Exhibit 10.1

 

Amendment to Deed of Trust

 

This Amendment (including the annexes attached hereto, this “Amendment”) to the
Deed (as defined below) is entered into between Medley Capital Corporation, a
business development company incorporated under the laws of the State of
Delaware, File Number 4815200 (the “Company”), and Mishmeret Trust Company Ltd.,
with its principal offices at 46-48 Menachem Begin Road, Tel Aviv (the
“Trustee”).

 

WHEREAS, The Company and the Trustee made and entered into that certain Deed of
Trust on January 23, 2018 (including the schedules attached thereto, the
“Deed”), with respect to notes of debt which were offered to the public by the
Company (the “Notes”; the holders of the Notes, the “Noteholders”); and    
WHEREAS, According to the Deed, the Trustee serves as trustee for the
Noteholders; and     WHEREAS, The Trustee sent to the Company a letter, dated
June 11, 2019, in which the Trustee raised, inter alia, certain
claims and allegations towards the Company, directors, and officers of the
Company, with respect to the Company, ce1iain affiliates of the Company and the
Deed (the “Trustee’s Letter”);  and     WHEREAS, The Company sent to the Trustee
a response letter, dated June 13, 2019, in which the Company denied the claims
and allegations raised in the Trustee’s Letter in their entirety;  and    
WHEREAS, The Company and the Trustee conducted discussions and negotiations and
as a result the Company, has offered the Trustee and the Noteholders, without
admitting to the claims or allegations of the Trustee and without waiving any
right it may have, to enter into this Amendment subject to the fulfillment of
the Conditions Precedent as detailed hereinafter;

 

NOW, THEREFORE, it is hereby agreed by and between the parties hereto that they
will conform to the terms of this Amendment as set forth hereinafter, together
with all the annexes hereto.

 

1.All capitalized terms used and not otherwise defined herein shall have the
respective meaning ascribed to them in the Deed.

 

 

 

 

2.Section 2.2 of the Deed shall be replaced in its entirety to read as follows:

 

“The Principal of the Notes shall be repaid in eight (8) equal installments,
each at the rate of twelve and a half percent (12.5%) of the original principal
of the Notes (after giving effect to the reduction of Principal due to the
repurchase of any Notes by the Company), which shall be payable as follows: (i)
the first installment (the “Initial Principal Payment”) shall be paid on the
‘Effective Date’ of the Amendment to Deed of Trust published by the Company on
July 16, 2019 (as defined in Section 17 therein) (the “Deed Amendment”); (ii)
the following six (6) installments shall be paid on a quarterly basis, on the
last day of each such quarter, namely, on September 30, 2019, December 31, 2019,
March 31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020; and
(iii) the remaining outstanding balance owed under the Notes shall be paid on
January 31, 2021. Attached to the Deed Amendment as Annex A is the applicable
Am01iization Schedule.”

 

3.Notwithstanding the provisions of Section 2.3 of the Deed, the interest to be
paid pursuant to the Deed shall be payable on a quarterly basis, at the last day
of each such quarter, namely, on September 30, 2019, December 31, 2019, March
31, 2020, June 30, 2020, September 30, 2020 and December 31, 2020 (each, an
“Interest Payment Date”), for the period commencing on the previous Interest
Payment Date and ending on the day immediately preceding the applicable Interest
Payment Date (the “Interest Period”), except for: (i) the initial interest
payment (the “Initial Interest Payment”), which shall be paid on the Effective
Date, for the period commencing on February 27, 2019 and ending on the day
immediately preceding such initial Interest Payment Date, (ii) the interest
payment (the “Second Interest Payment”) payable on September 30, 2019, for the
period commencing on the Effective Date and ending on the day immediately
preceding such Interest Payment Date and (iii) the final interest payment (the
“Final Interest Payment”), which shall be paid on January 31, 2021 (together
with the final payment of the Principal), for the period commencing on December
31, 2020 and ending on January 31, 2021, and against the surrender of the Note
Certificates to the Company and/or any third party as instructed by the Company,
each of which to be calculated on the basis of a 365-day year and the actual
number of days in such period.

 

3A.At least 17 days prior to the Effective Date but no earlier than 45 days
prior to the Effective Date, the Company shall publish an immediate report
setting forth (i) the date of the Effective Date, (ii) the record date for the
payment of the Initial Principal Payment and the Initial Interest Payment, (iii)
the interest rate of the Initial Interest Payment which shall be paid on the
Effective Date, and (iv) the interest rate of the Second Interest Payment which
shall be paid on September 30, 2019 (assuming no other events which affect the
interest rate as aforesaid shall occur). The Company shall include the final
Amortization Table with such immediate report.

 

4.Section 2.4 of the Deed (Record date) shall be amended to read in its entirety
as follows: “Record date - Payments on account of the Principal and/or any
interest thereon shall be paid to the relevant Noteholder on the following
dates:

 

2.4.1Payments due on February 27 - shall be paid to persons holding Notes on the
Trading Day on February 15.

 

2.4.2Payments due on August 27 - shall be paid to persons holding Notes on the
Trading Day on August 15.

 

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2.4.3Payments on the Effective Date - shall be paid to persons holding Notes on
the Trading Day that falls twelve (12) days before the Effective Date.

 

2.4.4Payments due on September 30 - shall be paid to persons holding Notes on
the Trading Day on September 18.

 

2.4.5Payments due on December 31 - shall be paid to persons holding Notes on the
Trading Day on December 19.

 

2.4.6Payments due on March 31 - shall be paid to persons holding Notes on the
Trading Day on March 19.

 

2.4.7Payments due on June 30 - shall be paid to persons holding Notes on the
Trading Day on June 18.

 

2.4.8The final payment of Principal and interest (on January 31, 2021) shall be
made against the surrender of the Note Certificates to the Company, on the date
of payment, at a location in Israel as the Company shall instruct the Trustee,
no later than five (5) Business Days prior to the last date of payment.

 

In the event a certain date of payment on account of Principal and/or interest
is not a Business Day, the date of such payment shall be postponed to the
following Business Day and no interest or other payment shall be due on account
of such delay, and the “record date” for determining the eligibility for
redemption or interest shall not be changed as a result of such postponement.”

 

5.Notwithstanding Sections 2.9.1 to 2.9.7 of the Deed the Company shall not be
entitled to expand the series of the Notes (but the Company is not prohibited
pursuant to this section from creating and offering new series of notes).

 

6.In Section 6.1.1 of the Deed, the amount “275 million US Dollars” shall be
replaced with the amount “215 million US Dollars”.

 

7.Section 10.1.25 of the Deed, shall be replaced in its entirety to read as
follows:

 

“If prior to November 30, 2019 the Notes’ rating will drop below il/B of Maalot
(or a corresponding rating that will be determined by another Rating Agency,
that will replace Maalot) except for (1) a downgrade described in sub-Section
7.1.9 above; and - (2) a temporary downgrade of the rating to “SD” as a result
only of the Company’s engagement in this Amendment that shall be in effect until
no later than October 1, 2019; or- If in the period between December 1, 2019 and
April 1, 2020 the Notes’ rating will be below il/BB- of Maalot (or a
corresponding rating that will be determined by another Rating Agency, that will
replace Maalot), except for a downgrade described in sub-Section 7.1.9 above;or-

 

If on April 1, 2020 or thereafter the Notes’ rating will be below il/BBB- of
Maalot (or a corresponding rating that will be determined by another Rating
Agency, that will replace Maalot), except for a downgrade described in
sub-Section 7.1.9 above.”

 

Notwithstanding the foregoing, nothing in this Section 7 shall derogate from the
provisions of the Deed with respect to the increase or decrease (as the case may
be) of the annual interest rate on the outstanding balance of the Principal upon
an occurrence of a downgrade in the Notes’ rating.

 

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8.Notwithstanding Section 9.1.7 of the Deed, in the event that the Company shall
effect an early redemption of all or a portion of the Notes pursuant to Section
9 of the Deed within eighteen (18) months following the Effective Date, then the
amount that shall be paid to the Noteholders in such early redemption shall be
the liability value of the Notes in circulation that are to be redeemed early,
i.e., the Principal plus accrued interest and linkage, until the date of early
redemption (and for avoidance of doubt, the provision of Sections 9.1.7(2) and
9.1.7(3) of the Deed shall not apply in such early redemption). Such early
redemption shall be applied on account of the last payment/s of Principal set
forth in the Amortization Schedule.

 

9.Notwithstanding Section 8 of the Deed, Medley Small Business Fund, LP, a
Delaware limited partnership and consolidated subsidiary of the Company (“Medley
Small Business Fund”), and Medley SLF Funding I LLC, a Delaware limited
liability company and consolidated subsidiary of the Company (“Medley SLF”),
shall each guarantee all of the Company’s obligations under the Deed (including
this Amendment) and the Notes, pursuant to the guaranty agreements in the forms
attached hereto as Annexes B and C. The guaranty provided by Medley Small
Business Fund is hereinafter referred to as the “Medley Small Business Fund
Guaranty” and the guaranty provided by Medley SLF is hereinafter referred to as
the “Medley SLF Guaranty”. Each of Medley Small Business Fund and Medley SLF
shall be subject to a security agreement in the forms attached hereto as Annexes
D and E. The security agreement entered into by Medley Small Business Fund is
hereinafter referred to as the “Medley Small Business Fund Security Agreement”
and, the security agreement entered into by Medley SLF is hereinafter referred
to as the “Medley SLF Security Agreement”.

