaction") to Oaktree Capital Management, L.P. and/or its affiliates (collectively, “Oaktree”), a global asset manager. Management concluded that these businesses represent a strategic shift that had a major effect on our operations and met the criteria for discontinued operations and, as such, have been excluded from continuing operations in the periods presented as more fully described in Note 4. Net (loss) income per share amounts are computed independently for net (loss) income from continuing operations, net (loss) income from discontinued operations and net loss attributable to the Company. As a result, the sum of per-share amounts may not equal the total. Unless otherwise indicated, information in these notes to consolidated financial statements relates to continuing operations.
On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel Financial Corp. ("Stifel"). The sale was completed on April 4, 2025 for net cash consideration based on the 36 financial advisors that joined Stifel at closing. The Company determined that the assets and liabilities associated with the Wealth Management transaction met the criteria to be classified as held for sale, as discussed in Note 4, and properly classified in the consolidated balance sheets as of December 31, 2024.
On March 3, 2025, the Company and BR Financial Holdings, LLC, a wholly owned subsidiary of the Company (“BR Financial”), B. Riley Environmental Holdings, LLC and other indirect subsidiaries of the Company which included Atlantic Coast Recycling, LLC (“Atlantic Coast Recycling”), Atlantic Coast Recycling of Ocean County, LLC, (“Atlantic Coast Recycling of Ocean County” and, together with Atlantic Coast Recycling, the “Atlantic Companies”), entered into a Membership Interest Purchase Agreement, dated as of March 1, 2025 (the “MIPA”), whereby all of the issued and outstanding membership interests in each of the Atlantic Companies (the “Interests”) owned by BR Financial and the minority holders were sold to a third party for an agreed upon purchase price subject to certain adjustments and holdback amount pending receipt of a certain third party consent. Net cash proceeds received as a result of the sale were net of adjustments for amounts allocated to non-controlling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction. The Company determined that the assets and liabilities associated with the Atlantic Coast Recycling transaction met the criteria to be classified as held for sale, as discussed in Note 4, and properly classified in the consolidated balance sheets as of December 31, 2024.
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On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests of its wholly owned subsidiary, GlassRatner Advisory & Capital Group, LLC, a Delaware limited liability company (“GlassRatner”), and B. Riley Farber Advisory Inc., an Ontario corporation (“Farber”). The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117,800, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date. In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.
Liquidity
For the year ended December 31, 2024, the Company incurred a net loss of $764,274 which includes fair value adjustments totaling $(509,954) related to the Company’s loss on the write-off of the equity investment in Freedom VCM Holdings, LLC ("Freedom VCM") and the loan receivable from Vintage Capital Management, LLC. As more fully described in Note 25 – Subsequent Events, the Company entered into a new term loan facility on February 26, 2025 with Oaktree affiliated companies, with a maturity date of February 26, 2028 and the proceeds were primarily used to repay all amounts outstanding under the Nomura Credit Agreement as more fully described in Note 13 – Term Loans and Revolving Credit Facility.

The Company completed the Brands Transaction in October 2024 and the Great American Group Transaction in November 2024 as more fully discussed in Note 4. The proceeds from these transactions were used for general working capital purposes, make principal payments on the term loan with Nomura, and retire all of the $145,211 of outstanding 6.375% senior notes due February 28, 2025. The Company also completed the sale of the Company’s majority owned subsidiary Atlantic Coast Recycling, LLC on March 3, 2025 for proceeds of approximately $68,638 (the “Atlantic Coast Transaction”) and the sale of part of Wealth Management business for $26,037 (the “Wealth Transaction”) as more fully described in Note 4 and the sale of the Company’s financial consulting business for $117,800 on June 27, 2025.

From March 26, 2025 to July 11, 2025, the Company completed five private exchange transactions with institutional investors pursuant to which approximately $115,800 of aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026, approximately $2,100 aggregate principal amount of 6.50% Senior Notes due September 2026, approximately $146,400 aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, approximately $51,100 aggregate principal amount of the Company’s 6.00% Senior Notes due January 2028, and approximately $39,500 aggregate principal amount of the Company’s 5.25% Senior Notes due August 2028 (collectively, the “Exchanged Notes”) owned by the investors were exchanged for approximately $228,400 aggregate principal amount of newly-issued 8.00% Senior Secured Second Lien Notes due 2028 (the “New Notes”), whereupon the Exchanged Notes were cancelled.

After the completion of the Exchanged Notes described above, the Company has approximately $100,818 of 5.50% Senior Notes due March 31, 2026 as more fully described in Note 14 – Senior Notes Payable. The Company believes that the current cash and cash equivalents, securities and other investments owned, funds available under our credit facilities, cash expected to be generated from operating activities and proceeds received from the Atlantic Coast Transaction, the Wealth Management Transaction and the sale of the Company’s financial consulting business will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months from issuance date of the accompanying financial statements.

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NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated upon consolidation. Certain prior-year amounts have also been reclassified to conform to the current-year’s presentation as a result of held for sale and discontinued operations, see Notes 1 and 4.
The Company consolidates all entities that it controls through a majority voting interest. In addition, the Company performs an analysis to determine whether its variable interest or interests give it a controlling financial interest in a variable interest entity (“VIE”) including ongoing reassessments of whether it is the primary beneficiary of a VIE. See Note 2(ab) for further discussion.
(b) Risks and Uncertainties
In 2025, the United States introduced trade policy actions that have increased import tariffs across a wide range of countries at various rates, with certain exemptions. To the extent that trade tariffs and other restrictions imposed by the United States or other countries increase the price of, or limit the amount of, our products or components or materials used in our products imported into the United States or other countries, or create adverse tax consequences, the sales, cost, or gross margin of our products that are sold in our Consumer Products segment may be adversely affected and the demand from our customers for products may be diminished. Uncertainty surrounding international trade policy and regulations as well as disputes and protectionist measures could also have an adverse effect on consumer confidence and spending and may impact the Company’s results of operations.
(c) Use of Estimates
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expense during the reporting period. Estimates are used when accounting for certain items such as valuation of securities, allowance for credit losses, the fair value of loans receivables, intangible assets and goodwill, share based arrangements, contingent consideration, accounting for income tax valuation allowances, and sales returns and allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ.
(d) Revenue Recognition
The Company recognizes revenues under Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers. Revenues are recognized when control of the promised goods or performance obligations for services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.
Revenues from contracts with customers in the Capital Markets segment, Wealth Management segment, Financial Consulting segment, Communications segment, Consumer Products segment, E-Commerce segment and the All Other category are primarily comprised of the following:
Capital Markets segment
Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. The performance obligation for financial advisory services may also include success and performance-based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period.
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Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.
Fees from asset management services are recognized over the period the performance obligation for the services are provided. Asset management fees are primarily comprised of fees for asset management services and are generally based on the dollar amount of the assets being managed.
Revenues from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research.
Revenues from other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of capital to facilitate customer orders and fair value adjustments on loans, (iii) trading activities from investments in securities for the Company’s account, and (iv) other income.
Interest income from securities lending activities consists of interest income from equity and fixed income securities that are borrowed from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned.
Wealth Management segment
Fees from wealth management asset advisory services consist primarily of investment advisory fees that are recognized over the period the performance obligation for the services is provided. Investment advisory and asset management fees are primarily comprised of fees for investment services and are generally based on the dollar amount of the assets being managed. Investment advisory fee revenues as a principal registered investment advisor (“RIA”) are recognized on a gross basis. Asset management fee revenues as an agent are recognized on a net basis.
Revenues from sales and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities transactions executed as agent and are recorded on a trade date basis.
Financial Consulting segment
Revenues in the Financial Consulting segment are primarily comprised of fees earned from providing bankruptcy, financial advisory, and forensic accounting. Fees earned from bankruptcy, financial advisory, and forensic accounting services are rendered to clients over time as work progresses on the engagement and services are delivered to the client. Fees may also include success and performance-based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Revenues in the Financial Consulting segment also include contractual reimbursable costs.
Communications segment
Revenues in the Communications segment are primarily comprised of subscription services revenues which consist of fees charged to United Online pay accounts; revenues from the sale of the magicJack VoIP Services, LLC, (“magicJack”) access rights; revenues from access rights renewals and mobile apps; prepaid minutes revenues; revenues from access and wholesale charges; service revenue from unified communication as a service (“UCaaS”) hosting services; and revenues from mobile phone voice, text, and data services. Products revenues consist of revenues from the sale of magicJack, mobile phone, and mobile broadband service devices, including the related shipping and handling and installation fees, if applicable.
Subscription service revenues are recognized over time in the service period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. Fees charged to customers in advance are initially recorded in the consolidated balance sheets as deferred revenue and then recognized ratably over the service period as the performance obligations are provided.
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For services offered by the Company in the Communications segment that include third-party providers, the Company evaluates whether it is acting as the principal or as the agent with respect to the goods or services provided to the customer. This principal-versus-agent assessment involves judgment and focuses on whether the facts and circumstances of the arrangement indicate that the goods or services were controlled by the Company prior to transferring them to the customer. To evaluate if the Company has control, it considers various factors including whether it is primarily responsible for fulfillment, bears risk of loss in billing the customer, and has discretion over pricing.
Product revenues for hardware and shipping are recognized at the time of delivery. Revenues from sales of devices and services represent revenues recognized from sales of the magicJack devices to retailers or direct to customers, net of returns, and rights to access the Company’s servers over the period associated with the access right period, and from sales of mobile phones and voice, text, and data services. The transaction price for devices is allocated between equipment and service based on stand-alone selling prices. Revenues allocated to devices are recognized upon delivery (when control transfers to the customer), and service revenue is recognized ratably over the service term. The Company estimates the return of magicJack device direct sales as part of the transaction price using a six-month rolling average of historical returns.
Consumer Products segment
Revenues in the Consumer Products segment primarily consist of the global sales of notebook computer carrying cases and computer accessories. Global sales of consumer goods to customers are subject to contracts that contain a single performance obligation and revenue is recognized at a point in time when control of the product transfers to the customer which is generally upon product shipment. Customers consist primarily of equipment manufacturers, distributors (servicing resellers and corporate end-customers), and retailers. Consignment customers represent retailers that are in possession of the Company's inventory but that inventory is owned by the Company until sold. As such, consignment revenue is recognized when the retail sale is reported by the customer. Generally, the terms of the contracts for the sale of global goods do not allow for a right of return except for matters related to products with defects or damages. Revenues may be reduced by allowances for advertising and promotion, which generally represent contractual selling incentives offered to customers that will be charged to the Company at a later date. During the years ended December 31, 2024 and 2023 and the period from the date of acquisition October 18, 2022 to December 31, 2022, allowances for selling incentives were $17,143, $16,633 and $4,297, respectively. These allowances are included in accrued expenses and other liabilities on the consolidated balance sheets and consist of rebates that reduce revenue at time of sale. Shipping and handling expenses, which consist primarily of transportation charges incurred to move finished goods to customers, is included in cost of goods sold.
E-Commerce segment
Revenues in the E-Commerce segment primarily consist of commission fees derived from contractually committed gross revenue processed by customers on the Company's e-commerce platform. The Company is acting as an agent in these arrangements and customers do not have the contractual right to take possession of the Company's software. Revenue is recognized in an amount that reflects the consideration that the Company expects to ultimately receive in exchange for those promised goods, net of expected discounts for sales promotions and customary allowances.

CaaS Revenue is recognized on a net basis from maintaining e-commerce platforms and online orders, as the Company is engaged primarily in an agency relationship with its customers and earns defined amounts based on the individual contractual terms for the customer and the Company does not take possession of the customers' inventory or any credit risks relating to the products sold. The Company has concluded the sale of goods and related shipping and handling on behalf of our customers are accounted for as a single performance obligation, while the expenses incurred for actual shipping charges are included in cost of sales. Variable consideration is included in revenue for potential product returns. The Company uses an estimate to constrain revenue for the expected variable consideration at each period end. The Company reviews and updates its estimates and related accruals of variable consideration each period based on the terms of the agreements, historical experience, and expected levels of returns. Any uncertainties in the ultimate resolution of variable consideration due to factors outside of the Company’s influence are typically resolved within a short timeframe therefore not requiring any additional constraint on the variable consideration. The estimated reserve for returns is included on the balance sheet in accrued expenses with changes to the reserve in revenue on the accompanying statement of operations.

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All Other
Revenue in the All Other category, which is not a reportable segment, rental fees through rent-to-own agreements and merchandise sales from the operation of rent-to-own franchise stores, and revenues from a regional environmental services business in the New York metropolitan area and a landscaping business in the southeast United States, which was sold during the quarter ended September 30, 2023.
Rental fees consist of merchandise, such as furniture, appliances and consumer electronics, which is rented to customers pursuant to rental purchase agreements which provide for weekly, semi-monthly or monthly rental terms with non-refundable rental payments. At the end of each rental term, the customer may renew the agreement for the next rental term by making a payment in advance. The customer can acquire ownership of the merchandise on lease by completing payment of all required rental periods. The Company maintains ownership of the rental merchandise until all payment obligations are satisfied. The customer can terminate the lease agreement at any time during the lease term and return the leased merchandise to the store. All prior rental payments are nonrefundable.
Merchandise sales are from merchandise purchased upfront through a point-of-sale transaction. In addition, rental customers may exercise an early purchase option to buy the merchandise at a fixed discount to the total contractual price at any point in the lease term as established in the original rental agreement. Revenue from merchandise sales and early purchase option is recognized at the point in time when payment is received and ownership of the merchandise passes to the customer. Any remaining net value of the merchandise is recorded to cost of sales at the time of the transaction.
The environmental services business is engaged in the recycling of scrap and waste materials and deals primarily in paper products. The business provides processing services that consists of the receipt of materials from municipalities and commercial entities that are then sorted and then disposed of or sold, using third-party processors as needed. The businesses' customer arrangements contain a single obligation to transfer processed sorted and baled recycled raw materials and revenues are recognized at a point in time as sales when the performance obligation is satisfied. The pricing for recyclable materials can fluctuate based upon market conditions and the business has certain arrangements with customers to reduce the risk exposure to commodity pricing volatility through revenue sharing (or processing fee) contracts with municipal customers.
The landscaping business, which was sold in November 2023, provided landscaping maintenance, improvements, and irrigation services to its customers. Revenues prior to the sale were recognized as the services are performed, which is typically ratably over the term of the contract upon the transfer of control of services to its customers in an amount reflecting the total consideration expected to be received from the customer.
(e) Direct Cost of Services
Direct cost of services relates to service and fee revenues. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct cost of services in the Communications segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct costs of services include cost of rentals and fees for the Company’s rent-to-own stores. Direct cost of services does not include an allocation of the Company’s overhead costs. Direct costs of services for Nogin, Inc. ("Nogin") (as defined below) include costs directly related to providing services under the master service agreements with customers, which primarily includes service provider costs directly related to processing revenue transactions, marketing expenses and shipping and handling expenses which correspond to marketing and shipping revenues, as well as credit card merchant fees.
(f) Interest Expense - Securities Lending Activities
Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company and totaled $66,128, $145,435, and $66,495 during the years ended December 31, 2024, 2023, and 2022, respectively.
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(g) Concentration of Risk
Revenues in the Capital Markets, Financial Consulting, Wealth Management, Communications, and E-Commerce segments are primarily generated in the United States. Revenues in the Consumer Products segment are primarily generated in the United States, Canada, and Europe.
The Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts.
On December 18, 2023, the Company loaned $108,000 to Conn’s Inc. (“Conn’s”) as more fully described in Note 23 under the Term Loan and Security Agreement, dated as of December 18, 2023 (the “Conn’s Term Loan”), among Conn’s, W.S. Badcock LLC ("WS Badcock"), as borrowers, and an affiliate of the Company, as administrative agent, collateral agent, and lender. On February 14, 2024, the Company collected $15,000 of principal payments which reduced the loan balance to $93,000. The fair value of the Conn’s loan receivable was $19,065 at December 31, 2024. This loan combined with two other existing loans receivable with a fair value of $6,082 and $62,808 as of December 31, 2024 and 2023, respectively, is collateralized by consumer loan receivables of customers of the furniture and electronics retailer. These loans have an aggregate fair value of $25,147 or 27.9% and $167,568 or 31.5% of the loan portfolio as of December 31, 2024 and 2023, respectively, and are concentrated in the retail industry. The fair value of these loans at December 31, 2024 has been impacted by a deterioration in Conn’s operating results in the second quarter of 2024, which culminated in the Conn's Chapter 11 bankruptcy filing on July 23, 2024 as more fully discussed in Note 2(s) below. On December 17, 2024, the Company entered into an agreement with the first-lien holder banks of the Conn’s loan receivable to assign the first-lien loan receivable to the Company for consideration of $27,738. The Company collected the $27,738 and interest earned on the first-lien loan receivable of $238 for the period from December 17, 2024 through January 24, 2025 when the first-lien loan receivable was paid in full. This loan receivable has a fair value of $19,761 as of December 31, 2024.
The Company also has a loan receivable with a principal amount of $224,968 and $200,506 as of December 31, 2024 and 2023, respectively. The increase in the loan receivable principal amount at December 31, 2024 in the amount of $24,462 includes interest in-kind interest that was capitalized to the loan receivable balance annually on the loan's anniversary date. The loan receivable is secured by a first priority security interest in Freedom VCM equity interests owned by Brian Kahn as more fully described in Note 2(s) below. The fair value of the loan receivable and collateral from the security interest in Freedom VCM at December 31, 2024 is impacted by the Freedom VCM filing of voluntary petitions for relief under Chapter 11 of title 11 of the United States Code (the "Bankruptcy Code") on November 3, 2024. The fair value of the loan receivable was $2,057 and $200,506 or 2.3% and 37.7% of the total loan portfolio as of December 31, 2024 and 2023, respectively. As a result of the bankruptcy filing on November 3, 2024, the loan receivable at December 31, 2024 is on non-accrual and there is no accrued interest receivable on the loan receivable at December 31, 2024. Interest receivable on the loan in the amount of $8,889 as of December 31, 2023 is included in prepaid expenses and other assets in the consolidated balance sheets. The fair value of the underlying collateral for this loan is primarily comprised of other securities which amounted to $2,057 at December 31, 2024 and decreased to a fair value of $1,284 at September 16, 2025.
At December 31, 2024, the Company is also exposed to a concentration of risk related to (a) a loan receivable with a fair value of $32,136 from a technology company, (b) the Freedom VCM Receivables, Inc. loan receivable which totaled $3,913, and (c) exposure from the loan receivable with a fair value of $2,057 as described above where the primary security includes other public equity securities owned by Brian Kahn.
The maximum amount of loss that the Company is exposed to loss from loans receivable concentration is an amount equivalent to the fair value of these loans at which totaled $59,340 and $368,074 as of December 31, 2024 and 2023, respectively.
(h) Advertising Expenses
The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $7,629, $10,515, and $10,690 during the years ended December 31, 2024, 2023, and 2022, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying consolidated statements of operations.
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(i) Share-Based Compensation
The Company’s share-based payment awards principally consist of grants of restricted stock, restricted stock units ("RSUs") and costs associated with the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the consolidated statements of operations over the requisite service or performance period the award is expected to vest. The Company accounts for forfeitures when they occur rather than estimate a forfeiture rate.
In June 2018, the Company adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees to purchase common stock through payroll deductions at a price that is 85% of the market value of the common stock on the last day of the offering period. In accordance with the provisions of ASC 718 - Compensation - Stock Compensation, the Company is required to recognize compensation expense relating to shares offered under the Purchase Plan.
(j) Income Taxes
The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect during the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced.
The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense.
(k) Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
(l) Restricted Cash
As of December 31, 2024 and 2023, restricted cash included $100,475 and $1,875, respectively, primarily consisting of cash set aside for the repayment of the 6.375% Senior Notes due on February 28, 2025 and cash collateral for leases.
Cash, cash equivalents and restricted cash consist of the following:
December 31,
2024		 December 31,
2023
Cash and cash equivalents $ 154,877  $ 222,690 
Restricted cash 100,475  1,875 
Total cash, cash equivalents and restricted cash $ 255,352  $ 224,565 

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(m) Securities Borrowed and Securities Loaned
Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate.
The Company accounts for securities lending transactions in accordance with ASC 210 - Balance Sheet, which requires companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the consolidated balance sheets.
(n) Due from/to Brokers, Dealers, and Clearing Organizations
The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposits and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker.
(o) Accounts Receivable
Accounts receivable represents amounts due from the Company’s Financial Consulting, Capital Markets, Wealth Management, Communications, Consumer Products, and E-Commerce customers. The Company maintains an allowance for credit losses for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes the expected loss model, which includes the pooling of receivables using the aging method and specific identification. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. The Company’s bad debt expense and changes in the allowance for credit losses are included in Note 7.

(p) Inventories

Inventories are substantially all finished goods from the Consumer Products and Communications segments and are stated at the lower of cost, determined on the first-in, first-out (FIFO) basis, or net realizable value. The Company maintains an allowance for excess and obsolete inventories to reflect its estimate of realizable value of the inventory based on historical sales and recoveries. Inventories are included in prepaid and other assets in the consolidated balance sheets.
(q) Leases
The Company determines if an arrangement is, or contains, a lease at the inception date and reviews leases for finance or operating classification once control is obtained. Operating leases with terms greater than twelve months are included in right-of-use assets, with the related liabilities included in operating lease liabilities in the consolidated balance sheets. Finance leases are included in prepaid expenses and other assets, with the related liabilities included in accrued expenses and other liabilities in the consolidated balance sheets.
Operating and finance lease assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The Company uses its estimated incremental borrowing rate in determining the present value of lease payments. Variable components of the lease payments such as fair market value adjustments, utilities, and maintenance costs are expensed as incurred and not included in determining the present value. The Company's lease terms include rent escalations and options to extend or terminate the lease when it is reasonably certain that it will exercise that option. Lease expense is recognized on a straight-line basis over the lease term.
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The Company has lease agreements with lease and non-lease components which are accounted for as a single lease component. See Note 11 for additional information on leases.
(r) Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under finance leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation expense on property and equipment was $10,219, $9,432, and $5,573 during the years ended December 31, 2024, 2023, and 2022, respectively.
(s) Loans Receivable

Under ASC 825 - Financial Instruments, the Company elected the fair value option for all outstanding loans receivable. Management evaluates the performance of the loan portfolio on a fair value basis. Under the fair value option, loans receivables are measured at each reporting period based upon their exit value in an orderly transaction and unrealized gains or losses from changes in fair value are recorded in the consolidated statements of operations.

Loans receivable, at fair value totaled $90,103 and $532,419 as of December 31, 2024 and 2023, respectively. The loans have various maturities through February 2029. As of December 31, 2024 and 2023, the principal balances of loans receivable accounted for under the fair value option were $446,004 and $555,882, respectively. The principal balance of loans receivable exceeded the fair value of loans by $355,901 and $23,463 as of December 31, 2024 and 2023, respectively. At the time of origination, the Company's loans are collateralized by the assets of borrowers and other pledged collateral and may have guarantees to provide for protection of the payments due on loans receivable. During the years ended December 31, 2024, 2023 and 2022, the Company recorded net unrealized losses of $332,438, net unrealized gains of $55,756, and net unrealized losses of $54,439, respectively, on loans receivable, at fair value, which is included fair value adjustments on loans on the consolidated statements of operations. Loans receivable, at fair value on non-accrual and 90 days or greater past due was $21,122, which represented approximately 23.4% of total loans receivable, at fair value as of December 31, 2024. The principal balance of loans receivable on non-accrual and 90 days or greater past due was $321,544 as of December 31, 2024. Loans receivable, at fair value on non-accrual was $41,236, which represents approximately 7.7% of total loans receivable, at fair value as of December 31, 2023. The principal balance of loans receivable on non-accrual was $43,326 as of December 31, 2023. Interest income for loans on non-accrual and/or 90 days or greater past due is recognized separately from changes in fair value adjustments on loans on the consolidated statements of operations. The amount of gains or (losses) included in earnings attributable to changes in instrument-specific credit risk was $(323,840), $6,322 and $(58,068) during the years ended December 31, 2024, 2023 and 2022, respectively. The gains or losses attributable to changes in instrument-specific risk was determined by management based on an estimate of the fair value change during the period specific to each loan receivable.

The Company may periodically provide limited guarantees to third parties for loans that are made to investment banking and lending clients. As of December 31, 2024, the Company has outstanding limited guarantee arrangements with respect to Babcock & Wilcox Enterprises, Inc. (“B&W”) as further described in Note 19(b). In accordance with the credit loss standard, the Company evaluates the need to record an allowance for credit losses for these loan guarantees since they have off-balance sheet credit exposures. As of December 31, 2024, the Company has not recorded any provision for credit losses on the B&W guarantees since the Company believes that there is sufficient collateral to protect the Company from any credit loss exposure.
Interest income on loans receivable is recognized based on the stated interest rate of the loan on the unpaid principal balance plus the amortization of premiums and discounts and is included in interest income - loans on the consolidated statements of operations.
On August 21, 2023, one of the Company’s subsidiaries and Vintage Capital Management, LLC (“VCM”), an affiliate of Brian Kahn, amended and restated a promissory note (the “Amended and Restated Note”), pursuant to which VCM owes the Company's subsidiary the aggregate principal amount of $200,506 and bears interest at the rate of 12% per annum payable-in-kind with a maturity date of December 31, 2027. The Amended and Restated Note requires repayments prior to the maturity date from certain proceeds received by VCM, Mr. Kahn or his affiliates from, among other proceeds, distributions or dividends paid by Freedom VCM in amount equal to the greater of (i) 80% of the net after-tax proceeds, and (ii) 50% of gross proceeds. The obligations under the Amended and Restated Note are primarily secured by a first priority perfected security interest in Freedom VCM equity interests owned by Mr. Kahn, the CEO and a board member of Freedom VCM as of December 31, 2023, and his spouse with a value (based on the transaction price in the Franchise Resource Group, Inc. ("FRG") take-private transaction) of $227,296 as of August 21, 2023. On January 22, 2024, Mr. Kahn resigned as CEO and a member of the board of directors of Freedom VCM.
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The fair value of the Freedom VCM equity interest owned by Mr. Kahn and his spouse was zero and $232,065 as of December 31, 2024 and 2023, respectively. Amounts owing under the Amended and Restated Note may be repaid at any time without penalty. On a quarterly basis, the Company will continue to obtain third party appraisals to evaluate the value of the collateral of the loan since the repayment of the loan and accrued interest will be paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying collateral. In light of Mr. Kahn’s alleged involvement with the alleged misconduct concerning Prophecy Asset Management LP, the Company can provide no assurances that it will not be subject to claims asserting an interest in the Freedom VCM equity interests owned by Mr. Kahn, including those that collateralize the Amended and Restated Note. If a claim were successful, it would diminish the value of the collateral which could impact the carrying value of the loan. If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit. Other factors leading to continued deterioration in the collateral, including in the performance of Freedom VCM or delays in the execution of its strategies, including the possible disposition of additional businesses and further de-leveraging of its balance sheet, for the loan receivable may further impact the ultimate collection of principal and interest. To the extent the loan balance and accrued interest exceed the underlying collateral value of the loan, as was the case as of December 31, 2024, the fair value of the loan has been and will be impacted and has resulted, and will result, in an unrealized loss being recorded in the consolidated statements of operations. On November 3, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code, which impacts the collateral for this loan receivable. The fair value adjustment on the VCM loan receivable was $(222,911) and zero for the year ended December 31, 2024 and 2023. The fair value of the underlying collateral for this loan decreased to a fair value of $1,284 at September 16, 2025. The $1,284 is comprised of other public securities. On June 1, 2025, the United States Bankruptcy Court for the District of Delaware entered an Order Confirming the Ninth Amended Joint Chapter 11 Plan of Franchise Group, Inc. and its affiliated debtors (the “FRG Plan”). Under the FRG Plan, all equity interests and claims related thereto were cancelled and such equity interest holders, including Freedom VCM as an equity holder of Franchise Group, Inc. will not receive any property or distributions under the FRG Plan. As a result, of the FRG Plan, the Company does not expect to receive any proceeds or distributions from the Freedom VCM equity interests owned by Mr. Kahn and his spouse that collateralize the VCM loan receivable.
As of December 31, 2024, loans receivable had an aggregate remaining contractual principal balance of $448,709, an aggregate fair value of $90,103, and the contractual principal balance exceeded the fair value by $358,606. As of December 31, 2023, loans receivable had an aggregate remaining contractual principal balance of $563,637, an aggregate fair value of $532,419, and the contractual principal balance exceeded the fair value by $31,218.
The Company has a loan receivable with a principal amount of $93,000 outstanding from Conn’s and two loans with a fair value of $6,082 outstanding which are discussed below, (the Badcock Receivables I and Freedom VCM Receivables loans receivable, each as defined below), which are serviced by Conn’s. Accrued interest on the $93,000 Conn’s loan receivable was current as of June 30, 2024. As a result of Conn's voluntary petition filing on July 23, 2024 for relief (the “Chapter 11 Cases”) under chapter 11 of title 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (the “Bankruptcy Court”) this loan receivable with a fair value of $19,065 at December 31, 2024 is included in loans receivable on non-accrual as discussed above. Future collection of the $93,000 Conn’s loan receivable is expected to be paid from the sale of assets and servicing of a pool consumer receivables that serve as collateral for the loan where we have a second lien on these assets. These proceeds which are expected to be collected over the next year has been impacted by the Chapter 11 Cases under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. The commencement of the Chapter 11 Cases constitutes an event of default that accelerates the repayment obligations under the $93,000 loan receivable to Conn’s. Any efforts to enforce repayment obligations under the Conn’s $93,000 loan receivable are automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of this loan are subject to the applicable provisions of the Bankruptcy Code. The fair value adjustment on the Conn's loan receivable was $(71,724) and $494 for the year ended December 31, 2024 and 2023. On December 17, 2024, the Company entered into an agreement with the first-lien holder banks of the Conn’s loan receivable to assign the first-lien loan receivable to the Company for consideration of $27,738. The Company collected the principal of $27,738 and interest on the first-lien loan receivable of $238 for the period from December 17, 2024 through January 24, 2025 when the first-lien loan receivable was paid in full.
The Company has continued to receive payments for the other two loans with a fair value of $6,082 at December 31, 2024 and has received payments of $1,114 subsequent to December 31, 2024 and through February 5, 2025 on the Badcock Receivables I and Freedom VCM Receivable loans receivable. On February 7, 2025, the Company sold the two loans for $6,611 and recorded a gain of $1,643 during the first quarter of fiscal year 2025.
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Badcock Loan Receivable
On December 20, 2021, the Company entered into a Master Receivables Purchase Agreement (“Badcock Receivables I”) with W.S. Badcock Corporation, a Florida corporation (“WSBC”), which at the time was an indirect wholly owned subsidiary of FRG, which became a subsidiary of Freedom VCM as a result of the transaction on August 21, 2023. The Company paid $400,000 in cash to WSBC for the purchase of certain consumer credit receivables which are small consumer loans issued by WSBC to consumers for the purchase of merchandise sold at WSBC's stores. On September 23, 2022, the Company's then majority-owned subsidiary, B Riley Receivables II, LLC (“BRRII”), a Delaware limited liability company, entered into a Master Receivables Purchase Agreement (“Badcock Receivables II”) with WSBC. This purchase of $168,363 consumer credit receivables of WSBC was partially financed by a $148,200 term loan discussed in Note 13. During the three months ended March 31, 2023, BRRII entered into Amendment No. 2 and No. 3 to Badcock Receivables II with WSBC for a total of $145,278 in additional consumer credit receivables. The accounting for these transactions resulted in the Company recording a loan receivable from WSBC with the recognition of interest income at an imputed rate based on the cash flows expected to be received from the collection of the consumer receivables that serve as collateral for the loan. The collateral for these loans receivables are the individual consumer credit receivables that were originally issued to WSBC consumers for merchandise sold in WSBC stores and the total amount of collections on these loan receivables is dependent upon their credit performance. These loan receivables are measured at fair value.
On August 21, 2023, all of the equity interests of BRRII were sold to Freedom VCM Receivables, Inc. (“Freedom VCM Receivables”), a subsidiary of Freedom VCM, which resulted in a loss of $78. In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement, as more fully discussed in Note 13, and Freedom VCM Receivables entered into the Freedom Receivables Note (as defined below) in the amount of $58,872, with a stated interest rate of 19.74% and a maturity date of August 21, 2033 with payments of principal and interest on the note limited solely to the performance of certain consumer receivables held by BRRII. This loan receivable is measured at fair value.
In connection with these loans, the Company entered into a Servicing Agreement with WSBC pursuant to which WSBC provides to the Company certain customary servicing and account management services in respect of the receivables purchased by the Company under the Receivables Purchase Agreement. In addition, subject to certain terms and conditions, FRG has agreed to guarantee the performance by WSBC of its obligations under the Master Receivables Purchase Agreements and the Servicing Agreement.
As of December 31, 2024 and 2023, the Badcock Receivables I loan receivable in the Company's consolidated balance sheets included loans measured at fair value in the amount of $2,169 and $20,624, respectively. As of December 31, 2024 and 2023, the Freedom Receivables Note was included in the Company's consolidated balance sheets in loans receivable, at fair value in the amount of $3,913 and $42,183, respectively.
Nogin Loan and Loan Commitment
On November 16, 2023, the Company entered into a Chapter 11 Restructuring Support Agreement (as amended, the “RSA”) with Nogin, certain of its subsidiaries, and certain holders of the respective convertible notes (the “Consenting Noteholders”). Pursuant to the RSA, the Company funded $17,530 of debtor-in-possession (“DIP”) financing as of December 31, 2023. The Company funded an additional $20,170 (inclusive of $1,700 in fees payable in kind) in DIP financing which increased the loan amount to $37,700 as of May 3, 2024. On May 3, 2024 the DIP financing of $37,700 was extinguished and the Company funded an additional $18,670 in cash to complete the acquisition of Nogin of which $15,500 was a payment to the Consenting Noteholders. See Note 3 for more details on the Nogin acquisition.
(t) Securities and Other Investments Owned and Securities Sold Not Yet Purchased
Securities owned consist of equity securities including, common and preferred stocks, warrants, and options; corporate bonds; other fixed income securities including, government and agency bonds; loans receivable valued at fair value; and investments in partnerships. Securities sold, but not yet purchased represent obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these securities are reflected currently in the results of operations.
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As of December 31, 2024 and 2023, the Company’s securities and other investments owned and securities sold not yet purchased at fair value consisted of the following securities:
December 31,
2024		 December 31,
2023
Securities and other investments owned:
Equity securities $ 232,508  $ 711,577 
Corporate bonds 29,027  59,287 
Other fixed income securities 4,923  2,989 
Partnership interests and other 15,867  35,196 
$ 282,325  $ 809,049 
   
Securities sold not yet purchased:    
Equity securities $ —  $ 1,037 
Corporate bonds 1,891  5,971 
Other fixed income securities 3,784  1,593 
$ 5,675  $ 8,601 
The Company owns certain equity securities that are accounted for under the fair value option where the Company would otherwise use the equity method of accounting. Investments become subject to the equity method of accounting when the Company possesses the ability to exercise significant influence, but not control, over the operating and financial policies of the investee. The ability to exercise significant influence is presumed when the Company possesses more than 20% of the voting interests of the investee. However, the Company may have the ability to exercise significant influence over the investee when the Company owns less than 20% of the voting interests of the investee depending on the facts and circumstances that demonstrate that the ability to exercise influence is present, such as when the Company has representation on the board of directors of such investee. In accordance with ASC 321 - Equity Securities, unrealized gains (losses) on equity securities held at December 31, 2024, includes unrealized gains (losses) of $(48,994), $(134,027), and $(186,202) for the years ended December 31, 2024, 2023, and 2022 respectively, reported in other income (loss) - realized and unrealized gains (losses) on investments in the consolidated statement of operations.
Freedom VCM Holdings, LLC Equity Interest and Take-Private Transaction
During the year ended December 31, 2024, the Company's investment in Freedom VCM was written-off as a result of Freedom VCM filing of voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024. As a result of the bankruptcy filing, the Company no longer has significant influence over Freedom VCM. The investment in Freedom VCM was from the Company's equity interest that was acquired on August 21, 2023 for $216,500 in cash in connection with the closing of the take private transaction that included the acquisition of FRG, by a buyer group that included members of senior management of FRG, led by Mr. Kahn, FRG’s then Chief Executive Officer (the “FRG take-private transaction”). In connection with the closing of the FRG take-private transaction, the Company terminated an investment advisory agreement (the “Advisory Agreement”) with Mr. Kahn. Pursuant to the Advisory Agreement, Mr. Kahn, as financial advisor, had the sole power to vote or dispose of $64,644 of shares of FRG common stock (based on the value of FRG shares in the FRG take-private transaction as of the closing date of such transaction) held of record by B. Riley Securities, Inc. ("BRS"). Upon the termination of the Advisory Agreement, (i) Mr. Kahn’s right to vote or dispose of such FRG shares terminated, (ii) such FRG shares owned by BRS were rolled over into additional equity interests in Freedom VCM in connection with the FRG take-private transaction, and (iii) Mr. Kahn owed a total of $20,911 to the Company under the Advisory Agreement which amount was added to, and included in, the Amended and Restated Note.
Following these transactions, the Company owned an equity interest of $281,144 (based on the transaction price in the FRG take-private transaction) or 31% of the outstanding equity interests in Freedom VCM. Also in connection with the FRG take-private transaction, on August 21, 2023 all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to a Freedom VCM affiliate, which resulted in a loss of $78. In connection with the sale, the Freedom VCM affiliate assumed the obligations with respect to the Pathlight Credit Agreement, as further discussed in Note 13, and the Company entered into a non-recourse promissory note with another Freedom VCM affiliate in the amount of $58,872, with a stated interest rate of 19.74% and a maturity date of August 21, 2033 (the “Freedom Receivables Note”) with payments of principal and interest on the note limited solely to performance of certain receivables held by BRRII.
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On December 18, 2023, a wholly owned subsidiary of Freedom VCM entered into a transaction that resulted in the sale of all of the operations of WS Badcock to Conn’s in exchange for the issuance by Conn’s of 1,000,000 shares of Conn’s preferred stock (the “Preferred Shares”). The Preferred Shares issued by Conn’s to Freedom VCM, subject to the terms set forth in the Certificate of Designation, are nonvoting and are convertible into an aggregate of approximately 24,540,295 shares of non-voting common stock of Conn’s, which represented 49.99% of the issued and outstanding shares of common stock of Conn’s which resulted in consideration received by Freedom VCM of approximately $69,900. As a result of the convertible preferred stock having a conversion feature into 49.99% of the common stock of Conn’s, Freedom VCM is considered to have significant influence over Conn’s in accordance with ASC 323, Investments – Equity Method and Joint Ventures. On July 23, 2024, Conn’s filed a Chapter 11 Case under the Bankruptcy Code in the Bankruptcy Court as more fully discussed in Note 2(s).
On June 1, 2025, the United States Bankruptcy Court for the District of Delaware entered an Order Confirming the Ninth Amended Joint Chapter 11 Plan of Franchise Group, Inc. and its affiliated debtors pursuant to the FRG Plan. Under the FRG Plan, all equity interests and claims related thereto were cancelled and such equity interest holders, including Freedom VCM as an equity holder of Franchise Group, Inc. will not receive any property or distributions under the FRG Plan. As a result, of the FRG Plan, the Company does not expect to receive any proceeds or distributions from the equity investment in Freedom VCM. Prior to the write-off of the investment in Freedom VCM, the Company elected to account for the 31% equity investment under the fair value option. The following tables contain summarized financial information with respect to Freedom VCM, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2024 and 2023 correspond to amounts as of December 31, 2024 and 2023, respectively, of the Company; income statement amounts during the twelve months ended September 30, 2024 and 2023 correspond to amounts during the year ended December 31, 2024 and 2023, respectively, of the Company), which is the period in which the most recent financial information is available:
As of September 30,
2024 2023
Current assets $ 871,102  $ 1,219,682 
Noncurrent assets $ 2,889,334  $ 3,142,660 
Current liabilities $ 569,281  $ 749,894 
Noncurrent liabilities $ 2,680,178  $ 2,695,446 
Equity attributable to investee $ 510,977  $ 917,003 
For the twelve months ended September 30
2024 2023
Revenues $ 3,131,138  $ 4,276,097 
Cost of revenues $ 1,991,258  $ 2,608,203 
Net loss attributable to investees $ (391,385) $ (276,813)

As of December 31, 2024 and 2023, the fair value of the investment in Freedom VCM totaled zero and $287,043, and is included in securities and other investments owned, at fair value in the consolidated balance sheets. The change in fair value recorded in the statement of operations was an unrealized loss $287,043 for the year ended December 31, 2024 and an unrealized gain of $5,899 for the period from August 21, 2023 (date of investment) through December 31, 2023, respectively.

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Babcock and Wilcox Enterprises, Inc, Equity Investment
The Company owns a 29.1% voting interest in B&W whereby the Company has elected to account for this investment under the fair value option. The following tables contain summarized financial information with respect to B&W included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2024 and 2023, correspond to amounts as of December 31, 2024 and 2023, respectively, of the Company; income statement amounts during the twelve months ended September 30, 2024, 2023, and 2022, correspond to amounts during the year ended December 31, 2024, 2023, and 2022, respectively, of the Company):

As of September 30,
2024 2023
Current assets $ 530,223  $ 542,300 
Noncurrent assets $ 274,410  $ 294,979 
Current liabilities $ 297,928  $ 393,539 
Noncurrent liabilities $ 709,823  $ 585,430 
Equity attributable to investee $ (203,694) $ (142,316)
Noncontrolling interest $ 576  $ 626 

For the twelve months ended September 30,
2024 2023 2022
Revenues $ 878,224  $ 1,022,064  $ 832,233 
Cost of revenues $ 721,112  $ 795,422  $ 651,493 
Loss from continuing operations $ (55,910) $ (23,484) $ (3,958)
Net loss $ (59,482) $ (128,587) $ (2,052)
Net loss attributable to investees $ (67,019) $ (143,591) $ (13,868)
As of December 31, 2024 and 2023, the fair value of the investment in B&W totaled $45,012 and $40,072, respectively, and are included in securities and other investments owned, at fair value in the consolidated balance sheets.

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Other Public Company Equity Investments
As of December 31, 2024, the Company no longer had significant influence related to the investment in Synchronoss Technologies, Inc. ("Synchronoss") since the Company's voting interest declined below 10% and is no longer entitled to board representation on Synchronoss. During the year ended December 31, 2024, the Company sold its entire equity investment in Alta Equipment Group, Inc. In the prior year, at December 31, 2023, the Company had a voting interest of 14% in Synchronoss Technologies, Inc. and 11% in Alta Equipment Group, Inc., and the Company had significant influence due to the equity ownership interest and board representation for both companies. The Company elected to account for these equity investments under the fair value option. The following tables contain summarized financial information for these companies, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2024 and 2023, correspond to amounts as of December 31, 2024 and 2023, respectively, of the Company; income statement amounts during the twelve months ended September 30, 2024, 2023, and 2022, correspond to amounts during the year ended December 31, December 31, 2024, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:
Synchronoss
 Alta Equipment Group, Inc.
As of September 30, As of September 30,
2024 2023 2023
Current assets $ 77,940  $ 85,903  $ 784,300 
Noncurrent assets $ 221,758  $ 275,304  $ 696,100 
Current liabilities $ 41,553  $ 74,528  $ 569,800 
Noncurrent liabilities $ 210,342  $ 166,673  $ 763,100 
Equity attributable to investee $ 47,803  $ 120,006  $ 147,500 
Synchronoss
 Alta Equipment Group, Inc.
For the twelve months ended September 30, For the twelve months ended September 30,
2024 2023 2022 2023 2022
Revenues $ 170,789  $ 234,699  $ 264,829  $ 1,783,900  $ 1,499,500 
Cost of revenues $ 68,365  $ 82,167  $ 95,621  $ 1,298,900  $ 1,101,600 
Net (loss) income attributable to investees $ (38,283) $ (45,468) $ (3,655) $ 7,100  $ 6,500 
As of December 31, 2024 and 2023, the fair value of the equity investment in Synchronoss was $7,200 and $8,780, respectively. As of December 31, 2023 and 2022, the fair value of the equity investment in Alta Equipment Group, Inc. was zero and $44,653, respectively. These amounts are included in securities and other investments owned in the consolidated balance sheets.

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Other Equity Investments
As of December 31, 2024, the Company had other equity investments where the Company is considered to have the ability to exercise influence since the Company has representation on the board of directors or the Company is presumed to have the ability to exercise significant influence since the investment is more than minor and the limited liability company is required to maintain specific ownership accounts for each member. The Company has elected to account for these equity investments under the fair value option. These equity investments are comprised of equity investments in five private companies at December 31, 2024 and six private companies at December 31, 2023. The following table contains summarized financial information for these companies, included below for purposes of the disclosure a quarter in arrears (balance sheet amounts as of September 30, 2024 and 2023, correspond to amounts as of December 31, 2024 and 2023, respectively, of the Company; income statement amounts during the twelve months ended September 30, 2024, 2023, and 2022, correspond to amounts during the year ended December 31, 2024, 2023 and 2022, respectively, of the Company), which is the period in which the most recent financial information is available:
As of September 30,
2024 2023
Current assets $ 215,927  $ 281,610 
Noncurrent assets $ 572,628  $ 627,858 
Current liabilities $ 86,672  $ 150,114 
Noncurrent liabilities $ 105,711  $ 277,638 
Preferred stock $ —  $ 4,500 
Equity attributable to investee $ 596,172  $ 477,216 
For the twelve months ended September 30,
2024 2023 2022
Revenues $ 428,564  $ 551,374  $ 114,941 
Cost of revenue and expenses $ 320,364  $ 383,461  $ 55,780 
Net (loss) income attributable to investees $ (43,372) $ 35,898  $ 6,146 
As of December 31, 2024 and 2023, the fair value of these investments totaled $29,562 and $81,685, respectively, and are included in securities and other investments owned, at fair value in the consolidated balance sheets.
(u) Goodwill and Other Intangible Assets
The Company accounts for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of an asset has decreased below its carrying value.
Goodwill includes the excess of the purchase price over the fair value of net assets acquired in business combinations and the acquisition of noncontrolling interests. ASC 350 – Intangibles - Goodwill and Other, as amended by Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2017-04, Simplifying the Test for Goodwill Impairment, permits management to perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its corresponding carrying value. If management determines the reporting unit's fair value is more likely than not less than its carrying value, a quantitative analysis will be performed to compare the fair value of the reporting unit with its corresponding carrying value. If the conclusion of the quantitative analysis is that the fair value is in fact less than the carrying value, management will recognize a goodwill impairment charge for the amount by which the reporting unit’s carrying value exceeds its fair value. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value. The Company operates six reporting units, which are the same as its reporting segments described in Note 24 – Business Segments comprised of the Capital Markets segment, Wealth Management segment, Financial Consulting segment, Communications segment, the Consumer Products segment, the E-Commerce segment, and the All Other category. Significant judgment is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment.
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The Company reviews the carrying value of its finite-lived amortizable intangibles and other long-lived assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair market value.

In performing the annual review of goodwill and other intangible assets at December 31, 2024, qualitative factors indicated it could be more likely than not that the carrying value of goodwill and other intangible assets for the Nogin reporting unit could be impaired and the tradename for the Targus reporting unit could be impaired. For the Targus reporting unit, there were also qualitative factors in performing the interim and annual analysis at June 30, 2024, December 31, 2023 and September 30, 2023 that indicated it could be more likely than not that the carrying value of goodwill and tradename for the Targus reporting unit could be impaired. As more fully described in Note 10, based on the results of these analyses, the Company recorded non-cash impairment charges of $105,373 during the year ended December 31, 2024 which included impairment charges related to (a) indefinite lived assets of $84,345 related to goodwill and $5,000 related to tradenames and (b) $16,028 related to finite-lived intangible assets for customer relationships, internally developed software and other intangible assets, and trademarks. The Company recorded non-cash impairment charges of $70,333 during the year ended December 31, 2023 which included impairment charges related to (a) indefinite lived assets of $53,100 related to goodwill and $15,500 related to tradenames and (b) $1,733 related to finite-lived tradename in the Capital Markets segment that was no longer used by the Company. There were no impairments of goodwill or indefinite-lived intangibles identified during the year ended December 31, 2022. During the year ended December 31, 2022, the Company recognized $4,174 impairment of finite-lived intangibles representing the carrying amount of tradenames and software development costs as a result of the reorganization and consolidation activities in the Wealth Management segment and the Communications segment, which was included as a restructuring charge in the Company's consolidated statements of operations.
(v) Fair Value Measurements
The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable, and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common and preferred stocks and warrants, corporate bonds, and investments in partnerships. Investments in common stocks that are based on quoted prices in active markets are included in Level 1 of the fair value hierarchy. The Company also holds loans receivable valued at fair value, nonpublic common and preferred stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds. The Company also invests in priority investment funds and the underlying securities held by these funds are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. The Company’s partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the partnerships and funds; the value for these investments is derived from the most recent statements received from the general partner or fund administrator.
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These partnership and investment fund interests are valued at net asset value (“NAV”) and are excluded from the fair value hierarchy in the table below in accordance with ASC 820 - Fair Value Measurements. The investment strategy of these partnerships and investment funds is primarily for capital appreciation from investments in privately held technology and small and mid-cap companies. As of December 31, 2024 and 2023, partnership and investment fund interests valued at NAV of $15,867 and $35,196, respectively, and are included in securities and other investments owned in the accompanying consolidated balance sheets.
Securities and other investments owned also include investments in nonpublic entities that do not have a readily determinable fair value and do not report NAV per share. These investments are accounted for using a measurement alternative under which they are measured at cost and adjusted for observable price changes and impairments. Observable price changes result from, among other things, equity transactions for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions related to the same issuer. For these transactions to be considered observable price changes of the same issuer, we evaluate whether these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and other factors, to the investments we hold. As of December 31, 2024 and 2023, the following table presents the carrying value of equity securities measured under the measurement alternative investments and the related adjustments recorded during the periods presented for those securities with observable price changes:
December 31,
2024		 December 31,
2023
Securities and other investments owned, carrying value $ 67,100  $ 64,455 
Upward carrying value changes 1,848  100 
Downward carrying value changes/impairment (2) (21,395)
The Company measures certain assets at fair value on a nonrecurring basis. These assets include equity method investments when they are deemed to be other-than-temporarily impaired, investments adjusted to their fair value by applying the measurement alternative, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property, plant and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired.
The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of December 31, 2024 and 2023.
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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2024 Using
Fair value at December 31,
2024		 Quoted prices in active markets
for identical assets
 (Level 1)		 Other observable inputs
 (Level 2)		 Significant unobservable inputs
 (Level 3)
Assets:
Securities and other investments owned:
Equity securities $ 165,408  $ 124,892  $ —  $ 40,516 
Corporate bonds 29,027  25,461  3,566  — 
Other fixed income securities 4,923  —  4,923  — 
Total securities and other investments owned 199,358  150,353  8,489  40,516 
Loans receivable, at fair value 90,103  —  —  90,103 
Total assets measured at fair value $ 289,461  $ 150,353  $ 8,489  $ 130,619 
Liabilities:
Securities sold not yet purchased:
Corporate bonds $ 1,891  $ —  $ 1,891  $ — 
Other fixed income securities 3,784  —  3,784  — 
Total securities sold not yet purchased 5,675  —  5,675  — 
Contingent consideration 7,630  —  —  7,630 
Total liabilities measured at fair value $ 13,305  $ —  $ 5,675  $ 7,630 
Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis at December 31, 2023 Using
Fair value at December 31,
2023		 Quoted prices in active markets
for identical assets
 (Level 1)		 Other observable inputs
 (Level 2)		 Significant unobservable inputs
 (Level 3)
Assets:
Securities and other investments owned:
Equity securities $ 647,122  $ 194,541  $ —  $ 452,581 
Corporate bonds 59,287  56,045  3,242  — 
Other fixed income securities 2,989  —  2,989  — 
Total securities and other investments owned 709,398  250,586  6,231  452,581 
Loans receivable, at fair value 532,419  —  —  532,419 
Total assets measured at fair value $ 1,241,817  $ 250,586  $ 6,231  $ 985,000 
Liabilities:
Securities sold not yet purchased:
Equity securities $ 1,037  $ 1,037  $ —  $ — 
Corporate bonds 5,971  —  5,971  — 
Other fixed income securities 1,593  —  1,593  — 
Total securities sold not yet purchased 8,601  1,037  7,564  — 
Contingent consideration 27,985  —  —  27,985 
Total liabilities measured at fair value $ 36,586  $ 1,037  $ 7,564  $ 27,985 
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As of December 31, 2024 and 2023, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $130,619 and $985,000, respectively, or 7.3% and 16.2%, respectively, of the Company’s total assets. In determining the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter market trading activity.
The following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category of investment and valuation technique as of December 31, 2024:
Fair value at
December 31,
2024
 Valuation
Technique		 Unobservable
Input		 Range
Weighted
Average(1)
Assets:
Equity securities $ 34,654  Market approach
Multiple of EBITDA(2)
6.3x
6.3x
Multiple of Sales
2.1x - 8.0x
3.1x
Market price of related security
$9.97 - $11.10
$10.76
5,862  Option pricing model Annualized volatility
47.0% - 171.0%
87.0%
Loans receivable at fair value 86,150  Discounted cash flow Market interest rate
7.3% - 69.1%
19.7%
3,953  Market approach Market price of related security
$9.60 - $16.48
$12.90
Total level 3 assets measured at fair value $ 130,619 
Liabilities:
Contingent consideration 7,630  Discounted cash flow Market interest rate
5.0% - 7.5%
 5.1%
Revenue volatility
5.0% - 6.3%
5.8%
Total level 3 liabilities measured at fair value $ 7,630 
(1) Unobservable inputs were weighted by the relative fair value of the financial instruments.
(2) Multiple of earnings before interest, taxes, depreciation, and amortization ("EBITDA").
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The following table summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category of investment and valuation technique as of December 31, 2023:
Fair value at December 31,
2023		 Valuation Technique Unobservable Input Range
Weighted
Average(1)
Assets:
Equity securities $ 324,279  Market approach Multiple of EBITDA
0.7x - 13.5x
8.3x
Multiple of Sales
0.8x to 3.5x
0.9x
Market price of related security
$0.04 - $92.51
 $12.27
58,331  Discounted cash flow Market interest rate
20.2% - 57.0%
 24.60%
69,971  Option pricing model Annualized volatility
25.0% - 187.0%
 67.0%
Loans receivable at fair value 512,522  Discounted cash flow Market interest rate
10.0% - 41.6%
 17.1%
19,897  Market approach Market price of related security $19.87 $19.87
Total level 3 assets measured at fair value $ 985,000 
Liabilities:
Contingent consideration 27,985  Discounted cash flow EBITDA volatility 70.0% 70.0%
Asset volatility 69.0% 69.0%
Market interest rate 8.5% 8.5%
Revenue volatility 5.1% 5.1%
Total level 3 liabilities measured at fair value $ 27,985 
(1) Unobservable inputs were weighted by the relative fair value of the financial instruments.
The changes in Level 3 fair value hierarchy during the year ended December 31, 2024 and 2023 are as follows:
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  Level 3
Balance at
Beginning of
Year		 Level 3 Changes During the Period Level 3
Balance at
End of
Period
Change in unrealized gains (losses) (3)
  Fair
Value
Adjustments (1)		 Relating to
Undistributed
Earnings		 Purchases/ Originations Sales Settlements/ Repayments Transfer in
and/or out
of Level 3
(2)
Year Ended December 31, 2024
Equity securities $ 452,581  $ (349,918) $ 20  $ 3,862  $ (78,197) $ 13,245  $ (1,077) $ 40,516  $ (65,839)
Loans receivable at fair value 532,419  (325,499) 5,420  107,025  (30,936) (198,326) —  90,103  (335,295)
Contingent consideration 27,985  2,324  —  1,055  —  (12,921) (10,813) 7,630  — 
Year Ended December 31, 2023
Equity securities $ 153,972  $ (4,600) $ (22) $ 341,802  $ (44,383) $ —  $ 5,812  $ 452,581  $ (21,987)
Loans receivable at fair value 701,652  20,225  (3,105) 531,844  (84,984) (632,963) (250) 532,419  21,641 
Contingent consideration 31,046  (4,537) —  3,381  —  (1,905) —  27,985  — 
(1) - Fair value adjustments during the year ended December 31, 2024 includes the following: $(349,918) of realized and unrealized gains (losses) on equity securities is comprised of $(70,437) of realized and unrealized gains (losses) included in trading (loss) income and $(279,481) of realized and unrealized gains (losses) included in other income (loss) - realized and unrealized gains (losses) on investments, $(325,499) of fair value adjustments on loans included in fair value adjustments on loans, and $2,324 related to contingent consideration included in selling, general and administrative expenses in the consolidated statement of operations. Fair value adjustments during the year ended December 31, 2023 includes the following: $(4,600) of realized and unrealized gains (losses) on equity securities is comprised of $10,883 of realized and unrealized gains (losses) included in trading (loss) income and $(15,483) of realized and unrealized gains (losses) included in other income (loss) - realized and unrealized gains (losses) on investments, $20,225 of fair value adjustments on loans included in fair value adjustments on loans, and $(4,537) related to contingent consideration included in selling, general and administrative expenses in the consolidated statement of operations.
(2) - The $10,813 transfer out of Level 3 represents the reclassification of contingent consideration associated with Atlantic Coast Recycling to liabilities held for sale during the year ended December 31, 2024. Refer to Note 4 for more information.
(3) - For the years ended December 31, 2024 and 2023, the change in unrealized gains (losses) is related to financial instruments held at the end of each respective reporting period.

The carrying amounts reported in the consolidated financial statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other liabilities approximate fair value based on the short-term maturity of these instruments.
As of December 31, 2024 and 2023, the senior notes payable had a carrying amount of $1,530,561 and $1,668,021, respectively, and a fair value of $769,476 and $1,127,503, respectively. The aggregate carrying amount of the Company's notes payable, revolving credit facility, and term loans of $243,779 and $688,343 as of December 31, 2024 and 2023, respectively, approximates fair value because the effective yield of such instrument is consistent with current market rates of interest for instruments of comparable credit risk.
The investments in nonpublic entities that do not report NAV are measured at cost, adjusted for observable price changes and impairments, with changes recognized in realized and unrealized gains (losses) on investments on the consolidated statements of operations. These investments are evaluated on a nonrecurring basis based on the observable price changes in orderly transactions for the identical or similar investment of the same issuer. Further adjustments are not made until another observable transaction occurs. Therefore, the determination of fair values of these investments in nonpublic entities that do not report NAV does not involve significant estimates and assumptions or subjective and complex judgments.
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Investments in nonpublic entities that do not report NAV are subject to a qualitative assessment for indicators of impairment. If indicators of impairment are present, the Company is required to estimate the investment’s fair value and immediately recognize an impairment charge in an amount equal to the investment’s carrying value in excess of its estimated fair value.
The following table presents information on the assets measured at fair value on a nonrecurring basis by level within the fair value hierarchy as of December 31, 2024 and 2023. These investments were measured due to an observable price change or impairment during the years ended December 31, 2024 and 2023.
Fair Value Measurement Using
Total Quoted prices in active markets
for identical assets
 (Level 1)		 Other observable inputs
 (Level 2)		 Significant unobservable inputs
 (Level 3)
As of December 31, 2024
    
Investments in nonpublic entities that do not report NAV $ 7,294  $ —  $ 7,294  $ — 
As of December 31, 2023
Investments in nonpublic entities that do not report NAV $ 1,628  $ —  $ 1,602  $ 26 
(w) Foreign Currency Translation
The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying consolidated balance sheets. Transaction gains were $2,831, losses were $2,289, and gains were $1,920, during the years ended December 31, 2024, 2023, and 2022, respectively. These amounts are included in selling, general and administrative expenses in the Company’s consolidated statements of operations.
(x) Redeemable Noncontrolling Interests in Equity of Subsidiaries
The Company records redeemable noncontrolling interests in equity of subsidiaries to reflect the economic interests of the class A ordinary shareholders in the BRPM 250 sponsored SPAC and the 20% noncontrolling interest of Lingo Management, LLC (“Lingo”), which on February 24, 2023, the Company acquired, increasing its ownership interest in Lingo to 100%. These interests are presented as redeemable noncontrolling interests in equity of subsidiaries within the consolidated balance sheet, outside of the permanent equity section. The class A ordinary shareholders of BRPM 250 have redemption rights that are considered to be outside of the Company’s control. Remeasurements to the redemption value of the redeemable noncontrolling interest in equity of subsidiaries are recorded within retained earnings (accumulated deficit). The operating agreement with Lingo has provisions which result in the noncontrolling interest being accounted for as temporary equity. Net income (losses) are reflected in net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests in the consolidated statement of operations.
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Changes to redeemable noncontrolling interest consist of the following:
Amount
Balance, December 31, 2022 178,622 
Net loss (146)
Purchase of Lingo minority interest (11,190)
Remeasurement adjustments for Lingo and BRPM 250 8,477 
Redemption of BRPM 250 Class A common stock (175,763)
Balance, December 31, 2023 $ — 
(y) Common Stock Warrants
On October 28, 2019, the Company issued 200,000 warrants to purchase common stock of the Company with a warrant expiration date of February 2025 (the “BR Brands Warrants”) in connection with the acquisition of the majority ownership interest in BR Brand Holdings LLC. The BR Brands Warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at an exercise price of $26.24 per share. One-third of the BR Brands Warrants immediately vested and became exercisable upon issuance, and the remaining two-thirds of warrants vested and became exercisable on the second anniversary of the closing, upon the BR Brands’ satisfaction of specified financial performance targets. The BR Brands warrants expired in February 2025. As of December 31, 2024 and 2023, zero and 200,000 BR Brands warrants were outstanding, respectively. In April 2024, 200,000 shares of the Company's common stock were issued in connection with the exercise of all of the warrants for cash in the amount of $653.
(z) Equity Method Investments
As of December 31, 2024 and 2023, an equity investment that is accounted for under the equity method of accounting had a carrying value of $85,487 and $2,087, respectively, which is included in prepaid expenses and other assets in the accompanying consolidated balance sheets. The Company’s share of earnings or losses from equity method investees included in income (loss) from equity investments was $31 and $(152) during the year ended December 31, 2024 and 2023, respectively, in the consolidated statements of operations.
bebe stores, inc.

The Company had a 40.1% ownership interest in bebe at December 31, 2022 which was accounted for under the equity method of accounting for the periods presented prior to the Company obtaining a controlling interest in bebe on October 6, 2023 due to the purchase of an additional 3,700,000 shares for an aggregate purchase price of $18,500 that resulted in an increase in the Company’s ownership to 76.2%. Prior to October, 2023, the investment in bebe was included in prepaid expenses and other assets in the consolidated balance sheets. On October 6, 2023, the fair value of the Company's existing equity interest in bebe was revalued at $30,575 as a result of obtaining a controlling interest from the purchase of additional shares.

The carrying value of the Company’s equity method investment in bebe was remeasured at fair value in the amount of $30,575 on October 6, 2023 upon obtaining the controlling interest in bebe. Since the transaction price to obtain the controlling interest on a per share basis was less than the aggregate carrying value of the Company’s investment by $12,891, upon remeasurement, the Company recorded a loss for this in the amount of $12,891 at September 30, 2023, which is included in other income (expense) - change in fair value of financial instruments and other in the accompanying consolidated statements of operations. Total revenues and net income of bebe during the year ended December 31, 2022 was $55,452 and $17,423, respectively. During the years ended December 31, 2023, and 2022, the Company received dividends from the equity investment in bebe of $245, and $3,197, respectively.

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Great American Group
As discussed in Note 4 – Discontinued Operations and Assets Held for Sale, after the completion of the sale of a majority interest in Great American NewCo on November 15, 2024, the Company retained a non-controlling equity interest which is comprised of (a) 93.2% of the issued and outstanding class B preferred limited liability company units of Great American NewCo (which will have a 2.3% payment-in-kind coupon and an initial aggregate liquidation preference of approximately $183,000) (the “Class B Preferred Units”) and (b) 44.2% of the issued and outstanding Common Units. This equity method investment is accounted for in the Company’s financial statements under the equity method of accounting a quarter in arrears, and no income or loss has been recorded in the Company’s consolidated financial statements for this equity method investment for the period November 15, 2024 to December 31, 2024.
Upon deconsolidation of Great American NewCo, the Company's equity investment was valued at $82,462 and is included in prepaid expenses and other assets in the consolidated balance sheet. The fair value of the equity investment at November 15, 2024, is comprised of the Class B Preferred Units and the Common Units owned by the Company. The Class B Preferred Units were valued at November 15, 2024 using a discounted cash flow model with a discount rate of 19.2% with an estimated investment exit date of five years from the transaction date. The fair value of the common units at November 15, 2024 was determined using a market multiple approach utilizing an EBITDA multiple of 8.3 based upon guideline public companies and further supported by the transaction price in the Equity Purchase Agreement.
Other Equity Method Investments
The Company had other equity method investments over which the Company exercises significant influence but that did not meet the requirements for consolidation, the largest ownership interest being a 40% ownership interest in Lingo, which was acquired in November 2020. On May 31, 2022, the Company's ownership increased to 80% and Lingo's operating results were consolidated with the Company. On February 24, 2023, the Company acquired the remaining 20% ownership in Lingo, increasing the Company's ownership interest from 80% to 100%. The equity ownership in these other investments was accounted for at the applicable times under the equity method of accounting and was included in prepaid expenses and other assets in the consolidated balance sheets.
(aa) Supplemental Non-cash Disclosures
During the year ended December 31, 2024, there was non-cash investing activity related to the receipt of a note receivable in the amount of $2,000 related to the sale of certain assets, $53,530 related to a loan receivable, at fair value that converted into equity securities, DIP loan conversion to purchase consideration equity for the purchase of Nogin in the amount of $37,700, and the receipt of $16,698 in loans receivable and $82,462 in non-controlling equity interest related to the sale of Great American Group During the year ended December 31, 2024, there was non-cash financing activity related to the Company's redemption of its 6.375% Senior Notes due 2025 in the aggregate principal amount of $1,130 in exchange for 36,903 shares of its common stock at fair value of $1,011 for a net gain on extinguishment of debt of $120. During the year ended December 31, 2024, other non-cash activities included the recognition of new operating lease right-of-use assets, and corresponding operating lease liabilities, of $3,720.
During the year ended December 31, 2023, non-cash activities related to the sale of BRRII and other businesses consisted of: (1) non-cash investing activity for a decrease in loans receivable of $124,397 and receipt of a loan receivable in the amount of $58,872, and (2) non-cash financing activity for a decrease in term loan in the amount of $65,790 and decrease in non-controlling interest related to the distribution of equity of subsidiary of $3,374. Other non-cash investing activities during the year ended December 31, 2023 included $26,817 of notes receivable that converted into equity securities; $23,668 of other receivables financed with a loan receivable; $1,190 of loans receivable, at fair value, that was included in consideration paid for the purchase of the Lingo noncontrolling interest; and $2,111 of common stock issued as part of the purchase price consideration for a business acquisition. During the year ended December 31, 2023, non-cash financing activities also included $7,000 in seller financing related to the purchase of the Lingo noncontrolling interest. During the year ended December 31, 2023, other non-cash activities included the recognition of new operating lease right-of-use assets of $15,979 and the recognition of new operating lease liabilities of $15,979.
During the year ended December 31, 2022, non-cash investing activities included $35,648 in issuance of the Company's common stock and stock options as part of purchase price consideration from acquisitions the Company completed and the repayment of loans receivable in the amount of $850 with equity securities. During the year ended December 31, 2022, non-cash financing activities included $22,661 in seller financing for deferred cash consideration, the conversion of $17,500 of a loan receivable to equity related to an acquisition, and the distribution of investment securities of $4,408 to non-controlling interests.
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During the year ended December 31, 2022, other non-cash activities included the recognition of new operating lease right-of-use assets of $48,552 and the recognition of new operating lease liabilities of $49,050.
(ab) Variable Interest Entities
The Company holds interests in various entities that meet the characteristics of a VIE but are not consolidated as the Company is not the primary beneficiary. Interests in these entities are generally in the form of equity interests, loans receivable, or fee arrangements.
The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties.
The party with a controlling financial interest in a VIE is known as the primary beneficiary and consolidates the VIE. The Company determines whether it is the primary beneficiary of a VIE by performing an analysis that principally considers: (a) which variable interest holder has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance; (b) which variable interest holder has the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE; (c) the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders; (d) the terms between the VIE and its variable interest holders and other parties involved with the VIE; and (e) related-party relationships with other parties that may also have a variable interest in the VIE.
On August 21, 2023, in connection with the FRG take-private transaction, one of the Company's subsidiaries and an affiliate of Mr. Kahn (the “Kahn Borrower”) entered into an amended and restated a promissory note. The Company was not involved in the design of the Kahn Borrower, has no equity financial interest, and has no rights to make decisions or participate in the management of the Kahn Borrower that significantly impact the economics of the Kahn Borrower. Since the Company does not have the power to direct the activities of the Kahn Borrower, the Company is not the primary beneficiary and therefore does not consolidate the Kahn Borrower. The promissory note is included in loans receivable, at fair value in the Company’s consolidated financial statements and is a variable interest in accordance with the accounting guidance. As of December 31, 2024, the collateral underlying the promissory note was impaired, and the fair value of the promissory note was significantly reduced due to Freedom VCM's Chapter 11 bankruptcy filing on November 3, 2024 (see Notes 2(s) and 2(t) for further discussion). As of December 31, 2024 and 2023, the maximum amount of loss exposure to the VIE on a fair value basis was $2,057 and $209,395.
The Company, has entered into agreements to provide investment banking and advisory services to numerous investment funds (the “Funds”) that are considered variable interest entities under the accounting guidance.
The Company earns fees from the Funds in the form of placement agent fees and carried interest. For placement agent fees, the Company receives a cash fee of generally 7% to 10% of the amount of raised capital for the Funds and the fee is recognized at the time the placement services occurred. The Company receives carried interest as a percentage allocation (8% to 15%) of the profits of the Funds as compensation for asset management services provided to the Funds and it is recognized under the ownership model of ASC 323 - Investments – Equity Method and Joint Ventures as an equity method investment with changes in allocation recorded currently in the results of operations. As the fee arrangements under such agreements are arm’s length and contain customary terms and conditions and represent compensation that is considered fair value for the services provided, the fee arrangements are not considered variable interests and accordingly, the Company does not consolidate such VIEs.
Placement agent fees attributable to such arrangements during the years ended December 31, 2024, 2023, and 2022 were $866, $3,382, and $12,576, respectively, and are included in services and fees in the consolidated statements of operations.
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The carrying amounts included in the Company’s consolidated financial statements related to variable interests in VIEs that were not consolidated is shown below.
  December 31,
2024		 December 31, 2023
Securities and other investments owned, at fair value $ —  $ 28,573 
Loans receivable, at fair value 28,193  250,801 
Other assets 3,359  11,418 
Maximum exposure to loss $ 31,552  $ 290,792 
Bicoastal Alliance, LLC (“Bicoastal”)
On May 3, 2024, as part of the acquisition of Nogin, the Company acquired a 50% equity interest in Bicoastal through a wholly owned subsidiary of Nogin. Bicoastal is a holding company designed to manage the investments, including strategy and operations, for two brand apparel operating companies. The Company determined Bicoastal is a variable interest entity as it does not have sufficient resources to carry out its management activities without additional financial support. The Company determined that it has the power to direct the activities that most significantly impact Bicoastal’s economic performance, has more equity capital at risk, and is expected to continue to fund operations. Therefore, the Company determined that it is the primary beneficiary of Bicoastal and has consolidated its results into the Company’s consolidated financial statements.
On August 14, 2024, Bicoastal entered into an agreement to acquire the remaining 50% equity interest upon paydown of a $700 note payable to the noncontrolling interest noteholder with a final repayment date and equity ownership interest transfer date of June 30, 2025. Subsequent to December 31, 2024 this equity interest was included in the assets of Nogin that were transferred to an assignee for the benefits of creditors as more fully described in Note 25.
B. Riley Principal 250 Merger Corporation (“BRPM”)
In 2021, the Company along with BRPM 250, a newly formed special purpose acquisition company incorporated as a Delaware corporation, consummated the initial public offering of 17,250,000 units of BRPM 250. Each Unit of BRPM 250 consisted of one share of class A common stock and one-third of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of BRPM 250 class A common stock at an exercise price of $11.50 per share. The BRPM 250 Units were each sold at a price of $10.00 per unit, generating gross proceeds to BRPM 250 of $172,500. These proceeds were deposited in a trust account established for the benefit of the BRPM 250 class A public shareholders and was included in prepaid expenses and other assets in the consolidated balance sheets. These proceeds are invested only in U.S. treasury securities in accordance with the governing documents of BRPM 250. Under the terms of the BRPM 250 initial public offering, BRPM 250 was required to consummate a business combination transaction within 24 months (or 27 months under certain circumstances) of the completion of its respective initial public offering.
In connection with the completion of the initial public offering of BRPM 250, the Company invested in the private placement units of BRPM 250. BRPM 250 was determined to be a VIE because it did not have enough equity at risk to finance its activities without additional subordinated financial support. The Company had determined that the class A shareholders of BRPM 250 do not have substantive rights as shareholders of BRPM 250 since these equity interests are determined to be temporary equity. As such, the Company has determined that it is the primary beneficiary of BRPM 250 as it has the right to receive benefits or the obligation to absorb losses, as well as the power to direct a majority of the activities that significantly impact BRPM 250’s economic performance. Since the Company is determined to be the primary beneficiary, BRPM 250 was consolidated into the Company’s consolidated financial statements.
In 2021, the Company formed BRPM 150 a special purpose acquisition company and raised $172,500 of gross proceeds. BRPM 150 was determined to be a VIE because the entity did not have enough equity at risk to finance its activities without additional subordinated financial support. The Company determined that the class A shareholders of BRPM 150 did not have substantive rights as shareholders of BRPM 150 since the equity interests were determined to be temporary equity. As such, the Company has determined that it is the primary beneficiary of BRPM 150 as it has the right to receive benefits or the obligation to absorb losses of the entity, as well as the power to direct a majority of the activities that significantly impact BRPM 150’s economic performance. Since the Company was determined to be the primary beneficiary, BRPM 150 was consolidated into the Company’s financial statements in 2022 for the period January 1, 2022 through July 19, 2022. On July 19, 2022, BRPM 150 completed a business combination with FaZeClan Holdings, Inc.
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(“Faze Holdings”) in a reverse merger transaction resulting in BRPM 150 no longer being a VIE of the Company and no longer being included in the consolidated group of the Company. In connection with the de-consolidation of BRPM 150, among other items, prepaid expenses and other assets decreased by $172,584 related to funds held in a trust account and redeemable noncontrolling interests in equity of subsidiaries decreased by $172,500. During the year ended December 31, 2022, the Company recognized incentive fees of $41,885, which is included in services and fees in the consolidated statement of operations.
On April 21, 2023, the Board of Directors of BRPM 250 approved a plan to redeem all of the outstanding shares of Class A common stock of BRPM 250, effective as of May 4, 2023. The BRPM 250 Class A public shares were deemed cancelled on May 4, 2023, and the funds held in trust were used to fund the corresponding redemption amounts to the BRPM 250 Class A shareholders and BRPM 250 was no longer a VIE.
(ac) Reclassifications
Certain prior period amounts have been reclassified to conform with the current period presentation. Certain amounts reported in Inventory during the year ended December 31, 2023 have been reclassified as rental merchandise, net in the prepaid expenses and other assets note during the year ended December 31, 2024. In addition, certain amounts reported in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2023 have been reclassified to loss on extinguishment of debt. Certain prior-year amounts have also been reclassified to conform to the current-year’s presentation as a result of discontinued operations and held for sale, see Note 4. These reclassifications had no effect on previously reported net income (loss), total assets, total liabilities, or stockholders' equity (deficit).
(ad) Contingent Consideration
Contingent consideration is comprised of contractual earnouts or milestones in connection with the Company's purchase of businesses and is initially recorded as purchase consideration in the purchase price allocation with a corresponding liability at the acquisition date measured at fair value with valuation methodologies as described in Note 2(v). Subsequent changes in the fair value of contingent consideration during the reporting period are recognized in selling, general and administrative expenses in the Company’s consolidated statements of operations.
(ae) Transfer of Financial Assets
As discussed in more detail in Note 4 - Discontinued Operations and Assets Held for Sale, the Company's controlling and non-controlling equity interest in assets and certain intellectual properties related to the Brands Transaction were contributed and transferred to a securitization financing vehicle in exchange for consideration upon sale. Transfers of financial assets are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that preclude it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets. Transfers of assets that meet the sale criteria under ASC 860, Transfers and Servicing, are derecognized from the Consolidated Balance Sheets at the time of transfer, and assets and liabilities incurred in connection with transfers reported as sales are initially recognized in the Consolidated Balance Sheets at fair value. Gains and losses stemming from transfers reported as sales are included in the "Income from discontinued operations, net of income taxes" line item in the Consolidated Statements of Operations.
(af) Recent Accounting Standards
Not yet adopted

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures. This ASU requires additional expense disclosures by public entities in the notes to the financial statements. The ASU outlines the specific costs that are required to be disclosed which include such costs as: purchases of inventory, employee compensation, depreciation, intangible asset amortization, selling costs, and depreciation, depletion, and amortization related to oil and gas production. It also requires qualitative descriptions of the amounts remaining in the relevant expense income statement captions that are not separately disaggregated quantitatively in the notes to the financial statements and the entity's definition of selling expenses. The disclosures are required for each interim and annual reporting period. In January 2025, the FASB issued ASU 2025-01 which clarified the effective date for entities that do not have an annual reporting period that ends on December 31st. The guidance is effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.
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The Company has not yet adopted this update and is currently evaluating the effect this new standard will have on its financial position and results of operations.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. The amendments in this update improve income tax disclosure requirements related to the transparency of rate reconciliation and income taxes paid disclosures and the effectiveness and comparability of disclosures of pretax income (or loss) and income tax expense (or benefit). The amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The update should be applied on a prospective basis. The Company has not yet adopted this update and is currently evaluating the effect this new standard will have on its financial position and results of operations.
Recently adopted
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures, which requires a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires a public entity to disclose the title and position of the Chief Operating Decision Maker (“CODM”). The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The Company adopted the new standard effective December 31, 2024. As a result, the Company has enhanced our segment disclosures in Note 24 "Business Segments" to include the titles and positions of individuals comprising the CODM and significant expense categories and amounts included in segment profit or loss that are regularly provided to the CODM. The adoption of this ASU affects only the disclosures, with no impacts to the financial position and results of operations.
NOTE 3 — ACQUISITIONS
2024 Acquisitions
On May 3, 2024, one of the Company’s wholly owned subsidiaries completed the acquisition of Nogin for a total purchase consideration of approximately $56,370, which consisted of $37,700 in DIP financing (see Note 2(s)) and an additional $18,670 in cash consideration. To fund the $18,670 in cash consideration, contemporaneous with the closing, the acquired company issued $15,000 of convertible debt. In accordance with ASC 805, the Company used the acquisition method of accounting for this acquisition. Goodwill of $56,028 and other intangible assets of $17,350 were recorded as a result of the acquisition. The acquisition complements the Company's principal investments strategy and offers potential growth to the Company's portfolio of principal investments.
The assets and liabilities of Nogin, both tangible and intangible, were recorded at their estimated fair values as of the May 3, 2024 acquisition date. Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Nogin, were charged against earnings in the amount of $2,425 and included in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2024. Nogin goodwill recognized subsequent to the acquisition will be non-deductible for tax purposes.
The fair value of acquisition consideration and purchase price allocation were as follows:
Consideration paid:
Cash $ 18,670 
Credit bid - Settlement of DIP Facility 37,700 
Total Consideration $ 56,370 
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Assets acquired and liabilities assumed:
Cash and cash equivalents $ 604 
Accounts receivable 421 
Prepaid and other assets 6,826 
Operating lease right-of-use assets 740 
Property and equipment 400 
Other intangible assets 17,350 
Deferred income taxes 227 
Accounts payable (9,731)
Accrued expenses and other liabilities (10,309)
Deferred revenue (95)
Operating lease liabilities (740)
Note payable (700)
Net tangible assets acquired and assumed 4,993 
Goodwill 56,028 
Noncontrolling interest (4,651)
Total $ 56,370 
During the year ended December 31, 2024, goodwill for Nogin increased by $1,636 related to certain purchase price accounting adjustments.
The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets:
Category Useful life Fair Value
Customer relationships 9 Years $ 10,300 
Internally developed software and other intangibles 8 Years 3,950 
Trademarks 10 Years 3,100 
Total $ 17,350 
As described in Note 2(s), the Company had entered into a Chapter 11 RSA with Nogin prior to the acquisition date. As part of Nogin's Chapter 11 restructuring activities, it ceased the sale of brand apparel merchandise and eliminated warehousing and other costs associated with the inventory, among other things. The Company has determined that the preparation of pro forma financial information would be impracticable due to the significant estimates of amounts needed to reflect Nogin's historical financial information with its operations emerging from bankruptcy.
2023 Acquisitions
On October 6, 2023, the Company purchased an additional 3,700,000 shares of bebe for an aggregate purchase price of $18,500, resulting in an increase in the Company's ownership interest to 76.2%. The purchase of these additional shares resulted in the Company having a majority voting interest in bebe and the consolidation of bebe financial results for periods subsequent to October 6, 2023. The Company used the acquisition method of accounting and determined the fair value of assets exceeded consideration by $15,903 which was recorded as a bargain purchase gain during the three months ended December 31, 2023. The gain on bargain purchase was included within other income (expense) in gain on bargain purchase in the consolidated statements of operations. The bargain purchase gain resulted from the Company’s specific deferred tax asset attributes associated with the utilization of bebe’s net operating losses. bebe is included in the All Other category that is reported with Corporate and Other in Note 24 – Business Segments.

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Freedom VCM Equity Investment Acquisition - Pro Forma Financial Information

On August 21, 2023, the Company acquired approximately 31% equity interest in Freedom VCM for total consideration of $281,144. The equity interest was acquired in connection with Freedom VCM's acquisition of FRG by a buyer group that included members of senior management of FRG, led by Brian Kahn, FRG’s then Chief Executive Officer as part of the FRG take-private transaction.

The unaudited pro-forma financial information for the years ended December 31, 2023 and 2022 in the table below summarizes the results of operations of the Company and the equity investment in Freedom VCM as though the acquisition of the approximately 31% equity investment on August 21, 2023 had occurred as of the beginning of each of the years on January 1, 2023 and 2022. The pro-forma financial information presented includes the effects of the common stock offering in July 2023 and adjustments related to additional interest expense from borrowings that the Company used to finance the acquisition of the equity interest. The Company has elected to account for the acquisition of the equity investment under the fair value option and any changes in fair value of the equity investment during future periods will be recorded in the consolidated statements of operations.

The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition of the equity investment had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results.

Pro Forma (unaudited)
Year Ended December 31,
2023 2022
Revenues $ 1,643,600  $ 1,080,670 
Net loss attributable to B. Riley Financial, Inc. $ (105,750) $ (168,970)
Net loss attributable to common shareholders $ (113,807) $ (176,978)
Basic loss per share $ (3.74) $ (5.84)
Diluted loss per share $ (3.74) $ (5.84)
Weighted average basic shares outstanding 30,456,631  30,279,439 
Weighted average diluted shares outstanding 30,456,631  30,279,439 
2022 Acquisitions
Acquisition of Targus
On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus in a transaction pursuant to Purchase Agreement with Targus, the sellers identified therein, and the other parties thereto. The purchase price consideration totaled $247,546, which consisted of cash in the amount of $112,686, seller financing of $54,000, the issuance of $59,016 in 6.75% senior notes due 2024, the issuance of $15,329 of the Company’s common stock and stock options, and deferred payments of $6,515. In accordance with ASC 805, the Company used the acquisition method of accounting for this acquisition. Goodwill of $79,781 and other intangible assets of $89,000 were recorded as a result of the acquisition. The acquisition complements the Company’s existing investments and offers potential growth to the Company’s operations in the Consumer Products segment.
The assets and liabilities of Targus, both tangible and intangible, were recorded at their estimated fair values as of the October 18, 2022 acquisition date. Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Targus, were charged against earnings in the amount of $1,921 and included in selling, general and administrative expenses in the consolidated statements of operations for the year ended December 31, 2022. Targus goodwill recognized subsequent to the acquisition will be non-deductible for tax purposes.

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The fair value of acquisition consideration and purchase price allocation were as follows:

Consideration paid:
Cash $ 112,686 
Fair value of seller financing 54,000 
Fair value of 2,400,000 RILYO shares issued in senior notes at $24.59 per share
 59,016 
Fair value of 227,491 B. Riley common shares issued at $42.11 per share
 9,580 
Fair value of 215,876 stock options attributable to service period prior to acquisition
 5,749 
Fair value of deferred payments 6,515 
Total consideration $ 247,546 
Assets acquired and liabilities assumed:
Cash and cash equivalents $ 18,810 
Accounts receivable 91,039 
Prepaid and other assets 90,289 
Right-of-use assets 7,665 
Property and equipment 8,320 
Other intangible assets 89,000 
Accounts payable (54,553)
Accrued expenses and other liabilities (62,939)
Deferred income taxes (9,989)
Contingent consideration (2,212)
Lease liability (7,665)
Net tangible assets acquired and liabilities assumed 167,765 
Goodwill 79,781 
Total $ 247,546 
During the year ended December 31, 2023, goodwill for Targus changed by $4,028 related to certain purchase price accounting adjustments.
The following is a summary of identifiable intangible assets acquired and the related expected lives for the finite-lived intangible assets:
Category Useful life Fair Value
Customer relationships 9 years $ 50,000 
Internally developed software and other intangibles
1 to 3 years
 4,000 
Tradenames N/A 35,000 
Total $ 89,000 
The weighted average lives of amortizable intangible assets at acquisition date was 8.5 years.


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Unaudited Pro Forma Information

Acquisition of Targus

The following unaudited pro forma financial information is presented to illustrate the estimated effects of the acquisition of Targus as if it had occurred on January 1, 2021.

Pro Forma (unaudited)
Year Ended December 31,
2022
Revenues $ 1,418,291 
Net (loss) income $ (138,448)
Net (loss) income attributable to B. Riley Financial, Inc. $ (141,683)
Net (loss) income attributable to common shareholders $ (149,691)

These pro forma results do not necessarily represent the results of operations that would have been achieved if the acquisition had taken place on January 1, 2021, nor are they indicative of the results of operations for future periods. For the period from October 18, 2022 to December 31, 2022, revenues and pre-tax income from Targus included in the Company’s consolidated results of operations were $77,821 and $6,899, respectively.
Other Acquisitions
During the year ended December 31, 2022, the Company converted $17,500 of a loan receivable with Lingo into equity and the Company's ownership interest in Lingo increased from 40% to 80%. This resulted in the consolidation of Lingo and the pre-existing equity method investment was remeasured at fair value resulting in the recognition of a gain of $6,790, which is included in trading (losses) income in the consolidated statements of operations. Upon the consolidation of Lingo on May 31, 2022, the total fair value of the assets of Lingo was $116,500 and the fair value of the 20% noncontrolling interest was $8,021. As part of the acquisition, the Company assumed liabilities in the amount of $32,172 and recorded goodwill of $34,412 and other intangible assets of $63,000 were recorded in the accompanying consolidated balance sheet.
The Company also completed the acquisitions of BullsEye Telecom, Inc. (“BullsEye”), FocalPoint Securities LLC (“FocalPoint”), and Atlantic Coast Fibers (“ACR”) (and related businesses). In accordance with ASC 805, the Company used the acquisition method of accounting for these acquisitions, none of which were material to the Company's consolidated financial statements. The aggregate purchase price consideration consisted of $145,987 in cash, $20,320 in issuance of common stock of the Company, $52,969 in assumed debt and other consideration payable. The purchase price allocation consisted of $151,925 in goodwill, $52,860 in intangible assets, and $2,522 in net assets acquired. The results of operations of the acquisitions which were not material, have been included in our consolidated financial statements from the date of purchase. During the year ended December 31, 2023, certain working capital holdback provisions in the BullsEye purchase agreement were finalized resulting in the Company receiving $672 of cash, which reduced goodwill from $151,925 to $151,253.

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Valuation Assumptions for Purchase Price Allocation
Our valuation assumptions used to value the acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets, inventories, property and equipment, and deferred income taxes. In determining the fair value of intangible assets acquired, the Company must make assumptions about the future performance of the acquired businesses, including among other things, the forecasted revenue growth attributable to the asset groups and projected operating expenses and other benefits expected to be achieved by combining the businesses acquired with the Company. The intangible assets acquired are primarily comprised of customer relationships, trademarks, and developed technology. The Company utilized widely accepted income-based, market-based, and cost-based valuation approaches to perform the preliminary purchase price allocations. The estimated fair value of the customer relationships and backlog are determined using the multi-period excess earnings method and the estimated fair value of the trade names and trademarks and developed technology are determined using the relief from royalty method. Both methods require forward looking estimates that are discounted to determine the fair value of the intangible asset using a risk-adjusted discount rate that is reflective of the level of risk associated with future estimates associated with the asset group that could be affected by future economic and market conditions.
NOTE 4 — DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
Assets Held For Sale
Wealth Management

On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel for estimated net consideration based on the number of advisors that join Stifel at closing, among other things. Upon closing the transaction on April 4, 2025, the sale was completed for net cash consideration of $26,037, representing 36 financial advisors whose managed accounts represent approximately $4.0 billion, or 19.3%, of total assets under management ("AUM") as of December 31, 2024.
Atlantic Coast Recycling
On March 3, 2025, the Company and BR Financial, B. Riley Environmental Holdings, LLC, and other indirect subsidiaries of the Company which included the Atlantic Companies, entered into the MIPA, whereby the Interests owned by BR Financial and the minority holders were sold to a third party in accordance with the terms of the MIPA on March 3, 2025. The Interests were sold to the third party on March 3, 2025 for a purchase price of $102,478, subject to certain adjustments and a holdback amount pending receipt of a certain third party consent, resulting in cash proceeds of $68,638 to the Company after adjustments for amounts allocated to non-controlling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction. Of the $68,638 of cash proceeds received by the Company, approximately $22,610 was used to pay interest, fees, and principal on the Credit Facility entered into with Oaktree Capital Management, L.P. on February 26, 2025 as further discussed in Note 25 – Subsequent Events. A gain of $52,705 was recognized in the first quarter of 2025 from this sale.

The Company determined that the assets and liabilities associated with the Wealth Management and Atlantic Coast Recycling transactions met the criteria under ASC 360 Impairment and Disposal of Long-Lived Assets to be classified as held for sale as of December 31, 2024 and are properly presented in the Consolidated Balance Sheets. Operating results from the disposal groups comprising the Wealth Management business and Atlantic Coast Recycling contributed to Wealth Management and All Other segment categories, respectively, operating incomes for the year ended December 31, 2024.


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Assets and liabilities held for sale consist of the following:

As of December 31, 2024
Atlantic
Wealth
Coast
Management
Recycling
Total
Assets Held for Sale
Cash and cash equivalents $ —  $ 1,324  $ 1,324 
Accounts receivable, net of allowance of $18
 —  3,698  3,698 
Prepaid expenses and other assets 3,704  2,427  6,131 
Operating lease right-of-use assets 512  21,127  21,639 
Property and equipment, net 71  22,799  22,870 
Goodwill 13,861  3,280  17,141 
Other intangible assets, net 2,678  9,242  11,920 
Total assets held for sale $ 20,826  $ 63,897  $ 84,723 
Liabilities Held for Sale
Accounts payable $ —  $ 1,410  $ 1,410 
Accrued expenses and other liabilities —  13,290  13,290 
Operating lease liabilities 525  24,371  24,896 
Notes payable —  1,909  1,909 
Total liabilities held for sale $ 525  $ 40,980  $ 41,505 
Discontinued Operations
The Company presents a disposition of a component, being an operating or reportable segment, business unit, subsidiary or asset group, that represents a strategic shift that has or will have a major effect on the Company’s operations and financial results as discontinued operations when the components meet the criteria to be classified as held for sale. The following operations have been presented as discontinued operations.
Brands Transaction
On October 25, 2024, the Company completed a transaction whereby the Company contributed and transferred its controlling equity interest in the assets and intellectual properties related to the licenses of Catherine Malandrino, English Laundry, Joan Vass, Kensie Girl, Limited Too and Nanette Lepore (or “Six Brands”), which were previously consolidated in the Company's financial statements, and the noncontrolling equity interests the Company owned in the assets and intellectual properties of Hurley, Justice, and Scotch & Soda (collectively with Six Brands the “Brands Interests”), which the Company had elected to account for the equity investments under the fair value option, into a securitization financing vehicle in exchange for $189,300 in net proceeds. As noted in Note 2(ae) - Transfer of Financial Assets, the Company accounted for this transfer of financial assets as a sale. During the year ended December 31, 2024, upon deconsolidation of the Six Brands, the Company recognized a loss on disposal of discontinued operations of $(40,782) and the Company recognized a write-down in the fair value of the equity investments in Hurley, Justice, and Scotch & Soda of $(87,810) that is reported in realized and unrealized (losses) gains on investments in discontinued operations below. In addition, the Company’s ownership interest in the Brand Interests will be reported as a non-controlling equity investment that is estimated to have a nominal value as a result of the liquidation preferences and notes that were issued as part of the secured financing.
Additionally, in connection with the Brands Interests contribution and transfer noted above, the Company entered into a membership interest purchase agreement dated October 25, 2024, whereby the Company’s subsidiary bebe sold its limited liability company equity interests in BB Brand Holdings and BKST Brand Management (the “bebe Brands”), which the Company had elected to account for the equity investments in the bebe Brands under the fair value option for $46,624 in net cash proceeds. During the year ended December 31, 2024, the Company recognized a write-down in fair value of equity investment in the bebe Brands of $(21,386) that is reported in realized and unrealized (losses) gains on investments in discontinued operations below.
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Upon closing of the bebe Brands sale, proceeds of $22,188 was used to pay off the then outstanding balance of the bebe Credit Agreement in full (see Note 13 — Term Loans and Revolving Credit Facility) and $224 of loan-related pay off expenses. Collectively, the bebe Brands sale and the contribution and transfer of Brands Interest comprise the Brands Transaction.
The Brands Interests and bebe Brands were historically reported within All Other category - generating operating revenues from the Company's majority owned subsidiary that licenses the trademarks and intellectual properties from Six Brands. The bebe Brands equity investments also generated other income from dividends the Company received from the equity ownership of investments that range from 10% to 50% in companies that license the trademark and intellectual property of bebe and Brookstone brands (equity ownership of bebe stores, inc., our majority owned subsidiary).
The Company analyzed the quantitative and qualitative factors relevant to the divestiture of the brand assets, including the fair value adjustments and dividends received from the brand assets significance to the overall net income and earnings per share, and determined that those conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation. The Company has no significant continuing involvement with operations and management of the Brands Interests and bebe Brands post-disposition.
Great American Group
On November 15, 2024, the Company entered into an equity purchase agreement, dated October 13, 2024 (the “Equity Purchase Agreement”), to sell 52.6% ownership stake in the Appraisal and Valuation Services, Real Estate, and Retail, Wholesale & Industrial Solutions businesses (collectively, the "Great American Group") to Oaktree and/or its affiliates (collectively, “Oaktree”), a global asset manager. Subject to the terms and conditions set forth in, the Equity Purchase Agreement, the Company conducted an internal reorganization and contributed all of the interests in the “Great American Group”, to Great American Holdings, LLC, a newly formed holding company ("Great American NewCo"). At the Closing, (i) Oaktree received (a) all of the outstanding class A preferred limited liability units of Great American NewCo (which will have a 7.5% cash coupon and a 7.5% payment-in-kind coupon) (the “Class A Preferred Units”) and (b) common limited liability units of Great American NewCo (the “Common Units”) representing 52.6% of the issued and outstanding common limited liability units in Great American NewCo for a purchase price of approximately $203,000 (with an initial liquidation preference of approximately $203,000). The Company retains (a) 93.2% of the issued and outstanding class B preferred limited liability company units of Great American NewCo (which will have a 2.3% payment-in-kind coupon and an initial aggregate liquidation preference of approximately $183,000) (the “Class B Preferred Units”) and (b) 44.2% of the issued and outstanding Common Units. The remaining 6.8% of issued and outstanding Class B Preferred Units and 3.2% of issued and outstanding Common Units will be held by certain minority investors. The Company will account for its non-controlling equity interest in Great American NewCo using the equity method of accounting (refer to Note 2(z) Equity Method Investments) with its carrying value included in the “Prepaid and other assets” line item in the consolidated balance sheets (refer to Note 8 — Prepaid Expenses and Other Assets).
The Great American Group, which was historically reported within the Auction and Liquidation segment—providing auction and liquidation services to help clients dispose of assets that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property, and real property—and within the Financial Consulting segment—offering bankruptcy, financial advisory, forensic accounting, real estate consulting, and valuation and appraisal services—were divested. The Company recorded a net gain of $258,286 to the "Income from discontinued operations, net of taxes" line item in the Consolidated Statements of Operations. The net after-tax proceeds from this transaction were used to repay certain debt obligations and focus on the core operating subsidiaries.
The Company analyzed the quantitative and qualitative factors relevant to the sale of the Great American Group, including the significance of the operating income generated from the appraisal, real estate consulting and auction and liquidation operations to the overall net income (loss), net (loss) income per share, and net assets, and determined that those conditions for discontinued operations presentation had been met. As such, the financial position, results of operations and cash flows of that business are reported as discontinued operations in the accompanying consolidated financial statements. Prior period amounts have been adjusted to reflect discontinued operations presentation.

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Continuing Involvement

In addition to retaining an equity interest accounted for under the equity method of accounting, at the closing of the transaction, the Company entered into a Transition Services Agreement, pursuant to which the Company will provide certain transition services to Great American NewCo relating for the Great American Group for a period of up to one year from the Closing. Additionally, the Company entered into a credit agreement, pursuant to which an affiliate of the Company, as lender, will provide to Great American NewCo, as borrower, a first lien secured revolving credit facility of up to $25,000 for general corporate purposes, subject to the terms and conditions set forth therein, which had an outstanding balance of $1,698 at closing, and entered into promissory notes which totaled $15,332 related to capital requirements for certain retail liquidation engagements that were ongoing as of closing.

