B. Riley Financial, Inc. (NASDAQ:RILY) Files An 8-K Entry into a Material Definitive Agreement

B. Riley Financial, Inc. (NASDAQ:RILY) Files An 8-K Entry into a Material Definitive Agreement

Item1.01 Entry into a Material Definitive Agreement.

Merger Agreement

On February17, 2017, B. Riley Financial, Inc. (the
Company) entered into an Agreement and Plan of Merger (the
Merger Agreement) with FBR Co. (FBR), to which FBR
will merge with and into the Company (or a subsidiary of the
Company), with the Company (or its subsidiary) as the surviving
corporation (the Merger).

Subject to the terms and conditions of the Merger Agreement, at
the effective time of the Merger (the Effective Time),
each outstanding share of FBR common stock, par value $0.001 per
share (FBR Common Stock), excluding certain specified
shares, will be converted into the right to receive 0.671 of a
share of the Companys common stock, par value $0.0001 per share
(Company Common Stock).

In addition, prior to the closing of the Merger, the board of
directors of FBR (the FBR Board) may declare and pay a
cash dividend (the Pre-Closing Dividend) to holders of FBR
Common Stock and FBR equity awards. The Pre-Closing Dividend on a per
share basis will be equal to the value of cash and certain
specified investments on FBRs balance sheet in excess of
$33,500,000 divided by the total number of fully diluted shares
of FBR Common Stock outstanding (subject to certain adjustments
if the Pre-Closing Dividend would be equal to or more than $8.50
per fully diluted share of FBR Common Stock).

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.

Exhibit Number		Description
2.1		Agreement and Plan of Merger, dated February17, 2017, by and between B. Riley Financial, Inc. and FBR Co.*
99.1		Form of Voting Agreement, dated February17, 2017, by and between B. Riley Financial, Inc. and certain shareholders of FBR Co.
99.2		Form of Voting Agreement, dated February17, 2017, by and between FBR Co. and certain stockholders of B. Riley Financial.

* 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

This communication
may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements
other than statements of historical fact are forward-looking
statements. All statements other than statements of historical
fact are forward-looking statements. These forward-looking
statements involve known and unknown risks, uncertainties and
other factors which may cause B. Riley Financials or FBRs
performance or achievements to be materially different from any
expected future results, performance, or achievements.
Forward-looking statements speak only as of the date they are
made and neither B. Riley Financial nor FBR assume any duty to
update forward looking statements. We caution readers that a
number of important factors could cause actual results to differ
materially from those expressed in, or implied or projected by,
such forward-looking statements. Such forward-looking statements
include, but are not limited to, statements about the benefits of
the merger involving B. Riley Financial and FBR, including future
financial and operating results, the combined companys plans,
objectives, expectations and intentions and other statements that
are not historical facts. The following factors, among others,
could cause actual results to differ from those set forth in the
forward-looking statements: (i)the possibility that the merger
does not close when expected or at all because required
regulatory, stockholder or other approvals and other conditions
to closing are not received or satisfied on a timely basis or at
all; (ii)changes in B. Rileys share price before closing;
(iii)lower FBR earnings and/or higher FBR transaction and other
expenses that result in a shortfall in the funds available for
distribution by FBR in the special dividend; (iv)the risk that
the benefits from the transaction may not be fully realized or
may take longer to realize than expected, including as a result
of changes in general economic and market conditions, interest
and exchange rates, monetary policy, laws and regulations and
their enforcement, and the degree of competition in the
geographic and business areas in which B. Riley Financial and FBR
operate; (v)the ability to promptly and effectively integrate the
businesses of B. Riley Financial and FBR; (vi)the reaction to the
transaction of the companies customers, employees and
counterparties; (vii)diversion of management time on
merger-related issues; and (viii)other risks that are described
in B. Rileys and FBRs public filings with the SEC. For more
information, see the risk factors described in each of B. Rileys
and FBRs Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q and other filings with the SEC.

No Offer
or Solicitation

This communication
does not constitute an offer to sell or the solicitation of an
offer to buy any securities or a solicitation of any vote or
approval, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section10 of the Securities Act of 1933, as
amended.