 

10.Each of the Company and Medley Small Business Fund hereby represents and
warrants that:

 

(a) the total fair value (as such term is defined in the Company’s financial
statements) of the assets of Medley Small Business Fund (the “Medley Small
Business Fund Assets”) as of July 3, 2019 collectively was not less than USD 63
million based on the March 31, 2019 fair market values (most recently available)
(including cash in the amount of USD 954,288.96 (the “MSB Cash”)), and on July
2, 2019, Medley Small Business Fund distributed to the Company USD
$14,966,597.35; and (b) the Medley Small Business Fund Assets are free and clear
of any third parties’ right, lien, claim or encumbrance, and there is no
limitation whatsoever to grant a security interest and lien in favor of the
Trustee, in the Medley Small Business Fund Assets as collateral; and (c) the
Company and Medley Small Business Fund have no knowledge or indication that the
aggregate fair value of the loans comprising the Medley Small Business Fund
Assets and the Medley SLF Assets has materially changed since March 31, 2019;
(d) Medley Small Business Fund does not have and shall not have any debts,
obligations or expenses except for annual general expenses that shall not exceed
USD 25,000 (the “Permitted Operating Expenses”); (e) the table attached hereto
as Annex J sets forth the details with respect to each of the loans comprising
the Medley Small Business Fund Assets, including the applicable 1 to 5 credit
rating and the fair value of each such loan as of March 31, 2019. In addition,
the Company hereby undertakes to set forth in each of its quaiierly and annual
financial reports the aggregate fair value of the loans comprising the Medley
Small Business Fund Assets as of the date of such report.

 

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11.On or prior the Effective Date and as a condition precedent to the Effective
Date, the Company shall have transferred the assets described in Annex F (the
“Medley SLF Assets”) to Medley SLF. The Company and Medley SLF hereby represent
and warrant that: (a) the total fair value (as such term is defined in the
Company’s financial statements) of the Medley SLF Assets as of March 31, 2019
was not less than 27 million US Dollars; and (b) the Medley SLF Assets are free
and clear of any third parties’ right, lien, claim or encumbrance and there is
no limitation whatsoever to transfer such assets to Medley SLF, and for Medley
SLF to grant a security interest and lien in favor of the Trustee in the Medley
SLF Assets as collateral; and (c) the Company has no knowledge or indication
that the aggregate fair value of the loans comprising the Medley SLF Assets and
the Medley Small Business Fund Assets has materially changed since March 31,
2019; and (d) Medley SLF does not have and shall not have any debts, obligations
or expenses except for annual general expenses that shall not exceed USD 25,000
(the “Permitted Operating Expenses”); and (e) the table attached hereto as Annex
F sets forth the details with respect to each of the loans comprising the Medley
SLF Assets, including the applicable 1 to 5 credit rating and the fair value of
each such loan as of March 31, 2019. In addition, the Company hereby undertakes
to set forth in each of its quarterly and annually financial reports the
aggregate fair value of the loans comprising the Medley SLF Assets as of the
date of such report.

 

12.Neither the Company, Medley Small Business Fund, nor Medley SLF shall be
permitted to use the Medley Small Business Fund Assets, or Medley SLF Assets, or
any income or proceeds derived from any of the abovementioned assets, or any
other payment or amount received by Medley Small Business Fund or Medley SLF
from and after June 30, 2019 for any purpose other than as expressly provided
herein. The limitations set forth in this Section 12 regarding Medley Small
Business Fund Assets shall apply to the Company and Medley Small Business Fund
until such time that the Notes have been fully repaid and satisfied. The
limitations set forth in this Section 12 regarding Medley SLF Assets shall apply
to the Company and Medley SLF until such time that the Merger (as defined in
Section 14 herein) is consummated unless prior to such consummation the Trustee
shall have commenced any actions to effect remedies with respect to any security
interest or guarantee granted to the benefit of the Trustee pursuant to this
Amendment (the aforesaid shall not derogate from the Company’s right to object
in any way whatsoever to the Trustee’s effecting such remedies, if such right
exists). Each quarterly and annual CFO certificate delivered by the Company to
the Trustee pursuant to Section 6.1 of the Deed shall also confirm that the
Company is in compliance with the provisions of this Section 12.

 

13.Each of the Company and Medley Small Business Fund and Medley SLF hereby
undertakes that any payments or amounts received by Medley Small Business Fund
or by Medley SLF, from and after June 30, 2019, including without limitation on
account of the Medley Small Business Assets or on account of Medley SLF Assets,
including without limitation, interest, fees, principal, repayments or
prepayments, and including the MSB Cash, shall be held in a designated bank
account for such applicable entity and which account shall be subject to a
Deposit Account Control Agreement in a form acceptable to the Trustee (each of
the bank accounts of Medley Small Business Fund and of Medley SLF - the “Bank
Account”; and together the “Bank Accounts”). The Company, Medley Small Business
Fund and Medley SLF, shall inform the Trustee immediately after receiving any
such amount.

 

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Any amounts in the Bank Accounts representing full or partial principal payments
or principal prepayments on the Medley Small Business Fund Assets or Medley SLF
Assets shall be used, as soon as practicable following their acceptance,
according to TASE regulations, for early redemption of the Notes pursuant to
Section 9 of the Deed, provided, however, that the amount that shall be paid to
the Noteholders in such early redemption shall be the liability value of the
Notes in circulation that are to be redeemed early, i.e., the Principal plus
accrued interest and linkage, until the date of early redemption (and for
avoidance of doubt, the provision of Sections 9.1.7(2) and 9.1.7(3) of the Deed
shall not apply in such early redemption). Such Principal payments shall be
applied on account of the last payment/s of Principal set forth in the
Amortization Schedule.

 

All other amounts in the Bank Accounts, including, without limitation, payments
of interest, fees and other income on the Medley Small Business Fund Assets or
Medley SLF Assets shall be used to pay Permitted Operating Expenses of Medley
Small Business Fund and Medley SLF and to make regularly scheduled principal
installment payments on the Notes and to pay accrued interest on the Notes, in
each case as and when due.

 

The Trustee’s security interest in the Medley Small Business Fund Assets shall
be released only when the Notes are fully paid.

 

The CFO certificate as stated in Section 12 above shall include a breakdown of
the amounts in the Bank Accounts and distinguish between the principal amounts
and any other amounts.

 

14.In the event that the Company merges with Sierra Income Corporation, while
simultaneously a wholly-owned subsidiary of Sierra Income Corporation merges
with Medley Management Inc. (the “Merger”), upon the closing of the Merger (the
“Merger Closing Date”): the security interest in the Medley SLF Assets shall be
automatically released unless prior to the Merger Closing Date the Trustee shall
have commenced any actions to effect remedies with respect to such security
interest (the aforesaid shall not derogate from the Company’s right to object in
any way whatsoever to the Trustee’s effecting such remedies, if such right
exists); the Medley SLF Guaranty shall be automatically terminated unless prior
to the Merger Closing Date the Trustee shall have commenced any actions to
effect remedies with respect to such guaranty (the aforesaid shall not derogate
from the Company’s right to object in any way whatsoever to the Trustee’s
effecting such remedies, if such right exists); the Trustee shall file or
authorize the filing of the UCC-3 Termination Statement attached hereto as Annex
H; and Medley SLF shall be free to transfer the Medley SLF Assets to Sierra
Income Corporation, as the surviving entity in the Merger. Following the closing
of the Merger, the Company shall publish an immediate report setting forth the
date of the Merger Closing Date. For the avoidance of doubt, this Section and
any other provision of this Amendment shall not derogate from Section 10.1.14 of
the Deed.

 

15.During the period commencing on the Effective Date and ending on the Merger
Closing Date, the annual interest rate on the outstanding balance of the
Principal, pursuant to the Deed, shall be decreased by a rate of 0.25% per
annum; after the Merger Closing Date, the annual interest rate on the
outstanding balance of the Principal, pursuant to the Deed, shall be further
decreased by a rate of 0.5% per annum (i.e., a total decrease of 0.75% from the
closing of the Merger).

