MEDLEY MANAGEMENT INC. (NYSE:MDLY) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

MEDLEY MANAGEMENT INC. (NYSE:MDLY) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

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Effective as of February 9, 2021, James G. Eaton resigned as a director of Medley Management Inc. (the “Company”). Mr. Eaton’s resignation was not the result of any disagreement with the Company on any matter relating to the operations, policies or practices of the Company.

On February 9, 2021, the Company’s Board of Directors (the “Board”) appointed Peter Kravitz to the Board as a director of the Company, effective as of the same date.

In connection with his appointment to the Board, the Board appointed Mr. Kravitz to chair a newly-constituted subcommittee of the Board created to explore restructuring transactions for Medley LLC (the “Restructuring Subcommittee”), also effective as of February 9, 2021. The Board also appointed independent directors John Dyett and Guy T. Rounsaville, Jr. to the Restructuring Committee. The Restructuring Subcommittee is authorized to, among other things, consider, evaluate and approve possible strategic alternatives including restructuring transactions and/or similar transactions involving Medley LLC, none of which have been implemented at this time.

In connection with his appointment to the Board, the Board also appointed Mr. Kravitz to the Audit Committee of the Board, effective as of February 9, 2021. John Dyett has been appointed as chair of the Compensation Committee of the Board, filling the vacancy on such committee resulting from Mr. Eaton’s resignation.

The Company and Mr. Kravitz entered into a Director Agreement dated February 9, 2021 (the “Effective Date”), to which Mr. Kravitz will be paid a fee of $45,000 for the first month and then $30,000 per month thereafter, provided that the monthly fee may be reduced at any time following the date that is four months after the Effective Date if the Board determines that Mr. Kravitz’s duties have been materially reduced. Mr. Kravitz will also be entitled to reimbursement of his reasonable out-of-pocket expenses incurred in connection with his Board service subject to limitations and reporting requirements with respect to expenses as may be established by the Company including provision of supporting documentation to the Company. The Director Agreement has a term ending on the earlier of December 31, 2021 or the director’s earlier death, disability, resignation or removal, and may be terminated by the Board with one month’s prior notice to the director or the payment to the director of one month’s fee.

There are no related-party transactions between the Company and Mr. Kravitz that are required to be disclosed under Item 404(a) of Regulation S-K.

Item 8.01. Other Events.

In connection with possible strategic alternatives including restructuring transactions and/or similar transactions involving Medley LLC, including as previously disclosed and as described in Item 5.02 of this Current Report on Form 8-K, and after consultation with the Company’s and Medley LLC’s tax advisors, the Company and Medley LLC determined that it would be advisable and potentially advantageous that Medley LLC elect to be treated as a corporation for tax purposes. On February 3, 2021, Medley LLC filed with the U.S. Internal Revenue Service Form 8832 electing to classify Medley LLC as a corporation for U.S. federal income tax purposes, effective as of January 24, 2021 (the “C-Corp Election”). Prior to the C-Corp Election, Medley LLC had been treated as a partnership for income tax purposes and therefore had not previously been subject to U.S. federal, state or local income taxes since all income, gains and losses were passed through to Medley LLC’s members (other than a portion of taxable income from Medley LLC and its subsidiaries subject to New York City’s unincorporated business tax). As a result of the C-Corp Election, Medley LLC will be treated as a corporation for U.S. federal income tax purposes, and will be subject to U.S. federal income tax on any taxable income at the corporate tax rate, which is currently a maximum of 21%, and would likely pay state and local income tax at varying rates. Following the implementation of the Unit Exchange disclosed in Medley LLC’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2021, the members of Medley LLC are Medley Management Inc. (holding approximately 98% of the Medley LLC Units) and Freedom 2021 LLC, an entity owned and controlled by Seth Taube (holding approximately 2% of the Medley LLC Units).

On February 3, 2021, Medley LLC and the Company (as Medley LLC’s managing member) executed and adopted a First Amendment (the “Amendment”) to the Fourth Amended and Restated Limited Liability Company Agreement of Medley LLC, dated as of September 23, 2014 (the “Medley LLC Operating Agreement”), for the purpose of expressly permitting the implementation of the C-Corp Election. The Amendment amends the Medley LLC Operating Agreement to provide that the Members of Medley LLC intend to treat Medley LLC as a corporation for income tax purposes, and that Medley LLC shall file as a corporation for income tax purposes, except where otherwise required by applicable law. The Amendment authorizes Medley LLC and the Company (as Medley LLC’s managing member) to implement and effectuate such further appropriate conforming amendments to the Medley LLC Operating Agreement as may be necessary or desirable in connection with implementing the C-Corp Election, and authorizes Medley LLC and the managing member to conduct the business, operations and accounting of Medley LLC in a manner consistent with the procedures appropriate for those of an entity treated and classified as a corporation for income tax purposes.

The foregoing summary of the Amendment to the Medley LLC Operating Agreement does not purport to be complete, and is qualified in its entirety by reference to the full text the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference into this Item 8.01.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

10.1 First Amendment, dated as of February 3, 2021, to Fourth Amended and Restated Limited Liability Company Agreement of Medley LLC dated as of September 23, 2014.
 
 

MEDLEY MANAGEMENT INC. Exhibit
EX-10.1 2 ex_225382.htm EXHIBIT 10.1 ex_225382.htm Exhibit 10.1   FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF MEDLEY LLC   THIS FIRST AMENDMENT TO FOURTH AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Amendment”) of Medley LLC,…
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About MEDLEY MANAGEMENT INC. (NYSE:MDLY)

Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors. The Company operates in the investment management segment. It is focused on credit-related investment strategies, primarily originating senior secured loans to private middle market companies in the United States. The Company generally holds these loans to maturity. Its national direct origination franchise provides capital to the middle market in the United States. The Company has over $4.8 billion of assets under management (AUM) in approximately two business development companies (BDCs), Medley Capital Corporation (MCC) and Sierra Income Corporation (SIC), as well as private investment vehicles. It has over $5 billion of AUM. The Company provides capital to over 300 companies across approximately 35 industries in North America. The Company’s long-dated private funds include MOF I, MOF II and MOF III. Its private funds are managed through partnership structures

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