Additional
Information about the Merger and Where to Find It

Stockholders are
urged to carefully review and consider each of B. Riley
Financials and FBRs public filings with the SEC, including but
not limited to their Annual Reports on Form 10-K, their proxy
statements, their Current Reports on Form 8-K and their Quarterly
Reports on Form 10-Q. In connection with the proposed
transaction, B. Riley Financial will file with the SEC a
Registration Statement on Form S-4 that will include a Joint
Proxy Statement of B. Riley Financial and FBR and a Prospectus of
B. Riley Financial (the Joint Proxy/Prospectus), as well
as other relevant documents concerning the proposed transaction.
Stockholders of B. Riley Financial and FBR are urged to carefully
read the Registration Statement and the Joint Proxy/Prospectus
regarding the transaction in their entirety when they become
available and any other relevant documents filed with the SEC, as
well as any amendments or supplements to those documents, because
they will contain important information. A definitive Joint
Proxy/Prospectus will be sent to the stockholders of B. Riley
Financial and FBR. The Joint Proxy/Prospectus and other relevant
materials (when they become available) filed with the SEC may be
obtained free of charge at the SECs Website at
http://www.sec.gov. FBR AND B. RILEY FINANCIAL STOCKHOLDERS ARE
URGED TO READ THE JOINT PROXY/PROSPECTUS AND THE OTHER RELEVANT
MATERIALS BEFORE VOTING ON THE TRANSACTION.

Investors will
also be able to obtain these documents, free of charge, from FBR
by accessing FBRs website at www.fbr.com under the tab Investor
Relations or from B. Riley Financial at www.brileyfin.com under
the tab Investor Relations. Copies can also be obtained, free of
charge, by directing a written request to B. Riley Financial,
Attention: Corporate Secretary, 21255 Burbank Boulevard, Suite
400, Woodland Hills, California 91367 or to FBR, Attention:
Corporate Secretary, 1300 North Seventeenth Street, Arlington,
Virginia 22209.

Participants in
Solicitation

B. Riley Financial
and FBR and their directors and executive officers and certain
other persons may be deemed to be participants in the
solicitation of proxies from the stockholders of FBR or B. Riley
Financial in connection with the merger. Information about the
directors and executive officers of B. Riley Financial and their
ownership of B. Riley Financials common stock, par value $0.0001
per share is set forth in the proxy statement for B. Riley
Financials 2016 annual meeting of stockholders, as filed with the
SEC on a Schedule 14A on April19, 2016. Information about the
directors and executive officers of FBR and their ownership of
FBRs common stock, par value $0.001 per share is set forth in the
proxy statement for FBRs 2016 annual meeting of shareholders, as
filed with the SEC on a Schedule 14A on May9, 2016. Additional
information regarding the interests of those participants and
other persons who may be deemed participants in the transaction
may be obtained by reading the Joint Proxy/Prospectus regarding
the merger when it becomes available. Free copies of this
document may be obtained as described in the preceding
paragraph.

to the
requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

Date: February 21,
2017

EXHIBIT
INDEX

Exhibit Number		Description
2.1		Agreement and Plan of Merger, dated February17, 2017, by and between B. Riley Financial, Inc. and FBR Co.*
99.1		Form of Voting Agreement, dated February17, 2017, by and between B. Riley Financial, Inc. and certain shareholders of FBR Co.
99.2		Form of Voting Agreement, dated February17, 2017, by and between FBR Co. and certain stockholders of B. Riley Financial.

* Schedules and
exhibits omitted

About B. Riley Financial, Inc. (NASDAQ:RILY)
B. Riley Financial, Inc. provides collaborative financial services and solutions through several subsidiaries, including: B. Riley & Co. LLC, a investment bank which provides corporate finance, research, and sales and trading to corporate, institutional and high net worth individual clients; Great American Group, LLC, a provider of advisory and valuation services, asset disposition and auction solutions, and commercial lending services; B. Riley Capital Management, LLC, an Investment Advisor, which includes B. Riley Asset Management, a provider of investment products to institutional and high net worth investors, and B. Riley Wealth Management (formerly MK Capital Advisors), a multi-family office practice and wealth management firm focused on the needs of ultra-high net worth individuals and families; and Great American Capital Partners, LLC, a provider of senior secured loans and second lien secured loan facilities to middle market public and private United States companies. B. Riley Financial, Inc. (NASDAQ:RILY) Recent Trading Information
B. Riley Financial, Inc. (NASDAQ:RILY) closed its last trading session down -1.30 at 16.25 with 57,012 shares trading hands.