 

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No later than two (2) Business Days following the Merger Closing Date, the
Company shall publish an immediate report due to such change in interest as
aforesaid, and the provisions of Sections 7.1.3 and 7.1.4 of the Deed shall
apply, mutatus mutandis. For the avoidance of doubt, such report shall also
include the following details: (a) the interest rate that the Principal shall
bear for the period commencing on the first day of the then-current Interest
Period and until the Merger Closing Date (calculated on the basis of a 365-day
year and the actual number of days in such period) (in this sub-Section, the
“Original Interest”); (b) the interest rate that the Principal shall bear
commencing on the date immediately following the Merger Closing Date (which date
shall be set forth in the report) and until the date immediately preceding the
next Interest Payment Date (to the extent that the interest rate will not be
adjusted pursuant to Section 7 of the Deed and calculated on the basis of a
365-day year and the actual number of days in such period); (c) the weighted
interest rate to be paid by the Company to the Noteholders on the next Interest
Payment Date, deriving from the interest payments described in clauses (a) and
(b) above; (d) the annual interest rate reflected from the weighted interest
rate; and (e) the updated annual interest rate and the quarterly interest rate
for the period commencing on the next Interest Payment Date (i.e., the period
commencing immediately following the period during which the Merger Closing Date
occurred), computed by dividing such updated annual interest rate by four. For
the removal of doubt, such report shall include the rate of the Final Interest
Payment, payable on January 31, 2021.

 

From the day of publishing this Amendment by the Company and until the earlier
of (a) the Merger Closing Date or (b) June 30, 2020, notwithstanding Sections
6.4 and 8.4 of the Deed, the Company shall not (1) pledge or undertake to pledge
or grant any security interest or lien in any of its assets to any third party
(other than to secure the Notes and other than nonconsensual liens arising in
the ordinary course of business that do not secure indebtedness for borrowed
money in an aggregate amount not to exceed USD 50,000 unless the Company removes
such lien within 20 Business Days (the “Nonconsensual Liens”)) unless it obtains
the prior consent of the Noteholders by Special Resolution; and (2) make any
payment in connection with any long term indebtedness other than regularly
scheduled payments, and inter alia shall not make any pre-payments on account of
the Company’s 6.500% Notes due 2021 and the Company’s 6.125% Notes due 2023, and
shall not purchase such notes.

 

16.This Amendment is subject to the fulfilment of all of the following
conditions (the “Conditions Precedent”).

 

16.1.This Amendment has been approved at a Noteholders’ Meeting according to
Section 25.2.2 of the Deed, no later than July 16, 2019.

 

16.2.The Amendment has been approved by the TASE, no later than July 18, 2019;
or if such approval requires the approval of the Tel Aviv District Court, no
later than July 31, 2019. Each of the Trustee and the Company shall have the
right to postpone the aforementioned dates by no more than 3 periods of up to 21
days each. The Company and the Trustee shall cooperate in order to receive the
approval of the TASE to this Amendment and shall insert any changes to this
Amendment as shall be required to receive such approval, provided that the
aforementioned changes shall not affect the substance of the provisions of this
Amendment.

 

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16.3.To the extent necessary, this Amendment has been approved by the Tel Aviv
District Court, in accordance with the provisions of Section 350 of the
Companies Law 5759-1999, no later than July 31, 2019; Each of the Trustee and
the Company shall have the right to postpone the aforementioned date by no more
than 3 periods of up to 21 days each.;

 

16.4.If any further action of the board of directors of the Company, Medley
Small Business and Fund Medley SLF is necessary to authorize their execution and
delivery of this Amendment, the boards’ shall have taken such action within one
Business Day following the Trustee’s publication of this Amendment for approval
by the Noteholders.

 

17.Upon the fulfillment of the Conditions Precedent the Trustee shall set,
following coordination with the TASE, a date in which the actions set f01ih
below shall occur (the “Effective Date”). On the Effective Date:

 

17.1.The Trustee shall execute this Amendment.

 

17.2.The Company shall pay the Initial Principal Payment and the Initial
Interest Payment to the Noteholders. If for any reason whatsoever such payments
cannot be executed on the Effective date (including for reasons relating to the
payment to be made by the Company to the Noteholders on September 30, 2019 (the
“September Payment”)), then the Initial Principal Payment and the Initial
Interest Payment shall be transferred to the Trustee on the Effective date and
shall be paid to the Noteholders together and simultaneously with the September
Payment.

 

17.3.Medley Small Business Fund shall execute and deliver to the Trustee the
Medley Small Business Fund Guaranty, which shall provide for the subordination
to the Trustee’s claims and liens described herein of any subrogation claims of
Medley Small Business Fund to the extent Medley Small Business Fund makes any
payments under the Medley Small Business Fund Guaranty.

 

17.4.Medley Small Business Fund shall execute and deliver to the Trustee the
Medley Small Business Fund Security Agreement, pursuant to which (i) Medley
Small Business Fund shall have granted in favor of the Trustee a first priority
blanket security interest in and lien on all of the Medley Small Business Fund
Assets including without limitation the Bank Account (the “MSB Blanket
Security”); and (ii) authorized the Trustee to file all necessary financing
statements (including without limitation UCC-1 Financing Statements) in all
appropriate jurisdictions in connection therewith; for the avoidance of any
doubt the MSB Blanket Security shall prevent Medley Small Business Fund from
pledging any of its assets other than Nonconsensual Liens.

 

17.5.Medley Small Business Fund, the Trustee and U.S. Bank National Association
shall enter into an account control agreement, in form and substance
satisfactory to the Trustee with respect to the Bank Account. In the event that,
notwithstanding the best efforts of Medley Small Business Fund, such agreement
cannot be executed on the Effective Date, Medley Small Business Fund shall enter
into the account control agreement no later than July 31, 2019, and the
provisions of such agreement shall also apply on any and all funds received by
Medley Small Business Fund since June 30, 2019.

 

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17.6.Medley SLF shall execute and deliver to the Trustee the Medley SLF
Guaranty, which shall provide for the subordination to the Trustee’s claims and
liens described herein of any subrogation claims of Medley SLF to the extent
Medley SLF makes any payments under the Medley SLF Guaranty.

 

17.7.Medley SLF Fund shall execute and deliver to the Trustee the Medley SLF
Security Agreement, pursuant to which (i) Medley SLF shall have granted in favor
of the Trustee a first priority blanket security interest in and lien on all of
the Medley SLF Assets (the “SLF Blanket Security”); and (ii) authorized the
Trustee to file all necessary financing statements (including without limitation
UCC-1 Financing Statements) in all appropriate jurisdictions in connection
therewith; for the avoidance of any doubt the SLF Blanket Security shall prevent
Medley SLF Fund from pledging any of its assets other than Nonconsensual Liens.

 

17.8.Medley SLF, the Trustee and U.S. Bank National Association shall enter into
an account control agreement, in form and substance satisfactory to the Trustee
with respect to the Bank Account. In the event that, notwithstanding the best
efforts of Medley SLF, such agreement cannot be executed on the Effective Date,
Medley SLF shall enter into the account control agreement no later than July 31,
2019, and the provisions of such agreement shall also apply on any and all funds
received by Medley SLF since June 30, 2019.

 

17.9.The Company shall deliver to the Trustee a legal opinion of the Company’s
and Medley Small Business Fund’s and Medley SLF’s United States counsel (the
“American Attorney”) addressed to the Trustee, in a form and substance
satisfactory to the Trustee, that the Company and Medley Small Business Fund and
Medley SLF have duly adopted all of the resolutions required for the granting of
the security interests and liens on the pledge of Medley Small Business Fund
Assets and of Medley SLF Assets, and for the granting of the guarantee of Medley
Small Business Fund and of Medley SLF, and that the parties competent to sign in
the Company’s and Medley Small Business Fund’s and Medley SLF’s name have signed
on all of the required documents for the purposes of granting the security
interests and liens and guarantees described herein. The identity of the signer
and the fact that it is an authorized signatory for the Company and Medley Small
Business Fund and Medley SLF shall be verified and confirmed by the American
Attorney.

 

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17.10.The Company shall deliver to the Trustee a confirmation in a the form
attached hereto as Annex I, executed by a senior officer of the Company and
Medley Small Business Fund and Medley SLF (Officer Certificate) confirming (i)
the resolutions required for the purpose of entering into this Amendment and
granting the security interests and liens and guarantees described herein have
been adopted, (ii) the absence of any conflicting and/or contradictory
undertakings on the part of the Company or Medley Small Business Fund or Medley
SLF in connection with entering into this Amendment and granting the security
interests and liens and guarantees described herein and (iii) the laws of the
United States are those applicable to the grant of the security interests and
liens and guarantees described herein.

 

17.11.The Company shall deliver to the Trustee all relevant documents required
to effect the security interest and liens in the Medley Small Business Fund
Assets and the Medley SLF Assets as collateral.

 

17.12.The Company shall pay the Trustee and its representatives all expenses and
fees, including Trustee’s fees, legal fees, financial advisors’ fees and other
expenses incurred through the Effective Date.

 

17.13.The Company and Medley SLF shall deliver to the Trustee a written
certification in the form attached hereto as Annex G that the Medley SLF Assets
were transferred to Medley SLF.

 

18.Subject to any relevant law - in the event that the Trustee shall request the
special committee to provide the participants in the Go-Shop procedure that is
planned to be executed in connection with the Merger (the “Go-shop”) any
notice/s (the “Trustee Notice”) then upon the receipt of the Trustee Notice the
special committee on behalf of the Company shall promptly deliver it to the
participants unless the special committee determinates in good faith that such
delivery will be prejudicial to the Go-shop process.

