Exhibit 10.2

 

EXECUTION VERSION

 

LIMITED GUARANTY

 

THIS LIMITED GUARANTY (this “Guaranty”) is made as of February 19, 2020 by B.
Riley Financial, Inc. (the “Guarantor”), in favor of BTC Holdings Fund I, LLC,
BTC Holdings Fund I-B, LLC and BTC Holdings SC Fund LLC (collectively, “Blue
Torch”).

 

RECITALS

 

A. Franchise Group Intermediate Holdco, LLC, a Delaware limited liability
company (“Lead Borrower”), as a Borrower, Franchise Group Merger Sub AF, INC., a
Delaware corporation (“Merger Sub”), as a Borrower (which, on February 14, 2020,
was merged with and into American Freight Group, Inc., a Delaware corporation
(“AFGI”), with AFGI surviving such merger as a Borrower), certain other
Subsidiaries of Lead Borrower from time to time party thereto as Borrowers
(collectively with Lead Borrower and AFGI, the “Borrowers”), the lenders from
time to time party thereto (each of such lenders, together with its successors
and permitted assigns, is referred to hereinafter as a “Lender”), Kayne
Solutions Fund I, L.P., in its capacity as collateral agent (the “Collateral
Agent”) and GACP Finance Co., LLC, (“GACP”) in its capacity as administrative
agent (the “Administrative Agent” and, together with the Collateral Agent,
collectively, the “Agent”), have entered into that certain Credit Agreement,
dated as of February 14, 2020 (as amended, restated, supplemented or otherwise
modified and in effect from time to time as permitted hereunder, the “Credit
Agreement”; capitalized terms used herein and not otherwise defined shall have
the meanings ascribed to them in the Credit Agreement).

 

B. The Guarantor is a direct or indirect owner of FACP and will benefit directly
and indirectly from Blue Torch joining the Credit Agreement as a Tranche A-1
Term Lender.

 

C. As an inducement to and as one of the conditions precedent to the agreement
of Blue Torch to join the Credit Agreement as a Tranche A-1 Term Lender, Blue
Torch has required the execution and delivery of this Guaranty, whereby the
Guarantor shall guarantee the payment when due of all Guaranteed Obligations (as
defined below).

 

AGREEMENT

 

NOW, THEREFORE, in order to induce Blue Torch to join the Credit Agreement as a
Tranche A-1 Term Lender, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Guarantor hereby
agrees as follows:

 

1. Guaranty. The Guarantor guarantees to Blue Torch the full and prompt payment
and performance, when due, whether upon demand, maturity, by required
prepayment, acceleration or otherwise, and at all times thereafter, of all
Guaranteed Obligations which may now be or may hereafter become due and owing.
For purposes hereof, “Guaranteed Obligations” means (a) all Obligations in
respect of Tranche A-1 Term Loans, including principal, interest, fees,
premiums, indemnities and other amounts, payable to Blue Torch as a holder of
Tranche A-1 Term Loans under the Credit Agreement or the other Loan Documents
and (b) all Obligations in respect of Protective Advances, including principal,
interest, fees, premiums, indemnities and other amounts, payable to the Agents
by Blue Torch under the Credit Agreement or the other Loan Documents, in each
case, including without limitation all interest, fees and other amounts that
accrue after the commencement of an Insolvency Proceeding, regardless of whether
allowed or allowable in whole or in part as a claim in any Insolvency
Proceeding); provided, however, that the Guarantor’s liability under this
Guaranty shall be limited to the sum of (i) $50,000,000 plus (ii) the principal
amount of all Protective Advances payable to the Agents by Blue Torch, plus
(iii) the amount of interest, fees, premiums, indemnities and other amounts
owing in respect of the amounts described in the foregoing clauses (i) and (ii),
plus (iv) the amount of all Expenses (as defined below) (the amount described in
the foregoing clauses (i) through (iv) being referred to herein as the “Guaranty
Cap”). The Guarantor hereby agrees to pay or reimburse all fees, costs and
expenses (including, without limitation, all court costs and attorneys’ fees,
costs and expenses) paid or incurred by Blue Torch (1) collecting, enforcing or
endeavoring to collect or enforce all or any part of the Guaranteed Obligations
from, or in prosecuting any action against, the Guarantor in connection with
this Guaranty and (2) preserving, protecting or defending the enforceability of
this Guaranty or Blue Torch’s rights hereunder (the amounts described in the
foregoing clauses (1) and (2) are collectively referred to herein as the
“Expenses”; the Expenses and the Guaranteed Obligations are collectively
referred to herein as the “B. Riley Obligations”).

