Exhibit 10.8

 

FIRST AMENDMENT TO CREDIT AGREEMENT AND LIMITED CONSENT AND WAIVER

 

FIRST AMENDMENT TO CREDIT AGREEMENT AND LIMITED CONSENT AND WAIVER (this
“Amendment”) dated as of May 28, 2014, by and among

WELLS FARGO BANK, NATIONAL ASSOCIATION, successor by merger to WELLS FARGO
RETAIL FINANCE, LLC (“Lender”),

GREAT AMERICAN GROUP WF, LLC, a California limited liability company (“Original
Borrower”), and

any other affiliate of Original Borrower party hereto (such affiliates, together
with Original Borrower, each a “Borrower” and collectively “Borrowers” and
Borrower, together with GAG Inc. (defined below), Great American (defined
below), and/or any Subsidiary of any of the foregoing which is or which becomes
a party to any Loan Document from time to time, the “Credit Parties”).

WHEREAS:

A. Borrowers and Lender are party to that certain Second Amended & Restated
Credit Agreement dated as of July 15, 2013 (as may be amended, restated,
supplemented or otherwise modified, renewed or replaced from time to time, the
“Credit Agreement”), pursuant to which Lender agreed, subject to the terms and
conditions thereof, to extend credit and make certain other financial
accommodations available to Borrowers;

B. Great American Group, Inc., a Delaware corporation (“GAG Inc.”) and Great
American Group, LLC, a California limited liability company (“Great American”)
are parties to that certain Third Amended and Restated Guaranty dated as of July
15, 2013 (as may be amended, restated, supplemented or otherwise modified,
renewed or replaced from time to time, the “Guaranty”), pursuant to which GAG
Inc. and Great American jointly and severally unconditionally guaranteed to
Lender payment of (among other things) all obligations under the Credit
Agreement and other Loan Documents;

C. Credit Parties have informed Lender that GAG Inc. is contemplating entering
into a series of transactions consisting of the following (collectively, the
“Transactions”):

(i)a reverse stock split of GAG Inc.’s issued and outstanding common stock at a
ratio of 1-for-20 (the “Reverse Stock Split”);

(ii)issuance and sale by GAG Inc. to certain investors, in a private placement,
of an aggregate of approximately 206,000,000 shares (prior to adjustment for the
Reverse Stock Split) of GAG Inc.’s common stock at a purchase price of $0.25 per
share (prior to adjustment for the Reverse Stock Split) for aggregate gross
proceeds to GAG Inc. of approximately $51.4 million (the “Private Placement”);

(iii)payment by GAG Inc. of an aggregate of $30 million, plus accrued interest
through the applicable payoff date, to Andrew Gumaer, GAG Inc.’s Chief Executive
Officer and Chairman, and Harvey Yellen, GAG Inc.’s President and Vice Chairman
(collectively, the “Great American Members”), in exchange for the complete
satisfaction of all amounts owed to the Great American Members pursuant to
certain Subordinated Unsecured Promissory notes, dated as of July 31, 2009 (as
amended, restated or modified from time to time), issued by GAG Inc. to such
Great American Members (such repayment, the “Debt Repayment”); and

(iv)acquisition by GAG Inc. through a series of mergers and securities purchases
of B. Riley and Co. Inc., B. Riley & Co. Holdings, LLC and Riley Investment
Management LLC, each of which is wholly or majority owned by Bryant Riley, a
director of GAG Inc., in exchange for the issuance to Bryant Riley of 84,000,000
shares (prior to adjustment for any splits, recapitalization or the like,
including the Reverse Stock Split) of GAG Inc.’s common stock (such
transactions, collectively, the “Acquisition”).

D. Credit Parties have requested that Lender consent to the Reverse Stock Split
and Debt Repayment, waive a certain anticipated Event of Default arising out of
the Private Placement, and effect certain amendments to the Credit Agreement in
connection with the Acquisition, all as more specifically set forth herein, and
Lender is willing to effect such changes on the terms and conditions hereinafter
set forth.

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NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties signatory hereto agree
as follows:

1.                  Definitions. Capitalized terms not otherwise defined herein
shall have the respective meanings given such terms in the Credit Agreement.

2.                  Limited Consent. In accordance with, and in reliance on,
representations and warranties by Borrowers herein, Lender hereby consents to
the Reverse Stock Split and the Debt Repayment. This limited consent shall be
effective only in this specific instance and for the specific purpose for which
it is given, and shall not entitle any Credit Party to any other or further
consent in any similar or other circumstances.

3.                  Limited Waiver. The following Event of Default (the
“Anticipated Event of Default”) is expected to occur under Section 9.1(p) of the
Credit Agreement upon the consummation of the Private Placement: a Change of
Control is expected to occur as a result of Permitted Holders (as such term is
defined in the Credit Agreement prior to giving effect to the amendments thereto
provided for herein) ceasing to own, directly or indirectly, at least 15% of the
Capital Stock of GAG Inc. having the right to vote for a majority of the Board
of Directors of GAG Inc. Effective as of the date that the Private Placement is
consummated (but not prior to such date), Lender hereby waives, on a one-time
basis, the Anticipated Event of Default. This limited waiver shall be effective
only in this specific instance and for the specific purpose for which it is
given, and shall not entitle any Credit Party to any other or further waiver in
any similar or other circumstances.