On November 15, 2024, in connection with the GA Group Transaction as described above, the asset based credit facility with Wells Fargo Bank, National Association (the “Credit Agreement”) with a maximum borrowing limit of $200,000 and a maturity date of April 20, 2027, which provided for cash advances and the issuance of letters of credit on retail liquidation engagements under the credit facility, was terminated. There were no outstanding balances on this credit facility as of December 31, 2024 and 2023 or at the time of termination.
The major classes of assets and liabilities included in discontinued operations were as follows:
Brands Transaction Great American Group Total
December 31, 2023
ASSETS
Assets:
Cash and cash equivalents $ 845  $ 8,429  $ 9,274 
Securities and other investments owned, at fair value 283,057  —  283,057 
Accounts receivable, net 3,232  11,228  14,460 
Prepaid expenses and other assets —  1,655  1,655 
Operating lease right-of-use assets —  438  438 
Goodwill —  5,688  5,688 
Other intangible assets, net 123,769  —  123,769 
Total assets $ 410,903  $ 27,438  $ 438,341 
LIABILITIES
Liabilities:
Accounts payable $ —  $ 558  $ 558 
Accrued expenses and other liabilities 1,193  25,350  26,543 
Due to related parties and partners —  251  251 
Deferred revenue 724  205  929 
Operating lease liabilities —  475  475 
Total liabilities $ 1,917  $ 26,839  $ 28,756 

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Revenues and income (loss) from discontinued operations were as follows (in thousands):
Brands Transaction Great American Group Total
Year Ended
December 31,		 Year Ended
December 31,		 Year Ended
December 31,
2024 2023 2022 2024 2023 2022 2024 2023 2022
Revenues:
Services and fees $ 14,755  $ 18,136  $ 18,940  $ 80,612  $ 85,484  $ 60,732  $ 95,367  $ 103,620  $ 79,672 
Interest income - loans —  —  —  —  —  4,587  —  —  4,587 
Sale of goods —  —  —  21,574  74,203  56,928  21,574  74,203  56,928 
Total revenues 14,755  18,136  18,940  102,186  159,687  122,247  116,941  177,823  141,187 
Operating expenses:
Direct cost of services —  —  —  24,363  24,729  23,920  24,363  24,729  23,920 
Cost of goods sold —  —  —  17,992  40,515  17,893  17,992  40,515  17,893 
Selling, general and administrative expenses 3,071  3,379  5,218  52,425  55,189  54,570  55,496  58,568  59,788 
Total operating expenses 3,071  3,379  5,218  94,780  120,433  96,383  97,851  123,812  101,601 
Operating (loss) income 11,684  14,757  13,722  7,406  39,254  25,864  19,090  54,011  39,586 
Other income (expense):
Interest income —  —  —  6  —  —  6  —  — 
Dividend income 32,568  35,029  28,023  —  —  —  32,568  35,029  28,023 
Realized and unrealized (losses) gains on investments (109,196) (536) 46,461  —  —  —  (109,196) (536) 46,461 
Losses on extinguishment of loans and other (434) —  —  —  (750) —  (434) (750) — 
Loss from equity method investments —  —  —  —  (29) —  —  (29) — 
(Loss) gain on disposal of discontinued operations
 (40,782) —  —  258,286  —  —  217,504  —  — 
Interest expense (2,274) (680) —  (30,089) (30,093) (183) (32,363) (30,773) (183)
(Loss) income from discontinued operations before income taxes (108,434) 48,570  88,206  235,609  8,382  25,681  127,175  56,952  113,887 
Provision for income taxes (1,212) —  —  (48) (2,422) (1,396) (1,260) (2,422) (1,396)
(Loss) income from discontinued operations, net of income taxes $ (109,646) $ 48,570  $ 88,206  $ 235,561  $ 5,960  $ 24,285  $ 125,915  $ 54,530  $ 112,491 
Interest expense for discontinued operations is based upon the amount of debt that was required to be repaid as a result of the Brands Transaction and Great American Group transaction described above and amount to $32,363, $30,773 and $183 for the year ended December 31, 2024, 2023 and 2022, respectively.
Cash flows from discontinued operations were as follows (in thousands):
Year Ended December 31,
2024 2023 2022
Net cash from discontinued operations provided by (used in):
Operating activities $ 20,090  $ 41,057  $ 89,205 
Investing activities 401,114  —  — 
Financing activities (428,571) (79,138) (57,174)
Effect of foreign currency on cash (1,891) 2,495  (807)
Net (decrease) increase in cash, cash equivalents and restricted cash $ (9,258) $ (35,586) $ 31,224 

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Supplemental disclosures from cash flows were as follows (in thousands):
Year Ended December 31,
Supplemental disclosures from cash flows: 2024 2023 2022
Interest paid - Continuing Operations $ 210,349  $ 285,288  $ 178,670 
Interest paid - Discontinued Operations 29,949  30,021  14,717 
Interest paid - Total $ 240,298  $ 315,309  $ 193,387 
Taxes paid - Continuing Operations 4,751  20,119  49,347 
Taxes paid - Discontinued Operations 2,173  2  10 
Taxes paid - Total $ 6,924  $ 20,121  $ 49,357 
NOTE 5 — RESTRUCTURING CHARGE
The Company recorded restructuring charges in the amount of $1,522, $2,131, and $9,011 during the years ended December 31, 2024, 2023, and 2022, respectively.
The restructuring charges during the year ended December 31, 2024 were primarily related to reorganization and consolidation activities in the Communications segment and Consumer Products segment, which consisted of reductions in workforce.
The restructuring charges during the year ended December 31, 2023 were primarily related to reorganization and consolidation activities in the Wealth Management segment, Communications segment, and Consumer Products segment. Reorganization and consolidation activities consisted of reductions in workforce and facility closures.
The following tables summarize the changes in accrued restructuring charge during the years ended December 31, 2024, 2023, and 2022:
Year Ended December 31,
2024 2023 2022
Balance, beginning of year $ 2,540  $ 2,335  $ 624 
Restructuring charge 1,522  2,131  9,011 
Cash paid (2,158) (2,253) (2,712)
Non-cash items (588) 327  (4,588)
Balance, end of year $ 1,316  $ 2,540  $ 2,335 
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The following table summarizes the restructuring activities by reportable segment during the years ended December 31, 2024, 2023, and 2022:
Wealth
Management		 Communications Consumer Products Total
Restructuring charges for the year ended December 31, 2024:
Employee termination costs $ —  $ 379  $ 1,143  $ 1,522 
Total restructuring charge $ —  $ 379  $ 1,143  $ 1,522 
Restructuring charges for the year ended December 31, 2023:
Employee termination costs $ —  $ 1,540  $ 530  $ 2,070 
Facility closure and consolidation charge 61  —  —  61 
Total restructuring charge $ 61  $ 1,540  $ 530  $ 2,131 
Restructuring charges for the year ended December 31, 2022:
Employee termination costs $ 1,150  $ 1,054  $ —  $ 2,204 
Impairment of intangibles 2,012  2,162  —  4,174 
Facility closure and consolidation charge 1,792  841  —  2,633 
Total restructuring charge $ 4,954  $ 4,057  $ —  $ 9,011 

NOTE 6 — SECURITIES LENDING
The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of December 31, 2024 and 2023:
Gross amounts
recognized
Gross amounts offset in
the consolidated balance
sheets(1)
 Net amounts included in
the consolidated balance
sheets
Amounts not offset in the
consolidated balance
sheets but eligible for
offsetting upon
counterparty default(2)
 Net amounts
As of December 31, 2024
Securities borrowed $ 43,022  $ —  $ 43,022  $ 43,022  $ — 
Securities loaned $ 27,942  $ —  $ 27,942  $ 27,942  $ — 
As of December 31, 2023
Securities borrowed $ 2,870,939  $ —  $ 2,870,939  $ 2,870,939  $ — 
Securities loaned $ 2,859,306  $ —  $ 2,859,306  $ 2,859,306  $ — 
_______________________
(1) Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred.
(2) Includes the amount of cash collateral held/posted.
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The following table presents the contract value of securities lending transactions accounted for as secured borrowings by the type of collateral provided to counterparties as of December 31, 2024 and 2023:

December 31, 2024 December 31, 2023
Remaining contractual maturity Remaining contractual maturity
Overnight and continuous Total Overnight and continuous Total
Securities lending transactions
Corporate securities - fixed income $ 310  $ 310  $ 283,809  $ 283,809 
Equity securities 42,712  42,712  2,575,919  2,575,919 
Non-US sovereign debt —  —  11,211  11,211 
Total borrowings $ 43,022  $ 43,022  $ 2,870,939  $ 2,870,939 

The Company's securities lending transactions require us to pledge collateral based on the terms of each contract which is generally denominated in U.S. dollars and marked to market on a daily basis. If the fair value of the collateral pledged for these transactions declines, the Company could be required to provide additional collateral to the counterparty, therefore decreasing the amount of assets available for other liquidity needs that may arise. The Company's liquidity risk is mitigated by maintaining offsetting securities borrowed transactions in which the Company receives cash from the counterparty which, in general, is equal to or greater than the cash the Company posts on securities lending transactions.
NOTE 7 — ACCOUNTS RECEIVABLE
The components of accounts receivable, net, include the following:
December 31,
2024		 December 31,
2023
Accounts receivable $ 86,449  $ 95,102 
Investment banking fees, commissions and other receivables 12,008  13,109 
Total accounts receivable 98,457  108,211 
Allowance for credit losses (10,073) (7,175)
Accounts receivable, net $ 88,384  $ 101,036 
Additions and changes to the allowance for credit losses consist of the following:
Year Ended December 31,
2024 2023 2022
Balance, beginning of period $ 7,175  $ 3,501  $ 3,495 
Add: Additions to reserve 5,995  7,148  4,164 
Less: Other adjustments and write-offs (3,173) (3,499) (4,145)
Less: Recovery 76  25  (13)
Balance, end of period $ 10,073  $ 7,175  $ 3,501 
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NOTE 8 — PREPAID EXPENSES AND OTHER ASSETS
Prepaid expenses and other assets consist of the following:
December 31,
2024		 December 31,
2023
Inventory $ 63,004  $ 93,674 
Rental merchandise, net 15,084  16,629 
Equity method investments 85,487  2,087 
Prepaid expenses 23,305  29,982 
Unbilled receivables 10,111  12,997 
Other receivables 38,956  39,001 
Other assets 16,397  47,492 
Prepaid expenses and other assets $ 252,344  $ 241,862 
Unbilled receivables represent the amount of mobile handsets in the Communications segment, and consulting related engagements in the Financial Consulting segment. Other receivables primarily consist of interest receivables on loans and loans receivables that are held at cost. Other assets primarily consist of deposits, real estate held for investment, deferred financing costs, and finance lease assets.
NOTE 9 — PROPERTY AND EQUIPMENT
Property and equipment, net, consists of the following:
Estimated
Useful Lives		 December 31,
2024		 December 31,
2023
Leasehold improvements
1 to 15 years
 $ 14,766  $ 14,746 
Machinery, equipment and computer software
1 to 15 years
 28,871  32,910 
Furniture and fixtures
3 to 5 years
 5,510  5,799 
Total 49,147  53,455 
Less: Accumulated depreciation and amortization (30,193) (28,249)
$ 18,954  $ 25,206 
Depreciation expense was $10,219, $9,432, and $5,573 during the years ended December 31, 2024, 2023, and 2022, respectively.
NOTE 10 — GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill was $423,136 and $466,638 as of December 31, 2024 and 2023, respectively. The decrease in goodwill for the year ended December 31, 2024 was primarily from the Nogin goodwill impairment of $(57,664) in the E-Commerce segment, and the Targus goodwill impairment of $(26,681) in the Consumer Products segment, and the reclass to Held for sale of $(13,861) for the Stifel transaction in the Wealth Management segment, and $(3,280) for Reval in the All Other category as discussed in Note 4, partially offset by $56,028 from the Nogin acquisition in the E-Commerce segment, and $1,431 from an immaterial acquisition in the Financial Consulting segment. The decrease in goodwill for the year ended December 31, 2023 was primarily from the Targus goodwill impairment of $53,100 in the Consumer Products segment, partially offset by $11,871 from other acquisitions.
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The changes in the carrying amount of goodwill during the years ended December 31, 2024 and 2023 were as follows:
  Capital
Markets		 Wealth
Management		 Financial
Consulting		 Communications Consumer Products E-Commerce All Other Total
Balance as of December 31, 2022
 $ 162,018  $ 51,195  $ 19,967  $ 193,195  $ 75,753  $ —  $ 4,779  $ 506,907 
Changes in goodwill during the year:          
Acquisition of other businesses —  —  9,443  —  —  —  2,428  11,871 
Goodwill impairment —  —  —  —  (53,100) —  —  (53,100)
Other —  —  187  672  4,028  —  (3,927) 960 
Balance as of December 31, 2023
 162,018  51,195  29,597  193,867  26,681  —  3,280  466,638 
Changes in goodwill during the year:          
Acquisition of other businesses —  —  1,431  —  —  56,028  —  57,459 
Goodwill impairment —  —  —  —  (26,681) (57,664) —  (84,345)
Reclassified as held for sale —  (13,861) —  —  —  —  (3,280) (17,141)
Other (532) —  (579) —  —  1,636  —  525 
Balance as of December 31, 2024
 $ 161,486  $ 37,334  $ 30,449  $ 193,867  $ —  $ —  $ —  $ 423,136 
During the year ended December 31, 2024, the changes in goodwill included $(579) of foreign currency translation amounts, $1,636 related to certain purchase price accounting adjustments as described in Note 3, and $(532) related to the sale of certain assets. During the year ended December 31, 2023, the changes in goodwill included $187 of foreign currency translation amounts, $672 of working capital settlements as described in Note 3, $4,028 related to certain purchase price accounting adjustments, and $(3,927) related to the sale of certain assets.
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Intangible assets consisted of the following:
As of December 31, 2024
As of December 31, 2023
  Estimated Useful Life in Years Gross
Carrying
Value		 Accumulated
Amortization		 Intangibles
Net		 Gross
Carrying
Value		 Accumulated
Amortization		 Intangibles
Net
Amortizable assets:
Customer relationships
1 to 16
 $ 241,125  $ (126,230) $ 114,895  $ 263,721  $ (108,644) $ 155,077 
Domain names 7 175  (174) 1  185  (183) 2 
Advertising relationships 8 100  (100) —  100  (94) 6 
Internally developed software and other intangibles
0.5 to 10
 29,088  (23,245) 5,843  28,985  (19,613) 9,372 
Trademarks
3 to 10
 20,277  (10,231) 10,046  20,821  (8,133) 12,688 
Total 290,765  (159,980) 130,785  313,812  (136,667) 177,145 
           
Non-amortizable assets:            
Tradenames 16,100  —  16,100  21,100  —  21,100 
Total intangible assets $ 306,865  $ (159,980) $ 146,885  $ 334,912  $ (136,667) $ 198,245 
Amortization expense was $35,094, $39,770, and $32,181 during the years ended December 31, 2024, 2023, and 2022, respectively. As of December 31, 2024, estimated future amortization expense was $26,953, $24,612, $23,298, $20,099, $15,469 during the years ended December 31, 2025, 2026, 2027, 2028 and 2029, respectively. The estimated future amortization expense after December 31, 2029 was $20,354.
The Company performs impairment tests for goodwill and other intangible assets with indefinite lives as of December 31 of each year and between annual impairment tests if an event occurs or circumstances change that would more likely than not reduce the fair values of the Company’s reporting units or asset group below their carrying values. Due to challenges in executing Nogin’s growth plans operating results in the fourth quarter of 2024 were impacted and Nogin’s long-term forecasts were updated. A goodwill impairment charge of $57,664 was recognized in E-Commerce reporting unit related to Nogin at December 31, 2024. The Company’s Targus subsidiary which is included in the Consumer Products segment experienced lower than expected revenues in the fourth quarter of 2024 from market conditions in the personal computer market for computers and accessories and long-term forecasts for revenues were updated. An impairment charge for the tradename of $4,000 was recognized at December 31, 2024. At June 30, 2024, qualitative factors indicated that the carrying value of goodwill and tradename for the Company’s Targus subsidiary were impaired as operating results during the six months ended June 30, 2024 were impacted by market conditions in the personal computer market for computers and accessories, the Company revised its long-term forecasts. Based on the results of the analysis, the Company recorded a non-cash impairment charge for goodwill of $26,681 and a tradename impairment charge of $1,000 at June 30, 2024. In 2023, the Company performed an interim goodwill impairment quantitative assessment as of September 30, 2023 and a year ended assessment as of December 31, 2023 for the Targus reporting unit, and based on the results of the analysis, a non-cash impairment charge of $68,600 was recognized which included a goodwill impairment charge of $53,100 and a tradename impairment charge of $15,500. The Company also recorded an impairment charge for finite-lived intangible assets of $16,028 for customer relationships, internally developed software and other intangible assets, and trademarks related to Nogin as of December 31, 2024 and $1,733 as of December 31, 2023 for a tradename in the Capital Markets segment that is no longer used by the Company. These impairment charges have been recorded in impairment of goodwill and other intangible assets in the accompanying consolidated statements of operations during the years ended December 31, 2024 and 2023.

Goodwill and tradename were measured at fair value on a nonrecurring basis as part of the interim and annual impairment tests during 2024 and 2023. The estimated fair value of the Nogin and Targus were calculated using a weighted-average of values determined using an income approach and a market approach for each reporting unit.
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The income approach involves estimating the fair value of each of the reporting units by discounting its estimated future cash flows using discount rates that would be consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained from observed stock prices of public companies and recent merger and acquisition transaction data of comparable entities for each reporting unit. In order to estimate the fair value of goodwill and tradename, management must make certain estimates and assumptions that affect the total fair value of each of the reporting units including, among other things, an assessment of market conditions, projected cash flows, discount rates, and growth rates. The approximate inputs for the fair value calculations of the reporting units included (a) a growth rate of 3% to calculate the terminal value and a discount rate of 16% for the Nogin reporting unit and (b) a growth rate of 4% to calculate the terminal value and a discount rate of 16% for the Targus reporting unit. The approximate inputs for the fair value calculations of the Targus reporting unit in 2023 included a growth rate of 4% to calculate the terminal value and a discount rate of 21%. The approximate inputs with respect to indefinite live tradename in the Targus reporting unit included a royalty rate of 2%. Management’s estimates of projected cash flows each of the reporting units include, but are not limited to, future earnings of each of the reporting units using revenue growth rates, gross margins, and other cost assumptions consistent with the reporting unit's historical trends, and working capital requirements and future capital expenditures necessary to fund future operations. The assumptions in the fair value measurements of each of the reporting units reflect the current market environment, industry-specific factors and company-specific factors.

NOTE 11 — LEASING ARRANGEMENTS
Operating Leases
The Company’s operating lease assets primarily represent the lease of office space and facilities where the Company conducts its operations with the weighted average lease term of 4.1 years and 9.4 years as of December 31, 2024 and 2023, respectively. The operating leases have lease terms up to 7.4 years and 18.6 years as of December 31, 2024 and 2023, respectively. The weighted average discount rate used to calculate the present value of lease payments was 6.66% and 6.76% as of December 31, 2024 and 2023, respectively. During the years ended December 31, 2024, 2023, and 2022, the total operating lease expense was $26,563, $23,495, and $17,269, respectively. During the years ended December 31, 2024, 2023, and 2022, $2,942, $2,530, and $1,305, respectively, of operating lease expense were attributable to variable lease expenses. Operating lease expense is included in selling, general and administrative expenses in the consolidated statements of operations.
During the years ended December 31, 2024, 2023, and 2022, cash payments against operating lease liabilities totaled $25,553, $21,125, and $18,165 respectively, and non-cash lease expense transactions totaled $6,241, $6,162, and $4,420, respectively. Cash flows from operating leases are classified as net cash flows from operating activities in the accompanying consolidated statements of cash flows.
As of December 31, 2024, maturities of operating lease liabilities were as follows:
Operating
Leases
Year ending December 31:
2025 $ 22,326 
2026 16,195 
2027 11,457 
2028 9,673 
2029 5,430 
Thereafter 4,317 
Total lease payments 69,398 
Less: imputed interest (8,360)
Total lease liability $ 61,038 
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Finance Leases
The Company’s financing lease assets primarily represent the lease of vehicles for the Company's subsidiary bebe. As of December 31, 2024, finance lease assets of $3,538 are included in prepaid expenses and other assets with the related liabilities of $3,723 included in accrued expenses and other liabilities in the consolidated balance sheets.
As of December 31, 2024 and 2023, the Company did not have any significant leases executed but not yet commenced.
NOTE 12 — NOTES PAYABLE
As of December 31, 2024 and 2023, the outstanding balance for the other notes payable was $28,021 and $19,391, respectively. On May 3, 2024, upon closing of the acquisition of Nogin, Nogin entered into a secured convertible promissory note agreement with a principal amount of $15,000 with an annual interest rate of 10.0% and a maturity date of May 3, 2027. As discussed on Note 25 — Subsequent Events on March 31, 2025, the Company signed a Deed of Assignment for the Benefit of Creditors and the convertible note in the amount of $15,000 is no longer an obligation of the Company. Of the remaining notes payable, $12,408 related to deferred cash consideration owed to the sellers of FocalPoint and was paid in full in January 2025. Interest expense was $1,640, $609, and $1,125 during the years ended December 31, 2024, 2023, and 2022, respectively.
NOTE 13 — TERM LOANS AND REVOLVING CREDIT FACILITY
Targus Credit Agreement
On October 18, 2022, Targus (the “Targus Borrower”), among others, entered into a credit agreement (“Targus Credit Agreement”) with PNC Bank, National Association (“PNC”), as agent and security trustee for a five-year $28,000 term loan and a five-year $85,000 revolver loan, which was used to finance part of the acquisition of Targus. The final maturity date is October 18, 2027.
The Targus Credit Agreement is secured by substantially all Targus assets as collateral defined in the Targus Credit Agreement which assets had an aggregate value of approximately $176,643, which includes $39,095 of accounts receivable and $57,507 of inventory as of December 31, 2024. The Targus Credit Agreement contains certain covenants, including those limiting the Targus Borrower’s ability to incur certain indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus Credit Agreement. On October 31, 2023 and February 20, 2024, the Company entered into Amendment No. 1 and Amendment No. 2 to the Targus Credit Agreement, which, among other things, modified the fixed charge coverage ratio “FCCR” and the minimum EBITDA requirements which waived the financial covenant breaches for the periods ended September 30, 2023 and December 31, 2023, respectively. Amendment No. 2 also provided, among other things, with a cure right for the Company to provide a capital contribution to Targus in the event of a financial covenant breach (the "Keepwell"). For the period ended September 30, 2023, the FCCR covenant was not fulfilled in accordance with the Targus Credit Agreement, and for the period ended December 31, 2023, the FCCR and minimum EBITDA covenant was not fulfilled in accordance with the Targus Credit Agreement. However, the amendments to the Targus Credit Agreement and the capital contributions made to the subsidiary cured the covenant breaches. On June 27, 2024 the Company entered into Amendment No. 3 to the Targus Credit Agreement to replace the terminating Canadian benchmark interest rate with the Term CORRA Reference Rate. For the period ended June 30, 2024, the minimum EBITDA covenant was also breached. On August 14, 2024, the Company contributed $1,602 to Targus to cure a minimum EBITDA financial covenant requirement for the period ended June 30, 2024. For the period ended September 30, 2024, the minimum EBITDA covenant was also breached. On November 7, 2024, the Company entered into Amendment No. 4 to the Targus Credit Agreement, which among other things, reduced revolving loan sublimits, modified the FCCR covenant, removed the minimum EBITDA requirement, imposed a minimum undrawn availability covenant, and modified the terms of the Keepwell. Amendment No. 4 to the Targus Credit Agreement also waived the September 30, 2024 minimum EBITDA covenant breach. Concurrently with the effectiveness of Amendment No. 4 to the Targus Credit Agreement, the Company repaid the outstanding balance of the term loan in full with $2,100 of revolver loan advances and $7,500 of cash from the Company.
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On May 9, 2025, the Targus Borrower entered into Amendment No. 5 to the Targus Credit Agreement, which among other things, (i) requires quarterly repayments of revolver loan advances in an amount equal to $2,500 commencing on September 30, 2025 and continuing until the total outstanding amount thereunder is paid in full, (ii) reduced the maximum revolving commitments from $30,000 to $25,000, (iii) required the repayment of $5,000 of outstanding revolving advances and (iv) requires that the Targus Borrower to pay a deferred amendment fee of $1,000 in the event the Company is unable to refinance the Targus Credit Agreement by July 31, 2025. On July 25, 2025, the Targus Borrower entered into Amendment No. 6 to the Targus Credit Agreement, which among other things, (i) reduced the deferred amendment fee of $1,000 to $150, due and payable on July 25, 2025, and (ii) requires the Targus Borrower to pay an additional deferred amendment fee of $850 in the event the Company is unable to refinance the Targus Credit Agreement by August 15, 2025. On August 15, 2025, the Targus Borrower entered into Amendment No. 7 to the Targus Credit Agreement, which among other things, (i) requires the Targus Borrower to pay an additional deferred amendment fee of $100 in the event the Targus Borrower is unable to refinance the Targus Credit Agreement by August 15, 2025, and (ii) requires the Targus Borrower to pay an additional deferred amendment fee of $850 in the event the Targus Borrower is unable to refinance the Targus Credit Agreement by August 20, 2025.
In connection with the above amendments to the Targus Credit Agreement, the Company entered into Amendment No. 2 to the Keepwell on May 9, 2025, Amendment No. 3 to the Keepwell on July 25, 2025, and Amendment No. 4 to the Keepwell on August 15, 2025, which among other things, modified the conditions under which, if satisfied, the Company would be required to make certain capital contributions to the Targus Borrower.
On August 20, 2025, the Company entered into the new Targus/FGI Credit Agreement to refinance and repay all obligations under the existing Targus Credit Agreement, as more fully described below.
The Company is in compliance with all financial covenants with the Targus Credit Agreement, as amended, and no defaults or events of default, as defined in the credit agreement, were noted as of December 31, 2024.

The term loan bears interest on the outstanding principal amount equal to the term Secured Overnight Financing Rate ("SOFR") rate plus an applicable margin of 5.75%. The revolver loan consists of base rate loans that bear interest on the outstanding principal amount equal to the base rate plus an applicable margin of 3.00% and term rate loans that bear interest on the outstanding principal amount equal to the revolver SOFR rate plus an applicable margin of 4.00%.

As of December 31, 2024 and 2023, the outstanding balance on the term loan was zero and $17,834 (net of unamortized debt issuance costs of $366), respectively. As of December 31, 2024 and 2023, the outstanding balance on the revolver loan was $16,329 and $43,801, respectively. The average borrowings under the revolver loan was $21,418 and $56,704 during the year ended December 31 2024 and 2023, respectively. The amount available for borrowings under the Targus Credit Agreement was $5,361 and $1,814 at December 31, 2024, and 2023, respectively.
Interest expense on these loans during the years ended December 31, 2024, 2023, and 2022, was $4,234 (including amortization of deferred debt issuance costs and unused commitment fees of $957), $7,303 (including amortization of deferred debt issuance costs and unused commitment fees of $664) and $1,322 (including amortization of deferred debt issuance costs and unused commitment fees of $157), respectively. In connection with the principal payments made on the term loan during the year ended December 31, 2024, the Company recorded losses on the extinguishment of this debt in the amount of $769, which was included in the consolidated statements of operations in 2024. The interest rate on the term loan was 10.45%, 10.20% and 8.43% and the interest rate on the revolver loan ranged between 8.44% to 11.25%, between 8.45% to 11.25% and between 6.03% to 9.25% as of December 31, 2024, 2023 and 2022, respectively. The weighted average interest rate on the revolver loan was 10.39%, 8.53% and 6.68% as of December 31, 2024, 2023 and 2022, respectively.

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Targus/FGI Credit Agreement
On August 20, 2025, the Targus Borrower and certain of the Targus Borrowers' direct and indirect subsidiaries (the “FGI Loan Parties”) entered into a Revolving Credit, Receivables Purchase, Security and Guaranty Agreement (the “Targus/FGI Credit Agreement”) with FGI Worldwide LLC (“FGI”), as agent and for a three-year $30,000 revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement with PNC. The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028.
The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature, under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term SOFR for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee.
The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Targus Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement.
As required under the Targus/FGI Credit Agreement, B. Riley Commercial Capital, LLC ("BRCC"), a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5,000 increasing the aggregate principal amount of such loan from $5,000 to $10,000.
Pathlight Credit Agreement
On September 23, 2022, the Company's subsidiary, BRRII, entered into a credit agreement (the “Pathlight Credit Agreement”) by and among PLC Agent, LLC in the capacity as administrative agent and Pathlight Capital Fund I LP, Pathlight Capital Fund II LP, and Pathlight Capital Fund III LP as the lenders (collectively, “Pathlight”) for a five-year $148,200 term loan. On January 12, 2023, Amendment No. 2 to the Pathlight Credit Agreement increased the term loan by an additional $78,296. On March 31, 2023, Amendment No. 3 to the Pathlight Credit Agreement increased the term loan by an additional $49,890. On August 21, 2023, in connection with the sale of all of the equity interests in BRRII to Freedom VCM Receivables as more fully described in Note 2(s), the Company was released from all obligations, guarantees and covenants related to the Pathlight Credit Agreement. The Company had been in compliance with all financial covenants in the Pathlight Credit Agreement.
The term loan bore interest on the outstanding principal amount equal to the Term SOFR rate plus an applicable margin of 6.50%. Interest expense on the term loan during the years ended December 31, 2023 and 2022 was $14,359 (including amortization of deferred debt issuance costs of $4,262) and $5,331 (including amortization of deferred debt issuance costs of $1,328), respectively.
Lingo Credit Agreement
On August 16, 2022, Lingo (the “Lingo Borrower”), entered into a credit agreement (the “Lingo Credit Agreement”) by and among the Lingo Borrower, the Company as the secured guarantor, and Banc of California, N.A. in its capacity as administrative agent and lender, for a five-year $45,000 term loan. This loan was used to finance part of the purchase of BullsEye by the Lingo Borrower. On September 9, 2022, the Lingo Borrower entered into the First Amendment to the Lingo Credit Agreement with Grasshopper Bank for an incremental term loan of $7,500, increasing the principal balance of the term loan to $52,500. On November 10, 2022, the Lingo Borrower entered into the Second Amendment to the Lingo Credit Agreement with KeyBank National Association for an incremental term loan of $20,500, increasing the principal balance of the term loan to $73,000.

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The term loan bears interest on the outstanding principal amount equal to the term SOFR rate plus a margin of 3.00% to 3.75% per annum, depending on the consolidated total funded debt ratio as defined in the Lingo Credit Agreement, plus applicable spread adjustment. As of December 31, 2024, 2023, and 2022, the interest rate on the Lingo Credit Agreement was 7.91%, 8.70%, and 7.89% respectively.
The Lingo Credit Agreement is guaranteed by the Company and the Lingo Borrower's subsidiaries and secured by certain Lingo assets and equity interests as collateral which totals approximately $228,679 defined in the Lingo Credit Agreement which includes $12,316 of accounts receivable. The agreement contains certain covenants, including those limiting the Lingo Borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of its businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the Lingo Credit Agreement requires the Lingo Borrower to maintain certain financial ratios. The Lingo Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the Lingo Credit Agreement. The Company is in compliance with all financial covenants in the Lingo Credit Agreement as of December 31, 2024.
Principal outstanding is due in quarterly installments. The quarterly installments from March 31, 2025 to June 30, 2027 are in the amount of $3,650, and the remaining principal balance is due at final maturity on August 16, 2027.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was $52,363 (net of unamortized debt issuance costs of $562) and $63,153 (net of unamortized debt issuance costs of $722), respectively. Interest expense on the term loan during the years ended December 31, 2024, 2023 and 2022 was $5,759 (including amortization of deferred debt issuance costs of $542), $6,370 (including amortization of deferred debt issuance costs of $293) and $1,619 (including amortization of deferred debt issuance costs of $97), respectively.
On January 6, 2025, as discussed below BRPAC entered into an amended and restated credit agreement (the “BRPAC Amended Credit Agreement”) with the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time. A portion of the proceeds from the BRPAC Amended Credit Agreement were used to pay all outstanding principal amounts and accrued interest under the Lingo Credit Agreement and the Lingo Credit Agreement was effectively terminated upon repayment on January 6, 2025.
bebe Credit Agreement
As a result of the Company obtaining a majority ownership interest in bebe on October 6, 2023, bebe's credit agreement with SLR Credit Solutions (the “bebe Credit Agreement”) for a $25,000 five-year term loan with a maturity date of August 24, 2026 is included in the Company's long-term debt. The term loan bears interest on the outstanding principal amount equal to the Term SOFR rate plus a margin of 5.50% to 6.00% per annum, depending on the total fixed charge coverage ratio as defined in the bebe Credit Agreement. As of December 31, 2023, the interest rate on the bebe Credit Agreement was 11.14%.
The bebe Credit Agreement is collateralized by a first lien on all bebe assets and pledges of capital stock including equity interests. The agreement contains certain covenants, including those limiting the borrower’s ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the agreement requires bebe to maintain certain financial ratios. The agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was zero (net of unamortized debt issuance costs of zero) and $22,487 (net of unamortized debt issuance costs of $638), respectively. Interest expense on the term loan during the year ended December 31, 2024 and 2023 was $2,715 (including amortization of deferred debt issuance costs of $638 and allocated to income from discontinued operations, net of income taxes in the consolidated statement of operations) and $680 (including amortization of deferred debt issuance costs of $56), respectively. Principal outstanding is due in quarterly installments through June 30, 2026 in the amount of $313 per quarter and the remaining principal balance of $20,000 is due at final maturity on August 24, 2026.
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On October 25, 2024, upon the closing of the Brands Transaction as described in Note 4 – Discontinued Operation, proceeds of $22,188 was used to pay off the then outstanding balance of the loan in full and $224 of loan payoff expenses.
Nomura Credit Agreement
The Company, and its wholly owned subsidiaries, BR Financial Holdings, LLC ("BRFH"), and BR Advisory & Investments, LLC had entered into a credit agreement dated June 23, 2021 (as amended, the “Prior Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Wells Fargo Bank, N.A., as collateral agent, for a four-year $300,000 secured term loan credit facility (the “Prior Term Loan Facility”) and a four-year $80,000 secured revolving loan credit facility (the “Prior Revolving Credit Facility”) with a maturity date of June 23, 2025.
On August 21, 2023, the Company and BRFH (the “BRFH Borrower”), and certain direct and indirect subsidiaries of the BRFH Borrower (the “BRFH Guarantors”), entered into a credit agreement (the “Credit Agreement”) with Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, for a four-year $500,000 secured term loan credit facility (the “New Term Loan Facility”) and a four-year $100,000 secured revolving loan credit facility (the “New Revolving Credit Facility” and together, the “New Credit Facilities”). The purpose of the Credit Agreement was to (i) fund the Freedom VCM equity investment, (ii) prepay in full the Prior Term Loan Facility and Prior Revolving Credit Facility with an aggregate outstanding balance of $347,877, which included $342,000 in principal and $5,877 in interest and fees, (iii) fund a dividend reserve in an amount not less than $65,000, (iv) pay related fees and expenses, and (v) for general corporate purposes. The Company recorded a loss on extinguishment of debt related to the Prior Credit Agreement of $5,409, which was included in the consolidated statements of operations for the year ended December 31, 2023.
SOFR rate loans under the New Credit Facilities accrued interest at the adjusted term SOFR rate plus an applicable margin of 6.00%. In addition to paying interest on outstanding borrowings under the New Revolving Credit Facility, the Company was required to pay a quarterly commitment fee based on the unused portion, which was determined by the average utilization of the facility for the immediately preceding fiscal quarter.
The Credit Agreement was secured on a first priority basis by a security interest in the equity interests of the BRFH Borrower and each of the BRFH Borrower’s subsidiaries (subject to certain exclusions) and a security interest in substantially all of the assets of the BRFH Borrower and the BRFH Guarantors. The borrowing base as defined in the Credit Agreement consisted of a collateral pool that included certain of the Company's loans receivables in the amount of $112,454 (which is included in the total loans receivable, at fair value balance of $90,103 reported in our consolidated balance sheet at December 31, 2024) and $375,814 (which is included in the total loans receivable, at fair value balance of $532,419 reported in our consolidated balance sheet at December 31, 2023) and investments in the amount of $228,292 (which is included in the total securities and other investments owned, at fair value of $282,325 reported in our consolidated balance sheet at December 31, 2024) and $786,714 (which is included in the total securities and other investments owned, at fair value of $809,049 reported in our consolidated balance sheet at December 31, 2023) as of December 31, 2024 and 2023, respectively.
The Credit Agreement contained certain affirmative and negative covenants customary for financings of this type that, among other things, limited the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests. The Credit Agreement contained customary events of default, including with respect to a failure to make payments under the credit facilities, cross-default, certain bankruptcy and insolvency events and customary change of control events. The Company was in compliance with all financial covenants in the Credit Agreement as of December 31, 2024. On September 17, 2024, the Company entered into Amendment No. 4 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fourth Amendment”). On September 17, 2024, the Company made a payment of $85,857 which consisted of a principal payment of $85,146 and accrued interest of $711. Loan fees incurred in connection with the Fourth Amendment totaled $5,869 of which $3,523 was added to the principal balance of the term loan. After giving effect to these amounts, the outstanding principal balance on the term loan was reduced from $469,750 to $388,127. In connection with the Fourth Amendment, the revolving credit facility in the amount of $100,000 which had no balance outstanding at September 17, 2024 was terminated and the Company was required to reduce the principal amount of the term loan to be no greater than $100,000 on or prior to September 30, 2025. The scheduled maturity date of the term loan was August 21, 2027.
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The Fourth Amendment contained certain provisions related to borrowing base, including specific treatment for certain assets in the calculation of borrowing base and also included mandatory prepayment provisions regarding asset sales. Interest on the term loan increased to SOFR loans accrued interest at the adjusted term SOFR plus an applicable margin of 7.00% cash interest or, at the election of the Company, at the adjusted term SOFR determined plus an applicable margin of 6.00% cash interest plus 1.50% paid-in-kind interest; and base rate loans accrued interest at the base rate plus an applicable margin of 6.00% cash interest or, at the election of the Company, at the adjusted term SOFR determined for such day plus an applicable margin of 5.00% cash interest plus 1.50% PIK Interest. On December 9, 2024, the Company entered into Amendment No. 5 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Fifth Amendment”). The Fifth Amendment extended the springing maturity date of the term loans if more than $25,000 aggregate principal amount of the 5.50% 2026 Notes was outstanding to February 3, 2026 and permitted under certain conditions an additional $10,000 of telecommunications financing. On January 3, 2025, the Company entered into Amendment No. 6 to its credit agreement, dated August 21, 2023, with Nomura Corporate Funding Americas, LLC, as administrative agent (the “Sixth Amendment”). The Sixth Amendment agreed to permit under certain conditions the contribution by BRPI of 100% of the equity interests in Lingo to BRPAC in connection with the entry into the BRPAC Credit Agreement. There was no fee charged in connection with the Sixth Amendment.
As of December 31, 2024 and 2023, the outstanding balance on the term loan was $117,292 (net of unamortized debt issuance costs of $5,246) and $475,056 (net of unamortized debt issuance costs of $18,694), respectively. Interest on the term loan during the years ended December 31, 2024, 2023, and 2022 was $23,529 (including amortization of deferred debt issuance costs of $5,799), $11,662 (including amortization of deferred debt issuance costs of $2,916), and $21,310 (including amortization of deferred debt issuance costs of $2,085), respectively. The interest rate on the term loan as of December 31, 2024 and 2023 was 11.52%, 11.37% and 9.23%, respectively.
There were no borrowings outstanding under the revolving facility as of December 31, 2024. The Company had an outstanding balance $74,700 under the revolving facility as of December 31, 2023. Interest on the revolving facility during the years ended December 31, 2024, 2023, and 2022 was $1,420 (including unused commitment fees of $688 and amortization of deferred financing costs of $732), $5,908 (including unused commitment fees of $334 and amortization of deferred financing costs of $754), and $5,441 (including unused commitment fees of $13 and amortization of deferred financing costs of $586), respectively. The interest rate on the Revolving Credit Facility as of December 31, 2024 and 2023 was 11.37%.
In connection with the principal payments made on the term loan and revolving credit facility with Nomura during the year ended December 31, 2024, the Company recorded losses of the extinguishment of this debt in the amount of $17,956, which was included in the consolidated statements of operations in 2024.
On February 26, 2025, the Company entered into a new credit agreement with a group of funds indirectly or directly controlled by Oaktree Capital Management, L.P. with Oaktree Fund Administration, LLC, acting as the administrative agent and collateral agent, as more fully described in Note 25. The new credit agreement provided for (i) a three-year $125,000 secured term loan credit facility (the “Initial Term Loan Facility”) and (ii) a four-month $35,000 secured delayed draw term loan credit facility (the “Delayed Draw Facility” and, together with the Initial Term Loan Facility, the “Oaktree Credit Facilities”). The Nomura Credit Agreement discussed above was paid in full and terminated using proceeds from the Initial Term Loan Facility.
BRPAC Credit Agreement
On December 19, 2018, BRPI Acquisition Co LLC (“BRPAC”), a Delaware limited liability company, United Online, Inc. ("UOL"), and YMAX Corporation, Delaware corporations (collectively, the “BRPAC Borrowers”), indirect wholly owned subsidiaries of the Company, in the capacity as borrowers, entered into a credit agreement (the “BRPAC Credit Agreement”) with the Banc of California, N.A. in the capacity as agent (the “Agent”) and lender and with the other lenders party thereto (the “Closing Date Lenders”). Certain of the BRPAC Borrowers’ U.S. subsidiaries are guarantors of all obligations under the BRPAC Credit Agreement and are parties to the BRPAC Credit Agreement in such capacity (collectively, the “Secured Guarantors”; and together with the BRPAC Borrowers, the “Credit Parties”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of BRPAC and a subsidiary of the Company, are guarantors of the obligations under the BRPAC Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares outstanding membership interests of BRPAC are pledged as collateral.

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The obligations under the BRPAC Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the Credit Parties which totals approximately $184,587 (which includes $3,737 of accounts receivable and $3,325 of inventory), including a pledge of (a) 100% of the equity interests of the Credit Parties, (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65% of the equity interests in magicJack VocalTec Ltd., an Israel corporation. Such security interests are evidenced by pledge, security, and other related agreements.
The BRPAC Credit Agreement contains certain covenants, including those limiting the Credit Parties’ and their subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the BRPAC Credit Agreement requires the Credit Parties to maintain certain financial ratios. The BRPAC Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of amounts due under the outstanding BRPAC Credit Agreement. The Company is in compliance with all financial covenants in the BRPAC Credit Agreement as of December 31, 2024.
Through a series of amendments, including the Fourth Amendment to the BRPAC Credit Agreement (the “Fourth Amendment”) on June 21, 2022, the BRPAC Borrowers, the Secured Guarantors, the Agent and the Closing Date Lenders agreed to the following, among other things: (i) the Closing Date Lenders agreed to make a new $75,000 term loan to the BRPAC Borrowers, the proceeds of which the BRPAC Borrowers used to repay the outstanding principal amount of the existing terms loans and optional loans and will use for other general corporate purposes, (ii) a new applicable margin level of 3.50% was established as set forth from the date of the Fourth Amendment, (iii) Marconi Wireless Holdings, LLC (“Marconi Wireless”) was added to the BRPAC Borrowers, (iv) the maturity date of the term loan was set to June 30, 2027, and (v) the BRPAC Borrowers were permitted to make certain distributions to the parent company of the BRPAC Borrowers.
The borrowings under the amended BRPAC Credit Agreement bear interest equal to the Term SOFR rate plus a margin of 2.75% to 3.50% per annum, depending on the BRPAC Borrowers’ consolidated total funded debt ratio as defined in the BRPAC Credit Agreement. As of December 31, 2024, 2023 and 2022, the interest rate on the BRPAC Credit Agreement was 7.42% and 8.46% and 7.65%, respectively.
Principal outstanding under the Amended BRPAC Credit Agreement is due in quarterly installments. The quarterly installments from March 31, 2025 to December 31, 2026 are in the amount of $3,169 per quarter, the quarterly installment on March 31, 2027 is in the amount of $2,377, and the remaining principal balance is due at final maturity on June 30, 2027.
As of December 31, 2024, and 2023, the outstanding balance on the term loan was $29,774 (net of unamortized debt issuance costs of $332) and $46,421 (net of unamortized debt issuance costs of $429), respectively. Interest expense on the term loan during the years ended December 31, 2024, 2023, and 2022, was $3,525 (including amortization of deferred debt issuance costs of $252), $5,201 (including amortization of deferred debt issuance costs of $272), and $3,478 (including amortization of deferred debt issuance costs of $331), respectively.
On January 6, 2025 (the “Closing Date”), BRPAC entered into the BRPAC Amended Credit Agreement with certain subsidiaries of the Company, the Banc of California, in the capacity as agent and lender and with other lenders party thereto from time to time. The Company’s subsidiary Lingo was added as a BRPAC Borrower to the BRPAC Amended Credit Agreement. Pursuant to the BRPAC Amended Credit Agreement, the lenders made a new five-year $80,000 term loan to the BRPAC Borrowers, the proceeds of which were used to repay in full the obligations under the original BRPAC Credit Agreement dated December 19, 2018 and the Lingo Credit Agreement. In connection with the BRPAC Amended Credit Agreement, the BRPAC Borrowers also made certain distributions to the parent company of the BRPAC Borrowers from existing cash on hand. The BRPAC Amended Credit Agreement also builds in provisions for incremental term loans up to $40,000 allowing certain distributions to the parent company of the BRPAC Borrowers from the proceeds of such incremental term loans. The BRPAC Borrowers’ U.S. subsidiaries are guarantors of all obligations under the BRPAC Amended Credit Agreement. The obligations under the BRPAC Amended Credit Agreement are secured by first-priority liens on, and first priority security interest in, substantially all of the assets of the BRPAC Borrowers, including a pledge of (a) 100% of the equity interests of the BRPAC Borrowers; (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India; and (c) 65% of the equity interests in magicJack VocalTec Ltd., an Israel corporation.
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Such security interests are evidenced by pledge, security, and other related agreements.
The borrowings under the BRPAC Amended Credit Agreement bear interest equal to the Term SOFR rate plus a margin of 2.75% to 3.50% per annum, depending on the BRPAC Borrowers consolidated total funded debt ratio as defined in the BRPAC Amended Credit Agreement. The interest rate is subject to a margin level of 3.25%. As of the Closing Date, the outstanding principal amount was $80,000 with quarterly installments of principal due in the amount of $4,000, and any remaining principal balance is due at final maturity on January 6, 2030.
The BRPAC Amended Credit Agreement contains certain covenants, including those limiting the Credit Parties’, and their subsidiaries’, ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the BRPAC Amended Credit Agreement requires the Credit Parties to maintain certain financial ratios. The BRPAC Amended Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the agent would be entitled to take various actions, including the acceleration of outstanding amounts due under the BRPAC Amended Credit Agreement. The Company obtained a waiver from the lender to allow for an extra 15 days to deliver interim financial statements for the quarter ended March 31, 2025. The Company delivered the interim financial statements within the amended time period.
NOTE 14 — SENIOR NOTES PAYABLE
Senior notes payable, net, is comprised of the following as of December 31, 2024 and 2023:
December 31,
2024		 December 31,
2023
6.750% Senior notes due May 31, 2024
 $ —  $ 140,492 
6.375% Senior notes due February 28, 2025
 145,211  146,432 
5.500% Senior notes due March 31, 2026
 216,662  217,440 
6.500% Senior notes due September 30, 2026
 180,464  180,532 
5.000% Senior notes due December 31, 2026
 322,667  324,714 
6.000% Senior notes due January 31, 2028
 264,345  266,058 
5.250% Senior notes due August 31, 2028
 401,307  405,483 
1,530,656  1,681,151 
Less: Unamortized debt issuance costs (95) (13,130)
$ 1,530,561  $ 1,668,021 
The Company did not issue any senior notes during the year ended December 31, 2024. During the years ended December 31, 2023 and 2022, the Company issued $185 and $111,841, respectively, of senior notes with maturity dates ranging from May 2024 to August 2028 pursuant to At the Market Issuance Sales Agreements with BRS which governs the program of at-the-market sales of the Company’s senior notes. A series of prospectus supplements were filed by the Company with the SEC in respect of the Company’s offerings of these senior notes.
In June 2023, the Company entered into note purchase agreements in connection with the 6.75% Senior Notes due 2024 (“6.75% 2024 Notes”) that were issued for the Targus acquisition. The note purchase agreements had a repurchase date of June 30, 2023 on which date the Company repurchased 2,356,978 shares of its 6.75% 2024 Notes with an aggregate principal amount of $58,924. The repurchase price was equal to the aggregate principal amount, plus accrued and unpaid interest up to, but excluding, the repurchase date. The total repurchase payment included approximately $663 in accrued interest.

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On February 29, 2024, the Company partially redeemed $115,492 aggregate principal amount of its 6.75% 2024 Notes pursuant to the seventh supplemental indenture dated December 3, 2021. The redemption price was equal to 100% of the aggregate principal amount, plus accrued and unpaid interest, up to, but excluding, the redemption date. The total redemption payment included approximately $628 in accrued interest.

On May 31, 2024, the Company redeemed the remaining $25,000 aggregate principal amount of the 6.75% 2024 Notes. The redemption price was equal to 100% of the aggregate principal amount, plus any accrued and unpaid interest up to, but excluding, the redemption date. The total redemption payment included approximately $145 in accrued interest. In connection with the full redemption, the 6.75% 2024 Notes, which were listed on NASDAQ under the ticker symbol “RILYO,” were delisted from NASDAQ and ceased trading on the redemption date.
On February 28, 2025 the Company redeemed all the issued and outstanding 6.375% Senior Notes due February 28, 2025 (the "6.375% 2025 Notes"). The redemption price was equal to 100% of the aggregate principal amount, plus any accrued interest and unpaid interest up to, but excluding, the redemption date The total redemption payment included approximately $720 accrued interest. In connection with the full redemption, the 6.375% 2025 Notes, which were listed on NASDAQ under the ticker symbol “RILYM,” were delisted from NASDAQ and ceased trading on the redemption date.
As of December 31, 2024 and 2023, the total senior notes outstanding was $1,530,561 (net of unamortized debt issue costs of $95) and $1,668,021 (net of unamortized debt issue costs of $13,130) with a weighted average interest rate of 5.62% and 5.71%, respectively. Interest on the senior notes is payable on a quarterly basis. Interest expense on the senior notes totaled $92,650, $103,192, and $99,854 during the years ended December 31, 2024, 2023, and 2022, respectively.
As of December 31, 2024, the aggregate maturities of borrowings from notes payable, term loans, credit facilities, and senior notes for the next five years are as follows:
Amount
2025 $ 209,352 
2026 747,343 
2027 166,049 
2028 665,735 
2029 81 
On March 26, 2025, the Company completed a private exchange transaction with an institutional investor pursuant to which $86,309 of aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026 and $36,745 aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026 owned by the institutional investor were cancelled and exchanged for $87,753 aggregate principal amount of New Notes as more fully described in Note 25 — Subsequent Events. In addition, on April 7, 2025, the Company completed a private exchange transaction with a certain institutional investor pursuant to which the investor exchanged approximately $22,000 aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for approximately $9,992 aggregate principal amount of the New Notes. On May 21, 2025, the Company completed a private exchange transaction with a certain institutional investor to exchange principal amounts of approximately $29,535, $75,000, and $34,537 of the Company's 5.50% Senior Notes due March 2026, 5.00% Senior Notes due December 2026, and 6.00% Senior Notes due January 2028, respectively, for approximately $93,067 aggregate principal amount of the New Notes. On June 30, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $28,009 aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $13,000 aggregate principal amount of the New Notes. On July 11, 2025, the Company entered into a private exchange transaction with a certain institutional investor pursuant to which such investor exchanged approximately $42,838 aggregate principal amount of the Company’s 6.50% Senior Notes due September 2026, 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for $24,611 aggregate principal amount of the New Notes.

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NOTE 15 — REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue from contracts with customers from the Company's six reportable operating segments and the All Other category during the years ended December 31, 2024, 2023, and 2022 is reported below.
Capital
Markets		 Wealth
Management		 Financial
Consulting		 Communications Consumer Products E-Commerce Corp & All Other Total
Revenues for the year ended December 31, 2024:
           
Corporate finance, consulting and investment banking fees $ 154,388  $ —  $ 92,176  $ —  $ —  $ —  $ —  $ 246,564 
Wealth and asset management fees 4,795  180,464  —  —  —  —  —  185,259 
Commissions, fees and reimbursed expenses 22,905  9,472  —  —  —  —  —  32,377 
Subscription services —  —  —  284,315  —  —  —  284,315 
Sale of goods —  —  —  5,589  202,597  10,646  1,787  220,619 
Advertising and other —  —  —  5,120  —  13,855  90,047  109,022 
Total revenues from contracts with customers 182,088  189,936  92,176  295,024  202,597  24,501  91,834  1,078,156 
           
Trading (loss) income (60,285) 3,278  —  —  —  —  —  (57,007)
Fair value adjustments on loans (325,498) —  —  —  —  —  —  (325,498)
Interest income - loans 54,141  —  —  —  —  —  —  54,141 
Interest income - securities lending 70,862  —  —  —  —  —  —  70,862 
Other 10,411  7,532  —  —  —  —  —  17,943 
Total revenues $ (68,281) $ 200,746  $ 92,176  $ 295,024  $ 202,597  $ 24,501  $ 91,834  $ 838,597 
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Capital
Markets		 Wealth
Management		 Financial
Consulting		 Communications Consumer Products
Corp & All Other
 Total
Revenues for the year ended December 31, 2023:
            
Corporate finance, consulting and investment banking fees $ 190,480  $ —  $ 77,283  $ —  $ —  $ —  $ 267,763 
Wealth and asset management fees 4,060  177,283  —  —  —  —  181,343 
Commissions, fees and reimbursed expenses 32,436  9,993  —  —  —  42,429 
Subscription services —  —  —  324,758  —  —  324,758 
Sale of goods —  —  —  6,737  233,202  364  240,303 
Advertising and other —  —  —  6,194  —  47,992  54,186 
Total revenues from contracts with customers 226,976  187,276  77,283  337,689  233,202  48,356  1,110,782 
           
Trading (loss) income 16,845  4,758  —  —  —  —  21,603 
Fair value adjustments on loans 20,225  —  —  —  —  —  20,225 
Interest income - loans 123,244  —  —  —  —  —  123,244 
Interest income - securities lending 161,652  —  —  —  —  —  161,652 
Other 22,060  6,211  —  —  —  —  28,271 
Total revenues $ 571,002  $ 198,245  $ 77,283  $ 337,689  $ 233,202  $ 48,356  $ 1,465,777 

Capital
Markets		 Wealth
Management		 Financial
Consulting		 Communications Consumer Products Corp & All Other Total
Revenues for the year ended December 31, 2022:
Corporate finance, consulting and investment banking fees $ 169,955  $ —  $ 50,243  $ —  $ —  $ —  $ 220,198 
Wealth and asset management fees 12,547  204,805  —  —  —  —  217,352 
Commissions, fees and reimbursed expenses 41,316  19,299  114  —  —  —  60,729 
Subscription services —  —  —  219,379  —  —  219,379 
Sale of goods —  —  —  7,526  77,821  —  85,347 
Advertising and other —  —  —  8,750  —  13,797  22,547 
Total revenues from contracts with customers 223,818  224,104  50,357  235,655  77,821  13,797  825,552 
             
Trading (loss) income (151,816) 3,522  —  —  —  —  (148,294)
Fair value adjustments on loans (54,334) —  —  —  —  —  (54,334)
Interest income - loans 157,669  —  —  —  —  —  157,669 
Interest income - securities lending 83,144  —  —  —  —  —  83,144 
Other 69,115  6,631  —  —  —  —  75,746 
Total revenues $ 327,596  $ 234,257  $ 50,357  $ 235,655  $ 77,821  $ 13,797  $ 939,483 
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Revenues are recognized when control of the promised goods or performance obligations for services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. A performance obligation may be satisfied over time or at a point in time. Revenue from a performance obligation satisfied over time is recognized by measuring the Company’s progress in satisfying the performance obligation in a manner that depicts the transfer of the goods or services to the customer. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that we determine the customer obtains control over the promised good or service. The amount of revenue recognized reflects the consideration we expect to be entitled to in exchange for those promised goods or services (i.e., the “transaction price”). In determining the transaction price, the Company considers multiple factors, including the effects of variable consideration. Variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved. In determining when to include variable consideration in the transaction price, the Company considers the range of possible outcomes, the predictive value of the Company’s past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of our influence, such as market volatility or the judgment and actions of third parties. Payment terms vary by customer with due dates varying in advance of service or upon invoice of the service or for the sale of goods with credit terms. Revenues by geographic region by segment is included in Note 24 – Business Segments.
The following provides detailed information on the recognition of the Company’s revenues from contracts with customers:
Corporate finance, consulting and investment banking fees. Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent. Fees from underwriting activities are recognized as revenues when the performance obligation for the services related to the underwriting transaction is satisfied under the terms of the engagement and is not subject to any other contingencies. Fees are also earned from financial advisory and consulting services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. The performance obligation for financial advisory services is satisfied over time as work progresses on the engagement and services are delivered to the client. Fees earned from bankruptcy, financial advisory, forensic accounting and real estate consulting services are rendered to clients over time as work progresses on the engagement and services are delivered to the client. Fees may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. The performance obligation for financial advisory services may also include success and performance based fees which are recognized as revenue when the performance obligation is no longer constrained and it is not probable that the revenue recognized would be subject to significant reversal in a future period. Generally, it is probable that the revenue recognized is no longer subject to significant reversal upon the closing of the investment banking transaction.
Wealth and asset management fees. Fees from wealth and asset management services consist primarily of investment management fees that are recognized over the period the performance obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed.
Commissions, fees and reimbursed expenses. Commissions and other fees from clients for trading activities are earned from equity securities transactions executed as agent or principal are recorded at a point in time on a trade date basis. Revenues from fees and reimbursed expenses for valuation services to clients are recognized when the performance obligation is completed and is generally at the point in time upon delivery of the report to the customer.
Subscription services. Subscription service revenues are primarily earned from the Communications segment's service contracts and are recognized in the period in which the transaction price has been determinable and the related performance obligations for services are provided to the customer. UOL pay accounts generally pay in advance for their internet access services and revenues are then recognized ratably over the service period. Subscription service revenues from magicJack include (a) revenues for initial access rights, which are recognized ratably over the service term, (b) revenues from access rights renewal, which are recognized ratably over the extended access right period; (c) revenues from access and wholesale charges, which are recognized as calls are terminated to the network; (d) revenues from UCaaS services, which are recognized in the period the services are provided over the term of the customer agreements; and (e) prepaid international long distance minutes, which are recognized as the minutes are used or expired. Subscription service revenues from our mobile phone business include revenues from mobile voice, text, and data services and are recognized ratably over the service period.
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Voice, text, and data overage charges are recognized over time as the consumer simultaneously receives and consumes the benefits each period as the Company performs.
Sale of goods. Sale of goods primarily consists of the sale of magicJack and Marconi Wireless devices and amounts from the sale of goods from Targus in the Consumer Products segment and from Nogin in the E-Commerce segment. Revenues from the sale of magicJack and Marconi Wireless devices are recognized upon delivery (when control transfers to the customer). Sale of product revenues also include the related shipping and handling and installment fees, if applicable. Revenue from the sale of Targus and Nogin goods is recognized when control of the product transfers to the customer, generally upon product shipment. Revenue is measured as the amount of consideration expected to be received in exchange for the transfer of product. There are no significant judgments or estimates made to determine the amount or timing of reported revenues. Sales terms do not allow for a right of return except for matters related to products with defects or damages.
Advertising and other. Advertising revenues consist of amounts from UOL’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements. Advertising revenues are recognized in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the transaction price is determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available.
Other income primarily consists of services revenues from the operations of an e-commerce, technology platform provider, a regional environmental services business, bebe, and a landscaping business. The e-commerce, technology platform provider delivers CaaS solutions for apparel brands and other retailers. Revenues primarily consist of commission fees derived from contractually committed gross revenue processed by customers on the Company's e-commerce platform. CaaS revenue is recognized on a net basis from maintaining e-commerce platforms and online orders, as the Company is engaged primarily in an agency relationship with its customers and earns defined amounts based on the individual contractual terms for the customer and the Company does not take possession of the customers' inventory or any credit risks relating to the products sold. The environmental services business is engaged in the recycling of scrap and waste materials and deals primarily in paper products. Customer arrangements contain a single obligation to transfer processed recycled goods and revenues are recognized at a point in time as processing fees when the performance obligation is satisfied. bebe's revenues are primarily from rental fees of merchandise, and revenue is recognized over the rental term. The landscaping business provides landscaping maintenance, improvements, and irrigation services to its customers. Revenues are recognized as the services are performed, which is typically ratably over the term of the contract.
Information on Remaining Performance Obligations and Revenue Recognized from Past Performance
The Company does not disclose information about remaining performance obligations pertaining to contracts that have an original expected duration of one year or less. The transaction price allocated to remaining unsatisfied or partially unsatisfied performance obligation(s) with an original expected duration exceeding one year was not material as of December 31, 2024. Corporate finance and investment banking fees and retail liquidation engagement fees that are contingent upon completion of a specific milestone and fees associated with certain distribution services are also excluded as the fees are considered variable and not included in the transaction price as of December 31, 2024.
Contract Balances
The timing of the Company’s revenue recognition may differ from the timing of payment by its customers. The Company records a receivable when revenue is recognized prior to payment and the Company has an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligation(s) are satisfied. Receivables related to revenues from contracts with customers totaled $88,384, $101,036, and $133,838 as of December 31, 2024, 2023, and 2022, respectively. The Company had no significant impairments related to these receivables during the years ended December 31, 2024, 2023, and 2022. The Company also has $10,111, $12,997, and $13,225 of unbilled receivables included in prepaid expenses and other assets as of December 31, 2024, 2023, and 2022, respectively. The Company’s deferred revenue primarily relates to retainer and milestone fees received from corporate finance and investment banking advisory engagements, asset management agreements, financial consulting engagements, subscription services where the performance obligation has not yet been satisfied.
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Deferred revenue as of December 31, 2024, 2023, and 2022 was $58,153, $70,575, and $84,456, respectively. The Company expects to recognize the deferred revenue of $58,153 as of December 31, 2024 as service and fee revenues when the performance obligation is met during the years December 31, 2025, 2026, 2027, 2028 and 2029 in the amount of $38,874, $8,882, $4,375, $2,082, and $1,229, respectively. The Company expects to recognize the deferred revenue of $2,711 after December 31, 2029.
During the years ended December 31, 2024, 2023, and 2022, the Company recognized revenue of $41,733, $50,318, and $36,610 that was recorded as deferred revenue at the beginning of each period, respectively.
Contract Costs
Contract costs include: (1) costs to fulfill contracts associated with corporate finance and investment banking engagements are capitalized where the revenue is recognized at a point in time and the costs are determined to be recoverable and; (2) commissions paid to obtain magicJack contracts which are recognized ratably over the contract term and third party support costs for magicJack and related equipment purchased by customers which are recognized ratably
over the service period.
The capitalized costs to fulfill a contract were $5,694, $8,131, and $5,990 as of December 31, 2024, 2023, and 2022, respectively, and are recorded in prepaid expenses and other assets in the consolidated balance sheets. During the years ended December 31, 2024, 2023, and 2022, the Company recognized expenses of $5,440, $4,677, and $3,117 related to capitalized costs to fulfill a contract, respectively. There were no significant impairment charges recognized in relation to these capitalized costs during years ended December 31, 2024, 2023, and 2022.
NOTE 16 — INCOME TAXES

During the years ended December 31, 2024, 2023, and 2022, the Company's loss from continuing operations before income taxes of $878,729, $199,276, and $334,337 includes a United States component of loss from continuing operations before income taxes of $888,631, $216,184, and $343,061 and a foreign component comprised of income from continuing operations before income taxes of $9,902, $16,908, and $8,724, respectively. The company will recognize any U.S. income tax expense it may incur on global intangible low tax income as income tax expense in the period in which the tax is incurred. The Company’s provision (benefit) for income taxes consists of the following during the years ended December 31, 2024, 2023, and 2022:
Year Ended December 31,
2024 2023 2022
Current:
Federal $ —  $ 2,411  $ 15,793 
State 300  1,871  (1,090)
Foreign 2,627  (2,438) 279 
Total current provision 2,927  1,844  14,982 
Deferred:      
Federal 18,154  (30,049) (60,736)
State 632  (10,294) (19,544)
Foreign 412  (616) 46 
Total deferred 19,198  (40,959) (80,234)
Total (benefit from) provision for income taxes $ 22,125  $ (39,115) $ (65,252)
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A reconciliation of the federal statutory rate of 21.0% to the effective tax rate for loss from continuing operations before income taxes is as follows during the years ended December 31, 2024, 2023, and 2022:
Year Ended December 31,
2024 2023 2022
Provision for income taxes at federal statutory rate (21.0 %) (21.0 %) (21.0 %)
State income taxes, net of federal benefit (6.3 %) (6.4 %) (7.0 %)
Employee stock based compensation 0.5 % 1.3 % (1.8 %)
Bargain purchase — % (2.0 %) — %
Foreign tax differential — % (3.5 %) (0.1 %)
Goodwill impairment 0.8 % 6.5 % — %
Provision true-up 1.5 % (2.5 %) 1.9 %
Change in valuation allowance 27.4 % 7.7 % 9.4 %
Other (0.4 %) 0.3 % (0.9 %)
Effective income tax rate (benefit) 2.5 % (19.6 %) (19.5 %)
Deferred income tax assets (liabilities) consisted of the following as of December 31, 2024 and 2023:
December 31,
2024 2023
Deferred tax assets:
Accrued liabilities and other $ 12,521  $ 14,006 
Loans receivable and investments 151,725  3,696 
Other 8,733  1,784 
Share based payments 3,464  13,953 
Credit carryforwards 973  — 
Capital loss carryforward 64,875  43,488 
Net operating loss carryforward 103,559  103,313 
Total deferred tax assets 345,850  180,240 
Deferred tax liabilities:    
Deductible goodwill and other intangibles (8,169) (33,265)
State taxes (12,515) (5,051)
Depreciation (5,479) (2,983)
Other —  (993)
Total deferred tax liabilities (26,163) (42,292)
Net deferred tax assets 319,687  137,948 
Valuation allowance (311,756) (104,317)
Net deferred tax asset $ 7,931  $ 33,631 
Deferred tax assets, net $ 13,393  $ 33,631 
Deferred tax liabilities, net (5,462) — 
Net deferred tax asset $ 7,931  $ 33,631 

As of December 31, 2024, the Company had federal net operating loss carryforwards of $344,508 and state net operating loss carryforwards of $71,248. There was no benefit or expense for income taxes recorded on NOLs during the year ended December 31, 2024 due to the valuation allowance. During the years ended December 31, 2023 and 2022, the Company recorded a benefit in the provision for income taxes related to federal and state net operating loss carryforwards in the amount of $1,983 and $1,820, respectively.
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The Company, has $105,673 of capital loss carryovers as of December 31, 2024. There is potential to carryback approximately $40,077 to refund taxes paid in 2021 and 2022. The remaining balance is available for carryforwards and will expire December 31, 2029. The Company’s federal net operating loss carryforwards will expire in the tax years commencing in December 31, 2033 through December 31, 2038, the state net operating loss carryforwards will expire in tax years commencing in December 31, 2030.
The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits of operating loss, capital loss, and tax credit carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. The Company’s net operating losses are subject to annual limitations in accordance with Internal Revenue Code Section 382. Accordingly, the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s actual taxable income. As of December 31, 2024, a valuation allowance in the amount of $311,756 has been recorded since it is more likely than not that the Company will not be able to utilize tax benefits before they expire. The Company’s net deferred tax assets at December 31, 2024 of $11,013 represents the amount refund claims available from capital loss carrybacks of previously reported taxable capital gains in prior year tax returns. The valuation allowance increased by $207,439 during the year ended December 31, 2024 primarily due net operating losses, realized and unrealized losses on investments, and fair value adjustments for loans receivable in the current year. As of December 31, 2023, the Company believes that the existing net operating loss carryforwards will be utilized in future tax periods before the loss carryforwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided an additional valuation allowance. The valuation allowance increased by $20,740 during the year ended December 31, 2023. This was primarily due to the inclusion of bebe in the Company's consolidated results offset by the expiration of capital loss carryover that had previously been valued. The Company does not believe that it is more likely than not that it will be able to utilize the benefits related to Israel capital loss carryforwards and has provided a full valuation allowance in the amount of $41,751 against these deferred tax assets.

As of December 31, 2024, the Company had gross unrecognized tax benefits totaling $13,162 all of which would have an impact on the Company’s effective income tax rate, if recognized. A reconciliation of the amounts of gross unrecognized tax benefits (before federal impact of state items), excluding interest and penalties, was as follows:
Year Ended December 31,
2024 2023 2022
Beginning balance $ 14,819  $ 16,146  $ 10,826 
Additions for current year tax positions —  —  7,129 
Additions for prior year tax positions 23  —  — 
Reductions for prior year tax positions —  (969) (1,766)
Reductions due to lapse in statutes of limitations (1,680) (358) (43)
Ending balance $ 13,162  $ 14,819  $ 16,146 
The Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions. The Company is currently under audit by certain federal, state and local, and foreign tax authorities. The audits are in varying stages of completion. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, case law developments, and closing of statutes of limitations. Such adjustments are reflected in the provision for income taxes, as appropriate. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December 31, 2021 to 2024.
As of December 31, 2024, the Company believes it is reasonably possible that its gross liabilities for unrecognized tax benefits may decrease by $243 within the next 12 months due to expiration of statute of limitations.

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During the year ended December 31, 2024, the Company had accrued interest and penalties relating to uncertain tax positions of $19, $962, and $1,116 for UOL, magicJack, and Targus respectively, all of which is included in income taxes payable. During the year ended December 31, 2024, the Company recorded a net release of $1,375 for UOL, magicJack, and Targus combined, related to interest and penalties for uncertain tax positions primarily due to the lapse in statute of limitations.
Inflation Reduction Act of 2022
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases if stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of public traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of excise tax is generally 1% of the fair market value of the shares repurchased at the time of repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The Company does not expect the IR Act to have a material impact on its financial position and result of operations.
Pillar Two
The Pillar Two directive, which was established by the Organization for Economic Co-operation and Development, and which generally provides for a 15% minimum effective tax rate for multinational enterprises, in every jurisdiction in which they operate. While the Company does not anticipate that this will have a material impact on its tax provision or effective tax rate, it will continue to monitor evolving tax legislation in the jurisdictions in which it operates.
NOTE 17 — EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Remeasurements to the carrying value of the redeemable noncontrolling interests in equity of subsidiaries are not deemed to be a dividend (see Note 2(x)). According to ASC 480 - Distinguishing Liabilities from Equity, there is no impact on earnings per share in the computation of basic and diluted earnings per share to common shareholders for changes in the carrying value of the redeemable noncontrolling interests in equity, when such changes in carrying value which in substance approximates fair value.
Securities that could potentially dilute basic net income (loss) per share in the future that were not included in the computation of diluted net income (loss) per share were 1,412,305, 2,341,329, and 1,651,011 during the years ended December 31, 2024, 2023, and 2022, respectively, because to do so would have been anti-dilutive.

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Basic and diluted earnings per share were calculated as follows:
Year Ended December 31, 2024
Continuing Operations Discontinued Operations Total
Net (loss) income $ (900,854) $ 125,915  $ (774,939)
Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests (8,920) (1,745) (10,665)
Net (loss) income attributable to B. Riley Financial, Inc. (891,934) 127,660  (764,274)
Preferred stock dividends 8,060  —  8,060 
Net (loss) income available to common shareholders $ (899,994) $ 127,660  $ (772,334)
Year Ended December 31, 2023
Continuing Operations Discontinued Operations Total
Net (loss) income $ (160,161) $ 54,530  $ (105,631)
Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests (10,780) 5,059  (5,721)
Net (loss) income attributable to B. Riley Financial, Inc. (149,381) 49,471  (99,910)
Preferred stock dividends 8,057  —  8,057 
Net (loss) income available to common shareholders $ (157,438) $ 49,471  $ (107,967)
Year Ended December 31, 2022
Continuing Operations Discontinued Operations Total
Net (loss) income $ (269,085) $ 112,491  $ (156,594)
Net income (loss) attributable to noncontrolling interests and redeemable noncontrolling interests 1,024  2,211  3,235 
Net (loss) income attributable to B. Riley Financial, Inc. (270,109) 110,280  (159,829)
Preferred stock dividends 8,008  —  8,008 
Net (loss) income available to common shareholders $ (278,117) $ 110,280  $ (167,837)
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Year Ended December 31,
2024 2023 2022
Weighted average common shares outstanding:      
Basic 30,336,274  29,265,099  28,188,530 
Effect of dilutive potential common shares:      
RSUs and warrants —  —  — 
Contingently issuable shares —  —  — 
Diluted 30,336,274  29,265,099  28,188,530 
Basic net (loss) income per common share:
Continuing operations $ (29.67) $ (5.38) $ (9.87)
Discontinued operations $ 4.21  $ 1.69  $ 3.92 
Basic (loss) income per common share $ (25.46) $ (3.69) $ (5.95)
Diluted net (loss) income per common share:
Continuing operations $ (29.67) $ (5.38) $ (9.87)
Discontinued operations $ 4.21  $ 1.69  $ 3.92 
Diluted (loss) income per common share $ (25.46) $ (3.69) $ (5.95)
NOTE 18 — ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
December 31,
2024		 December 31,
2023
Accrued payroll and related expenses $ 58,474  $ 68,255 
Dividends payable 2,534  18,929 
Income taxes payable 2,997  4,353 
Other tax liabilities 16,184  13,540 
Contingent consideration 7,630  27,985 
Accrued expenses 51,899  55,822 
Other liabilities 63,478  63,992 
Accrued expenses and other liabilities $ 203,196  $ 252,876 
Other tax liabilities primarily consist of uncertain tax positions, sales and VAT taxes payable, and other non-income tax liabilities. Accrued expenses primarily consist of accrued trade payables, investment banking payables and legal settlements. Other liabilities primarily consist of interest payables, customer deposits, accrued legal fees and finance lease liabilities.

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NOTE 19 — COMMITMENTS AND CONTINGENCIES
(a) Legal Matters
The Company is subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from the Company’s securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding the Company’s business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In addition to such legal and other claims, reviews, investigations, and proceedings, the Company and its subsidiaries are subject to the risk of unasserted claims, including, among others, as it relates to matters related to Mr. Kahn and our investment in Freedom VCM. For example, in light of Mr. Kahn’s alleged involvement with the alleged misconduct concerning Prophecy Asset Management LP, the Company can provide no assurances that it will not be subject to claims asserting an interest in the Freedom VCM equity interests owned by Mr. Kahn, including those that collateralize the Amended and Restated Note. If a claim were successful, it would diminish the value of the collateral which could impact the carrying value of the loan. If such claims are made, however, the Company believes it has valid defenses from any such claim and any such claim would be without merit.
On July 11, 2025, the Company’s subsidiary, BRS, received a demand letter from certain parties that invested in a special purpose entity (the “SPV”) that in turn invested in the going private transaction (the “Transaction”) in August 2023 of Franchise Group, Inc. The letter alleges that BRS failed to disclose certain material facts regarding FRG and the Transaction in violation of certain securities and other laws. Such investors seek rescission of the aggregate investment amount of $37,500. The Company believes such claims are meritless and intends to defend such claims.
On February 14, 2025, a stockholder derivative complaint was filed by Michael Marchner in the Delaware Chancery Court on behalf of the Company and against the members of the Company’s Board of Directors. The complaint alleges that certain of the Company's officers and the board of directors (i) breached their fiduciary duties related to the Company’s involvement with Brian Kahn and subsequent legal issues, (ii) engaged in misconduct, and (iii) wasted corporate assets, including the approval of improper compensation. The Company believes that these claims are meritless and intends to defend this action.
On January 22, 2025, a stockholder derivative complaint was filed by James Smith in the Superior Court for Los Angeles County against the Company, certain of the Company’s executive officers and the members of the Company’s Board of Directors. The complaint alleges that certain of the Company's officers and directors (i) breached their fiduciary duties related to the Company’s involvement with Brian Kahn and subsequent legal issues, (ii) engaged in a waste of corporate assets, and (iii) received unjust enrichment. The Company believes that these claims are meritless and intends to defend this action.
On July 9, 2024, a putative class action was filed by Brian Gale, Mark Noble, Terry Philippas and Lawrence Bass in the Delaware Chancery Court against Freedom VCM, Mr. Kahn, Andrew Laurence, Matthew Avril, and the Company. This complaint alleges that former shareholders of FRG suffered damages due to alleged breaches of fiduciary duties by officers, directors and other participants in the August 2023 management-led take private transaction of FRG and that the Company aided and abetted those alleged breaches of fiduciary duties. The claim seeks an award of unspecified damages, rescissory damages and/or quasi-appraisal damages, disgorgement of profits, attorneys’ fees and expenses, and interest thereon. The Company believes these claims are meritless and intends to defend this action.

On July 3, 2024, each of the Company and Bryant Riley, Chairman and Co-Chief Executive Officer, received a subpoena from the U.S. Securities and Exchange Commission (the "SEC") requesting the production of certain documents and other information primarily related to (i) the Company’s business dealings with Brian Kahn, (ii) certain transactions in an unrelated public company’s securities, and (iii) the communications and related compliance and other policies and procedures of certain of its regulated subsidiaries. On November 22, 2024, each of the Company and Mr. Riley received an additional SEC subpoena requesting the production of certain additional documents and information relating to Franchise Group, Inc. (including its holding company, Freedom VCM Holdings, LLC) as well as Mr. Riley’s personal loan and his pledge of shares of the Company’s common stock as collateral for such loan. As previously disclosed on April 23, 2024, the Audit Committee of the Company’s Board of Directors, with the assistance of Sullivan & Cromwell LLP, the Company’s legal counsel, conducted an internal review, and separately the Audit Committee retained Winston & Strawn LLP, independent legal counsel, to conduct an independent investigation, to review transactions among Mr. Kahn (and his affiliates) and the Company (and its affiliates). The review and the investigation both confirmed that the Company and its executives, including Mr. Riley, had no involvement with, or knowledge of, any alleged misconduct concerning Mr. Kahn or any of his affiliates. The receipt of subpoenas is not an indication that the SEC or its staff has determined that any violations of law have occurred.
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Both the Company and Mr. Riley are responding to the subpoenas and are fully cooperating with the SEC.

On May 2, 2024 a putative class action was filed Ted Donaldson in the Superior Court for the State of California, County of Los Angeles on behalf of all persons who acquired the Company’s senior notes pursuant to the shelf registration statement filed with the SEC on Form S-3 dated January 28, 2021, and the prospectuses filed and published on August 4, 2021 and December 2, 2021 (the “Offerings”). The action asserts claims under §§ 11, 12, and 15 of the Securities Act of 1933 against the Company, some of the Company's current and former officers and directors, and the financial institutions that served as underwriters and book runners for the Offerings. An amended complaint was filed on September 27, 2024. The amended complaint alleges that the offering documents failed to advise investors that Brian Kahn and/or one or more of his controlled entities was engaged in illicit business activities, that the Company, despite the foregoing, continued to finance transactions for Kahn, eventually enabling him and others to take FRG private, and that the foregoing was reasonably likely to draw regulatory scrutiny and reputational harm to the Company. The Company believes these claims are meritless and intends to defend this action.

On January 24, 2024, a putative securities class action complaint was filed by Mike Coan in U.S. Federal District Court, Central District of California, against the Company, Mr. Riley, Tom Kelleher and Phillip Ahn. The purported class includes persons and entities that purchased shares of the Company’s common stock between May 10, 2023 and November 9, 2023. A second putative class action lawsuit was filed on March 15, 2024 by the KL Kamholz Joint Revocable Trust (“Kamholz”). On August 8, 2024, this matter was consolidated with the Kamholz matter and an amended complaint was then filed on April 21, 2025. The amended complaint alleges that the Company failed to disclose to investors material financial details concerning a going private transaction involving FRG, and that the Company made false or misleading statements concerning the Company’s lending practices, its high concentration of risk in transactions involving Mr. Kahn and his affiliates, the condition and composition of the Company’s loan portfolio, the Company’s due diligence and risk management procedures, and the Company’s level of concern and internal scrutiny concerning Mr. Kahn after it learned he was potentially implicated in a fraud involving an unrelated third party. The amended complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The Company cannot estimate the amount of potential liability, if any, that could arise from these matters and believes these claims are meritless and intends to defend these actions.

On September 21, 2023, BRCC, a wholly owned subsidiary of the Company, received a demand alleging that certain payments to BRCC in the aggregate amount of approximately $32,166 made by Sorrento Therapeutics, Inc. (“Sorrento”), a chapter 11 debtor in U.S. Bankruptcy Court, Southern District of Texas (the “Court”), pursuant to that certain Bridge Loan Agreement dated September 30, 2022 between Sorrento and BRCC, are avoidable as preferential transfers (the “Alleged Preferences”). On June 16, 2025, the liquidating trustee on behalf of the Sorrento Liquidating Trust filed a complaint with the Court in an adversary proceeding seeking to avoid and recover the Alleged Preferences. On September 12, 2025, the Court denied BRCC’s motion to dismiss. The Company believes that the liquidating trustee’s claims lack merit and intends to continue to assert its statutory defenses to defeat such claims.

In light of the significant factual issues to be resolved with respect to the asserted claims and other proceedings described above and uncertainties regarding unasserted claims described above, at the present time reasonably possible losses cannot be estimated with respect to the asserted and unasserted claims described in the preceding paragraphs.
(b) Babcock & Wilcox Commitments and Guarantees
On January 18, 2024, the Company, entered into a guaranty (the “Axos Guaranty”) in favor of (i) Axos Bank, in its capacity as administrative agent (the “Administrative Agent”) for the secured parties under that certain credit agreement, dated as of January 18, 2024, among B&W, the guarantors party thereto, the lenders party thereto and the Administrative Agent (the “B&W Axos Credit Agreement”), and (ii) the secured parties. Subject to the terms and conditions of the Axos Guaranty, the Company has guaranteed certain obligations of B&W (subject to certain limitations) under the B&W Axos Credit Agreement, including the obligation to repay outstanding loans and letters of credit and to pay earned interest, fees costs and expenses of enforcing the Axos Guaranty, provided however, that the Company’s obligations with respect to the principal amount of credit extensions and unreimbursed letter of credit obligations under the B&W Axos Credit Agreement shall not at any time exceed $150,000 in the aggregate, which is the maximum potential amount of future payments under the guaranty. In consideration for the agreements and commitments under the Axos Guaranty and pursuant to a separate fee and reimbursement agreement, B&W has agreed to pay the Company a fee equal to 2.00% of the aggregate revolving commitments (as defined in the B&W Axos Credit Agreement) under the B&W Axos Credit Agreement, payable quarterly and, at B&W’s election, in cash in full or 50% in cash and 50% in the form of penny warrants. On June 18, 2025, an amendment was made to the Axos Guaranty whereby the Company's obligations as guarantor were suspended until January 1, 2027.
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On June 30, 2021, the Company agreed to guaranty (the “Cash Collateral Provider Guaranty”) up to $110,000 of obligations that B&W may owe to providers of cash collateral pledged in connection with a debt financing for B&W. The Cash Collateral Provider Guaranty is enforceable in certain circumstances, including, among others, certain events of default and the acceleration of B&W’s obligations under a reimbursement agreement with respect to such cash collateral. B&W will pay the Company $935 per annum in connection with the Cash Collateral Provider Guaranty. B&W has agreed to reimburse the Company to the extent the Cash Collateral Provider Guaranty is called upon. As of December 31, 2023, the Cash Collateral Provider Guaranty was in respect of up to $90,000 of B&W obligations after B&W made paydowns of $10,000 during the year ended December 31, 2023. During the year ended December 31, 2024, B&W paid all of the obligations owed under the Cash Collateral Provider Guaranty and there are no amounts outstanding under this guarantee at December 31, 2024.
On December 22, 2021, the Company entered into a general agreement of indemnity in favor of one of B&W’s sureties. Pursuant to this indemnity agreement, the Company agreed to indemnify the surety in connection with a default by B&W under a €30,000 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W. In consideration for providing the indemnity, B&W paid the Company fees in the amount of $1,694 on January 20, 2022.
On August 10, 2020, the Company entered into a project specific indemnity rider to a general agreement of indemnity made by B&W in favor of one of its sureties. Pursuant to the indemnity rider, the Company agreed to indemnify the surety in connection with a default by B&W under the underlying indemnity agreement relating to a $29,970 payment and performance bond issued by the surety in connection with a construction project undertaken by B&W. In consideration for providing the indemnity rider, B&W paid the Company fees in the amount of $600 on August 26, 2020. During the year ended December 31, 2024 and December 31, 2023, the indemnity rider was reduced to $2,997 and $5,994.
(c) FRG Commitments
On May 10, 2023, the Company entered into certain agreements pursuant to which the Company had, among other things, agreed to provide certain equity funding and other support in connection with the acquisition (the “Acquisition”) by Freedom VCM, Inc., a Delaware corporation (the “Parent”), of FRG. The Company entered into an Equity Commitment Letter with Freedom VCM (“TopCo”), the parent company of the Parent, and the Parent, pursuant to which the Company agreed to provide to TopCo, at or prior to the closing of the Acquisition, an amount equal to up to $560,000 in equity financing. The Company and FRG also entered into a Limited Guarantee in favor of FRG, pursuant to which the Company agreed to guarantee to FRG the due and punctual payment, performance and discharge when required by Parent or its subsidiary to FRG of certain liabilities and obligations of the Parent or such subsidiary. On August 21, 2023, in connection with the completion of the Acquisition and the Company's portion of the equity financing, the Company's obligations pursuant to the Equity Commitment Letter and Limited Guarantee were satisfied and the Company was paid the $16,500 fee pursuant to the Equity Commitment Letter and Limited Guarantee and the Company has no current commitment or guarantees related to FRG.
(d) Other Commitments
In the normal course of business, the Company enters into commitments to its clients in connection with capital raising transactions, such as firm commitment underwritings, equity lines of credit, or other commitments to provide financing on specified terms and conditions. These commitments require the Company to purchase securities at a specified price or otherwise provide debt or equity financing on specified terms. Securities underwriting exposes the Company to market and credit risk, primarily in the event that, for any reason, securities purchased by the Company cannot be distributed at the anticipated price and to balance sheet risk in the event that debt or equity financing commitments cannot be syndicated.

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NOTE 20 — SHARE-BASED PAYMENTS
2021 Stock Incentive Plan
On May 27, 2021, the 2021 Stock Incentive Plan (the “2021 Plan”) replaced the Amended and Restated 2009 Stock Incentive Plan (the “2009 Plan”) and replaced the FBR & Co. 2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”). Equity awards previously granted or available for issuance under the 2009 Plan and FBR Stock Plan are now included in the 2021 Plan activity reported below.
Share-based compensation expense for RSUs under the 2021 Plan was:
Year Ended December 31,
2024 2023 2022
Share-based compensation expense for RSUs for continuing operations $ 18,169  $ 41,182  $ 57,180 
Share-based compensation expense for RSUs for discontinued operations 605  2,471  3,340 
Total share-based compensation expense for RSUs
 $ 18,774  $ 43,653  $ 60,520 
During the year ended December 31, 2024, in connection with employee stock incentive plans the Company granted 1,223,263 RSUs with a total grant date fair value of $16,181. During the year ended December 31, 2023, in connection with employee stock incentive plans the Company granted 537,168 RSUs with a total grant date fair value of $20,496.
The RSUs generally vest over a period of one to five years based on continued service. Performance based restricted stock units ("PRSUs") generally vest based on both the employee’s continued service and the Company’s common stock price, as defined in the grant, achieving a set threshold during the two to three-year period following the grant. In determining the fair value of RSUs on the grant date, the fair value is adjusted for expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period, and the risk-free interest rate based on U.S. Treasuries for a maturity matching the expected holding period.
As of December 31, 2024, the expected remaining unrecognized share-based compensation expense of $19,116 was to be expensed over a weighted average period of 1.9 years. As of December 31, 2023, the expected remaining unrecognized share-based compensation expense of $36,497 was to be expensed over a weighted average period of 1.3 years.
A summary of equity incentive award activity during the years ended December 31, 2024 and 2023 was as follows:
Shares Weighted
Average
Fair Value
Nonvested at December 31, 2022
 3,375,627  $ 54.66 
Granted 537,168  38.16 
Vested (1,615,025) 62.63 
Forfeited (156,441) 45.13 
Nonvested at December 31, 2023
 2,141,329  $ 54.18 
Granted 1,223,263  13.23 
Vested (484,442) 53.56 
Forfeited (1,467,845) 52.10 
Nonvested at December 31, 2024
 1,412,305  $ 22.43 

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During the years ended December 31, 2024, 2023, and 2022, the per-share weighted average grant-date fair value of RSUs granted was $13.23, $38.16, and $53.49, respectively. During the years ended December 31, 2024, and 2023, the per-share weighted average grant-date fair value of performance stock units granted was zero. During the year ended December 31, 2022, the per-share weighted average grant-date fair value of PRSUs granted was $38.95. During the years ended December 31, 2024, 2023, and 2022, the total fair value of shares vested was $25,945, $23,432, and $21,132, respectively.

As discussed in Note 3, there were 215,876 stock options with a fair value of $5,749 issued as part of the consideration for the purchase price of Targus. All of these options were exercised during the fourth quarter of 2022 and there were no stock options outstanding as of December 31, 2024 and 2023.
NOTE 21 — BENEFIT PLANS AND CAPITAL TRANSACTIONS
(a) Employee Benefit Plans
The Company maintains qualified defined contribution 401(k) plans, which cover substantially all of its U.S. employees. Under the plans, participants are entitled to make pre-tax contributions up to the annual maximums established by the Internal Revenue Service. The plan documents permit annual discretionary contributions from the Company. Employer contributions in the amount of $2,441, $2,363 and $2,284 were made during the years ended December 31, 2024, 2023, and 2022, respectively.
(b) Employee Stock Purchase Plan
In connection with the Purchase Plan, share based compensation was:
Year Ended December 31,
2024 2023 2022
Share-based compensation expense for the Purchase Plan for continuing operations $ —  $ 540  $ 323 
Share-based compensation expense for the Purchase Plan for discontinued operations —  85  46 
Total share-based compensation expense for the Purchase Plan $ —  $ 625  $ 369 
As of December 31, 2024 and 2023, there were 236,949 shares reserved for issuance under the Purchase Plan.
(c) Common Stock
Since October 30, 2018, the Company’s Board of Directors has authorized annual share repurchase programs of up to $50,000 of its outstanding common shares. All share repurchases were effected on the open market at prevailing market prices or in privately negotiated transactions. During the year ended December 31, 2023, the Company repurchased 2,174,608 shares of its common stock for $69,490, which represents an average price of $31.95 per common share. The shares repurchased under the program were retired. In November 2023, the share repurchase program was reauthorized by the Board of Directors for share repurchases of up to $50,000 of the Company's outstanding common shares and expired in October 2024. Amounts purchased prior to November 2023 relate to the previously authorized share repurchase program.
On July 28, 2023, the Company issued 2,090,909 shares of common stock through a public offering at a price of $55.00 per share for net proceeds of $114,507 after underwriting fees and costs.
(d) Preferred Stock
On October 7, 2019, the Company closed its public offering of depositary shares (the “Depositary Shares”), each representing 1/1000th of a share of 6.875% Series A Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”). The liquidation preference of each share of Series A Preferred Stock is $25,000 ($25.00 per Depositary Share). At the closing, the Company issued 2,000 shares of Series A Preferred Stock represented by 2,000,000 Depositary Shares issued. On October 11, 2019, the Company completed the sale of an additional 300,000 Depositary Shares, pursuant to the underwriters’ full exercise of their over-allotment option to purchase additional Depositary Shares. The offering of the 2,300,000 Depositary Shares generated $57,500 of gross proceeds.
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During the years ended December 31, 2024 and 2023, the Company issued zero depositary shares of the Series A Preferred Stock through ATM sales. There were 2,834 shares issued and outstanding as of December 31, 2024 and 2023. Total liquidation preference for the Series A Preferred Stock as of December 31, 2024 and 2023 was $70,854. Dividends on the Series A preferred paid during the years ended December 31, 2024 and 2023 were $0.4296875 per depositary share.
On September 4, 2020, the Company issued depositary shares each representing 1/1000th of a share of 7.375% Series B Cumulative Perpetual Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”). The Series B Preferred Stock has a liquidation preference of $25 per 1/1000 depositary share or $25,000 per preferred share. As a result of the offering the Company issued 1,300 shares of Series B Preferred Stock represented by 1,300,000 depositary shares. The offering resulted in gross proceeds of approximately $32,500.
During the years ended December 31, 2024 and 2023, the Company issued depositary shares equivalent to zero and 18 shares, respectively, of the Series B Preferred Stock through ATM sales. There were 1,729 shares issued and outstanding as of December 31, 2024, and 2023. Total liquidation preference for the Series B Preferred Stock as of December 31, 2024 and 2023 was $43,228. Dividends on the Series B preferred paid during the years ended December 31, 2024 and 2023 were $0.4609375 per depositary share.
The Series A Preferred Stock and the Series B Preferred Stock ranks, as to dividend rights and rights upon the Company’s liquidation, dissolution or winding up: (i) senior to all classes or series of the Company’s common stock and to all other equity securities issued by the Company other than equity securities issued with terms specifically providing that those equity securities rank on a parity with the Series A Preferred Stock or Series B Preferred Stock, (ii) junior to all equity securities issued by the Company with terms specifically providing that those equity securities rank senior to the Series A Preferred Stock and the Series B Preferred Stock with respect to payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution or winding up and (iii) effectively junior to all of the Company’s existing and future indebtedness (including indebtedness convertible into our common stock or preferred stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s existing or future subsidiaries. Generally, the Series A Preferred Stock and the Series B Preferred Stock is not redeemable by the Company prior to October 7, 2024. However, upon a change of control or delisting event, the Company will have the special option to redeem the Series A Preferred Stock and the Series B Preferred Stock.
(e) Dividends
From time to time, we may decide to pay dividends which will be dependent upon our financial condition and results of operations. During the years ended December 31, 2024, 2023, and 2022, the Company paid cash dividends on its common stock of $33,731, $141,099, and $119,454, respectively. In August 2024, we announced the suspension of our common stock dividend as we prioritize reducing our debt. The declaration and payment of any future dividends or repurchases of our common stock will be made at the discretion of our Board of Directors and will be dependent upon our financial condition, results of operations, cash flows, capital expenditures, and other factors that may be deemed relevant by our Board of Directors.
A summary of our common stock dividend activity during the years ended December 31, 2024, 2023, and 2022 was as follows:
Date Declared Date Paid Stockholder Record Date Amount
May 15, 2024 June 11, 2024 May 27, 2024 $ 0.500 
February 29, 2024 March 22, 2024 March 11, 2024 0.500 
November 8, 2023 November 30, 2023 November 20, 2023 1.000 
July 25, 2023 August 21, 2023 August 11, 2023 1.000 
May 4, 2023 May 23, 2023 May 16, 2023 1.000 
February 22, 2023 March 23, 2023 March 10, 2023 1.000 
November 3, 2022 November 29, 2022 November 15, 2022 1.000 
July 28, 2022 August 23, 2022 August 11, 2022 1.000 
April 28, 2022 May 20, 2022 May 11, 2022 1.000 
February 23, 2022 March 23, 2022 March 9, 2022 1.000 
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Holders of Series A Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 6.875% per annum of the $25,000 liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,718.75 or $1.71875 per Depositary Share). Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October. As of December 31, 2024 and 2023, dividends in arrears in respect of the Depositary Shares were $812. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series A Preferred Stock. Unpaid dividends will accrue until paid in full.
Holders of Series B Preferred Stock, when and as authorized by the board of directors of the Company, are entitled to cumulative cash dividends at the rate of 7.375% per annum of the $25,000 liquidation preference ($25.00 per Depositary Share) per year (equivalent to $1,843.75 or $1.84375 per Depositary Share). Dividends will be payable quarterly in arrears, on or about the last day of January, April, July and October. As of December 31, 2024 and 2023, dividends in arrears in respect of the Depositary Shares were $531. On January 21, 2025, the Company announced that it had temporarily suspended dividends on its Series B Preferred Stock. Unpaid dividends will accrue until paid in full.
A summary of our preferred stock dividend activity during the years ended December 31, 2024, 2023, and 2022 was as follows:
Preferred Dividend per Depositary Share
Date Declared Date Paid Stockholder Record Date Series A Series B
October 16, 2024 October 31, 2024 October 28, 2024 $ 0.4296875  $ 0.4609375 
July 9, 2024 July 31, 2024 July 22, 2024 0.4296875  0.4609375 
April 9, 2024 April 30, 2024 April 22, 2024 0.4296875  0.4609375 
January 9, 2024 January 31, 2024 January 22, 2024 0.4296875  0.4609375 
October 10, 2023 October 31, 2023 October 23, 2023 0.4296875  0.4609375 
July 11, 2023 July 31, 2023 July 21, 2023 0.4296875  0.4609375 
April 10, 2023 May 1, 2023 April 21, 2023 0.4296875  0.4609375 
January 9, 2023 January 31, 2023 January 20, 2023 0.4296875  0.4609375 
October 10, 2022 October 31, 2022 October 21, 2022 0.4296875  0.4609375 
July 7, 2022 July 29, 2022 July 19, 2022 0.4296875  0.4609375 
April 7, 2022 April 29, 2022 April 19, 2022 0.4296875  0.4609375 
January 10, 2022 January 31, 2022 January 21, 2022 0.4296875  0.4609375 
NOTE 22 — NET CAPITAL REQUIREMENTS
BRS and B. Riley Wealth Management (“BRWM”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and members of the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Company’s broker-dealer subsidiaries are subject to SEC Uniform Net Capital Rule (Rule 15c3-1) which requires the maintenance of minimum net capital and requires that the ratio of aggregate indebtedness to net capital, both as defined, to not exceed 15 to 1. As such, they are subject to the minimum net capital requirements promulgated by the SEC. As of December 31, 2024, BRS had net capital of $69,197, which was $65,420 in excess of its required minimum net capital of $3,777 and BRWM had net capital of $16,384, which was $14,832 in excess of its required minimum net capital of $1,552.
As of December 31, 2023, BRS had net capital of $134,561, which was $130,163 in excess of its required minimum net capital of $4,398 and BRWM had net capital of $12,328, which was $10,431 in excess of its required minimum net capital of $1,897.
NOTE 23 — RELATED PARTY TRANSACTIONS
The Company provides asset management and placement agent services to unconsolidated funds affiliated with the Company (the “Funds”). In connection with these services, the Funds may bear certain operating costs and expenses which are initially paid by the Company and subsequently reimbursed by the Funds. Management fees from the Funds during the years ended December 31, 2024, 2023 and 2022 totaled $150, $1,725 and $6,937, respectively.
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As of December 31, 2024 and 2023, amounts due from related parties were $162 and $172, respectively, of which $41 and $172, respectively, were due from the Funds for management fees and other operating expenses.
As of December 31, 2024 and 2023, amounts due to related parties were $3,404 and $2,480, respectively, of which $2,764 and $2,480, respectively, related to bebe's rent to own stores which are franchised through Freedom VCM and consist of royalty fees, inventory purchases, marketing, and IT services. As of December 31, 2024, $640 were due to certain of the Company's brand investments from Nogin for sales transactions settled by Nogin as part of its e-commerce related services to the Company’s brand investments.
During the year ended December 31, 2024, royalty fees, marketing, and IT services charged to bebe by Freedom VCM totaled $4,852, and inventory purchases by bebe from Freedom VCM totaled $15,319. During the year end December 31, 2024, Nogin recognized revenues of $7,420 from clients that are part of the Company’s brand investments.
In June 2020, the Company entered into an investment advisory services agreement with Whitehawk Capital Partners, L.P. (“Whitehawk”), a limited partnership controlled by Mr. J. Ahn, who is the brother of Phil Ahn, the Company’s former Chief Financial Officer and Chief Operating Officer. Whitehawk has agreed to provide investment advisory services for GACP I, L.P. and GACP II, L.P. During the years ended December 31, 2024, 2023, and 2022, management fees paid for investment advisory services by Whitehawk was $2,272, $1,142, and $1,173, respectively. On February 1, 2024, one of the Company's loans receivable with a principal amount of $4,521 was sold to a fund managed by Whitehawk for $4,584.
The Company periodically participates in loans and financing arrangements for which the Company has an equity ownership and representation on the board of directors (or similar governing body). The Company may also provide consulting services or investment banking services to raise capital for these companies. These transactions can be summarized as follows:
Babcock and Wilcox
One of the Company’s wholly owned subsidiaries entered into a services agreement with B&W that provided for the President of the Company to serve as the Chief Executive Officer of B&W until November 30, 2020 (the “Executive Consulting Agreement”), unless terminated by either party with thirty days written notice. The agreement was extended through December 31, 2028. Under this agreement, fees for services provided are $750 per annum, paid monthly. In addition, subject to the achievement of certain performance objectives as determined by B&W’s compensation committee of the board, a bonus or bonuses may also be earned and payable to the Company. In March 2022, a $1,000 performance fee was approved in accordance with the Executive Consulting Agreement. On September 20, 2024, Kenny Young resigned from his position as the President of the Company, the Executive Consulting Agreement with B&W was terminated, and concurrently, entered into a one-year consulting agreement (“the Agreement”) to provide services to the Company, pursuant to which he will be paid an annual fee of $250 paid on a monthly basis, subject to deduction of damages, fees and expenses that he owes the Company pursuant to this agreement.
During the years ended December 31, 2024, 2023, and 2022, the Company earned $3,850, zero, and $154, respectively, of underwriting and financial advisory and other fees from B&W in connection with B&W’s capital raising activities.
The Company is also a party to indemnification agreements for the benefit of B&W and the B. Riley Guaranty, each as disclosed above in Note 19 – Commitments and Contingencies.
The Arena Group Holdings, Inc. (fka the Maven, Inc.)
The Company had loans receivable due from The Arena Group Holdings, Inc. (fka the Maven, Inc.) (“Arena”) included in loans receivable, at fair value of $98,729 as of December 31, 2023. On August 31, 2023, the Arena loan was amended for an additional $6,000 loan receivable with interest payable at 10.0% per annum and a maturity date of December 31, 2026. Two of the Company's members of senior management were members of the board of directors of Arena. On December 1, 2023, the Company sold its equity interest in Arena for $16,576 at a gain of $3,315 and its outstanding loans receivable for $78,796 at a loss of $28,919. Following the completion of the sale, two of the Company's members of senior management resigned from the board of directors of Arena and Arena is no longer a related party.
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Interest income on the loan receivable was $10,882 and $7,540, during the years ended December 31, 2023 and 2022, respectively.
There were no fees earned from Arena by the Company during the year ended December 31, 2024 and 2023. During the year ended December 31, 2022, the Company earned $2,023 in underwriting and financial advisory and other fees from Arena.
Applied Digital
On May 20, 2023, the Company entered into a loan agreement with Applied Digital (“APLD”). The chief executive officer of APLD was also a member of senior management of the Company. As of December 31, 2023, APLD had paid off its outstanding loan receivable balance with the Company, and the Company had an unfunded loan commitment with APLD of $5,500. Interest income on the loan receivable was $3,150 during the year ended December 31, 2023. On February 5, 2024, the loan was terminated and no commitments remain.
During the year ended December 31, 2024, 2023 and 2022, the Company earned $393, zero and $2,321 in underwriting and financial advisory fees from APLD, respectively.
California Natural Resources Group, LLC.
California Natural Resources Group, LLC (“CalNRG”) was a related party as a result of the Company's approximately 25.0% equity ownership. On January 3, 2022, CalNRG repaid the promissory note using proceeds from a new credit facility with a third party bank (the “CalNRG Credit Facility”). Interest income on the loan receivable was $19 during the year ended December 31, 2022. As of December 31, 2023, the Company had guaranteed CalNRG’s obligations, up to $7,375, under the CalNRG Credit Facility. On May 23, 2024, the Company sold its equity interest in CalNRG for $9,272 resulting in a realized gain of $254, and no commitments remain.
Faze Clan

On March 9, 2022, the Company loaned $10,000 to Faze Clan, Inc. (“Faze”) pursuant to a bridge credit agreement (the “Bridge Agreement”). On April 25, 2022, the Company loaned an additional $10,000 pursuant to the Bridge Agreement. All principal and accrued interest pursuant to the Bridge Agreement was repaid upon closing of Faze’s business combination (the “Business Combination”) with BRPM 150, which following the Business Combination changed its name to Faze Holdings. Interest income was $420 during the period the loans were outstanding in 2022. As a result of the Business Combination, BRPM 150 is no longer a VIE of the Company. On July 19, 2022, in connection with the Business Combination, the Company purchased 5,342,500 shares of Faze Holdings Class A common stock for $10.00 per share. One of the Company's members of senior management was appointed to the board of directors of Faze. During the year ended December 31, 2022, the Company earned $41,885 of incentive fees for the de-consolidation of BRPM 150 and $9,632 of underwriting and financial advisory fees from Faze and BRPM 150 in connection with the Business Combination and capital raising activities. In September 2023, one of the Company's members of senior management resigned from the board of directors of Faze and Faze is no longer a related party.
Lingo
On May 31, 2022, the Company converted $17,500 of a loan receivable with Lingo Management into equity and the Company's ownership interest in Lingo increased from 40% to 80%. Interest income was $1,478 and $2,878 during the years ended December 31, 2023 and 2022, respectively. Lingo was a related party due to our 40% equity ownership prior to the Company obtaining a controlling ownership of 80% on May 31, 2022, which resulted in Lingo becoming a majority-owned subsidiary of the Company. On February 24, 2023, the Company acquired the remaining 20% ownership in Lingo, increasing the Company's ownership interest to 100%.
Targus
On October 18, 2022, the Company acquired all of the issued and outstanding shares of Targus for total purchase consideration of $247,546 as more fully discussed in Note 3. At the time of the acquisition, the chief executive officer of Targus was also a member of the Company’s board of directors. Upon closing the acquisition, the individual resigned from the Company’s board of directors and continues to serve as the chief executive officer of Targus.

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Freedom VCM Holdings, LLC
On May 10, 2023, the Company entered into certain agreements pursuant to which the Company had, among other things, agreed to provide certain equity funding and other support as part of the FRG take-private transaction as previously discussed in Note 2(t). The Company entered into an Equity Commitment Letter with Freedom VCM, pursuant to which the Company agreed to provide up to $560,000 in equity financing at or prior to the closing of the FRG take-private transaction. On August 21, 2023, in connection with the completion of the FRG take-private transaction, the Company's obligations pursuant to the Equity Commitment Letter and Limited Guarantee were satisfied. Upon closing the acquisition on August 21, 2023, the Company was paid an equity commitment fee of $16,500 which is included in services and fees revenues. At the time of the Company's equity investment on August 21, 2023, the Company's chief executive officer became a member of the board of directors of Freedom VCM.
On August 21, 2023, the Company purchased an additional equity interest in Freedom VCM for $216,500, which resulted in a total equity interest of $281,144 and a 31% voting interest and representation on the board of directors of Freedom VCM as part of the FRG take-private transaction as previously discussed in Note 2(t). As part of the FRG take-private transaction, certain members of management of Freedom VCM, which are related parties to Freedom VCM, exchanged their equity interest in FRG for a combined 35% voting interest in Freedom VCM, of which Mr. Kahn and his wife and one of Mr. Kahn’s affiliates comprised 32%. The Company has a first priority security interest in a 25% equity interest of Mr. Kahn (who was also CEO and a board member of Freedom VCM) in Freedom VCM to secure the loan to an affiliate of Mr. Kahn as more fully described in Note 2(s). Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code on November 3, 2024 which impacts the fair value of this equity investment. The change in fair value of the Freedom VCM equity investment was an unrealized loss of $287,043 for the year ended December 31, 2024.
In connection with the FRG take-private transaction, all of the equity interests of BRRII, a majority-owned subsidiary of the Company, were sold to Freedom VCM Receivables (a subsidiary of Freedom VCM), for a purchase price of $58,872 which resulted in a loss of $78 on August 21, 2023. In connection with the sale, Freedom VCM Receivables assumed the obligations with respect to the Pathlight Credit Agreement as more fully discussed in Note 13 and as consideration for the purchase price, the Company entered into a non-recourse promissory note with another Freedom VCM affiliate in the amount of $58,872, with a stated interest rate of 19.74% and a maturity date of August 21, 2033. Payments of principal and interest on the note are limited solely to the performance of certain receivables held by BRRII. Principal and interest is payable based on the collateral without recourse to Freedom VCM Receivables, which includes the performance of certain consumer credit receivables. This loan receivable was measured at fair value in the amount of $3,913 and $42,183 as of December 31, 2024 and 2023. Interest income on this loan receivable was $6,035 and $3,427 during the years ended December 31, 2024 and 2023, respectively. On October 9, 2024, the Promissory Note was cancelled and certain of the receivables owned by BRRII were transferred to BRRI, all in accordance with the terms of that certain amended and restated funding agreement, dated December 18, 2023, by and among Freedom VCM Interco Holdings, Inc., Freedom VCM Receivables, Inc., BRRII, the Company and certain other parties thereto.
As more fully described in Note 2(s), the Company also has a related party loan receivable with a fair value of approximately $2,169 and $20,624 at December 31, 2024 and 2023 from home-furnishing retailer W.S. Badcock Corporation (“Badcock”) that is collateralized by consumer finance receivables of Badcock. These consumer finance receivables were acquired from Badcock in multiple purchases beginning in December 2021. On December 18, 2023, Badcock was sold by Freedom VCM to Conn’s and the Company loaned Conn’s $108,000 pursuant to the Conn’s Term Loan which bears interest at an aggregate rate per annum equal to the Term SOFR Rate (as defined in the Conn’s Term Loan), subject to a 4.80% floor, plus a margin of 8.00% and matures on February 20, 2027. On February 14, 2024, the Company collected $15,000 of principal payments which reduced the loan balance to $93,000. Badcock now operates as a wholly owned subsidiary of Conn’s. For the year ended December 31, 2024 interest income on these loans totaled $7,538. The commencement of the Chapter 11 Cases constitutes an event of default that accelerated the obligations under the Conn’s Term Loan. As of the date of the filing of the Chapter 11 Cases, $93,000 in outstanding borrowings existed under the Conn’s Term Loan. Any efforts to enforce payment obligations under the Conn’s Term Loan are automatically stayed as a result of the Chapter 11 Cases and the Company’s rights of enforcement in respect of the Conn’s Term Loan are subject to the applicable provisions of the Bankruptcy Code. These loan receivables are reported as related party loan receivables due to the Company’s related party relationship with Freedom VCM and Freedom VCM’s ability to exercise influence over Conn’s as a result of the equity consideration Freedom VCM received from the sale of Badcock to Conn’s on December 18, 2023.
On June 27, 2024, Conn’s entered into a Consulting Agreement, as subsequently amended on July 19, 2024 (the “Consulting Agreement”), with an affiliate of the Company. Pursuant to the Consulting Agreement, Conn’s engaged the Company to sell merchandise and furniture, fixtures, & equipment (“FF&E”) as well as additional goods at Conn’s and Badcock stores, headquarters, distribution centers, and cross-dock locations. The Company will receive a fee of 1.75% of the gross proceeds of merchandise sold where the gross recovery on cost thresholds is below 105% of cost, 2.0% of the gross proceeds of merchandise sold where the gross recovery on cost thresholds is between 105.1% of cost and 109.9% of cost, and 2.25% of the gross proceeds of merchandise sold where the gross recovery on cost thresholds is 110% of cost or more.
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The Company will also receive a fee equal to 15% of the gross proceeds of FF&E sales and 92.5% of the gross proceeds from the sale of additional goods. In connection with the Chapter 11 Cases, the Consulting Agreement was assumed by the Conn’s debtors on an interim basis, and on August 22, 2024, the Consulting Agreement was assumed by the Conn’s debtors on a final basis. Included in discontinued operations for Great American Group, see Note 4, revenues from services and fees earned from the Conn’s consulting agreement for the period through November 15, 2024 was $26,106.
Vintage Capital Management - Brian Kahn
Simultaneously with the completion of the FRG take-private transaction, one of our subsidiaries and VCM, an affiliate of Brian Kahn, amended and restated a promissory note (the “Amended and Restated Note”), pursuant to which VCM owes our subsidiary the aggregate principal amount of $200,506 and bears interest at the rate of 12% per annum payable-in-kind with a maturity date of December 31, 2027. The Amended and Restated Note requires repayments prior to the maturity date from certain proceeds received by VCM, Mr. Kahn, or his affiliates from, among other proceeds, distributions or dividends paid by Freedom VCM in amount equal to the greater of (i) 80% of the net after-tax proceeds, and (ii) 50% of gross proceeds. The obligations under the Amended and Restated Note are primarily secured by a first priority perfected security interest in Freedom VCM equity interests owned by Mr. Kahn and his spouse with a value (based on the transaction price in the FRG take-private transaction) of $227,296 as of August 21, 2023. Interest income was $15,573 and $8,889 during the years ended December 31, 2024 and 2023, respectively. The fair value of the Freedom VCM equity interest owned by Mr. Kahn and his spouse was zero and $232,065 as of December 31, 2024 and 2023, respectively. On November 3, 2024, Freedom VCM filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code which impacts the collateral for this loan receivable. The fair value of the loan was $2,057 at December 31, 2024 which was determined based on the underlying collateral for this loan which is primarily comprised of other securities. The fair value adjustment on the VCM loan receivable was a decrease of $(222,911) for the year ended December 31, 2024. The fair value of the underlying collateral for this loan decreased to a fair value of $1,284 at September 16, 2025. The $1,284 is comprised of other public securities. In light of the Company’s determination that the repayment of the Amended and Restated Note will be paid primarily from the cash distributions from Freedom VCM or foreclosure on the underlying collateral provided by Mr. Kahn and his spouse being in Freedom VCM equity interests, the Company has determined that both VCM and Mr. Kahn are related parties as of December 31, 2024 and 2023.
Torticity, LLC
On November 2, 2023, the Company agreed to lend up to $15,369 to Torticity, LLC, of which $6,690 was drawn upon with $8,679 remaining, with interest payable of 15.0% per annum and a maturity date of November 2, 2026. Interest income was $1,952 and $165 during the years ended December 31, 2024 and 2023, respectively. One of the Company's members of senior management is on the board of directors of Torticity. The loan receivable had a fair value of zero and $6,791 as of December 31, 2024 and 2023, respectively, and is included in the Company's loans receivable, at fair value in the consolidated balance sheets.
Kanaci Technologies, LLC
On November 21, 2023, the Company agreed to lend up to $10,000 to Kanaci Technologies, LLC (“Kanaci”), of which $4,000 was drawn upon with $6,000 remaining, with interest payable of 15.0% per annum and a maturity date of June 30, 2026. Interest income was $2,088 and $51 during the years ended December 31, 2024 and 2023, respectively. In June 2023, one of the Company's members of senior management was appointed to the board of directors of Kanaci. The loan receivable in the amount of $11,453 was converted to equity on September 30, 2024. At December 31, 2023, the loan receivable with a fair value of $3,904 is included in loans receivable, at fair value in the consolidated balance sheets.
Great American Holdings, LLC (“GA Holdings”)
GA Holdings is a related party as a result of B. Riley’s representation on the Board of Directors and 44.2% equity ownership of common equity as part of the Great American Transaction on November 15, 2024 (as discussed in more detail in Note 4 - Discontinued Operations and Assets Held for Sale). Upon closing the Great American Transaction on November 15, 2024, the Company had loans receivable outstanding for three retail liquidation engagements from GA Holdings in the amount of $15,000. The three loans receivable are due and payable upon completion of the retail liquidation engagements and do not accrue interest on the outstanding balance. Two of the loans receivable were paid in full prior to December 31, 2024 and the Company collected principal payments of $13,661 and one of the loans remains outstanding with a balance of $1,339 at December 31, 2024.
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The Company also provided GA Holdings with a $25,000 secured revolving credit facility upon closing the Great American Transaction on November 15, 2024 which had an initial outstanding balance of $1,698. The secured revolving credit facility is secured by all of the assets of GA Holdings and accrues interest at the annual rate of SOFR plus 4.75% (9.27% at December 31, 2024). Interest income recorded on the loan receivable was $21 during the period November 15, 2024 to December 31, 2024. The loan matures on November 15, 2025. The outstanding balance on the secured revolving credit facility was $1,698 at December 31, 2024.
During the period November 15, 2024 to December 31, 2024, the Company provided services to GA Holdings in accordance with a transition services agreement for accounting, information technology and other administration services and recorded fee revenues for these services in the amount of $598. At December 31, 2024, amounts due from GA Holdings for these services totaled $121.
Other
On March 2, 2021, the Company purchased a $2,400 minority equity interest in Dash Medical Holdings, LLC ("Dash") and one of the Company's board of directors was appointed to the board of directors of Dash. On June 13, 2024, the Company sold its equity interest in Dash for $2,760, resulting in a realized gain of $360. In December 2024, the Company earned an advisory fee of $2,650 for services in connection with sale of Q-mation, Inc. where one of the board of directors of the Company is the president of Q-mation, Inc.
On March 10, 2023, the Company sold a loan receivable including accrued interest in the amount of $7,600 to two related parties. BRC Partners Opportunity Fund, LP (“BRCPOF”) purchased $3,519 of the loan receivable including accrued interest, and 272 Capital L.P. (“272LP”) purchased $4,081 of the loan receivable including accrued interest; both of the partnerships are private equity funds managed at the time of the transaction by one of the Company’s subsidiaries. Our executive officers and members of our board of directors have a 58.2% financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 24.9% in the BRCPOF as of December 31, 2023. During the year ended December 31, 2024, all equity balances in the BRCPOF were distributed, pro-rata, to BRC Partners Opportunity Trust, LP, a liquidating trust. As of December 31, 2024, our board of directors have a 58.2% financial interest, which includes a financial interest of Bryant Riley, our Co-Chief Executive Officer, of 24.9% in BRC Partners Opportunity Trust, LP as of December 31, 2024. Our executive officers and members of our board of directors had a zero and 15.3% financial interest in the 272LP as of December 31, 2024 and 2023, respectively. On February 5, 2024, the Company sold its interest in 272LP and 272 Advisors, LLC for a promissory note of $2,000 plus additional revenue sharing up to $4,100, which is based on future management fees earned.
The Company often provides consulting or investment banking services to raise capital for companies in which the Company has significant influence through equity ownership, representation on the board of directors (or similar governing body), or both. During the years ended December 31, 2024, 2023, and 2022, the Company earned $4,491, $3,278, and $4,968, respectively, of fees related to these services.


