Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into by and between Great
American Group, LLC (the “Company”) and Andrew Gumaer (“Executive”), effective
as of January 1, 2018 (“Effective Date”).

 

WHEREAS, the Company desires to continue to retain the services of Executive,
and Executive desires to continue to be employed by the Company.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the Company and Executive, intending to be legally bound, hereby
agree as follows:

 

AGREEMENT

 

1.        Employment. The Company shall employ Executive as its Chief Executive
Officer (“Position”), and Executive accepts such employment commencing on the
Effective Date and continuing until terminated in accordance with the
termination provisions below (the “Employment Period”).

 

2.        Position and Duties.

 

2.1 Services with the Company. Executive shall perform all duties and functions
customarily performed by the Position of a business of the size and nature
similar to that of the Company, and such other employment duties as the Company
shall assign to him from time to time. Executive shall devote substantially all
of his business time and attention to the performance of the Executive’s duties
hereunder and will not engage in any other business, profession or occupation
for compensation or otherwise which would conflict or interfere with the
performance of such services either directly or indirectly without the prior
written consent of the Chief Executive Officer of B. Riley Financial, Inc., the
parent corporation of the Company (“BRF”). Notwithstanding the foregoing, the
Executive will be permitted to act or serve as a director, trustee, committee
member or principal of any type of business, civic or charitable organization as
long as such activities are disclosed in writing in advance to BRF’s Chief
Executive Officer and does not interfere with the discharge of his duties
hereunder.

 

3.        Compensation.

 

3.1     Base Salary. As compensation for all services to be rendered by
Executive under this Agreement, the Company shall pay to Executive an annualized
salary of five hundred thousand Dollars ($500,000), less applicable tax and
other authorized applicable withholdings (the “Base Salary”), which shall be
paid in accordance with the Company’s normal payroll procedures and policies.
Executive’s salary will be reviewed, and if appropriate, adjusted, on an annual
basis at or after the end of each calendar year.

 

3.2     Performance Bonus. Executive shall be eligible to earn an annual
performance bonus based upon his performance and/or the Company’s performance
after Executive’s first anniversary with the Company in accordance with BRF’s
Management Bonus Plan. Executive’s target bonus shall be equal to not less than
100% of Executive’s Base Salary. Each annual performance bonus will be paid by
the Company in full, less applicable tax and other authorized withholdings, by
no later than March 30th of the calendar year following the calendar year in
which the services were rendered.

 

 

 

 

3.3     Equity Awards. With respect to each fiscal year of the Company ending
during the Employment Period, the Executive shall be eligible to receive an
annual long-term incentive award with a value of no less than fifty percent
(50%) of the Base Salary (but in no event more than 50,000 restricted stock
units). Each such award shall be subject to the approval of the Compensation
Committee of the Board of Directors of BRF, (the “Committee”) and vest annually
over a three year period. Such Awards shall be issued pursuant to the Company’s
Amended and Restated 2009 Stock Incentive Plan (or successor plan). All other
terms and conditions applicable to each such award shall be determined by the
Committee. Notwithstanding the terms of any equity incentive plan or award
agreements, as applicable all outstanding unvested stock options, restricted
stock units, stock appreciation rights and other unvested equity linked awards
granted to the Executive during the Employment Period shall become fully vested
upon a Change of Control (as hereinafter defined) and exercisable for the
remainder of their full term.

 

3.4     Participation in Benefit Plans. Executive shall be included to the
extent eligible thereunder in any and all plans of the Company providing
benefits for the Company’s executives, including, but not limited to, medical,
retirement and disability plans. Executive’s participation in any such plan or
program shall be subject to the Company’s policies and the provisions, rules,
and regulations applicable to any plans. Nothing in this Agreement shall impose
on the Company any affirmative obligation to establish any benefit plan. The
Company reserves the right to prospectively terminate or change benefit plans
and programs it offers to its employees at any time.

 

3.5     Expenses. In accordance with the Company’s policies established from
time to time, the Company will pay or reimburse Executive for all reasonable and
necessary out- of-pocket expenses incurred by him or her in the performance of
his/her duties under this Agreement, subject to the presentment of appropriate
receipts or expense reports in connection with the Company’s policies and
procedures.

 

3.6     Taxes. The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.

 

4.         Annual Paid Time Off. Executive shall be entitled to accrue and take
vacation and sick leave in accordance with the Company’s Leave Policy.