 

 

 

 

2. Payment of Obligations. Upon the occurrence of any Guarantor Event of Default
(as defined below), at any time, and from time to time, the Guarantor shall pay
to Blue Torch promptly (and in any event within five (5) Business Days) after
the Guarantor’s receipt of written demand therefor and in immediately available
funds, all of the Guaranteed Obligations then due and outstanding up to the
amount of the Guaranty Cap.

 

3. Guaranty Provisions.

 

3.01 Obligations Unconditional. The obligations of the Guarantor under this
Guaranty are absolute and unconditional, irrespective of the validity or
enforceability of the Loan Documents, or any other agreement or instrument
referred to herein or therein, or any substitution, release or exchange of any
other guaranty of or security for any of the Obligations or the Tranche A-1 Term
Loans, and, to the fullest extent permitted by applicable law, irrespective of
any other circumstance whatsoever which might otherwise constitute a legal or
equitable discharge or defense of a surety or guarantor, it being the intent of
this Section that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances and shall not be released,
discharged or in any way affected or impaired by any thing, event, happening,
matter, circumstance or condition whatsoever (whether or not the Guarantor shall
have any knowledge or notice thereof or shall consent thereto), other than
payment in full of the Obligations, which might otherwise constitute a legal or
equitable discharge or defense of a guarantor. In furtherance of the foregoing
and without limiting the generality thereof, the Guarantor agrees as follows:

 

(a) This Guaranty is a guaranty of payment and performance when due and not of
collection.

 

(b) The obligations of the Guarantor hereunder are independent of the
obligations of the Borrowers and any one or more of the Loan Parties under the
other Loan Documents to which they are a party and a separate action or actions
may be brought and prosecuted against the Guarantor whether or not any action is
brought against the Borrowers or any other Loan Party and whether or not the
Borrowers or any other Loan Party is joined in any such action or actions.

 

(c) Payment, performance or completion by the Guarantor, or any other obligor,
of a portion, but not all, of the Obligations shall in no way limit, affect,
modify or abridge the Guarantor’s liability hereunder for any portion of the
Guaranteed Obligations which have not been paid, performed or completed. Without
limiting the generality of the foregoing, if Blue Torch is awarded a judgment in
any suit brought to enforce the Guarantor’s or any other obligor’s covenants to
pay any of the Obligations, such judgment shall not be deemed to release the
Guarantor from its covenant hereunder to pay any of the Guaranteed Obligations
that are not the subject of such suit, and such judgment shall not, except to
the extent satisfied by such Guarantor, limit, affect, modify or abridge such
Guarantor’s liability hereunder in respect of the Guaranteed Obligations.

 

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(d) The Agents and the Lenders (subject to the terms of the Loan Documents),
upon such terms as the Agents or the Lenders, as the case may be, deem
appropriate, may (i) renew, extend, accelerate, increase the rate of interest
on, or otherwise change the time, place, manner or terms of payment or
performance under the Loan Documents, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Obligations or any Loan Document and/or subordinate the
payment of the same to the payment of any other obligations; (iii) request and
accept other guaranties of any of the Borrowers’ obligations under the Loan
Documents and take and hold security for the payment or performance of this
Guaranty or the Loan Documents; (iv) release, surrender, exchange, substitute,
compromise, settle, rescind, waive, alter, subordinate or modify, with or
without consideration, any security for payment or performance of the Borrowers’
obligations under the Loan Documents, any other guaranties of the Obligations,
or any other obligation of any Person with respect to the Obligations; (v)
enforce and apply any security now or hereafter held by or for the benefit of
Blue Torch in respect of this Guaranty or the Obligations and direct the order
or manner of sale thereof, and to bid at any such sale, or exercise any other
right or remedy that the Agents and the Lenders may have against any such
security, in each case as in its discretion may determine consistent with any
applicable security agreement, including without limitation foreclosure on any
such security pursuant to one or more judicial or non-judicial sales, even
though such action operates to impair or extinguish any right of reimbursement
or subrogation or other right or remedy of the Guarantor against the Borrowers
or Affiliates of any Borrower or any security for the Obligations; and (vi)
exercise any other rights available to them under the Loan Documents or
otherwise. The Guarantor authorizes the Agents at any time in its discretion to
direct the order and manner of any sale of all or any part of any security now
or later held for the Obligations and to bid at any such sale, to apply any
payments or recoveries from the Borrowers, the Guarantor or any other source,
and any proceeds of any security, to the Obligations in such manner, order and
priority as set forth in the Credit Agreement (whether or not those obligations
are guaranteed by this Guaranty or secured at the time of the application). The
Agents and the Lenders may take any of the foregoing actions upon any terms and
conditions as the Agents or the Lenders, as the case may be, may elect, without
giving notice to, or making any demand upon, the Guarantor, and without
affecting the validity or enforceability of this Guaranty, or giving rise to any
reduction, limitation, impairment, discharge or termination of the Guarantor’s
liability hereunder.

