The Company and
FBR have made customary representations, warranties and covenants
in the Merger Agreement for a transaction of this nature. The
Company and FBR have also agreed, among other things, to
covenants relating to (i)the conduct of their respective
businesses during the interim period between the execution of the
Merger Agreement and the consummation of the Merger,
(ii)facilitating FBRs shareholders and the Companys stockholders
consideration of, and voting upon, the adoption or approval of
the Merger Agreement and certain related matters (including, in
the case of the Company, the approval of the issuance of shares
of Company Common Stock in connection with the Merger (the
Share Issuance), (iii) the recommendation by the FBR Board
in favor of the Merger Agreement, (iv)the recommendation of the
board of directors of the Company (the Company Board) in
favor of the approval of the Share Issuance and certain related
matters, and (v)the use of their respective reasonable best
efforts to obtain necessary regulatory approvals and to do or
cause to be done all things reasonably necessary, proper or
advisable to consummate and make effective the Merger. In
addition, FBR has agreed to non-solicitation obligations relating
to alternative business combination transactions subject to
certain exceptions.

Consummation of
the Merger is subject to certain closing conditions, including:
(i)the approval of the Merger Agreement by the holders of a
majority of the outstanding shares of FBR Common Stock as of the
applicable record date, (ii)the

adoption of the
Merger Agreement by the holders of a majority of the outstanding
shares of Company Common Stock as of the applicable record date,
(iii)the approval of the Share Issuance by a majority of the
votes cast on the issuance, (iv)the absence of any law or order
prohibiting the Merger or the other transactions contemplated by
the Merger Agreement, (v)the receipt of certain required
regulatory approvals that do not contain materially burdensome
regulatory conditions, subject to certain exceptions and
(vi)effectiveness of the registration statement for the Share
Issuance. The obligation of each party to consummate the Merger
is also conditioned upon the accuracy of the other partys
representations and warranties (subject to customary materiality
qualifiers), the other partys performance in all material
respects of its obligations contained in the Merger Agreement and
the receipt by such party of a tax opinion to the effect that the
Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended.
The obligation of the Company to consummate the Merger is also
conditioned upon FBR having $33,500,000 in cash and certain
specified investments at the Effective Time.

The Merger
Agreement contains certain termination rights for both the
Company and FBR, including (i)if the consummation of the Merger
is legally prohibited or enjoined, (ii)the failure of the Merger
to be consummated by September30, 2017 (the Outside Date)
or (iii)in the event that the approval of FBR shareholders or the
Companys stockholders is not obtained. In addition, in certain
circumstances, the Company may terminate the Merger Agreement
prior to FBRs shareholder approval of the Merger in the event
that (A)FBR materially breaches certain non-solicitation
obligations relating to alternative business combination
transactions, (B)the FBR Board changes its recommendation or
(C)the FBR Board recommends a tender offer or fails to recommend
against such tender offer within 10 business days after
commencement thereof. The Merger Agreement also provides that FBR
will be obligated to pay a termination fee of $5million to the
Company if the Merger Agreement (i)is terminated by the Company
in the circumstances described in the preceding sentence or
(ii)(A) if an acquisition proposal is made to FBR or to its
shareholders publicly, (B)the Merger Agreement is terminated for
failure to consummate the Merger by the Outside Date or for
failure to obtain the approval of FBRs shareholders and (C)FBR
enters into a definitive agreement with respect to or consummates
certain acquisition proposals within 12 months of termination of
the Merger Agreement.

The Merger
Agreement further provides that, at or prior to the Effective
Time, the number of directors comprising the full Company Board
will be increased by one, with Richard J. Hendrix, Chairman,
President and Chief Executive Officer of FBR, being appointed to
fill the new seat in accordance with the terms of the employment
agreement described below.

In connection with
the execution of the Merger Agreement, on February17, 2017, B.
Riley Co., LLC and the Company entered into an employment
agreement with Mr.Hendrix, which provides that, following the
closing of the Merger, Mr.Hendrix will become President and Chief
Executive Officer of the combined business of FBR and B. Riley
Co., LLC and will be appointed to the Company Board, contingent
on Mr.Hendrix remaining employed by FBR through the closing of
the Merger.

Voting
Agreements

On February17,
2017, certain officers and directors of FBR entered into voting
agreements with the Company with respect to shares of FBR Common
Stock held by such officers or directors, and certain officers
and directors of the Company entered into voting agreements with
FBR with respect to shares of Company Common Stock held by such
officers or directors (collectively, the Voting
Agreements) on substantially the same terms, as described
below.

The Voting
Agreements generally require each stockholder party thereto (each
a Stockholder,) in his or her capacity as a stockholder,
to vote all of the shares of common stock over which such
Stockholder has voting control in favor of adoption of the Merger
Agreement and certain related matters (including, in the case of
the Company, the Share Issuance) and against alternative
transactions and generally prohibit them from transferring their
shares of common stock, subject to certain exceptions. The Voting
Agreements will terminate in certain circumstances, including
upon the consummation of the Merger or the termination of the
Merger Agreement in accordance with its terms.

The foregoing
descriptions of the Merger Agreement and the Voting Agreements do
not purport to be complete and are qualified in their entirety by
reference to the respective agreements attached hereto as
Exhibits 2.1, 99.1 and 99.2, respectively, which are incorporated
by reference herein.

The Merger
Agreement and the above description of the Merger Agreement have
been included to provide investors and securityholders with
information regarding the terms of the Merger Agreement. The
Merger Agreement and the above description are not intended to
provide any other factual information about the Company, FBR, or
their respective subsidiaries or affiliates. The representations,
warranties and covenants contained in the Merger Agreement were
made only for purposes of the Merger Agreement and as of specific
dates; were solely for the benefit of the parties to the Merger
Agreement; may be subject to limitations agreed upon by the
parties, including being qualified by confidential disclosures
made by each contracting party to the other for the purposes of
allocating contractual risk between them rather than establishing
these matters as facts; and may be subject to standards of
materiality applicable to the contracting parties that differ
from those applicable to investors. Investors are not third-party
beneficiaries under the Merger Agreement and should not rely on
the representations, warranties and covenants or any description
thereof as characterizations of the actual state of facts or
condition of the Company, FBR or any of their respective
subsidiaries, affiliates or businesses. Moreover, information
concerning the subject matter of the representations, warranties
and covenants may change after the date of the Merger Agreement,
which subsequent information may or may not be fully reflected in
public disclosures by the Company or FBR. The Merger Agreement
should not be read alone, but should instead be read in
conjunction with the other information about the Company or FBR
and their respective subsidiaries, the Merger Agreement and the
Merger that will be contained in, or incorporated by reference
into the Registration Statement on Form S-4 that will include a
Joint Proxy Statement of FBR and the Company, as well as in the
reports, statements and other filings each of the Company and FBR
make with the United States Securities and Exchange Commission
(the SEC).

Item9.01
Financial Statements and Exhibits.

(d)
Exhibits.

* Schedules and
exhibits omitted to Item 601(b)(2) of Regulation S-K. The Company
agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the SEC upon request.

Forward-Looking
Statements