 

-2- 

 

 

5.         Compensation upon Termination/Resignation. The Employment Period and
the Executive’s employment hereunder may be terminated by either the Company or
the Executive at any time and for any reason; provided that, unless otherwise
provided herein, either party shall be required to give the other party at least
twenty (20) days advance written notice of any termination of the Executive’s
employment. Upon termination of the Executive’s employment, the Executive shall
be entitled to the compensation and benefits described in this Section 5 and
shall have no further rights to any compensation or any other benefits from the
Company or any of its affiliates.

 

Notwithstanding the foregoing:

 

(a) the Executive may not Resign for Good Reason unless he has provided written
notice to the Company of the existence of the circumstances providing grounds
for termination for Good Reason within 30 days of the initial existence of such
grounds and the Company has had at least ten 10 days from the date on which such
notice is provided to cure such circumstances; provided however, if such
termination for Good Reason is due to a Change of Control, then the Executive
may deliver such notice within 90 days following the Change of Control. If the
Executive does not terminate his employment for Good Reason within the number
days set forth above, then the Executive will be deemed to have waived his right
to terminate for Good Reason with respect to such grounds.

 

(b) the Company may not terminate the Executive’s employment with Cause unless
it has provided written notice to the Executive of the existence of the
circumstances providing grounds for Termination with Cause within 90 days
following the later of (i) the circumstances constituting “Cause” or (ii) the
date that senior management of the Company has knowledge of such circumstances,
and the Executive has had at least ten 10 days from the date on which such
notice is provided to cure such circumstances (if possible).

 

5.1      Termination with Cause; Resignation. In the event Executive is
terminated by the Company with Cause or in the event Executive resigns,
Executive shall be paid his Base Salary, a pro rata portion of any target bonus
for the year of termination or if no target bonus for such calendar year has
been set on or prior to the effective date of termination, the target bonus for
the prior year, other benefits through termination, and accrued unused leave
owed through the termination/resignation date as well as reasonable unreimbursed
business expenses incurred through the termination/resignation date.

 

5.2      Termination Without Cause, for death or Disability or Resignation for
Good Reason. In the event that Executive is terminated without Cause, for death
or Disability or resigns for Good Reason, in addition to the amounts set forth
in 5.1 above, Executive shall also receive a Severance Payment (as defined
below) payable no later than 45 days after the effective date of termination,
subject to the Executive’s prior execution and delivery of a full general
release in form and substance reasonably satisfactory to the Company. The
“Severance Payment” shall be the sum of one (1) times the Executive’s base
salary (as in effect immediately prior to such termination) and one (1) times
the Executive’s target bonus for the calendar year in which the effective date
of termination (or resignation) occurs, or if no target bonus for such calendar
year has been set on or prior to the effective date of termination (or
resignation), the target bonus for the prior year. If the Executive timely and
properly elects continuation coverage under the Consolidated Omnibus
Reconciliation Act of 1985 (“COBRA”), the Company shall reimburse the Executive
for the difference between the monthly COBRA premium paid by the Executive for
himself (and his dependents, if applicable) and the monthly premium amount paid
by similarly situated active executives. Such reimbursement shall be paid to the
Executive on the tenth of the month immediately following the month in which the
Executive timely remits the premium payment. The Executive shall be eligible to
receive such reimbursement until the earliest of: (i) the twelve month
anniversary of the Termination Date; and (ii) the date on which the Executive
becomes eligible to receive substantially similar coverage from another
employer.

 

-3- 

 

 

5.3       Definitions. The following definitions apply to this Agreement:

 