 

(e) Except as otherwise expressly provided in this Guaranty, this Guaranty and
the obligations of the Guarantor hereunder shall be valid and enforceable and
shall not be subject to any reduction, limitation, impairment, discharge or
termination for any reason (other than payment in full of the B. Riley
Obligations), including without limitation the occurrence of any of the
following, whether or not the Guarantor shall have had notice or knowledge of
any of them: (i) any failure or omission to assert or enforce, or agreement or
election not to assert or enforce, or the stay or enjoining, by order of court,
by operation of law or otherwise, of the exercise or enforcement of, any claim
or demand or any right, power or remedy (whether arising under the Loan
Documents, at law, in equity or otherwise) with respect to the Obligations or
the Loan Documents, or with respect to any other guaranty of or security for the
payment or performance of the Obligations; (ii) any rescission, waiver,
amendment or modification of, or any consent to departure from, any of the terms
or provisions (including without limitation provisions relating to events of
default) of the Loan Documents or of any other guaranty or security for the
Obligations, in each case whether or not in accordance with the terms of the
Loan Documents or any agreement relating to such other guaranty or security;
(iii) the application of payments received from any source (other than payments
received pursuant to this Guaranty or the other Loan Documents or from the
proceeds of any security for the Guaranteed Obligations except to the extent
such security also serves as collateral for indebtedness other than the
Guaranteed Obligations) to the payment of indebtedness other than the
Obligations, even though the Agents and Lenders might have elected to apply such
payment to any part or all of the Obligations; (iv) the consent of the Agents
and Lenders to the change, reorganization or termination of the ownership
structure or existence of any Borrower or any of its Affiliates and to any
corresponding restructuring of the Obligations, including, without limitation,
the Tranche A-1 Term Loans; (v) any failure to perfect or continue perfection of
a security interest in any collateral which secures any of the Obligations; (vi)
the acquisition or transfer of title to any real property covered by any
mortgage to any Agent, any Lender, any Affiliate of any Lender or any designee
of any Lender (including, without limitation, any purchaser through foreclosure,
deed in lieu or otherwise); (vii) any act or event which might otherwise
discharge, reduce, limit or modify any of the Guarantor’s obligations under this
Guaranty; (viii) any waiver, extension, modification, forbearance, delay or
other act or omission of the Agents and Lenders, or their failure to proceed
promptly or otherwise as against any Borrower, any other Loan Party or the
Guarantor, any other obligor or any security; (ix) any action, omission or
circumstance which might increase the likelihood that the Guarantor may be
called upon to perform under this Guaranty or which might affect the rights or
remedies of the Guarantor as against any Borrower or Affiliates of any Borrower;
(x) any dealings occurring at any time between any Borrower and the Agents and
Lenders, whether relating to the Obligations or otherwise; and (xi) any other
act or thing or omission, or delay to do any other act or thing, which may or
might in any manner or to any extent vary the risk of the Guarantor as an
obligor in respect of the Obligations.