 

19.

 

19.1.Subject to the Company and Medley Small Business Fund and Medley SLF
fulfillment and execution of all of their obligations and undertakings pursuant
to Section 17 of this Amendment, the Trustee and the Noteholders waive their
right to accelerate the full balance of the amount due to the Noteholders
(“Acceleration”) based on all claims and/or allegations and/or actions and/or
rights which were raised and/or are an outcome and/or are deriving from the
claims, allegations as set forth in the Trustee’s Letter. The Trustee and the
Noteholders hereby confirm and represent, that as of the execution of this
Amendment they are not aware of any claim, allegation, demand or cause of action
that give rise for Acceleration, which were not set forth in the Trustee’s
Letter.

 

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19.2.Subject to the Company and Medley Small Business Fund and Medley SLF
fulfillment and execution of all of their obligations and undertakings pursuant
to the Deed and this Amendment, the Trustee and the Noteholders waive any claim
and/or demand and/or right and/or action towards and/or in relation with the
Company and/or its subsidiaries and affiliates (as defined in the U.S.
Investment Company Act of 1940, as amended) and their respective employees
(including their respective directors, officers, members of the Company’s board
of directors, employees, stockholders, stakeholders, and advisors). The Trustee
and the Noteholders hereby confirm and represent, that as of the execution of
this Amendment they are not aware of any claim, allegation, demand or cause of
action against the Company or and/or its subsidiaries and affiliates (as defined
in the U.S. Investment Company Act of 1940, as amended) and their respective
employees (including their respective directors, officers, members of the
Company’s board of directors, employees, stockholders, stakeholders, and
advisors), which were not set forth in the Trustee’s Letter. For the avoidance
of doubt in the event that the Company or Medley Small Business Fund or Medley
SLF fail to comply in full with the undertakings and obligations set forth
herein or in the Deed (and inter alia in the event that the Company fails to
repay any of the amounts due to the Note holders according to this Amendment and
the Deed), then the waiver stated in this Section 19.2 shall be null and void.

 

20.Each of the obligations of the Company, Medley Small Business Fund, and
Medley SLF under this Amendment or its Annexes, shall be regarded as material
obligations under the Deed. Without derogating from the above said, and for the
avoidance of doubt, if the Company, Medley Small Business Fund, or Medley SLF
fails to pay any amount under this Amendment, such failure shall be regarded as
a failure to pay an amount under the Deed and in such case the Trustee and the
Noteholders shall be entitled to accelerate the full balance of the amount due
to the Noteholders according to Section 10.1.1 of the Deed.

 

21.For the avoidance of doubt, it is clarified that the Trustee is not subject
to and will not be subject to an obligation to examine, and in practice the
Trustee has not examined and will not examine, the need to provide securities to
secure the payments to the Noteholders. The Trustee was not asked to conduct,
and the Trustee did not conduct in practice and will not conduct, a financial,
accounting, or legal due diligence as to the state of the Company’s, Medley
Small Business Fund’s, and Medley SLF’s business.

 

11

 

 

22.Except as expressly amended herein, all other terms and conditions set forth
in the Deed shall remain in full force and effect. In case of a conflict between
the provisions of the Amendment and the provisions of the Deed or any other
applicable document with respect to the Deed, the provisions of this Amendment
shall prevail. For the avoidance of doubt, Section 30 of the Deed shall apply to
this Amendment, provided however, that notwithstanding anything to the contrary
set forth in Section 30 of the Deed, the Medley Small Business Fund Guaranty,
the Medley SLF Guaranty, the Medley Small Business Fund Security Agreement, and
the Medley SLF Security Agreement shall be governed by New York law and the
Trustee shall have the right to enforce such agreements and all of its rights
and remedies against Medley Small Business Fund, Medley SLF, the Medley Small
Business Fund Assets, and the Medley SLF Assets in accordance with New York law
and/or in any court of competent jurisdiction.

 

23.For the avoidance of doubt the Company’s address in Israel for purposes of
service of process is 98 Yigal Alon Street, Tel Aviv 6789141 c/o Goldfarb
Seligman & Co. Law Offices.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

12

 

 

IN WITNESS WHEREOF. the parties hereto have caused this Amendment to be duly
executed on August 12, 2019.

 

Medley Capital Corporation   Mishmeret Trust Company Ltd       By: /s/ Richard
T. Allorto, Jr.   By: /s/ Rami Katzav   Richard T. Allorto, Jr.     Rami Katzav
  Chief Financial Officer     Vice President

 

Medley Capital Corporation   Mishmeret Trust Company Ltd I the undersigned,
Nathan Bryce, Esq., hereby confirm that this Deed of Trust was signed by Richard
T. Allorto, Jr., and that his signature binds Medley Capital Corporation (the
“Company”), in all respects.   I the undersigned, Adv. Shlomy Ilany hereby
confirm that this Deed of Trust was signed by Rami Katzav, and that their
signatures bind Mishmeret Trust Company Ltd. (the “Trustee”), in all respects.  
      /s/ Nathan Bryce      /s/ Shlomy Ilany   Nathan Bryce, Esq.     Shlomy
Ilany, Adv.           Medley Small Business Fund, LP                 By: /s/
Richard T. Allorto, Jr.          Richard T. Allorto, Jr.         Chief Financial
Officer      

 

Medley Small Business Fund, LP   I the undersigned, Nathan Bryce, Esq., hereby
confirm that this Deed of Trust was signed by Richard T. Allorto, Jr., and that
his signature binds Medley Small Business Fund, LP, in all respects.         /s/
Nathan Bryce     Nathan Bryce, Esq.         Medley SLF Funding I LLC         By:
/s/ Richard T. Allorto, Jr.     Richard T. Allorto, Jr.     Chief Financial
Officer  

  

Medley SLF Funding I LLC   I the undersigned, Nathan Bryce, Esq., hereby confirm
that this Deed of Trust was signed by Richard T. Allorto, Jr., and that his
signature binds Medley SLF Funding I LLC, in all respects.         /s/ Nathan
Bryce     Nathan Bryce, Esq.  

 

13

 

 

Annex A

 

Amortization Schedule

 

A-1

 

 

Annex A

 

Amortization Schedule

 

Payment (% of the original principal of the Notes)  Date of payment 12.5%  The
Effective Date 12.5%  30/09/2019 12.5%  31/12/2019 12.5%  31/03/2020 12.5% 
30/06/2020 12.5%  30/09/2020 12.5%  31/12/2020 12.5%  31/01/2021 100%  Total

 

A-2

 

 

Annex B

 

Medley Small Business Fund Guaranty

 

B-1

 

 

FINAL

 

 

 

Guaranty Agreement

 

By

 

Medley Small Business Fund, LP,

 

as Guarantor

 

and

 

MISHMERET TRUST COMPANY LTD.,

as Trustee

 

___________________________

  

Dated as of July 3, 2019

 

 

 

 

B-2

 

 

Table of Contents

 

Section   Page       Section 1. Guaranty; Limitation of Liability B-4      
Section 2. Guaranty Absolute B-5       Section 3. Waivers and Acknowledgments
B-6       Section 4. Subrogation B-7       Section 5. Payments Free and Clear of
Taxes, Etc. B-8       Section 6. Representations and Warranties B-8      
Section 7. Covenants B-8       Section 8. Amendments, Guaranty Supplements, Etc
B-8       Section 9. No Waiver; Remedies B-8       Section 10. Right of Setoff
B-8       Section 11. Subordination B-9       Section 12. Continuing Guaranty;
Assignments under the Credit Agreement B-9       Section 13. Execution in
Counterparts B-10       Section 14. Governing Law B-10       Section 15.
Submission to Jurisdiction; Waivers; Etc B-10       Section 16. Waiver of Jury
Trial B-10       Exhibit A - Guaranty Supplement  

 

B-3

 

 

Guaranty Agreement

 

GUARANTY AGREEMENT (this “Agreement”) dated as of July 3, 2019, is made between
MEDLEY SMALL BUSINESS FUND, LP, a Delaware limited partnership (the “Guarantor”)
and MISHMERET TRUST COMPANY LTD., a company limited by shares and incorporated
in in Israel under the Companies Law, 5759-1999 (the “Trustee”).

 

WHEREAS, reference is made to that certain Deed of Trust, dated as of January
23, 2018 (as amended, restated, amended and restated, extended, supplemented or
otherwise modified from time to time, the “Deed”) between Medly Capital
Corporation, a business development company incorporated under the laws of the
State of Delaware (the “Company”) and the Trustee;

 

WHEREAS, further reference is made to that certain Amendment to Deed of Trust
(the “Amendment”), dated as of July 3, 2019 between the Company and the Trustee;

 

WHEREAS, the Guarantor and the Trustee have entered into a Security Agreement
(the “Security Agreement”) dated as of the date hereof. Certain capitalized
terms used herein shall have the meanings ascribed to such terms in the Security
Agreement; and

 

WHEREAS, this Agreement is required by the terms of the Amendment.