5.3.1 A “Change of Control” which shall be defined as either: (i) a sale or
exchange by the stockholders of more than fifty percent (50%) of BRF’s voting
stock (whether in a single or a series of related transactions) other than
transaction(s) in which (A) the stockholders of BRF or such stockholders’
affiliates immediately before such event retain immediately after such event
direct or indirect beneficial ownership of more than fifty percent (50%) of the
total combined voting power of the outstanding voting stock of BRF, its
successor, or the corporation to which the assets of the Company were
transferred, as the case may be; or (B) one of the stockholders of BRF or such
stockholder’s affiliates immediately before such event becomes immediately after
such event the beneficial owner of one hundred percent (100%) of the total
combined voting power of the outstanding voting stock of BRF, its successor, or
the corporation to which the assets of the Company were transferred, as the case
may be (subsections (A) and (B) are referred to herein as “Affiliate
Transactions”); (ii) a merger or consolidation in which BRF is a party other
than Transaction(s) that are Affiliate Transactions; (iii) the sale, exchange or
transfer of all or substantially all of the assets of BRF (whether in a single
or a series of related transactions); or (iv) a liquidation or dissolution of
BRF, wherein, upon any such event listed in (i) — (iv), the stockholders of BRF
immediately before such event do not retain immediately after such event direct
or indirect beneficial ownership of more than fifty percent (50%) of the total
combined voting power of the outstanding voting stock of BRF, its successor, or
the corporation to which the assets of BRF were transferred, as the case may be.
For purposes of the preceding sentence, indirect beneficial ownership shall
include, without limitation, an interest resulting from ownership of the voting
stock of one or more corporations which, as a result of such event, own BRF or
the transferee corporation(s), as the case may be, either directly or through
one or more subsidiary corporations. In addition to the foregoing, in the event
that Bryant Riley is no longer the Chairman of the Board or the Chief Executive
Officer of BRF, a “Change of Control” shall be deemed to have occurred as of the
date of his resignation or termination from both such positions.

 

5.3.2     “Disability” shall mean the Executive’s inability, due to physical or
mental incapacity, to substantially perform his duties and responsibilities
under this Agreement for one hundred eighty (180) days out of any three hundred
sixty-five (365) day period or one hundred twenty (120) consecutive days.

 

5.3.3      “Termination with Cause” shall mean (i) the Executive’s willful,
intentional and continued substantial misconduct in the reasonable judgment of
the Company; (ii) other than due to a Disability, the Executive’s repeated,
intentional gross negligence of duties or intentional gross failure to act which
can reasonably be expected to affect materially and adversely the business or
affairs of the Company or any subsidiary or affiliate thereof in the reasonable
judgment of the Company; (iii) the Executive’s gross material breach of any of
the obligations contained herein; or (iv) the commission by the Executive of any
intentional material fraudulent act with respect to the business and affairs of
the Company or any subsidiary or affiliate thereof, in the reasonable judgment
of the Company. Executive shall be given written notice of the Company’s intent
to terminate his employment for cause and shall have 15 days in which to cure
such claimed defect.

 

-4- 

 

 

5.3.4 “Good Reason” shall mean: termination by the Executive of his employment
with the Company based on:

 

(i)       A reduction in Annual Salary of the Executive during the Employment
Period;

 

(ii)       The Company’s material breach of this Agreement;

 

(iii)      A material, adverse change in the Executive’s title, authority,
duties or responsibilities (other than temporarily while the Executive is
physically or mentally incapacitated or as required by applicable law) taking
into account the Company’s size, status as a public company and capitalization
as of the date of this Agreement;

 

(iv)      Reassignment of Executive to (i) a location greater than twenty-five
(25) miles from Los Angeles, CA and (ii) a location requiring that the Executive
relocate from his principal residence as of the Effective Date; or

 

(v)       An event constituting a Change of Control has occurred.

 

6.          Compliance With Section 409A. The parties intend that the payments
and benefits contemplated in this Agreement either be exempt from Section 409A
of the Internal Revenue Code of 1986, as amended, and regulations and other
guidance promulgated thereunder (collectively, “Section 409A”), or be provided
in a manner that complies with Section 409A, and any ambiguity herein shall be
interpreted so as to be consistent with the intent of this Section
Notwithstanding anything herein to the contrary, all payments and benefits which
are payable hereunder upon Executive’s termination of employment shall be paid
or provided only upon a termination of employment that constitutes a “separation
from service” from the Company within the meaning of Section 409A.

 

In furtherance of this Section 6, and notwithstanding anything herein to the
contrary, to the extent any in-kind benefit or reimbursement to be paid or
provided under this Agreement constitutes a “deferral of compensation” within
the meaning of Section 409A, then (i) the amount of expenses eligible for
reimbursement or the provision of any in-kind benefit (within the meaning of
Section 409A) to Executive during any calendar year shall not affect the amount
of expenses eligible for reimbursement or provided as in-kind benefits to
Executive in any other calendar year (subject to any lifetime and other annual
limits provided under the Company’s group health plans); (ii) any reimbursements
for expenses incurred by Executive shall be made on or before the last day of
the calendar year following the calendar year in which the applicable expense is
incurred; (iii) Executive shall not be entitled to any in-kind benefits or
reimbursement for any expenses incurred subsequent to the end of the second
calendar year following the calendar year in which Executive incurs a
termination of employment; and (iv) the right to any such reimbursement or
in-kind benefit may not be liquidated or exchanged for any other benefit.