 

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3.02 Waivers by the Guarantors. The Guarantor hereby waives, for the benefit of
Blue Torch, to the fullest extent permitted by applicable law:

 

(i) any right to require Blue Torch or any other Person, as a condition of
payment or performance by the Guarantor, to (A) proceed against the Borrowers,
any other Loan Party or any other Person, (B) proceed against or exhaust any
security held from the Borrowers, any other Loan Party, the Guarantor or any
other Person, (C) proceed against or have resort to any balance of any deposit
account or credit on the books of Blue Torch or any other Person in favor of the
Borrowers, any other Loan Party or any other Person, or (D) pursue any other
remedy in the power of Blue Torch or any other Person whatsoever;

 

(ii) any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of the Borrowers, including, without limitation, any
defense based on or arising out of the lack of validity or the unenforceability
of the Obligations or any agreement or instrument related thereto or by reason
of the cessation of the liability of the Borrowers from any cause other than
payment and performance in full of the Obligations;

 

(iii) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects
more burdensome than that of the principal;

 

(iv) any defense based upon any errors or omissions in the administration of the
Tranche A-1 Term Loans or any other Obligations;

 

(v) (A) any principles or provisions of law, statutory or otherwise, which are
or might be in conflict with the terms of this Guaranty and any legal or
equitable discharge of the Guarantor’s obligations hereunder (other than payment
and performance of the B. Riley Obligations in full), (B) the benefit of any
statute of limitations affecting the Guarantor’s liability hereunder or the
enforcement hereof, (C) any rights to set-offs, recoupments and counterclaims
which may at any time be available to or be asserted by any Borrower or any
other Person against Blue Torch or any other Person, including without
limitation any defenses available to a surety (all of which defenses are hereby
waived), and (D) promptness, diligence and any requirement that Blue Torch or
any other Person protect, secure, perfect or insure any security interest or
lien or any property subject thereto;

 

(vi) except as otherwise expressly required under Sections 2 hereof, notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, notices of default under the other Loan
Documents, this Guarnty or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Obligations or any agreement
related thereto, notices of any extension of credit to the Borrowers and any
right to consent to any thereof;

 

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(vii) any release, discharge, modification, impairment or limitation of the
liability of the Borrowers to Blue Torch or any other Person, whether consented
to by Blue Torch or any other Person, consensual or arising by operation of law
or any proceedings in bankruptcy or reorganization or from any other cause;

 

(viii) any defense based on any rejection or disaffirmance of the Obligations,
or any part thereof, or any security held therefor, in any such proceedings in
bankruptcy or reorganization;

 

(ix) any defense based on any action taken or omitted by Blue Torch or any other
Person in any proceedings in bankruptcy or reorganization involving any
Borrower, any other Loan Party or any other Person, including without limitation
any election to have their claim allowed as being secured, partially secured or
unsecured, any extension of credit by Blue Torch to any Borrower in any
proceedings in bankruptcy or reorganization and the taking and holding by Blue
Torch of any security for any such extension of credit; and

 

(x) any defense or benefits that may be derived from or afforded by law which
limit the liability of or exonerate guarantors or sureties, or which may
conflict with the terms of this Guaranty, other than payment and performance of
the B. Riley Obligations in full.

 

3.03 Reinstatement. The obligations of the Guarantor under this Guaranty shall
be automatically reinstated if and to the extent that for any reason any payment
by or on behalf of any Borrower, another Loan Party or the Guarantor in respect
of the Obligations is rescinded or must be otherwise restored by any holder of
the Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise.

 

3.04 Guarantor’s Rights of Subrogation, Contribution, Etc. The Guarantor hereby
waives, until the Termination Date, any claim, right or remedy, direct or
indirect, that the Guarantor now has or may hereafter have against any Borrower
or any other Loan Party, or any of their respective assets, in connection with
this Guaranty or the performance by the Guarantor of its obligations hereunder,
in each case whether such claim, right or remedy arises in equity, under
contract, by statute, under common law or otherwise and, including without
limitation, (i) any right of subrogation, reimbursement or indemnification that
the Guarantor now has or may hereafter have against the Borrowers or any other
Loan Party, (ii) any right to enforce, or to participate in, any claim, right or
remedy that Blue Torch now has or may hereafter have against any Borrower or any
other Loan Party, and (iii) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by or on behalf of Blue Torch. In
addition, until the Termination Date, the Guarantor shall withhold exercise of
any right of contribution which the Guarantor may have against any other
guarantor of the Obligations. The Guarantor further agrees that, to the extent
the waiver or agreement to withhold the exercise of its right of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification the Guarantor may have
against any Borrower or any other Loan Party, or against any collateral or
security, and any rights of contribution the Guarantor may have against any
other guarantor, shall be junior and subordinate to any rights Blue Torch (or
any Agent or any Lender) may have against the Borrowers and the Loan Parties, to
all right, title and interest Blue Torch (or any Agent or any Lender) may have
in any such collateral or security, and to any right Blue Torch (or any Agent or
any Lender) may have against such other guarantor. If any amount shall be paid
to the Guarantor on account of any such subrogation, reimbursement,
indemnification or contribution rights at any time prior to the Termination
Date, such amount shall be held in trust for Blue Torch and shall forthwith be
paid over to Blue Torch to be credited and applied against the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms hereof.
The Guarantor agrees that it is not a surety and waives any right that it may
have as a surety to require that Blue Torch commence action against any
Borrower, any other Loan Party or any other Person or against any of the
Collateral.

