MEDLEY MANAGEMENT INC. (Form: 8-K, Received: 11/20/2018 16:36:43)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________________________________

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 14, 2018

Medley Management Inc.

(Exact name of registrant as specified in its charter)



Delaware	001-36638	47-1130638
(State or other jurisdiction of	(Commission File Number)	(IRS Employer
incorporation)		Identification No.)

280 Park Avenue, 6 th Floor East, New York, NY 10017

(Address of principal executive offices) (Zip Code)

(Registrant’s telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



x		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒



Item 1.01	Entry into a Material Definitive Agreement.

On November 14, 2018, Medley Management Inc.'s operating company, Medley LLC (“Medley”), entered into a Letter Agreement (the “Letter Agreement”), which amends that certain existing Credit Agreement, dated as of August 19, 2014 (as so amended, the “Credit Agreement”), entered into by and among City National Bank, a national banking association, as the administrative agent and collateral agent (in such capacities, the “Agent”), the lenders party thereto and Medley, as borrower. The Credit Agreement has been previously amended by the Amendment Number One to Credit Agreement, dated as of August 12, 2015, Amendment Number Two to Credit Agreement, dated as of May 3, 2016, and Amendment Number Three to Credit Agreement, dated as of September 22, 2017, each by and among Medley, the Agent and the lenders party thereto. The Credit Agreement makes a Revolving Credit Facility available to Medley.

The Letter Agreement addresses the treatment under the Credit Agreement of the proposed merger transaction to be consummated pursuant to the Merger Agreement dated as of August 9, 2018 (the “Merger Agreement”) among Medley Management Inc. (“MDLY”), Sierra Income Corporation (“Sierra”) and Sierra Management, Inc., a wholly-owned subsidiary of Sierra (“Merger Sub”), in accordance with which MDLY will merge with and into Merger Sub, with Merger Sub as the survivor thereof (the “Designated Transaction”). Pursuant to the Letter Agreement, the Agent, the lenders and Medley agree that so long as the closing of the Designated Transaction (such date, the “Designated Transaction Effective Date”) occurs on or before March 29, 2019, the Designated Transaction shall not constitute a Change in Control for purposes of the Credit Agreement until the date that is 120 days after the Designated Transaction Effective Date. If the Designated Transaction Effective Date occurs on or after March 30, 2019, the Designated Transaction shall constitute a Change in Control immediately upon the occurrence of the Designated Transaction Effective Date. Effective as of the Designated Transaction Effective Date, the Revolving Credit Facility Commitments under the Credit Agreement shall terminate, and from and after the Designated Transaction Effective Date, (a) Medley shall not be entitled to request a Borrowing under the Revolving Credit Facility, and (b) the Agent and the lenders shall have no obligation to make any Loans pursuant to the Revolving Credit Facility.

In connection with the Letter Agreement, Medley and the guarantors under the Credit Agreement provided a Reaffirmation and Consent (the “Reaffirmation”), which served to reaffirm their obligations pursuant to the Credit Agreement and the other Loan Documents.

On the Closing Date of the Credit Agreement, SIC Advisors LLC (“SIC Advisors”) was a Non-Guarantor Subsidiary for purposes of the Credit Agreement. On August 9, 2018, SIC Advisors became a Wholly Owned Subsidiary of Medley, and pursuant to the Credit Agreement, Medley is required to cause any Non-Guarantor Subsidiary to execute and deliver the Guarantee and Collateral Agreement and each applicable Security Document within 30 days following the date on which such Non-Guarantor Subsidiary becomes a Wholly Owned Subsidiary. Pursuant to the Guarantee and Collateral Agreement, any Subsidiary that is required to become a party thereto shall execute and deliver a supplement to become a Subsidiary Guarantor and a Grantor thereunder. SIC Advisors had not yet executed and delivered the Supplement, which constituted an Event of Default under Section 7.01(e) of the Credit Agreement (the “Specified Event of Default”). On November 14, 2018, Medley and the Agent executed a letter agreement (the “Waiver to Credit Agreement”) pursuant to which the Agent and the lenders waive the Specified Event of Default, subject to the receipt of a Supplement executed and delivered by SIC Advisors. Pursuant to the terms of the Waiver to Credit Agreement, on November 14, 2018, SIC Advisors executed and delivered Supplement No. 4 to Guarantee and Collateral Agreement (the “Supplement”), pursuant to which SIC Advisors became a Subsidiary Guarantor and a Grantor under the Guarantee and Collateral Agreement.