 

NOW, THEREFORE, in consideration of the premises and in order to induce the
Trustee to enter into the Amendment, the Guarantor hereby agrees as follows:

 

Section 1. Guaranty; Limitation of Liability. (a) The Guarantor hereby
absolutely, unconditionally and irrevocably guarantees, jointly and severally,
the punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all of the
Company’s obligations under the Deed and the Amendment (the “Obligations”), and
agrees, to pay any and all costs and expenses (including, without limitation,
reasonable and documented fees and expenses of counsel for the Trustee) incurred
by the Trustee in enforcing any rights under this Agreement, the Deed and the
Amendment (collectively, the “Guaranteed Obligations”). Without limiting the
generality of the foregoing, the Guarantor’s liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
the Company to the Trustee under or in respect of the Deed and the Amendment but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Company. For
the avoidance of doubt, the Guarantor shall not be liable for more than the
Guaranteed Obligations

 

(b) The Guarantor, and by its acceptance of this Agreement, the Trustee, hereby
confirms that it is the intention of all such Persons that this Agreement and
the Guaranteed Obligations of the Guarantor hereunder not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law (as hereinafter
defined), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar foreign, federal or state law to the extent applicable to
this Agreement and the Guaranteed Obligations of the Guarantor hereunder. To
effectuate the foregoing intention, the Trustee and the Guarantor hereby
irrevocably agree that the Guaranteed Obligations of the Guarantor under this
Agreement at any time shall be limited to the maximum amount as will result in
the Guaranteed Obligations of the Guarantor under this Agreement not
constituting a fraudulent transfer or conveyance under applicable foreign,
federal or state law. For purposes hereof, “Bankruptcy Law” means the Bankruptcy
Code of the United States, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, fraudulent transfer, reorganization, or similar debtor
relief Laws of the United States or any similar foreign, federal or state law
for the relief of debtors from time to time in effect and affecting the rights
of creditors generally.

 

B-4

 

 

Section 2. Guaranty Absolute. The Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Deed and
the Amendment, regardless of any applicable law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Trustee with respect thereto. The obligations of the Guarantor
under or in respect of this Agreement are independent of the Guaranteed
Obligations or any other obligations of the Company under or in respect of the
Deed and Amendment, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Agreement, irrespective of
whether any action is brought against Company or whether the Company is joined
in any such action or actions. This Agreement is a guaranty of payment when due,
and not of collection. The liability of the Guarantor under this Agreement shall
be irrevocable, absolute and unconditional irrespective of, and the Guarantor
hereby irrevocably waives (to the extent permitted by applicable Laws) any
defenses it may now have or hereafter acquire in any way relating to, any or all
of the following:

 

(a) any lack of validity or enforceability of the Deed, the Amendment or any
agreement or instrument relating thereto;

 

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other obligations of Company
under or in respect of the Deed or the Amendment, or any other amendment or
waiver of or any consent to departure from Deed or the Amendment, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to Collateral or otherwise;

 

(c) any taking, exchange, release or non-perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of, or consent
to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

 

(d) any manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral or any other collateral for all or any of
the Guaranteed Obligations or any other obligations of the Company under the
Deed, the Amendment or any other assets of any Loan Party or any of its
Subsidiaries;

 

(e) any change, restructuring or termination of the corporate structure or
existence of Company;

 

B-5

 

 

(f) any failure of the Trustee to disclose to the Company any information
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company now or hereafter known to
the Trustee (the Guarantor waiving any duty on the part of the Trustee to
disclose such information);

 

(g) the failure of any other Person to execute or deliver this Agreement or any
other guaranty or agreement or the release or reduction of liability of the
Guarantor or other guarantor or surety with respect to the Guaranteed
Obligations; or

 

(h) any other circumstance or any existence of or reliance on any representation
by the Trustee that might otherwise constitute a defense available to, or a
discharge of, the Company or any other guarantor or surety, other than
irrevocable payment in full in cash of the Guaranteed Obligations (other than
(A) contingent indemnification and reimbursement obligations not yet accrued and
payable and (B) any other obligation (including a guarantee) that is contingent
in nature and that has not yet accrued).

 

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations is rescinded
or must otherwise be returned by the Trustee or any other Person upon the
insolvency, bankruptcy or reorganization of the Company, all as though such
payment had not been made.

 

Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby unconditionally
and irrevocably waives, to the extent permitted by applicable Laws, promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Agreement and any
requirement that the Company protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against the
Company or any other Person or any Collateral.

 

(b) The Guarantor hereby unconditionally and irrevocably waives any right to
revoke this Agreement and acknowledges that this Agreement is continuing in
nature and applies to all Guaranteed Obligations, whether existing now or in the
future.

 

(c) The Guarantor hereby unconditionally and irrevocably waives, to the extent
permitted by applicable Laws, (i) any defense arising by reason of any claim or
defense based upon an election of remedies by the Trustee that in any manner
impairs, reduces, releases or otherwise adversely affects the subrogation,
reimbursement, exoneration, contribution or indemnification rights of the
Guarantor or other rights of the Guarantor to proceed against any the Company,
any other guarantor or any other Person or any Collateral and (ii) any defense
based on any right of setoff or counterclaim against or in respect of the
Guaranteed Obligations of the Guarantor hereunder.

 

(d) The Guarantor acknowledges that the Trustee may, without notice to or demand
upon the Guarantor and without affecting the liability of the Guarantor under
this Agreement, foreclose under any mortgage by nonjudicial sale (to the extent
such sale is permitted by applicable Laws), and the Guarantor hereby waives, to
the extent permitted by applicable Laws, any defense to the recovery by the
Trustee against the Guarantor of any deficiency after such nonjudicial sale and
any defense or benefits that may be afforded by applicable Laws.

 

B-6

 

 

(e) The Guarantor hereby unconditionally and irrevocably waives any duty on the
part of the Trustee to disclose to the Guarantor any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company now or hereafter known by
the Trustee.

 

(f) The Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by Deed and the
Amendment and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.

 

Section 4. Subrogation. Until the Guaranteed Obligations are indefeasibly
satisfied in full (other than contingent indemnification and reimbursement
obligations not yet accrued and payable), the Guarantor hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now have or
hereafter acquire against the Company or any other insider guarantor that arise
from the existence, payment, performance or enforcement of the Guarantor’s
Guaranteed Obligations under or in respect of this Agreement or the Deed or the
Amendment, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Trustee against the Company or any
other insider guarantor or any Collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company or any other
insider guarantor, directly or indirectly, in cash or other property or by
setoff or in any other manner, payment or security on account of such claim,
remedy or right, unless and until the occurrence of the Designated Date (as
hereinafter defined). If any amount shall be paid to the Guarantor in violation
of the immediately preceding sentence at any time prior to the payment in full
in cash of the Guaranteed Obligations (other than contingent indemnification and
reimbursement obligations not yet accrued and payable), such amount shall be
received and held in trust by the Guarantor for the benefit of the Trustee,
shall be segregated from other property and funds of the Guarantor and shall
forthwith be paid or delivered to the Trustee in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of the Deed or the Amendment, or to be held as Collateral for any
Guaranteed Obligations or other amounts payable under this Agreement thereafter
arising. If the Guarantor shall make payment to the Trustee of all or any part
of the Guaranteed Obligations and the Designated Date has occurred, the Trustee
will, at the Guarantor’s request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary or reasonably requested by the Guarantor to evidence the
transfer by subrogation to the Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by the Guarantor pursuant to this
Agreement. For purposes of this Agreement, “Designated Date” means the first
date to occur where all Guaranteed Obligations have been satisfied in full in
cash (other than contingent indemnification and reimbursement obligations not
yet accrued and payable).

 

B-7

 

 

Section 5. Payments Free and Clear of Taxes, Etc. Any and all payments by or on
account of any obligation of the Guarantor hereunder or under the Deed or the
Amendment shall be made free and clear of and without deduction or withholding
for any taxes.

 

Section 6. Representations and Warranties. The Guarantor hereby represents and
warrants that the Guarantor has, independently and without reliance upon Trustee
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and the
Security Agreement, and the Guarantor has established adequate means of
obtaining from the Company on a continuing basis information pertaining to, and
is now and on a continuing basis will be familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of
the Company.

 

Section 7. Covenants. The Guarantor covenants and agrees that, until the
Designated Date has occurred, the Guarantor will perform and observe all of the
terms, covenants and agreements set forth in this Agreement and the Security
Agreement on its part to be performed or observed or that the Company has agreed
in the Deed and the Amendment to cause the Guarantor to perform or observe.

 

Section 8. Amendments, Guaranty Supplements, Etc. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Trustee.

 

Section 9. No Waiver; Remedies. No failure on the part of the Trustee to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

 

Section 10. Right of Setoff. Upon the occurrence and during the continuance of
any Default, the Trustee is hereby authorized upon prior written notice to the
Guarantor at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Trustee to or for the credit or the account of the Guarantor
against any and all of the Guaranteed Obligations now or hereafter existing
under the this Agreement, irrespective of whether the Trustee shall have made
any demand under this Agreement or the Deed, the Amendment or the Security
Agreement and although such Guaranteed Obligations may be unmatured; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Trustee under this Section 10 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) that the Trustee may have.