 

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3.05 Subordination of Other Obligations. Any Indebtedness of any Borrower or any
other Loan Party now or hereafter held by the Guarantor is hereby subordinated
in right of payment to the prior payment and performance in full of the
Guaranteed Obligations, and any such Indebtedness collected or received by the
Guarantor after a Guarantor Event of Default has occurred and is continuing
shall be held in trust for Blue Torch and shall forthwith be paid over to Blue
Torch to be credited and applied against the Guaranteed Obligation, whether
matured or unmatured, but without affecting, impairing or limiting in any manner
the liability of the Guarantor under any other provision of this Guaranty.

 

3.06 Remedies.

 

(a) The Guarantor agrees that, notwithstanding anything set forth in this
Guaranty to the contrary, if for whatever reason, Blue Torch is prevented by
applicable law or the terms of any subordination agreement from exercising any
of its rights to receive payment from the Borrowers of all or any part of the
Guaranteed Obligations, to collect interest on all or any part of the Guaranteed
Obligations or to enforce or exercise any other right or remedy with respect to
all or any part of the Guaranteed Obligations, or is prevented from taking any
action to realize on all or any part of the collateral securing the Guaranteed
Obligations or the liabilities of the Borrowers, and any such occurrence results
in, or occurs during the continuance of, a Guarantor Event of Default, the
Guarantor agrees to pay to Blue Torch, within five (5) Business Days after
receipt of written demand therefor and in immediately available funds, the
amount that would otherwise have been due and payable had such rights and
remedies been permitted to be exercised by Blue Torch up to Guaranty Cap.

 

(b) All of the remedies set forth in this Guaranty and/or provided for in any of
the Loan Documents or at law (including without limitation the right of set-off)
or in equity shall be equally available to Blue Torch, and the choice by Blue
Torch of one such alternative over another shall not be subject to question or
challenge by the Guarantor or any other Person, nor shall any such choice be
asserted as a defense, setoff, or failure to mitigate damages in any action,
proceeding, or counteraction by Blue Torch to recover or seek any other remedy
under this Guaranty, nor shall any such choice preclude Blue Torch from
subsequently electing to exercise a different remedy; provided that only Blue
Torch (or any Affiliate or Related Fund of Blue Torch) shall be entitled to
enforce this Guaranty.

 

3.07 Continuing Guaranty. This Guaranty is a continuing guaranty and shall
remain in effect until the date that the B. Riley Obligations have been paid in
full (the “Termination Date”), and the Guarantor irrevocably waives any right to
revoke this Guaranty, or the continuing nature hereof, as to future transactions
giving rise to any Guaranteed Obligations or any Expenses payable hereunder
(subject to the Guaranty Cap).

 

3.08 Assumption of Risk Regarding Loan Parties’ Financial Condition. Before
signing this Guaranty, the Guarantor investigated the financial condition and
business operations of the Borrowers and the other Loan Parties and such other
matters as the Guarantor deemed appropriate to assure themselves of the
Borrowers’ and other Loan Parties’ ability to discharge their respective
obligations under the Loan Documents. The Guarantor assumes full responsibility
for keeping fully informed of the financial condition of the Borrowers and the
other Loan Parties and all other circumstances affecting the Borrowers’ and the
other Loan Parties’ ability to perform their respective obligations to Blue
Torch, and agree that Blue Torch will not have any duty to report to the
Guarantor any information which it receives about the Borrowers’ or any Loan
Party’s financial condition or any circumstances bearing on the Borrowers’ or
any Loan Party’s ability to perform.