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NOTE 24 — BUSINESS SEGMENTS

The Company reports segment information based on the various industries the Company operates and how the businesses are managed. These businesses are aggregated into operating segments in a manner that reflects how the Company views the business activities. The Company’s businesses are operated by separate local management and certain of the Company’s businesses are grouped together when they operate within a similar industry, comprising similarities in products and services, customers, and production processes, and when considered together, may be managed in accordance with one or more investment or operational strategies specific to those businesses. The Company’s six reportable segments reflect the way the Company is managed, and for which separate financial information is available and evaluated regularly by the Company’s CODM in deciding how to allocate resources and assess performance. The individuals comprising the role of CODM are the Company’s two Co-Chief Executive Officer’s and the Company’s Chief Financial Officer, who collectively use segment operating income or loss as a measure of a segment’s profit or loss. The segment information the CODM regularly receives does not include asset information and does not use segment asset information to assess performance or allocate resources. Accordingly, asset information is not provided by reportable segment. The measure of assets are reported on the consolidated balance sheets as total assets.

Revenues by segment represent amounts earned on the various services offered within each reportable segment. Our significant operating expenses regularly provided to the CODM and used to assess segment performance and determine the deployment of capital are classified as employee compensation and benefits expense, professional services, occupancy-related costs, other selling, general and administrative expenses, restructuring charge, depreciation and amortization, and impairment of goodwill and intangible assets. Employee compensation and benefits expense consists of salaries, payroll taxes, benefits, incentive compensation payable as commissions and cash bonus awards, and share based compensation for equity awards. Occupancy-related costs consists of office rent, technology and communication costs, and other office expenses. Professional services expense consists of legal, accounting, audit and other consulting expenses. Restructuring charges include expenses related to reorganization and consolidation activities which includes, among other, reductions in workforce and facility closures. Depreciation and amortization expense consists of depreciation expense for property and equipment and amortization of intangible assets. The balance of our operating expenses (other selling, general and administrative expenses) includes costs for travel, marketing and business development, and other operating expenses. Comparable prior year information has been recast to reflect the additional disclosure of employee compensation and benefits by segment and other selling, general and administrative expenses by segment in conjunction with the adoption of ASU 2023-07 as described in Note 2(af) – Recent Accounting Standards, as well as to reflect discontinued operations presentation as described in Note 4 – Discontinued Operations and Assets Held for Sale.
The following is a summary of certain financial data for each of the Company’s reportable segments:
 
Year Ended December 31,
  2024 2023 2022
Capital Markets segment:
Revenues - Services and fees $ 192,499  $ 249,036  $ 292,933 
Trading (loss) income (60,285) 16,845  (151,816)
Fair value adjustments on loans (325,498) 20,225  (54,334)
Interest income - loans 54,141  123,244  157,669 
Interest income - securities lending 70,862  161,652  83,144 
Total revenues (68,281) 571,002  327,596 
Employee compensation and benefits (123,520) (154,514) (176,253)
Professional services (4,012) (18,967) 59,807 
Occupancy-related costs (8,189) (9,242) (9,226)
Other selling, general and administrative expenses (42,823) (42,270) (45,333)
Interest expense - Securities lending and loan participations sold (66,128) (145,435) (66,495)
Depreciation and amortization (3,155) (3,998) (8,493)
Impairment of tradenames —  (1,733) — 
Segment (loss) income (316,108) 194,843  81,603 
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Year Ended December 31,
  2024 2023 2022
Wealth Management segment:
Revenues - Services and fees 197,468  193,487  230,735 
Trading income 3,278  4,758  3,522 
Total revenues 200,746  198,245  234,257 
Employee compensation and benefits (156,715) (152,309) (191,238)
Professional services (2,814) (3,127) (7,550)
Occupancy-related costs (11,464) (13,935) (16,797)
Other selling, general and administrative expenses (19,146) (21,408) (42,549)
Restructuring charge —  (61) (4,955)
Depreciation and amortization (4,177) (4,308) (5,488)
Segment income (loss) 6,430  3,097  (34,320)
Financial Consulting segment:
Revenues - Services and fees 92,176  77,283  50,357 
Employee compensation and benefits (54,986) (48,158) (34,724)
Professional services (1,251) (1,067) (1,167)
Occupancy-related costs (3,641) (3,227) (2,646)
Other selling, general and administrative expenses (14,321) (11,596) (8,053)
Depreciation and amortization (379) (318) (201)
Segment income 17,598  12,917  3,566 
Communications segment:
Revenues - Services and fees 289,435  330,952  228,129 
Revenues - Sale of goods 5,589  6,737  7,526 
Total revenues 295,024  337,689  235,655 
Direct cost of services (165,302) (183,993) (108,686)
Cost of goods sold (6,088) (7,848) (8,592)
Employee compensation and benefits (33,351) (43,090) (32,012)
Professional services (5,022) (3,743) (4,706)
Occupancy-related costs (9,919) (11,629) (8,962)
Other selling, general and administrative expenses (24,244) (25,180) (19,156)
Depreciation and amortization (21,548) (25,941) (19,165)
Restructuring charge (379) (1,540) (4,056)
Segment income 29,171  34,725  30,320 
Consumer Products segment:
Revenues - Sale of goods 202,597  233,202  77,821 
Cost of goods sold (152,625) (164,635) (52,162)
Employee compensation and benefits (39,650) (41,065) (9,645)
Professional services (8,544) (10,020) (3,043)
Occupancy-related costs (6,518) (6,606) (1,512)
Other selling, general and administrative expenses (6,812) (9,538) (1,103)
Depreciation and amortization (7,991) (9,918) (2,168)
Impairment of goodwill and other intangible assets (31,681) (68,600) — 
Restructuring charge (1,143) (530) — 
Segment (loss) income (52,367) (77,710) 8,188 
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Year Ended December 31,
  2024 2023 2022
E-Commerce segment:
Revenues - Services and fees 13,855  —  — 
Revenues - Sale of goods 10,646  —  — 
Total revenues 24,501  —  — 
Direct cost of services (6,449) —  — 
Cost of goods sold (6,959) —  — 
Employee compensation and benefits (10,732) —  — 
Professional services (3,681) —  — 
Occupancy-related costs (2,403) —  — 
Other selling, general and administrative expenses (7,025) —  — 
Depreciation and amortization (1,469) —  — 
Impairment of goodwill and other intangible assets (73,692) —  — 
Segment loss (87,909) —  — 
Consolidated operating (loss) income from reportable segments (403,185) 167,872  89,357 
All Other:
Revenues - Services and fees 89,449  47,992  13,797 
Revenues - Sale of goods 1,787  364  — 
Total revenues 91,236  48,356  13,797 
Direct cost of services (42,150) (30,072) (9,849)
Cost of goods sold (1,962) (353) — 
Employee compensation and benefits (22,491) (11,252) (2,871)
Professional services (2,950) (2,433) (757)
Occupancy-related costs (10,085) (3,723) (334)
Other selling, general and administrative expenses (13,208) (6,300) (1,198)
Depreciation and amortization (5,989) (3,971) (1,438)
Corporate:
Revenues - Services and fees 598  —  — 
Employee compensation and benefits (45,156) (57,614) (61,719)
Professional services (32,200) (16,136) (7,496)
Occupancy-related costs (8,036) (7,659) (6,368)
Other selling, general and administrative expenses 20,444  20,085  19,539 
Depreciation and amortization (604) (749) (801)
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Year Ended December 31,
  2024 2023 2022
Operating (loss) income (475,738) 96,051  29,862 
Interest income 3,621  3,875  2,735 
Dividend income 4,462  12,747  7,851 
Realized and unrealized losses on investments (263,686) (162,053) (247,540)
Change in fair value of financial instruments and other 4,614  (3,998) 10,188 
Gain on bargain purchase —  15,903  — 
Income (loss) from equity method investments 31  (152) 3,570 
Loss on extinguishment of debt (18,725) (5,409) — 
Interest expense:
Capital Markets segment (633) (14,986) (5,928)
Communications segment (9,288) (11,573) (5,099)
Consumer Products segment (4,261) (7,924) (1,318)
E-Commerce segment (1,056) —  — 
Corporate and other (118,070) (121,757) (128,658)
Interest expense (133,308) (156,240) (141,003)
Loss from continuing operations before income taxes (878,729) (199,276) (334,337)
(Provision for) benefit from income taxes (22,125) 39,115  65,252 
Loss from continuing operations (900,854) (160,161) (269,085)
Income from discontinued operations, net of income taxes 125,915  54,530  112,491 
Net loss (774,939) (105,631) (156,594)
Net (loss) income attributable to noncontrolling interests and redeemable noncontrolling interests (10,665) (5,721) 3,235 
Net loss attributable to B. Riley Financial, Inc. (764,274) (99,910) (159,829)
Preferred stock dividends 8,060  8,057  8,008 
Net loss available to common shareholders $ (772,334) $ (107,967) $ (167,837)
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The following table presents revenues by geographical area:
Year Ended December 31,
2024 2023 2022
Revenues
 Services and fees
North America $ 875,480  $ 898,750  $ 815,951 
Trading loss (income)
North America (57,007) 21,603  (148,294)
Fair value adjustments on loans
North America (325,498) 20,225  (54,334)
Interest income - loans
North America 54,141  123,244  157,669 
Interest income - securities lending
North America 70,862  161,652  83,144 
Sale of goods
North America 118,676  126,297  51,899 
Australia 12,305  11,878  4,903 
Europe, Middle East, and Africa 55,517  65,596  18,485 
Asia 24,736  26,790  7,970 
Latin America 9,385  9,742  2,090 
Total - Sale of goods 220,619  240,303  85,347 
 
Total Revenues  
North America 736,654  1,351,771  906,035 
Australia 12,305  11,878  4,903 
Europe, Middle East, and Africa 55,517  65,596  18,485 
Asia 24,736  26,790  7,970 
Latin America 9,385  9,742  2,090 
Total Revenues $ 838,597  $ 1,465,777  $ 939,483 

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The following table presents long-lived assets, which consist of property and equipment, net, by geographical area:
December 31, 2024 December 31, 2023
Long-lived Assets - Property and Equipment, net:
North America $ 18,602  $ 24,594 
Europe 217  396 
Asia Pacific 81  133 
Australia 54  83 
Total $ 18,954  $ 25,206 
Segment assets are not reported to, or used by, the Company’s CODM to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed.

NOTE 25 — SUBSEQUENT EVENTS
Wealth Management

On October 31, 2024, the Company signed a definitive agreement to sell a portion of the Company’s (W-2) Wealth Management business to Stifel for estimated net consideration based on the number of advisors that join Stifel at closing, among other things. Upon closing the transaction on April 4, 2025, the sale was completed for net cash consideration of $26,037, representing 36 financial advisors whose managed accounts represent approximately $4.0 billion, or 19.3%, of AUM as of December 31, 2024.
Debt Financing and Repayment of Nomura Credit Facility
On February 26, 2025, the Company and BRFH, a wholly owned subsidiary of the Company, entered into a new credit agreement with a group of funds indirectly or directly controlled by Oaktree Capital Management, L.P. with Oaktree Fund Administration, LLC, acting as the administrative agent and collateral agent. The new credit agreement provided for (i) a three-year $125,000 secured term loan credit facility and (ii) a four-month $35,000 secured delayed draw term loan credit facility. The proceeds from the Initial Term Loan Facility were primarily used (a) to repay the existing indebtedness under the Nomura Credit agreement discussed in Note 13, (b) for working capital and general corporate purposes and (c) to pay transaction fees and expenses. The proceeds of the Delayed Draw Facility was used (a) to fund obligations relating to the liquidation of substantially all of the assets of JOANN, Inc. and its subsidiaries and (b) for working capital and general corporate purposes.
Borrowings accrue interest at the adjusted term SOFR rate as defined in the Credit Facility with an applicable margin of 8.00%. In addition to paying interest on outstanding borrowings under the Credit Facility, the Company was required to pay (i) a closing fee of 3.00% of the aggregate principal amount of the loans under the Initial Term Loan Facility and 2.00% of the aggregate principal amount of the loans under the Delayed Draw Facility, and (ii) an exit fee upon the prepayment or repayment of the Credit Facility of 5.00% of the aggregate principal amount of such loans repaid, provided, that the Initial Term Loan Facility exit fee shall not be payable if the share price for the Company's common stock exceeds a certain threshold. The Credit Facility also contains a provision where the final $62,500 of repayment of principal on the Initial Term Loan may be subject to an additional prepayment premium, as defined in the Credit Facility, if the prepayment occurs before the second anniversary date of the Credit Facility.
The Company issued warrants to certain affiliates of Oaktree Capital Management, L.P. in connection with the Credit Facility to purchase approximately 1,832,290 shares (or 6% on a fully diluted basis) of the Company’s common stock at an exercise price of $5.14 per share. The warrants contain certain anti-dilution provisions pursuant to which, under certain circumstances, the warrant holders would be entitled to exercise the warrants for up to 19.9% of the then-outstanding shares of the Company’s common stock.

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Subject to certain eligibility requirements, certain assets of the BRFH Borrower are placed into the Borrowing Base, which serves to limit the borrowings under the Credit Facility. The sale of an asset in the Borrowing Base requires the BRFH Borrower to make a prepayment in an amount equal to the proceeds of such disposition multiplied by the percentage “credit” that is assigned to such asset in the Borrowing Base. The BRFH Borrower may be obligated to prepay the loans or post cash in a controlled account in the event the Borrowing Base falls below a certain level as defined in the Credit Facility. The Credit Facility contains covenants that, among other things, limit the Company’s, the BRFH Borrower’s and the BRFH Borrower’s subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
Sale of Atlantic Coast Recycling
On March 3, 2025, the Company and BR Financial, B. Riley Environmental Holdings, LLC and other indirect subsidiaries of the Company which included the Atlantic Companies, entered into the MIPA whereby the Interests owned by BR Financial and the minority holders were sold to a third party in accordance with the terms of the MIPA on March 3, 2025. The Interests were sold to the third party on March 3, 2025 for a purchase price of $102,478, subject to certain adjustments and a holdback amount pending receipt of a certain third party consent, resulting in cash proceeds of $68,638 to the Company after adjustments for amounts allocated to non-controlling interests, repayment of contingent consideration, transaction costs and other items directly attributable to the closing of the transaction. Of the $68,638 of cash proceeds received by the Company, approximately $22,610 was used to pay interest, fees, and principal on the Credit Facility discussed above. A gain of $52,705 was recognized in the first quarter of 2025 from this sale.
B. Riley Securities Holdings, Inc. Equity Issuance
On March 10, 2025, the Company’s wholly-owned subsidiary B. Riley Securities Holdings, Inc. (“BRSH”), which is comprised of the broker dealer operations within the Capital Markets segment, merged with a shell corporation and issued 0.6% of the equity in BRSH to certain investors in the shell corporation and. upon completion of the transaction, became minority stockholders of BRSH. Simultaneously with the merger with the shell corporation, BRSH approved the BRSH Stock Incentive Plan (the “BRSH Stock Plan”) and issued restricted stock awards to employees and officers of BRSH which represented 10.0% of the equity of BRSH that vest over a period of four to five years. Assuming the full issuance of the restricted stock awards, the Company continues to own 89.4% of BRSH.
Exchange of Senior Notes
On March 26, 2025, the Company completed a private exchange transaction with an institutional investor pursuant to which the investor exchanged $86,309 of aggregate principal amount of the Company’s 5.50% Senior Notes due March 2026 Notes and $36,745 aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026 owned by it for approximately $87,753 aggregate principal amount of New Notes, whereupon the exchanged notes were cancelled.
In addition, on April 7, 2025, the Company completed a private exchange transaction with another institutional investor pursuant to which the Investor exchanged approximately $22,000 aggregate principal amount of the Company’s 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028 and 5.25% Senior Notes due August 2028 for approximately $9,992 aggregate principal amount of the New Notes.
On May 21, 2025, the Company completed a private exchange transaction with another institutional investor to exchange principal amounts of approximately $29,535, $75,000, and $34,537 of the Company's 5.50% Senior Notes due March 2026, 5.00% Senior Notes due December 2026, and 6.00% Senior Notes due January 2028, respectively, for approximately $93,067 aggregate principal amount of the New Notes. In addition, the Company will issue to the investor warrants to purchase an aggregate of approximately 372,268 common shares at an exercise price of $10.00 per share exercisable for a period of seven years from the issuance date.
On June 30, 2025, the Company completed a private exchange transaction with another institutional investor to exchange principal amounts of approximately $8,021, $1,892, and $18,096 of the Company's 5.00% Senior Notes due December 2026, 6.00% Senior Notes due January 2028, and 5.25% Senior Notes due August 2028, respectively, for approximately $13,000 aggregate principal amount of the New Notes. In addition, the Company will issue to the investor warrants to purchase an aggregate of approximately 52,000 common shares at an exercise price of $10.00 per share exercisable for a period of seven years from the issuance date.
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On July 11, 2025, the Company completed a private exchange transaction with another institutional investor to exchange principal amounts of approximately $2,061, $19,682, $4,706, and $16,389 of the Company's 6.50% Senior Notes due September 2026, 5.00%, Senior Notes due December 2026, 6.00% Senior Notes due January 2028, and 5.25% Senior Notes due August 2028, respectively, for approximately $24,611 aggregate principal amount of the New Notes. In addition, the Company will issue to the investor warrants to purchase an aggregate of approximately 98,444 common shares at an exercise price of $10.00 per share exercisable for a period of seven years from the issuance date.
The New Notes were issued pursuant to an indenture, dated as of March 26, 2025 (the “Indenture”), between the Company, certain subsidiaries of the Company, as guarantors, and GLAS Trust Company LLC, a New Hampshire limited liability company, as trustee and collateral agent (in such capacities, the “Trustee”), and the New Notes are unconditionally guaranteed jointly and severally by all direct and indirect wholly-owned restricted subsidiaries of the Company, subject to certain excluded subsidiaries (collectively, the "Guarantors"). The New Notes are secured on a second lien basis, junior to the obligations under the Company’s Credit Facility, by substantially all of the assets of the Company and the Guarantors. The New Notes are subordinated in right of payment to the payment in full of the obligations under the Company’s Credit Facility.
The New Notes accrue interest at a rate of 8.00% per annum, payable semi-annually in arrears on April 30 and October 31, starting October 31, 2025. The New Notes mature on January 1, 2028. The Company may redeem the New Notes (i) at any time, in whole or in part, before March 26, 2026, at a redemption price equal to 100% of the aggregate principal amount being redeemed, plus a customary make-whole premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date; and (ii) at any time, in whole or in part, after March 26, 2026, at a redemption price equal to 100% of the aggregate principal amount being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
The New Notes contain change of control provisions, whereby the holders of the New Notes have the right to require the Company to repurchase all or a portion of the New Notes at a purchase price, in cash, equal to 101% of the principal amount thereof, plus accrued and unpaid interest. In addition, if the Company or its restricted subsidiaries engage in certain asset sales and do not invest such proceeds or permanently reduce certain debt within a specified period of time, the Company will be required to use a portion of the proceeds of such asset sales above a specified threshold to make an offer to purchase the New Notes at a price equal to 100% of the principal amount of the New Notes being purchased, plus accrued and unpaid interest. The Indenture contains certain covenants that, among other things, limit the Company’s and its subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends or to make other distributions or redemptions/repurchases in respect of their respective equity interests.
Nogin
On March 31, 2025, the Company signed a Deed of Assignment for the Benefit of Creditors, (i) pursuant to which all of the assets of Nogin were transferred to an assignee for the benefit of Nogin’s creditors, and (ii) which provides the assignee the right to, among other things, sell or dispose of such assets and settle all claims against Nogin. The Company no longer controls or owns the assets of Nogin and the results of operations will no longer be reported in the Company’s consolidated financial statements after March 31, 2025.
Sale of GlassRatner and Farber
On June 27, 2025, the Company signed an equity purchase agreement to sell all of the membership interests of GlassRatner and Farber. The aggregate cash consideration paid by the Buyers for the interests of GlassRatner and shares of Farber was $117,800, which is based on a target closing working capital amount that is subject to adjustment within 180-days following the sale date. In connection with the sale, the Company entered into a transition services agreement with the buyer to provide certain services.

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Targus/FGI Credit Agreement
On August 20, 2025, the Targus Borrower and certain FGI Loan Parties entered into the Targus/FGI Credit Agreement with FGI , as agent and for a three-year $30,000 revolving loan facility, the proceeds of which were used to refinance and repay all obligations under the existing Targus Credit Agreement with PNC. The final maturity date of the Targus/FGI Credit Agreement is August 20, 2028.
The Targus/FGI Credit Agreement is a revolving line of credit facility with a receivables purchase feature under which the purchase of eligible receivables is on a full recourse basis with each borrower retaining the risk of non-payment. The revolving loans bear interest at the greater of (a) 5.25% per annum or (b) 3.00% above the term SOFR for a period of 1 month plus 10 basis points, plus (c) 0.30% per month collateral management fee.
The Targus/FGI Credit Agreement is secured by (i) a first priority perfected security interest in and a lien upon all of the assets of the FGI Loan Parties, and (ii) a pledge of all of the equity interests of the Targus Borrower and its direct and indirect subsidiaries. The Targus/FGI Credit Agreement contains certain covenants, including those limiting the FGI Loan Parties' ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. The Targus/FGI Credit Agreement also contains customary representations and warranties, affirmative covenants, and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an uncured event of default occurs, FGI would be entitled to take various actions, including the acceleration of amounts outstanding under the Targus/FGI Credit Agreement.
As required under the Targus/FGI Credit Agreement, BRCC, a wholly owned subsidiary of the Company, entered into an amendment to an existing intercompany loan and security agreement to extend an additional subordinated loan to the Targus Borrower at the closing of the Targus/FGI Credit Agreement in the amount of $5,000 increasing the aggregate principal amount of such loan from $5,000 to $10,000.


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NOTE 26 — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

B. Riley Financial, Inc.
(Parent Company Only)
Condensed Balance Sheets
(Dollars in thousands)
December 31,
2024		 December 31,
2023
Assets
Assets:
Cash and cash equivalents $ 1,033  $ 1,147 
Investment in consolidated subsidiaries 1,095,523  2,002,325 
Other assets 19,903  52,153 
Total assets $ 1,116,459  $ 2,055,625 
Liabilities and Stockholders' Equity (Deficit)
Liabilities:
Accounts payable, accrued expenses and other liabilities $ 71,539  $ 77,558 
Dividends payable 2,534  18,929 
Senior notes payable, net 1,530,561  1,668,021 
Total liabilities 1,604,634  1,764,508 
Total stockholders' equity (deficit) (488,175) 291,117 
Total liabilities and stockholders' equity (deficit) $ 1,116,459  $ 2,055,625 
See Notes to Condensed Financial Statements

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B. Riley Financial, Inc.
(Parent Company Only)
Condensed Statements of Operations
(Dollars in thousands, except per share data)
Year Ended December 31,
2024 2023 2022
Revenues $ 3,642  $ 17,066  $ 805 
Operating expenses:
Selling, general and administrative expenses 48,896  40,053  39,146 
Total operating expenses 48,896  40,053  39,146 
Operating loss (45,254) (22,987) (38,341)
Other income (expense):
Interest and dividend income 7  201  272 
Interest expense (92,657) (103,212) (100,087)
Gain on sale of discontinued operations 2,277  —  — 
Gain on extinguishment of debt 120  —  — 
Loss before income taxes (135,507) (125,998) (138,156)
(Provision for) benefit from income taxes (54,636) 32,192  34,788 
Loss before income in equity investees (190,143) (93,806) (103,368)
Equity in loss of subsidiaries (574,131) (6,104) (56,461)
Net loss (764,274) (99,910) (159,829)
Other comprehensive (loss) income (6,798) 2,699  (1,390)
Comprehensive loss $ (771,072) $ (97,211) $ (161,219)
See Notes to Condensed Financial Statements











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B. Riley Financial, Inc.
(Parent Company Only)
Condensed Statements of Cash Flows
(Dollars in thousands)
Year Ended December 31,
2024 2023 2022
Cash flows from operating activities:
Net loss $ (764,274) $ (99,910) $ (159,829)
Adjustments to reconcile net loss to net cash used in operating activities:
Equity in net loss of subsidiaries 574,131  6,104  56,461 
Share-based compensation 7,746  16,241  21,743 
Non-cash interest and other 4,162  5,228  4,631 
Depreciation and amortization 382  606  646 
Gain on extinguishment of debt (120) —  — 
Change in operating assets and liabilities:
Other assets 102,225  7,994  32,006 
Accounts payable, accrued expenses and other liabilities (3,486) 22,562  1,721 
Other liabilities (2,533) (2,268) (42,411)
Net cash used in operating activities (81,767) (43,443) (85,032)
Cash flows from investing activities:
Contributions to subsidiaries (7,500) (392,984) (342,031)
Distributions from subsidiaries 274,000  580,000  519,213 
Net cash provided by investing activities 266,500  187,016  177,182 
Cash flows from financing activities:
Proceeds from issuance of senior notes —  185  51,601 
Redemption of senior notes (140,491) (58,924) — 
Payment of debt issuance and offering costs —  (714) (1,041)
ESPP and payment of employment taxes on vesting of restricted stock (3,218) (7,591) (10,286)
Common dividends paid (33,731) (141,099) (119,454)
Preferred dividends paid (8,060) (8,057) (8,008)
Repurchase of common stock —  (69,479) (6,516)
Proceeds from issuance of common stock —  115,000  — 
Proceeds from issuance of preferred stock —  467  874 
Proceeds from exercise of warrants 653  —  — 
Net cash used in financing activities (184,847) (170,212) (92,830)
Decrease in cash, cash equivalents and restricted cash (114) (26,639) (680)
Cash, cash equivalents and restricted cash, beginning of year 1,147  27,786  28,466 
Cash, cash equivalents and restricted cash, end of year $ 1,033  $ 1,147  $ 27,786 
     
See Notes to Condensed Financial Statements
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NOTES TO CONDENSED FINANCIAL STATEMENTS (PARENT COMPANY)
NOTE 1 — BASIS OF PRESENTATION
The accompanying condensed financial statements for B. Riley Financial, Inc. (the “Parent Company”) summarize the results of operations and cash flows of the Parent Company for the years ended December 31, 2024, 2023, and 2022 and the financial position as of December 31, 2024 and 2023.
The condensed financial statements of the Parent Company have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as the restricted net assets of the subsidiaries of the Parent Company (as defined in Rule 4-08(e)(3) of Regulation S-X) exceed 25% of the consolidated net assets of the Company. The ability of the Parent Company's operating subsidiaries to pay dividends may be restricted due to the terms of the Nomura Credit Agreement.
In these statements, the Parent Company's investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date the Parent Company began consolidating them. The Parent Company's share of net income of its unconsolidated subsidiaries is included in consolidated income using the equity method. The Parent Company financial statements should be read in conjunction with the consolidated financial statements of B. Riley Financial and subsidiaries for the corresponding years.
NOTE 2 — TRANSACTIONS WITH SUBSIDIARIES
During the years ended December 31, 2024, 2023, and 2022, distributions from subsidiaries to the Parent Company were $274,000, $580,000, and $519,213, respectively, and contributions from the Parent Company to its subsidiaries were $7,500, $392,984, and $342,031, respectively. The Parent Company maintains most of its cash and cash equivalents at its wholly owned subsidiaries to maximize returns on investments. Distributions from subsidiaries to the Parent Company are primarily to fund periodic investments that are made at the Parent Company or to fund debt service and interest costs on the senior notes, common stock and preferred stock dividends, and repurchases of common stock or other Parent Company securities. Contributions from the Parent Company to its subsidiaries are primarily made to fund acquisitions and investments that are made at the subsidiary level.
239
EX-10.19 2 exhibit1019twelfthamendmen.htm EX-10.19 Document
Exhibit 10.19
TWELFTH AMENDMENT TO CREDIT AGREEMENT
THIS TWELFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of November 18, 2024 (the “Twelfth Amendment Effective Date”), is entered into by and among BRPI Acquisition Co LLC, a Delaware limited liability company, United Online, Inc., a Delaware corporation, YMax Corporation, a Delaware corporation (collectively, the “Borrowers”), the Affiliates of the Borrowers identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, as successor-in-interest to Banc of California, N.A., as Administrative Agent (the “Administrative Agent”), with reference to the following facts:
RECITALS
A.    The Borrowers, the Secured Guarantors, the Lenders, and the Administrative Agent are parties to a Credit Agreement dated as of December 19, 2018, as amended by a First Amendment to Credit Agreement and Joinder dated as of January 30, 2019, a Second Amendment to Credit Agreement dated as of December 31, 2020, a Third Amendment to Credit Agreement dated as of December 16, 2021, a Fourth Amendment to Credit Agreement dated as of June 21, 2022, a Fifth Amendment to Credit Agreement dated as of March 15, 2024, a Sixth Amendment to Credit Agreement dated as of April 9, 2024, a Seventh Amendment to Credit Agreement dated as of August 22, 2024, an Eighth Amendment to Credit Agreement dated as of September 6, 2024, a Ninth Amendment to Credit Agreement dated as of September 13, 2024, a Tenth Amendment to Credit Agreement dated as of September 20, 2024, and an Eleventh Amendment to Credit Agreement dated as of September 30, 2024 (collectively, the “Credit Agreement”).
B.    The parties wish to amend the Credit Agreement to make certain modifications as set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 6.01(a). Section 6.01(a) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by formatting; added text is indicated in bold, italicized and underscored type):
(a) Ultimate Parent SEC Reporting. Ultimate Parent shall file with the SEC (i) annual reports on Form 10-K within 90 days (or in the case of the fiscal year of the Ultimate Parent ending December 31, 2023, 110 days) after the end of each fiscal year of Ultimate Parent, (ii) quarterly reports on Form 10-Q within 45 days (or in the case of (1) the fiscal quarter of the Ultimate Parent ending June 30, 2024, 163 days and (2) the fiscal quarter of Ultimate Parent ending September 30, 2024, 71 days) after the end of each of the first three fiscal quarters of each fiscal year of the Ultimate Parent or such later date as permitted under the Securities and Exchange Act of 1934 or the rules and regulations promulgated thereunder, and (iii) any current reports on Form 8-K as and when required under the Securities Exchange Act of 1934, and in the case of this clause (iii) subject to permitted extensions.
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3.Conditions Precedent. This Amendment shall be effective on the Twelfth Amendment Effective Date subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrowers, the Secured Guarantors, and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)Expenses. The Administrative Agent shall have received payment from the Borrowers of all costs and expenses (including, without limitation, the reasonable fees and expenses of Buchalter, P.C., outside counsel to the Administrative Agent) incurred by the Administrative Agent in connection with this Amendment, to the extent invoiced on or before the Twelfth Amendment Effective Date;
(iv)Representations and Warranties. The representations and warranties of the Borrowers and each other Loan Party contained in Article II and Article V of the Credit Agreement and in any other Loan Document shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the Twelfth Amendment Effective Date, except (i) that for purposes of this Section 3(iv), the representations and warranties contained in Sections 5.05(a) and (b) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(b) of the Credit Agreement, respectively; and (ii) to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date;
(v)Default. No Default shall exist;
(vi)Other Documents. All other documents provided for herein or which the Administrative Agent or any other Lender may reasonably request or require; and
(vii)Additional Information. Such additional information and materials which the Administrative Agent and/or any Lender shall reasonably request or require.
4.Reaffirmation and Ratification. The Borrowers and the Secured Guarantors hereby reaffirm, ratify and confirm the Obligations under the Credit Agreement and acknowledge that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
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5.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
6.Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument. The exchange of copies of this Amendment and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”), or by a combination of such means, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of an original Amendment for all purposes. Banc of California may also execute this Amendment by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, and the parties hereto hereby waive any objection to the contrary. The parties may deliver executed copies of the documents required by Section 3 to the Administrative Agent on the Twelfth Amendment Effective Date. The parties shall deliver the originals of such documents to the Administrative Agent no later than thirty (30) days after the Twelfth Amendment Effective Date.
7.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.
BORROWERS:
BRPI ACQUISITION CO LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
UNITED ONLINE, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
YMAX CORPORATION,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President


Twelfth Amendment to Credit Agreement


SECURED GUARANTORS:
NETZERO, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
JUNO ONLINE SERVICES, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
JUNO INTERNET SERVICES, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
CLASSMATES MEDIA CORPORATION,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
NETZERO MODECOM, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
Twelfth Amendment to Credit Agreement


NETZERO WIRELESS, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
UNITED ONLINE ADVERTISING NETWORK, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
UNITED ONLINE WEB SERVICES,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
MAGICJACK HOLDINGS CORPORATION,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
MAGICJACK VOIP SERVICES, LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President

Twelfth Amendment to Credit Agreement


MAGICJACK LP,
a Delaware limited partnership
By:    MAGICJACK HOLDINGS CORPORATION,
its General Partner
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
YMAX COMMUNICATIONS CORP. OF VIRGINIA,
a Virginia corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
MAGICJACK SMB, INC.,
a Florida corporation
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
MARCONI WIRELESS HOLDINGS, LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai                
Name: Ananth Veluppillai                
Title:     President
Twelfth Amendment to Credit Agreement


ADMINISTRATIVE AGENT:
BANC OF CALIFORNIA,
as Administrative Agent
By: /s/ Carlos Ramos                    
Name: Carlos Ramos                    
Title:     EVP                        

Twelfth Amendment to Credit Agreement


LENDERS:
BANC OF CALIFORNIA
By: /s/ Carlos Ramos                    
Name: Carlos Ramos                    
Title:     EVP                        

Twelfth Amendment to Credit Agreement


UMPQUA BANK
By: /s/ Derek X. Jasso                    
Name: Derek X. Jasso                    
Title:     Senior Vice President                

Twelfth Amendment to Credit Agreement


BANKUNITED, N.A.
By: /s/ Arthur Rhatigan                
Name:         Arthur Rhatigan            
Title:         SVP                

Twelfth Amendment to Credit Agreement


BANK HAPOALIM B.M.
By:     /s/ Joseph Romano                
Name:     Joseph Romano                
Title:     FVP                        



Twelfth Amendment to Credit Agreement


ACKNOWLEDGMENT OF PARENT AND
ULTIMATE PARENT GUARANTORS
By: /s/ Thomas J Vigna Name: Thomas J Vigna Title: SVP The undersigned (the “Parent and Ultimate Parent Guarantors”) hereby acknowledge and agree to the attached Twelfth Amendment to Credit Agreement (the “Twelfth Amendment”), including, without limitation, the Term Loans to me made by the Lenders to the Borrowers thereunder. The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the “Guaranties”), and the Parent and Ultimate Parent Guarantors agree that their respective Guaranties are and shall remain in full force and effect notwithstanding the Twelfth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors’ acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Twelfth Amendment.
Dated: As of November [__], 2024     B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai            
Title:    COO                    


B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn                
Name:    Phillip Ahn                
Title:    CFO                    
EX-10.20 3 exhibit1020thirteenthamend.htm EX-10.20 Document
Exhibit 10.20
THIRTEENTH AMENDMENT TO CREDIT AGREEMENT
THIS THIRTEENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 18, 2024 (the “Thirteenth Amendment Effective Date”), is entered into by and among BRPI Acquisition Co LLC, a Delaware limited liability company, United Online, Inc., a Delaware corporation, YMax Corporation, a Delaware corporation (collectively, the “Borrowers”), the Affiliates of the Borrowers identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, as successor-in-interest to Banc of California, N.A., as Administrative Agent (the “Administrative Agent”), with reference to the following facts:
RECITALS
A.    The Borrowers, the Secured Guarantors, the Lenders, and the Administrative Agent are parties to a Credit Agreement dated as of December 19, 2018, as amended by a First Amendment to Credit Agreement and Joinder dated as of January 30, 2019, a Second Amendment to Credit Agreement dated as of December 31, 2020, a Third Amendment to Credit Agreement dated as of December 16, 2021, a Fourth Amendment to Credit Agreement dated as of June 21, 2022, a Fifth Amendment to Credit Agreement dated as of March 15, 2024, a Sixth Amendment to Credit Agreement dated as of April 9, 2024, a Seventh Amendment to Credit Agreement dated as of August 22, 2024, an Eighth Amendment to Credit Agreement dated as of September 6, 2024, a Ninth Amendment to Credit Agreement dated as of September 13, 2024, a Tenth Amendment to Credit Agreement dated as of September 20, 2024, an Eleventh Amendment to Credit Agreement dated as of September 30, 2024, and a Twelfth Amendment to Credit Agreement dated as of November 18, 2024 (collectively, the “Credit Agreement”).
B.    The parties wish to amend the Credit Agreement to make certain modifications as set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 6.01(a). Section 6.01(a) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by formatting; added text is indicated in bold, italicized and underscored type):
3.(a) Ultimate Parent SEC Reporting. Ultimate Parent shall file with the SEC (i) annual reports on Form 10-K within 90 days (or in the case of the fiscal year of the Ultimate Parent ending December 31, 2023, 110 days) after the end of each fiscal year of Ultimate Parent, (ii) quarterly reports on Form 10-Q within 45 days (or in the case of (1) the fiscal quarter of the Ultimate Parent ending June 30, 2024, 205 days and (2) the fiscal quarter of Ultimate Parent ending September 30, 2024, 113 days) after the end of each of the first three fiscal quarters of each fiscal year of the Ultimate Parent or such later date as permitted under the Securities and Exchange Act of 1934 or the rules and regulations promulgated thereunder, and (iii) any current reports on Form 8-K as and when required under the Securities Exchange Act of 1934, and in the case of this clause (iii) subject to permitted extensions.
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4.Conditions Precedent. This Amendment shall be effective on the Thirteenth Amendment Effective Date subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrowers, the Secured Guarantors, and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)Expenses. The Administrative Agent shall have received payment from the Borrowers of all costs and expenses (including, without limitation, the reasonable fees and expenses of Buchalter, P.C., outside counsel to the Administrative Agent) incurred by the Administrative Agent in connection with this Amendment, to the extent invoiced on or before the Thirteenth Amendment Effective Date;
(iv)Representations and Warranties. The representations and warranties of the Borrowers and each other Loan Party contained in Article II and Article V of the Credit Agreement and in any other Loan Document shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the Thirteenth Amendment Effective Date, except (i) that for purposes of this Section 3(iv), the representations and warranties contained in Sections 5.05(a) and (b) of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to Sections 6.01(b) of the Credit Agreement, respectively; and (ii) to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date;
(v)Default. No Default shall exist;
(vi)Other Documents. All other documents provided for herein or which the Administrative Agent or any other Lender may reasonably request or require; and
(vii)Additional Information. Such additional information and materials which the Administrative Agent and/or any Lender shall reasonably request or require.
5.Reaffirmation and Ratification. The Borrowers and the Secured Guarantors hereby reaffirm, ratify and confirm the Obligations under the Credit Agreement and acknowledge that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
6.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
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7.Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument. The exchange of copies of this Amendment and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”), or by a combination of such means, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of an original Amendment for all purposes. Banc of California may also execute this Amendment by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, and the parties hereto hereby waive any objection to the contrary. The parties may deliver executed copies of the documents required by Section 3 to the Administrative Agent on the Thirteenth Amendment Effective Date. The parties shall deliver the originals of such documents to the Administrative Agent no later than thirty (30) days after the Thirteenth Amendment Effective Date.
8.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.
BORROWERS:
BRPI ACQUISITION CO LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
UNITED ONLINE, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
YMAX CORPORATION,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President


Thirteenth Amendment to Credit Agreement


SECURED GUARANTORS:
NETZERO, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
JUNO ONLINE SERVICES, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
JUNO INTERNET SERVICES, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
CLASSMATES MEDIA CORPORATION,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
NETZERO MODECOM, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
Thirteenth Amendment to Credit Agreement


NETZERO WIRELESS, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
UNITED ONLINE ADVERTISING NETWORK, INC.,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
UNITED ONLINE WEB SERVICES,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
MAGICJACK HOLDINGS CORPORATION,
a Delaware corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
MAGICJACK VOIP SERVICES, LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President

Thirteenth Amendment to Credit Agreement


MAGICJACK LP,
a Delaware limited partnership
By:    MAGICJACK HOLDINGS CORPORATION,
its General Partner
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
YMAX COMMUNICATIONS CORP. OF VIRGINIA,
a Virginia corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
MAGICJACK SMB, INC.,
a Florida corporation
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
MARCONI WIRELESS HOLDINGS, LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai
Title: President
Thirteenth Amendment to Credit Agreement


ADMINISTRATIVE AGENT:
BANC OF CALIFORNIA,
as Administrative Agent
By: /s/ Carlos Ramos                    
Name: Carlos Ramos                    
Title:     EVP                        

Thirteenth Amendment to Credit Agreement


LENDERS:
BANC OF CALIFORNIA
By: /s/ Carlos Ramos                    
Name: Carlos Ramos                    
Title:     EVP                        

Thirteenth Amendment to Credit Agreement


UMPQUA BANK
By:                             
Name:                             
Title:                             

Thirteenth Amendment to Credit Agreement


BANKUNITED, N.A.
By: /s/ Arthur Rhatigan                
Name:         Arthur Rhatigan            
Title:         SVP                    

Thirteenth Amendment to Credit Agreement


BANK HAPOALIM B.M.
By: /s/ John Yoler                    
Name: John Yoler, EVP                
Title:                             



Thirteenth Amendment to Credit Agreement


ACKNOWLEDGMENT OF PARENT AND
ULTIMATE PARENT GUARANTORS
By: /s/ Michael Gorman III Name: Michael Gorman III Title: SVP The undersigned (the “Parent and Ultimate Parent Guarantors”) hereby acknowledge and agree to the attached Thirteenth Amendment to Credit Agreement (the “Thirteenth Amendment”), including, without limitation, the Term Loans to me made by the Lenders to the Borrowers thereunder. The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the “Guaranties”), and the Parent and Ultimate Parent Guarantors agree that their respective Guaranties are and shall remain in full force and effect notwithstanding the Thirteenth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors’ acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Thirteenth Amendment.
Dated: As of December 18, 2024        B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: : /s/ Ananth Veluppillai            
Name:     Ananth Veluppillai
Title: COO

B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn                
Name:    Phillip Ahn                
Title:    CFO                    
EX-10.39 4 exhibit1039greatamericanho.htm EX-10.39 Document
Exhibit 10.39




GREAT AMERICAN HOLDINGS, LLC
a Delaware Limited Liability Company
SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

Dated as of November 15, 2024
THE UNITS AND OTHER MEMBERSHIP INTERESTS REPRESENTED BY THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS. SUCH INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT AND LAWS, OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.


TABLE OF CONTENTS
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. THE PREEMPTIVE RIGHTS UNDER THIS ARTICLE 14 SHALL TERMINATE AUTOMATICALLY AND BE OF NO FURTHER FORCE OR EFFECT IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE FIRST TO OCCUR OF (A) A PUBLIC OFFERING (AND FOR THE AVOIDANCE OF DOUBT, SHALL NOT APPLY TO A PUBLIC OFFERING OR ANY CONVERSION IN CONNECTION THEREWITH, OR TO ANY TRANSACTION STRUCTURED THROUGH A BLOCKER CORPORATION IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT) OR (B) ANY TRANSACTION OR SERIES OF RELATED TRANSACTIONS, OTHER THAN A PUBLIC OFFERING, PURSUANT TO WHICH ANY PERSON OR GROUP OF RELATED PERSONS (OTHER THAN ANY OF THE OAKTREE INVESTORS OR AN AFFILIATE THEREOF) IN THE AGGREGATE ACQUIRES EQUITY SECURITIES POSSESSING THE VOTING POWER OR CONTRACTUAL RIGHT (OTHER THAN VOTING RIGHTS ARISING ONLY IN THE EVENT OF A DEFAULT OR BREACH) TO ELECT ALL THE DIRECTORS OR ALL OF THE DIRECTORS OF ITS CORPORATE SUCCESSOR.
PUBLIC OFFERING AND STRUCTURING

TABLE OF CONTENTS
(Continued)
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SCHEDULES

Schedule A    Unitholders

Schedule B    Specified Adverse Event Reduction

EXHIBITS

Exhibit A Form of Spousal Consent GREAT AMERICAN HOLDINGS, LLC SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT





This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (as it may be amended, modified or supplemented from time to time in accordance with the terms hereof, this “Agreement”), dated as of November 15, 2024, is entered into by and among Great American Holdings, LLC, a Delaware limited liability company (the “Company”), the Initial Unitholders, and any other Person who may from time to time become party hereto as a Unitholder.
RECITALS
WHEREAS, the Company was formed on September 17, 2024 by filing a Certificate of Formation with the Secretary of State of the State of Delaware;
WHEREAS, BR Financial Holdings, LLC, a Delaware limited liability company (“BR Financial”), as the sole member of the Company, previously entered into that certain Limited Liability Company Agreement, dated as of September 17, 2024 (the “Original LLC Agreement”), in order to, among other things, set forth the rights, privileges, agreements and obligations of BR Financial in respect of the Company;
WHEREAS, on October 13, 2024, each of the Initial Unitholders entered into that certain Equity Purchase Agreement (as it may be amended from time to time, the “Equity Purchase Agreement”), pursuant to which, among other things, BR Financial, John Bankert, Ken Bloore and Michael Marchlik (collectively, “Sellers”) agreed to amend and restate the Existing LLC Agreement as set forth in this Agreement and sell to OCM SSF III Great American PT, L.P., a Delaware limited partnership (“Buyer 1”), Opps XII Great American Holdings, LLC, a Delaware limited liability company (“Buyer 2”), and VOF Great American Holdings, L.P., a Delaware limited partnership (“Buyer 3” and, together with Buyer 1 and Buyer 2, “Buyers”), and Buyers agreed to purchase from the Sellers, all of the Class A Preferred Units and Class A Common Units representing 52.591% of the Class A Common Units in the aggregate; and
WHEREAS, on November 13, 2024, the Sellers entered into that certain Amended and Restated Limited Liability Company Agreement, dated as of November 13, 2024 (the “Existing LLC Agreement”), in order to, among other things, set forth the rights, privileges, agreements and obligations of the Sellers in respect of the Company.
NOW THEREFORE, in consideration of the mutual covenants contained herein and 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 1
CERTAIN DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the following meanings:



“Acquisition Proposal” has the meaning set forth in Section 13.7(a).
“Additional Securities” has the meaning set forth in Section 3.4(a).
“Additional Unitholder” means a Person admitted to the Company as a Unitholder pursuant to Section 11.2.
“Adjusted Capital Account Deficit” means, with respect to the Capital Account maintained for each Unitholder as of the end of any Taxable Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, each Unitholder’s Capital Account balance shall be:
(a)reduced for any items described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5), and (6); and
(b)increased for any amount such Unitholder is obligated to restore or is treated as being obligated to restore pursuant to Treasury Regulations Sections 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to Minimum Gain). The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
“Affiliate” of any particular Person means (a) any other Person directly or indirectly controlling, controlled by, or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person whether through the ownership of voting securities, by contract, or otherwise, and (b) if such Person is a partnership, any partner thereof; provided that, for the purposes of this Agreement, (i) the Company and its Subsidiaries shall not be considered Affiliates of the BR Group, Oaktree or their respective Affiliates, and (ii) Brookfield Corporation and Brookfield Asset Management, Inc. (collectively, “Brookfield”), any funds managed directly or indirectly by Brookfield or its Affiliates (other than Oaktree Capital Management, L.P.) and any portfolio company thereof shall not be considered Affiliates of Oaktree, the Company or their respective Affiliates.
“Agreement” has the meaning set forth in the Preamble.
“Annual Budget” means, with respect to the Company and its Subsidiaries, the annual budget and business plan consisting of operating revenues and expenses targeted to be incurred for a given Fiscal Year.
“Appraiser” has the meaning set forth in Section 16.1.
“Approved Company Sale” has the meaning set forth in Section 13.7(a).
“Available Cash” means all cash funds or other property of the Company reasonably determined by the Board to be available for distribution to Unitholders and that is permitted to be distributed in compliance with the Equity Agreements and the Delaware Act or other applicable Law and taking into account reserves, as reasonably determined by the Board.
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“Blocker Corporation” means an entity that is an Oaktree Investor or is an Affiliate of an Oaktree Investor, including any successor, assign, or Permitted Transferee of such Oaktree Investor or Affiliate of an Oaktree Investor or any of their respective successors, assigns or Permitted Transferees, in each case, so long as such entity is treated as a corporation for U.S. federal income tax purposes and, directly or indirectly, through one or more intermediary entities treated as partnerships or disregarded entities for U.S. federal income tax purposes owns no material assets or property other than Membership Interests (and, if applicable, equity interests in any such intermediary entities) and cash or cash equivalents, and has no material liabilities other than those directly relating to or facilitating such ownership and was formed and at all times maintained exclusively for the purposes of owning directly or indirectly Membership Interests, Units or Unitholder Securities (or purposes ancillary or incidental to the foregoing).
“Board” has the meaning set forth in Section 5.1(b)(i).
“Book Value” means, with respect to any Company property, the Company’s adjusted Tax basis in such property for U.S. federal income tax purposes, except as follows:
(a) the Book Values of all properties of the Company shall be adjusted from time to time to equal their respective Fair Market Values in accordance with the rules set forth in Treasury Regulations Section 1.704-1(b)(2)(iv)(f) as of the following times: (i) the acquisition of an interest (or additional interest) in the Company by any new or existing Unitholder in exchange for more than a de minimis Capital Contribution to the Company, (ii) the distribution by the Company to a Unitholder of more than a de minimis amount of property as consideration for an interest in the Company, (iii) the liquidation of the Company within the meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), (iv) the grant of an interest in the Company (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Company by an existing Unitholder acting in a Unitholder capacity, or by a new Unitholder acting in a Unitholder capacity or in anticipation of being a Unitholder, and (v) at such other times as the Board shall reasonably determine necessary or advisable in order to comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2; provided that the adjustments pursuant to clauses (i), (ii), and (iv) of this clause (a) shall be made only if the Board reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Unitholders in the Company;
(b) the Book Value of any property contributed by a Unitholder to the Company shall initially equal the Fair Market Value of such property as of the date of contribution;
(c) the Book Value of any property distributed to a Unitholder shall be adjusted immediately prior to such distribution to equal its Fair Market Value as of the date of distribution;
(d) the Book Value of all property of the Company shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such property pursuant to Code Section 732(d), 734(b) or 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and Section 9.2(b)(v); provided, however, that Book Values shall not be adjusted pursuant to this clause (d) to the extent the Board reasonably determines that an adjustment pursuant to clause (a) of this definition is necessary or appropriate in connection with the transaction that would otherwise result in an adjustment pursuant to this clause (d); and
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(e) if the Book Value of property has been determined or adjusted pursuant to clause (a) or clause (d) of this definition, such Book Value shall thereafter be adjusted by the depreciation taken into account with respect to such property for purposes of computing Profits and Losses and other items allocated pursuant to Article 9.
“B. Riley Directors” has the meaning set forth in Section 5.2(a)(ii).
“B. Riley Investor” means BRF Finance Co., LLC.
“B. Riley Put Notice” has the meaning set forth in Section 4.2(b).
“B. Riley Put Units” has the meaning set forth in Section 4.2(b).
“Brookfield” has the meaning set forth in the definition of “Affiliate.”
“BR Financial” has the meaning set forth in the Recitals.
“BR Group” means BR Financial and its Affiliates.
“Business Day” means any day ending at 11:59 p.m. (Eastern Time) other than Saturday, Sunday or any day on which banks located in the State of New York are authorized or obligated to close.
“Businesses” means the businesses of (i) Great American Group Machinery & Equipment, LLC, Great American Group Intellectual Property Advisors, LLC and B. Riley Advisory and Valuation Services, LLC in providing appraisal and valuation services in support of mergers and acquisitions, lending and other transaction financing activities, (ii) B. Riley Retail Solutions, LLC and its Subsidiaries (other than the Excluded Subsidiaries (as defined in the Equity Purchase Agreement)) in providing retail, wholesale and industrial solutions and liquidation services and (iii) B. Riley Real Estate, LLC in providing advisory and brokerage services in support of asset sales, bankruptcy restructuring and lease portfolio management, mergers and acquisitions and real estate acquisitions and equity investment, in each case as such businesses have been conducted since January 1, 2024; provided that, in either case, “Businesses” shall not include the provision of any such services by Ultimate Parent or any Subsidiaries of Ultimate Parent (other than the Great American Entities (as defined in the Equity Purchase Agreement)) that are incidental to or as a non-primary part of a restructuring, forensic accounting and litigation support, turnaround management, recapitalization, bankruptcy, assignment for the benefit of creditors, financial advisory or any similar engagement and, for the avoidance of doubt, shall not include any investment banking businesses or any general appraisal or valuation services that are incidental to, and in connection with, a broader engagement conducted by Ultimate Parent or any Subsidiaries of Ultimate Parent (other than the Great American Entities (as defined in the Equity Purchase Agreement)), in each case as such businesses or services are being conducted as of November 15, 2024; provided, further, that to the extent Ultimate Parent or any Subsidiaries of Ultimate Parent (other than the Great American Entities) are actively engaged in activities in the preceding proviso prior to November 15, 2024, such activities shall be excluded from the definition of “Businesses” but only to the extent consistent with their past practice in all material respects.
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“Buyers” has the meaning set forth in the Recitals.
“Call Option” has the meaning set forth Section 16.1.
“Call Option Exercise Notice” has the meaning set forth in Section 16.1.
“Call Option Interests” has the meaning set forth in Section 16.1.
“Call Option Unitholder” has the meaning set forth in Section 16.1.
“Call Price Objection Notice” has the meaning set forth in Section 16.1.
“Calling Unitholder” has the meaning set forth in Section 16.1.
“Capital Account” means the capital account established and maintained by the Company for a Unitholder pursuant to Section 9.2.
“Capital Contribution” means, with respect to any Unitholder, the amount of cash and the initial Book Value of any property (other than cash) contributed or deemed contributed to the Company by such Unitholder. Any reference in this Agreement to the Capital Contribution of a Unitholder shall include a Capital Contribution of such Unitholder’s predecessors-in-interest to the extent the Capital Contribution was made in respect of Membership Interests transferred to such Unitholder.
“Certificate” means the Company’s Certificate of Formation as filed with the Secretary of State of the State of Delaware.
“Certificated Securities” has the meaning set forth in Section 3.1(a).
“Class A Common Unit” means a Unit representing a Membership Interest and having the powers, preferences, rights and obligations specified with respect to the Class A Common Units in this Agreement.
“Class A Preferred Tax Distribution” means any Tax Distribution with respect to any Class A Preferred Unit, calculated, with respect to any Unitholder that owns, for the relevant taxable period, a Membership Interest consisting of Class A Preferred Units, as the Tax Distribution to which such Unitholder would be entitled pursuant to Section 4.1(b) if such Unitholder held only such Class A Preferred Units (and no other Units).
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“Class A Preferred Unit” means a Unit representing a Membership Interest and having the powers, preferences, rights and obligations specified with respect to the Class A Preferred Units in this Agreement; provided that, unless otherwise determined by the Board, a Class A Preferred Unit shall automatically be forfeited for no further consideration and be cancelled and cease to be outstanding at such time as the Class A Preferred Unpaid Yield and the Class A Preferred Unreturned Capital with respect to such Class A Preferred Unit have been reduced to zero.
“Class A Preferred Unit Amount” means $1,000 per Class A Preferred Unit (as equitably adjusted for any Unit splits, reverse splits, recapitalizations or similar transactions that may occur following the date hereof).
“Class A Preferred Unit Cash Payment” has the meaning set forth in Section 4.1(c)(i).
“Class A Preferred Unpaid Yield” of any Class A Preferred Unit means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Class A Preferred Yield accrued on such Class A Preferred Unit for all periods prior to such date (including partial periods), over (b) the aggregate amount of prior Distributions made in respect of such unit pursuant to or in accordance with Section 4.1(a)(i). If any Class A Preferred Units are Transferred in accordance with the terms of this Agreement, the Transferee of such Units shall succeed to the Class A Preferred Unpaid Yield of the Transferor to the extent the Class A Preferred Unpaid Yield relates to the Units so Transferred.
“Class A Preferred Unreturned Capital” of any Class A Preferred Unit means, as of any date, the Class A Preferred Unit Amount reduced by all Distributions made prior to such date in respect of such Unit pursuant to or in accordance with Section 4.1(a)(ii). If any Class A Preferred Units are Transferred in accordance with the terms of this Agreement, the Transferee of such Units shall succeed to the Class A Preferred Unreturned Capital of the Transferor to the extent the Class A Preferred Unreturned Capital relates to the Units so Transferred.
“Class A Preferred Yield” means, as of any date with respect to each Class A Preferred Unit, the amount accruing on such Class A Preferred Unit on a daily basis, at the rate of 15% per annum, compounded on the last day of each calendar quarter, on (a) the Class A Preferred Unreturned Capital of such Class A Preferred Unit as of such date plus (b) the Class A Preferred Unpaid Yield thereon for all prior completed quarterly periods. In calculating the amount of any Distribution to be made in respect of any Units during a period, the portion of the Class A Preferred Yield accrued with respect to such Class A Preferred Unit for the portion of the quarterly period elapsing before such Distribution is made shall be taken into account in determining the amount of such Distribution.
“Class B Common Unit” means a Unit representing a Membership Interest and having the powers, preferences, rights and obligations specified with respect to the Class B Common Units in this Agreement.
“Class B Preferred Tax Distribution” means any Tax Distribution with respect to any Class B Preferred Unit, calculated, with respect to any Unitholder that owns, for the relevant taxable period, a Membership Interest consisting of Class B Preferred Units, as the Tax Distribution to which such Unitholder would be entitled pursuant to Section 4.1(b) if such Unitholder held only such Class B Preferred Units (and no other Units).
6


“Class B Preferred Unit” means a Unit representing a Membership Interest and having the powers, preferences, rights and obligations specified with respect to the Class B Preferred Units in this Agreement; provided that, unless otherwise determined by the Board, a Class B Preferred Unit shall automatically be forfeited for no further consideration and be cancelled and cease to be outstanding at such time as the Class B Preferred Unpaid Yield and the Class B Preferred Unreturned Capital with respect to such Class B Preferred Unit have been reduced to zero.
“Class B Preferred Unit Amount” means $1,000 per Class B Preferred Unit (as equitably adjusted for any Unit splits, reverse splits, recapitalizations or similar transactions that may occur following the date hereof).
“Class B Preferred Unpaid Yield” of any Class B Preferred Unit means, as of any date, an amount equal to the excess, if any, of (a) the aggregate Class B Preferred Yield accrued on such Class B Preferred Unit for all periods prior to such date (including partial periods), over (b) the sum of (x) the aggregate amount of prior Distributions made in respect of such unit pursuant to or in accordance with Section 4.1(a)(iii) and (y) the amount (if any) by which the Specified Class B Reduction Amount exceeds the Class B Preferred Unreturned Capital (but in no case to less than zero). If any Class B Preferred Units are Transferred in accordance with the terms of this Agreement, the Transferee of such Units shall succeed to the Class B Preferred Unpaid Yield of the Transferor to the extent the Class B Preferred Unpaid Yield relates to the Units so Transferred.
“Class B Preferred Unreturned Capital” of any Class B Preferred Unit means, as of any date, the Class B Preferred Unit Amount reduced by (a) all Distributions made prior to such date in respect of such unit pursuant to or in accordance with Section 4.1(a)(iv) and (b) the Specified Class B Reduction Amount as of such date. If any Class B Preferred Units are Transferred in accordance with the terms of this Agreement, the Transferee of such Units shall succeed to the Class B Preferred Unreturned Capital of the Transferor to the extent the Class B Preferred Unreturned Capital relates to the Units so Transferred.
“Class B Preferred Yield” means, as of any date with respect to each Class B Preferred Unit, the amount accruing on such Class B Preferred Unit on a daily basis, at the rate of 2.30% per annum, compounded on the last day of each calendar quarter, on (a) the Class B Preferred Unreturned Capital of such Class B Preferred Unit as of such date plus (b) the Class B Preferred Unpaid Yield thereon for all prior completed quarterly periods. In calculating the amount of any Distribution to be made during a period, the portion of the Class B Preferred Yield accrued with respect to such Class B Preferred Unit for the portion of the quarterly period elapsing before such Distribution is made shall be taken into account in determining the amount of such Distribution.
“Code” means the United States Internal Revenue Code of 1986, as amended.
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“Committee” has the meaning set forth in Section 5.4(a).
“Common Tax Distribution” means any Tax Distribution with respect to any Common Unit, calculated, with respect to any Unitholder that owns, for the relevant taxable period, a Membership Interest consisting of Common Units, as the Tax Distribution to which such Unitholder would be entitled pursuant to Section 4.1(b) if such Unitholder held only such Common Units (and no other Units).
“Common Units” means the Class A Common Units, Class B Common Units and any other common units of the Company that may be issued and outstanding at any time of determination.
“Company” has the meaning set forth in the Preamble.
“Company Put Notification” has the meaning set forth in Section 4.2(b).
“Company Sale” has the meaning set forth in Section 13.7(a).
“Company Service Provider” means (a) any full-time officer, employee, consultant, advisor or other service provider of the Company or any of the Company’s Subsidiaries or (b) any other such Person (whether full-time or part-time, but excluding any officer or employee of the BR Group or Oaktree) that the Board may designate as a Company Service Provider.
“Competing Business” has the meaning set forth in Section 5.7(b).
“Confidential Information” has the meaning set forth in Section 6.7.
“control” has the meaning set forth in the definition of “Affiliate.”
“Conversion” has the meaning set forth in Section 15.1.
“Co-Sale Notice” has the meaning set forth in Section 12.1.
“Covered Person” has the meaning set forth in Section 5.5(a).
“Credit Agreement” means that certain Senior Secured Revolving Credit and Guaranty Agreement, dated as of the date of the Investment Closing, between the Company, the Subsidiary Guarantors (as such term is defined in the Credit Agreement) and B. RILEY COMMERCIAL CAPITAL, LLC.
“Delaware Act” means the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101 et seq., as it may be amended from time to time, and any successor statute to the Delaware Act.
“Director” means a member of the Board who is a natural person, who will be subject to the rights, obligations, limitations and duties set forth in this Agreement.
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“Disqualified Designee” means any Person who is prohibited by applicable Law from serving as a Director (including under the Clayton Act).
“Distribution” means each distribution made by the Company to a Unitholder in respect of such Unitholder’s Membership Interest, whether in cash, property or securities of the Company and whether by liquidating distribution, redemption, repurchase, or otherwise; provided that none of the following shall be deemed a Distribution: (a) any recapitalization that does not result in the distribution of cash or property to Unitholders, or any exchange or conversion of securities of the Company, (b) any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units, (c) any amounts payable pursuant to or in connection with Section 1.03, Section 1.04, Section 5.19 or Section 5.22 of the Equity Purchase Agreement, (d) the accrual of any Class A Preferred Unpaid Yield or Class B Preferred Unpaid Yield and (e) any amounts payable under the Credit Agreement.
“Drag-Along Right” has the meaning set forth in Section 13.1.
“Drag-Along Sale” has the meaning set forth in Section 13.1.
“Drag-Along Sale Notice” has the meaning set forth in Section 13.1.
“Dragged Unitholder” has the meaning set forth in Section 13.1.
“EBITDA” means, with respect to any Person, the consolidated net income (loss) of such Person determined in accordance with GAAP (“Net Income”), excluding (if and only to the extent deducted (or included) in Net Income), (a) any income Tax expense and any income Tax credits or refunds, (b) interest expense and interest income, (c) depreciation and amortization, (d) gains or losses attributable solely to purchase accounting, (e) gains or losses attributable to the early extinguishment of indebtedness or derivative instruments, (f) profits, gains or losses of a capital nature (including those arising from any sale and leaseback arrangements or from the sale, disposal or scrapping of fixed assets), (g) profits or gains or losses arising from an upward revaluation of assets, (h) profits, income, gains or losses in respect of fair value adjustments, (i) profits, gains or losses in respect of the cumulative effect of a change in accounting principles during such period, (j) income, gains or losses from disposed, abandoned, transferred, closed or discontinued operations, company, brand, or business, and (k) any recoveries under insurance policies.
“Eligible Unitholder” has the meaning set forth in Section 14.1(a).
“Employee Call Purchase Price” has the meaning set forth in Section 3.5(d).
“Employee Call Option” has the meaning set forth in Section 3.5(d).
“Employee Call Option Exercise Notice” has the meaning set forth in Section 3.5(d).
“Employee Call Option Interests” has the meaning set forth in Section 3.5(d).
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“Employee Call Option Unitholder” has the meaning set forth in Section 3.5(d).
“Entity Taxes” has the meaning set for in Section 9.12.
“Equity Agreements” means this Agreement, the Equity Purchase Agreement, the Unit Grant Agreements, the Management Incentive Plan and all other agreements, instruments, certificates and other documents to be entered into or delivered by any Unitholder in connection with the transactions contemplated hereby or thereby.
“Equity Purchase Agreement” has the meaning set forth in the Recitals.

“Equity Securities” means:
(a) Units or other equity interests in the Company or a corporate successor (including other classes or groups thereof having such relative powers, preferences, rights and obligations as may from time to time be established by the Board, including powers, preferences, rights and obligations senior to existing classes and groups of Units and other equity interests in the Company);
(b) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into Units or other equity interests in the Company or a corporate successor; and
(c) warrants, options or other rights to purchase or otherwise acquire Units or other equity interests in the Company or a corporate successor.
“Estimated Tax Amount” means, with respect to each Unitholder for each Taxable Year, the Unitholder’s Tax Amount for such Taxable Year as estimated from time to time by the Board.
“Excess Tax Distribution” has the meaning set forth in Section 4.1(b)(v).
“Existing LLC Agreement” has the meaning set forth in the Recitals.
“Fair Market Value” has the meaning set forth in Section 19.2.
“Final Distribution” has the meaning set forth in Section 18.2.
“Fiscal Quarter” means each calendar quarter ending March 31, June 30, September 30 and December 31.
“Fiscal Year” means the Company’s annual accounting period established pursuant to Section 8.2.
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“Fundamental Change” means any transaction or series of related transactions, other than a Public Offering, pursuant to which any Person or group of related Persons (other than any of the Oaktree Investors or an Affiliate thereof) in the aggregate acquires (a) Equity Securities possessing the voting power or contractual right (other than voting rights arising only in the event of a default or breach) to elect a majority of the Directors or a majority of the directors of its corporate successor (whether by merger, consolidation, reorganization, combination, sale or Transfer of Equity Securities, securityholders or voting agreement, proxy, power of attorney or otherwise) or (b) all or substantially all of the assets of the Company (or its corporate successor) and its Subsidiaries determined on a consolidated basis (measured either by book value in accordance with U.S. generally accepted accounting principles consistently applied or by Fair Market Value).
“Fundamental Change True-Up Amount” has the meaning set forth in Section 3.5(d).
“GAAP” means United States generally accepted accounting principles.
“Governmental Entity” means any foreign, domestic, supranational, federal, territorial, provincial, state or local, administrative or regulatory authority (including any stock exchange or self-regulatory organization), agency, commission, body, court or other governmental or quasi-governmental entity, including any supranational body or any political or other subdivision, department or branch of any of the foregoing.
“Gross-Up Amount” means, with respect to any Distribution pursuant to Section 4.1(a)(v), the sum of (a) the amount of such Distribution pursuant to Section 4.1(a)(v), plus (b) the sum of the Participation Thresholds of all Participating Class B Common Units.
“Independent Director” shall mean any Director who is appointed to the Board by the Oaktree Investors who is not an employee or officer of Oaktree Capital Management L.P. or any of its Affiliates and is designated by the Oaktree Investors as an “Independent Director”; provided, that, for purposes of the definition of “Independent Director”, any portfolio company of Oaktree or its Affiliates (or any portfolio company of funds managed directly or indirectly thereby) shall not be considered an Affiliate of Oaktree Capital Management L.P. or its Affiliates. For the avoidance of doubt, an Independent Director shall not be an Oaktree Director.
“Initial Unitholders” means the Persons listed on Schedule A attached hereto (or on file with the Company) as of the date hereof (and identified thereon as Unitholders), all of whom have been admitted as Unitholders of the Company.
“Investment Closing” means the Closing as defined in the Equity Purchase Agreement.
“Investor Unitholder” means each Unitholder that is a private investment fund or an investment vehicle managed, directly or indirectly, by a private investment fund (each, including specifically any Oaktree Investor and any private investment fund or an investment vehicle managed, directly or indirectly, by Oaktree).
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“IRS” means the Internal Revenue Service.
“Law” means any law, statute, ordinance, common law, rule, regulation, Order or other judgments, decisions or legal requirement enacted, issued, promulgated, enforced or entered by a Governmental Entity of competent jurisdiction.
“Liens” means any lien, charge, pledge, mortgage, easement, hypothecation, usufruct, deed of trust, security interest, option, restriction, mortgage, collateral assignment, defect, claim or other encumbrance.
“Liquidations Business” means the business of the Company and its Subsidiaries in providing retail, wholesale and industrial solutions and liquidation services.

