Exhibit 10.4


 


May 19, 2014


 


Great American Group, Inc.

Attn: Chief Financial Officer


21860 Burbank Blvd.


Suite 300 South


Woodland Hills, CA 91367


 


Re: Great American, Inc. – Letter Agreement for Satisfaction
and Discharge of Credit Documents


 


Dear Phillip:


 


Reference is made to
that certain Subordinated Unsecured Promissory Note, dated as of July 31, 2009, between Harvey Yellen (“Creditor”)
and Great American Group, Inc., a Delaware corporation (the “Company”), as amended, restated or modified from
time to time (the “Promissory Note”).


 


Creditor has been advised
that, pursuant to a (i) Securities Purchase Agreement, dated on the date hereof, by and among the Company and certain other parties
thereto, the Company will issue and sell a significant number of shares of the Company’s common stock (the “Financing”)
and (ii) Acquisition Agreement, dated on the date hereof, by and among the Company and certain other parties thereto, the Company
will acquire certain entities affiliated with Bryant Riley, a director of the Company, in exchange for a significant number of
shares of the Company’s common stock (the “Acquisition” and together with the Financing and the transactions
contemplated by each of the foregoing, the “Transactions”).


 


As (i) the other parties
to the Financing and Acquisition are requiring as a condition to closing such transactions that the parties hereto enter into this
letter agreement (this “Payoff Letter”), (ii) Creditor and the Company desire to facility the Transactions,
(iii) there is uncertainty regarding the Company’s ability to timely satisfy its obligations under the Promissory Note, as
a matter of compromise and settlement, and in exchange for Creditor’s receipt of the Payoff Amount (as defined below), Creditor
and the Company hereby agree to irrevocably and forever terminate in its entirety the Promissory Note pursuant to the terms and
conditions set forth below.


 


By Creditor’s signature
below, Creditor represents, warrants and agrees that (i) a one-time, lump sum payment of the amount set forth on Schedule 1
hereto (the “Payoff Amount”) in immediately available funds, by wire transfer in accordance with the instructions
provided by Creditor to the Company prior to the Effective Time, shall constitute payment in full of all principal, interest, fees,
expenses and other sums that may be payable to Creditor from the Company under or in connection with the Promissory Note, (ii)
other than the Payoff Amount, there is no outstanding indebtedness, fees, expenses or other sums owed to Creditor by the Company
or any of its subsidiaries for any promissory notes or other outstanding indebtedness for borrowed monies, (iii) Creditor has full
legal title, capacity and authority to execute this Payoff Letter and no further action is required on the part of Creditor (including,
if applicable, by any spouse of Creditor) to authorize, deliver or perform this Payoff Letter and the transactions contemplated
hereby, (iv) this Payoff Letter has been duly executed and delivered by Creditor and, assuming the due authorization, execution
and delivery by the Company, constitutes the valid and binding obligations of Creditor enforceable against Creditor in accordance
with its terms, subject to laws of general application relating to bankruptcy, insolvency and other similar laws relating to or
affecting creditors’ rights generally, (v) the execution and delivery by Creditor of this Payoff Letter, and the consummation
of the transactions contemplated hereby, will not conflict with or result in any violation of or default under (with or without
notice or lapse of time, or both) or give rise to, any payment obligation, or a right of termination, cancellation, modification
or acceleration of any obligation or loss of any benefit under any agreement or arrangement to which Creditor is a party or any
judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Creditor or any of Creditor’s properties
or assets, (vi) Creditor is the sole record and beneficial owner of the Promissory Note, free and clear of any pledge, lien, security
interest, mortgage, charge, claim, equity, option, proxy, voting restriction, voting trust or agreement, (vii) Creditor, by reason
of his business and financial experience, has the capacity to protect his own interests in connection with the entrance into this
Payoff Letter and the transactions contemplated hereby, has had the opportunity to consult Creditor’s counsel and other tax
or financial advisors with respect thereto and the consequences thereof and is not relying on any representation or warranty of
any Company Party (as defined below) in making Creditor’s decision to enter into this Agreement, (viii) Creditor is solely
responsible for the payment of all taxes and any penalties and interest (if any) of Creditor that may result from the transactions
contemplated hereby and (ix) upon payment of the Payoff Amount, any conditions required under the Promissory Note in connection
with the Transactions shall have been fulfilled or are hereby waived.