 

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4. Representations and Warranties. The Guarantor hereby represents and warrants
to Blue Torch as of the date hereof that:

 

4.01 No Breach. None of the execution and delivery of this Guaranty, the

 

consummation of the transactions herein contemplated or compliance by the
Guarantor with the terms and provisions hereof will conflict with or result in a
breach of, or require any consent under any applicable law or regulation, or any
order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which the Guarantor is a party or by
which it is bound or to which it is subject or any of the Guarantor’s
Organizational Documents, or constitute a default under any such agreement,
instrument, or Organizational Documents, or result in the creation or imposition
of any lien upon any of the revenues or assets of the Guarantor pursuant to the
terms of any such agreement, instrument or Organizational Documents.

 

4.02 Action. This Guaranty has been duly and validly executed and delivered by
the Guarantor and constitutes its legal, valid and binding obligation,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws of general
application affecting the enforcement of creditors’ rights.

 

4.03 Litigation. There are no legal or arbitration proceedings or any
proceedings by or before any governmental authority, now pending or (to the
knowledge of the Guarantor) threatened against the Guarantor which could cause
(a) a material impairment of the ability of the Guarantor, taken as a whole, to
perform any of its obligations hereunder, (b) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Guarantor of
this Guaranty, or (c) a material impairment of the ability of Blue Torch to
enforce this Guaranty (the foregoing clauses (a) through (c), each, a “Material
Adverse Effect”).

 

4.04 Organization. The Guarantor is validly existing and in good standing under
the laws of its jurisdiction of organization; and the Guarantor is duly
qualified to do business in each jurisdiction where, because of the nature of
its activities or properties, such qualification is required, except for such
jurisdictions where the failure to so qualify could not reasonably be expected
to have a Material Adverse Effect.

 

4.05 Authorization. The Guarantor is duly authorized to execute and deliver this
Guaranty and perform its obligations hereunder.

 

4.06 Solvency. Immediately after giving effect to this Guaranty, (a)(i) the debt
(including without limitation contingent liabilities) of the Guarantor does not
exceed the present fair saleable value of the present assets of the Guarantor,
(ii) the capital of the Guarantor is not unreasonably small in relation to its
business as contemplated on the date hereof, and (iii) the Guarantor has not
incurred and does not intend to incur, or believe (nor should reasonably
believe) that it will incur, debts beyond its ability to pay such debts as they
become due (whether at maturity or otherwise), and (b) the Guarantor is
“solvent” within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
Section 4.06, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability (irrespective of whether such contingent
liabilities meet the criteria for accrual under Statement of Financial
Accounting Standard No. 5).

 

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5. Covenants. The Guarantor covenants to Blue Torch that, until the Termination
Date:

 

5.01 Compliance with Laws. The Guarantor will comply with the requirements of
all applicable laws, rules, regulations and orders of governmental or regulatory
authorities if failure to comply with such requirements could reasonably be
expected to have a Material Adverse Effect (either individually or in the
aggregate), except to the extent being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained.

 

5.02 Litigation. The Guarantor will promptly give Blue Torch notice of all legal
or arbitral proceedings, and of all proceedings by or before any governmental or
regulatory authority or agency, affecting the Guarantor, except proceedings
which could not reasonably be expected to have a Material Adverse Effect.

 

5.03 Preservation of Existence, Etc. Guarantor will (i) preserve and maintain
its separate existence, (ii) preserve and maintain all rights, franchises,
licenses and privileges necessary to the conduct of its business, and (iii)
maintain its qualification to do business in each jurisdiction where the nature
of its business makes such qualification necessary, in each case of the
foregoing clauses (ii) and (iii), except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect.

 

5.04 Fundamental Changes. Guarantor will not dissolve, liquidate, or wind up its
affairs, or be a party to any transaction of merger or consolidation in which
Guarantor merges or consolidates with or into another Person, unless Guarantor
is the surviving entity.

 

5.05 Maintenance of Capital. The Guarantor shall retain and maintain sufficient
capital or access to capital to satisfy its obligations under this Guaranty.

 

5.06 Further Assurances. At any time or from time to time upon the request of
Blue Torch, the Guarantor will, at its expense, promptly execute, acknowledge,
and deliver such further documents and do such other acts and things as Blue
Torch may reasonably request in order to effect fully the purposes of this
Guaranty. In furtherance and not in limitation of the foregoing, the Guarantor
shall take such actions as Blue Torch may reasonably request from time to time
to ensure that the Guaranteed Obligations are guaranteed by the Guarantor.