“Losses” means items of Company loss and deduction determined according to Section 9.2(b).
“Management Incentive Plan” means the Great American Holdings, LLC 2024 Management Incentive Plan, as amended from time to time.
“managers” has the meaning set forth in Section 5.1(b)(i).
“Member of the Immediate Family” means, with respect to any Unitholder who is a natural person, each parent, spouse or child of such individual and each custodian or guardian of any property of one or more of such Persons in his or her capacity as such custodian or guardian.
“Membership Interest” means the interest of the Unitholders in the Company, including rights in Profits, Losses, and Distributions, and the right of any Unitholder to any and all of the benefits to which such Unitholder may be entitled as provided in this Agreement and in the Delaware Act, together with the obligations of such Unitholder to comply with all the provisions of this Agreement and of the Delaware Act.
“Minimum Gain” means the partnership minimum gain determined pursuant to Treasury Regulations Section 1.704-2(d).
“Net Income” has the meaning set forth in the definition of “EBITDA.”
“Net Loss” means, with respect to a Taxable Year, the excess, if any, of Losses for such Taxable Year over Profits for such Taxable Year (excluding Losses and Profits specially allocated pursuant to Section 9.6, Section 9.7 and Section 18.2).
“Net Profit” means, with respect to a Taxable Year, the excess, if any, of Profits for such Taxable Year over Losses for such Taxable Year (excluding Losses and Profits specially allocated pursuant to Section 9.6, Section 9.7 and Section 18.2).
“New Securities” has the meaning set forth in Section 14.1(c).
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“Newco” has the meaning set forth in Section 15.1.
“Nomura Credit Facility” means that certain Credit Agreement, dated as of August 21, 2023, by and among the Ultimate Parent, the B. Riley Investor, each of the other loan parties and lenders party thereto, Nomura Corporate Funding Americas, LLC, as administrative agent, and Computershare Trust Company, N.A., as collateral agent, as such Credit Agreement may be amended, restated, amended and restated or otherwise modified or refinanced or replaced from time to time.
“Non-Compete Parties” has the meaning set forth in Section 5.7(a).
“Oaktree” means Oaktree Capital Management, L.P., a Delaware limited partnership, and each of its Affiliates.
“Oaktree Directors” has the meaning set forth in Section 5.2(a)(i).
“Oaktree Director Votes” has the meaning set forth in Section 5.3(a).
“Oaktree Equity” means:
(a) the Class A Common Units acquired by the Oaktree Investors on or prior to the date hereof;
(b) any Class A Common Units thereafter issued to or otherwise acquired by the Oaktree Investors from time to time; and
(c) any securities issued or issuable directly or indirectly with respect to the securities referred to in clauses (a) or (b) above by way of dividend, distribution, split or combination or in connection with any recapitalization, merger, consolidation, or other reorganization.
As to any particular securities constituting Oaktree Equity, such securities shall cease to be Oaktree Equity when they cease to be held by Oaktree Investors (subject to, and without limiting, Section 10.1(b) and the Board’s and the Oaktree Investors’ rights in connection with a Transfer).
“Oaktree Investors” means Buyers, and any other investment vehicle or fund managed, directly or indirectly, by Oaktree that at any time acquires Units and executes a joinder to this Agreement or otherwise becomes bound by the provisions hereof.
“Oaktree Put Notice” has the meaning set forth in Section 4.2(b).
“Oaktree Put Units” has the meaning set forth in Section 4.2(b).
“Oaktree Securities” means any Unitholder Securities held by Oaktree or any of its Affiliates.
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“Observer” has the meaning set forth in Section 5.2(c).
“Offering Period” has the meaning set forth in Section 14.2.
“Officers” means each person designated as an officer of the Company to whom authority and duties have been delegated pursuant to Section 5.6 and any resolution of the Board appointing such person as an officer or relating to such appointment.
“Order” means any decision or award, decree, injunction, judgment, order, stipulation, ruling or writ of any arbitrator, mediator or Governmental Entity.
“Original Amount” means the number of Class A Common Units owned by the B. Riley Investor or Oaktree Investors, as applicable, immediately following the Investment Closing (as equitably adjusted for any Unit splits, reverse splits, recapitalizations or similar transactions that may occur following the date hereof); provided, that for the purposes of this definition, the B. Riley Investor shall not be deemed to cease to own Class A Common Units that are pledged by the B. Riley Investor, but not foreclosed upon, pursuant to Section 10.01(a)(iv).
“Original Investors” means each of BR Financial, John Bankert, Ken Bloore and Michael Marchlik.
“Other Business” has the meaning set forth in Section 6.5.
“Participating Class B Common Unit” means, with respect to any Distribution pursuant to Section 4.1(a)(v), a Class B Common Unit that has a Participation Threshold that is less than the amount determined by dividing (a) the sum of (i) the amount of such Distribution pursuant to such Section 4.1(a)(v) and (ii) the sum of the Participation Thresholds of all outstanding Class B Common Units that have a Participation Threshold that is less than or equal to the Participation Threshold of such Class B Common Unit by (b) the sum of (i) the number of outstanding Class A Common Units and (ii) the number of outstanding Class B Common Units that have a Participation Threshold that is less than or equal to the Participation Threshold of such Class B Common Unit.
“Participating Common Unit” means, with respect to any Distribution pursuant to Section 4.1(a)(v), a Class A Common Unit or a Participating Class B Common Unit.
“Participation Threshold” means, with respect to each outstanding Class B Common Unit, an amount determined in accordance with Section 3.5; provided that the Participation Threshold with respect to each Class B Common Unit shall be no less than the amount required for such Class B Common Unit to constitute a Profits Interest at the time of issuance.
“Permitted Transferee” has the meaning set forth in Section 10.1(a)(v).
“Person” shall be construed broadly and shall include an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization (whether or not having separate legal personality), any other business entity, or a Governmental Entity.
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“Preemptive Election Notice” has the meaning set forth in Section 14.2.
“Preemptive Rights Notice” has the meaning set forth in Section 14.1(a).
“Preemptive Share” has the meaning set forth in Section 14.1(a).
“Preferred Put Notice Period” has the meaning set forth in Section 4.2(b).
“Preferred Tax Distributions” means, collectively, Class A Preferred Tax Distributions and Class B Preferred Tax Distributions.
“Preferred Units” means, collectively, Class A Preferred Units and Class B Preferred Units and any other preferred units of the Company that may be issued and outstanding at any time of determination.
“Pro Rata Share” has the meaning set forth in Section 12.1.
“Proceeding” has the meaning set forth in Section 7.2.
“Profits” means items of Company income and gain determined according to Section 9.2(b).
“Profits Interest” means an interest in the profits of the Company satisfying the requirements for a partnership interest transferred in connection with the performance of services, as set forth in IRS Revenue Procedures 93-27 and 2001-43, unless superseded by IRS Notice 2005-43, in which case, as set forth in Treasury Regulations Section 1.83-3, Notice 2005-43, and any similar or related authority or the corresponding requirements of any subsequent guidance promulgated by the IRS or other applicable law.
“Public Offering” means an initial public offering or direct listing of a class of Units or common equity securities of the Company, which in accordance with Article 15 may be converted into a corporation (or other successor) for such purpose (or using a Blocker Corporation or similar structure), that results in such common equity securities of the Company or such corporation being registered under the Securities Act and listed on the New York Stock Exchange, the Nasdaq Stock Market, any other established securities exchange or market or any successor to any of the foregoing.
“Public Sale” means any sale of Unitholder Securities to the public pursuant to an offering registered under the Securities Act or to the public through a broker, dealer or market-maker after a Public Offering.
“Purchase Price” has the meaning set forth in Section 16.1.
“Put Notice” has the meaning set forth in Section 4.2(b).
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“Put Option Unitholders” has the meaning set forth in Section 4.2(b).
“Put Units” has the meaning set forth in Section 4.2(b).
“Quarterly Estimated Tax Amount” means, with respect to each Unitholder for any Fiscal Quarter of a Taxable Year, an amount equal to the excess, if any, of (a) the product of (x) ¼ in the case of the first Fiscal Quarter of the Taxable Year, ½ in the case of the second Fiscal Quarter of the Taxable Year, ¾ in the case of the third Fiscal Quarter of the Taxable Year or 1 in the case of the fourth Fiscal Quarter of the Taxable Year, multiplied by (y) such Unitholder’s Estimated Tax Amount for such Taxable Year, over (b) all Tax Distributions previously made to such Unitholder for such Taxable Year.
“Redemption Amounts” has the meaning set forth in Section 4.2(b).
“Regulatory Allocations” has the meaning set forth in Section 9.6(e).
“Reserve Amount” has the meaning set forth in Section 4.1(f).
“Related Party Agreement” has the meaning set forth in Section 3.2(b)(vii).
“Required Interest” means, at any particular time, a majority of the Oaktree Equity then outstanding; provided, that, if the Oaktree Investors collectively fail to hold at least 25% of their combined Original Amount, “Required Interest” shall mean a majority of all Class A Common Units then outstanding.
“Restricted Employees” has the meaning set forth Section 5.7(a).
“Restricted Period” means the period commencing on the Investment Closing and ending one (1) year after the B. Riley Investor (and its Permitted Transferees as a result of Transfers described in Section 10.1(a)(ii) or Section 10.1(a)(iii)) cease to hold at least 25% of its Original Amount.
“Rule 501” has the meaning set forth in Section 13.8.
“Sale” has the meaning set forth in Section 12.1.
“Sale Notice” has the meaning set forth in Section 12.1.
“Sale Process” has the meaning set forth in Section 13.7(a).
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and applicable rules and regulations thereunder, and any successor to such statute, rules, or regulations. Any reference herein to a specific section, rule, or regulation of the Securities Act shall be deemed to include any corresponding provisions of future law.
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“Sellers” has the meaning set forth in the Recitals.
“Selling Unitholder” has the meaning set forth in Section 12.1.
“Specified Adverse Event” means any event, circumstance, condition, change, development or effect that the Board determines in good faith would reasonably be expected to have, individually or in the aggregate, a materially detrimental impact on the business, financial condition or results of operations of the Company and its Subsidiaries.
“Specified Adverse Event Reduction Amount” means the amount set forth in Schedule B hereto.
“Specified Class B Reduction Amount” means (i) the Specified Adverse Event Reduction Amount divided by (ii) 183,000.
“Spousal Consent” has the meaning set forth in Section 20.23.
“Subsequent Meeting” has the meaning set forth in Section 5.3(a).
“Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect, or contract rights to appoint or elect, a majority of the board of directors or other Persons performing similar functions or that is directly or indirectly owned or controlled by such first Person and/or by one or more of its Subsidiaries. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.
“Subsidiary Public Offering” means an initial public offering or direct listing of a class of units or common equity securities of any Subsidiary of the Company (or a successor thereto), that results in such common equity securities of such Subsidiary being registered under the Securities Act and listed on the New York Stock Exchange, the Nasdaq Stock Market, any other established securities exchange or market or any successor to any of the foregoing.
“Substituted Unitholder” means a Person that is admitted as a Unitholder of the Company pursuant to Section 11.1.
“Surplus Tax Distribution Amount” has the meaning set forth in Section 4.1(b)(vi).
“Suspended Meeting” has the meaning set forth in Section 5.3(a).
“Tag-Along Unitholders” has the meaning set forth in Section 12.1.
“Tax” means any U.S. federal, state, local, or foreign income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, registration, value-added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee, or other withholding, or other tax, of any kind whatsoever, including any interest, penalties, or additions to tax or additional amounts in respect of the foregoing.
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“Tax Amount” means, with respect to each Unitholder for each Taxable Year, an amount equal to the product of (x) the Tax Rate, multiplied by (y) such Unitholder’s Taxable Income for such Taxable Year. A Unitholder’s Tax Amount shall be reasonably determined initially by the Board on the basis of the figures set forth (or expected to be set forth) on IRS Form 1065 filed by the Company and the similar state or local forms filed by the Company but shall be subject to subsequent adjustment by the Board acting reasonably if there is an audit, litigation or other Tax proceeding with respect to a Tax return filed by the Company resulting from an adjustment to the relevant Tax or Tax items or an amended Tax return filed by the Company, in each case, to reflect any such adjustment or amendment.
“Tax Distribution” has the meaning set forth in Section 4.1(b)(i).
“Tax Distribution Condition” has the meaning set forth in Section 4.1(b)(i).
“Tax Distribution Shortfall” has the meaning set forth in Section 4.1(b)(v).
“Tax Matters Partner” has the meaning set forth in Section 9.12.
“Tax Rate” means, for each Taxable Year, the combined maximum U.S. federal, state, and local income Tax rate applicable to an individual or corporation (whichever is higher) (calculated by using the highest maximum combined marginal U.S. federal, state and local income Tax rates in any jurisdiction in the United States, including pursuant to Section 1411 of the Code) for such Taxable Year (making an appropriate adjustment for any rate changes that take place during such period), calculated by taking into account different tax rates applicable to ordinary income and capital gain, as determined by the Board, it being understood that the same Tax Rate shall apply to all Unitholders.
“Taxable Income” means, with respect to a Unitholder for a Taxable Year, the cumulative taxable income and gain allocated by the Company to such Unitholder for such Taxable Year, net of any taxable losses allocated by the Company to such Unitholder for such Taxable Year (and, in the Board’s discretion, for prior Taxable Years), to the extent that such losses (a) are of a character that would permit the losses to be deducted by such Unitholder against the current taxable income or gain allocated by the Company to such Unitholder and (b) have not previously been taken into account in determining such Unitholder’s Taxable Income (which, for the avoidance of doubt, includes allocations of net income or gross income), determined without regard to any items attributable to any adjustment of the Tax basis of the Company’s or any of its flow-through Subsidiaries’ assets pursuant to Code Section 732(d), 734(b), 743(b) or 754 (or any similar Tax basis step-up),taking into account items specially allocated to such Unitholder under Code Section 704(c), without regard to the effect of any deduction under Code Section 199A, and, solely with respect to such Unitholder’s Class A Preferred Units (if any), without regard to any taxable income or gain allocated by the Company to such Unitholder for such Taxable Year in respect of the Class A Preferred Unit Cash Payments on such Class A Preferred Units.
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“Taxable Year” means the Company’s Fiscal Year unless the Board determines otherwise in compliance with applicable laws.
“Transfer” means any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of a security interest or other direct or indirect disposition or encumbrance of an interest (including by operation of Law and voluntarily or involuntarily) or the acts thereof, including by means of the Transfer of an interest in a Person that directly or indirectly holds the object subject to any such Transfer, but explicitly excluding (a) conversions or exchanges with the Company of one class of Unit or Unitholder Security to or for another class of Unit or Unitholder Security, (b) with respect to the B. Riley Investor, any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of security interest or other direct or indirect disposition of any interest in B. Riley Financial, Inc. (or a successor entity) and (c) with respect to the Oaktree Investors, any sale, transfer, assignment, pledge, mortgage, exchange, hypothecation, grant of security interest or other direct or indirect disposition of any interest in Brookfield, Oaktree or any funds or investment vehicles managed thereby (or a successor entity thereof). The terms “Transferee,” “Transferred,” “Transferor” and other forms of the word “Transfer” shall have correlative meanings.
“Transfer Event” means a Transfer by the B. Riley Investor of its Units or Unitholder Securities without the prior written consent of the Board, other than a Transfer in compliance with Section 10.1(a)(ii)).
“Transition Services Agreement” means that certain Transition Services Agreement, dated as of the date of the Investment Closing, by and between the B. Riley Investor and the Company.
“Treasury Regulations” means the income tax regulations promulgated under the Code.
“Ultimate Parent” means B. Riley Financial, Inc. (or its corporate successor, whether by merger, consolidation, reorganization or similar transaction).
“Unapplied Class A Preferred Tax Advances” has the meaning set forth in Section 4.1(iii)(b).
“Unit” means a Membership Interest of a Unitholder in the Company representing a fractional part of the Membership Interests of all Unitholders and shall include Class A Common Units, Class B Common Units, Class A Preferred Units and Class B Preferred Units; provided that any class or group of Units issued shall have relative rights, powers, and duties set forth in this Agreement and the Membership Interest represented by such class or group of Units shall be determined in accordance with such relative rights, powers, and duties set forth in this Agreement.
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“Unit Grant Agreement” has the meaning set forth in Section 3.5(a).
“Unitholder” means (a) each Initial Unitholder and (b) and any person admitted to the Company as an Additional Unitholder or Substituted Unitholder, but in each case only for so long as such person has complied with the requirements to qualify as a Unitholder in accordance with the terms of this Agreement and the Delaware Act and continues to hold at least one Unit. The Unitholders shall constitute the “members” (as that term is defined in the Delaware Act) of the Company.
“Unitholder Nonrecourse Debt” has the meaning assigned to the term “partner nonrecourse debt” in Treasury Regulations Section 1.704-2(b)(4).
“Unitholder Nonrecourse Debt Minimum Gain” means an amount, with respect to each Unitholder Nonrecourse Debt, equal to the Minimum Gain that would result if such Unitholder Nonrecourse Debt were treated as a nonrecourse liability (as defined in Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
“Unitholder Securities” means any of the following held by any Unitholder:
(a) any Common Units, Preferred Units or other equity interests in the Company or any successor thereto;
(b) any warrants, options, or other rights to subscribe for or to acquire, directly or indirectly, Common Units, Preferred Units or other equity interests in the Company or any successor thereto, whether or not then exercisable or convertible;
(c) any other securities which are convertible into or exchangeable for, directly or indirectly, Common Units, Preferred Units or other equity interests in the Company or any successor thereto, whether or not then convertible or exchangeable; and
(d) any securities issued or issuable directly or indirectly with respect to the securities referred to in clauses (a) through (c) above by way of dividend, distribution, split or combination or in connection with any recapitalization, merger, consolidation, or other reorganization.
“Withheld Consideration” has the meaning set forth in Section 4.1(b)(vi).
“Withholding Advances” has the meaning set forth in Section 9.8(b).
Article 2
ORGANIZATIONAL MATTERS
Section 2.1Formation. The Company was formed under the Delaware Act pursuant to the Certificate filed with the Secretary of State of the State of Delaware on September 17, 2024, and shall be continued in accordance with this Agreement. The Unitholders desire to continue the Company for the purposes and upon the terms and subject to the conditions set forth in this Agreement.
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Section 2.2The Certificate, Etc. The Unitholders hereby agree to execute, file and record all such other certificates and documents, including amendments to the Certificate, and to do such other acts as may be appropriate to comply with all requirements for the formation, continuation, operation and termination of a limited liability company, the ownership of property, and the conduct of business under the laws of the State of Delaware and any other jurisdiction in which the Company may own property or conduct business. This Agreement shall constitute the “limited liability company agreement” (as that term is used in the Delaware Act) of the Company. The rights, powers, duties, obligations and liabilities of the Unitholders shall be determined pursuant to the Delaware Act and this Agreement. To the extent that the rights, powers, duties, obligations and liabilities of any Unitholders are different by reason of any provision of this Agreement than they would be under the Delaware Act in the absence of such provision, this Agreement shall, to the extent permitted by the Delaware Act, control.
Section 2.3Name. The name of the Company shall be “Great American Holdings, LLC” or such name as the Board in its sole discretion may determine at any time and from time to time. Notification of any such change shall be given to all Unitholders. The Company’s business may be conducted under its name and/or any other name or names deemed advisable by the Board.
Section 2.4Purpose; Powers. Subject to the limitations contained elsewhere in this Agreement, the purpose of the Company shall be to engage in any lawful business that may be engaged in by a limited liability company organized under the Delaware Act and any and all activities necessary, advisable, convenient or incidental thereto, as may be determined by the Board from time to time. The Company shall have all the powers necessary or convenient to carry out the purposes for which it is formed, including the powers granted by the Delaware Act. Subject to the provisions of this (a) Agreement, (b) to the extent not contemplated by this Agreement, the Delaware Act, and (c) the other agreements contemplated hereby and thereby, to the fullest extent permitted by law, (i) the Company may, with the approval of the Board, enter into and perform under any and all documents, agreements and instruments, all without any further act, vote or approval of any Unitholder, and (ii) the Board may authorize any Person (including any Unitholder or Officer) to enter into and perform under any document, agreement or instrument on behalf of the Company. Subject to the provisions of this Agreement and the other agreements contemplated hereby and thereby, including Section 3.2, to the fullest extent permitted by Law (and except as required by the non-waiveable portions of the Delaware Act), the Company may, with the approval of the Board and without the need for any further act, vote or approval of any Unitholder, merge with, or consolidate into, a limited partnership (organized under the laws of the State of Delaware or any other state), another limited liability company (organized under the laws of the State of Delaware or any other state), a corporation (organized under the laws of Delaware or any other state) or other business entity (as defined in Section 18-209(a) of the Delaware Act), regardless of whether the Company or such other entity is the survivor. If a merger is used as a means of effecting the intent of Article 15, then the provisions of such Section shall apply to such transaction.
Section 2.5No State-Law Partnership. The Unitholders do not intend that the Company be a partnership (including a limited partnership) or joint venture or that any Unitholder or Officer be a partner or joint venturer of any other Unitholder or Officer for any purposes other than for such tax purposes as set forth in Article 9. All property of the Company, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity. A Unitholder has no interest in such Company property or any portion thereof by virtue of being a “member” under the Delaware Act.
Section 2.6Foreign Qualification. The Board shall cause the Company to be qualified or registered in any jurisdiction where required by applicable law.
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The Board shall cause to be executed, delivered and filed any certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may conduct business.
Section 2.7Principal Office; Registered Office; Registered Agent. The principal office of the Company shall be located at such place as the Board may from time to time designate in the manner provided by the Delaware Act and applicable law. The Company may maintain offices at such other place or places as the Board deems advisable. Notification of any change in the location of the Company’s principal office shall be given to all Unitholders. The registered office of the Company required by the Delaware Act to be maintained in the State of Delaware shall be the office of the initial registered agent named in the Certificate or such other office (which need not be a place of business of the Company) as the Board may designate from time to time in the manner provided by the Delaware Act and applicable law. The registered agent of the Company for service of process on the Company in the State of Delaware shall be the initial registered agent named in the Certificate or such other Person or Persons as the Board may designate from time to time in the manner provided by the Delaware Act and applicable law.
Section 2.8Operation of Company as a Separate Enterprise. The Company shall, consistent with the terms of this Agreement, conduct its business and operations to maintain its status as a separate legal entity apart from that of any other Person, including any of the Unitholders and any Affiliates of any of the Unitholders, including by (a) not allowing funds or other assets of the Company to be commingled with the funds or other assets of, owned by or registered in the name of, any other Person (other than its Subsidiaries in customary cash pooling or similar arrangements), (b) maintaining books, bank accounts and financial records of the Company separate from those of any other Person, (c) observing customary procedures and formalities and (d) causing the Company to conduct its dealings with third parties in its own name and in all respects hold itself out as a separate and independent legal entity.
Section 2.9Term. The term of the Company commenced upon the filing of the Certificate in accordance with the Delaware Act and shall continue in existence until termination and dissolution thereof in accordance with the provisions of Article 18.
Article 3
UNITS
Section 3.1Unitholders.
(a)Capital Contributions. Each Unitholder named on Schedule A attached hereto or on file with the Company (or such Person’s predecessor-in-interest) has made (or has been deemed to have made) Capital Contributions to the Company as set forth on Schedule A in exchange for the Units specified thereon, and each Unitholder’s initial Capital Account shall be established in accordance with such Capital Contributions. Any reference in this Agreement to Schedule A shall be deemed to be a reference to Schedule A as amended and in effect from time to time, and such Schedule A may be updated and amended from time to time by the Board in good faith without requiring any further action by any Unitholder to reflect changes in the information thereon that occur pursuant to, and in compliance with, this Agreement. The Company and each Unitholder shall file all Tax returns, including any schedules thereto, in a manner consistent with such initial Capital Accounts (as may be adjusted in accordance with Section 9.2 or pursuant to the Equity Purchase Agreement or any unit purchase agreement from time to time).
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Each Person listed on Schedule A upon (i) such Person’s execution of this Agreement or a counterpart thereto and (ii) receipt (or deemed receipt) by the Company of such Person’s Capital Contribution, if any, as set forth on Schedule A, is hereby or was, as applicable, admitted to the Company as a Unitholder of the Company with respect to the Units specified opposite such Person’s name on Schedule A. Each Unitholder’s Membership Interest, including such Unitholder’s interest in Profits, Losses and Distributions of the Company and the right to vote on certain matters as provided in this Agreement, shall be represented by the Units owned by such Unitholder pursuant to the terms of this Agreement. The ownership of Units shall entitle each Unitholder to allocations of Profits and Losses and other items and distributions of cash and other property as set forth in Article 4 hereof. Each Unit shall constitute and remain a “security” within the meaning of Section 8-102(a)(15) of the Uniform Commercial Code as in effect from time to time in the state of Delaware. The Board may in its discretion issue to any Unitholder and, at the request of the B. Riley Investor in respect of Units held by the B. Riley Investor or its Affiliates or the Oaktree Investors in respect of Units held by the Oaktree Investors or their Affiliates, the Board shall cause the Company to issue to such Unitholder, certificates representing the Units (“Certificated Securities”) held by such Unitholder.
(b)Representations and Warranties of Unitholders. Each Unitholder hereby represents and warrants to the Company and acknowledges that:
(i)such Unitholder has knowledge and experience in financial and business matters and is capable of evaluating the merits and risks of an investment in the Company and making an informed investment decision with respect thereto;
(ii)such Unitholder is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act, and, in connection with the execution of this Agreement, agrees to deliver such certificates to that effect as the Board may reasonably request;
(iii)such Unitholder has reviewed and evaluated all information necessary to assess the merits and risks of such Unitholder’s investment in the Company and has had answered to such Unitholder’s satisfaction any and all questions regarding such information;
(iv)such Unitholder is able to bear the economic and financial risk of an investment in the Company for an indefinite period of time (including the risk of loss of its entire investment);
(v)such Unitholder is acquiring interests in the Company for investment only and not with a view to, or for resale in connection with, any distribution thereof;
(vi)the Membership Interests and Units have not been registered under the securities laws of any jurisdiction and cannot be disposed of unless they are subsequently registered and/or qualified under applicable securities laws, or an exemption from registration or qualification requirements is available under applicable securities laws, and the provisions of this Agreement have been complied with;
(vii)any attempt to Transfer, or offer to Transfer, any Unitholder Securities without complying with this Agreement shall be void and of no effect;
(viii)to the extent applicable, the execution, delivery and performance of this Agreement have been duly authorized by such Unitholder and do not, require such Unitholder to obtain any consent or approval that has not been obtained and do not contravene or result in a default under any provision of any Law or regulation applicable to such Unitholder or other governing documents or any agreement or instrument to which such Unitholder is a party or by which such Unitholder is bound or any Order, judgment, award, writ, injunction or decree applicable to the Unitholder’s properties or assets; (ix)the determination of such Unitholder to purchase interests in the Company has been made by such Unitholder independent of any other Unitholder and independent of any statements or opinions as to the advisability of such purchase, which may have been made or given by any other Unitholder or by any agent or employee of any other Unitholder;
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(x)the interests in the Company were not offered to such Unitholder by means of general solicitation or general advertising;
(xi)such Unitholder has carefully reviewed the terms of this Agreement and has evaluated the restrictions and obligations contained herein;
(xii)if such Unitholder is a natural person and married he or she has delivered a Spousal Consent; and
(xiii)this Agreement is valid, binding and enforceable against such Unitholder in accordance with its terms.
(c)No Liability of Partners and Unitholders.
(i)No Liability.
(A)Except as otherwise required by applicable Law and as expressly set forth in this Agreement, no Unitholder shall have any personal liability whatsoever in such Unitholder’s capacity as a Unitholder, whether to the Company, to any of the other Unitholders, to the creditors of the Company or to any other third party, for the debts, liabilities, commitments or any other obligations of the Company or for any losses of the Company, any Subsidiary thereof or any other Unitholder, in each case solely by reason of being a Unitholder or holding a Membership Interest. Each Unitholder shall be liable only to make such Unitholder’s Capital Contribution to the Company and the other payments provided expressly herein. No Unitholder shall be required to make any additional Capital Contributions to the Company. A Unitholder may make additional Capital Contributions to the Company only with the prior approval of the Board and in accordance with this Agreement.
(ii)Distribution. In accordance with the Delaware Act and the laws of the State of Delaware, a member of a limited liability company may, under certain circumstances, be required to return amounts previously distributed to such member. It is the intent of the Unitholders that no distribution to any Unitholder pursuant to Article 4 hereof shall be deemed a return of money or other property paid or distributed in violation of the Delaware Act. The payment of any such money or distribution of any such property to a Unitholder shall be deemed to be a compromise within the meaning of the Delaware Act, and the Unitholder receiving any such money or property shall not be required to return to any Person any such money or property. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Unitholder is obligated to make any such payment, such obligation shall be the obligation of such Unitholder and not of any other Unitholder.
Section 3.2Voting and Consent Rights; Unitholder Meetings.
(a)Voting of Unitholders. To the fullest extent permitted by the Delaware Act and applicable Law (including Section 18-302 of the Delaware Act), the holders of Units, other than the holders of those Class A Common Units comprising the Required Interest, shall not be entitled to a vote in respect of any such Units on any matters submitted to or required to be submitted to the Unitholders (provided that the foregoing shall not waive any requirement to obtain approval from any Unitholders to the extent otherwise specifically provided in this Agreement, including Section 3.2(b) and Article 13).
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To the fullest extent permitted by applicable Law (including Section 18-302 of the Delaware Act), (i) all matters required to be voted on by the Unitholders pursuant to this Agreement shall only require the vote of Unitholders holding the Required Interest, (ii) a quorum shall be present at a meeting of Unitholders if Unitholders holding the Required Interest are represented at the meeting in person or by proxy and (iii) the affirmative vote of the Unitholders holding the Required Interest at a meeting of Unitholders at which a quorum is present shall be the act of the Unitholders. Without limiting the foregoing, to the extent that a vote of Unitholders is required by the applicable Law and the foregoing waiver of voting rights in the first two sentences of this Section 3.2(a) is not effective, with respect to any matter for which the affirmative vote of the holders of a class or specified portion of Units entitled to vote is so required, (i) a quorum shall be present at a meeting of Unitholders if Unitholders holding the majority of Units of such class or specified portion of a class entitled to vote are represented at the meeting in person or by proxy, (ii) when a quorum is present, the affirmative vote of a majority of such class or specified portion of a class of Unitholders entitled to vote and present in person or by proxy at such meeting of Unitholders shall be the act of such class or specified portion of a class of Unitholders, and (iii) except as otherwise specifically required by applicable Law, on each such matter on which a vote or approval of any class or specified portion of a class of Unitholders is required, each Unit of such class or specified portion of a class of Unitholders shall be entitled to one vote per Unit. There shall be no cumulative voting.
(b)Unitholder Consent Rights. Notwithstanding anything to the contrary in this Agreement, without the prior written consent of, until the Oaktree Investors collectively fail to hold at least 25% of their combined Original Amount, the Oaktree Investors and, until the B. Riley Investor (or a Permitted Transferee thereof pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii)) fails to hold at least 25% of its Original Amount or a Transfer Event has occurred, the B. Riley Investor, the Company shall not, and shall cause its Subsidiaries not to, enter into any agreement or commit to take, or take, authorize or approve any of the following actions:
(i)amending this Agreement in a manner that would materially and adversely affect the rights, preferences, privileges or obligations of the B. Riley Investor in its capacity as a Unitholder, in the case of the B. Riley Investor’s consent right, or any Oaktree Investor in its capacity as a Unitholder, in the case of the Oaktree Investors’ consent right; provided, that such consent requirement shall not apply to any creation or issuances of Additional Securities in accordance with Section 3.4 or in accordance with Section 3.5, adjustments to Schedule A, the admittance of any Additional Unitholder or Substituted Unitholder (including any amendments in respect thereof in accordance with Section 10.1(b)), or the amendments contemplated by Article 15, in each case to the extent such actions are taken in accordance with the terms of this Agreement;
(ii)making any redemptions or repurchases of the Class A Common Units, other than any pro rata redemptions or repurchases of Class A Common Units (it being understood that the surrender, forfeiture and cancellation of Class A Common Units pursuant to Article VIII of the Equity Purchase Agreement and as contemplated by the last sentence of Section 20.15 shall not be deemed a redemption or repurchase for purposes of this clause (ii));
(iii)taking any action that would require the B. Riley Investor or its Affiliates, in the case of the B. Riley Investor’s consent right, or the Oaktree Investors or their Affiliates, in the case of the Oaktree Investors’ consent right, to provide a guarantee or other credit support on behalf of the Company or any of its Subsidiaries;
(iv)issuing or selling Units or Unitholder Securities to Company Service Providers, in their capacity as such, other than Class B Common Units in an aggregate amount not in excess of 100,000 Class B Common Units; provided that the Board shall have the right to increase such amount, at its discretion, to up to 115,000 Class B Common Units;
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(v)filing a voluntary bankruptcy or similar proceeding or knowingly failing to contest any bankruptcy or similar proceeding filed against the Company or any of its Subsidiaries; provided that no consent of the B. Riley Investor or the Oaktree Investors shall be required if such filing or failure to contest is approved by an Independent Director;
(vi)issuing or selling Units or Unitholder Securities ranking, as to payment of dividends or distributions or as to distributions of assets upon voluntary or involuntary dissolution, liquidation or winding-up of the Company, senior to or pari passu with the Class B Preferred Units, if the proceeds therefrom are used to make distributions to the holders of Class A Preferred Units in respect of their Class A Preferred Units (other than any Class A Preferred Unit Cash Payment to be made pursuant to Section 4.1(c) or distributions pursuant to Section 4.1(b)); provided that any such proceeds shall be deemed not to have been used in any distributions made more than eighteen (18) months following the issuance or sale that generated such proceeds;
(vii)entering into any contract, agreement or arrangement between the Company or any of its Subsidiaries, on the one hand, and any Unitholder or any Affiliate thereof, on the other hand (such contract, agreement or arrangement, a “Related Party Agreement”), other than (A) this Agreement or any contract, agreement or arrangement expressly contemplated by any of the Equity Agreements (including the entry into Unit Grant Agreements with Company Service Providers), the Transition Services Agreement or the Credit Agreement, including in connection with any exercise, assignment or Transfer of any rights granted, or any transaction otherwise subject to limitations, restrictions, procedures or other provisions, as applicable, as expressly described in any of the Equity Agreements, the Transition Services Agreement or the Credit Agreement or pursuant to any other contract or agreement that does not require any consent (or for which consent has been obtained) in accordance with this Section 3.2(b)(vii), (B) any entry into or approval of a Related Party Agreement on arm’s-length terms (as determined in good faith by the Board, which for this purpose shall include at least one Director that was not appointed to the Board by the Unitholder that is engaging (or whose Affiliate is engaging) in such Related Party Agreement (it being understood that the Independent Directors shall not be deemed to have been appointed by the Oaktree Investors or their Affiliates for purposes of this Section 3.2(b)(vii)), (C) any entry into or approval of a Related Party Agreement that is with any Persons who are employees, officers, directors, managers or consultants of the Company or any of its Subsidiaries solely with respect to such Person’s role as, and in such Person’s capacity as, an employee, officer, director, manager or consultant of the Company or any of its Subsidiaries, (D) any entry into or approval of a Related Party Agreement for which the Board has obtained advice (which may be oral or written) from an independent valuation, investment banking or financial advisory firm that the consideration payable in, or other principal financial terms, as applicable, of, such contract, agreement or arrangement, are fair, from a financial point of view, to the holders of Class A Common Units (other than, if applicable based on the nature of the contract, agreement or arrangement, the Oaktree Investors or the B. Riley Investor, as the case may be), and (E) any entry into or approval of a Related Party Agreement between the Company or any of its Subsidiaries, on the one hand, and any portfolio company of Oaktree, on the other hand, in the ordinary course of business that has a Fair Market Value (determined by reference to amounts to be received or paid by the Company and its Subsidiaries in such transaction or otherwise as determined in good faith by the Board) equal to or less than $1,500,000; provided that, in the aggregate, payments of any such Related Party Agreements to be subject to the exception set forth in this clause (E) shall not exceed $5,000,000 in any given Fiscal Year;
(viii)(A) other than in connection with a Public Offering, change the U.S. federal income tax classification of the Company or any of its material Subsidiaries, (B)
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subject to Section 9.7(b), Section 9.11, and Section 9.12, make, revoke or modify any other material tax election (other than any such election that is required by this Agreement or applicable Law), or (C) consent to any assessment or adjustment proposed by any taxing authority; in each case, that would reasonably be expected to materially increase the Tax liability of the Oaktree Investors, in the case of the Oaktree Investors’ consent right, or the B. Riley Investor, in the case of the B. Riley Investor’s consent right, in each case, in a manner that is materially disproportionate, taking into account the relative economic entitlements of the Unitholders; or
(ix)incurring, refinancing, creating or guarantying any indebtedness if the proceeds therefrom are used to make distributions to holders of Class A Preferred Units in respect of their Class A Preferred Units (other than any Class A Preferred Unit Cash Payment to be made pursuant to Section 4.1(c) or distributions pursuant to Section 4.1(b); provided that the rights granted to the B. Riley Investor pursuant to this Section 3.2(b)(ix) shall expire upon the date that is eighteen (18) months after the Investment Closing.
(c)Place. All meetings of the Unitholders shall be held at the principal place of business of the Company or at such other place within or without the State of Delaware as shall be specified or fixed in the notices or waivers of notice thereof. Unitholders may participate in any such meeting by means of video or telephone conference or similar forms of communication that enable all Persons participating in the meeting to hear each other, and participation in such meeting shall constitute attendance and presence in person at such meeting, except where a Person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.
(d)Adjournment. Notwithstanding the other provisions of the Certificate or this Agreement, the chairperson of the meeting shall have the power to adjourn such meeting from time to time, without any notice other than announcement at the meeting of the time and place of the holding of the adjourned meeting. If such meeting is adjourned by the Unitholders, the time and place for the resumption of such meeting shall be determined by a vote of the Unitholders holding the Required Interest. Upon the resumption of such adjourned meeting, any business may be transacted that might have been transacted at the meeting as originally called, so long as a quorum is present.
(e)Meetings. Meetings of the Unitholders for any proper purpose or purposes may be called at any time only by the Board or any Oaktree Director.
(f)Notice. A written or printed notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered to each Unitholder entitled to vote at such meeting by or at the direction of the Board or any Oaktree Director calling the meeting, not less than three (3) nor more than thirty (30) days before the date of the meeting in accordance with Section 20.12 of this Agreement. Presence at a meeting by a Unitholder shall constitute a waiver of any deficiency of notice, except when a Unitholder attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not called or convened in accordance with this Agreement.
(g)Record Date. Unless otherwise determined by the Board, the date on which notice of a meeting of Unitholders is mailed (by e-mail or otherwise) shall be the record date for the determination of any Unitholders entitled to notice of or to vote at such meeting (including any adjournment thereof).
(h)Proxies. A Unitholder may vote either in person or by proxy executed in writing by the Unitholder. An electronic mail in portable document format (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document executed by the Unitholder shall be treated as an execution in writing for purposes of this Section 3.2(h).
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Proxies for use at any meeting of Unitholders or in connection with the taking of any action by written consent pursuant to Section 3.3 shall be filed with the Secretary of the Company, before or at the time of the meeting or execution of the written consent as the case may be. All proxies shall be received and taken charge of and all ballots shall be received and canvassed by the Secretary of the Company, who shall decide all questions concerning the qualification of voters, the validity of the proxies and the acceptance or rejection of votes, unless an inspector or inspectors shall have been appointed by the chairman of the meeting, in which event such inspector or inspectors shall decide all such questions. No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. Should a proxy designate two (2) or more Persons to act as proxies, unless that instrument shall provide to the contrary, a majority of such Persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one (1) be present, then such powers may be exercised by that one (1); or, if an even number attend and a majority do not agree on any particular issue, the Company shall not be required to recognize such proxy with respect to such issue if such proxy does not specify how the Units that are the subject of such proxy are to be voted with respect to such issue.
(i)Conduct of Unitholder Meetings. All meetings of the Unitholders shall be presided over by the chairperson of the meeting, who shall be designated by the Directors present at such meeting. Subject to any procedural rules adopted by the Board, the chairperson of any meeting of Unitholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion.
(j)Oaktree Investors. Any rights of the Oaktree Investors under this Agreement shall be exercised by the holders of the majority of the Oaktree Equity then outstanding; provided that the appointment of the Oaktree Directors and Independent Directors shall only be effected by the holders of all of the Oaktree Equity then outstanding.
Section 3.3Action of Unitholders by Written Consent.
(a)Written Consent in Lieu of Meeting. Any action required or permitted to be taken at any meeting of Unitholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the Unitholder or Unitholders holding not less than the minimum number of Units that would be necessary to take such action at a meeting at which all Unitholders entitled to vote on the action were present and voted. Every written consent shall bear the date of signature of each Unitholder who signs the consent. An electronic mail in portable document format (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document signed by a Unitholder shall be regarded as signed by the Unitholder for purposes of this Section 3.3(a). Prompt notice of the taking of any action by Unitholders without a meeting by less than unanimous written consent shall be given to those Unitholders who did not consent in writing to the action.
(b)Record Date for Written Consent in Lieu of Meeting. The record date for determining Unitholders entitled to consent to action in writing without a meeting shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company.
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Section 3.4Issuance of Additional Units and Interests.
(a)Subject to compliance with the provisions of this Agreement and the other Equity Agreements, the Board shall have the right to cause the Company to issue or sell to any Person (including Unitholders and Affiliates) any of the following (which for purposes of this Agreement shall be “Additional Securities”): (i) additional Units or other Membership Interests (including other classes or series thereof having different powers, preferences, rights and obligations as may from time to time be established by the Board), (ii) obligations, evidences of indebtedness, or other securities or interests convertible or exchangeable into Units or other Membership Interests, and (iii) warrants, options, or other rights to purchase or otherwise acquire Units or Membership Interests. Subject to compliance with the provisions of this Agreement and the other Equity Agreements, the Board shall determine the rights, powers, preferences and obligations governing the issuance of such Additional Securities, including the number and designation of such Additional Securities, the preference (with respect to distributions, liquidations, or otherwise) over any other Units and any required or deemed contributions in connection therewith; provided, that no such issuance that would materially and adversely affect the rights, preferences or privileges of the holders of Class B Common Units in a manner disproportionate to the effect of such issuance on the rights, preferences or privileges of holders of Class A Common Units or Class B Common Units (without regard to any effect resulting from the individual circumstances of any holder of such class or group of Units) shall be effective against such holder whose rights, preferences or privileges are so affected thereby without the prior written consent of such holders so affected (provided that the specific terms of the Class B Common Units held by such holder, including with respect to the applicable vesting terms, Participation Threshold, Management Incentive Plan and Unit Grant Agreement terms in respect of each such Unit, may be considered in determining whether such issuance materially and adversely affect the rights, preferences or privileges of the Class B Common Units in a manner disproportionate to the effect of such issuance on the rights, preferences or privileges of such Class A Common Units and Class B Common Units). Subject to the foregoing, the Board shall have the right and authority to amend this Agreement to reflect the creation of additional classes or series of Units without requiring any further action by the Unitholders. Any Person who acquires Units may be admitted to the Company as a Unitholder pursuant to the terms of Section 11.2 hereof. All Units issued pursuant to the terms of this Agreement shall be validly issued and, unless otherwise determined at the time of issuance, fully paid.
(b)If any Person acquires Additional Securities from the Company pursuant to Section 3.4(a) or Section 3.5 or other interests in the Company or is admitted to the Company as an Additional Unitholder pursuant to Section 11.2, Schedule A shall be amended to reflect such additional issuance and/or Unitholder, as the case may be, without requiring any further approval or consent of any Unitholder.
Section 3.5Incentive Equity.
(a)Subject to Section 3.2(b)(iv), the Company may (i) issue incentive Class B Common Units to existing or new Company Service Providers pursuant to, and subject to the terms of, the Management Incentive Plan and written award agreements thereunder approved by the Board (each such agreement, regardless of its actual title, and as amended, modified and waived from time to time in accordance with its terms, is referred to herein as a “Unit Grant Agreement”) and (ii) reissue any Class B Common Units that are forfeited or otherwise reacquired by the Company to any existing or new Company Service Providers. Each Unitholder agrees and acknowledges that Class B Common Units may be subject to vesting arrangements, in each case different from those of any other Class B Common Units, and in each case as set forth in the Management Incentive Plan and applicable Unit Grant Agreement. Except as expressly provided in a Unit Grant Agreement, the Unitholders and the Company agree that in the event of any conflict or inconsistency between the terms of any Unit Grant Agreement, the Management Incentive Plan and this Agreement, the terms of this Agreement shall control; provided, however, that any Unit Grant Agreement and the Management Incentive Plan may impose greater restrictions or grant lesser rights to any grantee or participant than this Agreement.
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On the date of each grant of any Class B Common Units, the Board shall establish an initial Participation Threshold with respect to such Class B Common Units, including as the Board may deem necessary to permit such Class B Common Units to constitute Profits Interests, and in such case, the Participation Threshold with respect to such Class B Common Units shall be subject to adjustment in accordance with this Section 3.5. Unless otherwise determined by the Board in its reasonable discretion, the Participation Threshold with respect to a Class B Common Unit shall be equal to or greater than the amount that would be distributed with respect to a then outstanding Class A Common Unit pursuant to Section 4.1(a) in a hypothetical transaction in which the Company sold itself for its Fair Market Value (calculated in accordance with Section 19.2(b)) and distributed the proceeds pursuant to Section 18.2 (as determined immediately prior to the issuance of such Class B Common Unit). The Board may designate a series number for each subset of Class B Common Units having the same Participation Threshold. A Unit Grant Agreement, the Management Incentive Plan or the Board may provide for restrictions, limitations and other requirements (including vesting requirements) on the amount of Distributions to which a Company Service Provider may directly or indirectly be entitled. Subject to Section 3.2(b)(iv), the Board shall have sole and complete power and discretion to approve which Company Service Providers shall be offered Class B Common Units, the number of Class B Common Units to be offered and issued to any such Company Service Provider, the purchase price (if any) for such Class B Common Units and the terms and conditions (including the vesting schedule and the Participation Threshold) with respect thereto.
(b)Each Class B Common Unit’s Participation Threshold shall be adjusted (as determined by the Board) after the grant of such Class B Common Unit in the following manner:
(i)in the event of any Distribution made or deemed to be made pursuant to Section 4.1(a), the Participation Threshold of each Class B Common Unit outstanding at the time of such Distribution shall be reduced (but not below zero) by the excess of (A) the amount that each Class A Common Unit receives in such Distribution less (B) the amount that such Class B Common Unit is entitled to receive in such Distribution, if any (with such reduction occurring immediately after the determination of the portion of such Distribution, if any, that such Class B Common Unit is entitled to receive);
(ii)in the event of any Capital Contribution with respect to any outstanding Common Units, the Participation Threshold of each Class B Common Unit outstanding at the time of such Capital Contribution shall be increased by the amount contributed with respect to each Common Unit, or, if such Capital Contribution is made with respect to less than all of the Common Units then outstanding other than Class B Common Units, then the Participation Threshold of each Class B Common Unit may be increased by a lesser amount as may be reasonably determined by the Board consistent with the treatment of the Class B Common Units as Profits Interests; and
(iii)no adjustment shall be made in connection with any redemption or repurchase by the Company or any Unitholder of any Units.
(c)The Board shall have the ability, in its sole discretion, to adjust the operations of this Section 3.5 and Section 4.1 to achieve the economic results intended by this Agreement, including (i) that the amount that would be distributed with respect to a Unit if there were a liquidation and termination of the Company pursuant to Section 18.2 shall be the same immediately before and immediately after certain events, including an issuance of new Units, a Unit split or a Unit redemption and (ii) that the Class B Common Units are Profits Interests for U.S. federal income tax purposes.
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(d)Without limiting any rights of the Company under the Management Incentive Plan or any Unit Grant Agreement, the Company shall have the right, but not the obligation, to purchase (the “Employee Call Option”) all, but not less than all, of the vested Class B Common Units (the “Employee Call Option Interests”) of any Company Service Provider (or any Transferee of such Company Service Provider (other than a bona fide third-party transferee that was approved by the Board)) (the “Employee Call Option Unitholder”) during the twelve (12)-month period immediately following the termination of employment of, or termination of full-time consulting or other service arrangements of, such Company Service Provider at a price in cash for each such vested Class B Common Unit, determined as of the date of exercise of the Employee Call Option, assuming a hypothetical transaction in which the Company sold itself for its Fair Market Value (calculated in accordance with Section 19.2(b) except as is otherwise expressly provided in an applicable Unit Grant Agreement) and assuming the distribution of proceeds in accordance with Section 18.2 (the “Employee Call Purchase Price”) by delivering a written notice to the Employee Call Option Unitholder (the “Employee Call Option Exercise Notice”). Notwithstanding the foregoing, if the Employee Call Option is exercised within a period of six (6) months prior to the consummation of a Fundamental Change (and such Fundamental Change is actually consummated), if the Employee Call Option Unitholder would have been entitled to receive an amount per Class B Common Unit in connection with the consummation of such Fundamental Change greater than the Employee Call Purchase Price, assuming (i) such Employee Call Option Interests and all other Class B Common Units repurchased pursuant to an Employee Call Option during such six (6)-month period prior to such Fundamental Change remained outstanding at the time of the consummation of such Fundamental Change, (ii) that all of the proceeds from such sale were paid directly to the Company other than an amount of such proceeds necessary to pay transfer taxes payable in connection with such sale, which amount will not be received or deemed received by the Company, and (iii) the Company distributed the proceeds pursuant to Section 18.2 (such amount per share, the “Fundamental Change True-Up Amount”), then the Company shall pay to the applicable Employee Call Option Unitholder an amount in cash per Class B Common Unit repurchased pursuant to the Employee Call Option equal to (y) the Fundamental Change True-Up Amount less (z) the Employee Call Purchase Price.
(e)Following the delivery of the Employee Call Option Exercise Notice, the Employee Call Option Unitholder shall (i) cooperate in good faith with the Company and take such actions as may be required to effectuate such exercise of the Employee Call Option expeditiously in accordance with and subject to the terms of this Agreement (including by assisting the Company with any filings required to be made under applicable Law with any Governmental Entity or to obtain any regulatory approval), (ii) execute and deliver (or cause to be executed and delivered) any purchase agreement or other documentation required or reasonably necessary to consummate the transactions contemplated by the Employee Call Option, which such documentation shall include customary terms and provisions for such a transaction (which may include customary confidentiality covenants and covenants not to sue on claims relating to payments in respect of Units), but which shall not include any non-compete, non-solicitation or other restrictive covenants, or any employment-related releases of claims) and (iii) if requested, deliver one or more duly completed and executed letters of transmittal, unit powers or other applicable instruments.
(f)The Employee Call Option Unitholder hereby agrees with respect to all Unitholder Securities such Unitholder holds, or otherwise exercises dispositive power over, that are subject to the Employee Call Option to consent to any amendments to this Agreement to reflect the transfer of the Employee Call Option Interests.
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Section 3.6No Withdrawal. No Person shall be entitled to withdraw any part of such Person’s Capital Contributions or Capital Account or to receive any Distribution from the Company, except as expressly provided herein or in the other agreements referred to herein.
Section 3.7Loans from Unitholders. Loans by Unitholders to the Company shall not be considered Capital Contributions. If any Unitholder shall loan funds to the Company, the making of such loans shall not result in any increase in the amount of the Capital Account of such Unitholder. The amount of any such loans shall be a debt of the Company to such Unitholder and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made. Nothing contained in this Agreement shall require any Unitholder to provide a loan to the Company or its Subsidiaries.
Article 4
DISTRIBUTIONS AND REDEMPTIONS
Section 4.1Distributions.
(a)Distributions Generally. Except as otherwise set forth in this Section 4.1, and subject to the provisions of Section 18-607 of the Delaware Act, the Board may in its sole discretion, subject to Section 4.1(e) herein, make Distributions at any time or from time to time. All Distributions, other than Tax Distributions (which are addressed separately in Section 4.1(b)), shall be made only in the following order and priority:
(i)first, to the Unitholders holding Class A Preferred Units (in the proportion that each Unitholder’s share of Class A Preferred Unpaid Yield bears to the aggregate amount of Class A Preferred Unpaid Yield), until the Class A Preferred Unpaid Yield on each such Unitholder’s outstanding Class A Preferred Units as of the time of such Distribution is reduced to zero;
(ii)second, to the Unitholders holding Class A Preferred Units (in the proportion that each Unitholder’s share of Class A Preferred Unreturned Capital with respect to such Class A Preferred Units bears to the aggregate amount of Class A Preferred Unreturned Capital with respect to all Class A Preferred Units), until the Class A Preferred Unreturned Capital with respect to each such Unitholder’s outstanding Class A Preferred Units as of the time of such Distribution is reduced to zero;
(iii)third, to the Unitholders holding Class B Preferred Units (in the proportion that each Unitholder’s share of Class B Preferred Unpaid Yield bears to the aggregate amount of Class B Preferred Unpaid Yield), until the Class B Preferred Unpaid Yield on each such Unitholder’s outstanding Class B Preferred Units as of the time of such Distribution is reduced to zero;
(iv)fourth, to the Unitholders holding Class B Preferred Units (in the proportion that each Unitholder’s share of Class B Preferred Unreturned Capital with respect to such Class B Preferred Units bears to the aggregate amount of Class B Preferred Unreturned Capital with respect to all Class B Preferred Units), until the Class B Preferred Unreturned Capital with respect to each such Unitholder’s outstanding Class B Preferred Units as of the time of such Distribution is reduced to zero; and
(v)fifth, to the holders of the Participating Common Units, the remainder of such Distribution, if any, as follows: (x) with respect to each Class A Common Unit, an amount equal to the amount determined by dividing the Gross-Up Amount by the number of Participating Common Units, and (y) with respect to each Participating Class B Common Unit, an amount equal to (A) the amount determined pursuant to the foregoing clause (x) less (B) the Participation Threshold with respect to such Participating Class B Common Unit.
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(b)Tax Distributions.
(i)Notwithstanding any other provision herein to the contrary, with respect to any taxable period (or portion thereof) during which the Company is treated as a partnership for U.S. federal income tax purposes, the Company shall distribute to each Unitholder promptly after the end of each Fiscal Quarter after the effective date of this Agreement (but (x) only after making the Class A Preferred Unit Cash Payment(s) for such Fiscal Quarter and prior Fiscal Quarters, and (y) solely to the extent consistent with clause (x), at least five (5) days prior to the due date for the quarterly payment of estimated U.S. federal income Taxes by individuals or corporations (whichever is earlier) for a calendar year), to the extent permitted by Law and the Delaware Act (the foregoing condition, the “Tax Distribution Condition”), an amount of cash in respect of such Fiscal Quarter which equals such Unitholder’s Quarterly Estimated Tax Amount for such Fiscal Quarter (each, a “Tax Distribution”).
(ii)In the event that due to the Tax Distribution Condition the funds available for any Tax Distribution to be made hereunder are insufficient to pay the full amount of Tax Distributions that would otherwise be required under this Section 4.1(b), prior to making any distributions pursuant to Section 4.1(a) (other than Class A Preferred Unit Cash Payments), the Company shall distribute to the Unitholders the amount of funds that are available for distribution after application of the Tax Distribution Condition first, to satisfy any Preferred Tax Distributions, pro rata on the basis of the amount of Preferred Tax Distributions to which the Unitholders are otherwise entitled, and, second, any remainder pro rata to satisfy any Common Tax Distributions pro rata on the basis of the amount of Common Tax Distributions to which the Unitholders are otherwise entitled. At any time thereafter when additional funds of the Company are available for distribution after application of the Tax Distribution Condition and payment of Class A Preferred Unit Cash Payments and Tax Distributions for subsequent periods, the Company shall distribute such funds to the Unitholders in a manner that would cause the aggregate amount of Tax Distributions paid to all Unitholders to equal (or approximate as closely as possible) the aggregate amount of Tax Distributions that would have been paid to all Unitholders if all Tax Distributions had been distributed to Unitholders in accordance with this Section 4.1(b) if the Tax Distribution Condition had not restricted the funds available therefor, taking into account the preceding sentence (including the priority set forth therein); provided that to the extent any Tax Distribution that would have been paid but for restrictions of the Tax Distribution Condition would have been considered an advance of any distribution other than a Tax Distribution and such distribution is thereafter paid, the relevant Unitholder’s entitlement to the Tax Distribution shall be treated as satisfied.
(iii)
(A)Each Common Tax Distribution paid pursuant to this Section 4.1(b) shall be treated as an advance to the relevant Unitholder of amounts to which it is otherwise entitled in respect of its Common Unit(s) pursuant to, and shall reduce the amount of any other Distributions to such Unitholder in respect of such Common Unit(s) pursuant to, Section 4.1(a)(v).
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(B)Each Class A Preferred Tax Distribution paid pursuant to this Section 4.1(b) shall be treated as an advance to the relevant Unitholder of amounts to which it is otherwise entitled in respect of its Class A Preferred Unit(s) pursuant to, and shall reduce the amount of any other amounts payable to such Unitholder in respect of such Class A Preferred Unit(s) pursuant to, Section 4.1(a)(ii); provided, however, that such Class A Preferred Tax Distributions shall not so reduce any amounts payable to the relevant Unitholder in respect of its Class A Preferred Unit(s) pursuant to Section 4.1(a)(ii) (and shall not be treated for any purpose as having been paid pursuant to Section 4.1(a)) if the Class A Preferred Unreturned Capital in respect of such Class A Preferred Unit(s) exceeds the aggregate Class A Preferred Tax Distributions paid with respect to such Class A Preferred Unit(s) and not previously applied as an offset and reduction pursuant to the following proviso (“Unapplied Class A Preferred Tax Advances”); and, provided, further, that, at any time when the Unapplied Class A Preferred Tax Advances with respect to a Unitholder’s Class A Preferred Unit(s) equal the Class A Preferred Unreturned Capital in respect of such Class A Preferred Unit(s), any amounts that would otherwise be distributed in cash or other property to such Unitholder in respect of its Class A Preferred Unit(s) pursuant to Section 4.1(a)(ii) (without regard to this Section 4.1(b)(iii)(B)) shall be offset and reduced, dollar-for-dollar, by such Unapplied Class A Preferred Tax Advances (and the amount of any such offset and reduction shall be treated as a Distribution to such Unitholder pursuant to Section 4.1(a)(ii) that reduces the Class A Preferred Unreturned Capital in respect of such Class A Preferred Unit(s)).
(C)Each Class B Preferred Tax Distribution paid pursuant to this Section 4.1(b) shall be treated as an advance to the relevant Unitholder of amounts to which it is otherwise entitled in respect of its Class B Preferred Unit(s) pursuant to, and shall reduce the amount of any other amounts payable to such Unitholder in respect of such Class B Preferred Unit(s) pursuant to, Section 4.1(a)(iv); provided, however, that such Class B Preferred Tax Distributions shall not so reduce any amounts payable to the relevant Unitholder in respect of its Class B Preferred Unit(s) pursuant to Section 4.1(a)(iv) (and shall not be treated for any purpose as having been paid pursuant to Section 4.1(a)) if the Class B Preferred Unreturned Capital in respect of such Class B Preferred Unit(s) exceeds the aggregate Class B Preferred Tax Distributions paid with respect to such Class B Preferred Unit(s) and not previously applied as an offset and reduction pursuant to the following proviso (“Unapplied Class B Preferred Tax Advances”); and, provided, further that, at any time when the Unapplied Class B Preferred Tax Advances with respect to a Unitholder’s Class B Preferred Unit(s) equal the Class B Preferred Unreturned Capital in respect of such Class B Preferred Unit(s), any amounts that would otherwise be distributed in cash or other property to such Unitholder in respect of its Class B Preferred Unit(s) pursuant to Section 4.1(a)(iv) (without regard to this Section 4.1(b)(iii)(C)) shall be offset and reduced, dollar-for-dollar, by such Unapplied Class B Preferred Tax Advances (and the amount of any such offset and reduction shall be treated as a Distribution to such Unitholder pursuant to Section 4.1(a)(iv) that reduces the Class B Preferred Unreturned Capital in respect of such Class B Preferred Unit(s)).
(iv)Notwithstanding anything to the contrary herein:
(A)no Tax Distributions shall be made on or after the date of this Agreement with respect to any Taxable Income for any period (or portion thereof) prior to and through the date of this Agreement;
(B)the Board shall be entitled to reasonably adjust subsequent Tax Distributions up or down to reflect any variation between its prior estimation of quarterly Tax Distributions and the Tax Distributions that would have been computed under this Section 4.1(b) based on subsequent information and modify the timing of such Tax Distributions so that Unitholders can use such Tax Distributions to make estimated Tax payments they are required to make;
(C)any Common Tax Distribution otherwise required with respect to any Common Units for a Fiscal Quarter or Taxable Year shall be reduced by any other distributions previously received in respect of such Common Units for such Fiscal Quarter or Taxable Year, as applicable, as reasonably determined by the Board; and (D)any Preferred Tax Distribution otherwise required with respect to any Preferred Units for a Fiscal Quarter or Taxable Year shall be reduced by any other distributions (other than Class A Preferred Unit Cash Payments) previously received in respect of such Preferred Units for such Fiscal Quarter or Taxable Year, as applicable, as reasonably determined by the Board.
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(v)In furtherance of (and without limiting) Section 4.1(b)(iv)(B), if, at any time after the final quarterly Tax Distribution in respect of a Taxable Year has been distributed pursuant to this Section 4.1(b), the Board reasonably determines that (A) the cumulative distributions paid to any Unitholder pursuant to this Section 4.1(b) with respect to such Taxable Year are less than such Unitholder’s Tax Amount for such Taxable Year (any such difference, a “Tax Distribution Shortfall”), the Company shall promptly make an additional distribution to such Unitholder in an amount equal to such Tax Distribution Shortfall, which additional distribution shall be treated as a Tax Distribution for all purposes of this Agreement or (B) the cumulative distributions paid to any Unitholder pursuant to this Section 4.1(b) with respect to such Taxable Year are greater than such Unitholder’s Tax Amount for such Taxable Year (any such difference, an “Excess Tax Distribution”), then the Company shall credit the amount of such Excess Tax Distribution against and reduce the amount of subsequent Tax Distributions to such Unitholder by the amount of such Excess Tax Distribution.
(vi)If, by reason of this Section 4.1(b), any Unitholder (other than a Class B Common Unit holder) receives aggregate distributions pursuant to Section 4.1(a) and this Section 4.1(b) greater than it would have otherwise received in the absence of this Section 4.1(b) (such excess, a “Surplus Tax Distribution Amount”), then, in connection with a Fundamental Change or Public Offering, such Unitholder shall be obligated to return an amount of cash equal to such Surplus Tax Distribution Amount to the Company (which payment shall not constitute a Capital Contribution for any purpose hereunder), and an amount of cash equal to such Surplus Tax Distribution Amount shall be distributed pursuant to Section 4.1(a) or otherwise retained by the Company; provided, further, that, with respect to any Fundamental Change or Public Offering in which the consideration received by such Unitholder consists of both cash and other property, in lieu of the obligation of such Unitholder pursuant to the immediately preceding proviso to return such Surplus Tax Distribution Amount in cash to the Company, (i) the consideration otherwise to be received by such Unitholder pursuant to such Fundamental Change or Public Offering shall be reduced by an amount (the “Withheld Consideration”) equal to such Unitholder’s Surplus Tax Distribution Amount (with any non-cash portion of the consideration otherwise to be received by such Unitholder pursuant to such Fundamental Change or Public Offering valued at its Fair Market Value) as though such Surplus Tax Distribution Amount had been treated as an advance of such consideration otherwise to be received by such Unitholder pursuant to such Fundamental Change or Public Offering, and (ii) such Withheld Consideration shall instead be distributed to the Unitholders pursuant to Section 4.1(a). The Unitholders acknowledge and agree that the foregoing language is intended to result in each Unitholder receiving aggregate distributions pursuant to Section 4.1(a) and this Section 4.1(b) equivalent to those such Unitholder would have received had all distributions made pursuant to this Section 4.1(b) been treated as advances of, and offset and reduced, any amounts otherwise distributable pursuant to Section 4.1(a) (taking into account the timing of such offsets and reductions pursuant to Section 4.1(b)(iii)).
(c)Certain Distributions.
(i)Class A Preferred Unit Cash Payment.
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Promptly (and in any event within 5 Business Days) following the determination of the Class A Preferred Unpaid Yield at the end of each calendar quarter, to the extent permitted by Law and the Delaware Act and to the extent of Available Cash as of the end of such calendar quarter, the Company shall make a distribution to Unitholders holding Class A Preferred Units in cash in an amount equal to 50% of the applicable Class A Preferred Unpaid Yield accrued on such Class A Preferred Unit for the prior calendar quarter in accordance with Section 4.1(a)(i) (the “Class A Preferred Unit Cash Payment”); provided that to the extent that the full amount of such Class A Preferred Unit Cash Payment cannot be made promptly following the end of a calendar quarter, then (y) those funds which are so available shall be distributed to the Unitholders in accordance with Section 4.1(a)(i) and (z) when additional funds of the Company are available for Distribution pursuant to this Section 4.1(c)(i), such funds shall be promptly distributed in accordance with Section 4.1(a)(i). Any Class A Preferred Unit Cash Payment shall be treated as a payment made pursuant to Section 4.1(a)(i).
(ii)Public Offering. The Company shall provide to the Oaktree Investors and the B. Riley Investor at least 30 days’ prior written notice of the effectiveness of a registration statement with respect to any Public Offering or any Subsidiary Public Offering; provided that the Oaktree Investors collectively hold at least 25% of their combined Original Amount, in the case of the Oaktree Investors, and the B. Riley Investor (or a Permitted Transferee thereof pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii)) holds at least 25% of its Original Amount and a Transfer Event has not occurred, in the case of the B. Riley Investor. The Company shall, at the request of the Oaktree Investors, distribute to the Unitholders, to the extent permitted by Law and the Delaware Act, the net cash proceeds received by the Company from such Public Offering or Subsidiary Public Offering or by such Subsidiary from such Subsidiary Public Offering, in each case after deduction of all discounts, underwriters’ commissions and other reasonable expenses, in accordance with the provisions of Section 4.1(a) (whether or not the Board has approved such Distributions); provided that if the funds legally available for distribution under Section 18-607 of the Delaware Act or otherwise are less than the amount otherwise required to be distributed hereunder, those funds which are legally available shall be distributed to the Unitholders in accordance with the provisions of Section 4.1(a). Such Distribution shall take place on a date fixed by the Company, which date shall be not more than five (5) days after the Company’s receipt of such proceeds. Any such request by the Oaktree Investors may be made contingent upon the consummation of such Public Offering or Subsidiary Public Offering. At any time thereafter when additional funds of the Company are legally available for Distribution pursuant to this Section 4.1(c)(ii), if requested by the Oaktree Investors, such funds shall be immediately distributed to the Unitholders in accordance with Section 4.1(a).
(d)Persons Receiving Distributions. Each Distribution shall be made to the Persons shown on the Company’s books and records as Unitholders as of the date of such Distribution; provided, however, that any Transferor and Transferee of Units may mutually agree as to which of them should receive payment of any Distribution under this Section 4.1. In the event that restrictions on Transfer or change in beneficial ownership of Units set forth herein have been breached, the Company may withhold distributions in respect of the affected Units until such breach has been cured.
(e)Other Distribution Provisions. No Distribution shall be declared and paid to the extent that, after the Distribution is made, all liabilities of the Company, other than liabilities to Unitholders on account of their Membership Interests and liabilities for which the recourse of creditors is limited to specified property of the Company, exceed the fair value of the assets of the Company as provided in Section 18-607 of the Delaware Act.
(f)Unvested Class B Common Units. Except as otherwise set forth in any Unit Grant Agreement, any Distribution under this Section 4.1 with respect to any Class B Common Unit to the extent such Class B Common Unit has not vested (an “Unvested Class B Common Unit”) (other than Tax Distributions pursuant to Section 4.1(b)) shall not, at the date of such Distribution, be paid to the holder of such Unvested Class B Common Unit, but shall instead be retained by the Company, and a “reserve amount” shall be created on the books and records of the Company with respect to such Unvested Class B Common Unit (or the Reserve Amount with respect to such Unvested Class B Common Unit shall be increased, if a Reserve Amount already exists with respect to such Unvested Class B Common Unit) in an amount equal to the amount of the Distribution so retained by the Company in respect of such Unvested Class B Common Unit (such amount, the “Reserve Amount”).
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The Reserve Amount created (or increased) for each Unvested Class B Common Unit shall be treated as Distributed for purposes of this Section 4.1. If such Unvested Class B Common Unit subsequently becomes a vested Class B Common Unit, the Reserve Amount attributable to such Unvested Class B Common Unit shall be paid at the time of the next Distribution to the extent permitted by Law and the Delaware Act and to the extent of Available Cash as of such time (which date shall not be later than the date of the Distribution contemplated by Section 4.1(c)(i) to the extent permitted by Law and the Delaware Act and to the extent of Available Cash as of such time (but prior to any Distribution required by Section 4.1(c)(i)), without interest, to the holder of such Class B Common Unit, and if such Unvested Class B Common Unit is repurchased or forfeited or otherwise becomes ineligible to vest, the Reserve Amount attributable to such Unvested Class B Common Unit shall be cancelled and no longer treated as an amount the holder of such Unvested Class B Common Unit is entitled to receive.
Section 4.2Certain Repurchases and Redemptions.
(a)Subsidiary Distribution. Notwithstanding anything to the contrary in this Agreement, the Company may, at the election of the Board, exercise its distribution, repurchase or redemption rights, if any, and fulfill its distribution, repurchase or redemption obligations, if any, to a Unitholder pursuant to this Agreement or any agreement under which Units have been issued, in whole or in part, by distributing to such Unitholder securities issued by a Subsidiary of the Company with a value equal to the amount to be paid in connection with such distribution, redemption or repurchase in respect of such Unitholder’s Units; provided that immediately following such distribution the Subsidiary that issued the distributed securities shall redeem or repurchase such securities from such Unitholder for an amount of cash equal to the aggregate amount to be paid in connection with such distribution, redemption or repurchase in respect of such Unitholder’s Units; provided, further, that the Company shall only be permitted to effect such distribution, redemption or repurchase to the extent of Available Cash. The Company and the Unitholders agree to treat any such distribution as a distribution of securities of the Subsidiary under Code Section 731(a).
(b)Fundamental Change Put Right. The Company shall provide the Oaktree Investors and the B. Riley Investor (the “Put Option Unitholders”) with written notice of (i) the consideration expected to be received in a Fundamental Change by the Company and the Put Option Unitholders, and (ii) the expected date of the consummation of such Fundamental Change (the “Company Put Notification”) at least twenty (20) days prior to the consummation of any Fundamental Change (the period from the date of delivery of any such Company Put Notification through the fifteenth (15th) day following the date of delivery of such notice, the “Preferred Put Notice Period”). At any time during a Preferred Put Notice Period, (y) the Oaktree Investors shall have the right, but not the obligation, to deliver a written notice of election (an “Oaktree Put Notice”) to the Company requiring the Company to repurchase all (but not less than all) of its Class A Preferred Units (the “Oaktree Put Units”) for an amount equal to the sum of the aggregate Class A Preferred Unpaid Yield and Class A Preferred Unreturned Capital on all Class A Preferred Units then outstanding and (z) the B. Riley Investor shall have the right, but not the obligation, to deliver a written notice of election (a “B. Riley Put Notice” and, collectively with the Oaktree Put Notice, a “Put Notice”) to the Company requiring the Company to repurchase all (but not less than all) of its Class B Preferred Units (the “B. Riley Put Units” and collectively with the Oaktree Put Units, the “Put Units”) for an amount equal to the sum of the aggregate Class B Preferred Unpaid Yield and Class B Preferred Unreturned Capital on all Class B Preferred Units then outstanding (the applicable amounts contemplated to be paid for the Put Units by clauses (y) and (z), the “Redemption Amounts”).
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At, and contemporaneously with, the consummation of the Fundamental Change (and prior to making any distributions pursuant to Section 4.1(a)), (i) the Company shall pay the applicable Redemption Amounts to the Put Option Unitholders that timely provided a Put Notice by wire transfer of immediately available funds to account(s) specified by such Put Option Unitholders in writing, (ii) each Put Option Unitholder that provided a Put Notice shall Transfer its Put Units to the Company, and, if requested by the Company, provide an instrument of conveyance in form and substance customary for such transactions and reasonably satisfactory to the Company and such Put Option Unitholder, and (iii) upon payment of the applicable Redemption Amounts by the Company and Transfer of the Put Units by such Put Option Unitholders in compliance with this Section 4.2(b), the Company shall cancel all of the issued and outstanding Put Units that are so Transferred and, from and after such cancellation, such Put Option Unitholder shall have no further right or interest in or with respect to such Put Units. Notwithstanding anything to the contrary herein, Article 12 shall not apply to the exercise of the right by the Put Option Unitholder to cause the Company to purchase its Put Units pursuant to this Section 4.2(b) and such Transfer shall be deemed a Transfer approved by the Board for purposes of Article 10.
Article 5
BOARD OF DIRECTORS; OFFICERS
Section 5.1Management by the Board of Directors.
(a)No Management by Unitholders. Except as expressly provided in this Agreement or required by non-waiveable provisions of applicable Law (including where the approval of all or certain Unitholders is expressly required by this Agreement, including Section 3.2(b) and Article 13), no Unitholder shall have any authority to act for or bind the Company or any voting or approval rights.
(b)Authority of Board of Directors.
(i)Except as expressly provided in this Agreement or required by non-waiveable provisions of applicable Law (including where the approval of all or certain Unitholders is expressly required by this Agreement, including Section 3.2(b) and Article 13), subject to the provisions of Section 5.1(b)(ii), the sole and exclusive right to manage the business and affairs of the Company, and the powers and rights necessary, appropriate or advisable to effectuate and carry out the purposes and business of the Company, is vested in and reserved to the board of directors of the Company (the “Board”), and the Persons constituting the Board shall be the “managers” of the Company for all purposes of the Delaware Act. The power and authority granted to the Board hereunder shall include all those necessary, convenient or incidental for the accomplishment of the purposes of the Company, and include the power and authority to undertake and make decisions concerning the general course of affairs of the Company and supervise the Officers (subject in each case to the express rights provided to Unitholders pursuant to this Agreement), including:
(A)entering into, making and performing contracts, agreements and other undertakings binding the Company that may be necessary, appropriate or advisable in furtherance of the purposes and businesses of the Company;
(B)maintaining the assets of the Company in good order;
(C)collecting sums due the Company;
(D)opening and maintaining bank and investment accounts and arrangements, drawing checks and other orders for the payment of money and designating individuals with authority to sign or give instructions with respect to those accounts and arrangements;
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(E)to the extent that funds of the Company are available therefor, paying debts and obligations of the Company;
(F)acquiring, utilizing for Company purposes and disposing of any asset of the Company;
(G)hiring, employing and terminating executives, Officers, supervisors and other personnel;
(H)selecting, removing and changing the authority and responsibility of lawyers, accountants and other advisers and consultants;
(I)borrowing money, obtaining credit, issuing notes, debentures, securities, equity or other interests of or in the Company and securing the obligations undertaken in connection therewith with mortgages, pledges and security interests or entering into guaranties on behalf of the Company’s Subsidiaries;
(J)obtaining insurance for the Company;
(K)determining distributions of cash and other property of the Company as provided in Article 4;
(L)establishing reserves for commitments and obligations (contingent or otherwise) of the Company;
(M)forming subsidiaries or joint ventures
(N)approving and administering the Management Incentive Plan and applicable Unit Grant Agreements and awards thereunder; and
(O)adopting the Annual Budget.
(ii)The Board may act (A) by resolutions adopted at a meeting and by written consents pursuant to Section 3.3(a), (B) by delegating power and authority to Committees pursuant to Section 5.4, and (C) by delegating power and authority to any Officer pursuant to Section 5.6(a), and except as otherwise required by this Agreement, no Director (acting in his or her capacity as such) shall have any authority to bind the Company to any third party with respect to any matter. Decisions made in accordance with the preceding sentence shall be decisions of the “manager” for all purposes under the Delaware Act.
(iii)Each Unitholder acknowledges and agrees that no Director shall, solely as a result of being a Director, be bound to devote all of his or her business time to the affairs of the Company, and that he or she and Affiliates thereof do and will continue to engage for their own account and for the accounts of others in other business ventures.
(c)Officers. The management of the business and affairs of the Company by the Officers and the exercising of their powers shall be conducted under the supervision of and subject to the approval of the Board. The Officers, to the extent of their powers set forth in this Agreement or in resolutions of the Board, shall be agents of the Company for the purpose of the Company’s business, and the actions of the Officers taken in accordance with such powers shall bind the Company.
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Section 5.2Composition and Election of the Board of Directors.
(a)Number and Designation. The number of Directors on the Board shall initially be four (4) Directors and shall be composed of the following Persons:
(i)two (2) Directors appointed by the Oaktree Investors (collectively, together with any other Directors (excluding Independent Directors) who are appointed to the Board by the Oaktree Investors, the “Oaktree Directors”), and who shall initially be Tom Casarella and Nick Basso; and
(ii)two (2) Directors appointed by the B. Riley Investor (collectively, the “B. Riley Directors”), and who shall initially be Bryant Riley and Daniel Shribman.
(b)The number of Directors on the Board may be set from time to time by the Board; provided that (i) the B. Riley Investor shall at all times be entitled to appoint two (2) Directors and (ii) the Oaktree Investors shall at all times be entitled to appoint a majority of the Directors. Notwithstanding the foregoing, (A) if the B. Riley Investor (or a Permitted Transferee thereof pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii)) fails to hold at least 25% of its Original Amount or a Transfer Event has occurred, the B. Riley Investor shall cease to have any rights to appoint Directors, (B) if the Oaktree Investors collectively fail to hold at least 25% of their combined Original Amount, they shall cease to have any rights to appoint Directors and (C) if both of the scenarios described in the foregoing clauses (A) and (B) occur, then the holders of the Required Interest shall have the right to remove and appoint all Directors.
(c)Observers. In addition to the Oaktree Directors, the B. Riley Directors and any Independent Directors, the Oaktree Investors shall have the right to designate representatives to attend one or more meetings of the Board and its Committees in a non-voting observer capacity (each, an “Observer”) and the Company shall provide such Observers with copies of all notices, minutes, consents and other materials that it provides to the Directors (in each case, unless the Board otherwise determines); provided that (i) the Company reserves the right to withhold any information and exclude any Observer from any such meeting or portion thereof to the extent that such information or such meeting: (A) is reasonably likely to adversely affect any attorney-client or similar privilege between the Company or any of its Subsidiaries and its respective counsel, (B) is reasonably likely to result in a conflict of interest between the Company or any of its Subsidiaries and any Observer, any Affiliate of such Observer or the Directors who shall have appointed such Observer or violate applicable Law (including pursuant to applicable antitrust laws), (C) involves personnel decisions (e.g., selecting, hiring, compensating, promoting or terminating) or discussions regarding the capital structure of the Company and its Subsidiaries that, directly or indirectly, relate to the relationship between the Company and its Subsidiaries, on the one hand, and the applicable Observer or his or her Affiliates or any Director who shall have appointed such Observer, on the other hand, (ii) no Observer may be a Disqualified Designee and (iii) any such Observer shall be required to enter into a customary agreement reasonably acceptable to the Company regarding confidentiality and adherence to applicable Board and Company policies.
(d)Disqualified Designees. Each Unitholder with the right to appoint or participate in the appointment of a Director pursuant to this Agreement (i) hereby represents and warrants to the Company that to such Unitholder’s actual knowledge, each such Person is not a Disqualified Designee; and (ii) hereby covenants and agrees (x) not to appoint any Director who, to such Unitholder’s actual knowledge, is a Disqualified Designee, (y) to exercise reasonable care to determine whether any Director appointed by such Unitholder is a Disqualified Designee and (z) that in the event such Unitholder becomes aware that any individual previously designated is or has become a Disqualified Designee, such Unitholder shall as promptly as practicable notify the Company and shall take such actions as are necessary to remove such Disqualified Designee from the Board and appoint a replacement who is not a Disqualified Designee.
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(e)Term. Directors shall serve from their appointment in accordance with the terms hereof until their resignation, death or removal in accordance with the terms hereof. Directors need not be Unitholders and need not be residents of the State of Delaware. After the date hereof, a person shall become a Director effective upon receipt by the Company at its principal place of business of a written notice addressed to the Board (or at such later time or upon the happening of some other event specified in such notice) of such person’s appointment from the Person or Persons entitled to appoint such Director pursuant to Section 5.2(a). A Director may resign at any time by delivering such Director’s written resignation to the Company at the Company’s principal office addressed to the Board. Such resignation shall be effective upon receipt and without further action unless it is specified to be effective at some other time or upon the happening of some other event.
(f)Removal. The Person or Persons entitled to appoint a Director pursuant to Section 5.2(a) may remove such Director any time with or without cause, effective upon written notice to the Company at the Company’s principal office addressed to the Board. If at any time a Unitholder ceases to have a right to appoint any Directors, then unless the Board determines otherwise, such Directors shall be removed immediately and automatically from the Board (without the taking of any action, including the delivery of a resignation letter or otherwise), at which time the number of Directors comprising the full Board, unless otherwise approved by the Board, shall be reduced by such number of Directors. If the Board elects not to reduce the size of the Board in connection with the removal of Directors contemplated by the preceding sentence, then the vacant seat(s) on the Board shall be filled via appointment pursuant to Section 5.2(g).
(g)Vacancies. In the event that any appointee under Section 5.2(a) for any reason ceases to serve as a Director, the resulting vacancy on the Board shall be filled by an individual appointed by the Person or Persons then entitled to appoint such Director pursuant to Section 5.2(a) above (provided that, if any party fails to appoint a person to fill a vacancy on the Board pursuant to the terms of this Section 5.2, such vacant directorship shall remain vacant until such directorship is filled pursuant to this Section 5.2(g)).
(h)Expense Reimbursement. The Company shall pay all reasonable and documented out-of-pocket costs and expenses incurred by each Director in the course of their service hereunder (but not to exceed $15,000 per Director per Fiscal Year), including in connection with attending regular and special meetings of the Board, any board of managers or board of directors of any of the Company’s Subsidiaries and/or any of their respective committees.
(i)Compensation of Directors. Without limiting the rights of Directors to expense reimbursement pursuant to the terms of this Agreement, Directors shall receive no compensation or other remuneration for serving in such capacity, except as may be otherwise determined by the Board (which determination shall include the affirmative vote of at least one (1) Oaktree Director and one (1) B. Riley Director until the applicable party is no longer entitled to appoint Oaktree Directors or B. Riley Directors).
(j)Reliance by Third Parties. Any Person transacting business with the Company, other than a Unitholder, may rely on the authority of the Board (or any Officer authorized by the Board) in taking any action in the name of the Company without inquiry into the provisions of this Agreement or compliance herewith, regardless of whether that action actually is taken in accordance with the provisions of this Agreement.
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Every agreement, instrument or document executed by the Board (or any Officer authorized by the Board) in the name of the Company with respect to any business or property of the Company shall be conclusive evidence in favor of any Person relying thereon or claiming thereunder that (i) at the time of the execution or delivery thereof, this Agreement was in full force and effect, (ii) such agreement, instrument or document was duly executed according to this Agreement and is binding upon the Company and (iii) the Board or such Officer was duly authorized and empowered to execute and deliver such agreement, instrument or document for and on behalf of the Company.
(k)No Employment. This Agreement does not, and is not intended to, confer upon any Director or Observer any rights with respect to employment with the Company or its Subsidiaries, and nothing herein shall be construed to have created any employment agreement between the Company and its Subsidiaries, on the one hand, and any Director, on the other hand.
Section 5.3Board and Committee Meetings and Actions by Written Consent.
(a)Quorum; Voting. At least one (1) Oaktree Director and at least one (1) B. Riley Director must be present at a meeting of the Board or any Committee (including for purposes of actions taken pursuant to Section 5.3(g)) in person or by proxy order to constitute a quorum for the transaction of business of the Board or such Committee; provided that, notwithstanding anything in this Section 5.3(a) to the contrary, if a quorum is not established because a B. Riley Director is absent from a properly noticed meeting (if such notice of meeting is required) of the Board or a Committee at which the presence of such B. Riley Director is required for a quorum as herein provided (a “Suspended Meeting”), such Suspended Meeting shall be adjourned until such time as determined by the Directors so present at such meeting and shall be set forth in a notice of the subsequent meeting (which shall not be scheduled for or occur until at least twenty-four (24) hours following such Suspended Meeting) of the Board or such Committee thereof delivered to all Directors entitled to attend such meeting (the “Subsequent Meeting”), and if no B. Riley Director is present at the Subsequent Meeting, such Subsequent Meeting shall not require the presence of any B. Riley Director for purposes of establishing a quorum at such Subsequent Meeting; provided, further, that following such time as the B. Riley Investor is no longer entitled to appoint Directors, a B. Riley Director shall not be required for a quorum at any meetings of the Board or any Committee. If a quorum shall not be present during a meeting of the Board, no business may be conducted at such meeting, and the Directors present thereat may adjourn the meeting from time to time, and promptly give notice of when it will be reconvened(subject to the provisos in the preceding sentence). A Director who is present at a meeting of the Board or a Committee at which action on any matter is taken shall be presumed to have assented to the action unless such Person’s dissent shall be entered in the minutes of the meeting (and, any Director who votes in the negative may assume that such negative vote is properly recorded in the minutes of the meeting) or unless such Person files a written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall deliver such dissent to the Company immediately after the adjournment of the meeting. Such right to dissent shall not apply to a Director who voted in favor of such action. At each meeting of the Board or a Committee, and in each other circumstance in which the Directors are authorized or directed to take any action under this Agreement, the Oaktree Director(s) present at such meeting (or taking such action) shall be collectively entitled to a number of votes (the “Oaktree Director Votes”) on all matters to be voted on by the Directors equal to the sum of one (1) plus the number of Directors present at such meeting (or taking such action) that are not Oaktree Directors, with each Oaktree Director entitled to cast its proportionate share of the total Oaktree Director Votes. Each other Director shall be entitled to one (1) vote on all matters voted on by the Directors. Except as otherwise expressly stated herein, at any meeting of the Board or any Committee at which a quorum is present, the affirmative vote of a majority of the total votes cast by the Directors in attendance (after accounting for the Oaktree Director Vote) shall be required to authorize any action by the Board or Committee and shall constitute the action of the Board or Committee for all purposes as appropriate.
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(b)Place; Attendance. Meetings of the Board and any Committee may be held at any time and at any place within or without the State of Delaware (including electronically) as shall be determined from time to time by resolution of the Board or such Committee. At all meetings of the Board and Committees, business shall be transacted in such order as shall from time to time be determined by resolution of the Board and Committees. Directors may participate in any meeting of the Board and Committees by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation in a meeting shall constitute presence in person at the meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where a Director attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. Notice of any meeting may be waived in writing by any Director. The Board and its Committees may adopt such other rules for the conduct of its business and governance of its meetings as it may from time to time deem necessary or appropriate, including any customary compliance policies, that are not in conflict with the terms of this Agreement. No Director shall be disqualified from acting on any matter because such Director is interested in the matter to be acted upon by the Board or any Committee so long as all material aspects of such Director’s interest in the matter have been disclosed in reasonable detail to all Directors who are to act on such matter.
(c)Meeting in Connection with Unitholder Meeting. In connection with any meeting of Unitholders, the Directors may, if a quorum is present, hold a meeting for the transaction of business immediately after and at the same place as such meeting of the Unitholders (subject to quorum requirements). Notice of such meeting at such time and place shall not be required.
(d)Regular Meetings. Regular meetings of the Board shall be held at such times and places as shall be designated from time to time by resolution of the Board. Regular meetings of Committees shall be held at such times and places as shall be designated from time to time by resolution of the Board or such Committee. Further notice of such meetings shall not be required. The Board shall hold a regularly scheduled meeting at least once every calendar quarter.
(e)Special Meetings. Special meetings of the Board may be called by any Oaktree Director on at least two (2) Business Days’ notice to each other Director. Special meetings of any Committee may be called by any Oaktree Director serving on such Committee on at least two (2) Business Days’ notice to each other Director serving on such Committee. Such notice must state the purpose or purposes of such meeting, and shall be delivered either personally, by telephone, by electronic mail or by any other similarly timely means of communication; provided that a meeting may address matters that are not reflected in such notice.
(f)Chairperson. The Directors present at any meeting may designate a chairperson to preside over the meeting. Any designation of a Director as a chairperson shall not provide such Director with the authority or power to act for or on behalf of the Company, to do any act that would be binding on the Company or to make any expenditure or incur any obligation on behalf of the Company or authorize any of the foregoing.
(g)Action by Written Consent.
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Any action permitted or required by the Delaware Act, the Certificate or this Agreement to be taken at a meeting of the Board or any Committee may be taken without a meeting, without prior notice and without a vote, if a consent in writing (including by electronic mail), setting forth the action to be taken, is signed by the Directors holding not less than the majority of the total votes that would be entitled to be cast by the Directors at a meeting of the Board or such Committee at which all Directors or, as applicable, Committee members, were present and voted (after accounting for the Oaktree Director Votes), and such consent is acknowledged in writing by the counter-execution of at least one (1) B. Riley Director; provided that, once the B. Riley Investor fails to hold 25% of its Original Amount or following a Transfer Event, a B. Riley Director shall not be required to counter-execute any such consent. Such consent shall have the same force and effect as a vote of the Directors or members of such Committee vote of a majority of the total votes cast by the Directors (after accounting for the Oaktree Director Votes), as the case may be, at which a quorum is present, and may be stated as such in any document or instrument filed with the Secretary of State of the State of Delaware, and the execution of such consent shall constitute attendance or presence in person at a meeting of the Board or any such Committee, as the case may be. Prompt notice of the taking of any action without a meeting by less than unanimous written consent (including copies of any such consent) shall be given to those Directors or Committee members, as the case may be, who have not consented in writing to the taking of such action and who would have otherwise been entitled to vote on such action at a meeting of the Board or such Committee.
Section 5.4Committees; Delegation of Authority and Duties.
(a)Committees; Generally. The Board may, from time to time, designate one or more committees (each, a “Committee”), each of which shall consist of a majority of Oaktree Directors, for so long as the Oaktree Investors are entitled to appoint Directors in accordance with Section 5.2(a), and at least one (1) B. Riley Director, for so long as the B. Riley Investor is entitled to appoint Directors in accordance with Section 5.2(a). Any such committee, to the extent provided in the enabling resolution or in the Certificate or this Agreement, shall have and may exercise all of the authority of the Board. The Board may dissolve any Committee at any time, unless otherwise provided in the Certificate or this Agreement.
(b)Audit Committee. The Board will establish a standing audit committee to select the Company’s independent accountants and to review the annual audit of the Company’s financial statements conducted by such accountants.
(c)Delegation; Generally. The Board may, from time to time, delegate to one (1) or more Persons (including any Director or Officer) such authority and duties as the Board may deem advisable in addition to those powers and duties set forth in Section 5.1(b). The Board also may assign titles (including chairman, chief executive officer, president, vice president, secretary, assistant secretary, treasurer and assistant treasurer) to any Director, Unitholder or other individual and may delegate to such Director, Unitholder or other individual certain authority and duties. Any number of titles may be held by the same Director, Unitholder or other individual. Any delegation pursuant to this Section 5.4(c) may be revoked at any time by the Board.
Section 5.5Limitation of Liability.
(a)To the fullest extent permitted by applicable law, each Unitholder hereby disclaims any fiduciary duties to, or owed from, any Unitholder, the Tax Matters Partner, the Board or any Director due to such person’s status as such, to the maximum extent set forth in Section 18-1101(c) of the Delaware Act and applicable law. To the fullest extent permitted under applicable law, no Director shall be liable to any Unitholder, to the Company, to any Affiliate of any Unitholder or of the Company, or to any other Person for any loss, damage or claim incurred in their capacity as such, by reason of any act or omission performed or omitted by such Director with the level of care required by this Agreement.
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To the fullest extent permitted by applicable law, no Unitholder, acting in its capacity as such shall be required to consider the interests of, or have any duty stated or implied by Law or equity (including any fiduciary duty) to the Company or any other Covered Person, including by virtue of owning any interest in the Company or having the right to designate a Director. In addition, (i) a Unitholder, (ii) any officer, director, shareholder, partner, employee, agent or representative of each Unitholder or of any of their respective Affiliates, (iii) each Director of the Company, and (iv) the Tax Matters Partner (each of the foregoing, “Covered Person”) shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any Person as to matters the Covered Person reasonably believes are within such Person’s professional or expert competence and that has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, or any other facts pertinent to the existence and amount of assets from which distributions might properly be paid. The preceding sentence shall in no way limit any Person’s right to rely on information to the extent provided in Section 18-406 of the Delaware Act. Notwithstanding the foregoing, this Section 5.5 shall not limit or eliminate (A) the obligation of Unitholders, Officers or Directors to act in compliance with the express terms of this Agreement, and (B) liability for any act or omission that constitutes a violation of the implied contractual covenant of good faith and fair dealing.
(b)To the fullest extent permitted by applicable law, whenever in this Agreement a Covered Person is permitted or required to make a decision (including a decision that is in such Covered Person’s “discretion” or under a grant of similar authority or latitude), such Covered Person shall be entitled to consider only such interests and factors as such Covered Person desires, including its own interests (or those of its Affiliates), and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Company or any other Person, provided that this Section 5.5(b) shall not limit or eliminate (i) the obligation of the Unitholders, Officers or Directors to act in compliance with the express terms of this Agreement, and (ii) liability for any act or omission that constitutes a violation of the implied contractual covenant of good faith and fair dealing. To the fullest extent permitted by applicable Law, whenever in this Agreement a Covered Person is permitted or required to make a decision in such Covered Person’s “good faith,” the Covered Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or any other applicable law, to the fullest extent permitted by law.
(c)Subject to the provisions of Section 5.5(a) and Section 5.5(b), the obligations of the Officers pursuant to Section 5.6(c) (or the rights of the Company or the Unitholders in respect thereof), Section 5.7 and Section 6.5, to the fullest extent permitted by applicable law, each Unitholder hereby acknowledges and agrees that no Director, nor such Director’s agents and representatives and the Person that appointed such Director (and all Affiliates of such appointing Person), shall have any duty (including any fiduciary duty) or any liability for breach of duty (including fiduciary duty) and waives any claim or cause of action by such Person against each of the foregoing Persons for any breach of any fiduciary duty to the Company, its Unitholders or any Subsidiary of the Company by such Person, including as may result from a conflict of interest between the Company or such Subsidiary and such Person. With respect to any such waived conflict of interest, no Director shall be obligated to recommend or take any action as a Director that prefers the interests of the Company or any Subsidiary or the Unitholders over the interests of the Director or such Director’s agents and representatives and the Person that appointed such Director (and all Affiliates of such appointing Person).
Section 5.6Officers.
(a)Designation and Appointment. The Board may (but need not), from time to time, designate and appoint one or more persons as an Officer of the Company. No Officer need be a resident of the State of Delaware, a Unitholder or a Director.
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Any Officers so designated shall have such authority and perform such duties as the Board may, from time to time, delegate to them. The Board may assign titles to particular Officers. Unless the Board otherwise decides, if the title is one commonly used for officers of a business corporation, the assignment of such title shall constitute the delegation to such Officer of the authority and duties that are normally associated with that office, subject to (i) any specific delegation of authority and duties made to such Officer by the Board pursuant to the third sentence of this Section 5.6(a) or (ii) any delegation of authority and duties made to one or more Officers pursuant to the terms of Section 5.4(c). Each Officer shall hold office until such Officer’s successor shall be duly designated and shall qualify or until such Officer’s death or until such Officer shall resign or shall have been removed in the manner hereinafter provided. Any number of offices may be held by the same individual. The salaries or other compensation, if any, of the Officers and agents of the Company shall be fixed from time to time by the Board.
(b)Resignation; Removal; Vacancies. Any Officer (subject to any contract rights available to the Company, if applicable) may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Board. The acceptance of a resignation shall not be necessary to make it effective, unless expressly so provided in the resignation. Any Officer may be removed as such, either with or without cause, at any time by the Board in its discretion; provided, however, that such removal shall be without prejudice to the contract rights, if any, of the individual so removed. Designation of an Officer shall not of itself create contract rights. Any vacancy occurring in any office of the Company may be filled by the Board and shall remain vacant until filled by the Board.
(c)Duties of Officers; Generally; Standard of Care. Notwithstanding anything to the contrary herein, the Officers, in the performance of their duties as such, shall owe to the Unitholders duties of loyalty (including good faith) and due care of the type owed by the officers of a corporation to such corporation and its stockholders under the laws of the State of Delaware. With respect to all matters within the ordinary course of business of the Company, third parties dealing with the Company may rely conclusively upon any certificate of any Officer to the effect that any such Officer is acting on behalf of the Company.
Section 5.7Certain Restrictions.
(a)For the Restricted Period, the B. Riley Investor will not, and will cause its Subsidiaries and any successor entity or holding company of Ultimate Parent and such entity’s Subsidiaries (but excluding (i) any bona fide third-party acquirer of Ultimate Parent that has substantial business operations unrelated to Ultimate Parent and its Subsidiaries, (ii) the Administrative Agent, the Collateral Agent (each as defined in the Nomura Credit Facility) and their respective affiliates, agents or designees in connection with any foreclosure or other enforcement on Collateral (as defined in the Nomura Credit Facility) pursuant to the Nomura Credit Facility and (iii) transferees pursuant to Permitted Transfers by the B. Riley Investor pursuant to Section 10.1(a)(iv) that have foreclosed upon any pledge of Units) (collectively, the “Non-Compete Parties”) to not, directly or indirectly, (i) solicit for employment or any similar arrangement any Business Employee (as such term is defined in the Equity Purchase Agreement) or other person employed or engaged (whether as an employee, consultant or otherwise) by the Company or its Subsidiaries (“Restricted Employees”) or (ii) hire, engage or assist any other Person in hiring or engaging any Restricted Employee; provided, however, that this Section 5.7 shall not prohibit (A) general solicitations for employment through advertisements or other means not specifically directed toward employees of the Company or its Subsidiaries, (B) hiring a person who responds to such general solicitations without any prior solicitation by or on behalf of the Non-Compete Parties or (C) soliciting or hiring any person who ceased to be employed by the Company or its Subsidiaries more than three (3) months prior to such solicitation or hiring.
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(b)For the Restricted Period, the B. Riley Investor shall not, and shall cause the Non-Compete Parties not to, directly or indirectly, own (in whole or in part), acquire, invest in, manage, operate or otherwise engage (including through a joint venture) in any business that competes with the Businesses (a “Competing Business”) in (A) North America, Europe or Australia or (B) any other geographic area in which the Businesses operate as of the Investment Closing; provided that nothing in this Section 5.7(b) shall preclude such Non-Compete Parties from:
(i)    owning up to 5% (in the aggregate for all Non-Compete Parties) of the outstanding equity interests (including any options, warrants or convertible securities that may be exercised, exchanged or converted into equity securities) of any Person (or group of related Persons) engaged in a Competing Business, so long as (A) the Non-Compete Parties do not have the right to designate a representative to the board of directors or similar decision-making body of such Competing Business and (B) its and their holding in such Competing Business is solely for passive investment purposes;
(ii)    acquiring and, after such acquisition, owning an interest in any Person that is engaged in a Competing Business if such Competing Business generated less than (A) 10% of such Person’s consolidated annual revenues in the last completed fiscal year of such Person and (B) $20 million in consolidated annual revenue on average in the last five (5) years and in any single year during the last five (5) years;
(iii)    acquiring and, after such acquisition, owning an interest in any Person (or its successor) that would not otherwise fall under the exception set forth in clause (ii) of this Section 5.7(b) that is engaged in a Competing Business if within twelve (12) months after the consummation of such acquisition, such Non-Compete Party discontinues or divests or, within nine (9) months after the consummation of such acquisition enters into a definitive agreement with an unaffiliated third party to cause the divestiture of, and subsequently divests within fifteen (15) months after the consummation of such acquisition, a sufficient portion of the Competing Business of such Person such that the restrictions set forth in this Section 5.7(b) would not operate to restrict such ownership;
(iv)    entering into or participating in a joint venture, partnership or other strategic business relationship with any Person engaged in a Competing Business, if such joint venture, partnership or other strategic business relationship does not engage in the Competing Business; or
(v)    exercising its rights or performing or complying with its obligations under or as expressly contemplated by this Agreement or the Transition Services Agreement.
(c)Each of the Company and the B. Riley Investor, on behalf of themselves and their Affiliates, acknowledges that (i) the agreements contained in this Section 5.7 are an integral part of the transactions contemplated by this Agreement, and (ii) without these agreements, the parties would not enter into this Agreement or the other Equity Agreements. The Company and the B. Riley Investor specifically acknowledge that the provisions of this Section 5.7 are commercially reasonable restraints and are reasonably necessary to protect the interests of the Company and the interests of the Oaktree Investors in acquiring equity interests of the Company.
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Notwithstanding Section 20.6, if, at the time of enforcement of the covenant contained in this Section 5.7, a court of competent jurisdiction holds that the duration, scope or other restrictions stated herein are unreasonable under the circumstances then existing, the Company and the B. Riley Investor agree, on behalf of themselves and their Affiliates, that the maximum duration, scope or other restriction reasonable under such circumstances shall be substituted for the stated duration, scope or other restriction and that the court shall be allowed and directed to revise the restrictions contained herein to cover the maximum period, scope and other restriction permitted by applicable Law.
(d)The Company and the Unitholders agree that in no event shall this Section 5.7 apply to any Permitted Transferee that is not an Affiliate of the B. Riley Investor and acquires any interest in the Units of Unitholder Securities pursuant to Section 10.1(a)(iv).
Article 6
GENERAL RIGHTS AND OBLIGATIONS OF UNITHOLDERS
Section 6.1Limitation of Liability. Except as otherwise required by applicable law, the debts, obligations, and liabilities of the Company, whether arising in contract, tort, or otherwise, shall be solely the debts, obligations, and liabilities of the Company, and no Unitholder shall be obligated personally for any such debt, obligation, or liability of the Company solely by reason of being a Unitholder of the Company; provided that a Unitholder shall be required to return to the Company any Distribution made to it in clear and manifest accounting or similar error, subject to the provisions of Section 3.1(c)(ii) herein. The immediately preceding sentence shall constitute a compromise to which all Unitholders have consented within the meaning of the Delaware Act. Notwithstanding anything contained herein to the contrary, the failure of the Company to observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this Agreement or the Delaware Act shall not be grounds for imposing personal liability on the Unitholders for liabilities of the Company.
Section 6.2Lack of Authority. No Unitholder in such Person’s capacity as such has the authority or power to act for or on behalf of the Company in any manner, to do any act that would be (or could be construed as) binding on the Company or to make any expenditures on behalf of the Company, except for actions expressly authorized by the terms of this Agreement, and the Unitholders hereby consent to the exercise by the Board of the powers conferred on it by Law and this Agreement.
Section 6.3No Right of Partition. No real or personal property of the Company shall be deemed to be owned by any Unitholder individually, but shall be owned by, and title shall be vested solely in, the Company. No Unitholder shall have the right to seek or obtain partition by court decree or operation of Law of any Company property, or the right to own or use particular or individual assets of the Company.
Section 6.4Unitholders Right to Act. For situations requiring the approval of any Unitholders, or any class or specified portion thereof, the Unitholders shall act through meetings and written consents as described in Section 3.2 and Section 3.3.
Section 6.5Investment Opportunities and Conflicts of Interest.
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Any Unitholder who is a Company Service Provider or whose beneficial owners are Company Service Providers, for so long as such Person or such Person’s beneficial owner(s) are employed by or providing services to the Company or any of its Subsidiaries, shall, and shall cause each of such Person’s Affiliates to, bring all investment or business opportunities to the Company of which any of the foregoing becomes aware and which such Person believes are, or could reasonably be expected to be, within the scope and investment objectives of the Company or any of its Subsidiaries, which would or may be beneficial to the business of the Company or any of its Subsidiaries, or are otherwise competitive with the business of the Company or any of its Subsidiaries; provided that the foregoing shall not apply to the B. Riley Investor in its and its Affiliates’ capacity as service providers to the Company or its Subsidiaries in connection with the Transition Services Agreement. Notwithstanding the foregoing, but subject to Section 5.7 (which shall not be superseded or limited by this Section 6.5), each of the Unitholders expressly acknowledges and agrees that, other than each Unitholder who is a Company Service Provider or whose beneficial owners are Company Service Providers, (i) each Unitholder and its respective Affiliates are permitted to have, and may presently or in the future have, investments or other business relationships with entities of every type and description, including those engaged in the business engaged in by the Company other than through the Company or any of its Subsidiaries (an “Other Business”), (ii) each of the Unitholders and their respective Affiliates have and may develop a strategic relationship with businesses (directly or as an employee, officer, director, manager, consultant or agent of a Person who does business with) that are and may be competitive or complementary with the Company or any of its Subsidiaries, (iii) none of the Unitholders or any of their respective Affiliates will be prohibited by virtue of its investments in the Company or its Subsidiaries or its designation of managers or directors to serve on the Board or on any of the boards of directors or managers of the Company’s Subsidiaries, as applicable, from pursuing and engaging in any such activities, (iv) none of the Unitholders or any of their respective Affiliates will be obligated to inform or present to the Company or the Board any such opportunity, relationship or investment, (v) the other Unitholders will not acquire or be entitled to any interest or participation in any Other Business as a result of the participation therein of any of the Unitholders or any of their respective Affiliates or to account to the Company or any other Unitholder for any profits or income earned or derived from such Other Business, and (vi) the involvement of any of the Unitholders or any of their respective Affiliates in any Other Business will not constitute a conflict of interest by such Persons with respect to the Company or its Unitholders or any of the Company’s Subsidiaries. No amendment or repeal of this Section 6.5 shall apply to or have any effect on the liability or alleged liability of any Person for or with respect to any opportunities of which any such Person becomes aware prior to such amendment or repeal.
Section 6.6Transactions between the Company and the Unitholders. Notwithstanding that it may constitute a conflict of interest, the Unitholders or their Affiliates may enter into and engage in a Related Party Agreement with the Company and its Subsidiaries, subject to compliance with the applicable terms hereof (including, if applicable, Section 3.2(b)).
Section 6.7Confidentiality. Each of the Company and each Unitholder recognizes and acknowledges that it has and may in the future receive certain confidential and proprietary information and trade secrets of the Company, its Subsidiaries, the Unitholders and their respective Affiliates, including confidential information of the Company and its Subsidiaries regarding identifiable, specific and discrete business opportunities being pursued by the Company or its Subsidiaries, books and records, financial statements and other information provided pursuant to this Agreement, contracts, or materials relating to customers or clients of the businesses of the Company and its Subsidiaries, or other business information which such Persons treat as confidential (collectively, the “Confidential Information”).
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Except as otherwise agreed to by the Board, each Unitholder agrees that it shall not, and shall cause each of its Affiliates, directors, officers, unitholders, partners, employees, agents and members not to, during the period it is a Unitholder and for a period of three (3) years thereafter, take commercial or proprietary advantage of or profit from any Confidential Information, or disclose Confidential Information to any Person for any reason or purpose whatsoever, except (a) to authorized directors, officers, representatives, agents and employees of the Company or its Subsidiaries, to other Unitholders or to their respective or such Unitholder’s Affiliates, directors, officers, representatives, agents and employees who, in the reasonable judgment of such Unitholder, need to know such Confidential Information for a valid business purpose (it being agreed that such Unitholder shall be responsible for any breach hereof by any such Person), (b) to the extent necessary in the course of performing such Unitholder’s obligations or enforcing such Unitholder’s rights under this Agreement and the agreements expressly contemplated hereby, (c) in the case of any Investor Unitholder, in connection with such Investor Unitholder’s or such Investor Unitholder’s Affiliates’ normal fund raising, marketing, informational or reporting activities, or to such Unitholder’s (or any of its Affiliates’) Affiliates, authorized directors, officers, representatives, employees, auditors, attorneys or other agents, (d) with the prior written consent of the Oaktree Investors or the Board, to any bona fide prospective purchaser of the equity or assets of such Unitholder or its Affiliates or the Units held by such Unitholder, or prospective merger partner of such Unitholder or its Affiliates, provided that such prospective purchaser or merger partner agrees to be bound by the provisions of this Section 6.7 or terms substantially consistent with the provisions of this Section 6.7, (e) to the extent necessary in response to a routine audit or investigation conducted by a Governmental Entity that does not primarily relate or make any specific reference to the Company or any Confidential Information (provided that such Unitholder shall use commercially reasonable efforts to ensure that any Confidential Information so disclosed is accorded confidential treatment), (f) in respect to any Unitholder that is or whose ultimate parent entity is a public company, to the extent required in connection with such Person’s reporting obligations pursuant to applicable Law and the rules of the SEC or a national stock exchange, or as required for tax reporting purposes, (g) to the extent required to be disclosed by order of a court of competent jurisdiction, administrative body or other Governmental Entity or by law, rule or regulation, or compelled by subpoena, summons or legal process, provided that, in the case of this clause (f) and (g), to the extent permitted by Law and reasonably practicable, (i) the Unitholder required to make such disclosure shall provide to the Company prompt notice of such disclosure to permit the Company to seek a protective order or take other appropriate action, (ii) such Unitholder shall reasonably cooperate, at the Company’s expense, in the efforts of the Company to obtain a protective order or other reasonable assurance that confidential treatment shall be accorded the Confidential Information and, in the absence of a protective order, only disclose such portion of the Confidential Information that the Unitholder is required to disclose in accordance with applicable Law, and (iii) such Unitholder shall use commercially reasonable efforts to ensure that any Confidential Information so disclosed is accorded confidential treatment. For purposes of this Section 6.7, “Confidential Information” shall not include any information of which (x) such Person learns from a source other than the Company or its Subsidiaries who is not known by such Person to be bound by a confidentiality obligation, (y) is or becomes generally available to the public other than as a result of a disclosure by a Unitholder or any of their Affiliates in violation of this Agreement or another agreement by which they are bound or (z) has been independently developed by such Person (other than in such Person’s capacity as an officer, manager, employee or consultant of the Company or any of its Subsidiaries or similar situation where the rights in respect of such Confidential Information would accrue to the Company or its Subsidiaries pursuant to applicable Law or contracts) without use of or reference to any Confidential Information. Nothing in this Section 6.7 shall in any way limit or otherwise modify any confidentiality, non-competition or non-solicitation obligations of any Unitholder pursuant to any other agreement with the Company or any of its Subsidiaries (including as may be included in any offer letter or any Unit Grant Agreement). Notwithstanding anything in this Agreement to the contrary, nothing contained in this Agreement shall prohibit any Unitholder from filing a charge with, reporting possible violations of federal law or regulation to, participating in any investigation by, or cooperating with any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable Law or regulation or communicating directly with, cooperating with, or providing information (including trade secrets) in confidence to, any federal, state or local government regulator (including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice) for the purpose of reporting or investigating a suspected violation of law, or from providing such information to the Unitholder’s attorney or in a sealed complaint or other document filed in a lawsuit or other governmental proceeding.
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Nothing in this Agreement requires any Unitholder to waive any monetary award or other payment that the Unitholder might become entitled to from any governmental agency or entity.

Section 6.8VCOC. In each case for so long as Oaktree owns any Equity Securities, the Company shall provide such Persons with such rights (including information and consultation rights) as may reasonably be requested by it in order to qualify its or any of its Affiliates’ investment in the Company as a “venture capital investment” for purposes of the U.S. Department of Labor Regulations located at 29 C.F.R. Section 2510.3-101.
Section 6.9Registration Rights. Each Unitholder understands and agrees that the Unitholder Securities have not been registered under the Securities Act and are restricted securities within the meaning of the Securities Act. Prior to the consummation of a Public Offering, the Company, the B. Riley Investor and the Oaktree Investors will negotiate in good faith to agree on and enter into a registration rights agreement containing customary terms and conditions, including, following a Public Offering:

(a)such number of demand registrations on Form S-1 to be agreed by the Company, the Oaktree Investors and the BR Investor, and an unlimited number of registrations on Form S-3 (subject in each case to reasonable annual restrictions and reasonable limitations with respect to minimum expected net proceeds of such demand, and reasonable restrictions on the number of such demands that may be for an underwritten offering) (it being understood that in any demand registration or any shelf offering which is an underwritten offering, the Oaktree Investors shall have the right to select the investment banker(s) and managing underwriter(s) to administer such offering after considering in good faith the views of the B. Riley Investor);
(b)customary pro rata piggyback registration rights (it being understood that the Original Investors shall have such pro rata piggyback registration rights and the Company Service Providers who hold Common Units shall have such pro rata piggyback registration rights in respect of such Common Units);
(c)registration provisions including pro rata underwriter cutback provisions, in which the Units held by each of the Oaktree Investors and other Unitholders afforded registration rights are treated the same (but which cutbacks and other provisions shall apply on a pro rata basis);
(d)blackout periods as determined by the Company for reasonable periods of time not in excess of 60 days in the aggregate in any 12-month period;
(e)customary indemnification, contribution, expense reimbursement coordination and lock-up provisions (not to exceed 180 days) (it being understood that the form of any lock-up agreement or other agreements (including underwriting agreements) that the Oaktree Investors are required to sign in connection with the facilitation of a Public Offering or other offerings following a Public Offering shall be reasonably acceptable to the Oaktree Investors); and
(f)customary coordination provisions with respect to block sales and other Transfers.
(g)This Section 6.9 shall survive the termination of this Agreement until the registration rights agreement contemplated hereby shall have been entered into by the applicable Unitholders and the Company.
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Article 7
EXCULPATION AND INDEMNIFICATION
Section 7.1Exculpation. To the fullest extent permitted under the Delaware Act, no Covered Person shall be liable to the Company, any Unitholder or any Affiliate of a Unitholder for any loss, damage or claim incurred by reason of any action taken or omitted to be taken by such Covered Person in his or its capacity as a Covered Person, so long as (a) such action or omission does not constitute a criminal act, fraud or willful misconduct by such Covered Person and (b) with respect to such Covered Person, such action or omission did not constitute a breach of this Agreement or any other agreement expressly contemplated by this Agreement. For the avoidance of doubt, the exculpation of liability provided in this Section 7.1 shall be subject to the provisions of Section 5.5 and Section 5.6(c).
Section 7.2Right to Indemnification. The Company agrees that (and the Company shall cause any of its Subsidiary to provide that), subject to the limitations and conditions in this Article 7, each Person who was or is made a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or arbitrative (hereinafter, a “Proceeding”), or any appeal in such a Proceeding or any inquiry or investigation that could lead to such a Proceeding, by reason of the fact that he or she, or a Person of whom he or she is the legal representative, is or was a Unitholder, Director, Tax Matters Partner or Officer, or while a Unitholder, Director, Tax Matters Partner, or Officer is or was serving at the request of the Company or any of its Subsidiaries as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic partnership, limited liability company, corporation, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise, shall be indemnified by the Company or such Subsidiary to the fullest extent permitted by the Delaware Act, Delaware General Corporation Law or other applicable law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company or the applicable Subsidiary to provide broader indemnification rights than said law permitted the Company or the applicable Subsidiary to provide prior to such amendment) against judgments, penalties (including excise and similar taxes and punitive damages), fines, settlements and reasonable expenses (including attorneys’ fees) actually incurred by such Person in connection with such Proceeding, and indemnification under this Article 7 (or otherwise) shall continue as to a Person who has ceased to serve in the capacity which initially entitled such Person to such indemnity; provided that no such Person shall be indemnified for any expenses, liabilities and losses suffered that are attributable to actions or omissions by such Person or its Affiliates to the extent the act or omission was attributable to such Person’s or its Affiliates’ (i) in the case of a Unitholder or Tax Matters Partner, breach of the implied covenant of good faith and fair dealing (if applicable),willful misconduct or fraud, (ii) in the case of any Officer, any breach of this Agreement or any duty as provided in Section 5.6(c), willful misconduct or fraud, or (iii) in the case of a Director, any breach of the implied covenant of good faith and fair dealing (if applicable), willful misconduct or fraud, in each case as determined by a final judgment, Order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, further, that any indemnity payment pursuant to this Section 7.2 shall be provided out of and to the extent of the assets of the Company only (including available insurance), and no Unitholder shall have any personal liability on account thereof. The rights granted pursuant to this Article 7 shall be deemed contract rights, and no amendment, modification or repeal of this Article 7 shall have the effect of limiting or denying any such rights with respect to actions taken or Proceedings arising prior to any amendment, modification or repeal. It is expressly acknowledged that the indemnification provided in this Article 7 could involve indemnification for negligence or under theories of strict liability.
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Section 7.3Advance Payment. To the fullest extent permitted by applicable Law, reasonable expenses incurred by a Person of the type entitled to be indemnified under Section 7.2 who was, is or is threatened to be made a named defendant or respondent in a Proceeding (other than a Proceeding brought by the Company against such Person) shall be paid by the Company in advance of the final disposition of the Proceeding upon receipt of an undertaking by or on behalf of such Person to repay such amount if it shall ultimately be determined that such Person is not entitled to be indemnified by the Company.
Section 7.4Subrogation. In the event that any Oaktree Director, Independent Director, B. Riley Director or Officer is entitled to indemnification under Section 7.2 for which such Person is also entitled to indemnification from Oaktree or the BR Group, respectively, the Company hereby agrees that its duties to indemnify such Person, whether pursuant to this Agreement or otherwise, shall be primary to those of Oaktree or the BR Group respectively, and to the extent either Oaktree or the BR Group, as applicable, actually indemnifies any such Person, Oaktree and the BR Group, as applicable, shall be subrogated to the rights of such Person against the Company for indemnification hereunder. The Company hereby acknowledges the subrogation rights of Oaktree and the BR Group under such circumstances and agrees to execute and deliver such further documents and/or instruments as Oaktree or the BR Group may reasonably request in order to evidence any such subrogation rights, whether before or after Oaktree or the BR Group makes any such indemnification payment. The Company shall pay any amounts due under this Section 7.4, in cash, promptly, and in any event within fifteen (15) days, upon written demand from Oaktree or the BR Group, as applicable. The Company hereby waives any right against Oaktree and the BR Group to indemnification, subrogation or contribution. Furthermore, the Company expressly agrees that Oaktree and the BR Group are intended third-party beneficiaries as to the indemnification provisions of this Agreement and shall be entitled to bring suit against the Company to enforce said provisions.
Section 7.5Indemnification of Employees and Agents. The Company by action of the Board, may indemnify and advance expenses to an employee or agent of the Company to the same extent and subject to the same conditions under which it may indemnify and advance expenses to Persons who are not or were not a Unitholder, Director, Tax Matters Partner, or Officer but who are or were serving at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic partnership, limited liability company, corporation, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability asserted against him and incurred by him in such a capacity or arising out of his status as such a Person to the same extent that it may indemnify and advance expenses to Unitholders under this Article 7.
Section 7.6Appearance as a Witness. Notwithstanding any other provision of this Article 7, the Company shall pay or reimburse reasonable out-of-pocket expenses incurred by a Director, Tax Matters Partner or Officer (in such capacity) in connection with his appearance as a witness or other participation in a Proceeding at a time when he is not a named defendant or respondent in the Proceeding (including reasonable attorneys’ fees and disbursements).
Section 7.7Nonexclusivity of Rights. The right to indemnification and advancement and payment of expenses conferred in this Article 7 shall not be exclusive of any other right which a Director, Officer or other Person indemnified pursuant to Section 7.2 may have or hereafter acquire under any Law (common or statutory), provision of the Certificate or this Agreement, agreement, vote of Unitholders or disinterested Directors or otherwise.
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Section 7.8Insurance. The Company shall purchase and maintain insurance, or cause any of its Subsidiaries to purchase and maintain insurance, at its or their expense, to protect itself and any Person who is or was serving as a Director, Tax Matters Partner or Officer or agent of the Company or is or was serving at the request of the Company as a manager, director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic partnership, limited liability company, corporation, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Company would have the power to indemnify such Person against such expense, liability or loss under this Article 7.
Section 7.9Savings Clause. If this Article 7 or any portion hereof is invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Director, Officer or any other Person indemnified pursuant to this Article 7 as to costs, charges and expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative to the fullest extent permitted by any applicable portion of this Article 7 that shall not have been invalidated and to the fullest extent permitted by applicable law.
Article 8
BOOKS, RECORDS, ACCESS, ACCOUNTING AND REPORTS
Section 8.1Records and Accounting.
(a)The Company shall cause to be kept books and records with respect to the Company’s business or pursuant to applicable laws. All matters concerning (i) the determination of the relative amount of allocations and distributions among the Unitholders pursuant to Articles 3 and 4 and (ii) accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Board, whose determination shall be final and conclusive as to all of the Unitholders absent manifest clerical error.
(b)The Company shall afford the B. Riley Investor or the Oaktree Investors and their respective representatives reasonable access, (i) to the corporate, financial and similar records, reports and documents of the Company and its Subsidiaries in each case as reasonably required by such requesting Unitholder to comply with applicable tax, accounting, auditing or SEC reporting requirements, applicable Laws or bona fide regulatory and compliance policies, and (ii) to any Director, Officer or employee, to the extent such access is required in order to enable such requesting party to comply with applicable Laws, applicable tax or accounting requirements or to enable the Oaktree Investors’ and the B. Riley Investor’s, as applicable, respective external auditor to perform its audit of such Person, and, in each case, the Company shall reasonably cooperate with the B. Riley Investor or the Oaktree Investors, as applicable, in connection with the foregoing. Any exercise of the inspection or access right pursuant to this Section 8.1(b) shall take place during regular business hours and be conducted in a reasonable manner, and the Company and its Subsidiaries shall not be required to cooperate with any inspection or access requests pursuant to this Section 8.1(b) that would unduly interfere with their business operations; provided that the Company may request, and if requested shall be entitled to, reimbursement from such requesting Unitholder for costs and expenses reasonably incurred by the Company or its Subsidiaries in providing such corporate, financial and similar records and information or access, on the condition that the Company provides such requesting Unitholder with the estimates of costs and expenses prior to incurring such costs and expenses; provided, further, that the Company may restrict access to any of the foregoing as it may reasonably determine to comply with applicable laws, contractual obligations, or to protect trade secrets, information protected by attorney-client privilege or other competitively sensitive information.
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(c)The Company shall use its reasonable best efforts to deliver or cause to be delivered to the B. Riley Investor, the Oaktree Investors and each Company Service Provider who holds Class B Common Units (for so long as such Company Service Provider remains a full-time officer, employee, consultant, advisor or other service provider of the Company or its Subsidiaries ), within sixty (60) days after each Fiscal Year end, audited consolidated balance sheets of the Company and its Subsidiaries as at the end of such Fiscal Year and audited consolidated statements of income, cash flows and members’ equity for such Fiscal Year.
(d)The Company shall use its reasonable best efforts to deliver or cause to be delivered to the B. Riley Investor or the Oaktree Investors, within forty (40) days after the Fiscal Quarter end, unaudited consolidated balance sheets of the Company and its Subsidiaries as at the end of each such quarter and unaudited consolidated statements of income, cash flows and members’ equity for such quarter, in each case, solely for the first three quarters of a Fiscal Year.
(e)Notwithstanding anything to the contrary herein, the B. Riley Investor’s rights pursuant to this Article 8 shall terminate upon the occurrence of a Transfer Event.
Section 8.2Fiscal Year. The fiscal year of the Company (the “Fiscal Year”) shall be the 12-month period ending on December 31 of each calendar year (or such other annual accounting period as may be established by the Board).
Article 9
CERTAIN TAX AND ACCOUNTING MATTERS
Section 9.1Partnership for Tax Purposes. The Unitholders intend that the Company shall be treated as a partnership for U.S. federal and, to the extent applicable, state and local income tax purposes, and that each Unitholder and the Company shall file all Tax returns and shall otherwise take all Tax and financial reporting positions in a manner consistent with such treatment. Subject to Section 3.2(b)(viii), in the event that the Board determines that the Company should elect to be treated as a corporation for U.S. federal income tax purposes (including, if applicable, on a retroactive basis) pursuant to Treasury Regulations Section 301.7701-3 (or any successor regulation or provision) or, to the extent applicable, state or local income tax purposes, each Unitholder and former Unitholder shall cooperate with the Company to make such election (including, if applicable, on a retroactive basis), including by executing any forms or documents required in connection therewith. In the event that the Company is treated as a corporation for U.S. federal income tax purposes or, to the extent applicable, state or local income tax purposes, Section 4.1(b) and any other provisions of this Agreement inconsistent with such treatment shall be disregarded.
Section 9.2Capital Accounts.
(a)The Company shall maintain a separate Capital Account for each Unitholder according to the rules of Treasury Regulations Section 1.704-1(b)(2)(iv). Without limiting the foregoing, each Unitholder’s Capital Account shall be adjusted:
(i)by adding any additional Capital Contributions made by such Unitholder in consideration for the issuance of Units;
(ii)by deducting any amounts paid to such Unitholder in connection with the redemption or other repurchase by the Company of Units; (iii)by adding any Profits allocated (and any items in the nature of income or gain allocated) in favor of such Unitholder and subtracting any Losses allocated (and any items in the nature of loss or deduction allocated) in favor of such Unitholder;
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(iv)by deducting any Distributions paid by the Company in cash or other assets to such Unitholder in respect of Units; and
(v)by adding the amount of any Company liabilities assumed by such Unitholder as described in clause (1) of Treasury Regulations Section 1.704-1(b)(2)(iv)(c) and subtracting any liabilities of such Unitholder assumed by the Company as described in clause (2) of Treasury Regulations Section 1.704-1(b)(2)(iv)(c).
The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Treasury Regulations. In the event that the Board reasonably determines that, in order to comply with such Treasury Regulations, it is advisable to adjust the allocations of Profits and Losses to take into account any of the economic provisions of this Agreement, including the timing and the amount of actual distributions to the Unitholders, the Board may make such adjustment; provided that any such adjustment shall not affect the amount distributable to a Unitholder pursuant to this Agreement. In addition, the Company shall (x) make any adjustments that are necessary to maintain equality between Capital Accounts of the Unitholders and the amount of capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Treasury Regulations Sections 1.704-1(b)(2)(iv)(g) and (y) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Treasury Regulations Section 1.704-1(b).
(b)For purposes of computing the amount of any item of Company income, gain, loss, or deduction to be allocated pursuant to this Article 9 and to be reflected in the Capital Accounts, the determination, recognition, and classification of any such item shall be the same as its determination, recognition, and classification for U.S. federal income tax purposes (including any method of depreciation, cost recovery, or amortization used for this purpose); provided that:
(i)The computation of all items of income, gain, loss, and deduction shall include those items described in Code Section 705(a)(1)(B) or Code Section 705(a)(2)(B) and Treasury Regulations Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includable in gross income or are not deductible for U.S. federal income tax purposes.
(ii)If the Book Value of any Company property is adjusted pursuant to Treasury Regulations Sections 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property.
(iii)Items of income, gain, loss, or deduction attributable to the disposition of Company property having a Book Value that differs from its adjusted basis for Tax purposes shall be computed by reference to the Book Value of such property.
(iv)Items of depreciation, amortization, and other cost recovery deductions with respect to Company property having a Book Value that differs from its adjusted basis for Tax purposes shall be computed by reference to the property’s Book Value in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g).
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(v)To the extent an adjustment to the adjusted Tax basis of any Company asset pursuant to Code Sections 732(d), 734(b) or 743(b) is required, pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis).
Section 9.3Negative Capital Accounts. No Unitholder shall be required to pay to any other Unitholder or the Company any deficit or negative balance which may exist from time to time in such Unitholder’s Capital Account (including upon and after dissolution of the Company).
Section 9.4Transfer of Capital Accounts. The original Capital Account established for each Substituted Unitholder shall be in the same amount as the Capital Account of the Unitholder (or portion thereof) to which such Substituted Unitholder succeeds, at the time such Substituted Unitholder is admitted to the Company. The Capital Account of any Unitholder shall be increased or decreased to reflect (a) the Transfer to such Unitholder of all or part of the Units of another Unitholder or (b) the repurchase or cancellation of Units pursuant to a Unit Grant Agreement or other agreement setting forth the terms under which such Units were repurchased or cancelled. Any reference in this Agreement to a Capital Contribution of or Distribution to a Unitholder that has succeeded any other Unitholder shall include any Capital Contributions or Distributions previously made by or to the former Unitholder on account of the Units of such former Unitholder Transferred to such Unitholder.
Section 9.5Allocations. Except as otherwise stated in Section 9.6, Net Profits and Net Losses (and, to the extent reasonably determined necessary and appropriate by the Board to achieve the resulting Capital Account balances described below, any allocable items of gross income, gain, loss and expense includible in the computation of Net Profits and Net Losses) for any Taxable Year shall be allocated among the Unitholders in such a manner that, as of the end of such Taxable Year, the sum of (a) the Capital Account of each Unitholder, (b) such Unitholder’s share of Minimum Gain (as determined according to Treasury Regulations Section 1.704-2(g)), and (c) such Unitholder’s Unitholder Nonrecourse Debt Minimum Gain shall be equal to the respective net amounts, positive or negative, which would be distributed to them, determined as if the Company were to (x) liquidate the assets of the Company for an amount equal to their Book Values, and (y) distribute the proceeds of the liquidation pursuant to Section 18.2 (provided that, for purposes of such determination only, all outstanding Class B Common Units shall be deemed to be fully vested for purposes of calculating the amount of such proceeds distributed to each Unitholder pursuant to Section 4.1(a)). Notwithstanding the foregoing, in any Taxable Year in which the Company makes a Distribution pursuant to Section 4.1(a)(i) or (iii), if the aggregate amount distributed pursuant to Section 4.1(a)(i) or (iii), as applicable, for such Taxable Year and all prior Taxable Years exceeds the aggregate Profit that would, but for this sentence, be allocated to the Class A Preferred Unitholders or Class B Preferred Unitholders, as applicable, for such Taxable Year and all prior Taxable Years, then such excess shall be treated as a guaranteed payment pursuant to Code Section 707(c) for such Taxable Year and any expense associated with such guaranteed payment shall be specially allocated to the Class A Preferred Unitholders or Class B Preferred Unitholders, as applicable.
Section 9.6Special Allocations.
(a)Losses attributable to Unitholder Nonrecourse Debt shall be allocated in the manner required by Treasury Regulations Section 1.704-2(i). If there is a net decrease during a Taxable Year in Unitholder Nonrecourse Debt Minimum Gain, Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) shall be allocated to the Unitholders in the amounts and of such character as determined according to, and subject to the exceptions contained in, Treasury Regulations Section 1.704-2(i)(4).
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This Section 9.6(a) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(i)(4) and shall be interpreted in a manner consistent therewith.
(b)Nonrecourse deductions (as determined according to Treasury Regulation Sections 1.704-2(b)(1)) and excess nonrecourse liabilities (as determined according to Treasury Regulations Section 1.752-3(a)(3)) shall be allocated among the Unitholders in a manner consistent with applicable Treasury Regulations and the Unitholders’ economic entitlements as reasonably determined by the Board. If there is a net decrease in Minimum Gain during any Taxable Year, each Unitholder shall be allocated Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) in the amounts and of such character as determined according to, and subject to the exceptions contained in, Treasury Regulations Section 1.704-2(g). This Section 9.6(b) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulations Section 1.704-2(f), and shall be interpreted in a manner consistent therewith.
(c)If any Unitholder that unexpectedly receives an adjustment, allocation, or distribution described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Taxable Year, computed after the application of Section 9.6(a) and Section 9.6(b) but before the application of any other provision of this Article 9, then Profits for such Taxable Year shall be allocated to such Unitholder in proportion to, and to the extent of, such Adjusted Capital Account Deficit. This Section 9.6(c) is intended to be a qualified income offset provision as described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.
(d)To the extent an adjustment to the adjusted Tax basis of any asset of the Company pursuant to Code Section 734(b) or 743(b) is required, pursuant to Treasury Regulations Sections 1.704-1(b)(2)(iv)(m)(2) or (4), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Unitholders in accordance with their respective interests in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Unitholder to whom such distribution was made in the event Treasury Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(e)The allocations set forth in Sections 9.6(a)-(d) (the “Regulatory Allocations”) are intended to comply with certain requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations. The Regulatory Allocations may not be consistent with the manner in which the Unitholders intend to allocate Profit and Loss of the Company or make Distributions. Accordingly, notwithstanding the other provisions of this Article 9, but subject to the Regulatory Allocations, income, gain, deduction, and loss shall be reallocated among the Unitholders so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Unitholders to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction, and loss) had been allocated without reference to the Regulatory Allocations. In general, the Unitholders anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction, and loss) among the Unitholders so that the net amount of the Regulatory Allocations and such special allocations to each such Unitholder is zero. In addition, if in any Taxable Year there is a decrease in Minimum Gain, or in Unitholder Nonrecourse Debt Minimum Gain, and application of the Minimum Gain chargeback requirements set forth in Section 9.6(a) or Section 9.6(b) would cause a distortion in the economic arrangement among the Unitholders, the Unitholders may, if they do not expect that the Company will have sufficient other income or gain to correct such distortion, request the IRS to waive either or both of such Minimum Gain chargeback requirements. If such request is granted, this Agreement shall be applied in such instance as if it did not contain such Minimum Gain chargeback requirement.
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(f)The Unitholders acknowledge that allocations analogous to those described in Proposed Treasury Regulation Section 1.704-1(b)(4)(xii)(c) result from the allocation of Profits and Losses provided for in this Agreement. For the avoidance of doubt, the Company is entitled to make such allocations and, once required by applicable final or temporary guidance, allocations of Profits and Losses will be made in accordance with Proposed Treasury Regulation Section 1.704-1(b)(4)(xii)(c) or any successor provision or guidance.
Section 9.7Tax Allocations.
(a)The income, gains, losses, deductions and credits of the Company will be allocated, for U.S. federal, state, and local income tax purposes, among the Unitholders in accordance with the allocation of such income, gains, losses, deductions and credits among the Unitholders for computing their Capital Accounts; except that, if any such allocation is not permitted by the Code or other applicable law, then the Company’s subsequent income, gains, losses, deductions and credits will be allocated among the Unitholders so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.
(b)Items of Company taxable income, gain, loss and deduction with respect to any property contributed to the capital of the Company shall be allocated among the Unitholders in accordance with Code Section 704(c) so as to take account of any variation between the adjusted Tax basis of such property to the Company for U.S. federal income tax purposes and its Book Value as reasonably determined by the Board; provided that to the extent permitted by law, the “traditional method” set forth in Treasury Regulations Section 1.704-3(b) shall be used with respect to any such variation in respect of contributions or deemed contributions of property on or before the date hereof.
(c)If the Book Value of any Company asset is adjusted pursuant to the requirements of Treasury Regulations Sections 1.704-1(b)(2)(iv)(e) or (f), subsequent allocations of items of taxable income, gain, loss and deduction with respect to such asset shall take account of any variation between the adjusted Tax basis of such asset for U.S. federal income tax purposes and its Book Value in the same manner as under Code Section 704(c).
(d)Allocations of tax credits, Tax credit recapture, and any items related thereto shall be allocated to the Unitholders according to their interests in such items as reasonably determined by the Board taking into account the principles of Treasury Regulations Sections 1.704-1(b)(4)(ii) and 1.704-1(b)(4)(viii).
(e)Allocations pursuant to this Section 9.7 are solely for purposes of U.S. federal, state and local Taxes and shall not affect, or in any way be taken into account in computing, any Unitholder’s Capital Account or share of Profits, Losses, Distributions or other Company items pursuant to any provision of this Agreement.
(f)The Company and the Unitholders agree that for U.S. federal (and applicable state and local) income tax purposes, (i) except as provided by (x) the final sentence in Section 9.5 and (y) Section 18.2, none of a Unitholder’s rights to distributions or payments in respect of a Unit shall be reported as giving rise to a guaranteed payment or a capital shift (or any income in connection with a capital shift) and (ii) any acquisition or deemed acquisition of Membership Interests by an Oaktree Investor (including pursuant to any adjustment in respect of any Specified Class B Reduction Amount or any provision of the Equity Purchase Agreement) will not immediately result in a taxable event to such Oaktree Investor or to the B.
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Riley Investor, whether due to a capital shift or otherwise, and that any excess of the fair market value of any Membership Interests acquired or deemed acquired by an Oaktree Investor as of the date of acquisition over the purchase price allocated thereto (including any Membership Interests acquired pursuant to any adjustment in respect of any Specified Class B Reduction Amount or any provision of the Equity Purchase Agreement) shall be treated as an open transaction and not result in taxable income or gain to such Oaktree Investor until such time that there is a distribution by the Company in respect of such excess or a disposition of such Membership Interests. The parties hereto shall prepare all Tax returns in accordance with, and shall not otherwise take any position inconsistent with, the treatment described in the immediately preceding sentence, unless otherwise required pursuant to a “determination” within the meaning of Code Section 1313(a).
Section 9.8Payments Attributable to a Unitholder.
(a)If requested by the Company, each Unitholder shall, if able to do so, deliver to the Company (i) an affidavit in form satisfactory to the Company that the applicable Unitholder (or its partners or members, as the case may be) is not subject to withholding under the provisions of any federal, state, local, foreign or other law, (ii) any certificate that the Company may reasonably request with respect to any such laws and/or (iii) any other form or instrument reasonably requested by the Company relating to a Unitholder’s status under such law. In the event that a Unitholder fails or is unable to deliver to the Company an affidavit described in subclause (i), (ii), or (iii) of this clause (a) establishing an exemption from any applicable withholding requirements, the Company shall withhold amounts from such Unitholder in accordance with applicable law.
(b)To the extent the Company is required by Law to withhold or to make any Tax payment on behalf of, with respect to, or that is otherwise specifically attributable to a Unitholder or a Unitholder’s status as such (including any U.S. federal, state, local or foreign withholding, personal property, personal property replacement, unincorporated business or other Taxes, but excluding, for the avoidance of doubt, penalties and interest for the Company’s failure to withhold due to gross negligence of willful misconduct of the Company) (“Withholding Advances”), then the Company shall withhold such amounts and make such Tax payments as so required and such Unitholder shall indemnify the Company in full for the entire amount withheld and paid (including interest, penalties and related expenses). All Withholding Advances made on behalf of a Unitholder, plus interest thereon at a rate equal to the relevant Applicable Federal Rate published by the IRS in accordance with Section 1274(d) of the Code, shall (i) be paid on demand by the Unitholder on whose behalf such Withholding Advances were made (it being understood that no such payment shall increase such Unitholder’s Capital Account) or (ii) in the Board’s discretion, be repaid by reducing the amount of the current or next succeeding distribution or distributions that would otherwise have been made to such Unitholder in accordance with this Agreement or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Unitholder. The Company may pursue and enforce all rights and remedies it may have against each Unitholder under this Section 9.8, including instituting a lawsuit to collect such indemnification and contribution. Whenever repayment of a Withholding Advance by a Unitholder is made as described in clause (ii) above, for all other purposes of this Agreement, such Unitholder shall be treated as having received all distributions (whether before or upon dissolution) unreduced by the amount of such Withholding Advances and interest thereon. The obligations hereunder shall survive the winding-up or dissolution of the Company.
Section 9.9Tax Returns. The Tax Matters Partner shall, at the expense of the Company, prepare (or cause to be prepared) and file (or cause to be filed) all necessary U.S. federal, state and local income Tax returns, including making the elections described in Section 9.11. Each Unitholder shall furnish to the Company all pertinent information in its possession relating to Company operations that is necessary to enable the Company’s income Tax returns to be prepared and filed.
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No Unitholder shall file a notice with the U.S. IRS under Section 6222(b) of the Code in connection with such Unitholder’s intention to treat an item on such Unitholder’s federal income tax return in a manner that is inconsistent with the treatment of such item on the Company’s federal income tax return unless such Unitholder shall have notified the Company that it intends to take an inconsistent position and, following such notice to the Company, such Unitholder shall reasonably cooperate with the Company and the Tax Matters Partner, if applicable, to determine the appropriate treatment of such item and to avoid an inconsistent return position. Any Unitholder entering into a settlement agreement with the U.S. Department of the Treasury that concerns a Company item shall notify the Tax Matters Partner of such settlement agreement and its terms within thirty (30) days after the date thereof.
Section 9.10Tax Information. The Company shall use reasonable best efforts to deliver or cause to be delivered, within seventy-five (75) days after the end of each Taxable Year, to each Person who was a Unitholder at any time during such Taxable Year all information regarding the Company necessary for the preparation of such Person’s U.S. federal, state and local income Tax returns.
Section 9.11Tax Elections. The Company shall make any election the Tax Matters Partner may deem appropriate, including any election pursuant to Code Section 754 and, subject to Section 9.7(b), any elections under Code Section 704(c) or under the principles of “reverse” Code Section 704(c) regarding any variation between the adjusted Tax basis of property and such property’s Book Value.
Section 9.12Tax Matters Partner. The “partnership representative” of the Company within the meaning of Code Section 6223, as amended by the Company Tax Audit Rules, and the “tax matters partner,” to the extent applicable for any similar provision of state, local or non-U.S. Law purposes (the “Tax Matters Partner”) will be OCM SSF III Great American PT, LP.; provided that, to the extent that OCM SSF III Great American PT, LP. is not permitted to serve in such capacity, the Oaktree Investors shall designate a Person permitted to so serve. The Tax Matters Partner is authorized (i) to select the method of accounting and bookkeeping procedures to be used by the Company, (ii) to represent the Company (at the Company’s expense) in connection with all examinations by income Tax authorities of the Company’s affairs and any Company related items, including resulting administrative and judicial proceedings, (iii) to sign consents and to enter into settlements and other agreements with such authorities with respect to any such examinations or proceedings, (iv) to expend Company funds for professional services and costs associated therewith, (v) to make any elections or determinations it may choose regarding the administration of all Tax matters, including any Tax contest, audit or other similar proceeding, and (vi) to comply with the requirements of the Code and to conduct the Company’s affairs under Code Sections 6221 through 6241, including any amendments thereto or other Code provisions with respect to the same subject matter as Code Sections 6221 through 6241, and any regulations promulgated or proposed under any such Code Sections and any administrative guidance with respect thereto and any similar provisions of state, local or non-U.S. Tax laws. The Company will reimburse the Tax Matters Partner (and any applicable Affiliates of the Tax Matters Partner) for any reasonable costs and expenses incurred by it in connection with its activities as the Tax Matters Partner and in connection with any administrative or judicial proceeding affecting tax matters of the Company or any of the Unitholders in their capacity as such. Each Unitholder will cooperate with the Tax Matters Partner and do or refrain from doing any or all things reasonably requested by the Tax Matters Partner with respect to the conduct of any Tax audit, examination or proceeding of the Company, including by providing the Tax Matters Partner with any information reasonably requested by the Tax Matters Partner in connection with the conduct of such audits, examinations or proceedings. The Tax Matters Partner has discretion to determine whether the Company will contest or continue to contest any income Tax deficiencies assessed or proposed to be assessed by any income Tax authority on the Company. Any deficiency for Taxes imposed on any Unitholder (including penalties, additions to Tax or interest imposed with respect to such Taxes) shall be paid by such Unitholder.
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If the Company is subject to any Taxes imposed under Subchapter C of Chapter 63 of the Code (Sections 6221 et seq.), as amended by the Bipartisan Budget Act of 2015, as amended from time to time, and any Treasury Regulations and other guidance promulgated thereunder or with respect thereto, and any similar state or local legislation, regulations, or guidance (“Entity Taxes”), the Tax Matters Partner shall allocate among the Unitholders any Entity Tax in a manner it reasonably determines to be fair and equitable taking into account any modifications attributable to the Unitholder pursuant to Code Section 6225(c) (if applicable). Any Entity Taxes so allocated shall be treated as Withholding Advances subject to the provisions of Section 9.8(b).
Section 9.13Code Section 83(b) Election; Safe Harbor Election.
(a)As a condition subsequent to the issuance of any Class B Common Units, each Unitholder who receives a grant of Class B Common Units in exchange for services shall make a timely and effective election under Section 83(b) of the Code with respect to such Class B Common Units. The Company and all Unitholders will (a) treat such Class B Common Units as outstanding for tax purposes, (b) treat such Unitholder as a partner of the Company for tax purposes with respect to such Class B Common Units and (c) file all tax returns and reports consistently with the foregoing, and, except as required pursuant to a “determination” within the meaning of Section 1313(a) of the Code, neither the Company nor any of its Unitholders shall claim a deduction (as wages, compensation or otherwise) for the Fair Market Value of such Class B Common Units for U.S. federal income tax purposes, either at the time of issuance of such Class B Common Units or, with respect to an Unvested Class B Common Unit, at the time such Class B Common Unit becomes a vested Class B Common Unit. Consistent with the foregoing, the Class B Common Units are intended to be treated as Profits Interests and the provisions of this Agreement shall be interpreted and applied consistently therewith. All Unitholders consent to the Company taking all actions, including amending this Agreement, necessary or appropriate to cause the Class B Common Units to be treated as Profits Interests for all U.S. federal income tax purposes, to be valued based on liquidation value or similar principles and to permit allocations of income made to such Unitholders to be respected even if such interests are subject to risk of forfeiture, including any action required by the Company under IRS Revenue Procedure 2001-43, unless superseded by Notice 2005-43, in which case, such consent shall allow the Company to take any and all actions as may be necessary or desirable pursuant to such notice, final or temporary regulations that may be promulgated to bring into effect the IRS Proposed Treasury Regulations set forth in the notice of proposed rulemaking (REG–105346–03), and any similar or related authority.
(b)The Unitholders acknowledge the proposed revenue procedure set forth in Notice 2005-43 and expressly intend that the Company shall be entitled to make a “Safe Harbor Election” and to issue “Safe Harbor Partnership Interests” within the meaning thereof. If such proposed revenue procedure (or a substantial equivalent) is promulgated in final, effective form, the Tax Matters Partner shall (without the need for further action by the other Unitholders) have all necessary authority under this Agreement to give effect to the intention set forth in the preceding sentence (including the authority to make any applicable tax election on behalf of the Company and the Unitholders).
Article 10
TRANSFER OF MEMBERSHIP INTERESTS
Section 10.1Transfers by Unitholders.
(a)No Unitholder shall Transfer any interest in any Units or Unitholder Securities except in compliance with this Article 10.
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Except for Transfers permitted by, and made in accordance with the express provisions of, the next succeeding sentence and Section 10.1(b) or any other agreement approved by the Board and binding upon the Unit to be Transferred and/or the holder thereof, no Unitholder shall Transfer, or offer or agree to Transfer, all or any part of any interest in such Person’s Units or Unitholder Securities. Subject to compliance with Section 10.1(b), a Unitholder shall only be permitted to Transfer its Units or Unitholder Securities as follows (subject, as applicable, to any obligations in the Management Incentive Plan and any Unit Grant Agreement applicable to such Units):
(i)with the prior written consent of the Board;
(ii)in the case of a Unitholder that is an entity, to an Affiliate of such Unitholder (other than in respect of any Unitholder Securities which have not fully vested in accordance with the agreements pursuant to which they were issued, which shall not be transferable unless expressly provided otherwise in such agreements);
(iii)in the case of a Unitholder that is a natural person (including in respect of any Unitholder Securities which have not fully vested in accordance with the agreements pursuant to which they were issued, subject to any additional limitations set forth in such agreements or in the Management Incentive Plan to the extent applicable), (A) a Transfer of such Unitholder’s Units or Unitholder Securities for bona fide estate planning purposes to such Unitholder as trustee of a trust or trusts held solely for the benefit of a Member of the Immediate Family of such Unitholder or to a limited liability company or similar entity, provided that the Transferring Unitholder at all times retains management control over such entity with respect to the Units or Unitholder Securities held by such entity, or (B) upon the death of such Unitholder, such Units or Unitholder Securities may be distributed by the will or other instrument taking effect at death of such Units or Unitholder Securities or by applicable laws of descent and distribution to such holder’s estate, executors, administrators and personal representatives, and then to such holder’s heirs, legatees or distributees, whether or not such recipients are Members of the Immediate Family of such person;
(iv)in the case of a Unitholder that is an entity (other than in respect of any Unitholder Securities which have not fully vested in accordance with the agreements pursuant to which they were issued, which shall not be transferable unless expressly provided otherwise in such agreements), by a Unitholder pursuant to a pledge of such Units or Unitholder Securities to secure obligations pursuant to (x) the Nomura Credit Facility, (y) a bona fide financing with any bank chartered and regulated by the Office of the Comptroller of the Currency (or any of their controlled Affiliates) or (z) any other any other lender or asset manager that has been approved for purposes of this Section 10.1(a)(iv)(z) by the Board (such approval not to be unreasonably withheld, conditioned or delayed)), provided that it shall not be unreasonable for the Board to withhold, condition or delay consent for any lender or asset manager whose purpose or investment thesis is the purchase of equity securities, loans, debt securities or any other securities with the intention of (or view to) owning the ordinary equity, or otherwise gaining control of, a distressed business; provided further (A) any pledgee shall agree in the documentation governing such pledge that, (i) as a condition to any foreclosure on any such pledge or any other Transfer of the pledged Units or Unitholder Securities pursuant to any other exercise of remedies by the lender, the lender (or its transferee, or any entity acquiring the Units pursuant to any foreclosure or similar proceeding) shall be required to agree in writing to be bound by the terms of this Agreement and the Equity Agreements pursuant to a joinder and letter of acceptance agreement, pursuant to which such lender or its transferee agrees to be bound by the terms and conditions of this Agreement, in form and substance reasonably acceptable to the Board (which joinder agreement and letter of acceptance shall not require that such lender transferee be bound by Section 5.7 or any other non-compete, non-solicitation or similar restrictive covenants) and (ii) upon any such foreclosure or exercise of other remedies, the lender (or other transferee) shall not have any right to designate one or more members to the Board or any of the express consent or approval rights of such Unitholder or other rights afforded to the B. Riley Investor pursuant to Section 3.2(b), Section 5.2, Section 5.3, Section 8.1, Article 13 and Article 14 and (B) subject to the foregoing clause (A), upon any such foreclosure the applicable lender shall have the right without further approval of any Unitholder, to exercise any voting rights afforded to Unitholders in respect of Units (which such voting rights, if any, are addressed solely in Section 3.2(a));
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(v)any Transfer of Units or Unitholder Securities by any Unitholder (other than Oaktree) to the Company and/or Oaktree (including pursuant to the Call Option or the exercise of a Put Option Unitholder’s rights pursuant to Section 4.2(b)) (any Transferee in clauses (i), (ii), (iii), (iv) or (v), a “Permitted Transferee”);
(vi)pursuant to the exercise of tag-along rights in accordance with Article 12 or in a Drag-Along Sale or Approved Company Sale in accordance with Article 13;
(vii)following the consummation of a Public Offering, in a Public Sale (subject to compliance with applicable securities laws and any applicable registration rights, lock-up or similar agreement or arrangement); or
(viii)by the Oaktree Investors at any time to any entity subject to, if applicable, the tag-along rights set forth in Article 12; provided, however, that, without the prior written consent of the B. Riley Investor (for so long as it has the right to appoint any Directors pursuant to Section 5.2), the Oaktree Investors may not make any Transfer that would constitute a Fundamental Change to any entities that the Oaktree Investors and the B. Riley Investor have mutually agreed in writing shall be subject to the B. Riley Investor’s prior written approval.
(ix)Notwithstanding the foregoing, no Unitholder may avoid the provisions of this Agreement by (x) making one or more Transfers to one or more Permitted Transferees and then disposing of all or any portion of such party’s interest in any such Permitted Transferee or (y) by issuing or permitting any Transfer of any equity securities of or interests in any entity holding (directly or indirectly) Unitholder Securities. If any Transfer to an Affiliate is made in reliance on Section 10.1(a)(ii), and the Affiliate to whom such Units or Unitholder Securities thereafter ceases to be an “Affiliate” of the initial Transferring Unitholder, such Transfer shall be void and such Unitholder Securities shall be Transferred back to such initial Transferring Unitholder.
(b)Each Transferee of Units or other Unitholder Securities shall, as a condition precedent to such Transfer, execute a counterpart to this Agreement and the other applicable Equity Agreements to which the Transferor Unitholder was a party and other documentation acceptable to the Board (including, in the case of a Unitholder who is a natural person, the execution of a Spousal Consent, if required) pursuant to which such Transferee shall agree to be bound by the provisions of this Agreement and the applicable provisions of the other applicable Equity Agreements. Notwithstanding anything to the contrary herein, (i) in the event of any Transfer Event, no Transferee who acquires such Units or Unitholder Securities shall be entitled to the rights provided to the B. Riley Investor under Section 3.2(b), Section 5.2, Section 5.3, Section 8.1, Article 13 and Article 14 and (ii) the Oaktree Investors shall have the right to transfer all (or part) of the powers, preferences, rights and obligations of such Oaktree Investors, as applicable, as set forth in this Agreement to any Transferee to which the Oaktree Investors (or their Permitted Transferees) have Transferred its Units (and related Membership Interests) pursuant to a Transfer made in accordance with the provisions of this Agreement, at which point the rights of the Oaktree Investors transferred pursuant thereto shall terminate and thereafter such Transferee shall alone benefit from such rights (and such Transferee shall exercise such powers, preferences, rights and obligations hereunder, mutatis mutandis, and the Board shall be permitted to amend this Agreement and related Equity Agreements to reflect such Transfer without further action or consent by the Unitholders, including the rights to Oaktree Investors hereunder until such Transferee fails to hold 25% of the Oaktree Investors’ combined Original Amount).
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(c)For the avoidance of doubt, the rights provided to the B. Riley Investor under Section 3.2(b), Section 5.2, Section 5.4, Section 8.1, Article 13 and Article 14 hereof are personal to the B. Riley Investor in light of the historic and ongoing relationship between the B. Riley Investor and the Company and the nature of the business of the B. Riley Investor and shall in no event, other than with respect to a Transfer to a wholly owned subsidiary of B. Riley Investor or B. Riley Financial, Inc. pursuant to Section 10.1(a)(ii) or, solely with respect to any voting rights afforded to Unitholders in respect of Units (which such voting rights, if any, are addressed solely in Section 3.2(a)), to a lender pursuant to Section 10.1(a)(iv), be assignable hereunder or otherwise without the prior written consent of the Board in its sole discretion.
Section 10.2Effect of Assignment.
(a)Any Unitholder who shall Transfer any Units or other Unitholder Securities shall cease to be a Unitholder of the Company with respect to such Units or other interest and shall no longer have any rights or privileges of a Unitholder with respect to such Units or other interest. Subject to the other terms of this Agreement, the Company shall, from the effective date of any valid Transfer, thereafter pay all further Distributions on account of the respective Units or Unitholder Securities, or award any right or privilege thereto, so Transferred to the Transferee in accordance with Section 4.1(d) hereto.
(b)Any Person who acquires in any manner whatsoever any Units or other Unitholder Securities, irrespective of whether such Person has accepted and adopted in writing the terms and provisions of this Agreement, shall be deemed by the acceptance of the benefits of the acquisition thereof to have agreed to be subject to and bound by all of the terms and conditions of this Agreement that any predecessor in such Units or other Unitholder Securities of such Person was subject to or by which such predecessor was bound.
Section 10.3Restriction on Transfer. In addition, notwithstanding any other provision of this Agreement to the contrary, a Unitholder shall not Transfer of all or any part of its Membership Interests in the Company if such Transfer would (a) cause the Company to become a “publicly traded partnership” under Code Section 7704(b), (b) cause the Company to have more than one hundred (100) partners within the meaning of Treasury Regulations Section 1.7704-1(h), including the look through rule in Treasury Regulations Sections 1.7704-1(h)(3)), or (c) violate any provision of federal or state securities or blue sky laws, including any exemption from registration under any such laws, or breach any undertaking or agreement of a Unitholder in connection with obtaining an exemption thereunder.
Section 10.4Transfer Fees and Expenses. Except as otherwise provided herein or in the applicable Unit Grant Agreement, the Transferor and Transferee of any Units or other Unitholder Securities shall be jointly and severally obligated to reimburse the Company for all reasonable and documented expenses (including attorneys’ fees and expenses) of any Transfer, whether or not consummated.
Section 10.5Void Transfers. Any Transfer by any Unitholder of any Units or other Unitholder Securities in contravention of this Agreement (including the failure of the Transferee to execute a counterpart in accordance with Section 10.1(b)) or which would cause the Company to not be treated as a partnership for U.S. federal income tax purposes shall be void ab initio and ineffectual and shall not bind or be recognized by the Company or any other party, and no purported Transferee shall have any right as a Unitholder hereunder (including to any Profits, Losses or Distributions of the Company).
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Neither the Company nor the non-transferring Unitholders shall incur any liability as a result of refusing to make any such distributions to the transferee of any such invalid Transfer.
Section 10.6Blocker Rights. If requested by the Oaktree Investors, any assignment or Transfer of Oaktree Securities, whether pursuant to a Fundamental Change, a Drag-Along Sale, an Approved Company Sale, Article 12, or otherwise, and any mergers, consolidations, conversions, restructurings, transactions or reorganizations related to any of the foregoing, shall be structured as a Transfer of the equity securities of a Blocker Corporation that is, or affiliated with, the Oaktree Investors, without any discount in the consideration received for such equity securities, such that the direct equityholders of such Blocker Corporation shall be entitled to the same amount and type of consideration as the Blocker Corporation would have received if such Blocker Corporation had transferred the Oaktree Securities directly and shall be subject to the same liabilities and obligations as such Blocker Corporation would have been subject to if such Blocker Corporation had transferred the Oaktree Securities directly under and pursuant to the terms of this Agreement. The Company and each Unitholder shall consent to, and raise no objections against, and reasonably cooperate with any such Transfer of equity securities of a Blocker Corporation, including in connection with any restructuring transaction that the Oaktree Investors determine is necessary or appropriate to permit them or such other Blocker Corporation to obtain the benefits of this Section 10.6.
Article 11
ADMISSION OF UNITHOLDERS
Section 11.1Substituted Unitholders. In connection with the Transfer of a Membership Interest of a Unitholder in accordance with, and to the extent permitted under, the terms of this Agreement and the other Equity Agreements, the Transferee shall become a Substituted Unitholder on the effective date of such Transfer, which effective date shall not be earlier than the date of compliance with or waiver of the conditions to such Transfer (unless one of the conditions to such Transfer is that Board or Unitholder consent is required for the admission of such Transferee, in which case such consent must first be obtained) (including, in the case of a Unitholder who is a natural person, the execution of a Spousal Consent, if required), and such admission shall be shown on the books and records of the Company and Schedule A to this Agreement shall be amended to reflect such change in accordance with Section 3.1(a). Unless and until a Substituted Unitholder is admitted as a Unitholder, such Person shall have no powers, rights or privileges of a Unitholder of the Company.
Section 11.2Additional Unitholders. A Person may be admitted to the Company as an Additional Unitholder only as contemplated under, and in compliance with, the terms of this Agreement, including furnishing to the Board (a) a letter of acceptance, in form satisfactory to the Board, of all the terms and conditions of this Agreement, including the power of attorney granted in Section 20.1, and, if requested by the Board, ratifying all agreements and other instruments of the Company that many have been executed and delivered on behalf of the Company on or prior to such date that are in force and effect on such date (including, for natural persons, the execution of a Spousal Consent, if required), and (b) such other documents or instruments as may be necessary or appropriate to effect such Person’s admission as a Unitholder (including counterparts or joinders to all applicable Equity Agreements). Such admission shall become effective on the date on which the Board determines in its sole discretion that such conditions have been satisfied and when any such admission is shown on the books and records of the Company and Schedule A to this Agreement shall be amended in accordance with Section 3.4(b) hereto. Unless and until an Additional Unitholder is admitted as such, such Person shall no powers, rights or privileges of a Unitholder of the Company.
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Section 11.3Optionholders. Except to the extent otherwise set forth herein, no Person that holds securities (including options, warrants, or rights) exercisable, exchangeable, or convertible into Units shall have any rights with respect to such Units until such Person is actually issued Units upon such exercise, exchange, or conversion and, if such Person is not then a Unitholder, is admitted as a Unitholder pursuant to Section 11.2.
Article 12
TAG-ALONG RIGHTS
Section 12.1Tag-Along Rights. Prior to (i) any Transfer by a Unitholder (other than the Oaktree Investors) of any Unitholder Securities or any Transfer by the Oaktree Investors that would qualify as a Fundamental Change, in each case other than a Transfer to a Permitted Transferee or a Drag-Along Sale or Approved Company Sale in accordance with this Agreement, or (ii) any Transfer by the Oaktree Investors that includes a Transfer of their right to appoint a majority of the Directors to such transferee (other than any of the Oaktree Investors or an Affiliate thereof) other than a Drag-Along Sale or Approved Company Sale in accordance with this Agreement (subject to the foregoing exceptions, a “Sale”), such Unitholder (the “Selling Unitholder”) will give written notice at least twenty (20) Business Days prior to the consummation of the proposed Sale setting forth (a) the number of Units proposed to be sold, (b) the consideration that it proposes to receive, (c) the identity of the proposed Transferee, (d) the expected date of the proposed Transfer and (e) the other material terms and conditions of the Sale (such notice, a “Sale Notice”) to the Company and each of the other Unitholders who then hold Unitholder Securities of the class(es) to be sold by such Unitholder (each, a “Tag-Along Unitholder,” and collectively, the “Tag-Along Unitholders”); provided that solely for purposes of this Article 12, the Class A Common Units and Class B Common Units shall be deemed to be the same class of Unitholder Securities. Each Tag-Along Unitholder may, within 10 Business Days following receipt of the Sale Notice, give to the Company an irrevocable written notice (a “Co-Sale Notice”) indicating that it desires to participate in the proposed Sale. If any Tag-Along Unitholders elect to participate in such Sale, each such Tag-Along Unitholder will be entitled to sell in the proposed Sale, at the same price per Unit (less any applicable per Unit Participation Threshold) and on the same terms and conditions as the Selling Unitholder (except as expressly provided in the Management Incentive Plan and Unit Grant Agreement in respect of each such Unit), a number of Unitholder Securities of the class proposed to be Transferred equal to the product of (A) the quotient determined by dividing (1) the aggregate number of such class of Unitholder Securities owned by such Tag-Along Unitholder by (2) the aggregate number of such class of Unitholder Securities owned by all of the holders of Unitholder Securities, and (B) the aggregate number of such class of Unitholder Securities to be sold in the contemplated Sale (such product, the “Pro Rata Share” of such Tag-Along Unitholder).
Section 12.2Election to Exercise Tag-Along Right. Any of the Tag-Along Unitholders may elect to sell in any Transfer contemplated under this Article 12 a lesser number of Unitholder Securities than such Tag-Along Unitholder’s Pro Rata Share, in which case the Selling Unitholder shall have the right to sell in the aggregate an additional number of Unitholder Securities of such class in such Sale equal to the number of Unitholder Securities of such class that such Tag-Along Unitholders have elected not to sell in such Sale. The Selling Unitholder shall use reasonable best efforts to obtain the agreement of the prospective Transferee(s) to the participation of the Tag-Along Unitholders who have elected to participate in any contemplated Sale, and the Selling Unitholder shall not sell any of its Unitholder Securities to the prospective Transferee(s) unless (a) the prospective Transferee(s) agrees to allow the participation of the Tag-Along Unitholders who have elected to participate subject to the terms hereof or (b) Oaktree agrees to purchase the number of Unitholders Securities from the Tag-Along Unitholders that the Tag-Along Unitholders elected to sell pursuant to this Article 12 for the consideration per unit to be paid to Oaktree by the prospective Transferee(s) (accounting for any applicable per Unit Participation Threshold) (in which case Oaktree shall be entitled to sell such additional number of units of such class of Unitholder Securities to the prospective Transferee(s) for the consideration per unit to be paid to Oaktree by the prospective Transferee(s)).
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A Co-Sale Notice shall constitute an irrevocable commitment by such electing Tag-Along Unitholders to Transfer the specified Unitholder Securities on the terms and conditions set forth in the Sale Notice and as contemplated by this Agreement.
Section 12.3Additional Terms of Sale. Each Tag-Along Unitholder who has elected to participate in any contemplated Sale shall be required to become a party to, or enter into, any agreement(s) contemplated by the Co-Sale Notice and to be executed and delivered by the Selling Unitholder in connection with the Sale of the Unitholder Securities and shall be entitled to receive payment for such Unitholder Securities on the terms and at the time contemplated by the Sale; provided that such agreements shall include customary terms and provisions for such a transaction, including, if applicable, (a) customary pro rata escrow, indemnities and hold-backs, to the extent the Selling Unitholder agrees to the same, which indemnification obligations that shall be (i) several and not joint and several and (ii) no less favorable to any Tag-Along Unitholders than that resulting from pro rata indemnification by all the Tag-Along Unitholders and the Selling Unitholder based on the proceeds to be received by such Persons in the Sale, and (b) covenants, representations and warranties, no less favorable to the Tag-Along Unitholders than those agreed to by the Selling Unitholder; provided, further, that in no event shall (1) the liability of any Tag-Along Unitholder in respect of its participation, in any Sale, whether in connection with an indemnity or otherwise, exceed the net proceeds received by such Unitholder in the Sale, (2) any Tag-Along Unitholder be required to agree to any non-compete, non-solicitation or other restrictive covenants (but may be required to agree to a customary confidentiality covenant and covenant not to sue on claims relating to payments in respect of Units), or any employment related releases of claims, or (3) a Tag-Along Unitholder be liable to the third-party purchaser for any punitive, exemplary, consequential, incidental or similar damages in connection with any Tag-Along Unitholder’s indemnification obligations in such Transfer of its Unitholder Securities (except to the extent such damages are owed by an indemnitee to unrelated third parties). The Tag-Along Unitholders who have elected to participate in any contemplated Sale shall bear their pro rata share of the reasonable costs and expenses incurred by or on behalf of the Company or Selling Unitholder in connection with such Sale (based on the amount by which each Tag-Along Unitholder’s pro rata share of the aggregate proceeds paid with respect to its Unitholder Securities would have been reduced had the aggregate proceeds available for distribution to the holders of Unitholder Securities participating in such proposed Sale been reduced by the amount of such costs and expenses). Notwithstanding the foregoing, the provisions of this Article 12 shall not apply to any Sale (other than a Sale constituting a Fundamental Change), directly or indirectly, to any officer, director or employee of the Company or any of its Subsidiaries, or to the exercise of the Call Option. The Selling Unitholder may, during the period not exceeding ninety (90) days following the expiration of the end of the Co-Sale Notice period, provided that such ninety (90)-day period shall be extended until the expiration of five (5) Business Days following the date on which all required approvals from a Governmental Entity are obtained, Transfer its Unitholder Securities (or if one or more Tag-Along Unitholders does so elect, any Unitholder Securities of such Selling Unitholder in respect of which no rights have been timely exercised) on terms and conditions no less favorable to the Selling Unitholder than those set forth in the Sale Notice. In the event the Transfer is not completed within such time period, the Tag-Along Unitholders’ rights shall be reinstated and the Selling Unitholder may not then effect such proposed Sale without again complying with the provisions of this Article 12.

Section 12.4Termination. The provisions of this Article 12 will terminate automatically and be of no further force and effect immediately prior to the consummation of the first to occur of (i) the consummation of a Public Offering and (ii) the consummation of a Fundamental Change.
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Section 12.5Limitations. None of the following shall constitute Unitholder Securities for any purpose in calculating the Pro Rata Share or the Units in respect of which Unitholders are entitled to exercise tag-along rights under this Article 12: (a) Unitholder Securities issuable upon or in connection with the exercise of employee options (or similar equity-like incentive shares or units) which have not vested or are otherwise not exercisable; (b) Unitholder Securities issuable upon or in connection with the exercise of vested employee options (or similar equity-like incentive shares or units) whose per share or per unit exercise price is more than the price to be paid for such share or unit in such Transfer; (c) Unitholder Securities whose per share or per unit participation threshold (including the Participation Threshold) is more than the price to be paid for such share or unit in such Transfer; and (d) Unitholder Securities held subject to vesting (i.e., to the extent subject to possible forfeiture or repurchase by the Company at less than fair market value).
Article 13
DRAG-ALONG RIGHTS; B. RILEY INVESTOR EXIT RIGHT
Section 13.1Right to Seek Sale of the Company. In the event that the Oaktree Investors propose to Transfer any of their Unitholder Securities in an amount equal to at least 25% of any class or series of Units to a bona fide third party (who is not an Affiliate of Oaktree) at any time after the second (2nd) year anniversary of the date of this Agreement, the Oaktree Investors shall have the right (a “Drag-Along Right”) to require each other Unitholder (each, a “Dragged Unitholder”) to Transfer its Unitholder Securities to such third party (a “Drag-Along Sale”) in accordance with this Article 13 so long as the Oaktree Investors collectively hold (without taking into account the Drag-Along Sale) at least 25% of their combined Original Amount. In order to exercise its Drag-Along Right, the Oaktree Investors shall deliver a written notice (a “Drag-Along Sale Notice”) to the Company and Dragged Unitholder(s) informing them of the Drag-Along Sale, including in reasonable detail (i) the number and class of Unitholder Securities proposed to be sold, (ii) the consideration that the Oaktree Investors propose to receive in respect of their Unitholder Securities and that the holders of Units will receive in the Drag-Along Sale, (iii) the identity of the third-party Transferee and (iv) the other material terms and conditions upon which the Unitholder Securities are to be Transferred, and copies of each of the final versions of the transaction documentation relating to the Drag-Along Sale. The Drag-Along Sale Notice shall be given at least twenty (20) Business Days before the closing of the proposed Transfer.
Section 13.2Consent, Waiver. Each Unitholder hereby agrees with respect to all Unitholder Securities such Unitholder holds, or otherwise exercises dispositive power: (a) in the event the Drag-Along Sale requires the approval of any Unitholders, to vote (in person, by proxy or by action by written consent) all Unitholder Securities held by such Unitholder in favor of such transaction and in opposition to any and all other proposals that could reasonably be expected to delay or impair the consummation of such transaction, and (b) in the event all or any portion of any Drag-Along Sale is structured as a sale of securities, to sell and Transfer all (or such other portion as described in the Drag-Along Sale Notice) of its Unitholder Securities (and any other securities of the Company) at the price and on the terms and conditions approved by the Oaktree Investors.
Section 13.3Cooperation.
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From and after the delivery of a Drag-Along Sale Notice, each Dragged Unitholder shall (a) cooperate in good faith and use reasonable best efforts to effect such Drag-Along Sale expeditiously in accordance with and subject to the terms of this Agreement, and (b) execute and deliver (or cause to be executed and delivered) any transaction documentation reasonably contemplated to be entered into by the Oaktree Investors to consummate the Drag-Along Sale, which transaction documentation shall provide that the Dragged Unitholders shall receive as consideration upon such Drag-Along Sale for their respective Unitholder Securities of the Company the amount (and same manner) of consideration to which it would be entitled under Section 13.4 and include customary terms and provisions for such a transaction (including, if applicable, customary pro rata escrows, indemnities and hold-backs, to the extent that the Oaktree Investors agree to same, which indemnification obligations shall (i) be several and not joint and several and (ii) no less favorable to such Dragged Unitholders than that resulting from pro rata indemnification by all the Dragged Unitholders and the Oaktree Investors based on the proceeds to be received by such Persons in the Drag-Along Sale), and include covenants, representations and warranties no less favorable to the Dragged Unitholders than those agreed to by the Oaktree Investors for itself; provided that, in no event shall (1) the liability of any Dragged Unitholder in respect of its participation in any Drag-Along Sale, whether in connection with an indemnity or otherwise, exceed the net proceeds received by such Unitholder in the Drag-Along Sale, (2) any Dragged Unitholder be required to agree to any non-compete, non-solicitation or other restrictive covenants (but may be required to agree to customary confidentiality covenants and covenants not to sue on claims relating to payments in respect of Units), or any employment related releases of claims, and (3) a Dragged Unitholder be liable to the third-party purchaser for any punitive, exemplary, consequential, incidental or similar damages in connection with any Dragged Unitholder’s indemnification obligations in such Transfer of its Unitholder Securities (except to the extent such damages are owed by an indemnitee to unrelated third parties). Except as otherwise provided in applicable transaction documentation, the Oaktree Investors shall have the right, in their sole discretion, at all times prior to consummation of the proposed Drag-Along Sale to abandon or otherwise terminate such sale or other disposition, and the Oaktree Investors shall have no liability to the Company or any Unitholders with respect thereto by virtue of such abandonment or termination.
Section 13.4Consideration Payable upon a Drag-Along Sale. All proceeds received in connection with a Drag-Along Sale for Units shall be allocated and distributed among the Oaktree Investors and the Dragged Unitholders in respect of their Unitholder Securities included in such Drag-Along Sale in accordance with the provisions of Section 4.1(a) of this Agreement (assuming, for purposes of such determination, that the Unitholder Securities sold in such Drag-Along Sale are the only Unitholder Securities then outstanding, and subject to Section 4.1(a) (but subject to the Redemption Amounts)); provided, however, that, unless otherwise agreed to by the B. Riley Investor (provided that a Transfer Event has not occurred and the B. Riley Investor (or a Permitted Transferee thereof pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii)) holds at least 25% of its Original Amount (without taking into account the Drag-Along Sale), or the Oaktree Investors if the B. Riley Investor is exercising its rights pursuant to Section 13.7), the proceeds paid to the Dragged Unitholders must be comprised solely of cash or marketable securities and, provided, further, that all Unitholders must receive the same form of consideration or the right to elect the same form of consideration with respect to the same class and series of Units held thereby and included in the Drag-Along Sale and, for purposes of this proviso but subject to the following parenthetical, Class A Common Units and Class B Common Units shall be treated as the same class of Common Unit (except as necessary in the case of Class B Common Units to give effect to the applicable vesting terms, Participation Threshold, Management Incentive Plan and Unit Grant Agreement in respect of each such Unit) (provided that (x) any Unitholder or its beneficial owners who is a Company Service Provider may, with such Unitholder’s or beneficial owner’s consent, receive additional consideration for entering into restrictive covenants, releases, or employment agreements or similar arrangements in favor of a purchaser or any of its Affiliates and (y) solely for purposes of the immediately preceding proviso, the Class A Common Units and Class B Common Units shall be deemed to be the same class of Unitholder Securities). Each holder of Unitholder Securities shall take all necessary or desirable actions reasonably requested by the Oaktree Investors in furtherance of the allocation and distribution of the aggregate consideration from such Transfer in accordance with this Section 13.4.
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Section 13.5Expenses. All holders of Unitholder Securities shall bear, as a reduction from the proceeds distributable to such Unitholders in connection therewith, their pro rata share of the out-of-pocket costs and expenses (based on the amount by which each Unitholder’s share of the aggregate proceeds paid with respect to its Unitholder Securities would have been reduced had the aggregate proceeds available for distribution to the Unitholders been reduced by the amount of such costs and expenses) incurred by the Company, the Oaktree Investors or the Original Investors in connection with any sale of Unitholder Securities pursuant to a Drag-Along Sale to the extent such costs and expenses are not otherwise paid by the Company or the acquiring party. Subject to the foregoing, costs or expenses incurred by the holders of Unitholder Securities on their own behalf shall not be considered costs or expenses of the transaction hereunder.
Section 13.6Delivery of Certificates. In the event that at the time of the approval or consummation of a Drag-Along Sale, any of the Unitholder Securities are Certificated Securities and a Unitholder fails to deliver any certificates representing such Person’s Certificated Securities and related instruments of Transfer as required by Section 13.3, or in lieu thereof, a customary affidavit (and indemnity) attesting to the loss or destruction of such certificate(s), such Unitholder: (a) shall not be entitled to the consideration that such Person would otherwise receive in the Drag-Along Sale until such holder cures such failure (provided that after curing such failure, such holder will be so entitled to such consideration without interest, and subject to reduction on account of any expenses incurred by the Company or the holders of Oaktree Securities in connection with such non-compliance and subsequent cure), (b) shall be deemed, for all purposes, no longer to be a Unitholder and shall have no voting rights, (c) shall not be entitled to any distributions declared or made after the consummation of the Drag-Along Sale with respect to the Unitholder Securities held by such holder, (d) shall have no other rights or privileges granted to Unitholders under this Agreement or any future agreement relating to the Unitholder Securities and (e) in the event of liquidation of the Company, such holder’s rights with respect to any consideration that such holder would have received if such holder had complied with this Article 13 shall be subordinate to the rights of any other holder of Unitholder Securities.
Section 13.7B. Riley Investor Exit Right.
(a)From and after the date that is the earlier of (i) six (6) months prior to the eighth (8th) year anniversary of the date of Investment Closing and (ii) the date on which the Oaktree Investors provide written notice, signed by each of the Oaktree Investors and referencing this Section 13.7, to the B. Riley Investor that they do not intend to, and will not, exercise the call rights pursuant to Article 16 hereto, the B. Riley Investor shall have the right to require the Company to commence a process to pursue a sale to a Person other than a Permitted Transferee of the B. Riley Investor of (x) all of the outstanding Unitholder Securities (either in a direct Transfer to a third party or by merger, consolidation, amalgamation or otherwise) or (y) all or substantially all of the assets of the Company and its Subsidiaries (a “Company Sale”) by delivering a written request to the Company and the Oaktree Investors. Following its receipt of such request, the Company shall use reasonable best efforts to facilitate a Company Sale (a “Sale Process”), including by preparing diligence and other materials and soliciting acquisition proposals from potential purchasers for a Company Sale (an “Acquisition Proposal”). The Company shall keep the B. Riley Investor and the Oaktree Investors reasonably apprised of the progress and status of such Sale Process and provide them with copies of any Acquisition Proposals thereby received by the Company, and shall consult with the B. Riley Investor and the Oaktree Investors with respect to such Sale Process. In the event that the Company receives any bona fide Acquisition Proposal, and such Acquisition Proposal is approved by the B.
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Riley Investor, the Company shall use reasonable best efforts to negotiate and enter into binding definitive agreements providing for, and to effectuate the consummation of, the Company Sale contemplated by such Acquisition Proposal; provided, however, that the final terms and conditions of any such Company Sale shall be subject to final approval by the B. Riley Investor (as so approved, an “Approved Company Sale”), and the provisions of this Article 13 shall apply mutatis mutandis so that the Board and the B. Riley Investor shall have the same Drag-Along Right as the Oaktree Investors would have with respect to such proposed Transfer; provided, further, that until such Drag-Along Right in respect of an Approved Company Sale is exercised, the Oaktree’ Investors shall retain their Drag-Along Right (but shall not, and shall cause their controlled Affiliates not to, materially and intentionally interfere with the sales process in the course of the exercise of such Drag-Along Right (it being understood that the exercise of Oaktree’s Drag-Along Right or sale of its Units or Unitholder Securities as otherwise permitted by this Agreement (and matters necessary or incidental thereto) shall be deemed not to materially and intentionally interfere with such sales process). The rights of the B. Riley Investor under this Section 13.7 shall cease to apply if (x) the Oaktree Investors have delivered a Call Option Exercise Notice or a Drag-Along Sale Notice; (y) the B. Riley Investor (or a Permitted Transferee thereof pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii)) fails to hold at least 25% of its Original Amount; or (z) a Transfer Event has occurred.
(b)If an Approved Company Sale has not been consummated by the eighth (8th) year anniversary of the date of the Investment Closing, and the B. Riley Investor thereafter proposes to Transfer all of its Unitholder Securities to a bona fide third-party purchaser (who is not an Affiliate of B. Riley), then (i) the B. Riley Investor shall have the right to require each other Unitholder to transfer its Unitholder Securities to such third party on terms which are no less favorable to such Unitholders than those obtained by the B. Riley Investor from such third party, (ii) such proposed Transfer shall constitute a Drag-Along Sale and (iii) the provisions of this Article 13 shall apply mutatis mutandis so that the B. Riley Investor have the same Drag-Along Right as the Oaktree Investors would have with respect to such proposed Transfer.
Section 13.8Termination. The provisions of this Article 13 will terminate automatically and be of no further force and effect immediately prior to the consummation of a Public Offering.
Section 13.9If the Company or the holders of Unitholder Securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the U.S. Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each holder of Unitholder Securities which is not an accredited investor (as that term is defined in Rule 501 or any similar rule then in effect (“Rule 501”) promulgated by the U.S. Securities and Exchange Commission) will, at the request of the Board, appoint a purchaser representative (as such term is defined in Rule 501) designated by or reasonably acceptable to the Board. If any holder of Unitholder Securities appoints a purchaser representative designated by the Board, the Company will be responsible for the fees of the purchaser representative so appointed. If any holder of Unitholder Securities declines to appoint the purchaser representative designated by the Board, such holder will appoint another purchaser representative (reasonably acceptable to the Board) and such holder will be responsible for the fees of the purchaser representative so appointed.
Article 14
PREEMPTIVE RIGHTS
Section 14.1Preemptive Rights Notice; Preemptive Share Calculation.
(a)If the Company authorizes the issuance or sale after the date hereof of any New Securities, the Company shall offer to issue or sell to each of the Oaktree Investors and the B.
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Riley Investor (subject to the last sentence of this Section 14.1, each, an “Eligible Unitholder”) such Unitholder’s Preemptive Share of such New Securities by delivering a written notice (a “Preemptive Rights Notice”) to each such holder describing in reasonable detail (i) the New Securities proposed to be issued or sold, (ii) the purchase price and payment terms therefor, (iii) the other material terms and conditions of the New Securities (including the price and, if known, the proposed issuance date(s) (which shall (subject to Section 14.5) be at least twenty (20) days from the date of such notice), voting powers, preferences, and relative participating, optional or other special rights, and the qualification, limitations or restrictions thereof and interest or dividend rate and maturity) and (iv) such holder’s Preemptive Share. “Preemptive Share” means, with respect to any Eligible Unitholder, as of the time of determination, the quotient obtained by dividing the number of Class A Common Units held by such Unitholder by the aggregate number of outstanding Class A Common Units held by the Eligible Unitholders in aggregate immediately prior to issuance of the Preemptive Rights Notice.
(b)Notwithstanding anything to the contrary contained herein, the Company shall not have any obligation to issue New Securities or to offer to issue any New Securities under this Article 14 to any Person who is not an “accredited investor” as such term is defined in Regulation D under the Securities Act or to the B. Riley Investor (or a Permitted Transferee thereof pursuant to Section 10.1(a)(i) or Section 10.1(a)(ii)) once it fails to hold at least 25% of its Original Amount or a Transfer Event occurs, and any such Person shall not be an “Eligible Unitholder” for purposes of this Article 14.
(c)“New Securities” means: (x) any Equity Securities of any kind, and equity securities, or securities convertible into equity securities, of any Subsidiary of the Company, or (y) any indebtedness for borrowed money or debt securities, solely in the case of this clause (y) to the extent to be issued to Oaktree or the B. Riley Investor and their respective Affiliates; provided that, in no event shall New Securities include any:
(i)Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company) or debt or debt securities issued in connection with any Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company) or debt or debt securities split, dividend, distribution, combination, recapitalization or similar transaction of the Company or any of its Subsidiaries;
(ii)Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company) or debt or debt securities issued in connection with, or in furtherance of the financing of, strategic transactions involving the Company or any of its Subsidiaries and any other entities (including (1) joint ventures and similar arrangements, (2) investments or (3) acquisitions by the Company or any of its Subsidiaries (in each case, whether through a purchase of securities, a merger, consolidation, purchase of assets or otherwise), provided that such Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company) are being issued as consideration for the strategic transaction and not in connection with financing such strategic transaction;
(iii)Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company) issued upon conversion, exchange or exercise of any Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company);
(iv)issuances or sales of Equity Securities (or any equity securities, or securities convertible into equity securities, of any Subsidiary of the Company) to employees, officers, directors, managers or consultants of the Company or any of its Subsidiaries pursuant to employee benefits or similar employee or management equity incentive plans or arrangements or hiring or retention plans or arrangements of the Company or any of its Subsidiaries (including the Management Incentive Plan and Unit Grant Agreements); or
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(v)any issuances or sales of equity securities, or securities convertible into equity securities, of any Subsidiary of the Company, (A) to the Company or any other Subsidiary of the Company (including in connection with the formation of a new Subsidiary or the formation of bona fide joint ventures and similar arrangements), (B) in connection with entering into, exiting or operating bona fide joint ventures and similar arrangements or (C) in connection with the sale of a majority of the equity securities, or securities convertible into equity securities, of any Subsidiary of the Company, to a third party.
Section 14.2Preemptive Election Notice. Each Eligible Unitholder may elect to purchase all (but not less than all) of such Eligible Unitholder’s Preemptive Share of the New Securities being issued or sold by the Company, by delivering, within fifteen (15) Business Days after receipt of a Preemptive Rights Notice from the Company (the “Offering Period”), a written notice (a “Preemptive Election Notice”) to the Company describing such holder’s election hereunder together with an irrevocable commitment to participate at the price and on the terms specified in the Preemptive Rights Notice. Each Eligible Unitholder who fails for any reason to deliver a Preemptive Election Notice to the Company within the Offering Period shall be deemed to have waived any and all of such Eligible Unitholder’s rights under this Article 14 in respect of the issuance of New Securities described in the applicable Preemptive Rights Notice. For the avoidance of doubt, an Eligible Unitholder’s failure to deliver a Preemptive Election Notice under this Article 14 in any one instance shall not affect such Eligible Unitholder’s right as to any subsequent proposed issuance subject to this Article 14.
Section 14.3Additional Terms of Purchase. Each Eligible Unitholder shall be entitled to purchase the New Securities being issued or sold by the Company at the same price and on other economic terms no less favorable in the aggregate than the terms on which such New Securities are proposed to be issued or sold by the Company at such time; provided that if the Person to whom such New Securities are to be issued will be required to also purchase other securities or instruments of the Company or its Subsidiaries, each Eligible Unitholder shall, in order to exercise such Eligible Unitholder’s rights pursuant to this Article 14, also be required to purchase such other securities or instruments of the same type (at the same price and on other economic terms no less favorable in the aggregate and in the same relative amounts) that such Person(s) to whom the New Securities may be issued; provided, further, that each Eligible Unitholder shall, subject to Section 14.5 and if required by the Company, consummate the purchase of such other securities or instruments of the Company or its Subsidiaries at the same time and place as the issuance to such Person(s). Each Eligible Unitholder participating in such purchase shall also be obligated to execute agreements in the form presented to such holder by the Company, so long as such agreements are substantially similar to those to be executed by such Person(s) include customary terms and provisions for such a transactions. The purchase price for all New Securities offered to each Eligible Unitholder shall be payable in cash by wire transfer of immediately available funds to an account designated by the Company. Each Eligible Unitholder participating in a such an issuance agrees that it shall use reasonable best efforts to cooperate and effect such issuance and purchase expeditiously in accordance with and subject to the terms of this Agreement.
Section 14.4Reoffer. The Company shall be entitled, during the ninety (90) days following the expiration of the Offering Period, to sell the New Securities described in the Preemptive Rights Notice which the Eligible Unitholders have not elected to purchase, in one or more transactions and to one or more Persons, as determined by the Board, at a price not less than that set forth in the applicable Preemptive Rights Notice and on other economic terms and conditions not more favorable to the purchaser(s) thereof in any material respect, in the aggregate, than those set forth in the Preemptive Rights Notice (with such ninety (90)-day period subject to any extensions required to comply with regulatory Law or to obtain any applicable approval from a Governmental Entity or other required approval), except that the amount of New Securities to be sold by the Company may be reduced.
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Any New Securities offered or sold by the Company after such period must be reoffered to the Eligible Unitholders if required pursuant to the terms of this Article 14.
Section 14.5Delayed Notice. Notwithstanding anything herein to the contrary, if the Board determines in good faith that the Company or any of its Subsidiaries expeditiously require additional funds, the Company may issue New Securities without first complying with this Article 14; provided that, within sixty (60) days after such issuance, the Company offers to each Eligible Unitholder the opportunity to purchase from the purchasers thereof (or from the Company in connection with a corresponding redemption or repurchase by the Company from such purchasers), such Eligible Unitholder’s Preemptive Share of the aggregate number of New Securities issued prior to compliance with this Article 14 (but in any case adding to the purchase price to be paid by such Eligible Unitholder any yield that accrues on such New Securities through the date of such purchase by such Eligible Unitholder) in accordance with this Article 14, mutatis mutandis.
Section 14.6Termination. THE PREEMPTIVE RIGHTS UNDER THIS ARTICLE 14 SHALL TERMINATE AUTOMATICALLY AND BE OF NO FURTHER FORCE OR EFFECT IMMEDIATELY PRIOR TO THE CONSUMMATION OF THE FIRST TO OCCUR OF (A) A PUBLIC OFFERING (AND FOR THE AVOIDANCE OF DOUBT, SHALL NOT APPLY TO A PUBLIC OFFERING OR ANY CONVERSION IN CONNECTION THEREWITH, OR TO ANY TRANSACTION STRUCTURED THROUGH A BLOCKER CORPORATION IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT) OR (B) ANY TRANSACTION OR SERIES OF RELATED TRANSACTIONS, OTHER THAN A PUBLIC OFFERING, PURSUANT TO WHICH ANY PERSON OR GROUP OF RELATED PERSONS (OTHER THAN ANY OF THE OAKTREE INVESTORS OR AN AFFILIATE THEREOF) IN THE AGGREGATE ACQUIRES EQUITY SECURITIES POSSESSING THE VOTING POWER OR CONTRACTUAL RIGHT (OTHER THAN VOTING RIGHTS ARISING ONLY IN THE EVENT OF A DEFAULT OR BREACH) TO ELECT ALL THE DIRECTORS OR ALL OF THE DIRECTORS OF ITS CORPORATE SUCCESSOR.
PUBLIC OFFERING AND STRUCTURING
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Article 15ARTICLE 15
PUBLIC OFFERING AND RESTRUCTURING
Section 15.1 Public Offering and Structuring. The Board shall have the power and authority, in order to facilitate a Public Offering, to cause the Company or any of its Subsidiaries to undergo a conversion or reorganization into another entity form, including by (a) the transfer of all of the assets and liabilities of the Company and its Subsidiaries, or the transfer of any portion of such assets and liabilities, to one or more corporations in exchange for shares of such corporation(s) and the subsequent distribution of such shares, at such time as the Board may determine, to the Unitholders in accordance with Section 4.1(a), (b) conversion of the Company into a corporation pursuant to Section 18-216 of the Delaware Act (or any successor section thereto) or (c) Transfer by each Unitholder of Units held by such Unitholder to one or more corporations in exchange for shares of such corporation(s) (including by merger of the Company into a corporation) (any of the foregoing, a “Conversion”); provided that any such Conversion shall be structured to be effective substantially concurrently with the consummation of the Public Offering (it being understood that such Conversion may be effected prior to the consummation of the Public Offering to the extent determined to be reasonably necessary by the Board in order to effectuate such Public Offering).
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In connection with any such Conversion as provided above, each Unitholder of a particular class shall receive the same form and the same amount per Unit of such class (except as necessary in the case of Class B Common Units to give effect to the applicable vesting terms, Participation Threshold, Management Incentive Plan and Unit Grant Agreement in respect of each such Unit) and if any holders of a class of Units are given an option as to the form and amount of securities to be received, each holder of such class of Units shall be given the same option; provided, further that in connection with a Conversion or a Public Offering, the Board shall use commercially reasonable efforts to effect such Conversion or Public Offering in a manner that provides holders of Class B Common Units substantially similar economic rights as holders of Class A Common Units and shall consider in good faith the comment of any Company Service Provider that holds Class B Common Units that the treatment of the economic rights represented by the Class B Common Units is disproportionately unfavorable in relation to the economic rights of the Class A Common Units (except in each case as necessary in the case of Class B Common Units to give effect to the applicable vesting terms, Participation Threshold, Management Incentive Plan and Unit Grant Agreement in respect of each such Unit). Each Unitholder and holder of Unitholder Securities hereby agrees that the Company may, in connection with any such structure, execute any amendments to this Agreement that terminate provisions that are no longer applicable following the institution of such a structure (including those that may not be consistent with the certificate of incorporation, bylaws or organizational documents of the Company) and modify existing provisions of this Agreement to the extent reasonably necessary or customary to make such provisions consistent with any such structure or status as a public company, in each case, as determined by the Board in good faith, provided that, prior to the execution of any amendment to this Agreement, each of the Oaktree Investors and the B. Riley Investor shall have the right to review and provide comments to such amendments. The Company shall pay any and all organizational, legal and accounting expenses and filing fees incurred in connection with such Conversion, including any fees related to a filing under the Hart-Scott-Rodino Anti-Trust Improvements Act of 1976, as amended, if applicable. Each Unitholder shall use reasonable best efforts to execute and deliver any documents and instruments and perform any additional acts that may be necessary or appropriate, as determined by the Board, to effectuate and perform any transaction described in this Section 15.1, including (i) consenting to, voting for and waiving any dissenter’s rights, appraisal rights or similar rights with respect to a reorganization pursuant to the terms of this Section 15.1, (ii) complying with the requirements of all laws that are applicable or that have jurisdiction over such Public Offering and using reasonable efforts to cooperate with the Company and assist the Company in making any filings required by applicable Law and (iii) executing of all documents as may be reasonably requested by the Board, including (x) a customary holdback, lock-up or similar agreement (not to exceed 180 days), (y) a customary exchange agreement/transfer agreement, pursuant to which each such Person agrees to limit its exchanges of Units for shares of any a newly formed corporation or existing corporate holding entity (“Newco”) in accordance with the terms of an agreement to which Newco is party, on terms and conditions determined in good faith by the Board, and (z) a tax receivable agreement pursuant to which Unitholders shall be compensated in a customary manner with respect to the tax attributes realized by Newco or the Company (with at least the majority of such Tax attributes to accrue to the benefit of the Unitholder), in each case at the expense of the Company and following the opportunity of the Oaktree Investors and the B. Riley Investor to review and provide comments to such amendment. Without limiting the generality of the foregoing, if any Oaktree Securities are owned, directly or indirectly through a Blocker Corporation, any Public Offering shall, at the request of the Oaktree Investors, be structured by using such Blocker Corporation as the vehicle for the Public Offering, by merging such Blocker Corporation into the vehicle used for the Public Offering, by causing such Blocker Corporation to become a subsidiary of the vehicle used for the Public Offering, or through another structure that is Tax-efficient for the Oaktree Investors, and each other Unitholder shall consent to, and cooperate fully with, such structure for the Public Offering.
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In connection with any Public Offering conducted using a structure described in the immediately preceding sentence, the owners of equity securities in such Blocker Corporation shall be entitled to the same consideration (whether in the form of cash, publicly traded property, non-publicly traded property, or any combination thereof) that the Blocker Corporation would have received had it participated in the Public Offering in the same manner as the other Unitholders. It is understood and agreed that the consent rights of the Unitholders in Section 3.2 shall not restrict the actions taken pursuant to this Section 15.1; provided that such actions do not materially and adversely affect the rights or obligations of B. Riley Investor in its capacity as a Unitholder relative to the Oaktree Investors in the case of the B. Riley Investor, or Oaktree in its capacity as a Unitholder relative to the B. Riley Investor in the case of the Oaktree Investors.
Article 16
CALL OPTION
Section 16.1Call Option. Following the fifth (5th) year anniversary of the Investment Closing, the Oaktree Investors (the “Calling Unitholder”) shall have the right, but not the obligation, to purchase (the “Call Option”) all, but not less than all, of the Unitholder Securities (the “Call Option Interests”) of the B. Riley Investor (or any Transferee of the B. Riley Investor) (the “Call Option Unitholder”) at a price equal to the sum of (i) the Class B Preferred Unreturned Capital and Class B Preferred Unpaid Yield for such Class B Preferred Units plus (ii) the Fair Market Value of any other Unitholder Securities, in each case determined as of the date of exercise of the Call Option in accordance with Section 19.1 and Section 19.2 (the “Purchase Price”) by delivering written notice to the B. Riley Investor (or the applicable Transferee) and the Company (the “Call Option Exercise Notice”). If the B. Riley Investor disagrees with the Fair Market Value ascribed to such other Unitholder Securities set forth in the Call Option Exercise Notice, it may object thereto in a writing delivered to the Oaktree Investors no later than twenty (20) Business Days after receipt of such Call Option Exercise Notice, which shall set forth the B. Riley Investor’s good-faith determination of Fair Market Value and reasonable detail regarding how such proposed Fair Market Value was determined (the “Call Price Objection Notice”). If the B. Riley Investor fails to deliver the Call Price Objection Notice within such twenty (20) Business Day period, the Purchase Price (and Fair Market Value reflected therein) shall be final and binding in all respects. If the Oaktree Investors and the B. Riley Investor cannot agree on the Fair Market Value to be ascribed to such other Unitholder Securities within fifteen (15) Business Days after receipt of a Call Price Objection Notice, then the Oaktree Investors may engage a nationally recognized banker or appraiser with expertise and experience in valuing businesses similar to the Company (the “Appraiser”), subject to the B. Riley Investor’s approval (not to be unreasonably withheld, conditioned or delayed), to determine the Fair Market Value of such other Unitholder Securities and the Appraiser’s determination shall control (absent manifest accounting or similar error). The Company, the Oaktree Investors and the B. Riley Investor shall, and shall cause their representatives to, submit such information or materials as may be reasonably requested by the Appraiser. The determination of the Appraiser in accordance with this Section 16.1 shall be in writing and set forth its determination of the Fair Market Value of such other Unitholder Securities, along with its analysis in reasonable detail and the basis and quantification. Except as provided below, the Oaktree Investors and the B. Riley Investor shall each bear 50% of the costs, fees and expenses of the Appraiser; provided that, in the event the Appraiser’s determination of Fair Market Value is (i) greater than the Oaktree Investors’ determination of Fair Market Value by 15% or more (but not less than the B. Riley Investor’s determination of Fair Market Value by 15% or more), then the Oaktree Investors shall bear 100% of such costs, fees and expenses of the Appraiser and (ii) less than the B. Riley Investor’s determination of Fair Market Value by 15% or more (but not greater than the Oaktree Investors’ determination of Fair Market Value by 15% or more), then the B. Riley Investor shall bear 100% of such costs, fees and expenses. Within ten (10) Business Days of the final determination of the Purchase Price (provided, that such ten (10) Business Day period shall be extended until the expiration of five (5) Business Days following the date on which all required approvals from a Governmental Entity are obtained), the Calling Unitholder and the Call Option Unitholder shall consummate such purchase and sale in accordance with Section 16.2 and the Calling Unitholder shall pay the applicable Purchase Price in cash to the Call Option Unitholder.
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Concurrently with the Calling Unitholder’s payment of the Purchase Price, the Call Option Interests shall be transferred and conveyed to the Calling Unitholder.
Section 16.2Call Option Mechanics. Following the delivery of the Call Option Exercise Notice, the Call Option Unitholder shall (a) cooperate in good faith with the Calling Unitholder and use reasonable best efforts to effect such exercise of the Call Option expeditiously in accordance with and subject to the terms of this Agreement (including by assisting the Calling Unitholder with any filings required to be made under applicable Law with any Governmental Entity or to obtain any regulatory approval), (b) execute and deliver (or cause to be executed and delivered) any purchase agreement or other documentation required or reasonably necessary to consummate the transactions contemplated by the Call Option, which such documentation shall include customary terms and provisions for such a transaction including indemnities, covenants, representations and warranties; provided, that in no event shall (y) the liability of any Call Option Unitholder in respect of its participation in any exercise of the Call Option, whether in connection with an indemnity or otherwise, exceed the Purchase Price or (z) the Call Option Unitholder be liable to the Calling Unitholder for any punitive, exemplary, consequential, incidental or similar damages in connection with any Call Option Unitholder’s indemnification obligations in such Transfer of its Unitholder Securities, and provided, further, that no Call Option Unitholder shall be required to agree to any non-compete, non-solicitation or other similar restrictive covenant, and (c) if requested, deliver one or more duly completed and executed letters of transmittal, unit powers or other applicable instruments.
Section 16.3Consent. The Call Option Unitholder hereby agrees with respect to all Unitholder Securities such Unitholder holds, or otherwise exercises dispositive power, that are subject to the Call Option: (a) in the event the exercise of the Call Option requires the approval of any Unitholders, to vote (in person, by proxy or by action by written consent) all Unitholder Securities held by such Unitholder in favor of such transaction and in opposition of any and all other proposals that could reasonably be expected to delay or impair the consummation of such transaction and (b) to consent to any amendments to this Agreement to reflect the transfer of the Call Option Interests (including the termination of the Call Option Unitholder’s consent rights and rights to appoint Directors to the Board).
Article 17
WITHDRAWAL AND RESIGNATION
Section 17.1Withdrawal and Resignation of Unitholders. So long as a Unitholder holds any Membership Interest, no Unitholder shall have the power or right to withdraw or otherwise resign or be expelled from the Company prior to the dissolution and winding-up of the Company pursuant to Article 18, except simultaneous with the Transfer of all of a Unitholder’s Units or Unitholder Securities in a Transfer permitted by this Agreement and if such Transfer is to a person or entity that is not a Unitholder, the admission of such person or entity as a Unitholder pursuant to Section 11.1. Any such withdrawal or resignation or attempted withdrawal or resignation by a Unitholder prior to the dissolution or winding-up of the Company shall be null and void, except as otherwise expressly permitted by this Agreement. As soon as any Person who is a Unitholder fails to hold any Membership Interests, such Person shall no longer be a Unitholder. A Unitholder shall not cease to be a Unitholder as a result of the bankruptcy of such Unitholder or as a result of any other events specified in Section 18-304 of the Delaware Act. Notwithstanding that payment on account of a withdrawal may be made after the effective time of such withdrawal, any completely withdrawing Unitholder will not be considered a Unitholder for any purpose after the effective time of such complete withdrawal, and, in the case of a partial withdrawal, such Unitholder’s Capital Account (and corresponding voting and other rights) shall be reduced for all other purposes hereunder upon the effective time of such partial withdrawal.
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The provisions hereof with respect to distributions upon withdrawal are exclusive, and no Unitholder shall be entitled to claim any further or different distribution upon resignation under Section 18-604 of the Delaware Act or otherwise.
Article 18
DISSOLUTION AND LIQUIDATION
Section 18.1Dissolution. The Company shall not be dissolved by the admission of any additional Unitholders (including by the admission of Additional Unitholders or Substituted Unitholders) nor by the death, retirement, expulsion, bankruptcy or dissolution of a Unitholder. The Company shall dissolve, and its affairs shall be wound up, upon the first to occur of the following:
(a)at any time by action of the Board (subject to the rights of the B. Riley Investor and the Oaktree Investors under Section 3.2(b), if applicable); or
(b)the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Delaware Act.
Except as otherwise set forth in this Article 18, the Company is intended to have perpetual existence.
Section 18.2Liquidation and Termination. Upon dissolution of the Company, the Company’s affairs shall be promptly wound up in accordance with the provisions of this Article 18 and the Company’s assets shall be distributed as set forth in this Article 18. Upon dissolution, the Board shall act as liquidator or may appoint one or more representatives or Unitholders as liquidator. The liquidators shall proceed diligently to wind up the affairs of the Company, sell all or any portion of the Company assets for cash or cash equivalents as they deem appropriate, and make final distributions as provided herein and in the Delaware Act. The costs of liquidation shall be borne as a Company expense. Until final distribution, the liquidators shall continue to operate the Company properties with all of the power and authority of the Board. The liquidators shall pay, satisfy, or discharge from the Company’s funds all of the debts, liabilities, and obligations of the Company (including all expenses incurred in liquidation and including Management Incentive Plan awards that are contractual in nature) or otherwise make adequate provision for payment and discharge thereof (including the establishment of a cash fund for contingent liabilities in such amount and for such term as the liquidators may reasonably determine) and shall promptly distribute the remaining assets to the holders of Units in accordance with Section 4.1(a) (the “Final Distribution”). Any non-cash assets will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), which shall be allocated in accordance with Section 9.5 and Section 9.6. After taking into account such allocations, it is anticipated that each Unitholder’s Capital Account will be equal to the amount to be distributed to such Unitholder pursuant to this Section 18.2. If any Unitholder’s Capital Account is not equal to the amount to be distributed to such Unitholder pursuant to this Section 18.2, Profits and Losses for the Taxable Year in which the Company is dissolved shall be allocated among the Unitholders in such a manner as to cause, to the extent possible, each Unitholder’s Capital Accounts to be equal to the amount to be distributed to such Unitholder pursuant to this Section 18.2. Notwithstanding anything to the contrary in this Agreement, if after the Capital Account adjustments described in this Section 18.2, the Capital Accounts of the Unitholders are not equal to their respective shares of the Final Distribution, the Company shall, with respect to each Unitholder whose respective share of the Final Distribution exceeds its individual Capital Account, treat such excess as a guaranteed payment (as determined under Code Section 707(c)) made by the Company to such Unitholder and any expense associated with such guaranteed payment shall be specially allocated to the Unitholders whose individual Capital Accounts exceed their respective shares of the Final Distribution in the amount of such excess, in each case, to the extent necessary to make the individual Capital Accounts of each of the Unitholders to equal their respective shares of the Final Distribution.
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In making such distributions, the liquidators shall allocate each type of asset (i.e., cash, cash equivalents, securities, etc.) among the Unitholders ratably based upon the aggregate amounts to be distributed with respect to the Units held by each such holder. Any such distributions in kind shall be subject to (x) such conditions relating to the disposition and management of such assets as the liquidators deem reasonable and equitable and (y) the terms and conditions of any agreement governing such assets (or the operation thereof or the holders thereof) at such time. For purposes of any such distribution, any property to be distributed will be valued at its Fair Market Value, as determined by the liquidators in good faith.
The distribution of cash and/or property to a Unitholder in accordance with the provisions of this Section 18.2 constitutes a complete return to the Unitholder of its Capital Contributions and a complete distribution to the Unitholder of its interest in the Company and all the Company’s property and constitutes a compromise to which all Unitholders have consented within the meaning of the Delaware Act. To the extent that a Unitholder returns funds to the Company, it has no claim against any other Unitholder for those funds.
Section 18.3Cancellation of Certificate. Upon completion of the distribution of Company assets as provided herein, the Company shall be terminated (and the Company shall not be terminated prior to such time), and the Board (or such other Person or Persons as the Delaware Act may require or permit) shall cause the cancellation of the Certificate, cancel any other filings made pursuant to this Agreement that are to be or should be canceled, and take such other actions as may be necessary to terminate the Company pursuant to the Delaware Act. The Company shall be deemed to continue in existence for all purposes of this Agreement until it is terminated pursuant to this Section 18.3.
Section 18.4Reasonable Time for Winding Up. A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Company and the liquidation of its assets pursuant to Section 18.2 in order to minimize any losses otherwise attendant upon such winding-up.
Section 18.5Return of Capital. Absent fraud, bad faith or willful misconduct, the liquidators shall not be personally liable for the return of Capital Contributions or any portion thereof to the Unitholders (it being understood that any such return shall be made solely from Company assets).
Section 18.6Reserves Against Distributions. The Board and liquidators shall have the right to withhold from Distributions payable to any Unitholder under this Agreement amounts sufficient to pay and discharge any reasonably anticipated contingent liabilities of the Company. Any amounts remaining after payment and discharge of any such contingent liabilities of the Company will be paid to the Unitholders from whom the Distributions were withheld.
Article 19
VALUATION
Section 19.1Determination. Subject to Section 19.2, the Fair Market Value of the assets of the Company or of a Membership Interest will be determined by the Board, or, if pursuant to Section 18.2, the liquidators, in their good-faith judgment in such manner as it deems reasonable and using all factors, information and data deemed to be pertinent, including, in the case of any determination made with respect to Fair Market Value as of any prior date, any facts and circumstances of which the Board or such liquidators may be aware arising after such prior date.
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Section 19.2Fair Market Value. “Fair Market Value” of (a) a specific Company asset will mean the amount which the Company would receive in an all-cash sale of such asset (free and clear of all Liens (other than Liens arising under the Equity Agreements or applicable securities laws) and after payment of all liabilities secured only by such asset), under no compulsion to sell, in an arm’s-length transaction with an unaffiliated third party with no compulsion to buy consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (and after giving effect to any transfer taxes payable in connection with such sale); and (b) the Company will mean the amount which the Company would receive in an all-cash sale of all of its assets and businesses as a going concern (free and clear of all Liens (other than Liens arising under the Equity Agreements or applicable securities laws) and after payment of indebtedness for borrowed money), under no compulsion to sell, in an arm’s-length transaction with an unaffiliated third party with no compulsion to buy consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (assuming that all of the proceeds from such sale were paid directly to the Company other than an amount of such proceeds necessary to pay transfer taxes payable in connection with such sale, which amount will not be received or deemed received by the Company); provided that the “Fair Market Value” of any publicly traded equity security (including, if applicable, Equity Securities) shall be determined as follows: (i) if traded on a securities exchange, the “Fair Market Value” shall be deemed to be the average of the closing prices of the securities on such exchange over the 30-day period ending three calendar days prior to the relevant date of determination; and (ii) if actively traded over-the-counter, the “Fair Market Value” shall be deemed to be the average of the closing bids or sale prices (whichever are applicable) over the 30-day period ending three calendar days prior to the relevant date of determination. After a determination of the Fair Market Value of the Company is made as provided above, the Fair Market Value of a Unit will be determined by making a calculation reflecting the cash distributions which would be made to the Unitholders in accordance with this Agreement in respect of such Unit if the Company were deemed to have received such Fair Market Value in cash and then distributed the same to the Unitholders in accordance with the terms of this Agreement incident to the liquidation of the Company after payment to all of the Company’s creditors from such cash receipts other than payments to creditors who hold evidence of indebtedness for borrowed money, the payment of which is already reflected in the calculation of the Fair Market Value of the Company and assuming that all of the convertible debt and other convertible securities were repaid or converted (whichever yields more cash to the holders of such convertible securities) and all options to acquire Units (whether or not currently exercisable) that have an exercise price below the Fair Market Value of such Units were exercised and the exercise price therefor paid.
Article 20
GENERAL PROVISIONS
Section 20.1Power of Attorney.
(a)Each Unitholder hereby constitutes and appoints the Oaktree Investors, each Oaktree Director and the liquidators, with full power of substitution, as such Person’s true and lawful agent and attorney-in-fact in relation to matters pursuant to this Agreement, with full power and authority in such Person’s name, place and stead, to execute, swear to, acknowledge, deliver, file, and record in the appropriate public offices: (i) all instruments which the Board reasonably determines appropriate or necessary to effectuate the provisions of Article 13 or Article 15 in each case in accordance with the terms thereof; (ii) all conveyances and other instruments or documents which the Board reasonably determines appropriate or necessary to reflect the dissolution and liquidation of the Company pursuant to the terms of this Agreement, including a certificate of cancellation; and (iii) all instruments relating to the admission, withdrawal, or substitution of any Unitholder pursuant to Articles 11 and 17.
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(b)The foregoing power of attorney is irrevocable and coupled with an interest, and shall survive the death, disability, incapacity, dissolution, bankruptcy, insolvency, or termination of any Unitholder and the Transfer of all or any portion of his or its Membership Interest and shall extend to such Unitholder’s heirs, successors, assigns, and personal representatives.
Section 20.2Amendment and Waiver. Except as otherwise provided herein (including in Section 3.4(b), Section 3.5(c), Section 6.5, Section 9.13, Section 10.1(b) and Article 15), no modification or amendment of any provision of this Agreement, including by operation of Law, merger or otherwise, but excluding a Fundamental Change, shall be effective against the Company or the Unitholders unless such modification or amendment is approved in writing by the Company and the holders of the Required Interest; provided that no such amendment or modification (including by operation of Law, merger or otherwise, but excluding a Fundamental Change) that would materially and adversely affect the rights, preferences or privileges of any class or group of Units in a manner disproportionate to the effect of such amendment or modification on the rights, preferences or privileges of similarly situated Unitholders of the same class or group (without regard to any effect resulting from the individual circumstances of any holder of such class or group of Units) shall be effective against any holder whose rights, preferences or privileges are so affected thereby without the prior written consent of such holders so affected (provided that, for purposes of the foregoing proviso, Class A Common Units and Class B Common Units shall be treated as the same class of Common Units, but the specific terms of the Class B Common Units, including with respect to the applicable vesting terms, Participation Threshold, Management Incentive Plan and Unit Grant Agreement terms in respect of each such Unit, may be considered in determining whether such amendment or modification materially and adversely affect the rights, preferences or privileges of the Class B Common Units in a manner disproportionate to the effect of such amendment or modification on the rights, preferences or privileges of any Class A Common Units or Class B Common Units); provided, further, that no modification or amendment of any provision of this Agreement that would affect the rights of a Unitholder or other Person specifically granted such rights by name or title shall be modified without the prior written consent of such Unitholder or other Person; provided, however, that, notwithstanding the two (2) immediately preceding provisos, any issuances of Additional Securities in accordance with Section 3.4 or in accordance with Section 3.5, adjustments to Schedule A in accordance with the terms of this Agreement, the admittance of any Additional Unitholder or Substituted Unitholder (including any amendments in respect thereof in accordance with Section 10.1(b)) shall not require the prior written consent of such Unitholder or Person. No party shall be deemed to have waived any provision of this Agreement unless such waiver is expressly set forth in writing. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.
Section 20.3Title to Company Assets. Legal title to any or all Company assets may be held in the name of the Company or one or more nominees, as the Board may determine. All Company assets shall be recorded as the property of the Company on its books and records, irrespective of the name in which legal title to such Company assets is held.
Section 20.4Remedies. Each Unitholder and the Company shall have all rights and remedies set forth in this Agreement and all of the rights which such Person has under any law, and the exercise by a Unitholder or the Company of any one remedy shall not preclude the exercise of any other remedy.
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Each Unitholder acknowledges that a breach or a threatened breach by such Unitholder of any of its obligations under this Agreement would give rise to irreparable harm to the other Unitholders or the Company, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by such Unitholder of any such obligations, each of the other Unitholders and the Company shall be entitled to seek to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement, and to exercise all other rights granted by law.
Section 20.5Successors and Assigns; Third-Party Beneficiaries. Except as provided in Article 10 with respect to any Transfer in accordance with this Agreement, no party hereto may assign or otherwise Transfer this Agreement or any of its rights, interests or obligations hereunder, in whole or in part, by operation of Law, merger or otherwise. A purported assignment of this Agreement or any of the rights, interests or obligations hereunder not in compliance with the provisions of this Agreement shall be null and void ab initio. This Agreement is made solely and specifically among and for the benefit of the Company, the Unitholders and their respective successors and assigns, and no other Person, unless express provision is made herein to the contrary (including Article 10), shall have any rights, interests or claims hereunder. Subject to the foregoing, all covenants and agreements contained in this Agreement shall bind and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors, legal representatives, and permitted assigns, whether so expressed or not.
Section 20.6Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality, or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and the relevant provision and this Agreement will be reformed, construed, and enforced in such jurisdiction as if such invalid, illegal, or unenforceable provision had never been contained herein.
Section 20.7Notice to Unitholder of Provisions. By being a party to this Agreement, each Unitholder acknowledges that it has actual notice of all of the provisions hereof (including the restrictions on the Transfer set forth herein), and all of the provisions of the Certificate.
Section 20.8Counterparts. This Agreement may be executed in multiple counterparts with the same effect as if all signing parties had signed the same document. All counterparts shall be construed together and constitute the same instrument.
Section 20.9Consent to Jurisdiction. Each Unitholder irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware or (if and only if the Court of Chancery of the State of Delaware lacks or declines jurisdiction) the United States District Court for the District of Delaware (and of the appropriate appellate courts therefrom) for the purposes of any suit, action or other Proceeding arising out of or in connection with this Agreement or any transaction contemplated hereby. Each Unitholder further agrees that service of any process, summons, notice or document by United States certified or registered mail to such Unitholder’s respective address set forth in the Company’s books and records or such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party shall be effective service of process in any action, suit or proceeding in Delaware with respect to any matters to which it has submitted to jurisdiction as set forth above in the immediately preceding sentence.
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Each Unitholder irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of or in connection with this Agreement or any transaction contemplated hereby in the Court of Chancery of the State of Delaware or the United States District Court for the District of Delaware (and of the appropriate appellate courts therefrom) and hereby irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in such court has been brought in an inconvenient forum.
Section 20.10Descriptive Headings; Interpretation. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine, or neuter forms, and the singular form of nouns, pronouns, and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be by way of example rather than by limitation. Unless the context of this Agreement otherwise requires, the terms “hereof,” “herein,” hereby” and derivative or similar words refer to this entire Agreement, and the terms Article and Section refer to the specified Article or Section of this Agreement. Reference to any agreement, document, or instrument means such agreement, document, or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. Wherever required by the context, references to a Fiscal Year shall refer to an applicable portion thereof. The use of the words “or,” “either,” and “any” shall not be exclusive. Wherever there is a reference to a Person’s officers, directors, employees, Affiliates, representatives, relatives or other relations, unless the relevant time of determination of such Persons is expressly stated or the context requires otherwise, such reference shall mean such applicable Persons as of any relevant time of determination (which, for illustrative purposes, in the case of a (a) representation or warranty made as of a specific date, shall mean only as of such date, and (b) covenant or agreement given or made on a continuous basis for a durational period, shall mean as of any relevant time of determination within such period). Unless the context requires otherwise, any reference to the laws or regulations shall include the amendments, modifications, or replacements thereof. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Wherever a conflict exists between this Agreement and any other agreement, this Agreement shall control but solely to the extent of such conflict. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or legal holiday in the state in which the Company’s principal executive office is located, the time period shall automatically be extended to the Business Day immediately following such Saturday, Sunday or legal holiday. Currency amounts referenced in this Agreement are in U.S. Dollars.
Section 20.11Applicable Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.
Section 20.12Addresses and Notices. All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given or made (a) when delivered personally to the recipient, (b) when telecopied or sent via email to the recipient (with hard copy sent to the recipient by reputable overnight courier service (charges prepaid) that same day) if telecopied or emailed before 5:00 p.m. local time of the recipient on a Business Day, or otherwise on the next Business Day, or (c) one (1) Business Day after being sent to the recipient by reputable overnight courier service (charges prepaid). Such notices, demands, and other communications shall be sent to the address for such recipient set forth in the Company’s books and records, or to such other address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Any notice to the Board or the Company shall be deemed given if received by the Board at the principal office of the Company designated pursuant to Section 2.7.
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Section 20.13Creditors. None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company or any of its Affiliates, and no creditor who makes a loan to the Company or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the Company in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in Company Profits, Losses, Distributions, capital, or property other than as a secured creditor other than as a result of a pledge of Units or Unitholder Securities pursuant to Section 10.1(a)(iv) which is foreclosed.
Section 20.14Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement, or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement, or condition. Notwithstanding the other provisions of this Agreement, the Unitholders shall not be entitled to, and hereby waive, any dissenter’s rights or appraisal rights under Section 18-210 of the Delaware Act and applicable Law and, to the fullest extent permitted by law, the Unitholders shall not be entitled to, and hereby waive, access under Section 18-305 of the Delaware Act, and no Unitholder shall have any rights thereunder.
Section 20.15Further Action. The parties shall execute and deliver all documents, provide all information, and take or refrain from taking such actions as may be necessary or reasonably requested to achieve the purposes of this Agreement; provided that neither Oaktree nor its Affiliates shall be required to take any action or commit to agree to take any action with respect to its Affiliates. Without limiting the foregoing, each Unitholder agrees that it shall execute and deliver all documents, and cooperate with the Company and take such further actions as may be necessary or reasonably requested to achieve the surrender, forfeiture and cancellation of Class B Preferred Units or Common Units as contemplated by Article VIII of the Equity Purchase Agreement, in connection with adjustments to the Class B Preferred Unpaid Yield and Class B Preferred Unreturned Capital as contemplated by Article VIII of the Equity Purchase Agreement or in respect of the Specified Adverse Event Reduction Amount or in connection with any Class B Common Units or Unitholder Securities granted to a Company Service Provider subject to vesting, surrender, cancellation or repurchase under the terms of this Agreement, the Management Incentive Plan or the applicable Unit Grant Agreement.
Section 20.16Offset. Unless otherwise prohibited by any other agreement, whenever the Company is to pay any sum to any Unitholder or any Affiliate or related person thereof, any amounts that such Unitholder or such Affiliate or related person then owes to the Company and which is due and payable may, in the discretion of the Board, be deducted from that sum before payment.
Section 20.17Entire Agreement. This Agreement, those documents expressly referred to herein, the Credit Agreement and the other Equity Agreements embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements, or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.
Section 20.18Electronic Delivery. This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of electronic transmission, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.
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No party hereto or to any such agreement or instrument shall raise the use of electronic transmission to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of electronic transmission as a defense to the formation or enforceability of a contract and each such party forever waives any such defense.
Section 20.19Survival. Sections 5.5, 6.1, 6.7, 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.8, 7.9, 9.8 and this Article 20 shall survive and continue in full force in accordance with its terms notwithstanding any termination of this Agreement or the dissolution of the Company.
Section 20.20Mutual Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS. EACH PARTY HEREBY ACKNOWLEDGES AND CERTIFIES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) IT MAKES THIS WAIVER VOLUNTARILY, AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 20.20.
Section 20.21Acknowledgements. Upon execution and delivery of a counterpart or joinder to this Agreement, each Unitholder (other than the Oaktree Investors) shall be deemed to acknowledge the following: (1)(a) Oaktree has not acted as an agent of such Unitholder in connection with making its investment hereunder, and Oaktree shall not be acting as an agent of such Unitholder in connection with monitoring its investment hereunder, (b) Oaktree has retained Wachtell, Lipton, Rosen & Katz in connection with the transactions contemplated hereby, and Oaktree expects to retain Wachtell, Lipton, Rosen & Katz as legal counsel in connection with the management and operation of the investment in the Company and its Subsidiaries, (c) Wachtell, Lipton, Rosen & Katz is not counsel to any other Unitholder and is not representing and will not represent any other Unitholder in connection with the transactions contemplated hereby or any dispute which may arise between Oaktree, on the one hand, and any other Unitholder, on the other hand, (d) such Unitholder will, if it desires legal advice with respect to any of the transactions contemplated hereby, retain its own independent counsel, and (e) Wachtell, Lipton, Rosen & Katz may represent Oaktree in connection with any and all matters contemplated hereby (including any dispute between Oaktree, on the one hand, and any other Unitholder, on the other hand) and such Unitholder waives any conflict of interest in connection with such representation by Wachtell, Lipton, Rosen & Katz, and (2)(a) BR Financial has retained Sullivan & Cromwell LLP in connection with the transactions contemplated hereby, (b) Sullivan & Cromwell LLP is not counsel to any other Unitholder and is not representing and will not represent any other Unitholder in connection with the transactions contemplated hereby or any dispute which may arise between the BR Group, on the one hand, and any other Unitholder, on the other hand, (c) such Unitholder will, if it desires legal advice with respect to any of the transactions contemplated hereby, retain its own independent counsel, and (d) Sullivan & Cromwell LLP may represent the BR Group in connection with any and all matters contemplated hereby (including any dispute between the BR Group, on the one hand, and any other Unitholder, on the other hand) and such Unitholder waives any conflict of interest in connection with such representation by Sullivan & Cromwell LLP.
Section 20.22Company Seal. The Company shall not have a Company seal, and no agreement, instrument or other document executed on behalf of the Company that would otherwise be valid and binding on the Company shall be invalid or not binding on the Company solely because no Company seal is affixed thereto.
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Section 20.23Spouses. The spouses of the individual Unitholders who are natural persons are fully aware of, understand and fully consent and agree to the provisions of this Agreement and its binding effect upon any community property interests or similar marital property interests in the Units or Unitholder Interests they may now or hereafter own, and agree that the termination of their marital relationship with any Unitholder for any reason shall not have the effect of removing any Units or Unitholder Interests otherwise subject to this Agreement from the coverage of this Agreement and that their awareness, understanding, consent and agreement are evidenced by their signing this Agreement. Furthermore, unless otherwise determined by the Board, each Unitholder who is a natural person and is married shall deliver a duly executed Consent by spouse, in substantially the form prescribed in Exhibit A to this Agreement and otherwise in form and substance reasonably acceptable to the Company and the Board (“Spousal Consent”), at the time of execution of this Agreement or an becoming a Unitholder hereunder or by any spouse married by him or her while such natural person is a Unitholder.
Section 20.24Legends. In addition to any other legend required by applicable law, each certificate, instrument, or book entry representing Unitholder Security shall be notated with a legend substantially in the following form:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN AN AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (WHICH MAY BE FURTHER AMENDED FROM TIME TO TIME) AMONG THE COMPANY AND ITS UNITHOLDERS, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY. NO TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED HEREBY MAY BE MADE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH LIMITED LIABILITY COMPANY AGREEMENT.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED EXCEPT PURSUANT TO (A) A REGISTRATION STATEMENT EFFECTIVE UNDER SUCH ACT AND LAWS, OR (B) AN EXEMPTION FROM REGISTRATION THEREUNDER.

[Signature pages follow]

* * * * * IN WITNESS WHEREOF, the undersigned have executed or caused to be executed on their behalf this Agreement as of the date first written above.
87




88


BR FINANCIAL HOLDINGS, LLC
By:     /s/ Bryant Riley    
Name:    Bryant Riley
Title:    Authorized Person
GREAT AMERICAN HOLDINGS, LLC
By:     /s/ Daniel Shribman    
Name:    Daniel Shribman
Title:    President
/s/ John Bankert    
JOHN BANKERT

/s/ Ken Bloore    
KEN BLOORE

/s/ Michael Marchlik    
MICHAEL MARCHLIK
[Signature Page to LLC Agreement]
4860-7738-1090 v.11
DB1/ 153131502.3


OCM SSF III GREAT AMERICAN PT, L.P.
By: Oaktree Fund AIF Series (Cayman), L.P. - Series S
Its: General Partner    
By: Oaktree AIF (Cayman) GP Ltd.
Its: General Partner
By: Oaktree Capital Management L.P.
Its: Director
By:     /s/ Thomas Casarella    
Name:    Thomas Casarella
Title:     Managing Director
By:     /s/ Ryan Irwin    
Name:    Ryan Irwin
Title:     Vice President
By: Oaktree Fund AIF Series, L.P. - Series N
Its: General Partner    
By: Oaktree Fund GP AIF, LLC
Its: General Partner
By: Oaktree Fund GP III, L.P.
Its: Managing Member
By:     /s/ Thomas Casarella    
Name:    Thomas Casarella
Title:     Authorized Signatory

By:     /s/ Ryan Irwin    
Name:    Ryan Irwin
Title:     Authorized Signatory
[Signature Page to LLC Agreement]
4860-7738-1090 v.11
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OPPS XII GREAT AMERICAN HOLDINGS, LLC
By: Oaktree Fund IIA, LLC
Its: Manager    
By: Oaktree Fund GP II, L.P.
Its: Managing Member
By:     /s/ Nicholas Basso    
Name:    Nicholas Basso
Title:     Authorized Signatory

By:     /s/ Reed Westerman    
Name:    Reed Westerman
Title:     Authorized Signatory
[Signature Page to LLC Agreement]
4860-7738-1090 v.11
DB1/ 153131502.3


VOF GREAT AMERICAN HOLDINGS, L.P.
By: Oaktree Fund AIF Series, L.P. - Series U
Its: General Partner    
By: Oaktree Fund GP AIF, LLC
Its: General Partner
By: Oaktree Fund GP III, L.P.
Its: Managing Member
By:     /s/ Steven Tesoriere    
Name:    Steven Tesoriere
Title:     Authorized Signatory

By:     /s/ Pavel Kaganas    
Name:    Pavel Kaganas
Title:     Authorized Signatory
By: Oaktree Fund AIF Series, L.P. - Series F
Its: General Partner    
By: Oaktree Fund GP AIF, LLC
Its: General Partner
By: Oaktree Fund GP III, L.P.
Its: Managing Member
By:     /s/ Steven Tesoriere    
Name:    Steven Tesoriere
Title:     Authorized Signatory

By:     /s/ Pavel Kaganas    
Name:    Pavel Kaganas
Title:     Authorized Signatory
[Signature Page to LLC Agreement]
4860-7738-1090 v.11
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SCHEDULE A

[INTENTIONALLY OMITTED]




SCHEDULE B
SPECIFIED ADVERSE EVENT REDUCTION
“Specified Adverse Event Reduction Amount” means, as of any date, the cumulative amount, calculated with respect to the period of four consecutive fiscal quarters for which the first quarter commences following the occurrence of a Specified Adverse Event (an “Annual Measurement Period”), equal to (i) the amount by which the EBITDA of the Liquidations Business in Europe for such Annual Measurement Period, as reflected in the financial statements of the Business for such Annual Measurement Period, is less than $10,000,000, multiplied by (ii) 6.5; provided, however, that the Specified Adverse Event Reduction Amount shall not exceed (w) $65,000,000 in the aggregate if the Specified Adverse Event initially occurs in a fiscal quarter ending on or prior to December 31, 2025, (x) $50,000,000 in the aggregate if the Specified Adverse Event initially occurs in a fiscal quarter ending on or prior to December 31, 2026, (y) $25,000,000 in aggregate if the Specified Adverse Event initially occurs in a fiscal quarter ending on or prior to December 31, 2027 or (z) $0 in aggregate if the Specified Adverse Event initially occurs in a fiscal quarter ending after December 31, 2027.







EXHIBIT A
CONSENT BY SPOUSE
    
This Spousal Consent (this “Consent”) is executed pursuant to the terms of the Second Amended and Restated Limited Liability Company Agreement of GREAT AMERICAN HOLDINGS, LLC, a Delaware limited liability company (the “Company”), dated as of [Date], a copy of which is attached hereto (the “Agreement”). By the execution of this Consent, the undersigned agree(s) as follows:
(i)Acknowledgement; Representations and Warranties. I acknowledge that I am acquiring (or being deemed to acquire) certain Units or Unitholder Interests of the Company subject to the terms and conditions of the Agreement. Capitalized terms used herein without definition are defined in the Agreement and are used herein with the same meanings set forth therein. I am aware that the legal, financial and other matters contained in the Agreement are complex and I am encouraged to seek advice with respect thereto from independent legal and/or financial counsel. I have either sought such advice or determined after carefully reviewing the Agreement that I hereby waive such right. By executing this Consent, I hereby represent and warrant that, in so executing, that this Consent shall be valid and effective upon the signing hereof and that I have not relied on any inducements, promises, or representations made by any other party (except as expressly set forth in the Agreement and this Consent) on any advice of the attorneys, accountants or other advisors of such other parties. I hereby represent and warrant that my execution of this Consent is free and voluntary.
(ii)Agreement. I hereby approve of the provisions of the Agreement and agree that (a) all of the Units or Unitholder Interests owned by my spouse, directly or indirectly (and my community property interest in it, if any), is subject to the provisions of the Agreement, and (b) I will take no action at any time to hinder operation of the Agreement with respect to any interest I may have in it. I further agree to promptly execute upon request from time to time any other and further documents necessary to effectuate the terms of the Agreement and this Consent. I hereby irrevocably appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any rights under the Agreement. This Consent, including its existence, validity, construction, and operating effect, and the rights of each of the parties hereto, shall be governed by and construed in accordance with the laws of the State of Delaware without regard to otherwise governing principles of choice of law or conflicts of law.
This Consent is executed for the benefit of the Company and each of its Unitholders and may be relied upon and enforced by any of the foregoing.