The Letter Agreement (including the Reaffirmation attached as Exhibit A thereto), the Waiver to Credit Agreement, and the Supplement are filed as Exhibits 10.1, 10.2 and 10.3, respectively, to this Current Report on Form 8-K and are incorporated by reference herein. The above descriptions of the Letter Agreement, the Waiver to Credit Agreement and the Supplement do not purport to be complete and are qualified in their entirety by reference to the Letter Agreement, the Waiver to Credit Agreement and the Supplement.



Item 2.03	Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.

No Offer or Solicitation

The information in this communication is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant to or in connection with the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Important Information and Where to Find It

In connection with the proposed transactions, Sierra has filed with the SEC a Registration Statement on Form N-14 that it intends to mail to its stockholders and which includes a preliminary proxy statement and that also will constitute a prospectus of Sierra, and Medley Capital Corporation (“MCC”) and MDLY have filed with the SEC a preliminary proxy statement which MCC and MDLY intend to mail to their stockholders (collectively, the “Joint Proxy Statement/Prospectus”). The definitive Joint Proxy Statement/Prospectus will be mailed to stockholders of Sierra, MCC, and MDLY, respectively. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT SIERRA, MCC, AND MDLY, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. Investors and security holders are able to obtain the preliminary Joint Proxy Statement/Prospectus and other documents filed with the SEC by Sierra, MCC, and Medley, free of charge, from the SEC’s web site at www.sec.gov and from Sierra’s website (www.sierraincomecorp.com), MCC’s website (www.medleycapitalcorp.com), or MDLY’s website (www.mdly.com). Investors and security holders may also obtain free copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC from Sierra, MCC, or Medley by contacting Sam Anderson, Medley’s Investor Relations contact, at 212-759-0777.

Participants in the Potential Solicitation

Sierra, MCC, and MDLY and their respective directors, executive officers, other members of their management, employees and other persons may be deemed to be participants in the anticipated solicitation of proxies in connection with the proposed transactions. Information regarding Sierra’s directors and executive officers is available in its definitive proxy statement for its 2018 annual meeting of stockholders filed with the SEC on March 14, 2018 (the “ Sierra 2018 Proxy Statement ”). Information regarding MCC’s directors and executive officers is available in its definitive proxy statement for its 2018 annual meeting of stockholders filed with the SEC on December 21, 2017 (the “ MCC 2018 Proxy Statement ”). Information regarding Medley’s directors and executive officers is available in its annual report for the year ended December 31, 2017 on Form 10-K filed with the SEC on March 29, 2018 (the “ MDLY 2017 10-K ”). To the extent holdings of securities by such directors or executive officers have changed since the amounts disclosed in the Sierra 2018 Proxy Statement, the MCC 2018 Proxy Statement, and the MDLY 2017 Form 10-K, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed by such directors or executive officers, as the case may be, with the SEC, and in the Joint Proxy Statement/Prospectus. Additionally, more detailed information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, is set forth in the Joint Proxy Statement/Prospectus and in other relevant materials to be filed with the SEC. These documents may be obtained free of charge from the sources indicated above.



Item 9.01	Financial Statements and Exhibits.



(d) Exhibits.		Description

10.1		Letter Agreement, dated as of November 14, 2018, regarding the Credit Agreement, dated as of August 19, 2014, among Medley LLC, the lenders party thereto and City National Bank

10.2		Waiver to Credit Agreement, dated as of November 14, 2018

10.3		Supplement No. 4 to Guarantee and Collateral Agreement

Pursuant 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.



MEDLEY MANAGEMENT INC.

By:	/s/ Richard T. Allorto, Jr.
	Name:	Richard T. Allorto, Jr.
	Title:	Chief Financial Officer

Date: November 20, 2018

November 14, 2018 Medley LLC 280 Park Avenue, 6th Floor East New York, NY 10017 Re: Letter Agreement (the "Letter Agreemene) Ladies and Gentlemen: We refer to that certain Credit Agreement, dated as of August 19, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among Medley LLC, a Delaware limited liability company (the "Borrower" or "you"), the lenders from time to time party thereto (the "Lenders"), and City National Bank, a national banking association, in its capacity as the administrative agent (the "Administrative Agent") and in its capacity as the collateral agent for the Lenders (the "Administrative Agent" and the "Collateral Agent", collectively "Agents"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement. Borrower has informed the Agents and the Lenders that Borrower intends to enter into a merger transaction, pursuant to the Merger Agreement dated as of August 9, 2018 in the form provided to Agents prior to the date hereof (the "Merger Agreement") among Medley Management Inc., a Delaware corporation ("Medley"), Sierra Income Corporation, a Maryland corporation ("SIC") and Sierra Management, Inc., a Delaware corporation and wholly-owned subsidiary of SIC ("Merger Sub"), in accordance with which Medley will merge with and into Merger Sub, with Merger Sub as the survivor thereof (the "Designated Transaction"). Agents, the Lenders and Borrower agree that on the "Closing Date" as such term is defined in the Merger Agreement and the consummation of the Designated Transaction ( such date, the "Designated Transaction Effective Date") a Change in Control will have occurred pursuant to the Credit Agreement. Notwithstanding, the Borrower requests that the Agents and the Lenders agree that the Designated Transaction be deemed to not constitute a Change in Control subject to the conditions stated herein. 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 Agents, the Lenders and Borrower agree as follows: 1. So long as the Designated Transaction Effective Date occurs on or before March 29, 2019, the Designated Transaction shall not constitute a Change in Control until the date that is 120 days after the Designated Transaction Effective Date. If the Designated Transaction Effective Date occurs on or after March 30, 2019, the Designated Transaction shall constitute a Change in Control immediately upon the occurrence of the Designated Transaction Effective Date. LEGAL_us _w # 96205864.9 38468.00116