4.                  Amendments to Credit Agreement. Effective as of the date
that the Acquisition is consummated (but not prior to such date), the Credit
Agreement shall be amended as follows:

(i) Change of Control. The definition of “Change of Control” is hereby deleted
in its entirety and the following is substituted in its stead:

““Change of Control” shall mean, at any time:

 

(a)       occupation of a majority of the seats (other than vacant seats) on the
Board of Directors (or other body exercising similar management authority) of
GAG Inc. by Persons who are not Continuing Directors and were neither (i)
nominated by the Permitted Holders nor (ii) appointed by directors so nominated;

(b)       any Person or “group” (within the meaning of the Securities and
Exchange Act of 1934, as amended), other than a Permitted Holder, is or becomes
the beneficial owner (within the meaning of Rule 13d-3 or 13d-5 of the
Securities and Exchange Act of 1934, as amended, except that such Person or
group shall be deemed to have “beneficial ownership” of all Capital Stock that
such Person or group has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of (i)
twenty-five percent (25%) or more (on a fully diluted basis) of the total then
outstanding Capital Stock of GAG Inc. entitled to vote for the election of
directors of GAG Inc., and (ii) Capital Stock of GAG Inc. entitled to vote for
the election of directors of GAG Inc. in an amount greater than the number of
shares of such Capital Stock beneficially owned by the Permitted Holders (or
over which the Permitted Holders have voting control);

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(c)        GAG Inc. fails at any time to own, directly or indirectly, 100% of
the Capital Stock of Great American free and clear of all Liens (other than
Permitted Encumbrances);

(d)        Great American fails at any time to own, directly or indirectly, 100%
of the Capital Stock of any Borrower free and clear of all Liens (other than
Permitted Encumbrances) and/or ceases to manage any Borrower’s business and
operations; and

(e)        either of Harvey Yellen or Andrew Gumaer: (i) ceases to be actively
engaged in the management and day-to-day operations and administration of any of
the Credit Parties (including, without limitation, any Borrower) or (ii) ceases
to be a Continuing Director of GAG Inc. and Great American.

(ii) Permitted Holders. The definition of “Permitted Holders” is hereby deleted
in its entirety and the following is substituted in its stead:

 

““Permitted Holders” shall mean Harvey Yellen, Andrew Gumaer and Bryant Riley.

 

5.                  Representations and Warranties. Borrowers represent and
warrant to Lender that:

(a)                the representations and warranties set forth in the Credit
Agreement and in each of the other Loan Documents are true and correct on and as
of the date hereof, as though made on such date, and as if each reference
therein to “this Agreement” or the “Credit Agreement” or the like includes
reference to this Amendment and the Credit Agreement as amended hereby (except
to the extent that such representations and warranties expressly relate to an
earlier date, in which case they are true and correct as of such earlier date);

(b)           the execution, delivery and performance of this Amendment by each
Credit Party (i) are all within such Credit Party’s corporate powers, (ii) are
not in contravention of any Laws or the terms of such Credit Party’s
Organization Documents, or any indenture, agreement or undertaking to which such
Credit Party is a party or by which such Credit Party or its property is bound,
and (iii) shall not result in the creation or imposition of any lien, claim,
charge or encumbrance upon any of the Collateral, except in favor of Lender
pursuant to the Credit Agreement and the other Loan Documents as amended hereby;

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(c)            this Amendment and each other agreement or instrument to be
executed and delivered by Credit Parties in connection herewith have been duly
authorized, executed and delivered by all necessary action on the part of such
Credit Party and, if necessary, its stockholders, as the case may be, and the
agreements and obligations of each Credit Party contained herein and therein
constitute the legal, valid and binding obligations of such Credit Party,
enforceable against it in accordance with their terms, except as enforceability
is limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other laws affecting creditor’s rights generally and by general principles of
equity;

(d)           after giving effect to this Amendment, no Default or Event of
Default exists as of the date hereof; and

(e)            no action of, or filing with, or consent of any Governmental
Authority, and no approval or consent of any other party (other than, in each
case, actions, filings or consents that have already been taken, made or
obtained) is required to authorize, or is otherwise required in connection with,
the execution, delivery and performance of this Amendment.

6.                  Conditions Precedent. The consent and amendments set forth
in this Amendment shall not be effective until each of the following conditions
precedent are satisfied in a manner satisfactory to Lender:

(a)                receipt by Lender of this Amendment, duly authorized and
executed by each Credit Party;

(b)               to the extent invoiced, reimbursement or payment of all
reasonable out-of-pocket expenses (including, without limitation, reasonable
fees and expenses of Choate, Hall & Stewart LLP, counsel to the Agent) required
to be reimbursed or paid by Credit Parties pursuant to the terms of the Credit
Agreement;

(c)                after giving effect to this Amendment, no Default or Event of
Default shall have occurred and be continuing, nor shall any Default or Event of
Default result from the consummation of the transactions contemplated herein;
and

(d)               all orders, permissions, consents, approvals, licenses,
authorizations and validations of, and filings, recordings and registrations
with, and exemptions by, any Governmental Authority, or any other Person
required to authorize or otherwise required in connection with the execution,
delivery and performance by each Credit Party of this Amendment and the
transactions contemplated, shall have been obtained and shall be in full force
and effect.