 

B-8

 

 

Section 11. Subordination. The Guarantor hereby subordinates any and all debts,
liabilities and other obligations owed to the Guarantor by the Company, whether
incurred prior to or after the date hereof, (the “Subordinated Obligations”) to
the Guaranteed Obligations to the extent and in the manner hereinafter set forth
in this Section 11:

 

(a) Prohibited Payments, Etc. Unless the Trustee shall otherwise agree, the
Guarantor shall not demand, accept or take any action to collect any payment on
account of the Subordinated Obligations, other than the filing of proofs of
claim or other similar requirements to preserve its rights as a creditor.

 

(b) Prior Payment of Guaranteed Obligations. In any proceeding under any
Bankruptcy Law relating to the Company, the Guarantor agrees that the Trustee
shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (including all interest and expenses accruing after the commencement
of a proceeding under any Bankruptcy Law, whether or not constituting an allowed
claim in such proceeding (“Post Petition Interest”)) before the Guarantor
receives payment of any Subordinated Obligations.

 

(c) Turn-Over. After the occurrence and during the continuance of any Default
(including, without limitation, the commencement and continuation of any
proceeding under any Bankruptcy Law relating to the Company), the Guarantor
shall, if the Trustee so requests, collect, enforce and receive payments on
account of the Subordinated Obligations as trustee for the Trustee and deliver
such payments to the Trustee on account of the Guaranteed Obligations (including
all Post Petition Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the
liability of the Guarantor under the other provisions of this Agreement.

 

(d) Trustee Authorization. After the occurrence and during the continuance of
any Default (including, without limitation, the commencement and continuation of
any proceeding under any Bankruptcy Law relating to any other Loan Party), the
Trustee is authorized and empowered (but without any obligation to so do), (i)
in the name of the Guarantor, to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and to apply any amounts received thereon
to the Guaranteed Obligations (including any and all Post Petition Interest),
and (ii) to require the Guarantor (A) to collect and enforce, and to submit
claims in respect of, Subordinated Obligations and (B) to pay any amounts
received on such obligations to the Trustee for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

 

Section 12. Continuing Guaranty; Assignments under the Credit Agreement;
Termination of Guaranty. This Agreement is a continuing guaranty and shall (a)
remain in full force and effect until the Designated Date, (b) be binding upon
the Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Trustee and its successors, transferees and permitted
assigns. Without limiting the generality of clause (c) of the immediately
preceding sentence, the Trustee may assign or otherwise transfer all or any
portion of its rights and obligations under Deed to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Trustee herein or otherwise. The Guarantor shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Trustee. On the Designated Date, this Agreement
shall terminate automatically, and from and after the Designated Date, the
Trustee shall sign any agreement, letter or certification as the Guarantor shall
reasonably request to further evidence such termination, all of which shall be
at the Guarantor’s expense.

 

B-9

 

 

Section 13. Execution in Counterparts. This Agreement and each amendment, waiver
and consent with respect hereto may be executed in any number of counterparts
and by different parties thereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile or an electronic transmission of a
.pdf copy thereof shall be effective as delivery of an original executed
counterpart of this Agreement.

 

Section 14. Governing Law . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW), PROVIDED HOWEVER, THAT THE OBLIGATIONS (AS DEFINED
HEREIN) AND ANY DEFAULT BY THE COMPANY UNDER THE DEED, SHALL BE GOVERNED BY
ISRAELI LAW AS SET FORTH IN THE DEED.

 

Section 15. Submission to Jurisdiction; Waivers; Etc. Each party hereto hereby
irrevocably and unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement or for recognition and enforcement of any judgment in
respect thereof, to the exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the Southern
District of New York, and the appellate courts of any of them;

 

(b) consents that any such action or proceeding may be brought in any court
described in Section 15(a) and waives to the fullest extent permitted by
applicable Law any objection that it may now or hereafter have to the venue of
any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address or at such other address as may be permitted thereunder;

 

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding against any party hereto
or Trustee arising out of or relating to this Agreement, the Security Agreement,
the Deed or the Amendment any special, exemplary, indirect, punitive or
consequential damages (as opposed to direct or actual damages) (whether or not
the claim therefor is based on contract, tort or duty imposed by any applicable
legal requirement).

 

Section 16. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR FOR ANY COUNTERCLAIM THEREIN OR RELATING THERETO.

 

[Remainder of the Page Intentionally Left Blank; Signature pages follow.]

 

B-10

 

 

In Witness Whereof, Guarantor has caused this Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.

 

  Medley Small Business Fund, LP, as a Guarantor         By:     Name:  Brook
Taube   Title: Authorized Representtive

 

 

 

SIGNATURE PAGE

TO GUARANTY AGREEMENT

 

B-11

 

 

  Acknowledged and accepted:       MISHMERET TRUST COMPANY LTD., as Trustee    
    By:                   Name:      Title:  

 

 

 

SIGNATURE PAGE

TO GUARANTY AGREEMENT

 

B-12

 

 

Annex C

 

Medley SLF Guaranty

 

C-1

 

 

FINAL

 

 

 

 

GUARANTY AGREEMENT

 

By

 

MEDLEY SLF FUNDING I LLC,

 

as Guarantor

 

and

 

MISHMERET TRUST COMPANY LTD.,

as Trustee

  

_______________________________

   

Dated as of July 3, 2019

 

 

 

C-2

 

 

Table of Contents

 

Section   Page       Section 1. Guaranty; Limitation of Liability C-4      
Section 2. Guaranty Absolute C-5       Section 3. Waivers and Acknowledgments
C-6       Section 4. Subrogation C-7       Section 5. Payments Free and Clear of
Taxes, Etc. C-8       Section 6. Representations and Warranties C-8      
Section 7. Covenants C-8       Section 8. Amendments, Guaranty Supplements, Etc
C-8       Section 9. Notices, Etc. C-8       Section 10. No Waiver; Remedies C-8
      Section 11. Right of Setoff C-9       Section 12. Indemnification C-9    
  Section 13. Subordination C-10       Section 14. Continuing Guaranty;
Assignments under the Credit Agreement C-10       Section 15. Execution in
Counterparts C-10       Section 16. Governing Law; Jurisdiction; Waiver of Jury
Trial, Etc C-11       Exhibit A - Guaranty Supplement  

  

C-3

 

 

Guaranty Agreement

 

GUARANTY AGREEMENT (this “Agreement”) dated as of July 3, 2019, is made between
MEDLEY SLF FUNDING I LLC, a Delaware limited liability company (the “Guarantor”)
and MISHMERET TRUST COMPANY LTD., a company limited by shares and incorporated
in in Israel under the Companies Law, 5759-1999 (the “Trustee”).

 

WHEREAS, reference is made to that certain Deed of Trust, dated as of January
23, 2018 (as amended, restated, amended and restated, extended, supplemented or
otherwise modified from time to time, the “Deed”) between Medly Capital
Corporation, a business development company incorporated under the laws of the
State of Delaware (the “Company”) and the Trustee;

 

WHEREAS, further reference is made to that certain Amendment to Deed of Trust
(the “Amendment”), dated as of July 3, 2019 between the Company and the Trustee;

 

WHEREAS, the Guarantor and the Trustee have entered into a Security Agreement
(the “Security Agreement”) dated as of the date hereof. Certain capitalized
terms used herein shall have the meanings ascribed to such terms in the Security
Agreement; and

 

WHEREAS, this Agreement is required by the terms of the Amendment.

 

NOW, THEREFORE, in consideration of the premises and in order to induce the
Trustee to enter into the Amendment, the Guarantor hereby agrees as follows:

 

Section 1. Guaranty; Limitation of Liability. (a) The Guarantor hereby
absolutely, unconditionally and irrevocably guarantees, jointly and severally,
the punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all of the
Company’s obligations under the Deed and the Amendment (the “Obligations”), and
agrees, to pay any and all costs and expenses (including, without limitation,
reasonable and documented fees and expenses of counsel for the Trustee) incurred
by the Trustee in enforcing any rights under this Agreement, the Deed and the
Amendment (collectively, the “Guaranteed Obligations”). Without limiting the
generality of the foregoing, the Guarantor’s liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
the Company to the Trustee under or in respect of the Deed and the Amendment but
for the fact that they are unenforceable or not allowable due to the existence
of a bankruptcy, reorganization or similar proceeding involving the Company. For
the avoidance of doubt, the Guarantor shall not be liable for more than the
Guaranteed Obligations

 

(b) The Guarantor, and by its acceptance of this Agreement, the Trustee, hereby
confirms that it is the intention of all such Persons that this Agreement and
the Guaranteed Obligations of the Guarantor hereunder not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law (as hereinafter
defined), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer
Act or any similar foreign, federal or state law to the extent applicable to
this Agreement and the Guaranteed Obligations of the Guarantor hereunder. To
effectuate the foregoing intention, the Trustee and the Guarantor hereby
irrevocably agree that the Guaranteed Obligations of the Guarantor under this
Agreement at any time shall be limited to the maximum amount as will result in
the Guaranteed Obligations of the Guarantor under this Agreement not
constituting a fraudulent transfer or conveyance under applicable foreign,
federal or state law. For purposes hereof, “Bankruptcy Law” means the Bankruptcy
Code of the United States, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, fraudulent transfer, reorganization, or similar debtor
relief Laws of the United States or any similar foreign, federal or state law
for the relief of debtors from time to time in effect and affecting the rights
of creditors generally.