EXHIBIT A REAFFIRMATION AND CONSENT Reference is hereby made to that certain LETTER AGREEMENT, dated as of November 14, 2018 (the "Letter Agreement"), by and among MEDLEY LLC, a Delaware limited liability company ("Borrower"), the lenders identified on the signature pages thereof (such lenders, together with their respective successors and assigns, are referred to hereinafter each individually as a "Lender" and collectively as the "Lenders"), and CITY NATIONAL BANK, a national banking association ("CNB"), as administrative agent and collateral agent for the Lenders and the Bank Product Providers (in such capacity, together with its successors and assigns in such capacity, "Agent"). All initially capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in that certain Credit Agreement dated as of August 14, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and Among Borrower, the Lenders and Agents. The undersigned Guarantors each hereby (a) represents and warrants to Agent that the execution, delivery, and performance of this Reaffirmation and Consent are within its powers, have been duly authorized by all necessary action, and are not in contravention of any law, rule, or regulation, or any order, judgment, decree, writ, injunction, or award of any arbitrator, court, or Governmental Authority, or of the terms of its Organizational Documents, or of any contract or undertaking to which it is a party or by which any of its properties may be bound or affected; (b) consents to the amendments of the Credit Agreement and the consents set forth in the Letter Agreement; ( c) acknowledges and reaffirms its obligations owing to the Agents and the Lenders under any Loan Documents to which it is a party; ( d) reaffirms, acknowledges and agrees that it has granted to Collateral Agent a perfected security interest in the Collateral in order to secure all of its present and future Indebtedness under the Loan Documents to which it is a party; (e) restates, ratifies and reaffirms each and every term and condition set forth in the Credit Agreement and other Loan Documents to which it is a party effective as of the date of the Letter Agreement; (f) confirms that all Indebtedness of the Guarantors evidenced by the Loan Documents to which they are a party are unconditionally owing by it to Agents and the Lenders, without offset, defense, withholding, counterclaim or deduction of any kind, nature or description whatsoever; and (g) agrees that each of the Loan Documents to which it is a party is and shall remain in full force and effect. Although each of the undersigned has been informed of the matters set forth herein and has acknowledged and agreed to same, they each understand that neither any Agent nor any Lender has any obligation to inform it of such matters in the future or to seek its acknowledgment or agreement to future amendments, and nothing herein shall create such a duty. Delivery of an executed counterpart of this Reaffirmation and Consent by telefacsimile or other electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Reaffirmation and Consent. Any party delivering an executed counterpart of this Reaffirmation and Consent by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Reaffirmation and Consent but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Reaffirmation and Consent. This Reaffirmation and Consent shall be governedby the laws of the State of New York. [Signature page follows] LEGAL_US_W # 96205864.9 38468.00116