 

6. Guarantor Event of Default. Any or each of the following shall constitute an
event of default (each, a “Guarantor Event of Default”):

 

6.01 Payment or Bankruptcy Event of Default. An Event of Default shall occur
under Section 8.01(a), Section 8.01(f) and/or Section 8.01(g) of the Credit
Agreement.

 

6.02 Covenants. The Guarantor shall fail to perform or comply with any term or
condition contained in Section 5 or any other section of this Guaranty.

 

6.03 Representations and Warranties. Any representation, warranty or other
certification made or deemed made by or on behalf of the Guarantor under Section
4 or otherwise under or in connection with this Guaranty, or any report,
certificate, financial statement or other document furnished or deemed furnished
pursuant to or in connection with this Guaranty, shall prove to have been
incorrect in any material respect (without duplication of any materiality
qualification therein) when made or deemed made.

 

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6.04 Acceleration. An Event of Default shall occur under the Credit Agreement
and/or the other Loan Documents and all or any portion of the Obligations shall
become or be declared due and payable (or subject to compulsory repurchase or
redemption) or shall require the prepayment, redemption, repurchase or
defeasance of, or cause any Loan Party or any of their respective Subsidiaries
to make any offer to prepay, redeem, repurchase or defease all or any portion
of, the Obligations prior to the stated maturity of all or such portion of the
Obligations.

 

6.05 Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of
competent jurisdiction shall enter a decree or order for relief in respect of
the Guarantor in an involuntary case under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency, or similar law now or hereafter in
effect, which decree or order is not stayed, or any other similar relief shall
be granted under any applicable federal or state law, or (ii) an involuntary
case shall be commenced against the Guarantor under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency, or similar law now or hereafter in
effect, or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian, or
other officer having similar powers over the Guarantor, or over all or a
substantial part of its property, shall have been entered, or there shall have
occurred the involuntary appointment of an interim receiver, trustee, or other
custodian of the Guarantor for all or a substantial part of its property, or a
warrant of attachment, execution, or similar process shall have been issued
against any substantial part of the property of the Guarantor, and any such
event described in this clause (ii) shall continue for 60 days without having
been dismissed, bonded, or discharged.

 

6.06 Voluntary Bankruptcy; Appointment of Receiver, etc. (i) The Guarantor shall
have an order for relief entered with respect to it or shall commence a
voluntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency, or similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an involuntary case, or to the
conversion of an involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a receiver, trustee,
or other custodian for all or a substantial part of its property, or the
Guarantor shall make any assignment for the benefit of creditors or (ii) the
Guarantor shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due, or the Board (or
similar governing body) of the Guarantor (or any committee thereof with
authority therefor) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to herein or in Section 6.05.

 

6.07 Invalidity. (i) This Guaranty for any reason shall cease to be in full
force and effect (other than in accordance with its terms) or shall be declared
to be null and void or the Guarantor shall repudiate its obligations hereunder
or (ii) the Guarantor shall contest the validity or enforceability of this
Guaranty in writing or deny in writing that it has any further liability under
this Guaranty.

 

7. Miscellaneous.

 

7.01 Governing Law. THIS GUARANTY SHALL BE A CONTRACT MADE UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO
BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.

 

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7.02 Forum Selection; Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTY, SHALL BE BROUGHT AND
MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED THAT
NOTHING IN THIS GUARANTY SHALL BE DEEMED OR OPERATE TO PRECLUDE BLUE TORCH FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION FOR
PURPOSES OF ENFORCING A FINAL JUDGMENT OF ANY SUCH COURT. EACH OF THE GUARANTOR
AND BLUE TORCH HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. EACH OF THE GUARANTOR AND BLUE TORCH FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH OF THE GUARANTOR AND BLUE
TORCH HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM
THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

 

7.03 Waiver of Jury Trial. EACH OF THE GUARANTOR AND BLUE TORCH HEREBY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS GUARANTY AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