Dated: __________________________






NAME:__________________________

4860-7738-1090 v.11
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EX-10.40 5 exhibit1040creditagreement.htm EX-10.40 Document

Exhibit 10.40
Execution Version


image_0.jpg






CREDIT AGREEMENT

among

LINGO MANAGEMENT, LLC,
as the Borrower,

THE SUBSIDIARIES OF THE BORROWER FROM TIME TO TIME PARTY HERETO,
as the Secured Guarantors,

BANC OF CALIFORNIA, N.A.,
as Sole Lead Arranger, Sole Book Manager and Administrative Agent,

and

THE LENDERS PARTY HERETO




Dated as of August 16, 2022



BN 71729329v12

TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS    1
1.01Defined Terms.    1
1.02Other Interpretive Provisions.    36
1.03Accounting Terms.    36
1.04Rounding    38
1.05Times of Day    38
1.06UCC Terms.    38
1.07Rates.    38
2.01    Term Loans; Term Loan Commitments.    38
2.02    [Reserved]    40
2.03    [Reserved]    40
2.04    [Reserved]    40
2.05    [Reserved]    40
2.06    Optional Prepayments.    40
2.07    Mandatory Prepayments.    40
2.08    [Reserved].    42
2.09    Repayment of Term Loans.    42
2.10    Interest and Default Rate    42
2.11    Fees.    42
2.12    Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate    43
2.13    Evidence of Debt    43
2.14    Payments Generally; Administrative Agent’s Clawback.    44
2.15    Sharing of Payments by Lenders.    45
2.16    Incremental Term Loans    46
2.17    Defaulting Lenders.    47
2.18    Acknowledgment and Consent to Bail-In of EEA Financial Institutions.    48
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY    49
3.01    Taxes.    49
3.02    Illegality    53
3.03    Index Cessation    54
3.04    Increased Costs.    55
3.05    Compensation for Losses.    56
3.06    Designation of a Different Lending Office    57
3.07    Survival    57
4.01    Conditions of Term Loans.    57
5.01    Existence, Qualification and Power    60
5.02    Authorization; No Contravention    61
5.03    Governmental Authorization; Other Consents.    61
i

TABLE OF CONTENTS
(continued)
Page
5.04    Binding Effect    61
5.05    Financial Statements; No Material Adverse Effect    61
5.06    Litigation    62
5.07    No Default    62
5.08    Ownership of Property    62
5.09    Environmental Compliance    63
5.10    Insurance    63
5.11    Taxes.    63
5.12    ERISA Compliance    64
5.13    Margin Regulations; Investment Company Act    64
5.14    Disclosure    65
5.15    Compliance with Laws.    65
5.16    Solvency    65
5.17    Casualty, Etc    65
5.18    Sanctions Concerns.    65
5.19    Responsible Officers.    66
5.20    Subsidiaries; Equity Interests; Loan Parties.    66
5.21    Collateral Representations.    66
5.22    Beneficial Ownership Certification    68
5.23    Purchase Agreement; BullsEye Acquisition    68
5.24    Intellectual Property; Licenses, Etc    68
5.25    Labor Matters.    68
6.01    Financial Statements.    69
6.02    Certificates; Other Information    70
6.03    Notices.    73
6.04    Payment of Obligations.    73
6.05    Preservation of Existence, Etc    73
6.06    Maintenance of Properties.    74
6.07    Maintenance of Insurance    74
6.08    Compliance with Laws.    74
6.09    Books and Records.    75
6.10    Inspection Rights.    75
6.11    Use of Proceeds.    75
6.12    Material Contracts.    75
6.13    Covenant to Guarantee Obligations.    76
6.14    Covenant to Give Security    76
6.15    Further Assurances.    77
6.16    Fusion Litigation Trust Payments.    78
6.17    Compliance with Terms of Leaseholds.    78
6.18    Compliance with Environmental Laws.    78
7.01    Liens.    79
ii

TABLE OF CONTENTS
(continued)
Page
7.02    Indebtedness    80
7.03    Investments.    82
7.04    Fundamental Changes.    83
7.05    Dispositions.    83
7.06    Restricted Payments.    84
7.07    Change in Nature of Business    84
7.08    Transactions with Affiliates.    84
7.09    Burdensome Agreements.    85
7.10    Use of Proceeds.    85
7.11    Financial Covenants.    85
7.12    [Reserved]    88
7.13    Amendments of Certain Documents; Fiscal Year; Legal Name, State of Formation;
Form of Entity and Accounting Changes.    88
7.14    Sale and Leaseback Transactions.    88
7.15    Prepayments, Etc. of Indebtedness    88
7.16    [Reserved]    88
7.17    [Reserved]    88
7.18    Sanctions.    89
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES    89
8.01    Events of Default    89
8.02    Remedies upon Event of Default    91
8.03    Application of Funds.    92
9.01    Appointment and Authority    93
9.02    Rights as a Lender    93
9.03    Exculpatory Provisions.    94
9.04    Reliance by Administrative Agent    95
9.05    Delegation of Duties.    95
9.06    Resignation of Administrative Agent    95
9.07    Non-Reliance on Administrative Agent and Other Lenders.    96
9.08    No Other Duties, Etc    97
9.09    Administrative Agent May File Proofs of Claim; Credit Bidding    97
9.10    Collateral and Guaranty Matters.    98
9.11    Secured Cash Management Agreements and Secured Hedge Agreements.    99
9.12    Certain ERISA Matters.    99
10.01    Guaranty    100
10.02    Rights of Lenders.    100
10.03    Certain Waivers.    101
10.04    Obligations Independent    101
10.05    Subrogation    101
10.06    Termination; Reinstatement    102
iii

TABLE OF CONTENTS
(continued)
Page
10.07    Stay of Acceleration    102
10.08    Condition of Borrower    102
10.09    Appointment of Borrower    102
10.10    Right of Contribution    102
10.11    Keepwell    103
11.01    Amendments, Etc    103
11.02    Notices; Effectiveness; Electronic Communications.    105
11.03    No Waiver; Cumulative Remedies; Enforcement    107
11.04    Expenses; Indemnity; Damage Waiver    107
11.05    Payments Set Aside    110
11.06    Successors and Assigns.    110
11.07    Treatment of Certain Information; Confidentiality    114
11.08    Right of Setoff    115
11.09    Interest Rate Limitation    115
11.10    Counterparts; Integration; Effectiveness    116
11.11    Survival of Representations and Warranties.    116
11.12    Severability    116
11.13    Replacement of Lenders.    117
11.14    Governing Law; Jurisdiction; Etc    117
11.15    Waiver of Jury Trial    118
11.16    Subordination    120
11.17    No Advisory or Fiduciary Responsibility    121
11.18    Electronic Execution of Assignments and Certain Other Documents.    121
11.19    USA PATRIOT Act Notice    121
11.20    Reserved    122
11.21    Waiver of Subrogation    122
iv

TABLE OF CONTENTS
(continued)
Page
BORROWER PREPARED SCHEDULES
Schedule 1.01(c)    Responsible Officers Schedule 5.06    Litigation
Schedule 5.10    Insurance
Schedule 5.11    Tax Matters
Schedule 5.12    Pension Plans
Schedule 5.20(a)    Subsidiaries, Joint Ventures, Partnerships and Other Equity Investments Schedule 5.20(b)    Loan Parties
Schedule 5.21(b)(i)    Intellectual Property
Schedule 5.21(c)    Documents, Instrument, and Tangible Chattel Paper Schedule 5.21(d)(i)    Deposit Accounts & Securities Accounts
Schedule 5.21(d)(ii)    Electronic Chattel Paper & Letter-of-Credit Rights Schedule 5.21(e)    Commercial Tort Claims
Schedule 5.21(f)    Pledged Equity Interests Schedule 5.21(g)(i)    Other Properties Schedule 5.21(h)    Material Contracts Schedule 7.01    Existing Liens
Schedule 7.02    Existing Indebtedness
Schedule 7.03    Existing Investments
Schedule 7.08    Affiliate Transactions Schedule 11.06(b)    Non-Assignment Persons

ADMINISTRATIVE AGENT PREPARED SCHEDULES
Schedule 1.01(a)    Certain Addresses for Notices
Schedule 1.01(b)    Commitments and Applicable Percentages

EXHIBITS
Exhibit A    Form of Administrative Questionnaire
Exhibit B    Form of Assignment and Assumption
Exhibit C    Form of Compliance Certificate
Exhibit D    Form of Joinder Agreement
Exhibit E    Form of Loan Notice
Exhibit F    Form of Term Note
Exhibit G    Form of Secured Party Designation Notice
Exhibit H    Form of Solvency Certificate
Exhibit I    Form of Officer’s Certificate
Exhibit J    Forms of U.S. Tax Compliance Certificates
Exhibit K    Form of Funding Indemnity Letter
Exhibit L    Form of Landlord Waiver
Exhibit M    Form of Financial Condition Certificate
Exhibit N    Form of Authorization to Share Insurance Information Exhibit O    Form of Notice of Loan Prepayment
v

CREDIT AGREEMENT

Exhibit P Cost Savings Initiate Summary This CREDIT AGREEMENT, dated as of August 16, 2022, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Secured Guarantors (defined herein), the Lenders (defined herein), and BANC OF CALIFORNIA, N.A., as the Administrative Agent.
PRELIMINARY STATEMENTS
WHEREAS, the Borrower has requested that the Lenders make term loans to the Borrower in an aggregate original principal amount of up to $45,000,000.
WHEREAS, the Lenders have agreed to make such term loans to the Borrower and to permit the Borrower to request such additional optional term loans on the terms and subject to the conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.01Defined Terms.
As used in this Agreement, the following terms shall have the respective meanings set forth
below:
“Acquired EBITDA” means, with respect to any acquired entity or business (any of the foregoing, a “Pro Forma Entity”) for any period prior to the applicable acquisition or conversion, the amount for such period of Consolidated Adjusted EBITDA of such Pro Forma Entity (determined as if references to the Borrower and the Subsidiaries in the definition of the term “Consolidated Adjusted EBITDA” (and in the component definitions used therein) were references to such Pro Forma Entity and its subsidiaries which will become Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity.
“Acquisition” means the acquisition, whether through a single transaction or a series of related transactions, of (a) a majority of the Voting Stock or other controlling ownership interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity or other ownership interest or upon the exercise of an option or warrant for, or conversion of securities into, such equity or other ownership interest, or (b) assets of another Person which constitute all or substantially all of the assets of such Person or of a division, line of business or other business unit of such Person.
“Additional Secured Obligations” means (a) all obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements and (b) all reasonable and documented out-of- pocket costs and expenses incurred in connection with enforcement and collection of the foregoing, including the reasonable and documented fees, charges and disbursements of external counsel, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to
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become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that Additional Secured Obligations of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party.
“Administrative Agent” means Banc of California in its capacity as administrative agent under any of the Loan Documents, or any successor administrative agent.
“Administrative Agent’s Office” means the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 1.01(a), or such other address or account as the Administrative Agent may from time to time notify the Borrower and the Lenders.
“Administrative Questionnaire” means an Administrative Questionnaire in substantially the form of Exhibit A or any other form approved by the Administrative Agent.
“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
“Aggregate Commitments” means the Commitments of all the Lenders.
“Agreement” means this Credit Agreement, as the same may be amended, amended and restated, or supplemented from time to time.
“Applicable Margin” means, for any day, the interest rate margin per annum set forth below opposite the applicable Level then in effect (based on the Consolidated Total Funded Debt Ratio) to be added to Term SOFR:

Level
Consolidated Total Funded Debt Ratio
Applicable Margin
1
˃ 3.25:1.00
3.75%

2
> 2.75:1.00 and
≤ 3.25:1.00

3.50%

3
> 2.25:1.00 and
≤ 2.75:1.00

3.25%
4
≤ 2.25:1.00
3.00%
Any increase or decrease in the Applicable Margin resulting from a change in the Consolidated Total Funded Debt Ratio shall become effective as of the first Business Day immediately following the date a Compliance Certificate is delivered pursuant to Section 6.02(b); provided, however, that if a Compliance Certificate is not delivered when due in accordance with such Section, then, upon the request of the Required Lenders, Pricing Level 1 shall apply, in each case as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and in each case shall remain in effect until the first Business Day following the date on which such Compliance Certificate is delivered.
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Notwithstanding anything to the contrary contained in this definition, (a) the determination of the Applicable Margin for any period shall be subject to the provisions of Section 2.10(b) and (b) the initial Applicable Margin shall be set forth in Level 1 until the first Business Day immediately following the date a Compliance Certificate is delivered to Administrative Agent pursuant to Section 6.02(b) for the second full fiscal quarter to occur following the Closing Date. Any adjustment in the Applicable Margin shall be applicable to all Term Loans then existing or subsequently made or issued.
“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.
“Arranger” means Banc of California, in its capacity as sole lead arranger and sole book manager.
“Asset Disposition” means the sale, sale and leaseback, transfer, conveyance, exchange, license, lease or other disposition (including by means of a merger, consolidation, amalgamation or joint venture) of any of the properties, business or assets (other than cash and Cash Equivalents disposed of in the ordinary course of business) of the Borrower or any Secured Guarantor to any Person or Persons; provided that Asset Dispositions shall not include any of the following:
(a)the sale of inventory or performance of services in the ordinary course of business;
(b)dispositions of assets or property between or among the Loan Parties or to the extent permitted by Section 7.04 hereof;
(c)dispositions in the ordinary course of business constituting the sale or discount of customer accounts reasonably deemed by the Borrower or Secured Guarantor to be uncollectible;
(d)the non-exclusive license (as licensor or sublicensor) of intellectual property in the ordinary course of business, and the license, transfer and other dispositions of intellectual property rights (including by allowing such intellectual property rights to lapse) if in the exercise of the Borrower’s or applicable Secured Guarantor’s reasonable business judgment it shall have determined that such intellectual property rights are no longer useful in its business;
(e)the disposition of obsolete, damaged or worn-out assets in an aggregate amount not exceeding $750,000 in any fiscal year;
(f)subject to Section 2.07(e), dispositions that constitute a casualty, taking or condemnation;
(g)the termination of leases or subleases and surrender or sublease of real or personal property in the ordinary course of business;
(h)dispositions of the type described in clauses (e), (g) and (h) of the definition of Permitted Transfers; and
(i)dispositions permitted by Sections 7.05(c) or (i) hereof.
“Assignment and Assumption” means an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.06(b)), and accepted by the Administrative Agent, in substantially the form of Exhibit B or any other form
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(including electronic documentation generated by MarkitClear or other electronic platform) approved by the Administrative Agent.
“Attributable Indebtedness” means, on any date, subject to Section 1.03(a) regarding the treatment of leases, (a) in respect of any Capitalized Lease of any Person, the capitalized amount thereof that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of the remaining lease or similar payments under the relevant lease or other applicable agreement or instrument that would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such lease or other agreement or instrument were accounted for as a Capitalized Lease.
“Audited Financial Statements” means, collectively, the audited Consolidated balance sheet of the Borrower and its Subsidiaries for the fiscal year ended December 31, 2021, and the related Consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of the Borrower and its Subsidiaries, including the notes thereto and (b) the audited Consolidated balance sheet of BullsEye and its Subsidiaries for the fiscal year ended December 31, 2021, and the related Consolidated statements of income or operations, shareholders’ equity and cash flows for such fiscal year of BullsEye and its Subsidiaries, including the notes thereto.
“Authorization to Share Insurance Information” means the authorization substantially in the form of Exhibit N (or such other form as required by each of the Loan Party’s insurance companies).
“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“Bail-In Legislation” means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“Beneficial Ownership Certification” means a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association.
“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230
“Benefit Plan” means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the ode or (c) any Person whose assets include (for purposes of ERISA) Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
“Banc of California” means Banc of California, N.A., and its successors and assigns.
“Bankruptcy Code” means Title II of the United States Code entitled “Bankruptcy” as now and hereafter in effect, or any successor statute.
“Base Rate” for any day, a rate per annum equal to the greater of (x) the Federal Funds Effective Rate in effect on such day plus ½ of 1% per annum, and (y) the rate of interest per annum as published as
4

the “Prime Rate” for U.S. banks in The Wall Street Journal as of such date; provided that, if the Base Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement. The Base Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Lenders may make commercial loans or other loans at rates of interest at, above or below the Base Rate. If, for any reason, the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms hereof, the Base Rate shall be determined without regard to clause (x) of the first sentence of this definition until the circumstances giving rise to such inability no longer exist. Any change in the Base Rate due to a change in the Federal Funds Rate or the “Prime Rate,” as the case may be, shall be effective on the effective date of such change in the Federal Funds Rate or the “Prime Rate,” as applicable.
“Board of Directors” means, as to any Person, the board of directors (or comparable managers) of such Person, or any committee thereof duly authorized to act on behalf of the board of directors (or comparable managers).
“Borrower” has the meaning specified in the introductory paragraph hereto.
“Borrower Materials” has the meaning specified in Section 6.02.
“Borrowing” means a borrowing of Term Loans from Lenders pursuant to the terms and conditions hereof.
“BullsEye” means BullsEye Telecom, Inc., a Michigan corporation.
“BullsEye Acquisition” means the Acquisition by the Borrower of all of the Equity Interests of BullsEye and its Subsidiaries pursuant to the BullsEye Purchase Agreement.
“BullsEye Majority Shareholder” means William H. Oberlin, Trustee of the William H. Oberlin Revocable Trust.
“BullsEye Purchase Agreement” means that certain Agreement and Plan of Merger, dated as of March 28, 2022, by and among the Borrower, Merger Sub, BullsEye, BullsEye Majority Shareholder, Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the agent, representative and attorney-in-fact of the Equityholders (as defined in the Purchase Agreement), and solely for purposes of Section 11.17 of the Purchase Agreement, William H. Oberlin, an individual resident of Michigan, pursuant to which, among other things, immediately upon the funding of the Term Loans, (i) Merger Sub will merge with and into BullsEye, the separate existence of Merger Sub shall cease, and BullsEye will be the surviving entity, and (ii) BullsEye will become a wholly-owned Subsidiary of the Borrower.
“BullsEye Purchase Documents” means the BullsEye Purchase Agreement together with any and all bills of sale, assignments and any and all other material agreements, instruments and documents evidencing or executed in connection with the BullsEye Acquisition.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the Laws of, or are in fact closed in, the state of California, provided, however, that if such day relates to a SOFR Loan, the term “Business Day” excludes any day on which the Securities Industry and Financial Markets Association (SIFMA) recommends that the fixed income
5

departments of its members be closed for the entire day for purposes of trading in United States government securities.
“Capital Expenditures” means, with respect to any Person for any period, any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations).
“Capitalized Leases” means all leases that have been or should be, in accordance with GAAP, recorded as capitalized leases; provided, that notwithstanding any change in GAAP after the Closing Date that would require lease obligations that would be treated as operating leases as of the Closing Date to be classified and accounted for as capital leases or otherwise reflected on any Person’s balance sheet, such obligations shall be treated in the same manner as operating leases are treated as of the Closing Date.
“Cash at Bank” means the amount of unrestricted cash and Cash Equivalents held by the Borrower at Banc of California or any of its Affiliates.
“Cash Equivalents” means any of the following types of Investments, to the extent owned by the Borrower or any of its Subsidiaries free and clear of all Liens (other than Permitted Liens):
(a)readily marketable securities issued by or directly, unconditionally and fully guaranteed or insured by the United States or any agency or instrumentality thereof having maturities of not more than three hundred sixty-five days (365) days from the date of acquisition thereof; provided that the full faith and credit of the United States is pledged in support thereof;
(b)any readily marketable direct obligations issued by any other agency of the United States, any state of the United States or any political subdivision of any such state or any public instrumentality thereof having maturities of not more than three hundred sixty-five days
(365) from the date of acquisition thereof, in each case having a rating of at least “A-1” from S&P or at least “P-1” from Moody’s;
(c)any dollar-denominated time deposits, insured certificates of deposit, overnight bank deposits or bankers’ acceptances of, any (i) Lender or commercial bank that is (x) organized under the laws of the United States, any state thereof or the District of Columbia, (y) “adequately capitalized” (as defined in the regulations of its primary federal banking regulators) and (z) has Tier 1 capital (as defined in such regulations) in excess of $250,000,000 (ii) having maturities of not more than three hundred sixty-five (365) days;
(d)commercial paper issued by any Person organized under the laws of any state of the United States and rated at least “P-1” (or the then equivalent grade) by Moody’s or at least “A-1” (or the then equivalent grade) by S&P, in each case with maturities of not more than one hundred eighty (180) days from the date of acquisition thereof; and
(e)Investments, classified in accordance with GAAP as current assets of the Borrower or any of its Subsidiaries, in money market investment programs registered under the Investment Company Act of 1940, which are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P, and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b), (c) and
(d) of this definition.
6

“Cash Management Agreement” means any agreement that is not prohibited by the terms hereof to provide treasury or cash management services, including deposit accounts, overnight draft, credit cards, debit cards, p-cards (including purchasing cards and commercial cards), funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.
“Cash Management Bank” means Banc of California or one of its Affiliates.
“CFC” means a Person that is a controlled foreign corporation under Section 957 of the Code.
“Change in Law” means the occurrence, after the Closing Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.
“Change of Control” means an event or series of events by which:
(a)during any period of 24 consecutive months commencing on or after the Closing Date, the occurrence of a change in the composition of the Board of Directors of any Loan Party such that a majority of the members of such Board of Directors of such Loan Party are not Continuing Directors;
(b)Ultimate Parent fails to own and control, directly or indirectly, 100% of the Equity Interests of Parent;
(c)Parent fails to own and control, directly or indirectly, 80% of the Equity Interests of the Borrower; or
(d)Except as permitted by the terms of Section 7.04 of this Agreement, the Borrower fails to own and control, directly or indirectly, 100% of the Equity Interests of any of its Subsidiaries that is a Loan Party.
“Closing Date” means the date hereof.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” means all of the “Collateral” referred to in the Collateral Documents and all of the other property that is or is intended under the terms of the Collateral Documents to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties; provided, however, that Collateral shall not include any Excluded Property.
7

“Collateral Assignment of Purchase Agreement” means that certain Collateral Assignment of Rights Under Purchase Agreement, dated as of even date herewith, by and among the Borrower, BullsEye and Administrative Agent.
“Collateral Documents” means, collectively, the Security Agreement, each Joinder Agreement, Collateral Assignment of Purchase Agreement, each of the security agreements, pledge agreements or other similar agreements delivered to the Administrative Agent pursuant to Section 6.14, and each of the other agreements, instruments or documents that creates or purports to create a Lien in favor of the Administrative Agent for the benefit of the Secured Parties.
“Commercial Tort Claims” has the meaning ascribed to the term “Commercial tort claims” in such term in Section 9-102(a)(13) of the UCC.
“Commitment” means a Term Loan Commitment.
“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.) as amended from time to time, or any successor statute.
“Compliance Certificate” means a certificate substantially in the form of Exhibit C.
“Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.
“Consolidated” means, when used with reference to financial statements or financial statement items of Borrower and its Subsidiaries or any other Person, such statements or items on a consolidated basis in accordance with the consolidation principles of GAAP.
“Consolidated Adjusted EBITDA” means, for any period, the sum of the following determined on a Consolidated basis, without duplication, for Borrower and its Subsidiaries in accordance with GAAP,
(a)net income for the most recently completed Measurement Period, plus
(b)the following for the most recently completed Measurement Period to the extent deducted in calculating such net income (without duplication):
(i)Consolidated Interest Charges,
(ii)the provision for federal, state, local and foreign income taxes paid or accrued during such period (including in respect of repatriated funds), tax settlements, fees and penalties and any amounts distributed for the payment of any taxes by, or on behalf of, any direct or indirect parent of Borrower,
(iii)depreciation and amortization expense,
(iv)non-cash charges, expenses, write-downs and losses (excluding any such non-cash charges, expenses, write-downs or losses to the extent (A) there were cash charges with respect to such charges, expenses, write-downs and losses in past accounting periods or (B) there is a reasonable expectation that there will be cash charges with respect to such charges, expenses, write-downs and losses in future accounting periods), including, without limitation, impairment charges or the impact of purchase or
8

recapitalization accounting adjustments and any non-cash compensation, non-cash translation (gain) loss, non-cash foreign exchange loss and non-cash expense relating to the vesting of warrants and any impairment charge or asset write-off and any amortization of intangibles pursuant to FASB ASC 805,
(v)The amount of cost savings and synergies projected by the Borrower in good faith to result from actions taken or expected to be taken (a “Cost Savings Initiative”) (calculated on a pro forma basis as through such cost savings and synergies had been realized on the first day of the period for which Consolidated Adjusted EBITDA is being determined), net of the amount of actual benefits realized during such period from such actions, provided that (A) such cost savings and synergies are reasonably identifiable, (B) the aggregate amount of cost savings and synergies added pursuant to this clause (v) shall not exceed $11,000,000, and (C) such projected cost savings and synergies may only be added back to net Income for any Measurement Period ending on or before December 31, 2023,
(vi)Non-recurring costs, fees and expenses incurred during 2022 and prior to the Closing Date (including restructuring, severance and integration costs and expenses and Transaction-Related Costs), provided that the aggregate amount of such costs, fee and expenses added pursuant to this clause (vi) shall not exceed $2,600,000,
(vii)Transaction-Related Costs incurred on the Closing Date or after the Closing Date in connection with the Bullseye Acquisition and costs and expenses incurred on the Closing Date or after the Closing Date in an attempt to realize the cost savings and synergies set forth in clause (v) above, provided that the aggregate amount of such Transaction-Related Costs and costs and expenses (including restructuring, severance and integration costs and expenses) incurred in an attempt to realize the cost savings and synergies set forth in clause (v) above added pursuant to this clause (vii) shall not exceed $12,000,000,
(viii)Transaction-Related Costs (other than Transaction-Related Costs relating to the BullsEye Acquisition) in an amount not to exceed $1,000,000 in the aggregate in any Measurement Period,
(ix)up to $360,000 in the aggregate of fees, costs, and expenses incurred prior to the first anniversary of the Closing Date in connection with the negotiation, documentation or closing of this Agreement,
(x)stock-based compensation expense and other non-cash compensation expense (including deferred non-cash compensation expenses),
(xi)unrealized losses on Master Agreements and swaps,
(xii)Litigation or Dispute Settlement Charges or Gains in an amount not to exceed (i) for any Measurement Period that includes either the fiscal quarter ended March 21, 2022 or June 20, 2022, $1,500,000, and (ii) for any other Measurement Period
$1,000,000 in aggregate for such Measurement Period,
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(xiii)the amount of all fees, costs and expenses incurred in connection with any amendment, modification or supplement of any Loan Document, including, without
10

limitation, any consent or waiver fees payable in connection therewith in an amount not to exceed $1,000,000 in the aggregate,
(xiv)proceeds of business interruption insurance (to the extent actually received),
(xv)charges, losses or expenses to the extent indemnified or reimbursed by a third party in connection with the BullsEye Acquisition or a Permitted Acquisition,
(xvi)losses and expenses from (or incurred in connection with) discontinued operations, divested joint ventures and other divested investments,
(xvii)contingent or deferred payments (including non-compete payments and other consulting payments) incurred in connection with Permitted Acquisitions, Investments and other transactions not prohibited by the Loan Documents, and earn-out obligation expense (including adjustments thereto), to the extend incurred, paid or accrued during such period, in an amount not to exceed $500,000 in the aggregate during any Measurement Period,
(xviii)non-cash charges incurred pursuant to any management equity plan, profits interest or stock option plan or any other management or employee benefit plan or agreement, pension plan, any stock subscription or shareholder agreement or any distributor equity plan or agreement, or any similar equity plan or agreement, but excluding any compensation (including bonuses) paid in the ordinary course of business, and charges in connection with the rollover, acceleration or payout of Equity Interests held by management of Borrower (or any direct or indirect parent company), the Borrower and/or any Subsidiary, in each case, to the extent that any such charge is funded with Net Proceeds contributed by the relevant person as a capital contribution or as a result of the sale or issuance of Equity Interests, and
(xix)non-cash losses or charges attributable to the capitalization of labor and personnel costs for any measurement period ending on or prior to the date that is 18 months after the Closing Date,
less
(c)without duplication and to the extent reflected as a gain or otherwise included in the calculation of net income for such period (i) non-cash gains (excluding any such non-cash gains to the extent (A) there were cash gains with respect to such gains in past accounting periods or (B) there is a reasonable expectation that there will be cash gains with respect to such gains in future accounting periods).
Notwithstanding the foregoing there shall be included in determining Consolidated Adjusted EBITDA for any period or measurement, without duplication, to the extent not included in net income, the Acquired EBITDA of any Person, property, business or asset acquired by the Borrower or any Subsidiary during such period to the extent not subsequently sold, transferred or otherwise disposed of (but not including the Acquired EBITDA of any related Person, property, business or assets to the extent not so acquired) (each such Person, property, business or asset acquired, including pursuant to a transaction consummated prior to the Closing Date, and not subsequently so disposed of, an “Acquired Entity or Business”), in each case, based on the Acquired EBITDA of such Pro Forma Entity for such period (including the portion thereof
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occurring prior to such acquisition or conversion) determined on a historical pro forma basis, in an amount (other than with respect to BullsEye and its Subsidiaries) not to exceed 10% of Consolidated Adjusted EBITDA
“Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of
(a) (i) Consolidated Adjusted EBITDA less (ii) the aggregate amount of all non-financed cash Capital Expenditures, less (iii) the aggregate amount of federal, state, local and foreign income taxes paid in cash, less (iv) the aggregate amount of cash distributions or dividends, in each case, of or by Borrower and its Subsidiaries for the most recently completed Measurement Period, to (b) the sum of (i) Consolidated Interest Charges to the extent paid in cash for the most recently completed Measurement Period (including but not limited to any Consolidated Interest Charges under the Parent Subordinated Credit Agreement that are repaid with Incremental Term Loans, but only to the extent such Consolidated Interest Charges exceed an effective interest rate of Term SOFR plus 3.75% per annum), but excluding any such payments to the extent refinanced through the incurrence of additional Indebtedness otherwise expressly permitted under Section 7.02, plus (ii) the current portion of Borrower’s and its Subsidiaries’ Consolidated long term Indebtedness (including the current portion of Capitalized Lease obligations) for the most recently completed Measurement Period.
“Consolidated Funded Indebtedness” means, as of any date of determination, for Borrower and its Subsidiaries on a Consolidated basis, the sum of (a) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments; (b) all purchase money Indebtedness; (c) the maximum amount available to be drawn under issued and outstanding letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (d) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business) to the extent such obligations are due and payable; (e) all Attributable Indebtedness; (f) all obligations to purchase, redeem, retire, defease or otherwise make any payment prior to the Term Loan Maturity Date in respect of any Equity Interests or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; (g) without duplication, all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (a) through (f) above of Persons other than Borrower or any Subsidiary; and
(h) all Indebtedness of the types referred to in clauses (a) through (g) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which Borrower or a Subsidiary is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to Borrower or such Subsidiary.
“Consolidated Interest Charges” means, for any Measurement Period, the sum of (a) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP, (b) all interest paid or payable with respect to discontinued operations and (c) the portion of rent expense under Capitalized Leases that is treated as interest in accordance with GAAP, in each case, of or by Borrower and its Subsidiaries on a Consolidated basis for the most recently completed Measurement Period.
“Consolidated Total Funded Debt Ratio” means, as of any date of determination, the ratio of
(a) Consolidated Funded Indebtedness as of such date to (b) Consolidated Adjusted EBITDA for the most recently completed Measurement Period.
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“Contractual Obligation” means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.
“Continuing Director” means (a) any member of the Board of Directors who was a director (or comparable manager) of a Loan Party on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was approved, appointed or nominated for election to the Board of Directors by Parent a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of the applicable Loan Party and whose initial assumption of office resulted from such contest or the settlement thereof.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto. Without limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, power to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors, managing general partners or the equivalent.
“Cost of Acquisition” means, with respect to any Acquisition, as at the date of entering into any agreement therefor, the sum of the following (without duplication): (a) the value of the Equity Interests of Borrower or any Subsidiary to be transferred in connection with such Acquisition, (b) the amount of any cash and fair market value of other property (excluding property described in clause (a) and the unpaid principal amount of any debt instrument) given as consideration in connection with such Acquisition, (c) the amount (determined by using the face amount or the amount payable at maturity, whichever is greater) of any Indebtedness incurred, assumed or acquired by Borrower or any Subsidiary in connection with such Acquisition, (d) all additional purchase price amounts in the form of earnouts and other contingent obligations that should be recorded on the financial statements of Ultimate Parent and its Subsidiaries in accordance with GAAP in connection with such Acquisition, (e) all amounts paid in respect of covenants not to compete and consulting agreements that should be recorded on the financial statements of Borrower and its Subsidiaries in accordance with GAAP, and other affiliated contracts in connection with such Acquisition, and (f) the aggregate fair market value of all other consideration given by Ultimate Parent or any Subsidiary in connection with such Acquisition. For purposes of determining the Cost of Acquisition for any transaction, the Equity Interests of Borrower shall be valued in accordance with GAAP.
“Cost Savings Initiative Summary” means summary of cost savings and synergies in connection with the Cost Savings Initiative substantially in the form of Exhibit P.
“Cure Notice” has the meaning given to such term in Section 7.11(d)(i).
“Current Assets” means, at a particular date, all accounts and inventory of Borrower and its Subsidiaries on a Consolidated basis and all other items (excluding cash and cash equivalents) that would, in conformity with GAAP, be included under current assets on a balance sheet of Borrower and its Subsidiaries on a Consolidated basis as at such date; provided, however, that such amounts shall not include (a) any amounts for any Indebtedness owing by an Affiliate of Borrower, unless such Indebtedness arose in connection with the sale of goods or rendition of services in the ordinary course of
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business and would otherwise constitute current assets in conformity with GAAP, (b) any Equity Interests issued by an Affiliate of Borrower, or (c) the cash surrender value of any life insurance policy.
“Current Liabilities” shall mean, at a particular date, all amounts which would, in conformity with GAAP, be included under current liabilities on a balance sheet of Borrower and its Subsidiaries on a Consolidated basis as at such date, but in any event including the amounts of (a) all Indebtedness of Borrower and its Subsidiaries on a Consolidated basis payable on demand, or, at the option of the Person to whom such Indebtedness is owed, not more than twelve (12) months after such date, but excluding the current portion of long-term debt, (b) any principal payments in respect of any Indebtedness of Borrower (whether installment, serial maturity, sinking fund payment or otherwise) required to be made not more than twelve (12) months after such date, excluding the current portion of long-term debt, (c) all reserves in respect of liabilities or Indebtedness payable on demand or, at the option of the Person to whom such Indebtedness is owed, not more than twelve (12) months after such date, other than any such reserves for the current portion of long-term debt, and (d) all accruals for federal or other taxes measured by income payable within a twelve (12) month period.
“Debt Offering” means the incurrence, sale or issuance by any Loan Party of any debt securities or other Indebtedness (other than Indebtedness permitted by Section 7.02).
“Debtor Relief Laws” means the Bankruptcy Code and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect.
“Default” means any event or condition that constitutes an Event of Default or that, with the giving of any notice, the passage of time, or both, would be an Event of Default.
“Default Rate” means with respect to any Obligation, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto.
“Defaulting Lender” means, subject to Section 2.17(b), any Lender that (a) has failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable Event of Default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two (2) Business Days of the date when due, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable Event of Default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), (d) has become the subject of a Bail-in-Action, or (e) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization
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or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and the effective date of such status, shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.17(b)) as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower and each other Lender promptly following such determination.
“Designated Jurisdiction” means any country or territory to the extent that such country or territory is the subject of any Sanction.
“Disposition” or “Dispose” means the sale, transfer, license, lease or other disposition (including any Sale and Leaseback Transaction) of any property by any Loan Party or Subsidiary (or the granting of any option or other right to do any of the foregoing), including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith, but excluding any Involuntary Disposition.
“Disqualified Capital Stock” means, with respect to any Person, any Equity Interest issued by such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable, either mandatorily or at the option of the holder thereof), or upon the happening of any event or condition:
(a)matures or is mandatorily redeemable (other than solely for Equity Interests issued by such Person that do not constitute Disqualified Capital Stock and cash in lieu of fractional shares of such Equity Interests), whether pursuant to a sinking fund obligation or otherwise;
(b)is convertible or exchangeable, either mandatorily or at the option of the holder thereof, for Indebtedness or Equity Interests (other than solely for Equity Interests issued by such Person that do not constitute Disqualified Capital Stock and cash in lieu of fractional shares of such Equity Interests); or
(c)is redeemable (other than solely for Equity Interests issued by such Person that do not constitute Disqualified Capital Stock and cash in lieu of fractional shares of such Equity Interests) or is required to be repurchased by such Person, in whole or in part, at the option of the holder thereof;
in each case, on or prior to the date 91 days after the Term Loan Maturity Date (determined at the time of the issuance of such Equity Interests); provided, that (i) an Equity Interest issued by any Person that would not constitute a Disqualified Capital Stock but for terms thereof giving holders thereof the right to require such Person to redeem or purchase such Equity Interest upon the occurrence of an “asset sale” or a “change of control” (or a similar transaction) shall not constitute a Disqualified Capital Stock if any such requirement is subject to the prior occurrence of the Facility Termination Date and (ii) if an Equity Interest issued by any Person is issued pursuant to any plan for the benefit of employees, officers,
15

directors, managers, members of management or consultants of Borrower (or any direct or indirect parent thereof) or any of its subsidiaries or by any such plan to such Persons, such Equity Interest shall not constitute a Disqualified Capital Stock solely because it may be required to be repurchased by Borrower (or any direct or indirect parent company thereof) or any of its subsidiaries in order to satisfy applicable statutory or regulatory obligations of such Person.
“Dollar” and “$” mean lawful money of the United States.
“Domestic Subsidiary” means any Subsidiary that is organized under the laws of any political subdivision of the United States.
“Early Termination Fee” has the meaning ascribed to such term in Section 2.11(c).
“EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 11.06 (subject to such consents, if any, as may be required under Section 11.06(b)(iii)).
“Environmental Laws” means any and all federal, state, local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the environment, including those related to hazardous substances or wastes, air emissions and discharges to waste or public systems.
“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of Borrower, any other Loan Party or any of their respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.
“Environmental Permit” means any permit, approval, identification number, license or other authorization required under any Environmental Law.
“Equity Cure Investment” has the meaning given to such term in Section 7.11(d)(ii).
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“Equity Cure Right” has the meaning given to such term in Section 7.11(d).
“Equity Interests” means, with respect to any Person, all of the shares of capital stock of (or other ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition from such Person of such shares (or such other interests), and all of the other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and whether or not such shares, warrants, options, rights or other interests are outstanding on any date of determination.
“Equity Issuance” means, any issuance by any Loan Party or any Subsidiary to any Person of its Equity Interests, other than (a) any issuance of its Equity Interests pursuant to the exercise of options or warrants, (b) any issuance of its Equity Interests pursuant to the conversion of any debt securities to equity or the conversion of any class of equity securities to any other class of equity securities, and
(c) any issuance of options or warrants relating to its Equity Interests. The term “Equity Issuance” shall not be deemed to include any Disposition.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.
“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and
(o) of the Code for purposes of provisions relating to Section 412 of the Code).
“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the withdrawal of Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete withdrawal, within the meaning of Section 4203 of ERISA, or a partial withdrawal, within the meaning of Section 4205 of ERISA, by Borrower or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing with the PBGC of a notice of intent to terminate under Section 4041(c) of ERISA by Borrower or any ERISA Affiliate; (e) the institution by the PBGC of proceedings to terminate a Pension Plan but only if the PBGC has notified the Borrower or ERISA Affiliate, as applicable, of the same; (f) the receipt by Borrower or any ERISA Affiliate from the PBGC of written notice relating to an intention to terminate any Pension Plan; (g) the determination that any Pension Plan is considered an at-risk plan (within the meaning of Section 430 of the Code or Section 303 of ERISA) or a plan in endangered or critical status (within the meaning of Section 432 of the Code or Section305 of ERISA); (h) the imposition of any liability under Title IV of ERISA other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate; or (i) with respect to any Multiple Employer Plan the provisions of Section 4064 of ERISA apply.
“Event of Default” has the meaning specified in Section 8.01.
“Excluded Account” has the meaning specified in Section 6.13.
“Excluded Property” means, with respect to any Loan Party, (a) any owned or leased real property which is located outside of the United States, (b) any Intellectual Property for which a perfected
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Lien thereon is not effected either by filing of a Uniform Commercial Code financing statement or by appropriate evidence of such Lien being filed in either the United States Copyright Office or the United States Patent and Trademark Office, (c) voting Equity Interests of any CFC, solely to the extent that such Equity Interests represent more than 65% of the outstanding voting Equity Interests of such CFC; (d) any lease, license, franchise, charter or other governmental authorization, or any other contract or agreement to which any Loan Party is a party, and any of its rights or interests thereunder or assets subject thereto, if and to the extent that a Lien in favor of the Administrative Agent is prohibited by (i) any applicable Law, or (ii) a term, provision or condition of any such lease, license, charter, governmental authorization, contract or agreement and such prohibition or restriction has not been waived or the consent of the other party to such contract, lease, permit, license, or license agreement has not been obtained; provided, that, in each case, (A) the foregoing exclusions of this clause (d) shall in no way be construed (1) to apply to the extent that any described prohibition or restriction is ineffective under Section 9-406, 9-407, 9-408, or 9-409 of the Uniform Commercial Code or other applicable Law (including the Debtor Relief Laws), or
(2) to apply to the extent that any consent or waiver has been obtained that would permit Administrative Agent’s security interest or Lien to attach notwithstanding the prohibition or restriction on the pledge of such contract, lease, permit, license, or license agreement and (B) the foregoing exclusions of clauses (a) through (d) shall in no way be construed to limit, impair, or otherwise affect any of Administrative Agent’s, any Lender’s continuing security interests in and Liens upon any rights or interests of any grantor in or to (1) monies due or to become due under or in connection with any described contract, lease, permit, license, license agreement, or Equity Interests (including any accounts or Equity Interests), or (2) any proceeds from the sale, license, lease, or other dispositions of any such contract, lease, permit, license, license agreement, or Equity Interests); (e) “intent-to-use” United States trademark applications to the extent that an amendment to allege use or statement of use has not been filed under 15 U.S.C.
§1051(c) or 15 U.S.C. §1051(d), respectively, or if filed, has not been deemed in conformity with 15
U.S.C. §1051(a) or (c), it being agreed that for purposes of this Agreement and the Loan Documents, no Lien granted to Administrative Agent on any “intent-to-use” United States trademark applications is intended to be a present assignment thereof; provided that upon submission and acceptance of an amendment to allege use pursuant to 15 U.S.C. Section 1060(a) (or any successor provision), such intent- to-use trademark application shall be considered Collateral; provided, in each case, that Excluded Property shall not include any Loan Parties’ rights to proceeds (or right to receive proceeds) of any of the assets described in the foregoing clauses (a) – (i) or any goodwill of any Loan Party’s business associated therewith or attributable thereto.
“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Loan Party of, or the grant by such Loan Party of a Lien to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act (or the application or official interpretation thereof) by virtue of such Loan Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 10.11 and any other “keepwell,” support or other agreement for the benefit of such Loan Party and any and all guarantees of such Loan Party’s Swap Obligations by other Loan Parties) at the time the Guaranty of such Loan Party, or grant by such Loan Party of a Lien, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a Master Agreement governing more than one Swap Contract, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Contracts for which such Guaranty or Lien is or becomes excluded in accordance with the first sentence of this definition.
“Excluded Taxes” means any of the following Taxes imposed on or with respect to any Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case,
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(i) imposed as a result of such Recipient being organized under the laws of, or having its principal office
19

or, in the case of any Lender, its Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which
(i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 11.13) or (ii) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 3.01(a)(ii), Section 3.01(a)(iii) or Section 3.01(c), amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its Lending Office,
(c) Taxes attributable to such Recipient’s failure to comply with Section 3.01(e) and (d) any U.S. federal withholding Taxes imposed pursuant to FATCA.
“Existing Letter of Credit Obligations” means the irrevocable standby letters of credit described on Schedule 7.02.
“Facility Termination Date” means the date on which all Obligations (other than contingent indemnification obligations) have been paid in full.
“FASB ASC” means the Accounting Standards Codification of the Financial Accounting Standards Board.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
“Federal Funds Rate” means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Banc of California on such day on such transactions as determined by the Administrative Agent.
“Fee Letter” means the letter agreement, dated as of the Closing Date, between the Borrower and the Administrative Agent.
“Financed Capital Expenditures” all Capital Expenditures not financed using cash from operations, including all Capital Expenditures (a) financed with the proceeds of long term debt (other than the Term Loans); (b) made (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored, (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced, (iii) with the proceeds of Asset Dispositions that are not applied to prepay the Term Loans pursuant to Section 2.7, or (iv) from the proceeds of an Equity Issuance; (c) representing the purchase price of equipment that is purchased simultaneously with the trade in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, or (d) representing any capitalized interest expense reflected as additions to property, plant, or equipment in the consolidated balance sheet of Borrower.
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“Financial Covenant Cure Amount” has the meaning given to such term in Section 7.11(d)(i).
“Financial Covenant Default” has the meaning given to such term in Section 7.11(d).
“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes. For purposes of this definition, the United States, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.
“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.
“FRB” means the Board of Governors of the Federal Reserve System of the United States.
“Fund” means any Person (other than a natural Person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities.
“Funding Indemnity Letter” means a funding indemnity letter, substantially in the form of Exhibit K.
“Fusion Litigation Trust” means the Fusion Litigation Trust established in the Chapter 11 bankruptcy case of Fusion Connect, Inc. and its affiliates in the United States Bankruptcy Court for the Southern District of New York.
“Fusion Litigation Trust Claims” means all claims asserted by the Fusion Litigation Trust against a Loan Party or any Subsidiary thereof.
“Fusion Litigation Trust Claims Loss” means all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorney’s fees, directly or indirectly incurred by a Loan Party or Subsidiary thereof arising out of a Fusion Litigation Trust Claim.
“GAAP” means generally accepted accounting principles in the United States set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession) including, without limitation, the FASB Accounting Standards Codification, that are applicable to the circumstances as of the date of determination, consistently applied and subject to Section 1.03.
“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, and any supra-national bodies such as the European Union or the European Central Bank).
“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness of the kind described in clauses (a) through (h) of the definition thereof or other obligation payable or performable by another
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Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part), or (b) any Lien on any assets of such Person securing any Indebtedness of the kind described in clauses (a) through (h) of the definition thereof or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed or expressly undertaken by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to obtain any such Lien). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.
“Guaranteed Obligations” has the meaning set forth in Section 10.01.
“Guarantors” means, collectively, (a) Ultimate Parent, (b) Parent, (c) the Domestic Subsidiaries of Borrower as are or may from time to time become parties to this Agreement pursuant to Section 6.13,
(d) with respect to Additional Secured Obligations owing by any Loan Party or any of its Subsidiaries and any Swap Obligation of a Specified Loan Party (determined before giving effect to Section 10.01 and Section 10.11) under the Guaranty, the Borrower.
“Guaranty” means, collectively, (a) the Guarantee made by the Secured Guarantors under Article X in favor of the Secured Parties, (b) the Ultimate Parent Guaranty, (c) the Parent Guaranty and (d) each other guaranty delivered pursuant to Section 6.13.
“Hazardous Materials” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law.
“Hedge Bank” means any Person in its capacity as a party to a Swap Contract that, at the time it enters into a Swap Contract not prohibited under Article VI or VII, is a Lender or an Affiliate of a Lender, in its capacity as a party to such Swap Contract (even if such Person ceases to be a Lender or such Person’s Affiliate ceased to be a Lender); provided, in the case of a Secured Hedge Agreement with a Person who is no longer a Lender (or Affiliate of a Lender), such Person shall be considered a Hedge Bank only through the stated termination date (without extension or renewal) of such Secured Hedge Agreement and provided further that for any of the foregoing to be included as a “Secured Hedge Agreement” on any date of determination by the Administrative Agent, the applicable Hedge Bank (other than the Administrative Agent or an Affiliate of the Administrative Agent) must have delivered a Secured Party Designation Notice to the Administrative Agent prior to such date of determination.
“Incremental Commitment Effective Date” has the meaning specified in Section 2.16(c).
“Incremental Term Loan Commitment” has the meaning specified in Section 2.16(a).
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“Incremental Term Loan Facility” means any facility consisting of Incremental Term Loan Commitments and all Borrowings thereunder.
“Incremental Term Loan Lender” has the meaning specified in Section 2.16(b).
“Incremental Term Loans” means the Term Loans made under any Incremental Term Loan Facility.
“Indebtedness” means, as to any Person at a particular time, without duplication, all of the following, if and to the extent (other than with respect to clause (h)) the same would be included as indebtedness or liabilities in accordance with GAAP:
(a)all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments;
(b)the maximum amount of all direct or contingent obligations of such Person arising under letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties and similar instruments;
(c)net obligations of such Person under any Swap Contract;
(d)all obligations of such Person to pay the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business and not past due for more than sixty (60) days after the date on which such trade account was created);
(e)indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse;
(f)all Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease Obligations of such Person and all Synthetic Debt of such Person;
(g)all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interest in such Person or any other Person or any warrant, right or option to acquire such Equity Interest, valued, in the case of a redeemable preferred interest, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends; and
(h)all Guarantees of such Person in respect of any of the foregoing;
provided, however, that notwithstanding the foregoing, the term “Indebtedness” shall exclude and shall be calculated without giving effect to (A) deferred or prepaid revenue, (B) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty, indemnity or other unperformed obligations of the respective seller, (C) deferred compensation under customary employment or consulting agreements, (D) any obligations attributable to the exercise of appraisal rights and the settlement of any claims or actions (whether actual, contingent or potential) with respect thereto, (E) any non-compete or consulting obligations incurred in connection with a transaction not prohibited by the Loan Documents, (F) any reimbursement obligations under pre-paid contracts entered into with clients in the ordinary course of business, (G) trade accounts payable in the ordinary course of business and accrued
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expenses and other accrued obligations incurred in the ordinary course of business, (H) any obligations in respect of any Equity Interests that do not constitute Disqualified Capital Stock, (I) liabilities under vendor agreements to the extent such liabilities may be satisfied exclusively through non-cash means such as purchase volume earning credit, (J) amounts reserved for deferred taxes, (K) obligations incurred under ERISA, (L) any portion of any contingent deferred consideration until such obligation becomes a non- contingent liability on the balance sheet of such Person in accordance with GAAP and/or such consideration becomes due and payable and has not yet been paid, (M) deferred fees that are not permitted to be paid by operation of any provision of the Loan Documents, and (N) intercompany Indebtedness between or among the Loan Parties and the Subsidiaries. For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership or any joint venture (other than any joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Person’s liability for such Indebtedness is otherwise limited or made non-recourse to such Person and only to the extent such Indebtedness would otherwise be included in the calculation of Consolidated Funded Indebtedness. The amount of Indebtedness of any Person for purposes of clause (e) above shall (unless such Indebtedness has been assumed by such Person) be deemed to be equal to the lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair market value of the property or asset encumbered thereby as determined by such Person in good faith. The amount of Guarantees by such Person of Indebtedness of others for clause
(h) above shall be deemed to be an amount equal to the lesser of (A) the principal amount of the obligations guaranteed and outstanding and (B) the maximum amount for which the guaranteeing Person may be liable in respect of such obligations under applicable Law. The amount of any net obligation under any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of such date.
“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and
(b) to the extent not otherwise described in clause (a), Other Taxes. “Indemnitees” has the meaning specified in Section 11.04(b).
“Index”: initially, the Term SOFR Reference Rate; provided, however, that the Index is subject to change pursuant to Section 3.03 of this Agreement.
“Information” has the meaning specified in Section 11.07.
“Intellectual Property” has the meaning set forth in the Security Agreement.
“Intercompany Debt” has the meaning specified in Section 7.02.
“Interest Payment Date” means, as to the Term Loans (or any applicable portion thereof), the last Business Day of each calendar month and the Term Loan Maturity Date.
“Investment” means, as to any Person, any direct or indirect acquisition or investment by such Person, whether by means of (a) the purchase or other acquisition of Equity Interests of another Person,
(b) a loan, advance or capital contribution to, Guarantee or assumption of debt of, or purchase or other acquisition of any other debt or interest in, another Person (including any partnership or joint venture interest in such other Person and any arrangement pursuant to which the investor guaranties Indebtedness of such other Person), or (c) the purchase or other acquisition (in one transaction or a series of transactions) of assets of another Person which constitute all or substantially all of the assets of such Person or of a division, line of business or other business unit of such Person. For purposes of covenant
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compliance, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment.
“Involuntary Disposition” means any loss of, damage to or destruction of, or any condemnation or other taking for public use of, any property of any Loan Party or any Subsidiary.
“IRS” means the United States Internal Revenue Service.
“Joinder Agreement” means a joinder agreement substantially in the form of Exhibit D executed and delivered in accordance with the provisions of Sections 6.13 and 6.14.
“Landlord Waiver” means a landlord or warehouse waiver substantially in the form of Exhibit L.
“Laws” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.
“Lender” means each of the Persons identified as a “Lender” on the signature pages hereto, each other Person that becomes a “Lender” in accordance with this Agreement and, their successors and assigns.
“Lender Joinder Agreement” means a joinder or similar agreement entered into by any Person (including any Lender) under Section 2.16 pursuant to which such Person shall provide an Incremental Term Loan Commitment hereunder and (if such Person is not then a Lender) shall become a Lender party hereto.
“Lending Office” means, as to any Lender, the office or offices of such Lender described as such in such Lender’s Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower and the Administrative Agent.
“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge, or preference, priority or other security interest or preferential arrangement in the nature of a security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property and any financing lease having substantially the same economic effect as any of the foregoing).
“Litigation or Dispute Settlement Charges or Gains” means charges or gains that include estimated losses for which the Loan Parties have established a reserve in accordance with GAAP, as well as actual settlements, judgments, fines, penalties, assessments or other resolutions against, or in favor of, the Loan Parties related to litigation, arbitration, investigations, disputes or similar matters, and costs fees and expenses incurred in connection with disputes. Insurance recoveries received by the Loan Parties related to such matters are also included in these adjustments.
“Loans” means the Term Loans (each, a “Loan”).
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“Loan Documents” means, collectively, (a) this Agreement, (b) the Notes, (c) each Guaranty,
(d) the Collateral Documents, (e) the Fee Letter, (f) the Parent Subordination Agreement, (g) each Joinder Agreement, and (h) the Funding Indemnity Letter.
“Loan Notice” means a notice of a Borrowing, which shall be substantially in the form of Exhibit E.
“Loan Parties” means, collectively, Borrower and each Secured Guarantor.
“Master Agreement” has the meaning set forth in the definition of “Swap Contract.”
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, liabilities (actual or contingent), or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole; (b) a material impairment of the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or of the ability of any Loan Party to perform any of its material obligations under any Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party.
“Material Contract” means, with respect to any Person, each contract or agreement (a) to which such Person is a party involving aggregate consideration payable to or by such Person of $1,500,000 or more per fiscal year or (b) otherwise material to the business, condition (financial or otherwise), operations, performance or properties of such Person or (c) any other contract, agreement, permit or license, written or oral, of Borrower or any Subsidiary of Borrower as to which the breach, nonperformance, cancellation or failure to renew by any party thereto, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
“Measurement Period” means, in respect of a financial covenant test date, the period of the four
(4) consecutive fiscal quarters of the Borrower ending on such date. “Merger Sub” means Lingo NewCo1 Inc., a Michigan corporation.
“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.
“Multiemployer Plan” means a Plan which is a multiemployer plan as described in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes or is obligated to make contributions, or during the preceding five (5) plan years, has made or been obligated to make contributions.
“Multiple Employer Plan” means a Plan which has two or more contributing sponsors (including Borrower or any ERISA Affiliate) at least two of whom are not under common control, as such a plan is described in Section 4064 of ERISA.
“Net Proceeds” means: (A) with respect to any Asset Disposition, the net amount equal to the aggregate amount received in cash (including any cash received by way of deferred payment pursuant to a note receivable, other non-cash consideration or otherwise, but only as and when such cash is so received) in connection with such Asset Disposition minus the sum of (a) the reasonable attorneys’, accountants’, investment banking, financial advisory and other customary fees, commissions and expenses reasonably incurred by the applicable Loan Party in connection with such Asset Disposition (excluding any such fees, commissions and expenses payable to an Affiliate of a Loan Party), (b) Indebtedness, other than the
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Loans, required to be paid as a result of such Asset Disposition and (c) federal, state and local taxes paid or reasonably estimated to be payable as a result of such Asset Disposition; and (B) with respect to any Equity Issuance or Debt Offering, the net amount equal to the aggregate amount received in cash (including any cash received by way of deferred payment pursuant to a note receivable, other non-cash consideration or otherwise, but only as and when such cash is so received) in connection with such Equity Issuance or Debt Offering minus the reasonable attorneys’, accountants’, investment banking, financial advisory and other customary fees, commissions and expenses reasonably incurred by the applicable Loan Party in connection with such Equity Issuance or Debt Offering (excluding such fees, commissions and expenses payable to an Affiliate of such Loan Party).
“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) requires the approval of all Lenders or all affected Lenders in accordance with the terms of Section 11.01 and (b) has been approved by the Required Lenders.
“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such
time.
“Note” means a Term Note.
“Notice of Loan Prepayment” means a certificate substantially the form of Exhibit O or any other form approved by the Administrative Agent.
“Obligations” means (a) all advances to, and debts, liabilities, obligations, covenants and duties of, any Loan Party arising under any Loan Document or otherwise with respect to the Term Loans and
(b) all reasonable and documented out-of-pocket costs and expenses incurred in connection with enforcement and collection of the foregoing, including the reasonable and documented fees, charges and disbursements of external counsel, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof pursuant to any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that Obligations of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party.
“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.
“Officer’s Certificate” means a certificate substantially the form of Exhibit I or any other form approved by the Administrative Agent.
“Organization Documents” means, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non-U.S. jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement or limited liability company agreement (or equivalent or comparable documents with respect to any non-U.S. jurisdiction); (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization (or equivalent or comparable documents with respect to any non- U.S. jurisdiction) and (d) with respect to all entities, any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental
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Authority in the jurisdiction of its formation or organization (or equivalent or comparable documents with respect to any non-U.S. jurisdiction).
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
“Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.06).
“Parent” means B. Riley Principal Investments, LLC, a Delaware limited liability company.
“Parent Guaranty” means that certain Guaranty and Pledge Agreement dated as of the date hereof executed by Parent in favor of the Administrative Agent, for the benefit of the Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent.
“Parent Subordinated Credit Agreement” means that certain Second Amended and Restated Credit and Guaranty Agreement dated as of the Closing Date among the Loan Parties, B. Riley Commercial Capital LLC, as administrative agent, and the lenders party thereto, as amended, amended and restated or otherwise modified from time to time in accordance with the Parent Subordination Agreement.
“Parent Subordination Agreement” means the Subordination Agreement, dated as of the date hereof, among the Loan Parties, B. Riley Commercial Capital LLC, B. Riley Securities, Inc., a Delaware corporation, B. Riley Principal Investments, LLC, a Delaware limited liability company, and Administrative Agent.
“Participant” has the meaning specified in Section 11.06(d).
“Participant Register” has the meaning specified in Section 11.06(d).
“PBGC” means the Pension Benefit Guaranty Corporation.
“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Pension Plans and set forth in Sections 412, 430, 431, 432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.
“Pension Plan” means any Plan (other than a Multiple Employer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code and in respect of which Borrower and any ERISA Affiliate is an “employer” as defined in Section 3(5) of ERISA.
“Permitted Liens” has the meaning set forth in Section 7.01.
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“Permitted Acquisition” means an Acquisition by a Loan Party (the Person or division, line of business or other business unit of the Person to be acquired in such Acquisition shall be referred to herein as the “Target”), in each case that is a type of business (or assets used in a type of business) permitted to be engaged in by the Borrower and its Subsidiaries pursuant to the terms of this Agreement, in each case so long as:
(a)no Default shall then exist or would exist after giving effect thereto;
(b)the Borrower shall demonstrate to the reasonable satisfaction of the Administrative Agent that, after giving effect to the Acquisition on a pro forma basis, (i) the Borrowers are in Pro Forma Compliance and with the financial covenants set forth in Sections 7.11(a) and 7.11(b), and (ii) Consolidated Adjusted EBITDA of the Loan Parties for the four (4) fiscal quarter period prior to the acquisition date (determined on a pro forma basis, and without giving effect to clauses (v) and (vii) of the definition of Consolidated Adjusted EBITDA) is greater than or equal to $40,000,000;
(c)the Administrative Agent, on behalf of the Secured Parties, shall have received (or shall receive in connection with the closing of such Acquisition) a first priority perfected security interest in all property (including, without limitation, Equity Interests) acquired with respect to the target in accordance with the terms of Section 6.14 and the Target, if a Person, shall have executed a Joinder Agreement in accordance with the terms of Section 6.13;
(d)if the Cost of Acquisition is greater than $5,000,000, the Administrative Agent and the Lenders shall have received not less than thirty (30) days prior to the consummation of any such Acquisition: (i) a description of the material terms of such Acquisition; (ii) audited financial statements (or, if unavailable, management-prepared financial statements) of the Target for its two most recent fiscal years and for any fiscal quarters ended within the fiscal year to date;
(iii) consolidated projected income statements of the Borrowers and their Subsidiaries (giving effect to such Acquisition); and (iv) not less than one (1) Business Day prior to the consummation thereof, a certificate, executed by a Responsible Officer of the Borrowers certifying that such Permitted Acquisition complies with the requirements of this Agreement;
(e)the acquired business has its primary operations in the United States and the Target shall be organized under the laws of a political subdivision of the United States;
(f)if the Cost of Acquisition is greater than $1,000,000, the Target shall have Consolidated Adjusted EBITDA for the four (4) fiscal quarter period prior to the acquisition date (determined on a pro forma basis, and with adjustments thereto as to cost synergies, expense reductions and similar benefits) in an amount greater than $0;
(g)such Acquisition shall not be a “hostile” Acquisition and shall have been approved by the board of directors (or equivalent) and/or shareholders (or equivalent) of the applicable Loan Party and the Target;
(h)after giving effect to such Acquisition and any Borrowings made in connection therewith, the Borrowers shall have Qualified Cash of at least $5,000,000;
(i)the Cost of Acquisition paid by the Loan Parties and their Subsidiaries for all Acquisitions made during the term of this Agreement shall not exceed $20,000,000 in the aggregate;
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(j)If the Acquisition is a purchase of the Equity Interests of a Target, the Target and its management team shall have passed the Administrative Agent’s know your customer process;
(k)the Acquisition is consummated after Administrative Agent’s receipt of the annual audited financial statements required under Section 6.01(b) for the fiscal year ending December 31, 2023; and
(l)the Acquisition is not consummated during any fiscal quarter in which an Equity Cure Right is exercised.
“Permitted Distributions” means, the aggregate cash distributions or dividends by the Borrower to Parent and/or Ultimate Parent (a) constituting Permitted Tax Distributions after the Closing Date, and (b) that are not Permitted Tax Distributions and are otherwise made from time to time after Administrative Agent’s receipt of the annual audited financial statements required under Section 6.01(b) for the fiscal year ending December 31, 2023, in each case, subject to all of the following additional requirements:
(A)solely with respect to cash distributions or dividends described in clause (b) of this definition of “Permitted Distributions,” in no event shall the aggregate amount of such distributions or dividends made exceed $10,000,000 in any fiscal year;
(B)the Borrower shall have delivered to Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, (x) the audited financial statements required by Section 6.01(b) for Borrower’s immediately preceding fiscal year and (y) evidence that immediately before and after giving effect to such dividends or distributions (I) no Event of Default shall have occurred and be continuing at the time thereof or result therefrom, (II) the Loan Parties shall be in Pro Forma Compliance with each of the financial covenants set forth in Section 7.11, and (III) no Material Adverse Effect shall have occurred and be continuing at the time thereof or result therefrom; and
(C)the Loan Parties shall have aggregate balance sheet cash of at least $5,000,000. “Permitted Tax Distribution” means for any taxable year (or portion thereof), the
payment of dividends or other distributions by the Borrower to enable the Parent or the Ultimate Parent to pay (1) the Tax liability for each relevant jurisdiction in respect of consolidated, combined, unitary, or affiliated returns filed by or on behalf of the Parent or the Ultimate Parent, provided that such proceeds are limited to the portion of such tax liability attributable to the operations and activities of the Borrower and/or its applicable Subsidiaries or (2) franchise taxes and other fees, Taxes, and expenses required to maintain the corporate existence of the Parent or the Ultimate Parent.
“Permitted Transfers” means (a) Dispositions of inventory in the ordinary course of business;
(b) Dispositions of property to Borrower or any Subsidiary of Borrower; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (c) Dispositions of accounts receivable in connection with the collection or compromise thereof; (d) licenses, sublicenses, leases or subleases granted to others not interfering in any material respect with the business of Borrower or any Subsidiary of Borrower; (e) the sale or disposition of Cash Equivalents for fair market value;
(f) dispositions of worn-out, obsolete or damaged property no longer used or useful in the business;
(g) Restricted Payments permitted by this Agreement; and (h) other Dispositions of property of Borrower or any Subsidiary of Borrower of up to $750,000 in the aggregate in any calendar year.
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“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.
“Plan” means any “employee benefit plan” within the meaning of Section 3(3) of ERISA (including a Pension Plan) maintained for employees of Borrower or any ERISA Affiliate or any such Plan to which Borrower or any ERISA Affiliate is required to contribute on behalf of any of its employees.
“Platform” has the meaning specified in Section 6.02.
“Pledged Equity” has the meaning specified in the Security Agreement; provided, however, that Equity Interests constituting Excluded Property shall not constitute Pledged Equity; provided, however, further that with respect to (a) Equity Interests issued by a Foreign Subsidiary, no more than 65% of such Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and (b) Equity Interests issued by a disregarded entity that owns a 65% (or higher) voting interest in a CFC, no more than 65% of such Equity Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956- 2(c)(2)) shall be Pledged Equity.
“Pro Forma Compliance” means, with respect to any transaction, that such transaction does not cause, create or result in a Default after giving Pro Forma Effect, based upon the results of operations for the most recently completed Measurement Period to (a) such transaction and (b) all other transactions which are contemplated or required to be given Pro Forma Effect hereunder that have occurred on or after the first day of the relevant Measurement Period.
“Pro Forma Effect” means, for any Permitted Distribution, Disposition of all or substantially all of a division or a line of business or for any Acquisition, whether actual or proposed, for purposes of determining compliance with the financial covenants set forth in Section 7.11, each such transaction or proposed transaction shall be deemed to have occurred on and as of the first day of the relevant Measurement Period, and the following pro forma adjustments shall be made:
(a)in the case of an actual or proposed Disposition, all income statement items (whether positive or negative) attributable to the line of business or the Person subject to such Disposition shall be excluded from the results of the Borrower and its Subsidiaries for such Measurement Period;
(b)in the case of an actual or proposed Acquisition, income statement items (whether positive or negative) attributable to the property, line of business or the Person subject to such Acquisition shall be included in the results of the Borrower and its Subsidiaries for such Measurement Period;
(c)interest accrued during the relevant Measurement Period on, and the principal of, any Indebtedness repaid or to be repaid or refinanced in such transaction shall be excluded from the results of the Borrower and its Subsidiaries for such Measurement Period; and
(d)any Indebtedness actually or proposed to be incurred or assumed in such transaction shall be deemed to have been incurred as of the first day of the applicable Measurement Period, and interest thereon shall be deemed to have accrued from such day on such Indebtedness at the applicable rates provided therefor (and in the case of interest that does or would accrue at a formula or floating rate, at the rate in effect at the time of determination) and shall be included in the results of the Borrower and its Subsidiaries for such Measurement Period.
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“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Public Lender” has the meaning specified in Section 6.02.
“Qualified Cash” means the amount of unrestricted cash and Cash Equivalents of the Loan Parties held in deposit accounts or securities accounts, as of any date of determination after the date that is after the date referenced in Section 6.14(d), are subject to the perfected first-priority Lien of Administrative Agent.
“Qualified ECP Guarantor” means, at any time, each Loan Party with total assets exceeding
$10,000,000 or that qualifies at such time as an “eligible contract participant” under the Commodity Exchange Act and can cause another Person to qualify as an “eligible contract participant” at such time under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Qualifying Control Agreement” means an agreement among a Loan Party, a depository institution or securities intermediary and the Administrative Agent, which agreement is in form and substance reasonably acceptable to the Administrative Agent and which provides the Administrative Agent with “control” (as such term is used in Article 9 of the UCC) over the deposit account(s) or securities account(s) described therein.
“Recipient” means the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of any Loan Party hereunder.
“Register” has the meaning specified in Section 11.06(c).
“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.
“Relevant Governmental Body”: means the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the Federal Reserve Bank of New York or, in each case, any successor thereto.
“Removal Effective Date” has the meaning specified in Section 9.06(b).
“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other than events for which the thirty (30) day notice period has been waived.
“Required Lenders” means, at any time, Lenders having Commitments representing more than 66-2/3% of the total Commitments of all Lenders. The Commitment of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.
“Resignation Effective Date” has the meaning set forth in Section 9.06(a).
“Responsible Officer” means the chief executive officer, president, chief financial officer, treasurer, assistant treasurer or controller of a Loan Party, solely for purposes of the delivery of incumbency certificates pursuant to Section 4.01, the secretary or any assistant secretary of a Loan Party and, solely for purposes of notices given pursuant to Article II, any other officer of the applicable Loan
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Party so designated by any of the foregoing officers in a notice to the Administrative Agent. Any document delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively presumed to have been authorized by all necessary corporate, partnership and/or other action on the part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted on behalf of such Loan Party. To the extent requested by the Administrative Agent, each Responsible Officer will provide an incumbency certificate, in form and substance satisfactory to the Administrative Agent.
“Restricted Payment” means (a) any dividend or other distribution (including, without limitation, Permitted Tax Distributions), direct or indirect, on account of any shares (or equivalent) of any class of Equity Interests of Borrower or any Subsidiary of Borrower, now or hereafter outstanding, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares (or equivalent) of any class of Equity Interests of Borrower or any Subsidiary of Borrower, now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Equity Interests of any Loan Party or any of its Subsidiaries, now or hereafter outstanding, and (d) any payment of principal or interest or any purchase, redemption, retirement, acquisition or defeasance with respect to any Subordinate Debt.
“S&P” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., and any successor thereto.
“Sale and Leaseback Transaction” means, with respect to any Loan Party or any Subsidiary, any arrangement, directly or indirectly, with any Person whereby such Loan Party or such Subsidiary shall sell or transfer any property used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred.
“Sanction(s)” means any international economic sanction administered or enforced by the United States Government (including, without limitation, OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.
“SEC” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.
“Secured Cash Management Agreement” means any Cash Management Agreement between any Loan Party and any of its Subsidiaries and any Cash Management Bank.
“Secured Guarantors” means each Guarantor other than Parent and Ultimate Parent.
“Secured Hedge Agreement” means any interest rate, currency, foreign exchange, or commodity Swap Contract permitted under Article VI or VII between any Loan Party and any of its Subsidiaries and any Hedge Bank.
“Secured Obligations” means all Obligations and all Additional Secured Obligations.
“Secured Parties” means, collectively, the Administrative Agent, the Lenders, the Hedge Banks, the Cash Management Banks, the Indemnitees and each co-agent or sub-agent appointed by the Administrative Agent from time to time pursuant to Section 9.05.
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“Secured Party Designation Notice” means a notice from any Lender or an Affiliate of a Lender substantially in the form of Exhibit G.
“Securities Act” means the Securities Act of 1933, including all amendments thereto and regulations promulgated thereunder.
“Security Agreement” means the security and pledge agreement, dated as of the Closing Date, executed in favor of the Administrative Agent by the Borrower.
“Senior Committed Debt” means, for Borrower and its Subsidiaries on a Consolidated basis, with respect to any date of determination and without duplication, the sum of (a) aggregate Consolidated Funded Indebtedness on such date, minus (b) the aggregate amount of Subordinate Debt as of such date.
“Senior Committed Debt to Consolidated Adjusted EBITDA Ratio” means the ratio, as determined as of the end of any fiscal quarter, of (a) Senior Committed Debt as of such date, to (b) Consolidated Adjusted EBITDA for the for the most recently completed Measurement Period.
“SOFR”: means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Loans”: Term Loans the rate of interest applicable to which is based upon Term SOFR.
“SOFR Administrator”: means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
“Solvency Certificate” means a solvency certificate in substantially in the form of Exhibit H.
“Solvent” and “Solvency” mean, with respect to any Person on any date of determination, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature, (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations and other commitments as they mature in the ordinary course of business. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.
“Specified Loan Party” means any Loan Party that is not then an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 10.11).
“Spread Adjustment”: 0.11448% per annum.
Notwithstanding the foregoing, if the SOFR Administrator, the Term SOFR Administrator, the Relevant Governmental Body or any other Governmental Authority increases the applicable Spread Adjustment, then, at Administrative Agent’s option, the applicable Spread Adjustment hereunder shall increase by the same amount upon delivery of written notice thereof from Administrative Agent to Borrower.
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“Subordinate Debt” has the meaning given to such term in the Subordination Agreement and also means any other Indebtedness that is subordinated to the Obligations pursuant to a Subordination Agreement in form and substance satisfactory to Administrative Agent.
“Subordination Agreements” means, collectively, (i) the Parent Subordination Agreement, and
(ii) any other subordination agreement in form and substance acceptable to Administrative Agent, in its sole discretion (each a “Subordination Agreement”).
“Subsidiary” of a Person means a corporation, partnership, joint venture, limited liability company or other business entity of which a majority of the shares of Voting Stock is at the time beneficially owned, or the management of which is otherwise controlled, directly, or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of the Loan Parties.
“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Obligations” means with respect to any Loan Party any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts,
(a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts (which may include a Lender or any Affiliate of a Lender).
“Synthetic Debt” means, with respect to any Person as of any date of determination thereof, all obligations of such Person in respect of transactions entered into by such Person that are intended to function primarily as a borrowing of funds but are not otherwise included in the definition of “Indebtedness” or as a liability on the Consolidated balance sheet of such Person and its Subsidiaries in accordance with GAAP.
“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or possession of property (including Sale and Leaseback Transactions), in each case, creating obligations that do not
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appear on the balance sheet of such Person but which, upon the application of any Debtor Relief Laws to such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment).
“Target” has the meaning set forth in the definition of “Permitted Acquisition.”
“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.
“Term Loan” and “Term Loans” have the respective meanings specified in Section 2.01(a) hereof and also means a loan under an Incremental Term Loan Facility made pursuant to Section 2.16.
“Term Loan Commitment” the commitment of a Lender to make a Term Loan hereunder as set forth on Schedule 1.01(b), including but not limited to any Incremental Term Loan Commitment, as the same may be adjusted pursuant to the provisions hereof.
“Term Loan Commitment Percentage” means, with respect to each Lender, the percentage equivalent of the ratio which such Lender’s Term Loan Commitment bears to the total Term Loan Commitments.
“Term Loan Maturity Date” means August 16, 2027, or such earlier date as the Term Loans shall become due and payable in full in accordance with the terms hereof (whether by acceleration or otherwise).
“Term Note” has the meaning specified in Section 2.01(c) hereof.
“Term Loan Reduction Installment” has the meaning specified in Section 2.01(d) hereof.
“Term SOFR”: means the Term SOFR Reference Rate on the day (such day, the “Periodic Term SOFR Determination Day”) that is two (2) Business Days prior to the first day of such calendar month, as such rate is published by the Term SOFR Administrator; provided, however, that if as of 5:00 p.m. (New York City time) on any Periodic Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR Administrator and the Index has not been replaced under Section 3.03 of this Agreement, then Term SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term SOFR Administrator so long as such first preceding Business Day is not more than three (3) Days prior to such Periodic Term SOFR Determination Day; provided, further, that if Term SOFR determined as provided above shall ever be less than zero, then Term SOFR shall be deemed to be zero.

“Term SOFR Administrator”: means the CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR selected by the Administrative Agent in its reasonable discretion).

“Term SOFR Reference Rate”: means the thirty-day average Secured Overnight Financing Rate per annum, as determined by the Term SOFR Administrator.

“Threshold Amount” means $2,000,000.
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“Transaction-Related Costs” means certain expense items resulting from the consummation of the BullsEye Acquisition, Permitted Acquisitions or Acquisitions to which the Required Lenders have consented or any attempted consummation of any other acquisitions which would reasonably be expected to have (if they had been consummated) satisfied the requirements of the defined term “Permitted Acquisition” but for the fact that they are not consummated, including, without limitation, in each case, expenses for advisors and representatives such as investment bankers, consultants, attorneys, and accounting firms. Transaction-related costs may also include, without limitation, transition and integration costs such as earn-out payments, retention bonuses and acquisition-related milestone payments to acquired employees.
“UCC” means the Uniform Commercial Code as in effect in the State of California; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of California, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non- perfection or priority.
“Ultimate Parent” means B. Riley Financial, Inc., a Delaware corporation.
“Ultimate Parent Guaranty” means that certain unsecured Guaranty dated as of the date hereof executed by Ultimate Parent in favor of the Administrative Agent, for the benefit of the Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent.
“United States” and “U.S.” mean the United States of America.
“U.S. Loan Party” means any Loan Party that is organized under the laws of one of the states of the United States and that is not a CFC.
“U.S. Person” means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code.
“U.S. Tax Compliance Certificate” has the meaning specified in Section 3.01(e)(ii)(B)(3).
“Voting Stock” means, with respect to any Person, Equity Interests issued by such Person the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right to so vote has been suspended by the happening of such contingency.
“Withholding Agent” means any Loan Party and the Administrative Agent.
“Working Capital” means, at any date of determination thereof, the excess, if any, of Current Assets over Current Liabilities at such date.
“Write-Down and Conversion Powers” means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
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1.02Other Interpretive Provisions.
With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such other Loan Document:
(a)The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document (including the Loan Documents and any Organization Document) shall be construed as referring to such agreement, instrument or other document as from time to time amended, modified, extended, restated, replaced or supplemented from time to time (subject to any restrictions on such amendments, supplements or modifications set forth herein or in any other Loan Document), (ii) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (iii) the words “hereto,” “herein,” “hereof” and “hereunder,” and words of similar import when used in any Loan Document, shall be construed to refer to such Loan Document in its entirety and not to any particular provision thereof, (iv) all references in a Loan Document to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to, the Loan Document in which such references appear, (v) any reference to any law shall include all statutory and regulatory rules, regulations, orders and provisions consolidating, amending, replacing or interpreting such law and any reference to any law or regulation shall, unless otherwise specified, refer to such law or regulation as amended, modified, extended, restated, replaced or supplemented from time to time, and (vi) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Any and all references to “Borrower” regardless of whether preceded by the term “a,” “any,” “each of,” “all,” “and/or,” or any other similar term shall be deemed to refer, as the context requires, to each and every (and/or any one or all) parties constituting a Borrower, individually and/or in the aggregate.
(b)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including.”
(c)Section headings herein and in the other Loan Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Loan Document.
1.03Accounting Terms.
(a)Generally. All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Audited Financial Statements, except as otherwise specifically prescribed herein. Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the computation of any financial covenant)
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contained herein, (i) Indebtedness of Borrower and its Subsidiaries shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded, and (ii) the determination of whether a lease is to be treated as an operating lease or capital lease shall be made without giving effect to any change in accounting for leases pursuant to GAAP, including, without limitation, resulting from the implementation of proposed changes to (x) Accounting Standards Codification Topic 840, Leases, by the Exposure Draft issued by the FASB and IASB on August 17, 2010 (and related updates and changes to the Exposure Draft), or any successor proposal, or
(y) Accounting Standards Codification Topic 842, Leases, by the Exposure Draft issued by the FASB and IASB on May 16, 2013 (and related updates and changes to the Exposure Draft).
Without limiting the foregoing, the parties hereto intend that all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made, without giving effect to any election under FASB ASC 159 (or any other Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Loan Party or any Subsidiary of any Loan Party at “fair value,” as defined therein.
(b)Changes in GAAP. If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative Agent and the Lenders financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or requirement made before and after giving effect to such change in GAAP. Notwithstanding any change in GAAP after the Closing Date that would require lease obligations that would be treated as operating leases as of the Closing Date to the classified and accounted for as capital leases or otherwise reflected on the Loan Parties’ consolidated balance sheet, for the purposes of determining compliance with any covenant contained herein, such obligations shall be treated in the same manner as operating leases are treated as of the Closing Date. Notwithstanding anything to the contrary, (x) unless specifically stated otherwise herein or in any other Loan Document, any dollar, number, percentage or other amount available under any carve-out, basket, exclusion or exception to any affirmative, negative or other covenant in this Agreement or the other Loan Documents may be accumulated, added, combined, aggregated or used together by any Loan Party and its Subsidiaries without limitation for any purpose not prohibited hereby, and (y) unless specifically stated otherwise herein or in any other Loan Document, any action or event permitted by this Agreement or the other Loan Documents need not be permitted solely by reference to one provision permitting such action or event but may be permitted in part by one such provision and in part by one or more other provisions of this Agreement and the other Loan Documents.
(c)Consolidation of Variable Interest Entities. All references herein to Consolidated financial statements of Borrower and its Subsidiaries or to the determination of any amount for Borrower and its Subsidiaries on a Consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that Borrower is required to consolidate pursuant to FASB ASC 810 as if such variable interest entity were a Subsidiary as defined herein.
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(d)Pro Forma Treatment. Each Disposition of all or substantially all of a line of business, and each Acquisition, by Borrower or any of its Subsidiaries that is consummated during any Measurement Period shall, for the purpose of determining compliance with the financial covenants set forth in Section 7.11 and for the purpose of determining the Applicable Margin, be given Pro Forma Effect as of the first day of such Measurement Period.
1.04Rounding.
Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
1.05Times of Day.
Unless otherwise specified, all references herein to times of day shall be references to Los Angeles time (daylight or standard, as applicable).
1.06UCC Terms.
Terms defined in the UCC in effect on the Closing Date and not otherwise defined herein shall, unless the context otherwise indicates, have the respective meanings provided by those definitions. Subject to the foregoing, the term “UCC” refers, as of any date of determination, to the UCC then in effect.
1.07Rates.
The Administrative Agent does not warrant, nor accept responsibility, nor shall the Administrative Agent have any liability with respect to the administration, submission or any other matter related to the rates in the definition of “Term SOFR” or with respect to any comparable or successor rate thereto.
ARTICLE II COMMITMENTS AND CREDIT EXTENSIONS
1.01Term Loans; Term Loan Commitments.
(a)Subject to the terms and conditions hereof, each Lender severally agrees to make a term loan (each, a ‘Term Loan’ and collectively, the ‘Term Loans’) to the Borrower on the Closing Date in an aggregate principal amount equal to the amount of the Term Loan Commitment of such Lender. Subject to the terms and conditions set forth herein and in the applicable Lender Joinder Agreement with respect to the applicable Incremental Term Loan Facility, each Incremental Term Loan Lender under the applicable Incremental Term Loan Facility severally agrees to make a Term Loan to the Borrower on such applicable Incremental Commitment Effective Date in an aggregate principal amount equal to such Lender’s Incremental Term Loan Commitment under such Incremental Term Loan Facility. After the funding of its respective Term Loans in an amount equal to its respective Term Loan Commitment or Incremental Term Loan Commitment on the Closing Date or Incremental Commitment Effective date, as applicable, each such Lender’s respective Term Loan Commitments shall expire.
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(b)Subject to Sections 3.02 and 3.03, all Term Loans shall be SOFR Loans.
(c)Each Lender shall maintain in its internal records an account or accounts evidencing the Indebtedness hereunder of the Borrower to such Lender, including the amounts of the Term Loans made by such Lender and each repayment and prepayment in respect thereof. Any such recordation shall be conclusive and binding on the Borrower, absent manifest error; provided, that the failure to make any such recordation, or any error in such recordation, shall not affect any Lender’s Term Loan Commitment or the Borrower’s Obligations in respect of any Term Loans; and provided further, in the event of any inconsistency between the Register and any Lender’s records, the recordations in the Register shall govern. If so requested by any Lender by written notice to the Borrower (with a copy to the Administrative Agent), the Borrower shall execute and deliver to such Lender a Term Note substantially in the form of Exhibit F (a ‘Term Note’) to evidence such Lender’s Term Loans.
(d)On each date set forth below, the Borrower shall repay the principal of the Term Loans in an aggregate amount equal to the corresponding amount set forth below (each such amount, a ‘Term Loan Reduction Installment’), as each such Term Loan Reduction Installment shall be ratably increased pursuant to a Lender Joinder Agreement in connection with any outstanding Incremental Term Loans:

Payment Date
Term Loan Reduction Installment Amount
September 30, 2022
$0.00
December 31, 2022
$0.00
March 31, 2023
$1,406,250
June 30, 2023
$1,406,250
September 30, 2023
$1,406,250
December 31, 2023
$1,406,250
March 31, 2024
$1,687,500
June 30, 2024
$1,687,500
September 30, 2024
$1,687,500
December 31, 2024
$1,687,500
March 31, 2025
$2,250,000
June 30, 2025
$2,250,000
September 30, 2025
$2,250,000
December 31, 2025
$2,250,000
March 31, 2026
$2,250,000
June 30, 2026
$2,250,000
September 30, 2026
$2,250,000
December 31, 2026
$2,250,000
March 31, 2027
$2,250,000
June 30, 2027
$2,250,000

The final Term Loan Reduction Installment shall be due on the Term Loan Maturity Date and shall be in an amount equal to all principal and interest outstanding with respect to the Term Loans (including but not limited to any Incremental Term Loans). The aggregate amount payable to any Lender on any date set forth in this Section 2.01(d) shall be determined in accordance with the provisions of Section 2.14.
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(e)The Borrower shall give the Administrative Agent irrevocable written notice, substantially in the form of a Loan Notice (which notice must be received by the Administrative
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Agent prior to 9:00 a.m., Los Angeles time, on the Closing Date) requesting that the Lenders make the Term Loans in accordance with their respective Term Loan Commitments on the Closing Date. Upon receipt of such notice, the Administrative Agent shall promptly notify each Lender thereof. Not later than 11:00 a.m., Los Angeles time, on the Closing Date, each Lender shall make available to the Administrative Agent the amount of such Lender’s Term Loan Commitment in immediately available funds by wiring such amount to such account as the Administrative Agent shall specify. On the Closing Date, the Administrative Agent may, in the absence of notification from any Lender that such Lender will not make its pro rata share available to the Administrative Agent on such date, credit the account of the Borrower on the books of the Administrative Agent (or credit such other account as the Borrower shall instruct the Administrative Agent in writing) in an amount equal to the aggregate Term Loan Commitments.
(f)Neither the Administrative Agent nor any Lender shall be responsible for the obligations or Term Loan Commitment of any other Lender hereunder, nor will the failure of any Lender to comply with the terms of this Agreement relieve any other Lender or the Borrower of their obligations under this Agreement.
1.02 [Reserved].
1.03[Reserved].
1.04 [Reserved].
1.05[Reserved].
1.06Optional Prepayments.
The Borrower may, upon notice to the Administrative Agent pursuant to delivery to the Administrative Agent of a Notice of Loan Prepayment, at any time or from time to time voluntarily prepay the Term Loans in whole or in part without premium or penalty, subject to Section 2.11(c) and Section 3.05; provided that (A) such notice must be received by the Administrative Agent not later than 11:00 a.m. three (3) Business Days prior to any date of prepayment of the Term Loans (or, in each case, such shorter period acceptable to the Administrative Agent), which notice may state that such notice is conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or other transactions in which, in which case, such notice of prepayment may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied and (B) each prepayment shall be in a principal amount of $500,000 or a whole multiple of
$250,000 in excess thereof. Each such notice shall specify the date and amount of such prepayment. The Administrative Agent will promptly notify each Lender of its receipt of each such notice, and of the amount of such Lender’s ratable portion of such prepayment). If such notice is given by the Borrower and not revoked in accordance with the terms of this Section 2.06, the Borrower shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein. Any prepayment of principal shall be applied as directed by the Borrower and shall be accompanied by all accrued interest on the amount prepaid, together with any additional amounts required pursuant to Section 3.05.
1.07Mandatory Prepayments.
(a)Within five (5) Business Days after receipt by any Loan Party of the Net Proceeds of an Asset Disposition in an aggregate amount in excess of $2,500,000 the Borrower
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shall prepay the Term Loans in an amount equal to,100% of such Net Proceeds from all such Asset Dispositions; provided that, so long as no Event of Default has occurred and is continuing, no such prepayment shall be required with respect to an Asset Disposition to the extent that, within one (1) year following receipt of such Net Proceeds, such Net Proceeds are used to acquire other assets or property necessary or useful in the business of the Loan Parties; provided that the Administrative Agent shall have a first-priority Lien thereon (subject only to the Permitted Liens), provided further that the Borrower shall notify the Administrative Agent of the applicable Loan Party’s intent to reinvest, if applicable, commitment to reinvest, and of the completion of such reinvestment at the time such proceeds are received and when such reinvestment occurs, respectively. On or prior to the date such prepayment is to be made, the Borrower agrees to provide the Administrative Agent calculations used by the Borrower in determining the amount of any such prepayment under this Section 2.07(a).
(b)Within five (5) Business Days of receipt by any Loan Party of any Net Proceeds with respect to a Debt Offering, the Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Proceeds of such Debt Offering. On or prior to the date such prepayment is to be made, the Borrower agrees to provide the Administrative Agent calculations used by the Borrower in determining the amount of any such prepayment under this Section 2.07(b). Nothing in this Section 2.07(b) shall be deemed to constitute a waiver to or modification of Section 7.02.
(c)Within five (5) Business Days of receipt by any Loan Party of Net Proceeds with respect to an Equity Issuance to a Person other than Parent or Lingo Communications LLC (so long as no Change of Control occurs as a result of such Equity Issuance), the Borrower shall prepay the Term Loans in an amount equal to 100% of the Net Proceeds of such Equity Issuance. On or prior to the date such prepayment is to be made, the Borrower agrees to provide the Administrative Agent calculations used by the Borrower in determining the amount of any such prepayment under this Section 2.07(c). Nothing in this Section 2.07(c) shall be deemed to constitute a waiver or modification of Section 8.01(k).
(d)If any Loan Party receives Net Proceeds from casualty or property insurance or condemnation at any time after the Closing Date in excess of $2,500,000 in the aggregate in any fiscal year, with respect to any damage, destruction or other loss of or to property, the Borrower shall prepay the Term Loans, in an amount equal to the amount thereof not applied to the repair, restoration or replacement of the applicable assets within one (1) year after receipt by such Loan Party of such proceeds, or immediately upon the request of the Administrative Agent upon the occurrence and during the continuance of an Event of Default (other than such proceeds that have been paid or committed to be paid to third parties). The Borrower shall give the Administrative Agent prompt written notice of all casualty or property insurance and condemnation proceeds received by any Loan Party on or after the Closing Date.
(e)Upon the making of an Equity Cure Investment pursuant to Section 7.11(d), the Borrower shall prepay the Term Loans in an amount equal to 100% of such Equity Cure Investment.
(f)Reserved.
(g)Each prepayment of the Term Loans pursuant to Sections 2.07(a) through (d) shall be applied to the outstanding principal balance of Term Loans. Any prepayment proceeds remaining after application of such prepayment in accordance with the terms hereof shall, so long as no Default has occurred and is continuing, be returned to the Borrower. Each prepayment
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under this Section 2.07 shall be accompanied by payment in full of all accrued interest to and including the date of such prepayment. Each prepayment of Term Loans under this Section 2.07 (other than prepayment of Term Loans under Section 2.07(e)) shall be applied to the remaining Term Loan Reduction Installments including the final installment due on the Term Loan Maturity Date on a pro rata basis, and no such amounts shall be available for reborrowing. Each prepayment of Term Loans under this Section 2.07(e) shall be applied to the remaining Term Loan Reduction Installments including the final installment due on the Term Loan Maturity Date in inverse order of maturity, and no such amounts shall be available for reborrowing
1.08[Reserved].
1.09Repayment of Term Loans.
The principal of the Term Loans shall be repaid as set forth in Section 2.01(d).
1.10Interest and Default Rate.
(a)Interest. Subject to the provisions of Section 2.10(b), each Term Loan shall bear interest on the outstanding principal amount thereof for each day during each calendar month from the applicable borrowing date at a rate per annum equal to the greater of (i) Term SOFR for such calendar month, plus the Applicable Margin, plus the Spread Adjustment, or (ii) 3.50%.
(b)Default Rate.
(i)If any amount of principal of the Term Loans is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(ii)If any amount (other than principal of the Term Loans) payable by the Borrower under any Loan Document is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable Laws.
(iii)Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable upon demand.
(c)Interest Payments. Interest on the Term Loans shall be due and payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. Interest hereunder shall be due and payable in accordance with the terms hereof before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law.
1.11Fees.
The Borrower shall pay the following fees:
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(a)to the Administrative Agent, for its own account, fees in the amounts and at the times specified in the Fee Letter. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever; and
(b)to the Lenders, such fees as shall have been separately agreed upon in writing in the amounts and at the times so specified. Such fees shall be fully earned when paid and shall not be refundable for any reason whatsoever.
(c)If Borrower prepays the Term Loans pursuant to Section 2.06 hereof, then Borrower shall, as liquidated damages, pay to the Administrative Agent, for the ratable account of the Lenders, a prepayment fee in an amount equal to a percentage of the aggregate outstanding principal balance of the Term Loans prepaid at such time, calculated as follows: (A) 2.0% if the prepayment occurs on or before the first anniversary of the Closing Date, (B) 1.0% if the prepayment occurs after the first anniversary of the Closing Date but on or before second anniversary of the Closing Date, and (C) 0.0% if the prepayment occurs any time after the second anniversary of the Closing Date (collectively, the “Early Termination Fee”). The Early Termination Fee shall be due and payable concurrent with any prepayment of the Term Loans pursuant to Section 2.06 hereof.
1.12Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate.
(a)Computation of Interest and Fees. All computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed (which results in more fees or interest, as applicable, being paid than if computed on the basis of a 365 day year). Interest shall accrue on the Term Loans from the Closing Date, and shall not accrue on the Term Loans, or any portion thereof, for the day on which the Term Loans, or such portion, are paid. Each determination by the Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all purposes, absent manifest error.
(b)Financial Statement Adjustments or Restatements. If, as a result of any restatement of or other adjustment to the financial statements of Borrower and its Subsidiaries or for any other reason, the Borrower, or the Lenders determine that (i) the Consolidated Total Funded Debt Ratio as calculated by the Borrower as of any applicable date was inaccurate and
(ii) a proper calculation of the Consolidated Total Funded Debt Ratio would have resulted in higher pricing for such period, the Borrower shall immediately and retroactively be obligated to pay to the Administrative Agent for the ratable account of the Lenders promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code, automatically and without further action by the Administrative Agent or any Lender, an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period. This paragraph shall not limit the rights of the Administrative Agent or any Lender, under any provision of this Agreement to payment of any Obligations hereunder at the Default Rate or under Article VIII. The Borrower’s obligations under this paragraph shall survive the termination of the Aggregate Commitments and the repayment of all other Obligations hereunder.
1.13Evidence of Debt.
The Term Loans shall be evidenced by one or more accounts or records maintained by the Lenders and by the Administrative Agent in the ordinary course of business. The accounts or records
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maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Term Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error.
1.14Payments Generally; Administrative Agent’s Clawback.
(a)General. All payments to be made by the Borrower shall be made free and clear of and without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, the Administrative Agent may, without notice or consent of Borrower, debit any deposit account maintained by Borrower at Banc of California for all required payments by the Borrower on the date such payments are due, including but not limited to payments of outstanding third party fees to the extent payable by Borrower hereunder, including reasonable attorneys’ fees and costs incurred by Administrative Agent hereunder to the extent payable by Borrower hereunder. The Administrative Agent will promptly distribute to each Lender its pro rata share of such payments by wire transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after 2:00 p.m. Los Angeles time shall be deemed received on the next succeeding Business Day and any applicable interest or fee shall continue to accrue. Except as otherwise specifically provided for in this Agreement, if any payment to be made by the Borrower shall come due on a day other than a Business Day, payment shall be made on the next succeeding Business Day, and such extension of time shall be reflected in computing interest or fees, as the case may be.
(b)Payments by Borrower; Presumptions by Administrative Agent. Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders hereunder that the Borrower designated deposit account at Banc of California will not contain sufficient funds to make such payment when due, the Administrative Agent may assume that the Borrower has sufficient funds on deposit in such account to allow such payment to be made in full on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if the Borrower does not in fact have sufficient funds in their designated deposit account to cover the full amount of such payment, then each of the Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. A notice of the Administrative Agent to the Borrower with respect to any amount owing under this subsection (b) shall be conclusive, absent manifest error.
(c)Failure to Satisfy Conditions Precedent. If any Lender makes available to the Administrative Agent funds for the Term Loan to be made by such Lender on the Closing Date, and such funds are not made available to the Borrower by the Administrative Agent because the conditions to the Term Loans set forth in Article IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, without interest.
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(d)Obligations of Lenders Several. The obligations of the Lenders hereunder to make the Term Loans on the Closing Date and to make payments pursuant to Section 11.04(c) are several and not joint. The failure of any Lender to make its Term Loan on the Closing Date or to make any payment under Section 11.04(c) on any date required hereunder shall not relieve any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible for the failure of any other Lender to so make its Term Loan on the Closing Date or to make its payment under Section 11.04(c).
(e)Funding Source. Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Term Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for its Term Loan in any particular place or manner.
(f)Pro Rata Treatment. Except to the extent otherwise provided herein: (i) the Term Loans shall be made by the Lenders pro rata according to the amounts of their respective Commitments; (ii) each payment or prepayment of principal of the Term Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the respective unpaid principal amounts of the Term Loans held by them; and (iii) each payment of interest on the Term Loans by the Borrower shall be made for account of the Lenders pro rata in accordance with the amounts of interest on the Term Loans then due and payable to the respective Lenders.
1.15Sharing of Payments by Lenders.
If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of (a) Obligations due and payable to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations due and payable to such Lender at such time to (ii) the aggregate amount of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations due and payable to all Lenders hereunder and under the other Loan Documents at such time obtained by all the Lenders at such time or (b) Obligations owing (but not due and payable) to such Lender hereunder and under the other Loan Documents at such time in excess of its ratable share (according to the proportion of (i) the amount of such Obligations owing (but not due and payable) to such Lender at such time to (ii) the aggregate amount of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time) of payments on account of the Obligations owing (but not due and payable) to all Lenders hereunder and under the other Loan Documents at such time obtained by all of the Lenders at such time, then, in each case under clauses
(a) and (b) above, the Lender receiving such greater proportion shall (A) notify the Administrative Agent of such fact, and (B) purchase (for cash at face value) participations in the Term Loans of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of Obligations then due and payable to the Lenders or owing (but not due and payable) to the Lenders, as the case may be, provided that:
(1)if any such participations or subparticipations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations or subparticipations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and
(2)the provisions of this Section shall not be construed to apply to (x) any payment made by or on behalf of the Borrower pursuant to and in accordance with the express terms of
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this Agreement (including the application of funds arising from the existence of a Defaulting Lender) or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Term Loan to any assignee or participant, other than an assignment to any Loan Party or any Affiliate thereof (as to which the provisions of this Section shall apply).
Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation.
1.16Incremental Term Loans.
(a)Request for Incremental Term Loans. The Borrower may, by notice to the Administrative Agent (who shall promptly notify the applicable Lenders), request the establishment of one or more new term loan commitments (each, an “Incremental Term Loan Commitment”) pursuant to an Incremental Term Loan Facility, in each case, for an aggregate amount (for all such requests not exceeding $28,000,000).
(b)Incremental Term Loan Lenders. An Incremental Term Loan Commitment may be provided by any existing Lender or other Person that is an Eligible Assignee (each such existing Lender or other Person that agrees to provide an Incremental Term Loan Commitment, an “Incremental Term Loan Lender”; provided that each Incremental Term Loan Lender shall be subject to the consent (in each case, not to be unreasonably withheld or delayed) of the Administrative Agent. Notwithstanding anything herein to the contrary, no Lender shall have any obligation to agree to provide an Incremental Term Loan Commitment pursuant to this Section and any election to do so shall be in the sole discretion of such Lender.
(c)Terms of Incremental Term Loan Commitments. The Administrative Agent and the Borrower shall determine the effective date for an Incremental Term Loan Facility pursuant to this Section (an “Incremental Commitment Effective Date”) and, if applicable, the final allocation of such Incremental Term Loan Commitments among the Persons providing such Incremental Term Loan Facility; provided that such date shall be a Business Day at least ten Business Days after delivery of the request for such Incremental Term Loan Facility (unless otherwise approved by the Administrative Agent) and at least 30 days prior to the Term Loan Maturity Date.
In order to effect such Incremental Term Loan Facility, the Loan Parties, the Parent, the Ultimate Parent, the applicable Incremental Term Loan Lender(s), the existing Lenders, and the Administrative Agent shall enter into one or more Lender Joinder Agreements, each in form and substance satisfactory to the Borrower and the Administrative Agent, pursuant to which the applicable Incremental Term Loan Lender(s) will provide the applicable Incremental Term Loan Commitment(s).
Effective as of the applicable Incremental Commitment Effective Date, subject to the terms and conditions set forth in this Section, each Incremental Term Loan Commitment shall be a Term Loan Commitment and, in each case, Schedule 1.01(b) shall be updated accordingly to reflect such Incremental Term Loan Commitment, Section 2.01(d) shall be amended as set forth in the applicable Lender Joinder Agreement, and each Incremental Term Loan Lender providing such Incremental Term Loan Commitment shall be, and have all the rights of, a Lender, and the Incremental Term Loan made by it on such Incremental Commitment Effective Date pursuant to this Section shall be Term Loans for all purposes of this Agreement.
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At Borrower’s option, Borrower may use 100% of the proceeds of Incremental Term Loans to repay the obligations of the Loan Parties under the Parent Subordinated Credit Agreement.
(d)Conditions to Effectiveness. Notwithstanding the foregoing, the Incremental Term Loan Commitments under an Incremental Term Loan Facility pursuant to this Section shall not be effective with respect to any Incremental Term Loan Lender unless:
(i)no Default or Event of Default shall have occurred and be continuing on the Incremental Commitment Effective Date and after giving effect to the Incremental Term Loans under such Incremental Term Loan Facility;
(ii)the representations and warranties contained in this Agreement are true and correct on and as of the Incremental Commitment Effective Date and after giving effect to such Incremental Term Loan Facility, as though made on and as of such date (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date);
(iii)the Administrative Agent shall have received one or more Lender Joinder Agreements contemplated above, providing for Incremental Term Loan Commitments in the amount of such Incremental Term Loan Facility; and
(iv)the Administrative Agent shall have received such legal opinions and other documents reasonably requested by the Administrative Agent in connection therewith.
(v)As of such Incremental Commitment Effective Date, upon the Administrative Agent’s receipt of the documents required by this paragraph (d), the Administrative Agent shall record the information contained in the applicable Lender Joinder Agreement(s) in the Register and give prompt notice of the Incremental Term Loan Commitments to the Borrower and the Lenders (including each Incremental Term Loan Lender).
1.17Defaulting Lenders.
(a)Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Law:
(i)Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 11.01.
(ii)Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 11.08 shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Administrative Agent hereunder; second, as the Borrower may
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request (so long as no Event of Default exists), to the funding of such Defaulting Lender’s Term Loan Commitment; third, to the payment of any amounts owing to the Lenders, as a result of any judgment of a court of competent jurisdiction obtained by any Lender, against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; fourth, so long as no Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; and fifth, to such Defaulting Lender or as otherwise as may be required under the Loan Documents in connection with any Lien conferred thereunder or directed by a court of competent jurisdiction; provided that if (1) such payment is a payment of the principal amount of Term Loans in respect of which such Defaulting Lender has not fully funded its appropriate share, and (2) such Term Loans were made at a time when the conditions set forth in Section 4.02 were satisfied or waived, such payment shall be applied solely to pay the Term Loans of all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of the Term Loan of such Defaulting Lender until such time as all Term Loans are held by the Lenders pro rata in accordance with the Commitments hereunder. Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender pursuant to this Section 2.17(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.
(iii)Certain Fees. No Defaulting Lender shall be entitled to receive any fee payable under Section 2.11 for any period during which that Lender is a Defaulting Lender (and the Borrower shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).
(b)Defaulting Lender Cure. If the Borrower, the Administrative Agent agree in writing that a Lender is no longer a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein, that Lender will, to the extent applicable, purchase at par that portion of the outstanding Term Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Term Loans to be held on a pro rata basis by the Lenders, whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.
1.18Acknowledgment and Consent to Bail-In of EEA Financial Institutions.
Notwithstanding anything to the contrary in this Agreement or any other Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any EEA Financial Institution arising under this Agreement or any other Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
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(a)the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an EEA Financial Institution; and
(b)the effects of any Bail-in Action on any such liability, including, if applicable:
(i)a reduction in full or in part or cancellation of any such liability;
(ii)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii)the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY

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1.01Taxes.

Taxes.