 

C-4

 

 

Section 2. Guaranty Absolute. The Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of the Deed and
the Amendment, regardless of any applicable law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Trustee with respect thereto. The obligations of the Guarantor
under or in respect of this Agreement are independent of the Guaranteed
Obligations or any other obligations of the Company under or in respect of the
Deed and Amendment, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Agreement, irrespective of
whether any action is brought against Company or whether the Company is joined
in any such action or actions. This Agreement is a guaranty of payment when due,
and not of collection. The liability of the Guarantor under this Agreement shall
be irrevocable, absolute and unconditional irrespective of, and the Guarantor
hereby irrevocably waives (to the extent permitted by applicable Laws) any
defenses it may now have or hereafter acquire in any way relating to, any or all
of the following:

 

(a) any lack of validity or enforceability of the Deed, the Amendment or any
agreement or instrument relating thereto;

 

(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Guaranteed Obligations or any other obligations of Company
under or in respect of the Deed or the Amendment, or any other amendment or
waiver of or any consent to departure from Deed or the Amendment, including,
without limitation, any increase in the Guaranteed Obligations resulting from
the extension of additional credit to Collateral or otherwise;

 

(c) any taking, exchange, release or non-perfection of any Collateral or any
other collateral, or any taking, release or amendment or waiver of, or consent
to departure from, any other guaranty, for all or any of the Guaranteed
Obligations;

 

(d) any manner of application of Collateral or any other collateral, or proceeds
thereof, to all or any of the Guaranteed Obligations, or any manner of sale or
other disposition of any Collateral or any other collateral for all or any of
the Guaranteed Obligations or any other obligations of the Company under the
Deed, the Amendment or any other assets of any Loan Party or any of its
Subsidiaries;

 

(e) any change, restructuring or termination of the corporate structure or
existence of Company;

 

C-5

 

 

(f) any failure of the Trustee to disclose to the Company any information
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company now or hereafter known to
the Trustee (the Guarantor waiving any duty on the part of the Trustee to
disclose such information);

 

(g) the failure of any other Person to execute or deliver this Agreement or any
other guaranty or agreement or the release or reduction of liability of the
Guarantor or other guarantor or surety with respect to the Guaranteed
Obligations; or

 

(h) any other circumstance or any existence of or reliance on any representation
by the Trustee that might otherwise constitute a defense available to, or a
discharge of, the Company or any other guarantor or surety, other than
irrevocable payment in full in cash of the Guaranteed Obligations (other than
(A) contingent indemnification and reimbursement obligations not yet accrued and
payable and (B) any other obligation (including a guarantee) that is contingent
in nature and that has not yet accrued).

 

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Guaranteed Obligations that is made
on or prior to the Designated Date is rescinded or must otherwise be returned by
the Trustee or any other Person upon the insolvency, bankruptcy or
reorganization of the Company, all as though such payment had not been made.

 

Section 3. Waivers and Acknowledgments. (a) The Guarantor hereby unconditionally
and irrevocably waives, to the extent permitted by applicable Laws, promptness,
diligence, notice of acceptance, presentment, demand for performance, notice of
nonperformance, default, acceleration, protest or dishonor and any other notice
with respect to any of the Guaranteed Obligations and this Agreement and any
requirement that the Company protect, secure, perfect or insure any Lien or any
property subject thereto or exhaust any right or take any action against the
Company or any other Person or any Collateral.

 

(b) Prior to the termination of this Agreement pursuant to Section 12, the
Guarantor hereby unconditionally and irrevocably waives any right to revoke this
Agreement and acknowledges that this Agreement is continuing in nature and
applies to all Guaranteed Obligations, whether existing now or in the future.

 

(c) The Guarantor hereby unconditionally and irrevocably waives, to the extent
permitted by applicable Laws, (i) any defense arising by reason of any claim or
defense based upon an election of remedies by the Trustee that in any manner
impairs, reduces, releases or otherwise adversely affects the subrogation,
reimbursement, exoneration, contribution or indemnification rights of the
Guarantor or other rights of the Guarantor to proceed against any the Company,
any other guarantor or any other Person or any Collateral and (ii) any defense
based on any right of setoff or counterclaim against or in respect of the
Guaranteed Obligations of the Guarantor hereunder.

 

(d) The Guarantor acknowledges that the Trustee may, without notice to or demand
upon the Guarantor and without affecting the liability of the Guarantor under
this Agreement, foreclose under any mortgage by nonjudicial sale (to the extent
such sale is permitted by applicable Laws), and the Guarantor hereby waives, to
the extent permitted by applicable Laws, any defense to the recovery by the
Trustee against the Guarantor of any deficiency after such nonjudicial sale and
any defense or benefits that may be afforded by applicable Laws.

 

C-6

 

 

(e) The Guarantor hereby unconditionally and irrevocably waives any duty on the
part of the Trustee to disclose to the Guarantor any matter, fact or thing
relating to the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Company now or hereafter known by
the Trustee.

 

(f) The Guarantor acknowledges that it will receive substantial direct and
indirect benefits from the financing arrangements contemplated by Deed and the
Amendment and that the waivers set forth in Section 2 and this Section 3 are
knowingly made in contemplation of such benefits.

 

Section 4. Subrogation. Until the Guaranteed Obligations are indefeasibly
satisfied in full (other than contingent indemnification and reimbursement
obligations not yet accrued and payable), the Guarantor hereby unconditionally
and irrevocably agrees not to exercise any rights that it may now have or
hereafter acquire against the Company or any other insider guarantor that arise
from the existence, payment, performance or enforcement of the Guarantor’s
Guaranteed Obligations under or in respect of this Agreement or the Deed or the
Amendment, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Trustee against the Company or any
other insider guarantor or any Collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law, including,
without limitation, the right to take or receive from the Company or any other
insider guarantor, directly or indirectly, in cash or other property or by
setoff or in any other manner, payment or security on account of such claim,
remedy or right, unless and until the occurrence of the Designated Date (as
hereinafter defined). If any amount shall be paid to the Guarantor in violation
of the immediately preceding sentence at any time prior to the payment in full
in cash of the Guaranteed Obligations (other than contingent indemnification and
reimbursement obligations not yet accrued and payable), such amount shall be
received and held in trust by the Guarantor for the benefit of the Trustee,
shall be segregated from other property and funds of the Guarantor and shall
forthwith be paid or delivered to the Trustee in the same form as so received
(with any necessary endorsement or assignment) to be credited and applied to the
Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms of the Deed or the Amendment, or to be held as Collateral for any
Guaranteed Obligations or other amounts payable under this Agreement thereafter
arising. If the Guarantor shall make payment to the Trustee of all or any part
of the Guaranteed Obligations and the Designated Date has occurred, the Trustee
will, at the Guarantor’s request and expense, execute and deliver to the
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary or reasonably requested by the Guarantor to evidence the
transfer by subrogation to the Guarantor of an interest in the Guaranteed
Obligations resulting from such payment made by the Guarantor pursuant to this
Agreement. For purposes of this Agreement, “Designated Date” means the earlier
to occur of (a) the date of closing of the Merger (as defined in the Amendment),
but only to the extent the Trustee had not yet taken any action to effect any
remedies against the Guarantor hereunder prior to such date (the aforesaid shall
not derogate from the Company’s right to object in any way whatsoever to the
Trustee’s effecting such remedies, if such right exists) and (b) first date to
occur where all Guaranteed Obligations have been satisfied in full in cash
(other than contingent indemnification and reimbursement obligations not yet
accrued and payable).

 

C-7

 

 

Section 5. Payments Free and Clear of Taxes, Etc. Any and all payments by or on
account of any obligation of the Guarantor hereunder or under the Deed or the
Amendment shall be made free and clear of and without deduction or withholding
for any taxes.

 

Section 6. Representations and Warranties. The Guarantor hereby represents and
warrants that the Guarantor has, independently and without reliance upon Trustee
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and the
Security Agreement, and the Guarantor has established adequate means of
obtaining from the Company on a continuing basis information pertaining to, and
is now and on a continuing basis will be familiar with, the business, condition
(financial or otherwise), operations, performance, properties and prospects of
the Company.

 

Section 7. Covenants. The Guarantor covenants and agrees that, until the
Designated Date has occurred, the Guarantor will perform and observe all of the
terms, covenants and agreements set forth in this Agreement and the Security
Agreement on its part to be performed or observed or that the Company has agreed
in the Deed and the Amendment to cause the Guarantor to perform or observe.