 

-5- 

 

 

7.          Certain Permitted Activities. Notwithstanding anything in this
Section to the contrary, the Executive may (i) own, directly or indirectly,
solely as a passive investment, securities of any person traded on any national
exchange or automated quotation system if the Executive is not a controlling
person of, or a member of a group which controls, such person, and does not,
directly or indirectly, “beneficially own” (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended, without regard to the 60 day period
referred to in Rule 13d-3(d)(1)(i)), 2.0% or more of any class of securities of
such person and (ii) serve as a member of a board of directors or board of
advisors either during, or following the termination of, the Executive’s
employment with the Company.

 

8.           Return of Records and Property. Upon termination of employment for
any reason, Executive shall deliver promptly to the Company all records,
manuals, books, blank forms, documents, letters, memoranda, notes, notebooks,
laptops, reports, data, tables, and calculations or copies thereof, which are
the property of the Company and which relate in any way to the business,
products, practices or techniques of the Company, and all other property of the
Company and Proprietary Information, including, but not limited to, all
documents which in whole or in part, contain any trade secrets or confidential
information of the Company or its clients, which in any of these cases are in
his or her possession or under his or her control.

 

9.           Assignment. The performance of Executive is personal hereunder, and
Executive agrees that Executive shall have no right to assign and shall not
assign or purport to assign any rights or obligations under this Agreement. This
Agreement may be assigned or transferred by the Company, and nothing in this
Agreement shall prevent the consolidation, merger or sale of the Company or a
sale of any or all or substantially all of its assets.

 

10.         Miscellaneous.

 

10.1      Governing Law; Arbitration. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
California. Any dispute, controversy or claim arising out of or related to this
Agreement or any breach of this Agreement shall be submitted to and decided by
binding arbitration. Arbitration shall be administered exclusively by JAMS and
shall be conducted consistent with the rules, regulations and requirements
thereof as well as any requirements imposed by state law. Any arbitral award
determination shall be final and binding upon the Parties.

 

10.2      Prior Agreements. This Agreement contains the entire agreement of the
parties relating to the subject matter hereof and supersedes all prior
agreements and understandings with respect to such subject matter. The parties
hereto have made no agreements, representations or warranties relating to the
subject matter of this Agreement which are not set forth herein.

 

-6- 

 

 

10.3      Amendments. No amendment or modification of this Agreement shall be
deemed effective unless made in writing signed by the parties hereto.

 

10.4      Mitigation. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and except as
provided in Section 5.2 with respect to the reimbursement of certain COBRA
expenses, any amounts payable pursuant to this Section 5 shall not be reduced by
compensation the Executive earns on account of employment with another employer.

 

10.5      No Conflicts. The Executive’s acceptance of employment with the
Company and the performance of his duties hereunder will not conflict with or
result in a violation of, a breach of, or a default under any contract,
agreement or understanding to which he is a party or is otherwise bound.

 

10.6      No Waiver. No term or condition of this Agreement shall be deemed to
have been waived nor shall there be any estoppel to enforce any provisions of
this Agreement, except by a statement in writing signed by the party against
whom enforcement of the waiver or estoppel is sought. Any written waiver shall
not be deemed a continuing waiver unless specifically stated, shall operate only
as to the specific term or condition waived and shall not constitute a waiver of
such term or condition waived and shall not constitute a waiver of such term or
condition for the future or as to any act other than that specifically waived.

 

10.7      Severability. To the extent any provision of this Agreement shall be
invalid or unenforceable, it shall be considered deleted herefrom and the
remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.

 

10.8      Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all which
together shall be deemed to be one and the same instrument.

 

[Signature page follows]

 

-7- 

 

 

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the Effective Date.

 

  GREAT AMERICAN GROUP, LLC     Dated: January 1, 2018 By: /s/ Phillip J. Ahn  
  Name:  Phillip J. Ahn
Title:    Chief Financial Officer and Chief Operating Officer

 

  EXECUTIVE:     Dated: January 1, 2018 /s/ Andrew Gumaer   Name: Andrew Gumaer
     

-8-