(a)Payments Free of Taxes; Obligation to Withhold; Payments on Account of
(i)Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable Laws. If any applicable Laws (as determined in the good faith discretion of an applicable Withholding Agent) require the deduction or withholding of any Tax from any such payment by the Administrative Agent or a Loan Party, then the applicable Withholding Agent shall be entitled to make such deduction or withholding.
(ii)If applicable Withholding Agent shall be required to withhold or deduct any Taxes, including both United States federal backup withholding and withholding taxes, from any payment, then (A) such Withholding Agent shall withhold or make such deductions as are determined by such Withholding Agent, (B) the Withholding Agent shall timely pay the full amount withheld or deducted to the relevant Governmental Authority in accordance with the Code, and (C) to the extent that the withholding or deduction is made on account of Indemnified Taxes, the sum payable by the applicable Loan Party shall be increased as necessary so that after any such required withholding or the making of all such required deductions (including such deductions applicable to additional sums payable under this Section 3.01) the applicable Recipient receives an amount equal to the sum it would have received had no such withholding or deduction been made.
(b)Payment of Other Taxes by the Loan Parties. Without limiting the provisions of subsection (a) above, the Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.
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(c)Tax Indemnifications.
(i)Each of the Loan Parties shall, and does hereby, jointly and severally indemnify each Recipient, and shall make payment in respect thereof within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section 3.01) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf, shall be conclusive absent manifest error.
(ii)Each Lender shall, and does hereby, severally indemnify and shall make payment in respect thereof within ten (10) days after demand therefor, (A) the Administrative Agent against any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (B) the Administrative Agent and the Loan Parties, as applicable, against any Taxes attributable to such Lender’s failure to comply with the provisions of Section 11.06(d) relating to the maintenance of a Participant Register and (C) the Administrative Agent and the Loan Parties, as applicable, against any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent or a Loan Party in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Loan Document against any amount due to the Administrative Agent under this clause (ii).
(d)Evidence of Payments. Upon request by the Borrower or the Administrative Agent, as the case may be, after any payment of Taxes by any Loan Party or by the Administrative Agent to a Governmental Authority as provided in this Section 3.01, the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return reporting such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.
(e)Status of Lenders; Tax Documentation.
(i)Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of
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withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 3.01(e)(ii)(A), Section 3.01(e)(ii)(B) and Section 3.01(e)(ii)(D) below) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(ii)Without limiting the generality of the foregoing, in the event that the Borrower is a U.S. Person,
(A)any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax;
(B)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:
(1)in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W- 8BEN or W-8BEN-E, as applicable, establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty;
(2)executed originals of IRS Form W-8ECI;
(3)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code,
(x) a certificate substantially in the form of Exhibit J-1 to the effect that such Foreign Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “U.S. Tax
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Compliance Certificate”) and (y) executed originals of IRS Form W- 8BEN or W-8BEN, as applicable; or
(4)to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN or W-8BEN, as applicable, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-4 on behalf of each such direct and indirect partner;
(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and
(D)if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(iii)Each Lender agrees that if any form or certification it previously delivered pursuant to this Section 3.01 expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.
(f)Treatment of Certain Refunds. Unless required by applicable Laws, at no time shall the Administrative Agent have any obligation to file for or otherwise pursue on behalf of a Lender, or have any obligation to pay to any Lender, any refund of Taxes withheld or deducted
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from funds paid for the account of such Lender. If any Recipient determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified by any Loan Party or with respect to which any Loan Party has paid additional amounts pursuant to this Section 3.01, it shall pay to such Loan Party an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by such Loan Party under this Section 3.01 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) incurred by such Recipient, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that each Loan Party, upon the request of the Recipient, agrees to repay the amount paid over to such Loan Party pursuant to Section 3.01(f) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this subsection, in no event will the applicable Recipient be required to pay any amount to such Loan Party pursuant to this subsection the payment of which would place the Recipient in a less favorable net after-Tax position than such Recipient would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This subsection shall not be construed to require any Recipient to make available its tax returns (or any other information relating to its Taxes that it deems confidential) to any Loan Party or any other Person.
(g)Survival. Each party’s obligations under this Section 3.01 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the repayment, satisfaction or discharge of all other Obligations.
1.02Illegality.
If any Lender determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its Lending Office to maintain its Term Loan as a loan whose interest is determined by reference to Term SOFR, or to determine or charge interest rates based upon Term SOFR, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market, then, on notice thereof by such Lender to the Borrower through the Administrative Agent, (a) any obligation of such Lender to continue its Term Loan as a loan whose interest is determined by reference to Term SOFR shall be suspended until such Lender notifies the Administrative Agent and the Borrower that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, (i) the Borrower shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert the Term Loan of such Lender to a loan whose interest is determined by reference to the Base Rate either on the last day of the calendar month therefor, if such Lender may lawfully continue to maintain its Term Loan as a loan whose interest is determined by reference to Term SOFR to such day, or immediately, if such Lender may not lawfully continue to maintain its Term Loan as a loan whose interest is determined by reference to Term SOFR and (ii) if such notice asserts the illegality of such Lender determining or charging interest rates based upon Term SOFR, the Administrative Agent shall during the period of such suspension compute the Base Rate applicable to such Lender until the Administrative Agent is advised in writing by such Lender that it is no longer illegal for such Lender to determine or charge interest rates based upon Term SOFR. Upon any such prepayment or conversion, the Borrower shall also pay accrued interest on the amount so prepaid or converted.
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1.03Index Cessation.
(a)If at any time Administrative Agent reasonably believes or reasonably determines that (i) the pre-replacement Index has been or will imminently be discontinued for any reason, (ii) the pre-replacement Index will not adequately and fairly reflect the cost to Administrative Agent and the Lenders of maintaining or funding loans based on the pre-replacement Index, (iii) the pre- replacement Index is not widely used as a benchmark Index or is no longer an industry-accepted reference rate for similarly situated loans to the Term Loans, (iv) adequate and fair means do not exist for Administrative Agent to ascertain the pre-replacement Index or the pre-replacement Index is no longer being published by a reliable source reasonably available to and used by Administrative Agent, (v) regulatory changes (meaning a change in any applicable Law, treaty, rule, regulation or guideline, or the interpretation or administration thereof, by the administrator of the relevant benchmark or its regulatory supervisor, any governmental authority, central bank or other fiscal, monetary or other authority having jurisdiction over each Lender or its lending office) make it unlawful or commercially unreasonable for the Administrative Agent to use the pre-replacement Index as the Index for purposes of determining the interest rate or (vi) the administrator of the pre-replacement Index or a governmental authority having jurisdiction over Administrative Agent and the Lenders has made a public statement identifying a specific date after which the pre-replacement Index shall no longer be used for determining interest rates for loans, then Administrative Agent shall use reasonable efforts to select a replacement Index that Administrative Agent in good faith believes is a practical means of preserving the parties’ intent relative to the economics of the pre-replacement Index.
(b)In the event that Administrative Agent determines a replacement Index, which determination shall be conclusive, in order to account for the relationship of the replacement Index to the pre-replacement Index, Administrative Agent shall also determine, which determination shall be conclusive, any change necessary to the percentage points (“Margin”) to be added or subtracted to the replacement Index necessary to ensure that the replacement method will measure interest rates in a manner similar to the pre-replacement Index, and for the avoidance of doubt, any such change to the Margin shall not reduce the interest rate in effect as of the date of such Index replacement.
(c)In selecting such replacement Index and Margin, Administrative Agent may give due consideration to (i) the recommendation of a replacement Index or Margin adjustment, or method of calculating or determining such replacement Index or Margin by the regulatory entities with jurisdiction over Administrative Agent and Lenders or a committee officially endorsed or convened by the regulatory entities, (ii) any evolving or industry-accepted means for determining an Index and Margin, or method of calculating or determining such Index and Margin, for the replacement of the Index and Margin with the replacement Index and Margin, (iii) the then prevailing market convention for determining an Index rate of interest for commercial loans that are comparable to Administrative Agent’s commercial loans at that time, and (iv) a similar rate Index from other sources deemed to be reasonably reliable by and available to Administrative Agent.
(d)To the extent a replacement Index and Margin are so designated, the replacement Index and Margin shall be applied in a manner consistent with market practice; and, to the extent such market practice is not administratively feasible for Administrative Agent, such replacement Index and Margin shall be applied in a manner as otherwise reasonably determined by Administrative Agent.
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(e)Reasonably promptly after such determination by Administrative Agent, Administrative Agent may, by notice to Borrower, amend this Agreement (without the need for any action or consent by Borrower) (i) to replace the Index with the replacement Index selected,
(ii) amend the Margin to be added to the Index, and (iii) state the date upon which the replacement Index and Margin shall be effective. Upon the operative date, the replacement Index and Margin shall then be deemed the Index and Margin for all purposes of this Agreement. To the extent practicable, the interest rate based on the replacement Index plus or subtract the Margin, as it may be adjusted, will be substantially equivalent to the interest rate plus or subtract the Margin previously in effect as of the date of the replacement of the Index and Margin.
(f)Borrower understands that Administrative Agent may make loans to other borrowers based on other rates as well. A different replacement Index and Margin may be selected for different types of loans and transactions. Borrower acknowledges that the discontinuation of pre-replacement Index is a future event over which neither Administrative Agent nor Borrower have influence but which will necessarily affect such Index and Margin. Borrower acknowledges that the interest rate resulting from replacement Index and Margin will differ from pre-replacement Index and Margin.
(g)Borrower agrees that Administrative Agent shall not be liable in any manner for its selection and implementation of a replacement Index and Margin, provided that Administrative Agent makes such selection in good faith and implementation consistent with market practice, or if not feasible, as reasonably determined by Administrative Agent.
(h)The replacement Index and Margin shall remain in effect from the effective date set forth in such notice until the maturity date, unless such an instance occurs where the replacement Index is no longer available, then the same process described in this section shall apply.
1.04Increased Costs.
(a)Increased Costs Generally. If any Change in Law shall:
(i)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement contemplated by Section 3.04(e));
(ii)subject any Recipient to any Taxes (other than (A) Indemnified Taxes,
(B)Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and
(C)Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or
(iii)impose on any Lender or interbank market any other condition, cost or expense affecting this Agreement or the Term Loan made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such Lender of or maintaining its Term Loan, or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, subject in all respects to the Borrower’s rights under
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Section 11.13 hereof, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.
Notwithstanding any other provision of this Section 3.04, no Lender shall invoke the provisions of the foregoing subsections of this Section 3.04 if it shall not at the time be the general policy and practice of such Lender to invoke such provisions in similar circumstances under comparable provisions of other credit agreements.
(b)Capital Requirements. If any Lender determines that any Change in Law affecting such Lender or any Lending Office of such Lender or such Lender’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.
(c)[Reserved].
(d)Certificates for Reimbursement. A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrower shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.
(e)Reserved.
(f)Delay in Requests. Failure or delay on the part of any Lender to demand compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute a waiver of such Lender’s right to demand such compensation, provided that the Borrower shall not be required to compensate a Lender pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than six (6) months prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the six (6) month period referred to above shall be extended to include the period of retroactive effect thereof).
1.05Compensation for Losses.
Upon demand of any Lender (with a copy to the Administrative Agent) from time to time, the Borrower shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of any failure by the Borrower (for a reason other than the failure of such Lender to make its Term Loan) to prepay, borrow, or continue any Term Loan on the date or in the amount notified by the Borrower; including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Term Loan or from fees payable to terminate the
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deposits from which such funds were obtained.    The Borrower shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.
For purposes of calculating amounts payable by the Borrower to the Lenders under this Section 3.05, each Lender shall be deemed to have funded its Term Loan at Term SOFR for such Term Loan by a matching deposit or other borrowing in an interbank market for a comparable amount and for a comparable period, whether or not such Term Loan was in fact so funded.
1.06Designation of a Different Lending Office.
If any Lender requests compensation under Section 3.04, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section 3.02, then at the request of the Borrower, such Lender shall, as applicable, use reasonable efforts to designate a different Lending Office for funding or booking its Term Loan hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 3.02, as applicable, and (ii) in each case, would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.
1.07Survival.
All of the Borrower’s obligations under this Article III shall survive termination of the Commitments, repayment of all other Obligations hereunder, resignation of the Administrative Agent and the Term Loan Maturity Date.
ARTICLE IV CONDITIONS PRECEDENT
1.01Conditions of Term Loans.
The obligation of each Lender to make its Term Loan hereunder is subject to satisfaction of the following conditions precedent:
(a)Execution of Credit Agreement; Loan Documents. The Administrative Agent shall have received (i) counterparts of this Agreement, executed by a Responsible Officer of each Loan Party and a duly authorized officer of each Lender, (ii) for the account of each Lender requesting a Note, a Note executed by a Responsible Officer of Borrower, (iii) counterparts of the Security Agreement and each other Collateral Document, executed by a Responsible Officer of the applicable Loan Parties and a duly authorized officer of each other Person party thereto, as applicable, (iv) counterparts of any other Loan Document, executed by a Responsible Officer of the applicable Loan Party and a duly authorized officer of each other Person party thereto, (v) the counterparts of the Ultimate Parent Guaranty, executed by an authorized officer of the Ultimate Parent and (vi) the counterparts of the Parent Guaranty, executed by an authorized officer of the Parent.
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(b)Officer’s Certificate. The Administrative Agent shall have received an Officer’s Certificate dated the Closing Date, certifying as to the Organization Documents of each Loan Party (which, to the extent filed with a Governmental Authority, shall be certified as of a recent date by such Governmental Authority), the resolutions of the governing body of each Loan Party, the good standing, existence or its equivalent of each Loan Party and of the incumbency (including specimen signatures) of the Responsible Officers of each Loan Party.
(c)Legal Opinions of Counsel. The Administrative Agent shall have received an opinion or opinions (including, if requested by the Administrative Agent, local counsel opinions) of counsel for the Loan Parties, dated the Closing Date and addressed to the Administrative Agent and the Lenders, in form and substance acceptable to the Administrative Agent.
(d)Financial Statements. The Administrative Agent and the Lenders shall have received copies of the financial statements referred to in Section 5.05, each in form and substance satisfactory to each of them.
(e)Personal Property Collateral. The Administrative Agent shall have received, in form and substance satisfactory to the Administrative Agent:
(i)(A) searches of UCC filings in the jurisdiction of incorporation or formation, as applicable, of each Loan Party and each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Administrative Agent’s security interest in the Collateral, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than Permitted Liens and (B) tax lien, judgment and bankruptcy searches;
(ii)searches of ownership of Intellectual Property in the appropriate governmental offices and such patent/trademark/copyright filings as requested by the Administrative Agent in order to perfect the Administrative Agent’s security interest in the Intellectual Property;
(iii)completed UCC financing statements for each appropriate jurisdiction as is necessary, in the Administrative Agent’s reasonable discretion, to perfect the Administrative Agent’s security interest in the Collateral;
(iv)stock or membership certificates, if any, evidencing the Pledged Equity and undated stock or transfer powers duly executed in blank; in each case to the extent such Pledged Equity is certificated;
(v)in the case of any personal property Collateral located at premises leased by a Loan Party and set forth on Schedule 5.21(g)(i), such estoppel letters, consents and waivers from the landlords of such real property to the extent required to be delivered in connection with Section 6.14 (such letters, consents and waivers shall be in form and substance satisfactory to the Administrative Agent, it being acknowledged and agreed that any Landlord Waiver is satisfactory to the Administrative Agent);
(vi)to the extent required to be delivered pursuant to the terms of the Collateral Documents, all instruments, documents and chattel paper in the possession of any of the Loan Parties, together with allonges or assignments as may be necessary or
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appropriate to perfect the Administrative Agent’s and the Lenders’ security interest in the Collateral; and
(vii)Qualifying Control Agreements satisfactory to the Administrative Agent to the extent required to be delivered pursuant to Section 6.14.
(f)Beneficial Ownership Certification. At least five (5) days prior to the Closing Date, each Loan Party that qualifies as a “legal entity customer” under the Beneficial Ownership Regulation shall have delivered a Beneficial Ownership Certification to the Administrative Agent.
(g)Liability, Casualty, Property, Terrorism and Business Interruption Insurance. The Administrative Agent shall have received copies of insurance policies, declaration pages, certificates, and endorsements of insurance or insurance binders evidencing liability, casualty, property, terrorism and business interruption insurance meeting the requirements set forth herein or in the Collateral Documents or as required by the Administrative Agent. The Loan Parties shall have delivered to the Administrative Agent an Authorization to Share Insurance Information.
(h)Solvency Certificate. The Administrative Agent shall have received a Solvency Certificate signed by a Responsible Officer of Borrower as to the financial condition, solvency and related matters of Borrower and its Subsidiaries, after giving effect to (i) the initial Borrowings under the Loan Documents and the other transactions contemplated hereby, and (ii) the BullsEye Acquisition.
(i)Financial Condition Certificate. The Administrative Agent shall have received a certificate or certificates executed by a Responsible Officer of Borrower as of the Closing Date, as to certain financial matters, substantially in the form of Exhibit M.
(j)Material Contracts. The Administrative Agent shall have received true and complete copies, certified by an officer of Borrower as true and complete in all material respects, of all Material Contracts, together with all material exhibits and schedules.
(k)Loan Notice. The Administrative Agent shall have received a Loan Notice with respect to the Loans to be made on the Closing Date.
(l)Existing Indebtedness of the Loan Parties. All of the existing Indebtedness for borrowed money of the Loan Parties (other than Indebtedness permitted to exist pursuant to Section 7.02) shall be repaid in full and all security interests related thereto shall be terminated on or prior to the Closing Date.
(m)Consents. The Administrative Agent shall have received evidence that all members, boards of directors, governmental, shareholder and material third party consents and approvals necessary in connection with the entering into of this Agreement have been obtained.
(n)Fees and Expenses. The Administrative Agent and the Lenders shall have received all fees and expenses, if any, owing pursuant to the Fee Letter and Section 2.11.
(o)Due Diligence. The Lenders shall have completed a due diligence investigation of the Loan Parties in scope, and with results, satisfactory to the Lenders.
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(p)Representations and Warranties. The representations and warranties of the Borrower and each other Loan Party contained in Article II, Article V or any other Loan Document, or which are contained in any document furnished at any time under or in connection herewith or therewith, shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the Closing Date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date.
(q)Default. No Default shall exist, or would result from (i) the Term Loans or from the application of the proceeds thereof, or (ii) the BullsEye Acquisition.
(r)Loan Notice. The Administrative Agent shall have received a Loan Notice in accordance with the requirements hereof.
(s)BullsEye Acquisition. The Administrative Agent shall have received:
(i)an officer certificate certifying the true and correct copies of the BullsEye Purchase Agreement and BullsEye Purchase Documents; and
(ii)reasonably satisfactory evidence that the BullsEye Acquisition has been duly consummated or shall be duly consummated immediately upon the funding of the Term Loans in material compliance with applicable Law and in accordance with the BullsEye Purchase Documents without waiver of any material term or condition thereof which has not been consented to by Administrative Agent.
(t)Other Documents.    All other documents provided for herein or which the Administrative Agent or any other Lender may reasonably request or require.
(u)Additional Information. Such additional information and materials which the Administrative Agent and/or any Lender shall reasonably request or require.
Without limiting the generality of the provisions of the last paragraph of Section 9.03, for purposes of determining compliance with the conditions specified in this Section, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
ARTICLE V REPRESENTATIONS AND WARRANTIES
Each Loan Party represents and warrants to the Administrative Agent and the Lenders, as of the date made or deemed made, that:
1.01Existence, Qualification and Power.
Each Loan Party and each of its Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good standing under the Laws of the jurisdiction of its incorporation or organization,
(b) has all requisite power and authority and all requisite governmental licenses, authorizations, consents
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and approvals to (i) own or lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its business requires such qualification or license; except in each case referred to in clause (b)(i) or (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect. The copy of the Organization Documents of each Loan Party provided to the Administrative Agent pursuant to the terms of this Agreement is a true and correct copy of each such document, each of which is valid and in full force and effect.
1.02Authorization; No Contravention.
The execution, delivery and performance by each Loan Party of each Loan Document to which such Person is or is to be a party have been duly authorized by all necessary corporate or other organizational action, and do not and will not (a) contravene the terms of any of such Person’s Organization Documents; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or require any payment to be made under (i) any Material Contract to which such Person is a party or affecting such Person or the properties of such Person or any of its Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental Authority or any arbitral award to which such Person or its property is subject; or (c) violate any Law; except in each case referred to in clause (b) and (c), to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect.
1.03Governmental Authorization; Other Consents.
No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person is necessary or required in connection with (a) the execution, delivery or performance by, or enforcement against, any Loan Party of this Agreement or any other Loan Document, (b) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (c) the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof, subject to Permitted Liens) or (d) the exercise by the Administrative Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents, other than (i) authorizations, approvals, actions, notices and filings which have been duly given, obtained or waived and (ii) filings to perfect the Liens created by the Collateral Documents.
1.04Binding Effect.
This Agreement has been, and each other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Loan Party that is party thereto. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, valid and binding obligation of such Loan Party, enforceable against each Loan Party that is party thereto in accordance with its terms, except as such enforcement may be limited by applicable Debtor Relief Laws affecting creditors’ rights generally and by equitable principles of law (regardless of whether enforcement is sought in equity or at law).
1.05Financial Statements; No Material Adverse Effect.
(a)Audited Financial Statements. The Audited Financial Statements (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Loan Parties as of the date thereof and their results of operations for the period
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covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Loan Parties as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.
(b)Ultimate Parent Annual Audited Financial Statements. The audited Consolidated balance sheets of the Ultimate Parent and its Subsidiaries dated December 31, 2021 (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present in all material respects the financial condition of the Ultimate Parent and its Subsidiaries as of the date thereof and their results of operations for the period covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities, direct or contingent, of the Ultimate Parent and its Subsidiaries as of the date thereof, including liabilities for taxes, material commitments and Indebtedness.
(c)Material Adverse Effect. Since the date of the Audited Financial Statements, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
(d)[Reserved].
(e)Forecasted Financials. The Consolidated forecasted balance sheets, statements of income and cash flows of the Borrower and its Subsidiaries delivered pursuant to Section 4.01 or Section 6.01 were prepared in good faith on the basis of the assumptions stated therein, which assumptions were fair in light of the conditions existing at the time of delivery of such forecasts, and represented, at the time of delivery, the Borrower’s best estimate of their future financial condition and performance. For the avoidance of doubt, the parties acknowledge and agree that forecasted, forward-looking information and projections are not a guarantee of future performance, and actual results may differ from the forecasted, forward-looking information or projections.
1.06Litigation.
Except as set forth on Schedule 5.06, there are no actions, suits or proceedings, or, to the actual knowledge of the Loan Parties after due and diligent investigation, threatened in writing or contemplated, at law or in equity, before any Governmental Authority, by or against any Loan Party or any Subsidiary or against any of their properties or revenues that (a) purport to affect or pertain to this Agreement or any other Loan Document or any of the transactions contemplated hereby, or (b) either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.
1.07No Default.
No Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Agreement or any other Loan Document.
1.08Ownership of Property.
Each Loan Party and each of its Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, all real property necessary or used in the ordinary conduct of its
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business, except for such defects in title as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
1.09Environmental Compliance.
(a)The Loan Parties and their respective Subsidiaries have been in compliance with existing Environmental Laws and there have been no claims alleging potential liability or responsibility for violation of any Environmental Law on their respective businesses, operations and properties, except to the extent such failure to comply or claims would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b)Neither any Loan Party nor any of its Subsidiaries is undertaking, and has not completed, either individually or together with other potentially responsible parties, any investigation or assessment or remedial or response action relating to any actual or threatened release, discharge or disposal of Hazardous Materials at any site, location or operation, either voluntarily or pursuant to the order of any Governmental Authority or the requirements of any Environmental Law; and all Hazardous Materials generated, used, treated, handled or stored at, or transported to or from, any property currently or formerly owned or operated by any Loan Party or any of its Subsidiaries have been disposed of in a manner not reasonably expected to result in material liability to any Loan Party or any of its Subsidiaries.
1.10Insurance.
The properties of the Loan Parties are insured with financially sound and reputable insurance companies not Affiliates of the Loan Parties, in such amounts, with such deductibles and covering such risks as are customarily carried by companies of similar size engaged in similar businesses and owning similar properties in localities where the applicable Loan Party or the applicable Subsidiary operates. The general liability, casualty, property, terrorism and business interruption insurance coverage of the Loan Parties as in effect on the Closing Date, and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is outlined as to carrier, policy number, expiration date, type, amount and deductibles on Schedule 5.10 and such insurance coverage complies with the requirements set forth in this Agreement and the other Loan Documents.
1.11Taxes.
Except as set forth on Schedule 5.11, each Loan Party and its Subsidiaries have filed all federal, state and other material tax returns and reports required to be filed, and have paid all federal, state and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves have been provided in accordance with GAAP. Except as set forth on Schedule 5.11, there is no proposed tax assessment against any Loan Party or any Subsidiary that would, if made, have a Material Adverse Effect, nor is there any tax sharing agreement applicable to the Borrower or any Subsidiary. The filing and recording of any and all documents required to perfect the security interests granted to the Administrative Agent (for the ratable benefit of the Secured Parties) will not result in any documentary, stamp or other taxes, except for customary filing and recordation fees that shall be paid concurrently with such filing or recording, as the case may be.
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1.12ERISA Compliance.
(a)Each Plan is in compliance in all material respects with the applicable provisions of ERISA and provisions of the Code and other federal or state law. Each Pension Plan that is intended to be a qualified plan under Section 401(a) of the Code has received a favorable determination letter or is subject to a favorable opinion letter from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code, or an application for such a letter is currently being processed by the IRS. To the best knowledge of the Loan Parties, nothing has occurred that would prevent or cause the loss of such tax-qualified status.
(b)There are no pending or, to the best knowledge of the Loan Parties, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan that would reasonably be expected to have a Material Adverse Effect. There has been no prohibited transaction within the meaning of Section 406 of ERISA for which a statutory, regulatory, or administrative exemption does not exist or violation of the applicable fiduciary requirements of Section 404 of ERISA with respect to any Plan (other than a Multiemployer Plan) that has resulted or would reasonably be expected to result in a Material Adverse Effect.
(c)(i) No ERISA Event has occurred, and no Loan Party nor any ERISA Affiliate is aware of any fact, event or circumstance that would reasonably be expected to constitute or result in an ERISA Event with respect to any Pension Plan; (ii) the Borrower and each ERISA Affiliate have met all applicable requirements under the Pension Funding Rules in respect of each Pension Plan, and no waiver of the minimum funding standards under the Pension Funding Rules has been applied for or obtained; (iii) as of the most recent valuation date for any Pension Plan, the adjusted funding target attainment percentage (as defined in Section 436(j)(2) of the Code) is 60% or higher and no Loan Party nor any ERISA Affiliate knows of any facts or circumstances that would reasonably be expected to cause the adjusted funding target attainment percentage for any such plan to drop below 60% as of the most recent valuation date; (iv) no Loan Party nor any ERISA Affiliate has incurred any liability to the PBGC other than for the payment of premiums, and there are no premium payments which have become due that are unpaid; (v) neither Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or Section 4212(c) of ERISA; and (vi) no Pension Plan has been terminated by the plan administrator thereof nor by the PBGC, with respect to which a material liability of Borrower or any ERISA Affiliate exists, and no event or circumstance has occurred or exists that would reasonably be expected to cause the PBGC to institute proceedings under Title IV of ERISA to terminate any Pension Plan (other than a Multiemployer Plan).
(d)Neither Borrower nor any ERISA Affiliate maintains or contributes to, or has any unsatisfied obligation to contribute to, or liability under, any active or terminated Pension Plan other than on the Closing Date, those listed on Schedule 5.12 hereto.
1.13Margin Regulations; Investment Company Act.
(a)Margin Regulations. The Borrower is not engaged and will not engage, principally or as one of their important activities, in the business of purchasing or carrying margin stock (within the meaning of Regulation U issued by the FRB), or extending credit for the purpose of purchasing or carrying margin stock. Following the application of the proceeds of the Term Loans, not more than twenty-five percent (25%) of the value of the assets (either of Borrower alone or the Borrower and its Subsidiaries on a Consolidated basis) subject to the provisions of Section 7.01 or Section 7.05 or subject to any restriction contained in any
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agreement or instrument between the Borrower and any Lender or any Affiliate of any Lender relating to Indebtedness and within the scope of Section 8.01(e) will be margin stock.
(b)Investment Company Act. None of Borrower, any Person Controlling any Borrower, or any Subsidiary of Borrower is or is required to be registered as an “investment company” under the Investment Company Act of 1940.
1.14Disclosure.
The Borrower have disclosed to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which the Borrower or any Domestic Subsidiary of any Borrower is subject, and all other matters known to it, that, individually or in the aggregate, would reasonably be expected to result in a Material Adverse Effect. No report, financial statement, certificate or other information furnished (whether in writing or orally) by or on behalf of any Loan Party to the Administrative Agent or any Lender in connection with the transactions contemplated hereby and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (in each case as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, each Loan Party represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. For the avoidance of doubt, the parties acknowledge and agree that forecasted, forward-looking information and projections are not a guarantee of future performance, and actual results may differ from the forecasted, forward-looking information or projections.
1.15Compliance with Laws.
Each Loan Party and each Subsidiary thereof is in compliance with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted or (b) the failure to comply therewith, either individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect.
1.16Solvency.
Borrower together with its Subsidiaries on a Consolidated basis are Solvent.
1.17Casualty, Etc.
Neither the businesses nor the properties of any Loan Party or any of its Subsidiaries are affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance) that, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
1.18Sanctions Concerns.
No Loan Party, nor any Subsidiary, nor, to the knowledge of the Loan Parties and their Subsidiaries, any director, officer, employee, agent, affiliate or representative thereof, is an individual or entity currently the subject of any Sanctions, nor is any Loan Party or any Subsidiary located, organized or resident in a Designated Jurisdiction.
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1.19Responsible Officers.
Set forth on Schedule 1.01(c) are Responsible Officers, holding the offices indicated next to their respective names, as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02 and such Responsible Officers are the duly elected and qualified officers of such Loan Party and are duly authorized to execute and deliver, on behalf of the respective Loan Party, this Agreement, the Notes and the other Loan Documents.
1.20Subsidiaries; Equity Interests; Loan Parties.
(a)Subsidiaries, Joint Ventures, Partnerships and Equity Investments. Set forth on Schedule 5.20(a), is the following information which is true and complete in all respects as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02: (i) a complete and accurate list of all Subsidiaries, joint ventures and partnerships and other equity investments of the Loan Parties as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, (ii) the number of shares of each class of Equity Interests in each Subsidiary outstanding, (iii) the number and percentage of outstanding shares of each class of Equity Interests owned by the Loan Parties and their Subsidiaries and (iv) the class or nature of such Equity Interests (i.e. voting, non-voting, preferred, etc.). The outstanding Equity Interests in all Subsidiaries are validly issued, fully paid and non-assessable and are owned free and clear of all Liens. There are no outstanding subscriptions, options, warrants, calls, rights or other agreements or commitments (other than stock options granted to employees or directors and directors’ qualifying shares) of any nature relating to the Equity Interests of any Loan Party or any Subsidiary thereof, except as contemplated in connection with the Loan Documents.
(b)Loan Parties. Set forth on Schedule 5.20(b) is a complete and accurate list of all Loan Parties, showing as of the Closing Date, or as of the last date such Schedule was required to be updated in accordance with Section 6.02, (as to each Loan Party) (i) the exact legal name,
(ii) any former legal names of such Loan Party in the four (4) months prior to the Closing Date,
(iii) the jurisdiction of its incorporation or organization, as applicable, (iv) the type of organization, (v) the jurisdictions in which such Loan Party is qualified to do business, (vi) the address of its chief executive office, (vii) the address of its principal place of business, (viii) its
U.S. federal taxpayer identification number or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer identification number, its unique identification number issued to it by the jurisdiction of its incorporation or organization, if applicable, (ix) the organization identification number, (x) ownership information (e.g. publicly held or if private or partnership, the owners and partners of each of the Loan Parties) and (xi) the industry or nature of business of such Loan Party.
1.21Collateral Representations.
(a)Collateral Documents. The provisions of the Collateral Documents are effective to create in favor of the Administrative Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority Lien (subject to Permitted Liens) on all right, title and interest of the respective Loan Parties in the Collateral described therein. Except for filings completed prior to the Closing Date and as contemplated hereby and by the Collateral Documents, no filing or other action will be necessary to perfect or protect such Liens.
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(b)Intellectual Property. Set forth on Schedule 5.21(b)(i), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a list of all registered or issued Intellectual Property (including all applications for registration and issuance) owned by each of the Loan Parties or that each of the Loan Parties has the right to (including the name/title, current owner, registration or application number, and registration or application date and such other information as reasonably requested by the Administrative Agent).
(c)Documents, Instrument, and Tangible Chattel Paper. Set forth on Schedule 5.21(c), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a description of all Documents, Instruments, and Tangible Chattel Paper of the Loan Parties (including the Loan Party owning such Document, Instrument and Tangible Chattel Paper and such other information as reasonably requested by the Administrative Agent), in each case, with a value of $1,500,000 or more.
(d)Deposit Accounts, Electronic Chattel Paper, Letter-of-Credit Rights, and Securities Accounts.
(i)Set forth on Schedule 5.21(d)(i), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a description of all Deposit Accounts and Securities Accounts of the Loan Parties, including the name of (A) the applicable Loan Party, (B) in the case of a Deposit Account, the depository institution and whether such account is a zero balance account or a payroll account, and (C) in the case of a Securities Account, the Securities Intermediary or issuer.
(ii)Set forth on Schedule 5.21(d)(ii), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a description of all Electronic Chattel Paper (as defined in the UCC) and Letter-of-Credit Rights (as defined in the UCC) of the Loan Parties, in each case, with a value of
$1,500,000 or more, including the name of (A) the applicable Loan Party, (B) in the case of Electronic Chattel Paper (as defined in the UCC), the account debtor and (C) in the case of Letter-of-Credit Rights (as defined in the UCC), the issuer or nominated person, as applicable.
(e)Commercial Tort Claims. Set forth on Schedule 5.21(e), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a description of all Commercial Tort Claims of the Loan Parties, in each case with a value of
$1,500,000 or more (detailing such Commercial Tort Claim in such detail as reasonably requested by the Administrative Agent).
(f)Pledged Equity Interests. Set forth on Schedule 5.21(f), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a list of (i) all Pledged Equity and (ii) all other Equity Interests required to be pledged to the Administrative Agent pursuant to the Collateral Documents (in each case, detailing the Grantor (as defined in the Security Agreement), the Person whose Equity Interests are pledged, the number of shares of each class of Equity Interests, the certificate number and percentage ownership of outstanding shares of each class of Equity Interests and the class or nature of such Equity Interests (i.e. voting, non-voting, preferred, etc.).
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(g)Properties. Set forth on Schedule 5.21(g)(i), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a list of
(A) each headquarter location of the Loan Parties, (B) each other location where any significant administrative or governmental functions are performed, (C) each other location where the Loan Parties maintain any books or records (electronic or otherwise) and (D) each location where any personal property Collateral is located at any premises owned or leased by a Loan Party (in each case, including (1) an indication if such location is leased or owned, (2) if leased, the name of the lessor, and if owned, the name of the Loan Party owning such property, (3) the address of such property (including, the city, county, state and zip code) and (4) to the extent owned, the approximate fair market value of such property).
(h)Material Contracts. Set forth on Schedule 5.21(h), as of the Closing Date and as of the last date such Schedule was required to be updated in accordance with Section 6.02, is a complete and accurate list of all Material Contracts of the Loan Parties.
1.22Beneficial Ownership Certification.
As of the Closing Date, the information included in the Beneficial Ownership Certification of each Loan Party is true and correct in all material respects.
1.23Purchase Agreement; BullsEye Acquisition. Borrower has provided to Administrative Agent true and correct copies of the BullsEye Purchase Agreement and the BullsEye Purchase Documents, including true and correct copies of the final disclosure schedules referenced in and/or attached thereto. All of the conditions precedent to the “Closing” as defined in the BullsEye Purchase Agreement have been fulfilled (or waived to the reasonable satisfaction of Administrative Agent) other than the payment of the purchase price due at such “Closing.” Immediately upon the funding of the Term Loans, the “Closing” under the BullsEye Purchase Agreement and the BullsEye Acquisition shall be consummated in accordance with the terms and conditions thereof and all applicable Laws, without material waiver of any term or condition thereof which has not been consented to by Administrative Agent, Merger Sub shall duly merge with and into BullsEye, BullsEye shall be the surviving corporation, and BullsEye shall be a Secured Guarantor hereunder and under the Loan Documents as successor-by-merger to Merger Sub.
1.24Intellectual Property; Licenses, Etc.
Each Loan Party owns, or possesses the right to use, all of the trademarks, service marks, trade names, copyrights, patents, patent rights, franchises, licenses and other intellectual property rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the actual knowledge of the Borrower (after reasonably inquiry), no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by any Loan Party infringes upon any rights held by any other Person. Except as set forth on Schedule 5.06, no claim or litigation regarding any of the foregoing is pending or, to the actual knowledge of the Borrower (after reasonably inquiry), threatened in writing, which, either individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.
1.25Labor Matters.
There are no collective bargaining agreements or Multiemployer Plans covering the employees of Borrower or any of its ERISA Affiliates as of the Closing Date and neither Borrower nor any Subsidiary has suffered any strikes, walkouts, work stoppages or other material labor difficulty within the last five
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(5) years preceding the Closing Date.
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ARTICLE VI AFFIRMATIVE COVENANTS
Each of the Loan Parties hereby covenants and agrees that on the Closing Date and thereafter until the Facility Termination Date, such Loan Party shall, and shall cause each of its Domestic Subsidiaries to:
1.01Financial Statements.
Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:
(a)Ultimate Parent SEC Reporting. Ultimate Parent shall file with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q, and any current reports on Form 8-K, in each case, as and when required under the Securities Exchange Act of 1934, subject to permitted extensions.
(b)Audited Financial Statements. As soon as available, but in any event within one hundred twenty (120) days after the end of each fiscal year of Borrower commencing with the fiscal year ended December 31, 2022, a Consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal year, and the related Consolidated statements of income or operations, changes in shareholders’ equity and cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP; provided, however, with respect to the fiscal year ending December 31, 2022, comparative figures shall not be required with respect to the audited financial statements but such figures shall be separately certified by the chief executive officer, chief financial officer, treasurer or controller who is a Responsible Officer of Borrower. In each such case above, (i) such Consolidated statements (x) to be audited and accompanied by a report and opinion of McNair McLemore Middlebrook & Co., Marcum LLP or another independent certified public accountant of nationally recognized standing reasonably acceptable to the Administrative Agent, which report and opinion shall be prepared in accordance with generally accepted auditing standards and shall not be subject to any “going concern” or like qualification or exception or any qualification or exception as to the scope of such audit (other than any going concern or like qualification resulting solely from an upcoming maturity date for the Loans), and
(y) to be certified by the chief executive officer, chief financial officer, treasurer or controller that is a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the Consolidated financial statements of Borrower and its Subsidiaries.
(c)Quarterly Financial Statements. As soon as available, but in any event within forty-five (45) days after the end of each fiscal quarter (or 60 days with respect to the fiscal quarter ended September 30, 2022) of each fiscal year of Borrower that is not the last fiscal quarter in any fiscal year (commencing with the fiscal quarter ending September 30, 2022), a Consolidated balance sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter, and the related Consolidated statements of income or operations, changes in shareholders’ equity, cash flows, and a Cost Savings Initiative Summary, for such fiscal quarter and for the portion of Borrower’s fiscal year then ended. The quarterly financial statements required by the immediately preceding sentence shall set forth in each case in comparative form the figures for the corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and prepared in accordance with GAAP and include
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management discussion and analysis of operating results inclusive of operating metrics in comparative form. The Consolidated statements required by this Section 6.01(c) shall be certified by the chief executive officer, chief financial officer, treasurer or controller who is a Responsible Officer of Borrower as fairly presenting the financial condition, results of operations, shareholders’ equity and cash flows of Borrower and its Subsidiaries, subject only to normal year-end audit adjustments and the absence of footnotes and such statements to be certified by the chief executive officer, chief financial officer, treasurer or controller that is a Responsible Officer of Borrower to the effect that such statements are fairly stated in all material respects when considered in relation to the Consolidated financial statements of Borrower and its Subsidiaries.
(d)[Reserved].
(e)Business Plan and Budget. As soon as available, but in any event within sixty
(60) days after the end of each fiscal year of the Borrower, an annual business plan and budget of the Borrower and its Subsidiaries on a Consolidated basis, including forecasts prepared by management of the Borrower, in form reasonably satisfactory to the Administrative Agent and the Required Lenders, of Consolidated balance sheets and statements of income or operations and cash flows of the Borrower and its Subsidiaries on a monthly basis for the immediately following fiscal year.
As to any information contained in materials furnished pursuant to Section 6.02(g), the Borrower shall not be separately required to furnish such information under Section 6.01(b) above, but the foregoing shall not be in derogation of the obligation of the Borrower to furnish the information and materials described in Sections 6.01(b) above at the times specified therein.
1.02Certificates; Other Information.
Deliver to the Administrative Agent and each Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Required Lenders:
(a)Accountants’ Certificate. Concurrently with the delivery of the financial statements referred to in Section 6.01(b) (commencing with the delivery of the financial statements for the fiscal year ended December 31, 2022, a certificate of its independent certified public accountants certifying such financial statements and stating that in making the examination necessary therefor no knowledge was obtained of any Event of Default or, if any such Event of Default shall exist, stating the nature and status of such event.
(b)Compliance Certificate. Concurrently with the delivery of the financial statements referred to in Sections 6.01(b) and (c) (commencing with the delivery of the financial statements for the fiscal quarter ended September 30, 2022), (i) a duly completed Compliance Certificate signed by Borrower’s applicable chief executive officer, chief financial officer, treasurer or controller which is a Responsible Officer of Borrower, and (ii) a copy of management’s discussion and analysis with respect to such financial statements. Unless the Administrative Agent or a Lender requests executed originals, delivery of the Compliance Certificate may be by electronic communication including fax or email and shall be deemed to be an original and authentic counterpart thereof for all purposes.
(c)Updated Schedules. Concurrently with the delivery of the Compliance Certificate referred to in Section 6.02(b), the following updated Schedules to this Agreement (which may be attached to the Compliance Certificate) to the extent required to make the
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representation related to such Schedule true and correct as of the date of such Compliance Certificate: Schedules 1.01(c), 5.10, 5.20(a), 5.20(b), 5.21(b)(i), 5.21(c), 5.21(d)(i), 5.21(d)(ii), 5.21(e), 5.21(f), 5.21(g)(i) and 5.21(h).
(d)Calculations. Concurrently with the delivery of the Compliance Certificate referred to in Section 6.02(b) required to be delivered with the financial statements referred to in Section 6.01(b), a certificate (which may be included in such Compliance Certificate) including the amount of all Restricted Payments, Investments, Dispositions, Capital Expenditures, and Equity Issuance that were made during the prior fiscal year.
(e)Changes in Entity Structure. Within ten (10) days prior to any merger, consolidation, dissolution or other change in entity structure of any Loan Party or any of its Subsidiaries permitted pursuant to the terms hereof, provide notice of such change in entity structure to the Administrative Agent, along with such other information as reasonably requested by the Administrative Agent. Provide notice to the Administrative Agent, not less than five (5) days prior (or such extended period of time as agreed to by the Administrative Agent) of any change in any Loan Party’s legal name, state of organization, or organizational existence.
(f)Audit Reports; Management Letters; Recommendations. Promptly after any request by the Administrative Agent or any Lender, copies of any detailed audit reports, management letters or recommendations submitted to the Board of Directors (or the audit committee of the Board of Directors) of any Loan Party by independent accountants in connection with the accounts or books of any Loan Party or any of its Subsidiaries, or any audit of any of them.
(g)Annual Reports; Etc. Promptly after the same are available, copies of each annual report, proxy or financial statement or other report or communication sent to the stockholders of Borrower, and copies of all annual, regular, periodic and special reports and registration statements which Borrower may file or be required to file with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934, or with any national securities exchange, and in any case not otherwise required to be delivered to the Administrative Agent pursuant hereto;.
(h)Debt Securities Statements and Reports. Promptly after the furnishing thereof, copies of any statement or report furnished to any holder of debt securities of any Loan Party or of any of its Subsidiaries pursuant to the terms of any indenture, loan or credit or similar agreement and not otherwise required to be furnished to the Lenders pursuant to Section 6.01 or any other clause of this Section.
(i)SEC Notices. Promptly, and in any event within five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of each notice or other correspondence received from the SEC (or comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or possible investigation or other inquiry by such agency regarding financial or other operational results of any Loan Party or any Subsidiary thereof.
(j)Notices. Not later than five (5) Business Days after receipt thereof by any Loan Party or any Subsidiary thereof, copies of all default notices, amendments, waivers and other modifications so received under or pursuant to any instrument, indenture, loan or credit or similar agreement and, from time to time upon request by the Administrative Agent, such other material
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information and reports regarding such instruments, indentures and loan and credit and similar agreements as the Administrative Agent may reasonably request.
(k)Environmental Notice. Promptly after the assertion or occurrence thereof, notice of any action or proceeding against or of any noncompliance by any Loan Party or any of its Subsidiaries with any Environmental Law or Environmental Permit that would reasonably be expected to have a Material Adverse Effect.
(l)Post-Closing Deliverables and Other Additional Information. (1) Within ten (10) days after the Closing Date, (A) lender’s loss payable endorsements for the insurance policies required by Section 6.07(a) and (B) copies of insurance policies, declaration pages, and certificates of insurance or insurance binders evidencing terrorism insurance; (2) within one hundred twenty (120) days after the Closing Date, the estoppel letters, consents and waivers from landlords required by Section 6.14(c), and (3) promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.
Documents required to be delivered pursuant to Section 6.01(b) or Section 6.02(g) (to the extent any such documents are included in materials otherwise filed with the SEC) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (a) on which the Borrower posts such documents, or provides a link thereto on Borrower’s website on the Internet at the website address listed on Schedule 1.01(a); or (b) on which such documents are posted on Borrower’s behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided that:
(i) the Borrower shall deliver paper copies of such documents to the Administrative Agent or any Lender upon its request to the Borrower to deliver such paper copies until a written request to cease delivering paper copies is given by the Administrative Agent or such Lender and (ii) the Borrower shall notify the Administrative Agent and each Lender (by fax transmission or e-mail transmission) of the posting of any such documents and provide to the Administrative Agent by e-mail electronic versions (i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the delivery of or to maintain paper copies of the documents referred to above, and in any event shall have no responsibility to monitor compliance by the Borrower with any such request by a Lender for delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining its copies of such documents.
The Borrower hereby acknowledges that (A) the Administrative Agent and/or an Affiliate thereof may, but shall not be obligated to, make available to the Lenders materials and/or information provided by or on behalf of the Borrower hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on Debt Domain, IntraLinks, Syndtrak or another similar electronic system (the “Platform”) and
(B) certain of the Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that they will use commercially reasonable efforts to identify that portion of the Borrower Materials that may be distributed to the Public Lenders and that (1) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (2) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, any Affiliate thereof, the Arranger, and the Lenders to treat such Borrower Materials as not containing any material non-public information (although it may be sensitive and proprietary) with respect to the Borrower or its securities for purposes of United States federal and state
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securities laws (provided, however, that to the extent such Borrower Materials constitute Information, they shall be treated as set forth in Section 11.07); (3) all Borrower Materials marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (4) the Administrative Agent and any Affiliate thereof and the Arranger shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”
1.03Notices.
Promptly, but in any event within five (5) Business Days, notify the Administrative Agent and each Lender:
(a)of the occurrence of any Event of Default;
(b)of any matter that has resulted or would reasonably be expected to result in a Material Adverse Effect;
(c)of the occurrence of any ERISA Event;
(d)of any material change in accounting policies or financial reporting practices by any Loan Party or any Subsidiary thereof, including any determination by the Borrower referred to in Section 2.12(b); and
Each notice pursuant to this Section 6.03 shall be accompanied by a statement of a Responsible Officer of Borrower setting forth details of the occurrence referred to therein and to the extent applicable, stating what action the Borrower has taken and proposes to take with respect thereto. Each notice pursuant to Section 6.03(a) shall describe with particularity any and all provisions of this Agreement and any other Loan Document that have been breached.
1.04Payment of Obligations.
Pay and discharge as the same shall become due and payable, all its obligations and liabilities, including (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP are being maintained by the applicable Loan Party;
(b) all lawful claims which, if unpaid, would by law become a Lien upon its property; and (c) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness.
1.05Preservation of Existence, Etc.
(a)Preserve, renew and maintain in full force and effect its legal existence and good standing under the Laws of the jurisdiction of its organization except in a transaction permitted by Section 7.04 or 7.05;
(b)take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary in the normal conduct of its business, except to the extent that failure to do so would not reasonably be expected to have a Material Adverse Effect; and
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(c)preserve or renew all of its registered patents, trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect.
1.06Maintenance of Properties.
(a)Maintain, preserve and protect all of its material properties and equipment necessary in the operation of its business in good working order and condition, ordinary wear and tear and obsolescence excepted; and
(b)make all necessary repairs thereto and renewals and replacements thereof except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
1.07Maintenance of Insurance.
(a)Maintenance of Insurance. Maintain with financially sound and reputable insurance companies not Affiliates of the Borrower, insurance with respect to its properties and business against loss or damage of the kinds customarily insured against by Persons of similar size, engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons, including, without limitation, terrorism insurance.
(b)Evidence of Insurance. Cause the Administrative Agent to be named as lenders’ loss payable, loss payee or mortgagee, as its interest may appear, and/or additional insured with respect of any such insurance providing liability coverage or coverage in respect of any Collateral, and cause, unless otherwise agreed to by the Administrative Agent, each provider of any such insurance to agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to the Administrative Agent that it will endeavor to give the Administrative Agent thirty (30) days prior written notice before any such policy or policies shall be altered or cancelled (or ten (10) days prior notice in the case of cancellation due to the nonpayment of premiums). Annually, upon expiration of current insurance coverage at the written request of the Administrative Agent, the Loan Parties shall provide, or cause to be provided, to the Administrative Agent, such evidence of insurance as required by the Administrative Agent, including, but not limited to: (i) certified copies of such insurance policies,
(ii) evidence of such insurance policies (including, without limitation and as applicable, ACORD Form 28 certificates (or similar form of insurance certificate), and ACORD Form 25 certificates (or similar form of insurance certificate)), (iii) declaration pages for each insurance policy and
(iv) lender’s loss payable endorsement if the Administrative Agent for the benefit of the Secured Parties is not on the declarations page for such policy. As requested by the Administrative Agent, the Loan Parties agree to deliver to the Administrative Agent an Authorization to Share Insurance Information.
1.08Compliance with Laws.
Comply with the requirements of all Laws and all orders, writs, injunctions and decrees applicable to it or to its business or property, except in such instances in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by appropriate proceedings diligently conducted; or (b) the failure to comply therewith would not reasonably be expected to have a Material Adverse Effect.
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1.09Books and Records.
Maintain proper books of record and account in all material respects, in which full, true and correct entries in material conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of such Loan Party or such Subsidiary, as the case may be.
1.10Inspection Rights.
(a)Permit representatives and independent contractors of the Administrative Agent to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and accounts with its directors, officers, and independent public accountants, all at the expense of the Borrower and at such reasonable times during normal business hours upon reasonable advance notice to the Borrower; provided, however, when no Event of Default exists, not more than (1) such inspection shall be made in any fiscal year of the Borrower; provided, however, further, that when an Event of Default exists the Administrative Agent (or any of its respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.
(b)If requested by the Administrative Agent in its sole discretion, permit the Administrative Agent, and its representatives, upon reasonable advance notice to the Borrower, to conduct an annual audit of the Collateral at the expense of the Borrower; provided, however, when no Event of Default exists, not more than (1) such audit shall be made in any fiscal year of the Borrower.
(c)If requested by the Administrative Agent in its reasonable discretion at any time after the occurrence and during the continuance of an Event of Default, promptly deliver to the Administrative Agent (i) asset appraisal reports with respect to all of the real and personal property owned by the Borrower and their Subsidiaries, and (ii) a written audit of the accounts receivable, inventory, payables, controls and systems of their Borrower and their Subsidiaries.
1.11Use of Proceeds.
Use the proceeds of the Term Loans (i) to pay a portion of the “Merger Consideration” and “Company Indebtedness” under and as defined in the BullsEye Purchase Agreement, (ii) to pay costs and expenses incurred in connection with the BullsEye Acquisition, (iii) for working capital and general corporate purposes not in contravention of any Law or of any Loan Document, and (iv) solely with respect to Incremental Term Loans, repay the obligations of the Loan Parties under the Parent Subordinated Credit Agreement.
1.12Material Contracts.
(i)Maintain each such Material Contract in full force and effect, except for expiry at the stated maturity thereof and, except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect,
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(ii)enforce each such Material Contract in accordance with its terms, except as determined by the Loan Parties or their Subsidiaries, as the case may be, to be in the best interest of the Loan Parties or their Subsidiaries, as the case may be,
(iii)during the continuance of an Event of Default, take all such action to such end as may be from time to time reasonably requested by the Administrative Agent and, upon request of the Administrative Agent made during the continuance of an Event of Default, make to each other party to each such Material Contract such demands and requests for information and reports or for action as any Loan Party or any of its Subsidiaries is entitled to make under such Material Contract, and cause each of its Subsidiaries to do so.
1.13Covenant to Guarantee Obligations.
The Loan Parties will cause each of their Subsidiaries (other than any CFC) whether newly formed, after acquired or otherwise existing to promptly (and in any event within thirty (30) days after such Subsidiary is formed or acquired (or such longer period of time as agreed to by the Administrative Agent in its reasonable discretion)) become a Secured Guarantor hereunder by way of execution of a Joinder Agreement; provided, however, that (a) neither Vancouver Telephone Company Limited no BullsEye Business Solutions ULC shall be a Guarantor or Secured Guarantor and (b) no other Foreign Subsidiary shall be required to become a Guarantor or Secured Guarantor to the extent such Guaranty would reasonably be expected to result in a material adverse tax consequence for Borrower. In connection therewith, the Loan Parties shall give notice to the Administrative Agent not less than ten (10) days prior to creating a Subsidiary (or such shorter period of time as agreed to by the Administrative Agent in its reasonable discretion), or acquiring the Equity Interests of any other Person. In connection with the foregoing, the Loan Parties shall deliver to the Administrative Agent, with respect to each new Secured Guarantor to the extent applicable, substantially the same documentation required pursuant to Sections 4.01(b), (d), (e), (j) and 6.14 and such other documents or agreements as the Administrative Agent may reasonably request.
1.14Covenant to Give Security.
Except with respect to Excluded Property:
(a)Equity Interests and Personal Property. Each Loan Party will cause the Pledged Equity and the Borrower will cause all of their respective tangible and intangible personal property now owned or hereafter acquired by them to be subject at all times to a first priority, perfected Lien (subject to Permitted Liens to the extent permitted by the Loan Documents) in favor of the Administrative Agent for the benefit of the Secured Parties to secure the Secured Obligations pursuant to the terms and conditions of the Collateral Documents.
(b)Reserved.
(c)Landlord Waivers. In the case of (i) each headquarter location of the Borrower, each other location where any significant administrative or governmental functions are performed and each other location where Borrower maintains any books or records (electronic or otherwise) and (ii) any personal property Collateral located at any other premises leased by a Loan Party containing personal property Collateral with a value in excess of $700,000 at any one location and $1,500,000 in the aggregate at all such locations, the Borrower will provide the Administrative Agent with such estoppel letters, consents and waivers from the landlords on such
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real property to the extent requested by the Administrative Agent (such letters, consents and waivers shall be in form and substance reasonably satisfactory to the Administrative Agent, it being acknowledged and agreed that any Landlord Waiver is satisfactory to the Administrative Agent).
(d)Accounts; Account Control Agreements. At all times from and after the date that is one hundred twenty (120) days after the Closing Date, the Loan Parties shall not open, maintain or otherwise have any deposit or other accounts (including securities accounts) at any bank or other financial institution, or any other account where money or securities are or may be deposited or maintained with any Person, other than (a) deposit accounts and securities accounts maintained with the Administrative Agent, (b) deposit accounts that are maintained at all times with depositary institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, (c) securities accounts that are maintained at all times with financial institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, (d) other deposit accounts, so long as at any time the balance in any such account does not exceed $50,000 and the aggregate balance in all such accounts does not exceed
$150,000, and (e) accounts exclusively used for payroll, payroll taxes or employee benefits, to the extent the amounts on deposit therein do not exceed the amounts reasonably expected to be required for such purposes (the accounts described in clause (e), the “Excluded Accounts”).
(e)Further Assurances. At any time upon request of the Administrative Agent, promptly execute and deliver any and all further instruments and documents and take all such other action as the Administrative Agent may reasonably deem necessary to maintain in favor of the Administrative Agent, for the benefit of the Secured Parties, Liens and insurance rights on the Collateral that are duly perfected in accordance with the requirements of, or the obligations of the Loan Parties under, the Loan Documents and all applicable Laws.
1.15Further Assurances.
Promptly upon request by the Administrative Agent, or any Lender through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution, acknowledgment, filing or recordation thereof, and (b) do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (i) carry out more effectively the purposes of the Loan Documents, (ii) to the fullest extent permitted by applicable Law, subject any Loan Party’s or any of its Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter intended to be covered by any of the Collateral Documents, (iii) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and
(iv) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party or any of its Subsidiaries is or is to be a party.
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1.16Fusion Litigation Trust Payments.
In the event that (i) there is entered against any Loan Party or any Subsidiary thereof a final and non-appealable judgment or order for the payment of money in connection with the Fusion Litigation Trust Claims, or (ii) any Loan Party or any Subsidiary thereof becomes obligated to pay any money in connection with a settlement of the Fusion Litigation Trust Claims, cause Ultimate Parent, within thirty
(30) days after entry of the judgment or execution of the settlement agreement, as applicable, to:
(a)Pay the Fusion Litigation Trust Claims Loss; or
(b)Directly or indirectly, purchase Equity Interests of Borrower that is not Disqualified Capital Stock or make a cash capital contribution to Borrower in an amount equal to the Fusion Litigation Trust Claims Loss (the “Fusion Litigation Trust Claims Loss Investment”) to enable the applicable Loan Party or Subsidiary thereof to pay the Fusion Litigation Trust Claims Loss.
Notwithstanding the foregoing, instead of the Ultimate Parent, the Loan Parties may pay the Fusion Litigation Trust Claims Loss from cash on their balance sheet to the extent that after such payment the Loan Parties have aggregate balance sheet cash of at least $10,000,000 and any such payment made by the Loan Parties pursuant hereto shall reduce on a dollar for dollar basis the Ultimate Parent’s requirements set forth above.

1.17Compliance with Terms of Leaseholds.
Make all payments and otherwise perform all obligations in respect of all leases of real property to which Borrower or any Subsidiary of Borrower is a party, keep such leases in full force and effect and not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled, notify the Administrative Agent of any default by any party with respect to such leases and cooperate with the Administrative Agent in all respects to cure any such default, and cause each of its Subsidiaries to do so, except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect.
1.18Compliance with Environmental Laws.
Comply, and cause all lessees and other Persons operating or occupying its properties to comply, in all material respects, with all applicable Environmental Laws and Environmental Permits, except, in any case, where the failure to do so, either individually or in the aggregate, would not be reasonably likely to have a Material Adverse Effect; obtain and renew all Environmental Permits necessary for its operations and properties; and conduct any investigation, study, sampling and testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean up all Hazardous Materials from any of its properties, in accordance with the requirements of all Environmental Laws; provided, however, that neither the Borrower nor any of its Subsidiaries shall be required to undertake any such cleanup, removal, remedial or other action to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.
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ARTICLE VII NEGATIVE COVENANTS
Each of the Loan Parties hereby covenants and agrees that on the Closing Date and thereafter until the Facility Termination Date, no Loan Party shall, nor shall it permit any Subsidiary to, directly or indirectly:
1.01Liens.
Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for the following (the “Permitted Liens”):
(a)Liens pursuant to any Loan Document;
(b)Liens existing on the Closing Date and listed on Schedule 7.01 and any renewals, extensions or refinancings thereof, provided that (i) the property covered thereby is not changed,
(ii) the amount secured or benefited thereby is not increased except as contemplated by Section 7.02(b), (iii) the direct or any contingent obligor with respect thereto is not changed, and (iv) any renewal or extension of the obligations secured or benefited thereby is permitted by Section 7.02(b);
(c)Liens for Taxes not yet due or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person in accordance with GAAP;
(d)Statutory Liens such as carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other like Liens arising in the ordinary course of business which are not overdue for a period of more than thirty (30) days or which are being contested in good faith and by appropriate proceedings diligently conducted, if adequate reserves with respect thereto are maintained on the books of the applicable Person; provided that a reserve or other appropriate provision shall have been made therefor;
(e)pledges or deposits in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other social security legislation, other than any Lien imposed by ERISA;
(f)deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(g)easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;
(h)Liens securing judgments for the payment of money (or appeal or other surety bonds relating to such judgments) not constituting an Event of Default under Section 8.01(h);
(i)Liens securing Indebtedness permitted under Section 7.02(c); provided that
(i) such Liens do not at any time encumber any property other than the property financed by such
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Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost or fair market value, whichever is lower, of the property being acquired on the date of acquisition;
(j)bankers’ Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by Borrower or any Subsidiary with any Lender, in each case in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing solely the customary amounts owing to such bank with respect to cash management and operating account arrangements; provided, that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;
(k)Liens arising out of judgments or awards not resulting in an Event of Default; provided the applicable Loan Party or Subsidiary shall in good faith be prosecuting an appeal or proceedings for review;
(l)Any interest or title of a lessor, licensor or sublessor under any lease, license or sublease entered into by any Loan Party or any Subsidiary thereof in the ordinary course of business and covering only the assets so leased, licensed or subleased;
(m)other Liens securing Indebtedness outstanding in an aggregate principal amount not to exceed the Threshold Amount, provided that no such Lien shall extend to or cover any Collateral;
(n)precautionary UCC financing statements filed with respect to any lease permitted by this Agreement;
(o)Liens securing Indebtedness permitted under Section 7.02(l) and Section 7.02(m); and
(p)other Liens not otherwise permitted by any of the other clauses of this Section 7.01, provided that the aggregate amount of obligations secured thereby does not exceed
$250,000.
1.02Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except:
(a)Indebtedness under the Loan Documents;
(b)Indebtedness outstanding on the date hereof and listed on Schedule 7.02 and any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any contingent obligor with respect thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal or extension;
(c)Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section
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7.01(i); provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding shall not exceed $2,000,000;
(d)(i) unsecured Indebtedness of a Subsidiary of Borrower owed to Borrower or a Subsidiary of Borrower, which Indebtedness in the case of this clause (i), shall (x) to the extent required by the Administrative Agent, be evidenced by promissory notes which shall be pledged to the Administrative Agent as Collateral for the Secured Obligations in accordance with the terms of the Security Agreement, (y) be on terms (including subordination terms) acceptable to the Administrative Agent and (z) be otherwise permitted under the provisions of Section 7.03 (“Intercompany Debt”); and (ii) to the extent constituting Indebtedness, Investments and other intercompany transactions by and between Borrower and its Subsidiaries, which are permitted by the terms of Section 7.03 and/or Section 7.08;
(e)Guarantees of Borrower or any Guarantor in respect of Indebtedness otherwise permitted hereunder of Borrower or any Guarantor;
(f)unsecured Indebtedness not contemplated by the above provisions in an aggregate principal amount not to exceed $1,000,000 at any time outstanding; provided that the Loan Parties are in Pro Forma Compliance with each of the financial covenants set forth in Section 7.11;
(g)all Indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person;
(h)(i) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business (provided that such Indebtedness is extinguished within ten (10) Business Days of incurrence and (ii) endorsements for collection or deposit in the ordinary course of business;
(i)(i) Subordinate Debt owing by the Loan Parties under the Parent Subordinated Credit Agreement and (ii) any other Subordinate Debt not in excess of $1,000,000 unless otherwise agreed by the Administrative Agent and the Required Lenders;
(j)contingent obligations in the ordinary course of business arising under indemnity provisions in Contractual Obligations;
(k)unsecured trade payables in the ordinary course of business and payable on normal trade terms and not otherwise prohibited by the terms of this Agreement;
(l)Indebtedness (i) in respect of the Existing Letter of Credit Obligations and replacements thereof and other commercial and trade letters of credit (including reimbursement obligations with respect to any such letters of credit) in the ordinary course of business consistent with past practice, (ii) pursuant to tenders, statutory obligations, bids, leases, governmental contracts, trade contracts, workers’ compensation claims, performance or completion guarantees, surety, stay, customs, appeal, performance and/or return of money bonds or other similar obligations incurred in the ordinary course of business, and (iii) bank guarantees, bankers’ acceptances, performance, bid, appeal and surety bonds, performance and completion guarantees, or similar obligations, in each case, in the ordinary course of business or consistent with past practice.; and
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(m)Indebtedness not in excess of $500,000 owing to KeyBank National Association under that certain Key2Purchase Application and Program Terms and Conditions (the “KeyBank Agreement”), so long as the KeyBank Agreement is terminated and the Indebtedness thereunder is indefeasibly paid in full on or before ninety (90) days after the Closing Date.
1.03Investments.
Make or hold any Investments, except:
(a)Investments held by the Borrower and its Subsidiaries in the form of cash or Cash Equivalents;
(b)advances to officers, directors and employees of the Borrower and its Subsidiaries in an aggregate amount not to exceed $150,000 at any time outstanding, for travel, entertainment, relocation and analogous ordinary business purposes;
(c)(i) Investments by the Borrower and its Subsidiaries in their respective Subsidiaries outstanding on the date hereof, (ii) additional Investments by the Borrower and its Subsidiaries in Loan Parties, (iii) additional Investments by Subsidiaries of the Borrower that are not Loan Parties in other Subsidiaries that are not Loan Parties, (iv) so long as no Event of Default has occurred and is continuing or would result from such Investment, additional Investments by the Loan Parties in Subsidiaries that are not Loan Parties in an aggregate amount invested from the date hereof not to exceed $500,000 per fiscal year, and (v) Investments consisting of Equity Interests obtained in connection with any Permitted Transfers;
(d)Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss;
(e)Guarantees permitted by Section 7.02;
(f)Investments existing on the date hereof (other than those referred to in Section 7.03(c)(i)) and set forth on Schedule 7.03;
(g)to the extent constituting Investments, transactions permitted pursuant to Section
7.08;
(h)the BullsEye Acquisition and any other Permitted Acquisitions;
(i)other Investments constituting securities in securities accounts, not contemplated by the above provisions, not exceeding $2,500,000 in the aggregate in any fiscal year of the Borrower so long as Administrative Agent receives a Qualifying Control Agreement with respect to such securities accounts; and
(j)Dispositions permitted by Section 7.05 and any transfer expressly excluded from the definition of “Disposition” herein.
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1.04Fundamental Changes.
Merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result therefrom:
(a)any Loan Party may Dispose of all or substantially all of its assets (upon voluntary liquidation or otherwise) to Borrower or to another Loan Party;
(b)any Subsidiary that is not a Loan Party may dispose of all or substantially all its assets (including any Disposition that is in the nature of a liquidation) to (i) another Subsidiary that is not a Loan Party or (ii) to a Loan Party; and
(c)Borrower and any of its Subsidiaries may merge into or consolidate with any other Person or permit any other Person to merge into or consolidate with it; provided, however, that in each case, immediately after giving effect thereto (i) in the case of any such merger to which Borrower is a party, Borrower is the surviving Person and (ii) in the case of any such merger to which any Loan Party (other than Borrower) is a party, such Loan Party is the surviving Person.
1.05Dispositions.
Make any Disposition or enter into any agreement to make any Disposition, except:
(a)Permitted Transfers;
(b)Dispositions of obsolete, damaged or worn out property, whether now owned or hereafter acquired, in the ordinary course of business;
(c)Dispositions of equipment or real property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are reasonably promptly applied to the purchase price of such replacement property;
(d)Dispositions permitted by Section 7.04 and any transfer expressly excluded from the definition of “Disposition” herein;
(e)other Dispositions so long as (i) the consideration paid in connection therewith shall be cash or Cash Equivalents paid contemporaneously with consummation of the transaction and shall be in an amount not less than the fair market value of the property disposed of, (ii) if such transaction is a Sale and Leaseback Transaction, such transaction is not prohibited by the terms of Section 7.14, (iii) such transaction does not involve the sale or other disposition of a minority Equity Interests in any Subsidiary, (iv) such transaction does not involve a sale or other disposition of receivables other than receivables owned by or attributable to other property concurrently being disposed of in a transaction otherwise permitted under this Section, and (v) the aggregate net book value of all of the assets sold or otherwise disposed of by the Loan Parties pursuant to this clause (e) and their Subsidiaries in all such transactions occurring after the Closing Date shall not exceed $1,000,000 in the aggregate during any fiscal year;
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(f)the use and disposition of cash or Cash Equivalents to the extent not otherwise prohibited by this Agreement or the other Loan Documents;
(g)the disposition of accounts or payment intangibles (each as defined in the UCC) resulting from the compromise or settlement thereof in the ordinary course of business for less than the full amount thereof;
(h)the license or sublicense, to third parties in arm’s length commercial transactions in the ordinary course of business to the extent that the same does not interfere in any material respect with the business and operations of such Person;
(i)the swap or exchange of any property in the ordinary course of business for reasonably equivalent consideration; and
(j)Dispositions of Inventory or the performance of services in the ordinary course of business.
1.06Restricted Payments.
Declare or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that so long as no Event of Default shall have occurred and be continuing at any time of any action described below or would result therefrom:
(a)any Subsidiary of any Loan Party may make Restricted Payments to any Loan Party and any Loan Party may make Restricted Payments to any other Loan Party;
(b)the Loan Parties may make payments on Subordinate Debt to the extent permitted by the applicable Subordination Agreement or Section 2.16 hereof;
(c)the Borrower may make Permitted Distributions; and
(d)the Borrower and each Subsidiary may declare and make dividend payments or other distributions payable solely in common Equity Interests of such Person;
(e)the Borrower and the other Loan Parties may make payments to the Parent and/or Ultimate Parent pursuant to the terms of the shared services arrangements and other similar transactions contemplated by Section 7.08.
1.07Change in Nature of Business.
Engage in any material line of business substantially different from those lines of business conducted by the Borrower and its Subsidiaries on the date hereof or any business substantially related or incidental thereto.
1.08Transactions with Affiliates.
Enter into or permit to exist any transaction or series of transactions with any officer, director or Affiliate of such Person other than (a) transactions which are entered into in the ordinary course of such Person’s business on fair and reasonable terms and conditions substantially as favorable to such Person as would be obtainable by it in a comparable arm’s length transaction with a Person other than an officer,
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director or Affiliate; (b) shared employee or services arrangements and other similar transactions by and among the Borrower and any or all of its Subsidiaries, the Parent and/or the Ultimate Parent described in summary form on Schedule 7.08, as in existence on the Closing Date or as the same Schedule 7.08 may be updated from time to time in a manner acceptable to the Administrative Agent, provided that such acceptance may not be unreasonably withheld, conditioned or delayed, (c) transactions otherwise permitted by Sections 7.02, 7.03, 7.04, 7.05 and 7.06 hereof, (d) usual and customary indemnification arrangements for the benefit of managers, directors, and officers; (e) payment of usual and customary fees and expenses of managers or directors; (f) employment agreements and usual and customary employee benefit and compensation plans and arrangements, and (g) other ordinary course transactions by and among Borrower and its Subsidiaries from and after the Closing Date on a cost plus basis or otherwise on terms no less favorable to the Borrower and its Subsidiaries than would be able to be obtained from third parties on an arm’s length basis.
1.09Burdensome Agreements.
Enter into, or permit to exist, any Contractual Obligation (except for this Agreement, the other Loan Documents, and the Parent Subordinated Credit Agreement) that (a) encumbers or restricts the ability of any such Person to (i) to act as a Loan Party; (ii) make Restricted Payments to any Loan Party,
(iii) pay any Indebtedness or other obligation owed to any Loan Party, (iv) make loans or advances to any Loan Party, or (v) create any Lien upon any of their properties or assets, whether now owned or hereafter acquired, except, in the case of clause (a)(v) only, for any document or instrument governing Indebtedness incurred pursuant to Section 7.02(c), and/or any Permitted Lien, provided that any such restriction contained therein relates only to the asset or assets constructed or acquired in connection therewith, or (b) requires the grant of any Lien on property for any obligation if a Lien on such property is given as security for the Secured Obligations, except for any Permitted Lien.
1.10Use of Proceeds.
Use the proceeds of any Term Loan, whether directly or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose of purchasing or carrying margin stock or to refund indebtedness originally incurred for such purpose.
1.11Financial Covenants.
(a)Consolidated Total Funded Debt Ratio. Permit the Consolidated Total Funded Debt Ratio as of the end of any Measurement Period ending as of the end of any fiscal quarter of the Borrower set forth below to be greater than the ratio set forth below opposite such period:

Measurement Period Ending
Maximum Consolidated Total Funded Debt Ratio
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Measurement Period Ending
Maximum Consolidated Total Funded Debt Ratio
December 31, 2022
3.75:1.00
March 31, 2023
3.75:1.00
June 30, 2023
3.50:1.00
September 30, 2023
3.50:1.00
December 31, 2023
3.25:1.00
March 31, 2024
3.25:1.00
June 30, 2024
3.25:1.00
September 30, 2024
3.25:1.00
December 31, 2024 and each fiscal quarter ending thereafter
3.00:1.00

(b)Consolidated Fixed Charge Coverage Ratio. Permit the Consolidated Fixed Charge Coverage Ratio as of the end of any Measurement Period ending as of the end of any fiscal quarter of the Borrower set forth below to be less than the ratio set forth below opposite such period:


Measurement Period Ending
Minimum Consolidated Fixed Charge Coverage Ratio
December 31, 2022
1.15:1.00
March 31, 2023
1.15:1.00
June 30, 2023
1.15:1.00
September 30, 2023
1.15:1.00
December 31, 2023 and each fiscal quarter ending thereafter
1.20:1.00
(c)Senior Committed Debt to Consolidated Adjusted EBITDA Ratio. Permit the Senior Committed Debt to Consolidated Adjusted EBITDA Ratio as of the end of any Measurement Period ending as of the end of any fiscal quarter of the Borrower set forth below to be greater than the ratio set forth below opposite such period:


Measurement Period Ending
Senior Committed Debt to Consolidated Adjusted EBITDA Ratio
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Measurement Period Ending
Senior Committed Debt to Consolidated Adjusted EBITDA Ratio
December 31, 2022
2.50:1.00
March 31, 2023
2.50:1.00
June 30, 2023
2.40:1.00
September 30, 2023
2.40:1.00
December 31, 2023
2.40:1.00
March 31, 2024 and each fiscal quarter ending thereafter
2.35:1.00

(d)Equity Cure. In the event the Borrower fails to comply with any covenant contained in Sections 7.11(a) (b), or (c) for any Measurement Period (any such failure, a “Financial Covenant Default”), the Borrower shall have the right to cure the resulting Event of Default on the following terms and conditions (the “Equity Cure Right”):
(i)If the Borrower desires to cure any Financial Covenant Default, the Borrower shall deliver to the Administrative Agent irrevocable written notice of the Borrower’s intent to cure (a “Cure Notice”) no later than five (5) Business Days after the earlier of (x) the date on which financial statements and a Compliance Certificate executed by an Responsible Officer of Borrower for the applicable fiscal quarter are required to be delivered and (y) the date on which financial statements and a Compliance Certificate for the applicable fiscal quarter were actually delivered. The Cure Notice shall set forth the calculation of the amount of the Equity Cure Investment necessary to cure the applicable Financial Covenant Default pursuant to the terms hereof (the “Financial Covenant Cure Amount”).
(ii)If the Borrower delivers a Cure Notice, Ultimate Parent shall, directly or indirectly, purchase Equity Interests of Borrower that is not Disqualified Capital Stock or make a cash capital contribution to Borrower (collectively, an “Equity Cure Investment”) in an amount equal to the Financial Covenant Cure Amount, no later than ten (10) Business Days after the earlier of (x) the date on which financial statements and a Compliance Certificate for the applicable fiscal quarter are required to be delivered and
(y) the date on which financial statements and a Compliance Certificate for the applicable fiscal quarter were actually delivered. The cash proceeds received by Borrower from such purchases or contributions shall be deemed to increase Consolidated Adjusted EBITDA on a dollar-for-dollar basis, and the amount of such increase may be included in a recalculation of the financial covenant(s) giving rise to the Financial Covenant Default for the fiscal quarter immediately preceding such purchase or contribution, as applicable, and, without duplication, for each of the following three fiscal quarters.
(iii)The Equity Cure Right shall not be exercised (x) in more than two (2) fiscal quarters in any four consecutive fiscal quarter period or (y) more than four (4) times during the term of this Agreement, and the amount of any Equity Cure Investment shall be no greater than the amount of Consolidated Adjusted EBITDA required to cause the Borrower to be in compliance with all financial covenants, and any Financial
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Covenant Cure Amounts shall not exceed $5,000,000 per each occurrence or $15,000,000 in the aggregate after the Closing Date.
(iv)Upon timely receipt by Borrower of the cash proceeds from the Equity Cure Investment, and the immediate application of 100% of the proceeds thereof as a mandatory prepayment of the outstanding Term Loans, the applicable Financial Covenant Default shall be deemed cured.
(v)Any Term Loans prepaid with the proceeds of an Equity Cure Investment shall be deemed outstanding for the purpose of determining compliance with the financial covenants for the fiscal quarter being cured and the next three fiscal quarters.
1.12[Reserved].
1.13Amendments of Certain Documents; Fiscal Year; Legal Name, State of Formation; Form of Entity and Accounting Changes.
(a)Amend (i) any of its Organization Documents, (ii) any provisions of any Subordinate Debt (other than as expressly permitted by the applicable Subordination Agreement), or (iii) any BullsEye Purchase Document, in each case in any manner adverse to the Administrative Agent or the Lenders;
(b)change its fiscal year;
(c)without providing ten (10) days prior written notice to the Administrative Agent (or such extended period of time as agreed to by the Administrative Agent), change its name, state of formation, form of organization or principal place of business; or
(d)make any material change in accounting policies or reporting practices, except as required by GAAP.
1.14Sale and Leaseback Transactions.
Enter into any Sale and Leaseback Transaction.
1.15Prepayments, Etc. of Indebtedness.
Prepay, redeem, purchase, defease or otherwise satisfy or obligate itself to do so prior to the scheduled maturity thereof in any manner (including by the exercise of any right of setoff), or make any payment in violation of any Subordination Agreement, or standstill or collateral sharing terms of or governing any Indebtedness (including but not limited to the Subordinate Debt), except (a) the prepayment of the Term Loans in accordance with the terms of this Agreement, (b) regularly scheduled or required repayments or redemptions of Indebtedness under the Indebtedness set forth in Schedule 7.02 and refinancings and refundings of such Indebtedness in compliance with Section 7.02(b) and (c) as may be permitted by the terms of any Subordination Agreement in favor of the Administrative Agent.
1.16[Reserved].
1.17[Reserved].
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1.18Sanctions.
Directly or indirectly, use the proceeds of the Term Loans, or lend, contribute or otherwise make available the proceeds of the Term Loans to any Person, to fund any activities of or business with any Person, or in any Designated Jurisdiction, that, at the time of such funding, is the subject of Sanctions, or in any other manner that will result in a violation by any Person (including any Person participating in the transaction, whether as Lender, Arranger, Administrative Agent, or otherwise) of Sanctions.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
1.01Events of Default.
Any of the following shall constitute an Event of Default:
(a)Non-Payment. The Borrower or any other Loan Party fail to pay (i) when and as required to be paid herein, any amount of principal of the Term Loans, or (ii) within three (3) days after the same becomes due, any interest on the Term Loans or any fee due hereunder, or
(iii) within five (5) days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b)Specific Covenants. (i) Any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 6.05, 6.08, 6.11, Article VII or Article X or
(ii) any of the Loan Parties fails to perform or observe any term, covenant or agreement contained in Sections 3 or 4 of the Security Agreement; or (ii) any Loan Party fails to perform or observe any term, covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.10 or 6.12 and such failure remains un-remedied for a period of ten (10) days; or
(c)Other Defaults. Any Loan Party fails to perform or observe any other covenant or agreement (not specified in Section 8.01(a) or (b) above) contained in any Loan Document on its part to be performed or observed and such failure continues for thirty (30) days; or
(d)Representations and Warranties. Any representation, warranty, certification or statement of fact made or deemed made by or on behalf of the Borrower or any other Loan Party herein, in any other Loan Document, or in any document delivered in connection herewith or therewith (in each case other than forecasted, forward-looking information and projections) shall be incorrect or misleading when made or deemed made; or
(e)Cross-Default. (i) Any Loan Party or any Subsidiary thereof (A) fails to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee (other than Indebtedness hereunder and Indebtedness under Swap Contracts and as may be required by the terms of any subordination agreement in favor of the Administrative Agent) having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount, or (B) fails to observe or perform any other agreement or condition relating to any such Indebtedness or Guarantee having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than the Threshold Amount or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event occurs, the
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effect of which default or other event is to cause, or to permit, the holder or holders of such Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to be demanded or to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, or such Guarantee to become payable or cash collateral in respect thereof to be demanded; (ii) there occurs under any Swap Contract an Early Termination Date (as defined in such Swap Contract) resulting from (A) any event of default under such Swap Contract as to which a Loan Party or any Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract) or (B) any Termination Event (as so defined) under such Swap Contract as to which a Loan Party or any Subsidiary thereof is an Affected Party (as so defined) and, in either event, the Swap Termination Value owed by such Loan Party or such Subsidiary as a result thereof is greater than the Threshold Amount; or
(f)Insolvency Proceedings, Etc. Any Loan Party or any Subsidiary thereof institutes or consents to the institution of any proceeding under any Debtor Relief Law, or makes an assignment for the benefit of creditors; or applies for or consents to the appointment of any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer for it or for all or any material part of its property; or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar officer is appointed without the application or consent of such Person and the appointment continues undischarged or unstayed for forty-five (45) calendar days; or any proceeding under any Debtor Relief Law relating to any such Person or to all or any material part of its property is instituted without the consent of such Person and continues undismissed or unstayed for sixty (60) calendar days, or an order for relief is entered in any such proceeding; or
(g)Inability to Pay Debts; Attachment. (i) Any Loan Party or any Subsidiary thereof becomes unable or admits in writing its inability or fails generally to pay its debts as they become due, or (ii) any writ or warrant of attachment or execution or similar process is issued or levied against all or any material part of the property of any such Person and is not released, vacated or fully bonded within thirty (30) days after its issue or levy; or
(h)Judgments. Other than the Fusion Litigation Trust Claims to the extent the Loan Parties are in compliance with Section 6.16 hereof, there is entered against any Loan Party or any Subsidiary thereof (i) one or more final judgments or orders for the payment of money in an aggregate amount (as to all such judgments and orders) (to the extent not covered by independent third-party insurance as to which the insurer is rated at least “A” by A.M. Best Company, has been notified of the potential claim and does not dispute coverage) that has or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or order, or (B) there is a period of twenty (20) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect, or (ii) any one or more non-monetary final judgments are entered that have, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and, in either case, (A) enforcement proceedings are commended by any creditor upon such judgment or order, or (B) there is a period of twenty (20) consecutive days during which a stay of enforcement of such judgment, by reason of a pending appeal or otherwise, is not in effect; or
(i)ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan which has resulted or would reasonably be expected to result in liability of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in
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an aggregate amount in excess of the Threshold Amount, or (ii) Borrower 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 the Threshold Amount; or
(j)Invalidity of Loan Documents. Any provision of any Loan Document, at any time after its execution and delivery and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in full of all Obligations arising under the Loan Documents, ceases to be in full force and effect in any material respect; or any Loan Party or any other Person contests in any manner the validity or enforceability of any provision of any Loan Document; or any Loan Party denies that it has any or further liability or obligation under any provision of any Loan Document, or purports to revoke, terminate or rescind any provision of any Loan Document;
(k)Change of Control. There occurs any Change of Control;
(l)Payment on Subordinate Debt. Any Loan Party makes any payment on account of any Subordinate Debt except as otherwise permitted under the Subordination Agreement; or
(m)Material Adverse Effect. Any Material Adverse Effect occurs.
Without limiting the provisions of Article VIII, if a Default shall have occurred under the Loan Documents, then such Default will continue to exist until it either is cured (to the extent specifically permitted) in accordance with the Loan Documents or is otherwise expressly waived by Administrative Agent (with the approval of requisite Required Lenders (in their sole discretion) as determined in accordance with Section 11.01); and once an Event of Default occurs under the Loan Documents, then such Event of Default will continue to exist until it is expressly waived by the Required Lenders or by the Administrative Agent with the approval of the Required Lenders, as required hereunder in Section 11.01.
1.02Remedies upon Event of Default.
If any Event of Default occurs and is continuing, the Administrative Agent shall, at the request of, or may, with the consent of, the Required Lenders, take any or all of the following actions:
(a)declare the unpaid principal amount of all outstanding Term Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrower; and
(b)exercise on behalf of itself and the Lenders all rights and remedies available to it and the Lenders under the Loan Documents or applicable Law or equity;
provided, however, that upon the occurrence of an actual or deemed entry of an order for relief with respect to the Borrower under the Bankruptcy Code of the United States, the unpaid principal amount of all outstanding Term Loans and all interest and other amounts as aforesaid shall automatically become due and payable, without further act of the Administrative Agent or any Lender.
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1.03Application of Funds.
After the exercise of remedies provided for in Section 8.02 (or after the Loans have automatically become immediately due and payable as set forth in the proviso to Section 8.02) or if at any time insufficient funds are received by and available to the Administrative Agent to pay fully all Secured Obligations then due hereunder, any amounts received on account of the Secured Obligations shall, subject to the provisions of Sections 2.15 and 2.17, be applied by the Administrative Agent in the following order:
First, to payment of that portion of the Secured Obligations constituting fees, indemnities, expenses and other amounts (including the reasonable and documented out-of-pocket fees, charges and disbursements of external counsel to the Administrative Agent and amounts payable under Article III) payable to the Administrative Agent in its capacity as such;
Second, to payment of that portion of the Secured Obligations constituting fees, indemnities and other amounts (other than principal or interest) payable to the Lenders (including, if reimbursable hereunder, the fees, charges and disbursements of external counsel to the respective Lenders) arising under the Loan Documents and amounts payable under Article III, ratably among them in proportion to the respective amounts described in this clause Second payable to them;
Third, to payment of that portion of the Secured Obligations constituting accrued and unpaid interest on the Term Loans and other Secured Obligations arising under the Loan Documents, ratably among the Lenders in proportion to the respective amounts described in this clause Third payable to them;
Fourth, to payment of that portion of the Secured Obligations constituting unpaid principal of the Term Loans and Secured Obligations then owing under Secured Hedge Agreements and Secured Cash Management Agreements, ratably among the Lenders, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause Fourth held by them; and
Last, the balance, if any, after all of the Secured Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by Law.
Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Secured Obligations otherwise set forth above in this Section.
Notwithstanding the foregoing, Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements shall be excluded from the application described above if the Administrative Agent has not received a Secured Party Designation Notice, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. Each Cash Management Bank or Hedge Bank not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article IX for itself and its Affiliates as if a “Lender” party hereto.
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ARTICLE IX ADMINISTRATIVE AGENT
1.01Appointment and Authority.
(a)Appointment. Each of the Lenders hereby irrevocably appoints, designates and authorizes Banc of California to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and neither Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. It is understood and agreed that the use of the term “agent” herein or in any other Loan Documents (or any other similar term) with reference to the Administrative 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 contracting parties.
(b)Collateral Agent. The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacities as a potential Hedge Bank and a potential Cash Management Bank) hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for the purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Secured Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05 for the purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this Article IX and Article XI (including Section 11.04(c), as though such co- agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.
1.02Rights as a Lender.
The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, own securities of, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of banking, trust, financial, advisory, underwriting or other business with any Loan Party or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders or to provide notice to or consent of the Lenders with respect thereto.
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1.03Exculpatory Provisions.
The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing, the Administrative Agent and its Related Parties:
(a)shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing;
(b)shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents), provided that the Administrative Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law, including for the avoidance of doubt any action that may be in violation of the automatic stay under any Debtor Relief Law or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of any Debtor Relief Law; and
(c)shall not, except as expressly set forth herein and in the other Loan Documents, have any duty or responsibility to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity.
Neither the Administrative Agent nor any of its Related Parties shall be liable for any action taken or not taken by the Administrative Agent under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby or thereby (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary), or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 11.01 and 8.02) or (ii) in the absence of its own gross negligence or willful misconduct as determined by a court of competent jurisdiction by final and nonappealable judgment. Any such action taken or failure to act pursuant to the foregoing shall be binding on all Lenders. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice describing such Default is given in writing to the Administrative Agent by the Borrower or a Lender.
Neither the Administrative Agent nor any of its Related Parties have any duty or obligation to any Lender or participant or any other Person to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Collateral Documents, (v) the value or the sufficiency of any Collateral, or (vi) the satisfaction of any condition set forth in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.
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1.04Reliance by Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall be fully protected in relying and shall not incur any liability for relying upon, any notice, request, certificate, communication, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall be fully protected in relying and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of the Term Loans, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of the Term Loans. The Administrative Agent may consult with legal counsel (who may be counsel for the Loan Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objections.
1.05Delegation of Duties.
The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the Term Loans as well as activities as Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent acted with gross negligence or willful misconduct in the selection of such sub- agents.
1.06Resignation of Administrative Agent.
(a)Notice. The Administrative Agent may at any time give notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation (or such earlier day as shall be agreed by the Required Lenders) (the “Resignation Effective Date”), then the retiring Administrative Agent may (but shall not be obligated to) on behalf of the Lenders, appoint a successor Administrative Agent meeting the qualifications set forth above. Whether or not a successor has been appointed, such resignation shall become effective in accordance with such notice on the Resignation Effective Date.
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(b)Removal of Administrative Agent. If the Person serving as the Administrative Agent is a Defaulting Lender pursuant to clause (e) of the definition thereof, the Required Lenders may, to the extent permitted by applicable Law, by notice in writing to the Borrower and such Person remove such Person as the Administrative Agent and, in consultation with the Borrower, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date
(c)Effect of Resignation. With effect from the Resignation Effective Date or the Removal Effective Date (as applicable) (i) the retiring or removed Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) except for any indemnity payments or other amounts then owed to the retiring or removed Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and directly, until such time, if any, as the Required Lenders appoint a successor Administrative Agent as provided for above. Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring or removed Administrative Agent (other than as provided in Section 3.01(g) and other than any rights to indemnity payments or other amounts owed to the retiring Administrative Agent as of the Resignation Effective Date or the Removal Effective Date, as applicable), and the retiring or removed Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring or removed Administrative Agent’s resignation or removal hereunder and under the other Loan Documents, the provisions of this Article and Section 11.04 shall continue in effect for the benefit of such retiring or removed Administrative Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring or removed Administrative Agent was acting as Administrative Agent.
1.07Non-Reliance on Administrative Agent and Other Lenders.
Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder.
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1.08No Other Duties, Etc.
Anything herein to the contrary notwithstanding, none of the titles listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.
1.09Administrative Agent May File Proofs of Claim; Credit Bidding.
In case of the pendency of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of the Term Loans shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loans and all other Secured Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent under Sections 2.11, 2.12(b) and 11.04) allowed in such judicial proceeding; and
(b)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent under Sections 2.12(b) and 11.04.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Secured Obligations or the rights of any Lender to authorize the Administrative Agent to vote in respect of the claim of any Lender or in any such proceeding.
The Loan Parties and the Secured Parties hereby irrevocably authorize the Administrative Agent, based upon the instruction of the Required Lenders, to (a) credit bid and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Section 363 of the Bankruptcy Code of the United States or any similar Laws in any other jurisdictions to which a Loan Party is subject, or (b) credit bid and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral at any other sale or foreclosure conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with applicable Law. In connection with any such credit bid and purchase, the Secured Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Secured Obligations with respect to contingent or unliquidated claims being estimated for such purpose if the fixing or liquidation thereof would not unduly delay the ability of the
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Administrative Agent to credit bid and purchase at such sale or other disposition of the Collateral and, if such claims cannot be estimated without unduly delaying the ability of the Administrative Agent to credit bid, then such claims shall be disregarded, not credit bid, and not entitled to any interest in the asset or assets purchased by means of such credit bid) and the Secured Parties whose Secured Obligations are credit bid shall be entitled to receive interests (ratably based upon the proportion of their Secured Obligations credit bid in relation to the aggregate amount of Secured Obligations so credit bid) in the asset or assets so purchased (or in the Equity Interests of the acquisition vehicle or vehicles that are used to consummate such purchase). Except as provided above and otherwise expressly provided for in this Agreement, in the other Loan Documents or in the other Collateral Documents, the Administrative Agent will not execute and deliver a release of any Lien on any Collateral. Upon request by the Administrative Agent or the Borrower at any time, the Secured Parties will confirm in writing the Administrative Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 9.09.
1.10Collateral and Guaranty Matters.
Each of the Lenders (including in its capacities as a potential Cash Management Bank and a potential Hedge Bank) irrevocably authorize the Administrative Agent, at its option and in its discretion:
(a)to release any Lien on any property granted to or held by the Administrative Agent under any Loan Document (i) upon the Facility Termination Date, (ii) that is sold or otherwise disposed of or to be sold or otherwise disposed of as part of or in connection with any sale or other disposition permitted hereunder or under any other Loan Document or Collateral Document, or (iii) if approved, authorized or ratified in writing by the Required Lenders in accordance with Section 11.01;
(b)to subordinate any Lien on any property granted to or held by the Administrative Agent under any Loan Document to the holder of any Lien on such property that is permitted by Section 7.01(i); and
(c)to release any Guarantor from its obligations under the Guaranty if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.
Upon request by the Administrative Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10. In each case as specified in this Section 9.10, the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case in accordance with the terms of the Loan Documents and this Section 9.10.
The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon, or any certificate prepared by any Loan Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral.
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1.11Secured Cash Management Agreements and Secured Hedge Agreements.
Except as otherwise expressly set forth herein, no Cash Management Bank or Hedge Bank that obtains the benefit of the provisions of Section 8.03, the Guaranty or any Collateral by virtue of the provisions hereof or any Collateral Document shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) (or to notice of or to consent to any amendment, waiver or modification of the provisions hereof or of the Guaranty or any Collateral Document) other than in its capacity as a Lender and, in such case, only to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article IX to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements except to the extent expressly provided herein and unless the Administrative Agent has received a Secured Party Designation Notice of such Secured Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Cash Management Bank or Hedge Bank, as the case may be. The Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Secured Obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements in the case of a Facility Termination Date.
1.12Certain ERISA Matters.
(a)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of Borrower or any other Loan Party, that at least one of the following is and will be true:
(i)such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans;
(ii)the transaction exemption set forth in one or more PTEs, such as PTE 84-
14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement;
(iii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection
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(a)of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or
(iv)such other representation, warranty and covenant as may be agreed in writing between Administrative Agent, in its sole discretion, and such Lender.
(b)In addition, unless either (1) sub-clause (i) in the immediately preceding clause
(a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, Administrative Agent and not, for the avoidance of doubt, to or for the benefit of Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any other Loan Document or any documents related to hereto or thereto).
ARTICLE X CONTINUING GUARANTY
1.01Guaranty.
Each Secured Guarantor hereby absolutely and unconditionally, jointly and severally guarantees, as a guaranty of payment and performance and not merely as a guaranty of collection, prompt payment when due, whether at stated maturity, by required prepayment, upon acceleration, demand or otherwise, and at all times thereafter, of any and all Obligations and Additional Secured Obligations (for each Secured Guarantor, subject to the proviso in this sentence, its “Guaranteed Obligations”); provided that
(a) the Guaranteed Obligations of a Secured Guarantor shall exclude any Excluded Swap Obligations with respect to such Secured Guarantor and (b) the liability of each Secured Guarantor individually with respect to this Guaranty shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code of the United States or any comparable provisions of any applicable state law. The Administrative Agent’s books and records showing the amount of the Obligations shall be admissible in evidence in any action or proceeding, and shall be binding upon each Secured Guarantor, and conclusive for the purpose of establishing the amount of the Secured Obligations. This Guaranty shall not be affected by the genuineness, validity, regularity or enforceability of the Secured Obligations or any instrument or agreement evidencing any Secured Obligations, or by the existence, validity, enforceability, perfection, non-perfection or extent of any collateral therefor, or by any fact or circumstance relating to the Secured Obligations which might otherwise constitute a defense to the obligations of the Secured Guarantors, or any of them, under this Guaranty, and each Secured Guarantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the foregoing, in each case, except for the defense of payment of the Obligations in full and the occurrence of the Facility Termination Date.
1.02Rights of Lenders.
Each Secured Guarantor consents and agrees that the Secured Parties may, at any time and from time to time, without notice or demand, and without affecting the enforceability or continuing
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effectiveness hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise change the time for payment or the terms of the Secured Obligations or any part thereof; (b) take, hold, exchange, enforce, waive, release, fail to perfect, sell, or otherwise dispose of any security for the payment of this Guaranty or any Secured Obligations; (c) apply such security and direct the order or manner of sale thereof as the Administrative Agent and the Lenders in their sole discretion may determine; and
(d)release or substitute one or more of any endorsers or other guarantors of any of the Secured Obligations. Without limiting the generality of the foregoing, each Secured Guarantor consents to the taking of, or failure to take, any action which might in any manner or to any extent vary the risks of such Secured Guarantor under this Guaranty or which, but for this provision, might operate as a discharge of such Secured Guarantor.
1.03Certain Waivers.
Each Secured Guarantor waives (a) any defense arising by reason of any disability or other defense of the Borrower or any other guarantor, or the cessation from any cause whatsoever (including any act or omission of any Secured Party) of the liability of the Borrower or any other Loan Party; (b) any defense based on any claim that such Secured Guarantor’s obligations exceed or are more burdensome than those of the Borrower or any other Loan Party; (c) the benefit of any statute of limitations affecting any Secured Guarantor’s liability hereunder; (d) any right to proceed against the Borrower or any other Loan Party, proceed against or exhaust any security for the Secured Obligations, or pursue any other remedy in the power of any Secured Party whatsoever; (e) any benefit of and any right to participate in any security now or hereafter held by any Secured Party; and (f) to the fullest extent permitted by law, any and all other defenses or benefits that may be derived from or afforded by applicable Law limiting the liability of or exonerating guarantors or sureties, in each case, except for the defense of payment of the Obligations in full and the occurrence of the Facility Termination Date. Each Secured Guarantor expressly waives all setoffs and counterclaims and all presentments, demands for payment or performance, notices of nonpayment or nonperformance, protests, notices of protest, notices of dishonor and all other notices or demands of any kind or nature whatsoever with respect to the Secured Obligations, and all notices of acceptance of this Guaranty or of the existence, creation or incurrence of new or additional Secured Obligations. Each Secured Guarantor waives any rights and defenses that are or may become available to it by reason of §§ 2787 to 2855, inclusive, and §§ 2899 and 3433 of the California Civil Code.
1.04Obligations Independent.
The obligations of each Secured Guarantor hereunder are those of primary obligor, and not merely as surety, and are independent of the Secured Obligations and the obligations of any other guarantor, and a separate action may be brought against each Secured Guarantor to enforce this Guaranty whether or not the Borrower or any other person or entity is joined as a party.
1.05Subrogation.
No Secured Guarantor shall exercise any right of subrogation, contribution, indemnity, reimbursement or similar rights with respect to any payments it makes under this Guaranty until all of the Secured Obligations and any amounts payable under this Guaranty have been indefeasibly paid and performed in full. If any amounts are paid to a Secured Guarantor in violation of the foregoing limitation, then such amounts shall be held in trust for the benefit of the Secured Parties and shall forthwith be paid to the Administrative Agent to reduce the amount of the Secured Obligations, whether matured or unmatured.
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1.06Termination; Reinstatement.
This Guaranty is a continuing and irrevocable guaranty of all Secured Obligations now or hereafter existing and shall remain in full force and effect until the Facility Termination Date. Notwithstanding the foregoing, this Guaranty shall continue in full force and effect or be revived, as the case may be, if any payment by or on behalf of the Borrower or a Secured Guarantor is made, or any of the Secured Parties exercises its right of setoff, in respect of the Secured Obligations and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by any of the Secured Parties in their discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Laws or otherwise, all as if such payment had not been made or such setoff had not occurred and whether or not the Secured Parties are in possession of or have released this Guaranty and regardless of any prior revocation, rescission, termination or reduction. The obligations of each Secured Guarantor under this paragraph shall survive termination of this Guaranty.
1.07Stay of Acceleration.
If acceleration of the time for payment of any of the Secured Obligations is stayed, in connection with any case commenced by or against a Secured Guarantor or the Borrower under any Debtor Relief Laws, or otherwise, all such amounts shall nonetheless be payable by each Secured Guarantor, jointly and severally, immediately upon demand by the Secured Parties.
1.08Condition of Borrower.
Each Secured Guarantor acknowledges and agrees that it has the sole responsibility for, and has adequate means of, obtaining from the Borrower and any other guarantor such information concerning the financial condition, business and operations of the Borrower and any such other guarantor as such Secured Guarantor requires, and that none of the Secured Parties has any duty, and such Secured Guarantor is not relying on the Secured Parties at any time, to disclose to it any information relating to the business, operations or financial condition of the Borrower or any other guarantor (each Secured Guarantor waiving any duty on the part of the Secured Parties to disclose such information and any defense relating to the failure to provide the same).
1.09Appointment of Borrower.
Each of the Secured Guarantors hereby appoints the Borrower to act as its agent for all purposes of this Agreement and the other Loan Documents and agrees that (a) the Borrower and may execute such documents on behalf of such Secured Guarantor as the Borrower deems appropriate in their or its sole discretion and each Secured Guarantor shall be obligated by all of the terms of any such document executed on its behalf, (b) any notice or communication delivered by the Administrative Agent or the Lender to the Borrower shall be deemed delivered to each Secured Guarantor and (c) the Administrative Agent or the Lenders may accept, and be permitted to rely on, any document, instrument or agreement executed by the Borrower on behalf of each Secured Guarantor.
1.10Right of Contribution.
The Secured Guarantors agree among themselves that, in connection with payments made hereunder, each Secured Guarantor shall have contribution rights against the other Secured Guarantors as permitted under applicable Law.
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1.11Keepwell.
Each Loan Party that is a Qualified ECP Guarantor at the time the Guaranty or the grant of a Lien under the Loan Documents, in each case, by any Specified Loan Party, becomes effective with respect to any Swap Obligation, hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support to each Specified Loan Party with respect to such Swap Obligation as may be needed by such Specified Loan Party from time to time to honor all of its obligations under the Loan Documents in respect of such Swap Obligation (but, in each case, only up to the maximum amount of such liability that can be hereby incurred without rendering such Qualified ECP Guarantor’s obligations and undertakings under this Article X voidable under applicable Law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations and undertakings of each Qualified ECP Guarantor under this Section shall remain in full force and effect until the Secured Obligations have been indefeasibly paid and performed in full. Each Loan Party intends this Section to constitute, and this Section shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of, each Specified Loan Party for all purposes of the Commodity Exchange Act.
ARTICLE XI MISCELLANEOUS
1.01Amendments, Etc.
No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent to any departure by the Borrower or any other Loan Party therefrom, shall be effective unless in writing signed by the Required Lenders and the Borrower or the applicable Loan Party, as the case may be, and acknowledged by the Administrative Agent, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such amendment, waiver or consent shall:
(a)waive any condition set forth in Section 4.01, without the written consent of each
Lender;
(b)extend or increase any Commitment of any Lender without the written consent of such Lender (it being understood that a waiver of any condition set forth in Section 4.01 or the waiver of any Default shall not constitute an extension or increase of any Commitment of any Lender);
(c)postpone any date fixed by this Agreement or any other Loan Document for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under such other Loan Document without the written consent of each Lender entitled to such payment; provided, however, that only the consent of the Required Lenders shall be necessary to postpone or rescind any obligation of the Borrower to pay interest at the Default Rate;
(d)reduce the principal of, or the rate of interest specified herein on, the Term Loans, or (subject to clause (ii) of the third proviso to this Section 11.01) any fees or other amounts payable hereunder or under any other Loan Document, or change the manner of computation of any financial ratio (including any change in any applicable defined term) used in determining the Applicable Margin that would result in a reduction of any interest rate on the Term Loans without the written consent of each Lender entitled to such amount; provided,
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however, that only the consent of the Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any obligation of the Borrower to pay interest or at the Default Rate or (ii) to amend any financial covenant hereunder (or any defined term used therein) even if the effect of such amendment would be to reduce the rate of interest on the Term Loans or to reduce any fee payable hereunder;
(e)change (i) Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender or (ii) the order of application of any prepayment of the Term Loans from the application thereof set forth in the applicable provisions of Section 2.07(f) in any manner that materially and adversely affects the Lenders without the written consent of the Required Lenders or (iii) 2.14(f) in a manner that would alter the pro rata application required thereby without the written consent of each Lender directly affected thereby;
(f)change any provision of this Section 11.01 or the definition of “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or thereunder or make any determination or grant any consent hereunder, without the written consent of each Lender;
(g)release all or substantially all of the Collateral in any transaction or series of related transactions, without the written consent of each Lender;
(h)release all or substantially all of the value of the Guaranty, without the written consent of each Lender, except to the extent the release of any Subsidiary from the Guaranty is permitted pursuant to Section 9.10 (in which case such release may be made by the Administrative Agent acting alone);
(i)release the Borrower or permit the Borrower to assign or transfer any of their rights or obligations under this Agreement or the other Loan Documents without the consent of each Lender; or
(j)impose any greater restriction on the ability of any Lender to assign any of its rights or obligations hereunder without the written consent of the Required Lenders;
and provided, further, that (i) no amendment, waiver or consent shall, unless in writing and signed by the Administrative Agent in addition to the Lenders required above, affect the rights or duties of the Administrative Agent under this Agreement or any other Loan Document; and (ii) the Fee Letter may be amended, or rights or privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding anything to the contrary herein, (A) no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender, may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender; (B) each Lender is entitled to vote as such Lender sees fit on any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code of the United States supersedes the unanimous consent provisions set forth herein and (C) the Required Lenders shall determine whether or not to allow a Loan
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Party to use cash collateral in the context of a bankruptcy or insolvency proceeding and such determination shall be binding on all of the Lenders.
Notwithstanding anything to the contrary herein the Administrative Agent may, with the prior written consent of the Borrower only, amend, modify or supplement this Agreement or any of the other Loan Documents to cure any ambiguity, omission, mistake, defect or inconsistency.
If any Lender does not consent to a proposed amendment, waiver, consent or release with respect to any Loan Document that requires the consent of each Lender and that has been approved by the Required Lenders, the Borrower may replace such Non-Consenting Lender in accordance with Section
11.13; provided that such amendment, waiver, consent or release can be effected as a result of the assignment contemplated by such Section (together with all other such assignments required by the Borrower to be made pursuant to this paragraph).
1.02Notices; Effectiveness; Electronic Communications.
(a)Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in subsection (b) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax transmission or e-mail transmission as follows, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(i)if to the Borrower or any other Loan Party, or the Administrative Agent, to the address, fax number, e-mail address or telephone number specified for such Person on Schedule 1.01(a); and
(ii)if to any other Lender, to the address, fax number, e-mail address or telephone number specified in its Administrative Questionnaire (including, as appropriate, notices delivered solely to the Person designated by a Lender on its Administrative Questionnaire then in effect for the delivery of notices that may contain material non-public information relating to the Borrower).
Notices and other communications sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices and other communications sent by (fax transmission or e-mail transmission shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices and other communications delivered through electronic communications to the extent provided in subsection (b) below shall be effective as provided in such subsection (b).
(b)Electronic Communications. Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communication (including e-mail address and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may each, in its or their discretion, agree to accept notices and other communications to it or to them hereunder by
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electronic communications pursuant to procedures approved by it or them, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail address or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor; provided that, for both clauses (i) and (ii), if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice, email or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.
(c)The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON- INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE
BORROWER MATERIALS OR THE PLATFORM. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Borrower, any Lender, or any other Person for losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or otherwise) arising out of the Borrower’s, any Loan Party’s or the Administrative Agent’s transmission of Borrower Materials or any other Information through the Internet, telecommunications, electronic or other information transmission systems.
(d)Change of Address, Etc. Each of the Borrower or the Administrative Agent may change its or their address, fax number or telephone number or e-mail address for notices and other communications hereunder by notice to the other parties hereto. Each other Lender may change its address, fax number or telephone number or e-mail address for notices and other communications hereunder by notice to the Borrower or the Administrative Agent. In addition, each Lender agrees to notify the Administrative Agent from time to time to ensure that the Administrative Agent has on record (i) an effective address, contact name, telephone number, fax number and e-mail address to which notices and other communications may be sent and
(ii) accurate wire instructions for such Lender. Furthermore, each Public Lender agrees to cause at least one (1) individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States federal and state securities Laws, to make reference to Borrower Materials that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower or its securities for purposes of United States federal or state securities laws.
(e)Reliance by Administrative Agent and Lenders. The Administrative Agent and the Lenders shall be entitled to rely and act upon any notices (including telephonic or electronic
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Loan Notices) purportedly given by or on behalf of any Loan Party even if (i) such notices were not made in a manner specified herein, were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof. The Loan Parties shall indemnify the Administrative Agent, each Lender and the Related Parties of each of them from all losses, costs, expenses and liabilities resulting from the reliance by such Person on each notice purportedly given by or on behalf of a Loan Party, in each case, except to the extent of the indemnified party’s own gross negligence or willful misconduct. All telephonic notices to and other telephonic communications with the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording.
1.03No Waiver; Cumulative Remedies; Enforcement.
No failure by any Lender or the Administrative Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or under any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided, and provided under each other Loan Document, are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.
Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 8.02 for the benefit of all the Lenders; provided, however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as Administrative Agent) hereunder and under the other Loan Documents, (b) any Lender from exercising setoff rights in accordance with Section 11.08 (subject to the terms of Section 2.15), or (c) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and (ii) in addition to the matters set forth in clauses (b) and (c) of the preceding proviso and subject to Section 2.15, any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.
1.04Expenses; Indemnity; Damage Waiver.
(a)Costs and Expenses. The Loan Parties shall pay (i) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable and documented fees, charges and disbursements of external counsel for the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent (including the reasonable and documented fees, charges and disbursements of any external counsel for the Administrative Agent), (A) in connection with this Agreement and
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the other Loan Documents, including its rights under this Section, or (B) in connection with Loans made hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided, that the reimbursement under this clause (ii) shall be limited to the reasonable and documented out-of-pocket costs of one firm of counsel for the Administrative Agent (plus local counsel) and (if applicable and reasonably necessary) one local counsel in each relevant material jurisdiction for Administrative Agent and (iii) after the occurrence and during the continuance of an Event of Default, also all reasonable and documented out-of-pocket expenses incurred by any Lender (including the reasonable and documented fees, charges and disbursements of any external counsel for any Lender), (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with Loans made hereunder, including all such reasonable and documented out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans; provided, that the reimbursement under this clause (iii) shall be limited to the reasonable and documented out-of-pocket costs of one firm of counsel (plus local counsel) for the Lenders, taken as a whole (and, in the case of an actual or perceived conflict of interest, of another firm of counsel for such affected Lender, as applicable) and (if applicable and reasonably necessary) one local counsel in each relevant material jurisdiction for the Lenders).
(b)Indemnification by the Loan Parties. The Loan Parties shall indemnify the Administrative Agent (and any sub-agent thereof) and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all actual and documented out-of-pocket losses, claims, damages, liabilities and related expenses (including the reasonable and documented fees, charges and disbursements of any external counsel for any Indemnitee provided that the same shall be limited to the reasonable and documented out-of-pocket costs of one firm of counsel (plus local counsel) to all Lenders (and, in the case of an actual or perceived conflict of interest, of another firm of counsel for such affected Lender) and (if applicable and reasonably necessary) and one firm of counsel (plus local counsel) to Administrative Agent and (if applicable and reasonably necessary) one local counsel in each relevant material jurisdiction for all Lenders and one local counsel in each relevant material jurisdiction for Administrative Agent and, solely in the case of a conflict of interest between Lenders, one additional primary counsel and (if applicable and reasonably necessary) one local counsel in each relevant material jurisdiction for each group of affected Lenders similarly situated and taken as a whole), incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the Borrower or any other Loan Party) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its Related Parties only, the administration of this Agreement and the other Loan Documents (including in respect of any matters addressed in Section 3.01), (ii) the Term Loans or the use or proposed use of the proceeds therefrom,
(iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by a Loan Party or any of its Subsidiaries, or any Environmental Liability related in any way to a Loan Party or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party or any of the Borrower’s or such Loan Party’s directors, shareholders or
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creditors, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,
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damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee, or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction or (z) arise out of any claim, litigation, investigation or proceeding brought by such Indemnitee solely against another Indemnitee (other than any claim, litigation, investigation or proceeding that is brought by or against Administrative Agent, acting in its capacity as Administrative Agent) that does not involve any act or omission of a Loan Party. Without limiting the provisions of Section 3.01(c), this Section 11.04(b) shall not apply with respect to Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
(c)Reimbursement by Lenders. To the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under subsection (a) or (b) of this Section to be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub- agent) or such Related Party, as the case may be, such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought based on each Lender’s share of the aggregate outstanding principal amount of the Term Loans at such time) of such unpaid amount (including any such unpaid amount in respect of a claim asserted by such Lender), such payment to be made severally among them based on such Lender’s pro rata share of the Term Loans (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought), provided, further that, the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent), in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub- agent), in connection with such capacity. The obligations of the Lenders under this subsection (c) are subject to the provisions of Section 2.14(d).
(d)Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no party hereto shall assert, and each party hereto hereby waives, and acknowledges that no other Person shall have, any claim against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, the Term Loans or the use of the proceeds thereof. No Indemnitee referred to in subsection (b) above shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed to such unintended recipients by such Indemnitee through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of competent jurisdiction.
(e)Payments. All amounts due under this Section shall be payable not later than twenty (20) days after demand therefor.
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(f)Survival. The agreements in this Section and the indemnity provisions of Section 11.02(e) shall survive the resignation of the Administrative Agent, the replacement of any Lender, the termination of the Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.
1.05Payments Set Aside.
To the extent that any payment by or on behalf of the Borrower is made to the Administrative Agent or any Lender, or the Administrative Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share (without duplication) of any amount so recovered from or repaid by the Administrative Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the Federal Funds Rate from time to time in effect. The obligations of the Lenders under clause (b) of the preceding sentence shall survive the payment in full of the Obligations and the termination of this Agreement.
1.06Successors and Assigns.
(a)Successors and Assigns Generally. The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except neither the Borrower nor any other Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the provisions of subsection (d) of this Section, or (iii) by way of pledge or assignment of a security interest subject to the restrictions of subsection (f) of this Section (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)Assignments by Lenders. Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement and the other Loan Documents (including all or a portion of its Term Loan at the time owing to it); provided that any such assignment shall be subject to the following conditions:
(i)Minimum Amounts.
(A)in the case of an assignment of the entire remaining amount of the assigning Lender’s Term Loans at the time owing to it or contemporaneous assignments to related Approved Funds that equal at least the amount specified in
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paragraph (b)(i)(B) of this Section in the aggregate or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and
(B)in any case not described in subsection (b)(i)(A) of this Section, the principal outstanding balance of the Term Loan of the assigning Lender subject to each such assignment, determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not be less than $5,000,000, unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed).
(ii)Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Agreement and the other Loan Documents with respect to the Term Loan assigned.
(iii)Required Consents. No consent shall be required for any assignment except (A) to the extent required by subsection (b)(i)(B) of this Section and (B) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (1) an Event of Default has occurred and is continuing at the time of such assignment or (2) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof.
(iv)Assignment and Assumption. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee in the amount of $3,500; provided, however, that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment. The assignee, if it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire.
(v)No Assignment to Certain Persons. No such assignment shall be made
(A) to the Borrower or any of the Borrower’s Affiliates or Subsidiaries, (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute any of the foregoing Persons described in this clause (B),
(C) to a natural Person, (D) to any Person if such Person would be entitled to receive any greater payment under Section 3.01 or Section 3.04, with respect to such assigned rights and obligations, than the Lender from whom it acquired the applicable rights and obligations would have been entitled to receive, or (E) the Persons set forth on Schedule 11.06(b) as of the Closing Date and their respective Affiliates.
(vi)Certain Additional Payments. In connection with any assignment of rights and obligations of any Defaulting Lender hereunder, no such assignment shall be effective unless and until, in addition to the other conditions thereto set forth herein, the parties to the assignment shall make such additional payments to the Administrative Agent in an aggregate amount sufficient, upon distribution thereof as appropriate (which
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may be outright payment, purchases by the assignee of participations or subparticipations, or other compensating actions, including funding, with the consent of the Borrower and the Administrative Agent, the applicable pro rata share of the Term Loans previously requested but not funded by the Defaulting Lender, to each of which the applicable assignee and assignor hereby irrevocably consent), to pay and satisfy in full all payment liabilities then owed by such Defaulting Lender to the Administrative Agent or any Lender hereunder (and interest accrued thereon). Notwithstanding the foregoing, in the event that any assignment of rights and obligations of any Defaulting Lender hereunder shall become effective under applicable Law without compliance with the provisions of this paragraph, then the assignee of such interest shall be deemed to be a Defaulting Lender for all purposes of this Agreement until such compliance occurs.
Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and 11.04 with respect to facts and circumstances occurring prior to the effective date of such assignment); provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Upon request, the Borrower (at their expense) shall execute and deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this subsection shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with subsection (d) of this Section.
(c)Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrower (and such agency being solely for tax purposes), shall maintain at the Administrative Agent’s Office a copy of each Assignment and Assumption delivered to it (or the equivalent thereof in electronic form) and a register for the recordation of the names and addresses of the Lenders, and the principal amounts (and stated interest) of the Term Loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive, absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.
(d)Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower or the Administrative Agent, sell participations to any Person (other than a natural Person, a Defaulting Lender or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of its Term Loan; provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement.
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For the avoidance of doubt, each Lender shall be responsible for the indemnity under Section 11.04(c) without regard to the existence of any participations.
Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 11.01 that affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 3.01, 3.04 and 3.05 (subject to the requirements and limitations therein, including the requirements under Section 3.01(e) (it being understood that the documentation required under Section 3.01(e) shall be delivered to the Lender who sells the participation)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Sections 3.06 and 11.13 as if it were an assignee under paragraph
(b) of this Section and (B) shall not be entitled to receive any greater payment under Sections 3.01, 3.04 or 3.05, with respect to any participation, than the Lender from whom it acquired the applicable participation would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 3.06 with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.15 as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(e)Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement (including under its Note or Notes, if any) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.
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1.07Treatment of Certain Information; Confidentiality.
(a)Treatment of Certain Information. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (i) to its Affiliates and to its Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and will agree to keep such Information confidential on substantially the same terms as the terms hereof), (ii) to the extent required or requested by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including any self- regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process,
(iv) to any other party hereto, (v) to the extent reasonably necessary in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights and obligations under this Agreement or (B) any actual or prospective party (or its Related Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the Borrower and its obligations, this Agreement or payments hereunder, (vii) on a confidential basis to (A) any rating agency in connection with rating the Borrower or its Subsidiaries or the credit facilities provided hereunder or (B) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers or other market identifiers with respect to the credit facilities provided hereunder, or (viii) with the consent of the Borrower or to the extent such Information
(1) becomes publicly available other than as a result of a breach of this Section or (2) becomes available to the Administrative Agent, any Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower. For purposes of this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or any of their respective businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.
(b)Non-Public Information. Each of the Administrative Agent and the Lenders acknowledges that (i) the Information may include material non-public information concerning a Loan Party or a Subsidiary, as the case may be, (ii) it has developed compliance procedures regarding the use of material non-public information and (iii) it will handle such material non- public information in accordance with applicable Law, including United States federal and state securities Laws.
(c)Press Releases. The Loan Parties and their Affiliates agree that they will not in the future issue any press releases or other public disclosure using the name of the Administrative Agent or any Lender or their respective Affiliates or referring to this Agreement or any of the Loan Documents without the prior written consent of the Administrative Agent (such consent not to be unreasonably withheld, conditioned or delayed), unless (and only to the extent that) the Loan Parties or such Affiliate is required to do so under law and then, in any event the Loan
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Parties or such Affiliate will consult with such Person before issuing such press release or other public disclosure.
(d)Customary Advertising Material. The Loan Parties consent to the publication by the Administrative Agent or any Lender of customary advertising material relating to the transactions contemplated hereby using the name, product photographs, logo or trademark of the Loan Parties.
1.08Right of Setoff.
If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the Obligations of the Borrower or such Loan Party now or hereafter existing and then due and owing under this Agreement or any other Loan Document to such Lender or their respective Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or such Loan Party may be contingent or unmatured, secured or unsecured, or are owed to a branch, office or Affiliate of such Lender different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (a) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.17 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent and the Lenders, and (b) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Secured Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.
1.09Interest Rate Limitation.
Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Loans or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Law, (a) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder.
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1.10Counterparts; Integration; Effectiveness.
This Agreement and each of the other Loan Documents 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 Agreement, the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, 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. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement or any other Loan Document, or any certificate delivered thereunder, by fax transmission or e-mail transmission (e.g. “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart of this Agreement or such other Loan Document or certificate. Without limiting the foregoing, to the extent a manually executed counterpart is not specifically required to be delivered under the terms of any Loan Document, upon the request of any party, such fax transmission or e-mail transmission shall be promptly followed by such manually executed counterpart. Banc of California, N.A. may also execute this Agreement by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature.
1.11Survival of Representations and Warranties.
All representations and warranties made hereunder and in any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at any time. Such representations and warranties shall continue in full force and effect on each date made or deemed made pursuant to this Agreement or any other Loan Document as long as any Loan or any other Obligation hereunder shall remain unpaid or unsatisfied.
1.12Severability.
If any provision of this Agreement or the other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Without limiting the foregoing provisions of this Section, if and to the extent that the enforceability of any provisions in this Agreement relating to Defaulting Lenders shall be limited by Debtor Relief Laws, as determined in good faith by the Administrative Agent, then such provisions shall be deemed to be in effect only to the extent not so limited.
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1.13Replacement of Lenders.
If the Borrower is entitled to request a designation or assignment of a Lender pursuant to the provisions of Section 3.06, or if any Lender is a Defaulting Lender or a Non-Consenting Lender, or if any Lender demands payment under Sections 3.01, 3.04 or 3.05, or if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as a party hereto, then the Borrower may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by Section 11.06), all of its interests, rights (other than its existing rights to payments pursuant to Sections 3.01 and 3.04) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that:
(a)the Borrower shall have paid to the Administrative Agent the assignment fee (if any) specified in Section 11.06(b)(iv);
(b)such Lender shall have received payment of an amount equal to 100% of the outstanding principal of its Term Loan, accrued interest thereon, and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.05) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts);
(c)in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 3.01, such assignment will result in a reduction in such compensation or payments thereafter;
(d)such assignment does not conflict with applicable Laws; and
(e)in the case of an assignment resulting from a Lender becoming a Non-Consenting Lender, the applicable assignee shall have consented to the applicable amendment, waiver or consent.
A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply.
1.14Governing Law; Jurisdiction; Etc.
(a)GOVERNING LAW. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT, AS TO ANY OTHER LOAN DOCUMENT, AS EXPRESSLY SET FORTH THEREIN) AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
(b)SUBMISSION TO JURISDICTION. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT THEY WILL
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NOT COMMENCE ANY ACTION, LITIGATION OR PROCEEDING OF ANY KIND OR DESCRIPTION, WHETHER IN LAW OR EQUITY, WHETHER IN CONTRACT OR IN TORT OR OTHERWISE, AGAINST THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY RELATED PARTY OF THE FOREGOING IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS RELATING HERETO OR THERETO, IN ANY FORUM OTHER THAN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN THE COUNTY OF LOS ANGELES AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY THEREOF, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE JURISDICTION OF SUCH COURTS AND AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION, LITIGATION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION, LITIGATION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ANY OTHER LOAN PARTY OR ITS OR THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.
(c)WAIVER OF VENUE. THE BORROWER AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d)SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 11.02. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
1.15Waiver of Jury Trial.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR
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OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (b) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
IN THE EVENT ANY LEGAL PROCEEDING IS FILED IN A COURT OF THE STATE OF CALIFORNIA (THE “COURT”) BY OR AGAINST ANY PARTY HERETO IN CONNECTION WITH ANY CLAIM AND THE WAIVER SET FORTH ABOVE IS NOT ENFORCEABLE IN SUCH PROCEEDING, THE PARTIES HERETO AGREE AS FOLLOWS:
WITH THE EXCEPTION OF THE MATTERS SPECIFIED IN THE IMMEDIATELY SUCCEEDING PARAGRAPH BELOW, ANY CLAIM SHALL BE DETERMINED BY A GENERAL REFERENCE PROCEEDING IN ACCORDANCE WITH THE PROVISIONS OF CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1. THE PARTIES INTEND THIS GENERAL REFERENCE AGREEMENT TO BE SPECIFICALLY ENFORCEABLE. VENUE FOR THE REFERENCE PROCEEDING SHALL BE IN THE COUNTY OF LOS ANGELES, CALIFORNIA.
THE FOLLOWING MATTERS SHALL NOT BE SUBJECT TO A GENERAL REFERENCE PROCEEDING: (A) NON-JUDICIAL FORECLOSURE OF ANY SECURITY INTERESTS IN REAL OR PERSONAL PROPERTY, (B) EXERCISE OF SELF-HELP REMEDIES (INCLUDING SET-OFF OR RECOUPMENT), (C) APPOINTMENT OF A RECEIVER, AND (D) TEMPORARY, PROVISIONAL, OR ANCILLARY REMEDIES (INCLUDING WRITS OF ATTACHMENT, WRITS OF POSSESSION, TEMPORARY RESTRAINING ORDERS, OR PRELIMINARY INJUNCTIONS). THIS AGREEMENT DOES NOT LIMIT THE RIGHT OF ANY PARTY TO EXERCISE OR OPPOSE ANY OF THE RIGHTS AND REMEDIES DESCRIBED IN CLAUSES (A) - (D) AND ANY SUCH EXERCISE OR OPPOSITION DOES NOT WAIVE THE RIGHT OF ANY PARTY TO PARTICIPATE IN A REFERENCE PROCEEDING PURSUANT TO THIS AGREEMENT WITH RESPECT TO ANY OTHER MATTER.
UPON THE WRITTEN REQUEST OF ANY PARTY, THE PARTIES SHALL SELECT A SINGLE REFEREE, WHO SHALL BE A RETIRED JUDGE OR JUSTICE. IF THE PARTIES DO NOT AGREE UPON A REFEREE WITHIN 10 DAYS OF SUCH WRITTEN REQUEST, THEN, ANY PARTY SHALL HAVE THE RIGHT TO REQUEST THE COURT TO APPOINT A REFEREE PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 640(B). THE REFEREE SHALL BE APPOINTED TO SIT WITH ALL OF THE POWERS PROVIDED BY LAW. PENDING APPOINTMENT OF THE REFEREE, THE COURT SHALL HAVE THE POWER TO ISSUE TEMPORARY OR PROVISIONAL REMEDIES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE REFEREE SHALL DETERMINE THE MANNER IN WHICH THE REFERENCE PROCEEDING IS CONDUCTED INCLUDING THE TIME AND PLACE OF HEARINGS, THE ORDER OF PRESENTATION OF EVIDENCE, AND ALL OTHER QUESTIONS THAT ARISE WITH RESPECT TO THE COURSE OF THE REFERENCE PROCEEDING. ALL PROCEEDINGS AND HEARINGS CONDUCTED BEFORE THE REFEREE, EXCEPT FOR TRIAL, SHALL BE CONDUCTED WITHOUT A COURT REPORTER, EXCEPT WHEN ANY PARTY SO REQUESTS A COURT REPORTER AND A TRANSCRIPT IS ORDERED, A COURT REPORTER SHALL BE USED AND THE REFEREE SHALL BE PROVIDED A COURTESY COPY OF THE TRANSCRIPT. THE PARTY MAKING SUCH REQUEST SHALL HAVE THE OBLIGATION TO ARRANGE FOR AND PAY THE COSTS
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OF THE COURT REPORTER, PROVIDED THAT SUCH COSTS, ALONG WITH THE REFEREE’S FEES, SHALL ULTIMATELY BE BORNE BY THE PARTY WHO DOES NOT PREVAIL, AS DETERMINED BY THE REFEREE.
THE REFEREE MAY REQUIRE ONE OR MORE PREHEARING CONFERENCES. THE PARTIES HERETO SHALL BE ENTITLED TO DISCOVERY, AND THE REFEREE SHALL OVERSEE DISCOVERY IN ACCORDANCE WITH THE RULES OF DISCOVERY, AND SHALL ENFORCE ALL DISCOVERY ORDERS IN THE SAME MANNER AS ANY TRIAL COURT JUDGE IN PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA.
THE REFEREE SHALL APPLY THE RULES OF EVIDENCE APPLICABLE TO PROCEEDINGS AT LAW IN THE STATE OF CALIFORNIA AND SHALL DETERMINE ALL ISSUES IN ACCORDANCE WITH CALIFORNIA SUBSTANTIVE AND PROCEDURAL LAW. THE REFEREE SHALL BE EMPOWERED TO ENTER EQUITABLE AS WELL AS LEGAL RELIEF AND RULE ON ANY MOTION WHICH WOULD BE AUTHORIZED IN A TRIAL, INCLUDING MOTIONS FOR DEFAULT JUDGMENT OR SUMMARY JUDGMENT. THE REFEREE SHALL REPORT HIS OR HER DECISION, WHICH REPORT SHALL ALSO INCLUDE FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE REFEREE SHALL ISSUE A DECISION AND PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE, SECTION 644, THE REFEREE’S DECISION SHALL BE ENTERED BY THE COURT AS A JUDGMENT IN THE SAME MANNER AS IF THE ACTION HAD BEEN TRIED BY THE COURT. THE FINAL JUDGMENT OR ORDER FROM ANY APPEALABLE DECISION OR ORDER ENTERED BY THE REFEREE SHALL BE FULLY APPEALABLE AS IF IT HAS BEEN ENTERED BY THE COURT.
THE PARTIES RECOGNIZE AND AGREE THAT ALL CLAIMS RESOLVED IN A GENERAL REFERENCE PROCEEDING PURSUANT HERETO WILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY HERETO KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION SHALL APPLY TO ANY DISPUTE BETWEEN THEM THAT ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS.
1.16Subordination.
Each Loan Party (a “Subordinating Loan Party”) hereby subordinates the payment of all obligations and indebtedness of any other Loan Party owing to it, whether now existing or hereafter arising, including but not limited to any obligation of any such other Loan Party to the Subordinating Loan Party as subrogee of the Secured Parties or resulting from such Subordinating Loan Party’s performance under this Guaranty, to the indefeasible payment in full in cash of all Obligations. If the Secured Parties so request during the continuance of an Event of Default, any such obligation or indebtedness of any such other Loan Party to the Subordinating Loan Party shall be enforced and performance received by the Subordinating Loan Party as trustee for the Secured Parties and the proceeds thereof shall be paid over to the Secured Parties on account of the Secured Obligations, but without reducing or affecting in any manner the liability of the Subordinating Loan Party under this Agreement. Without limitation of the foregoing, so long as no Event of Default has occurred and is continuing, the Loan Parties may make and receive payments with respect to Intercompany Debt; provided, that in the event that any Loan Party receives any payment of any Intercompany Debt at a time when such payment is prohibited by this Section, such payment shall be held by such Loan Party, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to the Administrative Agent.
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1.17No Advisory or Fiduciary Responsibility.
In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower and each other Loan Party acknowledge and agree, and acknowledge their Affiliates’ understanding, that:
(a) (i) the arranging and other services regarding this Agreement provided by the Administrative Agent and any Affiliate thereof, the Arranger and the Lenders are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent and, as applicable, its Affiliates and the Lenders and their Affiliates (collectively, solely for purposes of this Section, the “Lenders”), on the other hand, (ii) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and (iii) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (b) (i) the Administrative Agent and its Affiliates and each Lender each is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary, for the Borrower, any other Loan Party or any of their respective Affiliates, or any other Person and (ii) neither the Administrative Agent, any of its Affiliates nor any Lender has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (c) the Administrative Agent and its Affiliates and the Lenders may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and neither the Administrative Agent, any of its Affiliates nor any Lender has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates. To the fullest extent permitted by law, the Borrower and each other Loan Party hereby waives and releases any claims that it may have against the Administrative Agent, any of its Affiliates or any Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transactions contemplated hereby.
1.18Electronic Execution of Assignments and Certain Other Documents.
The words “execute,” “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, California’s Uniform Electronic Transactions Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
1.19USA PATRIOT Act Notice.
Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower and the other Loan Parties that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act. The Borrower and the other Loan Parties agree to, promptly following a request
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by the Administrative Agent or any Lender, provide all such other documentation and information that the Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.
1.20Reserved.
1.21Waiver of Subrogation.
Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution of any other claim which Borrower may now or hereafter have against any other Person directly or contingently liable for the Obligations hereunder, or against or with respect to any other Person’s property (including, without limitation, any property which is Collateral for the Obligations), arising from the existence or performance of this Agreement, until termination of this Agreement and repayment in full of the Obligations.