 




    	 



    	 



    

 


Creditor hereby agrees
to indemnify and hold harmless each of the Company Parties against any and all costs, expenses or other liabilities incurred or
sustained by the Company Parties as a result of (i) any breach or inaccuracy of a representation or warranty of Creditor in this
Payoff Letter or (ii) the failure of Creditor to perform and comply with any covenant or agreement in this Payoff Letter.


 


Creditor and the Company
agree that (i) the Company’s payment of the Payoff Amount shall be subject to and contingent upon the Company’s receipt
of at least $30 million in gross proceeds in the Financing, (ii) the Payoff Amount shall be paid within five (5) business days
of the closing of the Financing, (iii) upon receipt of the Payoff Amount by Creditor (the “Effective Time”),
the Promissory Note is hereby discharged and terminated in full automatically and without any further action by any person and
of no further force or effect, and that the Company, its past, present and future direct and indirect subsidiaries, each of the
foregoing’s respective affiliates, officers, directors, employees, agents and representatives (and each such person’s
successors and assigns) (the “Company Parties”) shall not have any further or surviving obligations, covenants,
debts or liabilities to Creditor whatsoever related to or arising out of the Promissory Note or this Payoff Letter. For greater
clarity, the parties agree that this Payoff Letter shall be deemed void ab initio in the event that the Company fails to
receive at least $30 million in gross proceeds in the Financing or if the Financing is abandoned by the Company or otherwise fails
to close.


 


Concurrently with the
execution of this Payoff Letter, Creditor shall deliver to the Company the Promissory Note for cancellation by the Company at the
Effective Time. Notwithstanding the foregoing, the cancellation, release and extinguishment of each the Promissory Note is effective
as of the Effective Time whether or not the Promissory Note is delivered to and canceled by the Company.


 


Creditor and the Company
agree that this Payoff Letter (i) constitutes the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings both written and oral, among the parties with respect to the subject matter
hereof, (ii) shall be binding upon and inure to the benefit of the heirs, executors, administrators, and successors of the parties
thereto; provided, however, that Creditor may not assign its rights or delegate its duties hereunder without the Company’s
prior written consent, (iii) shall be governed by and shall be construed and enforced in accordance with, the laws of the state
of New York and (iv) may be executed by the parties hereto in separate counterparts and the executed counterparts may be delivered
by facsimile transmission or other electronic means, including pdf, all of which will be enforceable as an original.


 


In furtherance of the
foregoing, Creditor further agrees to execute and/or cause to be delivered to the Company such instruments and other documents,
and shall take such other actions, as the Company may reasonably request for the purpose of carrying out or evidencing the foregoing.


 


[Remainder of Page
Left Intentionally Blank]




    	 



    	 



    

 


This letter agreement shall become effective as the date first
written above only when signed by Creditor and accepted and agreed to by the Company in the space provided below.


 


	Sincerely,	 
	 	 
	Harvey Yellen	 
	 	 
	By:  	/s/ Harvey Yellen	 
	Name:  Harvey Yellen	 
	 	 
	ACCEPTED AND AGREED	 
	 	 
	Great American Group, Inc.	 
	 	 
	By: 	/s/ Phillip J. Ahn	 
	Name:  	Phillip J. Ahn	 
	Title: 	Chief Financial Officer and	 
	 	Chief Operating Officer	 


 




    	 



    	 



    

 


SCHEDULE 1


  


	Payoff Amount	 	 	Per Diem	 
	$	14,401,571.66	*	 	$	2,504.72	 



 


* Payoff Amount assumes a payoff date of May 23, 2014 (the “Calculation
Date”). The Payoff Amount will increase by the amount listed under the column entitled “Per Diem” for each
day that payment follows the Calculation Date.