For the avoidance of doubt, (i) consummation of the Private Placement shall be a
condition precedent to the effectiveness of the limited waiver set forth in
Section 3 above and (ii) consummation of the Acquisition shall be a condition
precedent to the effectiveness of the amendments set forth in Section 4 above.

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7.                  Effect on Loan Documents. As amended hereby, the Credit
Agreement and the other Loan Documents shall be and remain in full force and
effect in accordance with their terms and hereby are ratified and confirmed by
each Credit Party in all respects. The execution, delivery, and performance of
this Amendment shall not operate as a waiver of any right, power, or remedy of
Lender under the Credit Agreement or the other Loan Documents. Each Credit Party
hereby ratifies and confirms in all respects all of its obligations and any
prior grant of a security interest under the Credit Agreement and the other Loan
Documents.

8.                  Further Assurances. Each Credit Party shall execute and
deliver all agreements, documents and instruments, each in form and substance
satisfactory to Lender, and take all actions as Lender may reasonably request
from time to time, to perfect and maintain the perfection and priority of the
security interest in the Collateral held by Lender and to fully consummate the
transactions contemplated under this Amendment and the Credit Agreement, as
modified hereby.

9.                  Release. Each Credit Party hereby remises, releases,
acquits, satisfies and forever discharges Lender, its agents, employees,
officers, directors, predecessors, attorneys and all others acting on behalf of
or at the direction of Lender, of and from any and all manner of actions, causes
of action, suit, debts, accounts, covenants, contracts, controversies,
agreements, variances, damages, judgments, claims and demands whatsoever, in law
or in equity, which any of such parties ever had, or now has, to the extent
arising from or in connection with any act, omission or state of facts taken or
existing on or prior to the date hereof, against Lender, its agents, employees,
officers, directors, attorneys and all persons acting on behalf of or at the
direction of Lender (“Releasees”), for, upon or by reason of any matter, cause
or thing whatsoever through the date hereof. Without limiting the generality of
the foregoing, each Credit Party waives and affirmatively agrees not to allege
or otherwise pursue any defenses, affirmative defenses, counterclaims, claims,
causes of action, setoffs or other rights they have or may have as of the date
hereof, including, but not limited to, the rights to contest any conduct of
Lender or other Releasees on or prior to the date hereof.

10.              No Novation; Entire Agreement. This Amendment is not a novation
or discharge of the terms and provisions of the obligations of Credit Parties
under the Credit Agreement and the other Loan Documents. There are no other
understandings, express or implied, among Credit Parties and Lender regarding
the subject matter hereof or thereof.

11.              Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

12.              Counterparts; Electronic Execution. This Amendment may be
executed in any number of counterparts and by different parties and separate
counterparts, each of which when so executed and delivered shall be deemed an
original, and all of which, when taken together, shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to this
Amendment by facsimile or other electronic transmission shall be as effective as
delivery of a manually executed counterpart of this Amendment. Any party
delivering an executed counterpart of this Amendment by facsimile or other
electronic transmission also shall deliver a manually executed counterpart of
this Amendment but the failure to deliver a manually executed counterpart shall
not affect the validity, enforceability, and binding effect of this Amendment.

13.              Construction. This Amendment and the Credit Agreement shall be
construed collectively and in the event that any term, provision or condition of
any of such documents is inconsistent with or contradictory to any term,
provision or condition of any other such document, the terms, provisions and
conditions of this Amendment shall supersede and control the terms, provisions
and conditions of the Credit Agreement. Upon and after the effectiveness of this
Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “herein”, “hereof” or words of like import referring to the Credit
Agreement, and each reference in the other Loan Documents to “the Credit
Agreement”, “thereunder”, “therein”, “thereof” or words of like import referring
to the Credit Agreement, shall mean and be a reference to the Credit Agreement
as modified hereby.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first above written.

 

GREAT AMERICAN GROUP WF, LLC., a California limited liability company

 

 

By: __/s/ Phillip J. Ahn_________________

Name: Phillip J. Ahn

Title: Chief Financial Officer, Chief Operating Officer

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WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

By: _/s/Joseph Burt___________________

Name: Joseph Burt

Title:Director

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ACKNOWLEDGEMENT AND AGREEMENT

 

Each of the undersigned hereby acknowledges and agrees to the provisions of the
foregoing Amendment applicable to it, including but not limited to the releases
set forth in Section 9.

 

GREAT AMERICAN GROUP, INC., a Delaware corporation

 

 

By: /s/ Phillip J. Ahn_______________________

Name: Phillip J. Ahn

Title: Chief Financial Officer, Chief Operating Officer

 

 

great american group, llc, a California limited liability company

 

 

By: /s/ Phillip J. Ahn________________________________

Name: Phillip J. Ahn

Title: Chief Financial Officer, Chief Operating Officer

 

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