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.

BORROWER:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer
Credit Agreement

SECURED GUARANTORS:    LINGO NEWCO1 INC.,
a Michigan corporation


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

BULLSEYE TELECOM, INC.,
a Michigan corporation

By: /s/Ananth Veluppillai
:
    
Name: Ananth Veluppillai Title:    Secretary and Treasurer

BULLSEYE BUSINESS SOLUTIONS HOLDINGS, INC.,
a Michigan corporation
                 By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai Title:    Secretary and Treasurer
BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company


By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Secretary and Treasurer

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai Title:    Secretary and Treasurer

TEMPO TELECOM, LLC,
a Georgia limited liability company

By: Name: Title:
/s/Ananth Veluppillai
Ananth Veluppillai
Chief Implementation Officer
Credit Agreement




LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company

By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer


IMPACT ACQUISITION, LLC,
a Delaware limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

IMPACT TELECOM, LLC,
a Nevada limited liability company
By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

LINGO TELECOM, LLC,
a Texas limited liability company
By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company

By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

Credit Agreement

ADMINISTRATIVE AGENT:    BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
Nam Carlos Ramos
Title:    Senior Vice President
Credit Agreement



    
LENDERS:    BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
Nam Carlos Ramos
Title:    Senior Vice President


Credit Agreement
EX-10.41 6 exhibit1041firstamendmentt.htm EX-10.41 Document
Exhibit 10.41
FIRST AMENDMENT TO CREDIT AGREEMENT AND JOINDER

THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND JOINDER (this “Amendment”),
dated as of September 9, 2022, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS

A.The Borrower, the Secured Guarantors, the financial institution identified therein as Lender (the “Closing Date Lender”), and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022 (the “Credit Agreement”), pursuant to which the Closing Date Lender made a Term Loan to the Borrower in the aggregate original principal amount of $45,000,000.
B.The Borrower wishes to obtain an Incremental Term Loan in the aggregate original principal amount of $7,500,000 pursuant to Section 2.16 of the Credit Agreement, and Grasshopper Bank (the “New Lender”) is willing to become a Lender and to provide such Incremental Term Loan.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Incremental Term Loan; Amendment to Schedule 1.01(b). Upon the New Lender’s funding of the Incremental Term Loan in the aggregate original principal amount of $7,500,000 on the effective date of the Amendment, the aggregate outstanding principal amount of the Term Loans will be increased from $45,000,000 to $52,500,000. Schedule 1.01(b) to the Credit Agreement is hereby amended and restated in its entirety to read in full as set forth on Schedule 1.01(b) hereto to reflect such increase in the aggregate outstanding principal amount of the Term Loans.
3.Commitment of New Lender. Pursuant to the joinder provisions of Section 4 below, as of the effective date of this Amendment, the New Lender shall be a Lender with a Commitment of
$7,500,000. The New Lender’s pro rata share of the aggregate outstanding Term Loans is set forth on Schedule 1.01(b) attached hereto. On the effective date of this Amendment, the New Lender shall fund its entire Commitment by wire transferring $7,500,000 to the Administrative Agent, the proceeds of which the Administrative Agent shall disburse in accordance with the Disbursement Instructions Letter dated as of the date hereof from the Borrower to the Administrative Agent (the “Disbursement Instructions”).
4.Joinder of New Lender as a Lender. By its execution of this Amendment, effective as of the effective date of this Amendment, the New Lender shall be a Lender for all purposes under the Credit Agreement and the other Loan Documents and shall be joined, and shall have bound itself to, the Credit Agreement and to all other Loan Documents to which Lenders are bound generally as of the effective date hereof. The New Lender hereby assumes all of the obligations of a Lender under the Credit Agreement and the other Loan Documents and shall be entitled to all of the rights and benefits of a Lender under the Loan Documents. In furtherance of this joinder agreement, the New Lender hereby agrees to furnish the Administrative Agent a completed Administrative Questionnaire, an Internal Revenue Service Form W-9, and any other agreements, documents or instruments that Lenders are required or reasonably requested by the Administrative Agent or the Borrower to deliver to the Administrative Agent or to the Borrower pursuant to the Credit Agreement.
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5.Amendment to Amortization Schedule. Section 2.01(d) of the Credit Agreement is hereby amended and restated to read in full as follows:
“(d)    On each date set forth below, the Borrower shall repay the principal of the Term Loans in an aggregate amount equal to the corresponding amount set forth below (each such amount, a ‘Term Loan Reduction Installment’), as each such Term Loan Reduction Installment shall be ratably increased pursuant to a Lender Joinder Agreement in connection with any outstanding Incremental Term Loans:

Payment Date
Term Loan Reduction Installment Amount
September 30, 2022
$0.00
December 31, 2022
$0.00
March 31, 2023
$1,640,625
June 30, 2023
$1,640,625
September 30, 2023
$1,640,625
December 31, 2023
$1,640,625
March 31, 2024
$1,968,750
June 30, 2024
$1,968,750
September 30, 2024
$1,968,750
December 31, 2024
$1,968,750
March 31, 2025
$2,625,000
June 30, 2025
$2,625,000
September 30, 2025
$2,625,000
December 31, 2025
$2,625,000
March 31, 2026
$2,625,000
June 30, 2026
$2,625,000
September 30, 2026
$2,625,000
December 31, 2026
$2,625,000
March 31, 2027
$2,625,000
June 30, 2027
$2,625,000

The final Term Loan Reduction Installment shall be due on the Term Loan Maturity Date and shall be in an amount equal to all principal and interest outstanding with respect to the Term Loans (including but not limited to any Incremental Term Loans). The aggregate amount payable to any Lender on any date set forth in this Section 2.01(d) shall be determined in accordance with the provisions of Section 2.14.”
6.Incremental Term Loan Commitment Fee. On the effective date of this Amendment, Borrower shall pay to the Administrative Agent, for the account of New Lender, the $37,500 Incremental Term Loan Commitment Fee required under the Fee Letter.
7.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:





2

(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, the New Lender, and each of the other Lenders;
(ii)New Lender Note. The Borrower shall have executed and delivered to the Administrative Agent for delivery to the New Lender a Term Note in the original principal amount of
$7,500,000 in favor of the New Lender;
(iii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iv)Disbursement Instructions. The Administrative Agent shall have received the Disbursement Instructions, duly executed by the Borrower;
(v)Loan Notice. The Administrative Agent shall have received a Loan Notice, duly executed by Borrower;
(vi)No Default or Event of Default.    No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(vii)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct on and as of the Incremental Commitment Effective Date for the Incremental Term Loan Facility described in this Amendment and after giving effect to such Incremental Term Loan Facility (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
8.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
9.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
10.Counterparts; Electronic Signatures. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment.
11.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]








3

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.

BORROWER:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai        
Name: Ananth Veluppillai
Title:Chief Implementation Officer








































First Amendment to Credit Agreement and Joinder


SECURED GUARANTORS:    LINGO NEWCOI INC.,
a Michigan corporation,

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer
BULLSEYE TELECOM, INC.,
a Michigan corporation

By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Secretary and Treasurer

BULLSEYE BUSINESS SOLUTIONS HOLDINGS, INC.,

By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai Title:    Secretary and Treasurer
BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company


By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai Title:    Secretary and Treasurer

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By:    /s/Ananth Veluppillai
Name: Ananth Veluppillai Title:    Secretary and Treasurer

TEMPO TELECOM, LLC,
a Georgia limited liability company

By:/s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer First Amendment to Credit Agreement and Joinder









LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

IMPACT ACQUISITION, LLC,
a Delaware limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer

IMPACT TELECOM, LLC,
a Nevada limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer


LINGO TELECOM, LLC,

                    A Texas limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer


LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer


LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Implementation Officer


First Amendment to Credit Agreement and Joinder


ADMINISTRATIVE AGENT:    BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
Nam Carlos Ramos
Title:    Senior Vice President













































First Amendment to Credit Agreement and Joinder


LENDERS:    BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
Nam Carlos Ramos
Title:    Senior Vice President













































First Amendment to Credit Agreement and Joinder


GRASSHOPPER BANK

By: /s/Max Furman
Nam Max Furman
Title:    Senior Vice President







































First Amendment to Credit Agreement and Joinder


ACKNOWLEDGMENT OF PARENT AND ULTIMATE PARENT GUARANTORS

The undersigned (the "Parent and Ultimate Parent Guarantors") hereby acknowledge and agree to the attached First Amendment to Credit Agreement and Joinder (the "First Amendment"), including, without limitation, the Incremental Term Loan to be made by Grasshopper Bank to the Borrower thereunder. The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the "Guarantees"), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the First Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors' acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the First Amendment.
Dated: As of September 9, 2022    B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    Chief Operating Officer

B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn    
Name: Phillip Ahn
Title:    Chief Financial Officer & Chief Operating Officer













First Amendment to Credit Agreement and Joinder
EX-10.42 7 exhibit1042secondamendment.htm EX-10.42 Document
Exhibit 10.42
SECOND AMENDMENT TO CREDIT AGREEMENT AND JOINDER

THIS SECOND    AMENDMENT    TO    CREDIT    AGREEMENT    AND    JOINDER    (this
“Amendment”), dated as of November 10, 2022, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS

A.The Borrower, the Secured Guarantors, the financial institution identified therein as Lender (the “Closing Date Lender”), and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022 (the “Credit Agreement”), pursuant to which the Closing Date Lender made a Term Loan to the Borrower in the aggregate original principal amount of $45,000,000 and Grasshopper Bank made an Incremental Term Loan to Borrower in the aggregate principal amount of
$7,500,000.
B.The Borrower wishes to obtain an Incremental Term Loan in the aggregate original principal amount of $20,500,000 pursuant to Section 2.16 of the Credit Agreement, and KeyBank National Association (the “New Lender”) is willing to become a Lender and to provide such Incremental Term Loan.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Incremental Term Loan; Amendment to Schedule 1.01(b). Upon the New Lender’s funding of the Incremental Term Loan in the aggregate original principal amount of $20,500,000 on the effective date of the Amendment, the aggregate outstanding principal amount of the Term Loans will be increased from $52,500,000 to $73,000,000. Schedule 1.01(b) to the Credit Agreement is hereby amended and restated in its entirety to read in full as set forth on Schedule 1.01(b) hereto to reflect such increase in the aggregate outstanding principal amount of the Term Loans.
3.Commitment of New Lender. Pursuant to the joinder provisions of Section 4 below, as of the effective date of this Amendment, the New Lender shall be a Lender with a Commitment of
$20,500,000. The New Lender’s pro rata share of the aggregate outstanding Term Loans is set forth on Schedule 1.01(b) attached hereto. On the effective date of this Amendment, the New Lender shall fund its entire Commitment by wire transferring $20,500,000 to the Administrative Agent, the proceeds of which the Administrative Agent shall disburse in accordance with the Disbursement Instructions Letter dated as of the date hereof from the Borrower to the Administrative Agent (the “Disbursement Instructions”).
4.Joinder of New Lender as a Lender. By its execution of this Amendment, effective as of the effective date of this Amendment, the New Lender shall be a Lender for all purposes under the Credit Agreement and the other Loan Documents and shall be joined, and shall have bound itself to, the Credit Agreement and to all other Loan Documents to which Lenders are bound generally as of the effective date
1

hereof. The New Lender hereby assumes all of the obligations of a Lender under the Credit Agreement and the other Loan Documents and shall be entitled to all of the rights and benefits of a Lender under the Loan Documents. In furtherance of this joinder agreement, the New Lender hereby agrees to furnish the Administrative Agent a completed Administrative Questionnaire, an Internal Revenue Service Form W-9, and any other agreements, documents or instruments that Lenders are required or reasonably requested by the Administrative Agent or the Borrower to deliver to the Administrative Agent or to the Borrower pursuant to the Credit Agreement.
5.Amendment to Definition of “Required Lenders”. Section 1.01 of the Credit Agreement is hereby amended by amending and restating the defined term “Required Lenders” to read in full as follows:
“ “Required Lenders” means, at any time, Lenders having Commitments representing more than 66-2/3% of the total Commitments of all Lenders; provided, however, that at any time there shall be two (2) or more unaffiliated Lenders, Required Lenders shall include at least two (2) such unaffiliated Lenders. The Commitment of any Defaulting Lender shall be disregarded in determining Required Lenders at any time.”
6.Amendment to Amortization Schedule. Section 2.01(d) of the Credit Agreement is hereby amended and restated to read in full as follows:
“(d)    On each date set forth below, the Borrower shall repay the principal of the Term Loans in an aggregate amount equal to the corresponding amount set forth below (each such amount, a ‘Term Loan Reduction Installment’), as each such Term Loan Reduction Installment shall be ratably increased pursuant to a Lender Joinder Agreement in connection with any outstanding Incremental Term Loans:

Payment Date
Term Loan Reduction Installment Amount
September 30, 2022
$0.00
December 31, 2022
$0.00
March 31, 2023
$2,281,250
June 30, 2023
$2,281,250
September 30, 2023
$2,281,250
December 31, 2023
$2,281,250
March 31, 2024
$2,737,500
June 30, 2024
$2,737,500
September 30, 2024
$2,737,500
December 31, 2024
$2,737,500
March 31, 2025
$3,650,000
June 30, 2025
$3,650,000
September 30, 2025
$3,650,000
December 31, 2025
$3,650,000
March 31, 2026
$3,650,000
June 30, 2026
$3,650,000
September 30, 2026
$3,650,000
December 31, 2026
$3,650,000
March 31, 2027
$3,650,000
June 30, 2027
$3,650,000
2

The final Term Loan Reduction Installment shall be due on the Term Loan Maturity Date and shall be in an amount equal to all principal and interest outstanding with respect to the Term Loans (including but not limited to any Incremental Term Loans). The aggregate amount payable to any Lender on any date set forth in this Section 2.01(d) shall be determined in accordance with the provisions of Section 2.14.”
7.Amendment to Section 3.03(b). Section 3.03(b) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“(b) In the event that Administrative Agent determines a replacement Index, which determination shall be conclusive, in order to account for the relationship of the replacement Index to the pre-replacement Index, Administrative Agent shall also determine, which determination shall be conclusive, any change necessary to the percentage points (“Margin”) to be added or subtracted to the replacement Index necessary to ensure that the replacement method will measure interest rates in a manner similar to the pre-replacement Index, and for the avoidance of doubt, any such change to the Margin shall not reduce the interest rate in effect as of the date of such Index replacement. Any determination by Administrative Agent relating to a replacement Index or change in the Margin will become effective at 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the Administrative Agent has provided notice of such proposed determination to all affected Lenders and the Borrower so long as the Administrative Agent has not received, by such time, written notice of objection to such determination from Lenders comprising the Required Lenders.”
8.Incremental Term Loan Commitment Fee. On the effective date of this Amendment, Borrower shall pay to the Administrative Agent, for the account of New Lender, the $102,500 Incremental Term Loan Commitment Fee required under the Fee Letter.
9.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, the New Lender, and each of the other Lenders;
(ii)New Lender Note. The Borrower shall have executed and delivered to the Administrative Agent for delivery to the New Lender a Term Note in the original principal amount of
$20,500,000 in favor of the New Lender;
(iii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iv)Disbursement Instructions. The Administrative Agent shall have received the Disbursement Instructions, duly executed by the Borrower;
(v)Loan Notice. The Administrative Agent shall have received a Loan Notice, duly executed by Borrower;
(vi)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
3

(vii)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct on and as of the Incremental Commitment Effective Date for the Incremental Term Loan Facility described in this Amendment and after giving effect to such Incremental Term Loan Facility (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
10.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
11.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
12.Counterparts; Electronic Signatures. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment.
13.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
4

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.

BORROWER:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO








































Second Amendment to Credit Agreement and Joinder


SECURED GUARANTORS:    LINGO NEWCOl INC.,
a Michigan corporation,


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai

Title:    President & CEO















BULLSEYE TELECOM, INC.,
a Michigan corporation


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO

BULLSEYE BUSINESS SOLUTIONS HOLDINGS, INC.,
a Michigan corporation


By:    /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO

BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company

By:    /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By:    /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO

TEMPO TELECOM, LLC,
a Georgia limited liability company

By:    /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO








Second Amendment to Credit Agreement and Joinder


LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company

By:    /s/ Ananth Veluppillai
                Name: Ananth Veluppillai
                Title:    President & CEO

IMPACT ACQUISITION, LLC,
a Delaware limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO
IMPACT TELECOM, LLC,
a Nevada limited liability company

By:/s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO
LINGO TELECOM, LLC,
a Texas limited liability company

By:/s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO
LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By:/s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO
LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company

By:/s/ Ananth Veluppillai
Name: Ananth Veluppillai Title:    President & CEO





Second Amendment to Credit Agreement and Joinder


ADMINISTRATIVE AGENT:

BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
Name: Carlos Ramos    
Title:    Senior Vice President
Second Amendment to Credit Agreement and Joinder

LENDERS:                    BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
                        Name: Carlos Ramos    
                        Title:    Senior Vice President



Second Amendment to Credit Agreement and Joinder

GRASSHOPPER BANK

By: /s/Max Furman
                        Name: Max Furman    
                        Title:    SVP


Second Amendment to Credit Agreement and Joinder

KEYBANK NATIONAL ASSOCIATION


By: /s/Paul T. Whalen
                        Name: Paul T. Whalen    
                        Title:    Vice President

Second Amendment to Credit Agreement and Joinder

ACKNOWLEDGMENT OF PARENT AND ULTIMATE PARENT GUARANTORS

The undersigned (the "Parent and Ultimate Parent Guarantors") hereby acknowledge and agree to the attached Second Amendment to Credit Agreement and Joinder (the "Second Amendment"), including, without limitation, the Incremental Term Loan to be made by KeyBank National Association to the Borrower thereunder. The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the "Guarantees"), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Second Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors' acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Second Amendment.
Dated: November 10, 2022    B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title:    Chief Operating Officer

B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn     Name: Phillip Ahn
Title: Chief Financial Officer & Chief Operating Officer














Second Amendment to Credit Agreement and Joinder
EX-10.43 8 exhibit1043thirdamendmentt.htm EX-10.43 Document
Exhibit 10.43
THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of March 2, 2023, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS

A.The Borrower, the Secured Guarantors, the Lenders, and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022 and that certain Second Amendment to Credit Agreement and Joinder dated as of November 10, 2022 (the “Credit Agreement”).
B.The Borrower has requested (x) an extension of the deadlines to (i) deliver the estoppel letters, consents and waivers from landlords required by Section 6.14(c) of the Credit Agreement, and (ii) to maintain its deposit accounts and other accounts in accordance with Section 6.14(d) of the Credit Agreement, and (y) the approval of the Tempo Telecom Sale (as defined below), and the Administrative Agent and the Lenders are willing to agree to such extension and such approval pursuant to the terms hereof.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 1.01. Section 1.01 of the Credit Agreement is hereby amended by adding the following defined terms in the appropriate alphabetical order:
“Tempo Telecom Sale” means the sale of 100% of the outstanding membership interests in Tempo Telecom, LLC to Konatel, Inc., a Delaware corporation pursuant to that certain Membership Interest Purchase Agreement dated as of January 24, 2023.
“KeyBank Cash Management Agreement” means the agreement evidenced by that certain Key2Purchase Application and Program Terms and Conditions between Borrower and KeyBank National Association.
3.Amendment to Section 1.01. The defined term “Additional Secured Obligations” is hereby amended and restated in its entirety to as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“Additional Secured Obligations” means (a) all obligations arising under Secured Cash Management Agreements and Secured Hedge Agreements and (b) all reasonable and documented out-of-pocket costs and expenses incurred in connection with enforcement and
1

collection of the foregoing, including the reasonable and documented fees, charges and disbursements of external counsel, in each case whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate thereof of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding; provided that (i) Additional Secured Obligations of a Loan Party shall exclude any Excluded Swap Obligations with respect to such Loan Party and (ii) any indebtedness under the KeyBank Cash Management Agreement in excess of $2,000,000 shall not be Additional Secured Obligations hereunder.
4.Amendment to Section 1.01. Clause (h) of the defined term “Asset Disposition” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“(h) dispositions of the type described in clauses (e), (g), (h) and (i) of the definition of Permitted Transfers; and”
5.Amendment to Section 1.01. The defined term “Cash Management Bank” is hereby amended and restated in its entirety to as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“Cash Management Bank” means (i) Banc of California or one of its Affiliates and
(ii) solely in its capacity as counterparty to the KeyBank Cash Management Agreement,
KeyBank National Association.
6.Amendment to Section 1.01. Clause (d) of the defined term “Change of Control” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“(d) Except pursuant to the Tempo Telecom Sale or as permitted by the terms of Section
7.04 of this Agreement, the Borrower fails to own and control, directly or indirectly, 100% of the Equity Interests of any of its Subsidiaries that is a Loan Party.”
7.Amendment to Section 1.01. Clauses (vi), (vii), and (xii) of the defined term “Consolidated Adjusted EBITDA” in Section 1.01 the Credit Agreement are hereby amended and restated to read in their entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
(vi)Non-recurring costs, fees and expenses incurred during 2022 and prior to the Closing Date (including restructuring, severance and integration costs and expenses and Transaction-Related Costs), provided that the aggregate amount of such costs, fee and expenses added pursuant to this clause (vi) shall not exceed $3,100,000,
(vii)Transaction-Related Costs incurred on the Closing Date or after the Closing Date in connection with the Bullseye Acquisition and costs and expenses incurred on the Closing Date or after the Closing Date in an attempt to realize the cost savings and synergies set forth in clause
(v) above, provided that the aggregate amount of such Transaction-Related Costs and costs and
2

expenses (including restructuring, severance and integration costs and expenses) incurred in an attempt to realize the cost savings and synergies set forth in clause (v) above added pursuant to this clause (vii) shall not exceed $11,500,000,
(xii) Litigation or Dispute Settlement Charges or Gains in an amount not to exceed (i) for the Measurement Period t3 3 ending on December 31, 2022, $2,250,000, (ii) for the Measurement Period ending March 31, 2023, $2,500,000, and (iii) for any other Measurement Period, $1,000,000 in aggregate for such Measurement Period,
8.Amendment to Section 1.01. The defined term “Permitted Transfers” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“Permitted Transfers” means (a) Dispositions of inventory in the ordinary course of business; (b) Dispositions of property to Borrower or any Subsidiary of Borrower; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (c) Dispositions of accounts receivable in connection with the collection or compromise thereof; (d) licenses, sublicenses, leases or subleases granted to others not interfering in any material respect with the business of Borrower or any Subsidiary of Borrower; (e) the sale or disposition of Cash Equivalents for fair market value; (f) dispositions of worn-out, obsolete or damaged property no longer used or useful in the business; (g) Restricted Payments permitted by this Agreement; (h) other Dispositions of property of Borrower or any Subsidiary of Borrower of up to $750,000 in the aggregate in any calendar year; and (i) the Tempo Telecom Sale.”
9.Amendment to Section 1.01. The defined term “Secured Cash Management Agreement” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“Secured Cash Management Agreement” means (i) any Cash Management Agreement between any Loan Party and any of its Subsidiaries and Banc of California, N.A. .; and (ii) the KeyBank Cash Management Agreement.
10.Amendment to Section 6.02(l). Section 6.02(l) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“(l)    Post-Closing Deliverables and Other Additional Information. (1) Within ten (10) days after the Closing Date, (A) lender’s loss payable endorsements for the insurance policies required by Section 6.07(a) and (B) copies of insurance policies, declaration pages, and certificates of insurance or insurance binders evidencing terrorism insurance; (2) on or before February 28, 2023 (or such later date as agreed to by the Administrative Agent in its sole discretion), the estoppel letters, consents and waivers from landlords required by Section 6.14(c), and (3) promptly, such additional information regarding the business, financial, legal or corporate affairs of any Loan Party or any Subsidiary thereof, or compliance with the terms of the Loan Documents, as the Administrative Agent or any Lender may from time to time reasonably request.
3

11.Amendment to Section 6.14(d). Section 6.14(d) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“(d) Accounts; Account Control Agreements. At all times from and after February 28, 2023 (or such later date as agreed to by the Administrative Agent in its sole discretion) , the Loan Parties shall not open, maintain or otherwise have any deposit or other accounts (including securities accounts) at any bank or other financial institution, or any other account where money or securities are or may be deposited or maintained with any Person, other than (a) deposit accounts and securities accounts maintained with the Administrative Agent, (b) deposit accounts that are maintained at all times with depositary institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, (c) securities accounts that are maintained at all times with financial institutions as to which the Administrative Agent shall have received a Qualifying Control Agreement, (d) other deposit accounts, so long as at any time the balance in any such account does not exceed $50,000 and the aggregate balance in all such accounts does not exceed
$150,000, and (e) accounts exclusively used for payroll, payroll taxes or employee benefits, to the extent the amounts on deposit therein do not exceed the amounts reasonably expected to be required for such purposes (the accounts described in clause (e), the “Excluded Accounts”).”
12.Amendment to Section 7.02(m). Section 7.02(m) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
(m) Indebtedness under the KeyBank Cash Management Agreement .
13.Termination of Liens on Tempo Telecom, LLC and Release. Upon the effective date of this Amendment:
(i)Administrative Agent shall promptly prepare and file, at Borrower’s expense, (i) a UCC-3 Termination to terminate the Administrative Agent’s UCC-1 Financing Statement filed on Tempo Telecom, LLC (“Tempo”), (ii) a UCC-3 Amendment of the Administrative Agent’s UCC-1 Financing Statement filed on the Borrower, deleting the issued and outstanding Equity Interests of Tempo from the collateral description, and (iii) a Release and Reassignment of Trademarks and Trademark Applications terminating the Notice of Grant of Security Interests in Trademarks, dated August 16, 2022, executed by Tempo in favor of the Administrative Agent which was recorded in the United States Patent and Trademark Office on August 16, 2022, at Reel 007824 Frame 0134.
(ii)Administrative Agent, the Lenders and Tempo hereby confirm that (i) all of Tempo’s obligations under the Loan Documents have been terminated, except to the extent that any such obligations survive termination as provided in the Credit Agreement or the applicable Loan Document; (ii) Tempo will no longer be a Secured Guarantor under the Loan Documents; and (iii) the Administrative Agent and the Lenders will owe no further obligations to Tempo and Tempo will have no rights under any of the Loan Documents.
(iii)Tempo hereby absolutely and unconditionally releases and forever discharges the Administrative Agent and the Lenders, and any and all participants, parent corporations, subsidiary
4

corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which Tempo has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown. Tempo certifies that it has read the following provisions of California Civil Code Section 1542:
A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
Tempo understands and acknowledges that the significance and consequence of this waiver of California Civil Code Section 1542 is that even if it should eventually suffer additional damages arising out of the facts referred to above, it will not be able to make any claim for those damages. Furthermore, Tempo acknowledges that it intends these consequences even as to claims for damages that may exist as of the date of this release but which it does not know exist, and which, if known, would materially affect its decision to execute this Amendment, regardless of whether its lack of knowledge is the result of ignorance, oversight, error, negligence, or any other cause.
14.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, Tempo and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(iv)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
15.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
16.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
5

17.Counterparts; Electronic Signatures. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment.
18.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
6

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.

BORROWER:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: President & CEO









































Schedule l.0l(b)

SECURED GUARANTORS:    BULLSEYE TELECOM, INC.,
a Michigan corporation


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO
BULLSEYE BUSINESS SOLUTIONS HOLDINGS, INC.,
a Michigan corporation

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

TEMPO TELECOM, LLC,
a Georgia limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO
8

LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


IMPACT ACQUISITION, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

IMPACT TELECOM, LLC,
a Nevada limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


LINGO TELECOM, LLC,
a Texas limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO    
9

ADMINISTRATIVE AGENT:    BANC OF CALIFORNIA, N.A.


By: /s/Carlos Ramos
Name: Carlos Ramos
Title: SVP – Market Manager


LENDERS:    BANC OF CALIFORNIA, N.A.

By: /s/Carlos Ramos
Name: Carlos Ramos
Title: SVP – Market Manager

    



GRASSHOPPER BANK

By: /s/Max Furman
Name: Max Furman
Title: SVP
























































KEYBANK NATIONAL ASSOCIATION

By: /s/Paul Whalen
Name: Paul Whalen
Title: Vice President




















































ACKNOWLEDGMENTOFPARENTAND ULTIMATE PARENT GUARANTORS

The undersigned (the "Parent and Ultimate Parent Guarantors") hereby acknowledge and agree to the attached Third Amendment to Credit Agreement (the "Third Amendment"). The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the "Guarantees"), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Third Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors' acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.

All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Third Amendment.

Dated: March 2, 2023    B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: COO

B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/Phillip Ahn
Name: Phillip Ahn
Title: CFO & COO
EX-10.44 9 exhibit1044fourthamendment.htm EX-10.44 Document
Exhibit 10.44
FOURTH AMENDMENT TO CREDIT AGREEMENT

THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of November 6, 2023, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS

A.The Borrower, the Secured Guarantors, the Lenders, and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022, that certain Second Amendment to Credit Agreement and Joinder dated as of November 10, 2022, and that certain Third Amendment to Credit Agreement dated as of March 2, 2023 (the “Credit Agreement”).
C. The Borrower has requested that (i) the Loan Documents be amended to replace all references to (a) “BullsEye Telecom, Inc., a Michigan corporation” and “BullsEye Telecom, Inc.” with “BullsEye Telecom, LLC, a Michigan limited liability company” and “BullsEye Telecom, LLC”, as applicable, and (b) “Bullseye Business Solutions Holdings, Inc., a Michigan corporation”, and “Bullseye Business Solutions Holdings, Inc.” with “Bullseye Business Solutions Holdings, LLC, a Michigan limited liability company” and “Bullseye Business Solutions Holdings, LLC”, as applicable; and (ii) the Administrative Agent and the Lenders waive certain notices, and the Administrative Agent and the Lenders are willing to agree to such requests pursuant to the terms hereof.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment of Loan Documents. Effective as of June 30, 2023, the Loan Documents are hereby amended to replace all references to (a) “BullsEye Telecom, Inc., a Michigan corporation” and “BullsEye Telecom, Inc.” with “BullsEye Telecom, LLC, a Michigan limited liability company” and “BullsEye Telecom, LLC”, as applicable; and (b) “Bullseye Business Solutions Holdings, Inc., a Michigan corporation”, and “Bullseye Business Solutions Holdings, Inc.” with “Bullseye Business Solutions Holdings, LLC, a Michigan limited liability company” and “Bullseye Business Solutions Holdings, LLC”, as applicable.
3.Waiver of Notice. Upon the terms and subject to the conditions set forth in this Amendment, effective as of June 28, 2023, the Administrative Agent and the Lenders shall be deemed to have waived the notice requirements set forth in (x) Sections 6.02(e) and 7.13(c) of the Credit Agreement of the conversion of (i) BullsEye into a Michigan limited liability company named “BullsEye Telecom, LLC” on June 30, 2023, and (ii) Bullseye Business Solutions Holdings, Inc., a Michigan corporation, into a Michigan limited liability company named Bullseye Business Solutions Holdings, LLC on June 28, 2023, and (y) Section 6.02(e) of the Credit Agreement of (i) Impact Telecom, LLC moving from a direct Subsidiary of Impact Acquisition, LLC to a direct Subsidiary of Borrower, and (ii) Lingo Telecom, LLC moving from a direct Subsidiary of Impact Telecom, LLC to a direct Subsidiary of Borrower on August 26, 2023. This waiver shall be effective only in this specific instance and for the specific purpose for which it is given, and shall not entitle Borrower or the Secured Guarantors to any other or further waiver in any similar or other circumstances.
1

4.Conditions Precedent. The effectiveness of this Amendment, and the waiver of notice, shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)No Default or Event of Default. After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(iv)Representations and Warranties. After giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
5.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
6.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
7.Counterparts; Electronic Signatures. This Amendment may be executed in multiple counterparts, each of which when so executed and delivered shall be deemed an original, and all of which, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this Amendment.
8.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
2

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.


BORROWER:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO














































Schedule l.0l(b)
3

SECURED GUARANTORS:    BULLSEYE TELECOM, LLC,
a Michigan limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


BULLSEYE BUSINESS SOLUTIONS HOLDINGS, LLC,
a Michigan limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO    

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO
LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

IMPACT ACQUISITION, LLC,
a Delaware limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO
4

IMPACT TELECOM, LLC,
a Nevada limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO



LINGO TELECOM, LLC,
a Texas limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company

By: /s/Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO
5

ADMINISTRATIVE AGENT:    BANC OF CALIFORNIA, N.A.


By: /s/Carlos Ramos
Name: Carlos Ramos
Title: SVP – Market Manager













































6



LENDERS:                    BANC OF CALIFORNIA, N.A.

    By: /s/Carlos Ramos
Name: Carlos Ramos
Title: SVP – Market Manager





7


GRASSHOPPER BANK

By: /s/Barbara Fleming
Name: Barbara Fleming
Title: Head of Fund & Sponsor Banking














































8



KEYBANK NATIONAL ASSOCIATION


By:    /s/ Paul T. Whalen
Name: Paul T. Whalen    
Title: Vice President    
9


ACKNOWLEDGMENT OF PARENT AND ULTIMATE PARENT GUARANTORS

The undersigned (the "Parent and Ultimate Parent Guarantors") hereby acknowledge and agree to the attached Fourth Amendment to Credit Agreement (the "Fourth Amendment"). The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the "Guarantees"), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Fourth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors' acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.

All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Fourth Amendment.
Dated: November 6, 2023    B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: /s/Phillip Ahn
Name: Phillip Ahn
Title: CFO

B.RILEY FINANCIAL, INC.,
a Delaware corporation

By: /s/Phillip Ahn
Name: Phillip Ahn
Title: CFO
10
EX-10.45 10 exhibit1045fifthamendmentt.htm EX-10.45 Document
Exhibit 10.45
FIFTH AMENDMENT TO
CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of February 14, 2024, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, as successor-in-interest to Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS
A.    The Borrower, the Secured Guarantors, the Lenders, and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022, that certain Second Amendment to Credit Agreement and Joinder dated as of November 10, 2022, that certain Third Amendment to Credit Agreement dated as of March 2, 2023, and that certain Fourth Amendment to Credit Agreement, dated as of November 6, 2023 (the “Credit Agreement”).
B.    The Borrower has requested the approval of the Impact Telecom Sale (as defined below), and the Administrative Agent and the Lenders are willing to agree to such approval pursuant to the terms hereof.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 1.01. Section 1.01 of the Credit Agreement is hereby amended by adding the following defined term in the appropriate alphabetical order:
“Impact Telecom Sale” means the sale of 100% of the outstanding membership interests in Impact Telecom, LLC, a Nevada limited liability company, to 46 Labs, LLC, an Oklahoma limited liability company, pursuant to that certain Membership Interest Purchase Agreement dated as of February 29, 2024.

3.Amendment to Section 1.01. Clause (d) of the defined term “Change of Control” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
“(d) Except pursuant to the Tempo Telecom Sale, the Impact Telecom Sale, or as permitted by the terms of Section 7.04 of this Agreement, the Borrower fails to own and control, directly or indirectly, 100% of the Equity Interests of any of its Subsidiaries that is a Loan Party.”

    1


4.Amendment to Section 1.01. The defined term “Permitted Transfers” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type): “Permitted Transfers” means (a) Dispositions of inventory in the ordinary course of business; (b) Dispositions of property to Borrower or any Subsidiary of Borrower; provided, that if the transferor of such property is a Loan Party then the transferee thereof must be a Loan Party; (c) Dispositions of accounts receivable in connection with the collection or compromise thereof; (d) licenses, sublicenses, leases or subleases granted to others not interfering in any material respect with the business of Borrower or any Subsidiary of Borrower; (e) the sale or disposition of Cash Equivalents for fair market value; (f) dispositions of worn-out, obsolete or damaged property no longer used or useful in the business; (g) Restricted Payments permitted by this Agreement; (h) other Dispositions of property of Borrower or any Subsidiary of Borrower of up to $750,000 in the aggregate in any calendar year; and (i) the Tempo Telecom Sale and the Impact Telecom Sale.”

5.Termination of Liens on Impact Telecom, LLC; Consent to Release under Parent Subordinated Credit Agreement; and Release. Upon the effective date of this Amendment:
(i)Administrative Agent shall promptly prepare and file, at Borrower’s expense, (i) a UCC-3 Termination to terminate the Administrative Agent’s UCC-1 Financing Statement filed on Impact Telecom, LLC (“Impact”), (ii) a UCC-3 Amendment of the Administrative Agent’s UCC-1 Financing Statement filed on the Borrower, deleting the issued and outstanding Equity Interests of Impact from the collateral description, and (iii) a Release and Reassignment of Trademarks and Trademark Applications terminating the Notice of Grant of Security Interests in Trademarks, dated August 16, 2022, executed by Impact in favor of the Administrative Agent which was recorded in the United States Patent and Trademark Office on August 16, 2022, at Reel 007824 Frame 0154.
(ii)Administrative Agent, the Lenders and Impact hereby confirm that (i) all of Impact’s obligations under the Loan Documents have been terminated, except to the extent that any such obligations survive termination as provided in the Credit Agreement or the applicable Loan Document; (ii) Impact will no longer be a Secured Guarantor under the Loan Documents; and (iii) the Administrative Agent and the Lenders will owe no further obligations to Impact and Impact will have no rights under any of the Loan Documents.
(iii)Administrative Agent and the Lenders hereby consent to the release of Impact and Tempo Telecom, LLC, a Georgia limited liability company, as guarantors under the Parent Subordinated Credit Agreement.
(iv)Impact hereby absolutely and unconditionally releases and forever discharges the Administrative Agent and the Lenders, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which Impact has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this Amendment, whether such claims, demands and causes of action are matured or unmatured or known or unknown. Impact certifies that it has read the following provisions of California Civil Code Section 1542: Impact understands and acknowledges that the significance and consequence of this waiver of California Civil Code Section 1542 is that even if it should eventually suffer additional damages arising out of the facts referred to above, it will not be able to make any claim for those damages. Furthermore, Impact acknowledges that it intends these consequences even as to claims for damages that may exist as of the date of this release but which it does not know exist, and which, if known, would materially affect its decision to execute this Amendment, regardless of whether its lack of knowledge is the result of ignorance, oversight, error, negligence, or any other cause.
A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.

    2



6.Amendment Fee. On the date of this Amendment, Borrower shall pay to the Administrative Agent, for the ratable account of the Lenders, an amendment fee in the amount of $15,969 (“Amendment Fee”). The Amendment Fee shall be deemed fully earned and nonrefundable on the date of this Amendment.
7.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, Impact and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(iv)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
8.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
9.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
10.Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument. The exchange of copies of this Amendment and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”), or by a combination of such means, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of an original Amendment for all purposes. Banc of California may also execute this Amendment by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, and the parties hereto hereby waive any objection to the contrary.
    3


11.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
    4


IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.
BORROWER:
LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        




    Schedule 1.01(b)


SECURED GUARANTORS:
BULLSEYE TELECOM, LLC,
a Michigan limited liability company

By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        
BULLSEYE BUSINESS SOLUTIONS HOLDINGS, LLC,
a Michigan limited liability company

By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        
BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company

By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        

LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company

By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        
IMPACT ACQUISITION, LLC,
a Delaware limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        
    6


IMPACT TELECOM, LLC,
a Nevada limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        

LINGO TELECOM, LLC,
a Texas limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        

LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    CEO                        

    7


ADMINISTRATIVE AGENT:
BANC OF CALIFORNIA


By:    /s/ Carlos Ramos                
Name:    Carlos Ramos                    
Title:    EVP, Regional Manager                


    8


LENDERS:
BANC OF CALIFORNIA


By:    /s/ Carlos Ramos                
Name:    Carlos Ramos                    
Title:    EVP, Regional Manager                

    9


KEYBANK NATIONAL ASSOCIATION
By: /s/Paul T. Whalen Name: Paul T. Whalen Title: Senior Vice President The undersigned (the “Parent and Ultimate Parent Guarantors”) hereby acknowledge and agree to the attached Fifth Amendment to Credit Agreement (the “Fifth Amendment”).

    10




ACKNOWLEDGMENT OF PARENT AND
ULTIMATE PARENT GUARANTORS
The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the “Guarantees”), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Fifth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors’ acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Fifth Amendment.
Dated: February 14, 2024            B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By:    /s/Ananth Veluppillai                
Name:    Ananth Veluppillai                
Title:    COO                        


B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/Phillip Ahn                    
Name:    Phillip Ahn                    
Title:     CFO                        



    11
EX-10.46 11 exhibit1046sixthamendmentt.htm EX-10.46 Document
Exhibit 10.46
SIXTH AMENDMENT TO CREDIT AGREEMENT

THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of March 15, 2024, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, as successor-in-interest to Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS

A.The Borrower, the Secured Guarantors, the Lenders, and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022, that certain Second Amendment to Credit Agreement and Joinder dated as of November 10, 2022, that certain Third Amendment to Credit Agreement dated as of March 2, 2023, that certain Fourth Amendment to Credit Agreement, dated as of November 6, 2023, and that certain Fifth Amendment to Credit Agreement, dated as of February 29, 2024 (the “Credit Agreement”).
B.The parties wish to amend the Credit Agreement to make certain modifications as set forth
below.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 1.01. The defined term “Permitted Distributions” in Section 1.01 of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by formatting; added text is indicated in bold, italicized and underscored type):
“Permitted Distributions” means, the aggregate cash distributions or dividends by the Borrower to Parent and/or Ultimate Parent (a) constituting Permitted Tax Distributions after the Closing Date, and (b) that are not Permitted Tax Distributions and are otherwise made from time to time after Administrative Agent’s receipt of the annual audited financial statements required under Section 6.01(b) for the fiscal year ending December 31, 2023, in each case, subject to all of the following additional requirements:
(A)solely with respect to cash distributions or dividends described in clause (b) of this definition of “Permitted Distributions,” in no event shall (i) the aggregate amount of such distributions or dividends made exceed $10,000,000 in any fiscal year and (ii) the Loan Parties make any cash distributions or dividends to Parent and/or Ultimate Parent during the fiscal year ending December 31, 2024;
(B)the Borrower shall have delivered to Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, (x) the audited financial statements required by Section 6.01(b) for Borrower’s immediately preceding fiscal year and (y) evidence that
1

immediately before and after giving effect to such dividends or distributions (I) no Event of Default shall have occurred and be continuing at the time thereof or result therefrom, (II) the Loan Parties shall be in Pro Forma Compliance with each of the financial covenants set forth in Section 7.11, and (III) no Material Adverse Effect shall have occurred and be continuing at the time thereof or result therefrom; and
(C)the Loan Parties shall have aggregate balance sheet cash of at least $5,000,000.
3.Amendment to Section 6.01(a). Section 6.01(a) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
(a) Ultimate Parent SEC Reporting. Ultimate Parent shall file with the SEC (i) annual reports on Form 10-K within 90 days after the end of each fiscal year of Ultimate Parent, (ii) quarterly reports on Form 10-Q within 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Ultimate Parent or such later date as permitted under the Securities and Exchange Act of 1934 or the rules and regulations promulgated thereunder, and
(iii) any current reports on Form 8-K as and when required under the Securities Exchange Act of 1934, and in the case of this clause (iii) subject to permitted extensions.
4.Amendment to Section 11.01(e). Section 11.01(e) of the Credit Agreement is hereby amended and restated in its entirety so that it reads in full as follows (deleted text is indicated by formatting; added text is indicated in bold, italicized and underscored type):
“(e) change (i) Section 8.03 in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender or (ii) the order of application of any prepayment of the Term Loans from the application thereof set forth in the applicable provisions of Section 2.07(fg) in any manner that materially and adversely affects the Lenders without the written consent of the Required Lenders or (iii) 2.14(f) in a manner that would alter the pro rata application required thereby without the written consent of each Lender directly affected thereby;”.
5.Amendment Fee. On the date of this Amendment, Borrower shall pay to the Administrative Agent, for the ratable account of the Lenders who have executed this Amendment, an amendment fee in the amount of $15,968.75 (“Amendment Fee”). The Amendment Fee shall be deemed fully earned and nonrefundable on the date of this Amendment.
6.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)Fees. The Administrative Agent shall have received payment from Borrower, for the benefit of the Lenders who have executed this Amendment, of the Amendment Fee required by Section 5 hereof;
2

(iv)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(v)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
7.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
8.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
9.Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument. The exchange of copies of this Amendment and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”), or by a combination of such means, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of an original Amendment for all purposes. Banc of California may also execute this Amendment by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, and the parties hereto hereby waive any objection to the contrary.
10.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
3

IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.

BORROWER:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


SECURED GUARANTORS:    BULLSEYE TELECOM, LLC,
a Michigan limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO
BULLSEYE BUSINESS SOLUTIONS HOLDINGS, LLC,
a Michigan limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

IMPACT ACQUISITION, LLC,
a Delaware limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO



5


LINGO TELECOM, LLC,
a Texas limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


ADMlNISTRATIVE AGENT:    BANC OF CALIFORNIA

By: /s/ Carlos Ramos
Name: Carlos Ramos
Title: EVP, Regional Manager



    GRASSHOPPER BANK

By:     /s/ Barbara Flemming
Name:     Barbara Flemming
Title:     Head of Fund & Sponsor Banking












KEYBANK NATIONAL ASSOCIATION



By: /s/Paul T. Whalen    
Name: Paul T. Whalen    
Title: Senior Vice President    




ACKNOWLEDGMENT OF PARENT AND ULTIMATE PARENT GUARANTORS

The undersigned (the "Parent and Ultimate Parent Guarantors") hereby acknowledge and agree to the attached Sixth Amendment to Credit Agreement (the "Sixth Amendment"). The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the "Guarantees"), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Sixth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors' acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Sixth Amendment.

Dated: March 15, 2024    B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: COO



B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn
Name: Phillip Ahn
Title: CFO

ACKNOWLEDGMENT OF SUBORDINATE CREDITOR AND AMENDMENT OF SUBORDINATION AGREEMENT

The undersigned (individually and/or collectively, the “Subordinate Creditor”) hereby acknowledge and agree to the attached Sixth Amendment to Credit Agreement (the “Sixth Amendment”). The Subordinate Creditor acknowledges and reaffirms their obligations owing to the Senior Creditors under that certain Subordination Agreement, dated as of August 16, 2022 (the “Subordination Agreement”), and Subordinate Creditor agrees that the Subordination Agreement is and shall remain in full force and effect notwithstanding the Sixth Amendment. Although the Subordinate Creditor has been informed of the matters set forth herein and have acknowledged and agreed to the same, the Subordinate Creditor understands that neither the Administrative Agent nor any other Senior Creditor has any obligation to inform the Subordinate Creditor of such matters in the future nor any obligation to seek the Subordinate Creditor’s acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Subordinate Creditor and Amendment of Subordination Agreement shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Sixth Amendment and/or the Subordination Agreement, as applicable.
The Subordinate Creditor, the Loan Parties, and Administrative Agent hereby agree that Section 1 of the Subordination Agreement is hereby amended to amend and restate the definition of “Permitted Payments” therein to read in its entirety as follows (deleted text is indicated by formatting; added text is indicated in bold, italicized and underscored type):
“Permitted Payments” means (a) AHYDO Catch-Up Payments, (b) repayments of interest and principal due under the Subordinate Creditor Agreement solely with the proceeds of Incremental Term Loans, and (c) regularly scheduled payments (but no prepayments) of interest and principal due under the Subordinate Credit Agreement (as in effect on the Closing Date); provided that:
(i)both immediately before and immediately after giving effect to such payments in clause (c) above, (a) no Senior Default shall have occurred and be continuing at the time of such payment or result therefrom, and (b) the Loan Parties shall be in Pro Forma Compliance with each of the financial covenants set forth in Section 7.11 of the Senior Credit Agreement, and (c) no Material Adverse Effect shall have occurred and be continuing at the time thereof or result therefrom; and
(ii)solely with respect to principal payments, (a) no such payments may be made (1) during the fiscal year ending December 31, 2024, or (2) before the Administrative Agent’s receipt of the annual audited financial statements required under Section 6.01(b) of the Senior Credit Agreement for the fiscal year ending December 31, 2023, and (b) the Loan Parties may make one principal payment each fiscal year (other than the fiscal year ending December 31, 2024, in which case no principal payments may be made in such fiscal year) in an aggregate amount that does not exceed 25% of the Consolidated Excess Cash Flow for the preceding fiscal year (based on the annual audited financial statements delivered under Section 6.01(b) of the Senior Credit Agreement for such prior fiscal year).


DocuSign Envelope ID: D9C2E937-369B-4BBE-9608-5B2B4C6645D9








SUBORDINATE CREDITOR:    B. RILEY COMMERCIAL CAPITAL LLC,
a Delaware limited liability company

By: /s/ Phillip Ahn
Name: Phillip Ahn
Title: CFO

B. RILEY SECURITIES, INC.,
a Delaware corporation


By: /s/ Michael McCoy
Name: Michael McCoy
Title: CFO


B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: COO
Subordination Agreement

LOAN PARTIES:    LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BULLSEYE TELECOM, LLC,
a Michigan limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BULLSEYE BUSINESS SOLUTIONS HOLDINGS, LLC,
a Michigan limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO        


BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


Subordination Agreement


LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO



IMPACT ACQUISITION, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO

LINGO TELECOM, LLC,
a Texas limited liability company


By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company

By: /s/ Ananth Veluppillai
Name: Ananth Veluppillai
Title: CEO


Subordination Agreement

ADMlNISTRATIVE AGENT:    BANC OF CALIFORNIA

    By: /s/ Carlos Ramos
Name: Carlos Ramos
        Title: EVP, Regional Manager
EX-10.52 12 exhibit1052twelfthamendmen.htm EX-10.52 Document
Exhibit 10.52
TWELFTH AMENDMENT TO
CREDIT AGREEMENT
THIS TWELFTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of November 18, 2024, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, as successor-in-interest to Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS
A.    The Borrower, the Secured Guarantors, the Lenders, and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022, that certain Second Amendment to Credit Agreement and Joinder dated as of November 10, 2022, that certain Third Amendment to Credit Agreement dated as of March 2, 2023, that certain Fourth Amendment to Credit Agreement, dated as of November 6, 2023, that certain Fifth Amendment to Credit Agreement, dated as of February 29, 2024, that certain Sixth Amendment to Credit Agreement, dated as of March 15, 2024, that certain Seventh Amendment to Credit Agreement, dated as of April 9, 2024, that certain Eighth Amendment to Credit Agreement dated as of August 22, 2024, that certain Ninth Amendment to Credit Agreement, dated as of September 6, 2024, that certain Tenth Amendment to Credit Agreement, dated as of September 20, 2024, and that certain Eleventh Amendment to Credit Agreement, dated as of September 30, 2024 (the “Credit Agreement”).
B.    The parties wish to amend the Credit Agreement to make certain modifications as set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 6.01(a). Section 6.01(a) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
(a)Ultimate Parent SEC Reporting. Ultimate Parent shall file with the SEC (i) annual reports on Form 10-K within 90 days (or in the case of the fiscal year of the Ultimate Parent ending December 31, 2023, 110 days) after the end of each fiscal year of Ultimate Parent, (ii) quarterly reports on Form 10-Q within 45 days (or in the case of (1) the fiscal quarter of the Ultimate Parent ending June 30, 2024, 163 days and (2) the fiscal quarter of Ultimate Parent ending September 30, 2024, 71 days) after the end of each of the first three fiscal quarters of each fiscal year of the Ultimate Parent or such later date as permitted under the Securities and Exchange Act of 1934 or the rules and regulations promulgated thereunder, and (iii) any current reports on Form 8-K as and when required under the Securities Exchange Act of 1934, and in the case of this clause (iii) subject to permitted extensions.
    1


3.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)Acknowledgment of Subordinate Creditor. B. Riley Commercial Capital LLC, B. Riley Securities, Inc., a Delaware corporation, B. Riley Principal Investments, LLC, a Delaware limited liability company, shall have executed the Acknowledgment of Subordinate Creditor attached to this Amendment;
(iv)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(v)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
4.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
5.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
6.Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument. The exchange of copies of this Amendment and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”), or by a combination of such means, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of an original Amendment for all purposes. Banc of California may also execute this Amendment by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, and the parties hereto hereby waive any objection to the contrary.
    2


7.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
    3


IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.
BORROWER:
LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO




    


SECURED GUARANTORS:
BULLSEYE TELECOM, LLC,
a Michigan limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO
BULLSEYE BUSINESS SOLUTIONS HOLDINGS, LLC,
a Michigan limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO
BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO

LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO
IMPACT ACQUISITION, LLC,
a Delaware limited liability company

By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO
    5



LINGO TELECOM, LLC,
a Texas limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO

LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company


By:    /s/ Ananth Veluppillai                
Name:     Ananth Veluppillai                
Title:    CEO

    6


ADMINISTRATIVE AGENT:
BANC OF CALIFORNIA


By:    /s/ Carlos Ramos                
Name: Carlos Ramos                    
Title:     EVP                     


    7


LENDERS:
BANC OF CALIFORNIA


By:    /s/ Carlos Ramos                
Name: Carlos Ramos                    
Title:     EVP                     

    8


GRASSHOPPER BANK
By:                             
Name:                             
Title:                             

    9


KEYBANK NATIONAL ASSOCIATION
By: /s/ Glen Bleeker                    
Name:     Glen Bleeker                    
Title:     Senior Vice President                

    10




ACKNOWLEDGMENT OF PARENT AND
ULTIMATE PARENT GUARANTORS
The undersigned (the “Parent and Ultimate Parent Guarantors”) hereby acknowledge and agree to the attached Twelfth Amendment to Credit Agreement (the “Twelfth Amendment”). The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the “Guarantees”), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Twelfth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors’ acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Twelfth Amendment.
Dated: November [__], 2024            B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai            
Title:    COO                    


B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn                
Name:    Phillip Ahn                
Title:    CFO                    

    11


ACKNOWLEDGMENT OF SUBORDINATE CREDITOR

The undersigned (individually and/or collectively, the “Subordinate Creditor”) hereby acknowledge and agree to the attached Twelfth Amendment to Credit Agreement (the “Twelfth Amendment”). The Subordinate Creditor acknowledges and reaffirms their obligations owing to the Senior Creditors under that certain Subordination Agreement, dated as of August 16, 2022 (as amended to date, the “Subordination Agreement”), and Subordinate Creditor agrees that the Subordination Agreement is and shall remain in full force and effect notwithstanding the Twelfth Amendment. Although the Subordinate Creditor has been informed of the matters set forth herein and have acknowledged and agreed to the same, the Subordinate Creditor understands that neither the Administrative Agent nor any other Senior Creditor has any obligation to inform the Subordinate Creditor of such matters in the future nor any obligation to seek the Subordinate Creditor’s acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Subordinate Creditor shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Twelfth Amendment and/or the Subordination Agreement, as applicable.

SUBORDINATE CREDITOR:
B. RILEY COMMERCIAL CAPITAL LLC,
a Delaware limited liability company
By: /s/ Phillip Ahn                
Name:    Phillip Ahn                
Title:    CFO                    


B. RILEY SECURITIES, INC.,
a Delaware corporation
 By: /s/ Mike McCoy                
Name: Mike McCoy                    
Title: CFO                        


B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company
By: /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai            
Title:    COO                    

    12
EX-10.53 13 exhibit1053thirteenthamend.htm EX-10.53 Document
Exhibit 10.53
THIRTEENTH AMENDMENT TO
CREDIT AGREEMENT
THIS THIRTEENTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of December 18, 2024, is entered into by and among LINGO MANAGEMENT, LLC, a Delaware limited liability company (“Borrower”), the Affiliates of the Borrower identified on the signature pages hereto (collectively, the “Secured Guarantors”), the financial institutions identified on the signature pages hereto (collectively, the “Lenders”), and Banc of California, as successor-in-interest to Banc of California, N.A., as Administrative Agent, with reference to the following facts:
RECITALS
A.    The Borrower, the Secured Guarantors, the Lenders, and Banc of California as Administrative Agent, are parties to a Credit Agreement dated as of August 16, 2022, as amended by that certain First Amendment to Credit Agreement and Joinder dated as of September 9, 2022, that certain Second Amendment to Credit Agreement and Joinder dated as of November 10, 2022, that certain Third Amendment to Credit Agreement dated as of March 2, 2023, that certain Fourth Amendment to Credit Agreement, dated as of November 6, 2023, that certain Fifth Amendment to Credit Agreement, dated as of February 29, 2024, that certain Sixth Amendment to Credit Agreement, dated as of March 15, 2024, that certain Seventh Amendment to Credit Agreement, dated as of April 9, 2024, that certain Eighth Amendment to Credit Agreement dated as of August 22, 2024, that certain Ninth Amendment to Credit Agreement, dated as of September 6, 2024, that certain Tenth Amendment to Credit Agreement, dated as of September 20, 2024, that certain Eleventh Amendment to Credit Agreement, dated as of September 30, 2024, and that certain Twelfth Amendment dated as of November 19, 2024 (the “Credit Agreement”).
B.    The parties wish to amend the Credit Agreement to make certain modifications as set forth below.
NOW, THEREFORE, the parties hereby agree as follows:
1.Defined Terms. All initially capitalized terms used in this Amendment (including, without limitation, in the recitals to this Amendment) without definition shall have the respective meanings assigned to such terms in the Credit Agreement.
2.Amendment to Section 6.01(a). Section 6.01(a) of the Credit Agreement is hereby amended and restated to read in its entirety as follows (deleted text is indicated by strikethrough formatting; added text is indicated in bold, italicized and underscored type):
1.Ultimate Parent SEC Reporting. Ultimate Parent shall file with the SEC (i) annual reports on Form 10-K within 90 days (or in the case of the fiscal year of the Ultimate Parent ending December 31, 2023, 110 days) after the end of each fiscal year of Ultimate Parent, (ii) quarterly reports on Form 10-Q within 45 days (or in the case of (1) the fiscal quarter of the Ultimate Parent ending June 30, 2024, 205 days and (2) the fiscal quarter of Ultimate Parent ending September 30, 2024, 113 days) after the end of each of the first three fiscal quarters of each fiscal year of the Ultimate Parent or such later date as permitted under the Securities and Exchange Act of 1934 or the rules and regulations promulgated thereunder, and (iii) any current reports on Form 8-K as and when required under the Securities Exchange Act of 1934, and in the case of this clause (iii) subject to permitted extensions.
    1


2.Conditions Precedent. The effectiveness of this Amendment shall be subject to the satisfaction of each of the following conditions:
(i)This Amendment. The Administrative Agent shall have received this Amendment, duly executed by the Borrower, the Secured Guarantors, and the Lenders;
(ii)Acknowledgment of Guaranties by Parent and Ultimate Parent. Parent and Ultimate Parent shall have executed the Acknowledgment of Parent and Ultimate Parent Guarantors attached to this Amendment;
(iii)Acknowledgment of Subordinate Creditor. B. Riley Commercial Capital LLC, B. Riley Securities, Inc., a Delaware corporation, B. Riley Principal Investments, LLC, a Delaware limited liability company, shall have executed the Acknowledgment of Subordinate Creditor attached to this Amendment;
(iv)No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing as of the date hereof; and
(v)Representations and Warranties. The representations and warranties contained in the Credit Agreement are true and correct in all material respects on and as of the date hereof (or, if any such representation or warranty is expressly stated to have been made as of a specific date, as of such specific date).
3.Reaffirmation and Ratification. The Borrower hereby reaffirms, ratifies and confirms its Obligations under the Credit Agreement and acknowledges that all of the terms and conditions of the Credit Agreement, as amended hereby, remain in full force and effect.
4.Integration. This Amendment constitutes the entire agreement of the parties in connection with the subject matter hereof and cannot be changed or terminated orally. All prior agreements, understandings, representations, warranties and negotiations regarding the subject matter hereof, if any, are merged into this Amendment.
5.Counterparts; Electronic Signatures. This Amendment may be executed in counterparts, each of which will be deemed to be an original, but all of which together will be deemed to be one and the same instrument. The exchange of copies of this Amendment and of executed signature pages by facsimile transmission or by electronic mail in “portable document format” (“.pdf”), or by a combination of such means, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of an original Amendment for all purposes. Banc of California may also execute this Amendment by electronic signature, whether digital or encrypted, which shall be considered as an original signature for all purposes and shall have the same force and effect as an original signature. Without limitation, “electronic signature” shall include DocuSign signature, faxed or emailed versions of an original signature or electronically scanned and transmitted versions of an original signature, each of which shall be of the same legal effect, validity, or enforceability as a manually executed signature or the use of a paper-based record keeping system, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, Electronic Signatures in Global and National Commerce Act, the California Uniform Electronic Transaction Act any other similar state laws based on the Uniform Electronic Transactions Act or the Uniform Commercial Code, and the parties hereto hereby waive any objection to the contrary.
6.Governing Law. This Amendment shall be governed by, and construed and enforced in accordance with, the internal laws (as opposed to the conflicts of law principles) of the State of California.
[Rest of page intentionally left blank; signature pages follow]
    2


IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their respective duly authorized officers as of the date first above written.
BORROWER:
LINGO MANAGEMENT, LLC,
a Delaware limited liability company


By:    /s/ Ananth Veluppillai                
Name:    Ananth Veluppillai
Title:    CEO




    


SECURED GUARANTORS:
BULLSEYE TELECOM, LLC,
a Michigan limited liability company

By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO

BULLSEYE BUSINESS SOLUTIONS HOLDINGS, LLC,
a Michigan limited liability company

By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO

BANDWAVE SYSTEMS, L.L.C.,
a Pennsylvania limited liability company

By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO

BULLSEYE TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO


LINGO TELECOM OF THE WEST, LLC,
a Delaware limited liability company


By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO


IMPACT ACQUISITION, LLC,
a Delaware limited liability company


By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO
    4



LINGO TELECOM, LLC,
a Texas limited liability company


By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO

LINGO TELECOM OF VIRGINIA, LLC,
a Virginia limited liability company


By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO

LINGO COMMUNICATIONS OF KENTUCKY, LLC
a Georgia limited liability company


By:    /s/ Ananth Veluppillai            
Name:    Ananth Veluppillai
Title:    CEO

    5


ADMINISTRATIVE AGENT:
BANC OF CALIFORNIA


By:    /s/ Carlos Ramos                
Name: Carlos Ramos                    
Title:     EVP                     


    6


LENDERS:
BANC OF CALIFORNIA


By:    /s/ Carlos Ramos                
Name: Carlos Ramos                    
Title:     EVP                     

    7


GRASSHOPPER BANK
By:                             
Name:                             
Title:                             

    8


KEYBANK NATIONAL ASSOCIATION
By: /s/ Glen Bleeker                    
Name:     Glen Bleeker                    
Title:     Senior Vice President                

    9




ACKNOWLEDGMENT OF PARENT AND
ULTIMATE PARENT GUARANTORS
The undersigned (the “Parent and Ultimate Parent Guarantors”) hereby acknowledge and agree to the attached Thirteenth Amendment to Credit Agreement (the “Thirteenth Amendment”). The Parent and Ultimate Parent Guarantors acknowledge and reaffirm their obligations owing to the Secured Parties under their respective unconditional guaranties (collectively, the “Guarantees”), and the Parent and Ultimate Parent Guarantors agree that their respective Guarantees are and shall remain in full force and effect notwithstanding the Thirteenth Amendment. Although the Parent and Ultimate Parent Guarantors have been informed of the matters set forth herein and have acknowledged and agreed to the same, the Parent and Ultimate Parent Guarantors understand that neither the Administrative Agent nor any other Secured Party has any obligation to inform the Parent and Ultimate Parent Guarantors of such matters in the future nor any obligation to seek the Parent and Ultimate Parent Guarantors’ acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Guarantors shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Thirteenth Amendment.
Dated: December 18, 2024            B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company


By: /s/ Ananth Veluppillai            
Name: Ananth Veluppillai
Title: COO


B. RILEY FINANCIAL, INC.,
a Delaware corporation


By: /s/ Phillip Ahn                
Name:    Phillip Ahn
Title:    CFO                    

    10


ACKNOWLEDGMENT OF SUBORDINATE CREDITOR

The undersigned (individually and/or collectively, the “Subordinate Creditor”) hereby acknowledge and agree to the attached Thirteenth Amendment to Credit Agreement (the “Thirteenth Amendment”). The Subordinate Creditor acknowledges and reaffirms their obligations owing to the Senior Creditors under that certain Subordination Agreement, dated as of August 16, 2022 (as amended to date, the “Subordination Agreement”), and Subordinate Creditor agrees that the Subordination Agreement is and shall remain in full force and effect notwithstanding the Thirteenth Amendment. Although the Subordinate Creditor has been informed of the matters set forth herein and have acknowledged and agreed to the same, the Subordinate Creditor understands that neither the Administrative Agent nor any other Senior Creditor has any obligation to inform the Subordinate Creditor of such matters in the future nor any obligation to seek the Subordinate Creditor’s acknowledgement or agreement to future amendments, consents or waivers with respect to the Credit Agreement, and nothing herein shall create such a duty.
All initially capitalized terms used in this Acknowledgment of Subordinate Creditor shall have the respective meanings set forth for such terms in the Credit Agreement referred to in the Thirteenth Amendment and/or the Subordination Agreement, as applicable.

SUBORDINATE CREDITOR:
B. RILEY COMMERCIAL CAPITAL LLC,
a Delaware limited liability company
By:    /s/ Phillip Ahn                    
Name:    Phillip Ahn
Title:    CFO


B. RILEY SECURITIES, INC.,
a Delaware corporation
 By:    /s/ Mike McCoy                
Name:    Mike McCoy
Title:    CFO


B. RILEY PRINCIPAL INVESTMENTS, LLC,
a Delaware limited liability company
By:    /s/ Ananth Veluppillai                
Name:    Ananth Veluppillai
Title:    COO

    11
EX-19.1 14 exhibit191briley-insidertr.htm EX-19.1 Document
Exhibit 19.1
            image_02.jpg POLICY STATEMENT

Subject: Insider Trading
Date Issued: February 16, 2017
Date Amended: May 21, 2019
Date Amended: April 28, 2022
Date Amended: February 24, 2023
Approved by: Board of Directors
               Date: February 24, 2023
Distribution:

Federal securities laws make it is illegal to trade in the securities of B. Riley Financial, Inc. (“B. Riley” or the “Company”) while in the possession of material nonpublic information about the Company. It is also illegal to disclose or give material nonpublic information to others who may trade on the basis of that information or to advise others how to trade while in possession of material nonpublic information.
Insider trading occurs when a person uses material non-public information obtained through involvement with the Company to make decisions to purchase, sell, or otherwise trade the Company's securities or to provide that information to others outside the Company, except to the extent necessary for such person to fulfill the responsibilities of his or her job. The prohibitions against insider trading apply to trades, tips and recommendations by virtually any person, including all persons associated with the Company, if the information involved is “material” and “non-public.” These terms are defined in this Policy under Part I, Section 3 below. The prohibitions apply to any director, officer or employee of the Company and to any securities of the Company (including common stock, depositary shares representing preferred stock, and bonds).
B. Riley has adopted this Policy both to satisfy the Company’s obligation to prevent insider trading and to help Company personnel avoid the severe consequences associated with violations of the insider trading laws. The Policy is also intended to prevent even the appearance of improper conduct on the part of anyone employed by or associated with the Company.

This Policy describes the standards of the Company and its subsidiaries on trading, and causing the trading of, the Company's securities or securities of certain other publicly traded companies while in possession of confidential information. This Policy is divided into two parts: the first part prohibits trading in certain circumstances and applies to all directors, officers and employees and their respective immediate family members of the Company and the second part imposes special additional trading restrictions and applies to all (i) directors of the Company, (ii) the employees listed on Appendix A (collectively, “Covered Persons”), and (iii) certain other employees that the Company may designate from time to time as “Covered Persons” because of their position, responsibilities or their actual or potential access to material information.





PART I
1. Applicability
This Part I applies to transactions in any of the Company's securities, including common stock, options and any other securities that the Company may issue, such as preferred stock, notes, bonds and convertible securities, as well as to derivative securities relating to any of the Company's securities, whether or not issued by the Company.
This Part I applies to all employees of the Company, all officers of the Company and all members of the Company's board of directors and their respective immediate family members (as defined below).
2. General Policy: No Trading or Causing Trading While in Possession of Material Non-public Information
(a) No director, officer or employee or any of their immediate family members may purchase or sell, or offer to purchase or sell, any Company security, whether or not issued by the Company, while in possession of material non-public information about the Company. (The terms “material” and “non-public” are defined in Part I, Section 3(a) and (b) below.)
(b) No director, officer or employee or any of their immediate family members who knows of any material non-public information about the Company may communicate that information to (“tip”) any other person, including family members and friends, or otherwise disclose such information without the Company’s prior authorization including to the extent necessary for such person to fulfill the responsibilities of his or her job.
(c) No director, officer or employee or any of their immediate family members may purchase or sell any security of any other company while in possession of material non-public information about that company that was obtained in the course of his or her involvement with the Company. No director, officer or employee or any of their immediate family members who knows of any such material non-public information may communicate that information to, or tip, any other person, including family members and friends, or otherwise disclose such information without the Company’s authorization.


(d) For compliance purposes, you should never trade, tip or recommend securities (or otherwise cause the purchase or sale of securities) while in possession of information that you have reason to believe is material and non-public unless you first consult with, and obtain the advance approval of, the Chief Compliance Officer.
(e) All directors and Covered Persons must “pre-clear” all trading in securities of the Company in accordance with the procedures set forth in Part II, Section 3 below, including trading by their immediate family members.
(f) Due to the risk of inadvertent disclosure of material nonpublic information, you may not disclose or discuss any nonpublic information of the Company in any Internet chat room, message board or other Internet site (whether or not such site is specifically related to the Company).
(g) There are no exceptions for emergencies. Transactions that may be necessary or justifiable for independent reasons (such as the need to raise money for an emergency expenditure) or to meet a margin call) are not excepted from this Policy. If the employee, officer or director has material nonpublic information, the prohibition still applies. The securities laws do not recognize such mitigating circumstances, and, in any event, even the appearance of an improper transaction must be avoided to preserve the Company’s reputation for adhering to high standards of conduct.
3. Definitions
(a) Material. Insider trading restrictions come into play only if the information you possess is “material.” Information is generally regarded as “material” if it has market significance, that is, if its public dissemination is likely to affect the market price of securities, or if it otherwise is information that a reasonable investor would want to know before making an investment decision.
Information that could be material includes the following:
(i) significant changes in the Company's prospects;
(ii) significant write-downs in assets or increases in reserves;
(iii) developments regarding significant litigation or government agency investigations;
(iv) liquidity problems;
(v) changes in earnings estimates or unusual gains or losses in major operations;
(vi) major changes in management;
(vii) changes in dividends;
(viii) extraordinary borrowings;
(ix) award or loss of a significant contract;
(x) changes in debt ratings; (xi) proposals, plans or agreements, even if preliminary in nature, involving mergers, acquisitions, divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial assets;


(xii) offerings of Company securities;
(xiii) pending statistical reports (such as, consumer price index, money supply and retail figures, or interest rate developments);
(ix) significant legal exposure due to actual, pending or threatened litigation or governmental investigations;
(x) impending bankruptcy or the existence of financial or liquidity problems;
(xi) major changes to accounting methods or policies; and
(xii) significant cybersecurity risks and/or incidents, including vulnerabilities and breaches.

Material information is not limited to historical facts but may also include projections and forecasts. With respect to a future event, such as a merger, acquisition or introduction of a new product, the point at which negotiations or product development are determined to be material is determined by balancing the probability that the event will occur against the magnitude of the effect the event would have on a company's operations or stock price should it occur. Thus, information concerning an event that would have a large effect on stock price, such as a merger, may be material even if the possibility that the event will occur is relatively small. When in doubt about whether particular non-public information is material, you should presume it is material. If you are unsure whether information is material, you should consult with the Company’s Chief Compliance Officer or General Counsel before making any decision to disclose such information (other than to persons who need to know it) or to trade in or recommend securities to which that information relates.
(b) Non-public. Insider trading prohibitions come into play only when you possess information that is material and “non-public.” The fact that information has been disclosed to a few members of the public does not make it public for insider trading purposes. To be “public,” the information must have been disseminated in a manner designed to reach investors generally, and the investors must be given the opportunity to absorb the information. Even after public disclosure of information about the Company, you must wait until the close of business on the next trading day after the information was publicly disclosed before you can treat the information as public.
Non-public information may include:

(i) information available to a select group of analysts or brokers or institutional investors;
(ii) undisclosed facts that are the subject of rumors, even if the rumors are widely circulated; and
(iii) information that has been entrusted to the Company on a confidential basis until a public announcement of the information has been made and enough time has elapsed for the market to respond to a public announcement of the information (at least one trading day).



As with questions of materiality, if you are not sure whether information is considered public, you should either consult with the Company’s Chief Compliance Officer or General Counsel or assume that the information is non-public and treat it as confidential.

(c) Immediate Family Member. The term “immediate family” means your spouse, parents, natural and adopted children (or other minor dependents), siblings, mothers- and fathers in-law, sons- and daughters-in-law and brothers- and sisters-in-law; provided, that such family member either (i) shares your household or (ii) is materially dependent upon you for financial support.

(d) Chief Compliance Officer. The duties of the Chief Compliance Officer include, but are not limited to, the following:

(i) assisting with implementation and enforcement of this Policy;
(ii) circulating this Policy to all employees and ensuring that this Policy is amended as necessary to remain up-to-date with insider trading laws;
(iii) pre-clearing all trading in securities of the Company by directors and Covered Persons in accordance with the procedures set forth in Part II, Section 3 below;
(iv) providing approval of any Rule 10b5-1 plans under Part II, Section 1(c) below and any prohibited transactions under Part II, Section 4 below; and
(v) providing a reporting system with an effective whistleblower protection mechanism.

4. Exceptions
The trading restrictions of this Policy do not apply to the following:
(a) 401(k) Plan. In the event that the Company incorporates the Company’s common stock as an investment alternative in its 401(k) plan, investing 401(k) plan contributions in a Company stock fund in accordance with the terms of the Company's 401(k) plan. However, the trading restrictions will apply to your election to participate in the plan as well as elections you make under the 401(k) plan to (i) increase or decrease the percentage of your periodic contributions that will be allocated to the Company stock account, (ii) make an intra-plan transfer of an existing account balance into or out of the Company stock account, (iii) borrow money against your 401(k) plan account if the loan will result in a liquidation of some or all of your Company’s stock account balance, and (iv) pre-pay a plan loan if the pre-payment will result in allocation of funds to the Company stock account.
(b) ESPP. Purchasing Company stock through periodic, automatic payroll contributions to the 2018 Employee Stock Plan (the “ESPP”). However, electing to enroll in the ESPP, any changes in your elections under the ESPP and selling any Company stock acquired under the ESPP are subject to trading restrictions under this Policy.


(c) Options. Exercising stock options granted under the Company’s Amended and Restated 2009 Stock Incentive Plan or the 2021 Stock Incentive Plan for cash or the delivery to the Company of previously owned Company stock or on a net exercise basis. However, the sale of any shares issued on the exercise of Company-granted stock options is subject to trading restrictions under this Policy
(d)    Approved 10b5-1 Plans. The trading restrictions outlined above do not apply to transactions under an Approved 10b5-1 Plan (as defined below).
5. Violations of Insider Trading Laws
Penalties for trading on or communicating material non-public information can be severe, both for individuals involved in such unlawful conduct and their employers and supervisors, and may include jail terms, criminal fines, civil penalties and civil enforcement injunctions. Given the severity of the potential penalties, compliance with this Policy is absolutely mandatory.
(a) Legal Penalties. A person who violates insider trading laws by engaging in transactions in a company's securities when he or she has material non-public information can be sentenced to a substantial jail term and required to pay a criminal penalty of several times the amount of profits gained or losses avoided.
In addition, a person who tips others may also be liable for transactions by the tippees to whom he or she has disclosed material non-public information. Tippers can be subject to the same penalties and sanctions as the tippees, and the SEC has imposed large penalties even when the tipper did not profit from the transaction.
The SEC can also seek substantial civil penalties from any person who, at the time of an insider trading violation, “directly or indirectly controlled the person who committed such violation,” which would apply to the Company and/or management and supervisory personnel. These control persons may be held liable for up to the greater of $1 million or three times the amount of the profits gained or losses avoided. Even for violations that result in a small or no profit, the SEC can seek penalties from a company and/or its management and supervisory personnel as control persons.
(b) Company-imposed Penalties. Employees who violate this Policy may be subject to disciplinary action by the Company, including dismissal for cause. Any exceptions to the Policy, if permitted, may only be granted by the Company’s Chief Compliance Officer or General Counsel and must be provided before any activity contrary to the above requirements takes place.


6. Inquiries
If you have any questions regarding any of the provisions of this Policy, please contact the Company’s Chief Compliance Officer at 310-689-2220.

PART II

1. Blackout Periods
All directors and Covered Persons, as well as their immediate family members, are prohibited from trading in the Company's securities during blackout periods as defined below.
(a) Quarterly Blackout Periods. Trading in the Company's securities is prohibited during the period beginning at the close of the market two weeks before the end of each fiscal quarter and ending at the close of business on the next trading day following the date the Company's financial results are publicly disclosed. During these periods, directors and Covered Persons generally possess or are presumed to possess material non-public information about the Company's financial results.
(b) Other Blackout Periods. From time to time, other types of material non-public information regarding the Company (such as negotiation of mergers, acquisitions or dispositions or new product developments) may be pending and not be publicly disclosed. While such material non-public information is pending, the Company may impose special blackout periods during which directors and/or Covered Persons are prohibited from trading in the Company's securities. If the Company imposes a special blackout period, it will notify those persons affected.
(c) Exception. These trading restrictions do not apply to transactions under a pre-existing written plan, contract, instruction, or arrangement under Rule 10b5-1 under the Securities Exchange Act of 1934 (an “Approved 10b5-1 Plan”) that:
(i) has been reviewed and approved in advance of the insider’s entering into such plan by the Chief Compliance Officer (or, if revised or amended, such revisions or amendments have been reviewed and approved by the Chief Compliance Officer in advance of any such revision or amendment); (ii) was entered into in good faith by the insider at a time when the insider was not in possession of material non-public information about the Company, and with respect to which the insider continues to act in good faith after it was entered into;


(iii) gives a third party the discretionary authority to execute such purchases and sales, outside the control of the insider, so long as such third party does not possess any material non-public information about the Company; or explicitly specifies the security or securities to be purchased or sold, the number of shares, the prices and/or dates of transactions, or other formula(s) describing such transactions; and
(iv) complies with the requirements of Rule 10b5-1, including, without limitation, as to required cooling-off periods, certifications from the insider, and otherwise.
2. Trading Window
Directors and Covered Persons are permitted to trade in the Company's securities when no blackout period is in effect as set forth in Section 1(a) of this Part II. However, even during this trading window, a director or Covered Person who is in possession of any material non-public information should not trade in the Company's securities until the information has been made publicly available or is no longer material. In addition, the Company may close this trading window if a special blackout period under Part II, Section 1(b) above is imposed until the trading window is re-opened.
3. Pre-clearance of Securities Transactions
(a) The Company requires all directors and Covered Persons to refrain from trading, and to cause their respective immediate family members to refrain from trading, even during a trading window under Part II, Section 2 above, without first pre-clearing all transactions in the Company's securities.
(b) Subject to the exemption in subsection (d) below, no director or Covered Person, or any of their immediately family members, may purchase or sell (or otherwise make any transfer, gift, pledge or loan of) any Company security at any time without first obtaining prior approval from the Chief Compliance Officer.
(c) The Chief Compliance Officer shall record the date each request is received and the date and time each request is approved or disapproved. Unless revoked, a grant of permission will normally remain valid until the close of trading one business day following the day on which it was granted. If the transaction does not occur during this period, pre-clearance of the transaction must be re-requested.


(d) Pre-clearance is not required for purchases and sales of securities under an Approved 10b5-1 Plan. With respect to any purchase or sale under an Approved 10b5-1 Plan, the third party effecting transactions on behalf of the director, officer or employee or any of their immediate family members should be instructed to send duplicate confirmations of all such transactions to the Chief Compliance Officer.
4. Prohibited Transactions
(a) Directors and executive officers of the Company are prohibited from trading in the Company's equity securities during a blackout period imposed under an “individual account” retirement or pension plan of the Company, during which at least 50% of the plan participants are unable to purchase, sell or otherwise acquire or transfer an interest in equity securities of the Company, due to a temporary suspension of trading by the Company or the plan fiduciary.
(b) Directors and Covered Persons, including any such person's immediately family members, are prohibited from engaging in the following transactions in the Company's securities unless advance approval is obtained from the Chief Compliance Officer:

(i) Short sales. Selling the Company's securities short;
(ii) Options trading. Buying or selling puts or calls or other derivative securities on the Company's securities;
(iv) Trading on margin or pledging. Holding Company securities in a margin account or pledging Company securities as collateral for a loan; and
(v) Hedging. Entering into hedging or monetization transactions or similar arrangements with respect to Company securities.

(c) Post-Termination Transactions. U.S. federal securities laws continue to apply to your transactions in securities of B. Riley even after you have terminated service as an employee, officer or director of the Company. If you are in possession of material nonpublic information when your service terminates, you may not trade in securities of B. Riley until that information has become public or is no longer material.

5. Acknowledgment and Certification
All directors, officers and employees are required to sign the attached acknowledgment and certification.
The undersigned does hereby acknowledge receipt of the Company's Insider Trading Policy. The undersigned has read and understands (or has had explained) such Policy and agrees to be governed by such Policy at all times in connection with the purchase and sale of securities and the confidentiality of non-public information.
EX-21.1 15 exhibit211subsidiarylist.htm EX-21.1 Document
 
Exhibit 21.1
         

Subsidiaries of B. Riley Financial, Inc. – December 31, 2024


 
    Jurisdiction of Organization/
Subsidiary   Incorporation
AAL (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
ABJ5, LLC Delaware
AGORA (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
ANNETNAUS (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
ApisRegina (ASSIGNMENT FOR THE BENEFIT OF CREDITORS) LLC California
Atlantic Coast Recycling of Ocean County, LLC Delaware
Atlantic Coast Recycling, LLC Delaware
Audience (Assignment for the Benefit of Creditors), LLC California
AYAPP (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
B. Riley Acquisition Corp. I Delaware
B. Riley Acquisition Corp. II Delaware
B. Riley Acquisition Corp. III Delaware
B. Riley Acquisition Corp. IV Delaware
B. Riley Acquisition Corp. V Delaware
B. Riley Acquisition Sponsor Co., I, LLC Delaware
B. Riley Acquisition Sponsor Co., II, LLC Delaware
B. Riley Acquisition Sponsor Co., III, LLC Delaware
B. Riley Acquisition Sponsor Co., IV, LLC Delaware
B. Riley Acquisition Sponsor Co., V, LLC Delaware
B. Riley Advisory Holdings, LLC Delaware
B. Riley Advisory Services de Mexico, S de RL Mexico City
B. Riley Advisory US, Inc. Delaware
B. Riley Brand Management, LLC Delaware
B. Riley Capital Management, LLC New York
B. Riley Commercial Capital, LLC Delaware
B. Riley Corporate Services, Inc. Delaware
B. Riley Environmental Holdings, LLC Delaware
B. Riley Environmental MIP, LLC Delaware
B. Riley Farber Advisory Inc. Ontario
B. Riley Farber Inc. Ontario
B. Riley Financial, Inc. Delaware
B. Riley International, LLC Delaware
B. Riley Operations Management Services, LLC Delaware
B. Riley Principal 150 Sponsor Co., LLC Delaware
B. Riley Principal 175 Merger Corp. Delaware
B. Riley Principal 175 Sponsor Co., LLC Delaware
B. Riley Principal 200 Merger Corp. Delaware
B. Riley Principal 200 Sponsor Co., LLC Delaware

 
Exhibit 21.1
         

Subsidiaries of B. Riley Financial, Inc. – December 31, 2024

B. Riley Principal 250 Sponsor Co., LLC Delaware
B. Riley Principal Capital II, LLC Delaware
B. Riley Principal Capital, LLC Delaware
B. Riley Principal Investments RE, LLC Delaware
B. Riley Principal Investments, LLC Delaware
B. Riley Principal Sponsor Co. II, LLC Delaware
B. Riley Principal Sponsor Co. III, LLC Delaware
B. Riley Principal Sponsor Co., LLC Delaware
B. Riley Private Shares 2023-2 QC, LLC Delaware
B. Riley Private Shares 2023-2 QP, LLC Delaware
B. Riley Private Shares Management 2022-1, LLC Delaware
B. Riley Real Estate Ventures Holdings LLC Delaware
B. Riley Receivables, LLC Delaware
B. Riley Retail RE Holdings LLC Delaware
B. Riley Retail Solutions WF, LLC California
B. Riley Securities Canada Holdings, Inc. Delaware
B. RILEY SECURITIES CANADA ULC British Columbia
B. Riley Securities Holdings, LLC Delaware
B. Riley Securities, Inc. Delaware
B. Riley Venture Capital, LLC Delaware
B. Riley Wealth Advisors, Inc. Washington
B. Riley Wealth Insurance, Inc. Washington
B. Riley Wealth Management Holdings, Inc. Delaware
B. Riley Wealth Management, Inc. Tennessee
B. Riley Wealth Portfolio Advisers, LLC. Delaware
B. Riley Wealth Private Shares, LLC Delaware
B. Riley Wealth Tax Services, Inc. Delaware
Bandwave Systems, LLC Pennsylvania
bebe stores, inc.* California
Benchmark (Assignment for the Benefit of Creditors), LLC California
Benchmark Landscaping, LLC Delaware
Bicoastal Alliance, LLC* Delaware
BR Advisory & Investments, LLC Delaware
BR Events, LLC California
BR EXAR, LLC Delaware
BR Financial Holdings, LLC Delaware
BR Great Northern Mall, LLC Delaware
BR HYATTSVILLE, LLC Delaware
Brandinc US (Assignment for the Benefit of Creditors), LLC California
Brandinconline (Assignment for the Benefit of Creditors), LLC California
BRC Emerging Managers GP, LLC Delaware
BRC Partners Management GP, LLC Delaware

 
Exhibit 21.1
         

Subsidiaries of B. Riley Financial, Inc. – December 31, 2024

BRCDI (Assignment for the Benefit of Creditors), LLC California
BRF Finance Co., LLC Delaware
BRF Investments, LLC Delaware
BR-NRG, LLC Delaware
BRPI Acquisition Co LLC Delaware
BRPI Executive Consulting, LLC Delaware
BRVC bolttech II, LLC* Delaware
BRVC bolttech, LLC* Delaware
BRVC CONTINUOUS COMPOSITES II, LLC* Delaware
BRVC Promenade Group, LLC* Delaware
BRVC Pura, LLC* Delaware
BRVC SparkCognition, LLC* Delaware
BRVC Swiftly, LLC Delaware
BRVC Uniphore LLC* Delaware
Bullseye Business Solutions Holdings, LLC Michigan
Bullseye Telecom of Virginia, LLC Virginia
Bullseye Telecom, LLC Michigan
C3PGA (Assignment for the Benefit of Creditors), LLC California
Ceres (Assignment for the Benefit of Creditors), LLC California
Champlain (Assignment for the Benefit of Creditors), LLC California
CHF BidCo, LLC Delaware
Classmates Media Corporation Delaware
CSEIV (Assignment for the Benefit of Creditors), LLC California
Express Container (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
Fandor ABC, LLC California
FBR Capital Markets PT, Inc Virginia
Fernish (Assignment for the Benefit of Creditors), LLC California
GA Asset Advisors, Ltd. England & Wales
GACP Finance Co., LLC Delaware
GAEBB Group B.V. Netherlands
Gaming Collective (Assignment for the Benefit of Creditors), LLC California
Gather (Assignment for the Benefit of Creditors), LLC California
GD ABC, LLC California
Georgia Scapes HoldCo LLC* Delaware
Georgia Scapes LLC Delaware
GlassRatner Advisory & Capital Group, LLC (dba B. Riley Advisory Services) Delaware
GlassRatner Brokerage Services, Inc. Georgia
GlassRatner International, Inc. Delaware
Great American Capital Partners, LLC Delaware
Great American Global Partners, LLC* California
Hyper Products Inc Delaware
Impact Acquistion, LLC Delaware

 
Exhibit 21.1
         

Subsidiaries of B. Riley Financial, Inc. – December 31, 2024

IPCO Holdings, LLC Delaware
ISEEU (assignment for the benefit of creditors), LLC California
JuiceBox USA (Assignment for the Benefit of Creditors), LLC California
Juno Internet Services, Inc. Delaware
Juno Online Services, Inc. Delaware
Levantina USA (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
Lingo Communications of Kentucky, LLC Georgia
Lingo Management, LLC Delaware
Lingo Telecom of the West, LLC Delaware
Lingo Telecom of Virginia, LLC Virginia
Lingo Telecom, LLC Texas
magicJack Holdings Corporation Delaware
magicJack L.P. Delaware
magicJack SMB, Inc. (dba MAGICJACK FOR BUSINESS) Florida
magicJack VocalTec Ltd. Israel
magicJack VoIP Services, LLC Delaware
Marconi Wireless Holdings, LLC Delaware
MCI (assignment for the benefit of creditors), LLC California
ModCloth Partners, LLC Delaware
NAM SPECIAL SITUATIONS MANAGEMENT, LLC Delaware
National Securities Corporation Washington
Native Brands Group, LLC California
NetZero Modecom, Inc. Delaware
NetZero, Inc. Delaware
NHC Holdings, LLC Delaware
Nogin Commerce, LLC Delaware
Nogin Holdings, LLC Delaware
O+JPAQ (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
OLEV (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
One Outdoor Holdings, LLC* Delaware
Pacific Casual (Assignment for the Benefit of Creditors), LLC California
PAM23 (Assignment for the Benefit of Creditors), LLC California
Passu (Assignment for the Benefit of Creditors), LLC California
Powermat Partners LLC Delaware
Powermat Partners Management Associates LLC Delaware
QLL (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
QLSL (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
QMSL (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
Quadrant Biosciences (ASSIGNMENT FOR THE BENEFIT OF CREDITORS) LLC California
QVCML (Assignment for the Benefit of Creditors), LLC California
QVTL (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
RBFST (Assignment for the Benefit of Creditors), LLC California

 
Exhibit 21.1
         

Subsidiaries of B. Riley Financial, Inc. – December 31, 2024

ReVal Group, LLC Delaware
Rex Healthcare Receivables, LLC Delaware
Sena Cases LLC Delaware
SERCK (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC California
Slang (Assignment for the Benefit of Creditors), LLC California
Steer Holdings (ASSIGNMENT FOR THE BENEFIT OF CREDITORS) LLC California
Studio D (ASSIGNMENT FOR THE BENEFIT OF CREDITORS) LLC California
Targus Asia Pacific Co. Ltd. Thailand
Targus Asia Pacific Ltd. Hong Kong
Targus Asia Pacific PTE Ltd. Korea
Targus Asia Pacific Sdn Bhd Malaysia
Targus Australia Pty Ltd NSW
Targus Brasil Comercio De Produtos Acessorios De Informatica Ltda. Brazil
Targus BV Netherlands
Targus Canada Ltd. Ontario
Targus Denmark ApS Denmark
Targus Deutschland GmbH Germany
Targus Europe Limited England & Wales
Targus Finland Oy Finland
Targus Group (UK) Limited England
Targus India Private Limited Republic of India
Targus International Holdco (UK) Limited England
Targus International LLC Delaware
Targus Italy S.R.L. Italy
Targus Japan Co. Ltd. Japan
Targus Korea Corporation Korea
Targus New Zealand Limited New Zealand
Targus S.A. Belgium Belgium
Targus SARL France
Targus Shanghai Company Ltd. China
Targus South Africa Pty Ltd. South Africa
Targus Spain, S.R.L. Spain
Targus Sweden AB Sweden
Targus Switzerland GmbH Switzerland
Targus US LLC Delaware
Targus US NewCo Inc. Delaware
Tdsoft Ltd. Israel
Tempo Telecom, LLC Georgia
Thirty Two Degrees (assignment for the benefit of creditors), LLC California
TIGER US HOLDINGS INC. Delaware
TreePeach Management, LLC Delaware
TSIF Management Associates, LLC Delaware

 
Exhibit 21.1
         

Subsidiaries of B. Riley Financial, Inc. – December 31, 2024

United Advisor Services, LLC New Jersey
United Advisors, LLC New Jersey
United Advisors, LLC (DE) Delaware
United Online Advertising Network, Inc. Delaware
United Online Software Development Republic of India
United Online Web Services, Inc. Delaware
United Online, Inc. Delaware
Vancouver Telephone Company Limited British Columbia
Veyl (Assignment for the Benefit of Creditors), LLC California
VSCLLC (Assignment for the Benefit of Creditors), LLC California
Workshop Cafe ABC, LLC California
WSquare (ASSIGNMENT FOR THE BENEFIT OF CREDITORS), LLC Texas
YMax Communications Corp. Delaware
YMax Communications Corp. of Virginia Virginia
YMax Corporation Delaware
 
  * B. Riley Financial, Inc. owns less than 100% of these subsidiaries.
 

 
EX-31.1 16 rily-20241231xexx311.htm EX-31.1 Document

Exhibit 31.1
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bryant R. Riley, certify that:
1.I have reviewed this Annual Report on Form 10-K of B. Riley Financial, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 19, 2025
/s/ BRYANT R. RILEY
Bryant R. Riley
Co-Chief Executive Officer
Chairman of the Board
(Principal Executive Officer)

EX-31.2 17 rily-20241231xexx312.htm EX-31.2 Document

Exhibit 31.2
CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Thomas J. Kelleher, certify that:
1.I have reviewed this Annual Report on Form 10-K of B. Riley Financial, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 19, 2025
/s/ THOMAS J. KELLEHER
Thomas J. Kelleher
Co-Chief Executive Officer
(Director)

EX-31.3 18 rily-20241231xexx313.htm EX-31.3 Document

Exhibit 31.3
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Scott Yessner, certify that:
1.I have reviewed this Annual Report on Form 10-K of B. Riley Financial, Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing equivalent functions):
(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: September 19, 2025
/s/ SCOTT YESSNER
Scott Yessner
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

EX-32.1 19 rily-20241231xexx321.htm EX-32.1 Document

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of B. Riley Financial, Inc. (the “Company”) during the year ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bryant R. Riley, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ BRYANT R. RILEY
Bryant R. Riley
Co-Chief Executive Officer
Chairman of the Board
September 19, 2025

EX-32.2 20 rily-20241231xexx322.htm EX-32.2 Document

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of B. Riley Financial, Inc. (the “Company”) during the year ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Kelleher, Co-Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ THOMAS J. KELLEHER
Thomas J. Kelleher
Co-Chief Executive Officer
Director
September 19, 2025

EX-32.3 21 rily-20241231xexx323.htm EX-32.3 Document

Exhibit 32.3
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K of B. Riley Financial, Inc. (the “Company”) during the year ended December 31, 2024 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Yessner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ SCOTT YESSNER
Scott Yessner
Executive Vice President and Chief Financial Officer
September 19, 2025