November 14, 2018 Medley LLC 280 Park A venue, 6th Floor East New York, NY 10017 Re: Waiver to Credit Agreement Ladies and Gentlemen: We refer to that certain Credit Agreement, dated as of August 19, 2014 (as amended, restated, supplemented or otherwise modified from time to time, the "Credit Agreement"), by and among Medley LLC, a Delaware limited liability company (the "Borrower" or "you"), the lenders from time to time party thereto (the "Lenders"), and City National Bank, a national banking association, in its capacity as the administrative agent (the "Administrative Agent") and in its capacity as the collateral agent for the Lenders (the "Administrative Agent" and the "Collateral Agent", collectively "Agents"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement. As of the Closing Date, SIC Advisors LLC ("SIC Advisors") was a Non-Guarantor Subsidiary. On August 9, 2018, SIC Advisors became a Wholly Owned Subsidiary of the Borrower. Pursuant to Sections 5.12 and 7.0l(e) of the Credit Agreement, the Borrower is required to cause any Non-Guarantor Subsidiary to execute and deliver the Guarantee and Collateral Agreement and each applicable Security Document within 30 days following the date on such Non-Guarantor Subsidiary becomes a Wholly Owned Subsidiary. Pursuant to Section 7 .16 of the Guarantee and Collateral Agreement, any Subsidiary that is required to become a party thereto pursuant to Section 5.12 of the Credit Agreement shall execute and deliver the supplement (the "Supplement") to become a Subsidiary Guarantor and a Grantor thereunder. As of the date of this letter, SIC Advisors has not yet executed and delivered the Supplement, which constitutes an Event of Default under Section 7.0l(e) of the Credit Agreement (the "Specified Event of Default"). At the request of the Borrower, and in accordance with the Credit Agreement, subject to the receipt of a Supplement executed and delivered by SIC Advisors in form and substance satisfactory to Agent, the Agents and Lenders hereby waive the Specified Event of Default. The waiver set forth in this paragraph will be effective upon execution of this letter by the Borrower, Agents, and the Lenders, and the execution and delivery by SIC Advisors of the Supplement to Agent. The waiver set forth above is limited solely to the Specified Event of Default and shall not be deemed to be a consent to or waiver of any other Default or Event of Default or an amendment of any other provision of the Credit Agreement or any other Loan Documents. As LEGAL US W # 96469119.2 38468.00116

SUPPLEMENT NO. 4 TO GUARANTEE AND COLLATERAL AGREEMENT SUPPLEMENT NO. 4 (this “Supplement”) dated as of November 14, 2018 to the Guarantee and Collateral Agreement dated as of August 19, 2014 (as amended, supplemented or otherwise modified from time to time, the “Guarantee and Collateral Agreement”), among MEDLEY LLC, a Delaware limited liability company (the “Borrower”), each Subsidiary of the Borrower from time to time party thereto (each such Subsidiary individually, a “Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”; the Subsidiary Guarantors, the Borrower are referred to collectively herein as the “Grantors”) and CITY NATIONAL BANK, a national banking association (together with its affiliates, “CNB”), as collateral agent (in such capacity, the “Collateral Agent”) for the Secured Parties (as defined therein). A. Reference is made to the Credit Agreement dated as of August 19, 2014 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the lenders from time to time party thereto (the “Lenders”) and CNB, as administrative agent for the Lenders and as Collateral Agent. B. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement or the Guarantee and Collateral Agreement referred to therein, as applicable. C. The Grantors have entered into the Guarantee and Collateral Agreement in order to induce the Lenders to make Loans. Section 7.16 of the Guarantee and Collateral Agreement provides that additional Subsidiaries of the Borrower may become Subsidiary Guarantors and Grantors under the Guarantee and Collateral Agreement by execution and delivery of an instrument in the form of this Supplement. The undersigned Subsidiary (the “New Subsidiary”) is executing this Supplement in accordance with the requirements of the Credit Agreement to become a Subsidiary Guarantor and a Grantor under the Guarantee and Collateral Agreement in order to induce the Lenders to make additional Loans (if any) and as consideration for Loans previously made. Accordingly, the Collateral Agent and the New Subsidiary agree as follows: SECTION 1. In accordance with Section 7.16 of the Guarantee and Collateral Agreement, the New Subsidiary by its signature below becomes a Grantor and Subsidiary Guarantor under the Guarantee and Collateral Agreement with the same force and effect as if originally named therein as a Grantor and Subsidiary Guarantor and the New Subsidiary hereby (a) agrees to all the terms and provisions of the Guarantee and Collateral Agreement applicable to it as a Grantor and Subsidiary Guarantor thereunder and (b) represents and warrants that the representations and warranties made by it as a Grantor and Subsidiary Guarantor thereunder are true and correct on and as of the date hereof (including, for the avoidance of doubt, the representations and warranties in Section 4.02(d), without giving effect to any references therein to the Closing Date or any Credit Event; provided, that Schedule III attached hereto shall be deemed to be “Schedule III” for purposes of such representations and warranties). In furtherance of the foregoing, the New Subsidiary, as security for the payment and performance in full of the Obligations (as defined in the Guarantee and Collateral Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the ratable benefit of the Secured Parties, their successors and assigns, a security interest in and lien on all of the New Subsidiary’s right, title and interest in and to the Collateral (as defined in the Guarantee and Collateral Agreement) of the New Subsidiary. Each reference to a “Grantor” or a “Subsidiary Guarantor” in the Guarantee and Collateral Agreement shall be deemed to include the New Subsidiary. The Guarantee and Collateral Agreement is hereby incorporated herein by reference. LEGAL_US_W # 96412860.2