7.04 Notices. All notices, requests, demands, statements, authorizations,
approvals, directions, consents and other communications provided for herein
shall be given or made in writing and shall be deemed sufficiently given or
served for all purposes as of the date (a) when hand delivered, (b) four (4)
days after being sent by postage pre-paid registered or certified mail, return
receipt requested, (c) one (1) Business Day after being sent by reputable
overnight courier service (with delivery evidenced by written receipt and
charges prepaid), or (d) by facsimile, when sent, with confirmation in each case
addressed to the intended recipient at the “Address for Notices” specified on
the signature pages hereto; or, as to any party, at such other address as shall
be designated by such party in a notice to each other party. Notices and other
communications to Blue Torch hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by Blue Torch. Blue
Torch and the Guarantor may, each in its discretion, agree to accept notices and
other communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

7.05 Amendments, Etc. The terms of this Guaranty may be waived, modified and
amended only by an instrument in writing duly executed by Blue Torch and the
Guarantor. Any such waiver, modification or amendment shall be binding upon Blue
Torch and the Guarantor.

 

7.06 Successors and Assigns. This Guaranty shall be binding upon and inure to
the benefit of the respective successors and permitted assigns of the Guarantor
and Blue Torch; provided that neither Blue Torch nor the Guarantor may assign or
transfer its rights or obligations hereunder without the prior written consent
of the other party hereto (and any such purported assignment or transfer shall
be null and void); provided further that Blue Torch may assign or transfer its
rights hereunder to an Affiliate or a Related Fund of Blue Torch without consent
from the Guarantor.

 

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7.07 Captions. The captions and section headings appearing herein are included
solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Guaranty.

 

7.08 Counterparts. This Guaranty may be executed in multiple counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one and the same agreement among the parties. Delivery of an executed
counterpart of this Guaranty by facsimile or other electronic means shall be
equally as effective as delivery of a manually executed counterpart hereof. Any
party hereto delivering an executed counterpart hereof by facsimile or other
electronic means shall also deliver a manually executed counterpart hereof, but
the failure to so deliver a manually executed counterpart hereof shall not
affect the validity, enforceability or binding effect hereof.

 

7.09 Severability. If any provision of this Guaranty shall be held by any court
of competent jurisdiction to be unlawful, void or unenforceable for any reason
as to any Person or circumstance, such provision or provisions shall be deemed
severable from and shall in no way affect the enforceability and validity of the
remaining provisions of this Guaranty.

 

7.10 No Waiver. No failure on the part of Blue Torch to exercise, no delay in
exercising, and no course of dealing with respect to, any right or remedy
hereunder will operate as a waiver, thereof; nor will any single or partial
exercise or any right or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right or remedy.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, this Guaranty has been duly executed as of the day and year
first set forth above.

 

GUARANTOR: B. RILEY FINANCIAL, INC.       By: /s/ Bryant R. Riley   Name: Bryant
R. Riley   Title: Co-Chief Executive Officer

 

Signature Page to Limited Guaranty

 

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  BTC HOLDNGS FUND I, LLC         By: Blue Torch Credit Opportunities Fund I LP,
its sole member         By: Blue Torch Credit Opportunities GP LLC, its general
partner           By: /s/ kevin Genda     Name: Kevin Genda     Title:
Authorized signer

 

  BTC HOLDINGS FUND I-B, LLC           by: Blue Torch Credit Opportunities Fund
I LP, its sole member           by: Blue Torch Credit Opportunities GP LLC, its
general partner       By: /s/ kevin Genda     Name: Kevin Genda     Title:
Authorized signer           BTC HOLDINGS SC FUND LLC           by: Blue Torch
Credit Opportunities SC Master Fund LP, its sole member         by: Blue Torch
Credit Opportunities SC GP LLC, its General Partner           By /s/ Kevin Genda
     Name: Kevin Genda     Title: Authorized signer

 

Signature Page to Limited Guaranty

 

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Notice Addresses:

 

Blue Torch

 

c/o Blue Torch Capital
430 Park Avenue

New York NY 10022

Attention: Vuk Djunic

E-mail: VDjunic@bluetorchcapital.com

Telephone: 212-503-5860

 

With a copy (which shall not constitute notice) to:

 

Dechert LLP

Three Bryant Park

1095 Avenue of the Americas

New York, New York 10036-6797

Attention: Jay Alicandri

Email: Jay.Alicandri@dechert.com

Telephone: (212) 698-3800

 

Grantor

 

B. Riley Financial, Inc.

21255 Burbank Blvd., Suite 400

Woodland Hills, CA 91367

Attn: Alan Forman

E-mail: aforman@brileyfin.com

 

 

 

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