 

Section 8. Amendments, Guaranty Supplements, Etc. No amendment or waiver of any
provision of this Agreement and no consent to any departure by the Guarantor
therefrom shall in any event be effective unless the same shall be in writing
and signed by the Trustee.

 

Section 9. No Waiver; Remedies. No failure on the part of the Trustee to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

 

Section 10. Right of Setoff. Upon the occurrence and during the continuance of
any Default, the Trustee is hereby authorized upon prior written notice to the
Guarantor at any time and from time to time, to the fullest extent permitted by
applicable law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Trustee to or for the credit or the account of the Guarantor
against any and all of the Guaranteed Obligations now or hereafter existing
under the this Agreement, irrespective of whether the Trustee shall have made
any demand under this Agreement or the Deed, the Amendment or the Security
Agreement and although such Guaranteed Obligations may be unmatured; provided,
however, that the failure to give such notice shall not affect the validity of
such setoff and application. The rights of the Trustee under this Section 10 are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) that the Trustee may have.

 

C-8

 

 

Section 11. Subordination. The Guarantor hereby subordinates any and all debts,
liabilities and other obligations owed to the Guarantor by the Company, whether
incurred prior to or after the date hereof, (the “Subordinated Obligations”) to
the Guaranteed Obligations to the extent and in the manner hereinafter set forth
in this Section 11:

 

(a) Prohibited Payments, Etc. Unless the Trustee shall otherwise agree, the
Guarantor shall not demand, accept or take any action to collect any payment on
account of the Subordinated Obligations, other than the filing of proofs of
claim or other similar requirements to preserve its rights as a creditor.

 

(b) Prior Payment of Guaranteed Obligations. In any proceeding under any
Bankruptcy Law relating to the Company, the Guarantor agrees that the Trustee
shall be entitled to receive payment in full in cash of all Guaranteed
Obligations (including all interest and expenses accruing after the commencement
of a proceeding under any Bankruptcy Law, whether or not constituting an allowed
claim in such proceeding (“Post Petition Interest”)) before the Guarantor
receives payment of any Subordinated Obligations.

 

(c) Turn-Over. After the occurrence and during the continuance of any Default
(including, without limitation, the commencement and continuation of any
proceeding under any Bankruptcy Law relating to the Company), the Guarantor
shall, if the Trustee so requests, collect, enforce and receive payments on
account of the Subordinated Obligations as trustee for the Trustee and deliver
such payments to the Trustee on account of the Guaranteed Obligations (including
all Post Petition Interest), together with any necessary endorsements or other
instruments of transfer, but without reducing or affecting in any manner the
liability of the Guarantor under the other provisions of this Agreement.

 

(d) Trustee Authorization. After the occurrence and during the continuance of
any Default (including, without limitation, the commencement and continuation of
any proceeding under any Bankruptcy Law relating to any other Loan Party), the
Trustee is authorized and empowered (but without any obligation to so do), (i)
in the name of the Guarantor, to collect and enforce, and to submit claims in
respect of, Subordinated Obligations and to apply any amounts received thereon
to the Guaranteed Obligations (including any and all Post Petition Interest),
and (ii) to require the Guarantor (A) to collect and enforce, and to submit
claims in respect of, Subordinated Obligations and (B) to pay any amounts
received on such obligations to the Trustee for application to the Guaranteed
Obligations (including any and all Post Petition Interest).

 

Section 12. Continuing Guaranty; Assignments under the Credit Agreement;
Termination of Guaranty. This Agreement is a continuing guaranty and shall (a)
remain in full force and effect until the Designated Date, (b) be binding upon
the Guarantor, its successors and assigns and (c) inure to the benefit of and be
enforceable by the Trustee and its successors, transferees and permitted
assigns. Without limiting the generality of clause (c) of the immediately
preceding sentence, the Trustee may assign or otherwise transfer all or any
portion of its rights and obligations under Deed to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Trustee herein or otherwise. The Guarantor shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of the Trustee. On the Designated Date, this Agreement
shall terminate automatically, and from and after the Designated Date, the
Trustee shall sign any agreement, letter or certification as the Guarantor shall
reasonably request to further evidence such termination, all of which shall be
at the Guarantor’s expense.

 

C-9

 

 

Section 13. Execution in Counterparts. This Agreement and each amendment, waiver
and consent with respect hereto may be executed in any number of counterparts
and by different parties thereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile or an electronic transmission of a
.pdf copy thereof shall be effective as delivery of an original executed
counterpart of this Agreement.

 

Section 14. Governing Law . THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF (EXCEPT FOR SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW), PROVIDED HOWEVER, THAT THE OBLIGATIONS (AS DEFINED
HEREIN) AND ANY DEFAULT BY THE COMPANY UNDER THE DEED, SHALL BE GOVERNED BY
ISRAELI LAW AS SET FORTH IN THE DEED.

 

Section 15. Submission to Jurisdiction; Waivers; Etc. Each party hereto hereby
irrevocably and unconditionally:

 

(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement or for recognition and enforcement of any judgment in
respect thereof, to the exclusive general jurisdiction of the courts of the
State of New York, the courts of the United States of America for the Southern
District of New York, and the appellate courts of any of them;

 

(b) consents that any such action or proceeding may be brought in any court
described in Section 15(a) and waives to the fullest extent permitted by
applicable Law any objection that it may now or hereafter have to the venue of
any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;

 

(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party at its
address or at such other address as may be permitted thereunder;

 

C-10

 

 

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law; and

 

(e) waives, to the maximum extent not prohibited by law, any right it may have
to claim or recover in any legal action or proceeding against any party hereto
or Trustee arising out of or relating to this Agreement, the Security Agreement,
the Deed or the Amendment any special, exemplary, indirect, punitive or
consequential damages (as opposed to direct or actual damages) (whether or not
the claim therefor is based on contract, tort or duty imposed by any applicable
legal requirement).

 

Section 16. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR FOR ANY COUNTERCLAIM THEREIN OR RELATING THERETO.

 

[Remainder of the Page Intentionally Left Blank; Signature pages follow.]

 

C-11

 

 

In Witness Whereof, Guarantor has caused this Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date first above
written.

 

  MEDLEY SLF FUNDING I LLC, as a Guarantor       By:     Name: Brook Taube  
Title: Authorized Representative

 

 

 

SIGNATURE PAGE

TO GUARANTY AGREEMENT

 

C-12

 

 

  Acknowledged and accepted:       MISHMERET TRUST COMPANY LTD., as Trustee    
    By:                      Name:      Title:  

 

 

 

 

SIGNATURE PAGE

TO GUARANTY AGREEMENT

 

C-13

 

 

Annex D

 

Medley Small Business Fund Security Agreement

 

D-1

 

 

FINAL

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT, dated as of July 3, 2019 (this “Agreement”), is made
between MEDLEY SMALL BUSINESS FUND, LP, a Delaware limited partnership (the
“Obligor”) and MISHMERET TRUST COMPANY LTD. , a company limited by shares and
incorporated in in Israel under the Companies Law, 5759-1999 (the “Trustee” ).

 

RECITALS

 

WHEREAS, reference is made to that certain Deed of Trust, dated as of January
23, 2018 (as amended, restated, amended and restated, extended, supplemented or
otherwise modified from time to time, the “Deed”) between Medley Capital
Corporation, a business development company incorporated under the laws of the
State of Delaware (the “Company”) and the Trustee;

 

WHEREAS, further reference is made to that certain Amendment to Deed of Trust
(the “Amendment”), dated as of July 3, 2019 between the Company and the Trustee;
and

 

WHEREAS, this Agreement is required by the terms of the Amendment.

 

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Definitions.

 

(a) The following terms shall have the meanings set forth in the Uniform
Commercial Code of the State of New York (the “UCC”): Accession, Account,
Adverse Claim, Certificated Security, Chattel Paper, Consumer Goods, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Financial Asset,
Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Company
Security, Investment Property, Letter-of-Credit Right, Money, Proceeds,
Securities Account, Securities Intermediary, Security, Security Entitlement,
Software, Supporting Obligation and Tangible Chattel Paper.

 

(b) As used herein, the following terms shall have the meanings set forth below:

 

“Collateral” has the meaning provided in Section 2 hereof.

 

“Copyright License” means any written agreement, naming the Obligor as licensor,
granting any right under any Copyright.

 

“Copyrights” means (i) all copyrights registered in the United States in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state thereof or
political subdivision thereof, and (ii) all renewals thereof.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect.

 

D-2

 

 

“Default” means any of the following: (1) the occurrence of any of the events
set forth in Section 10 of the Deed, as modified by Section 19 of the Amendment
with respect to the Company, Obligor or Medley SLF Funding I LLC (“Medley SLF”);
(2) the Obligor or Medley SLF is in fundamental breach of the terms of the
Guaranty, the guaranty agreement entered into by Medley SLF on the date hereof
(the “Medley SLF Guaranty”), this Agreement or the security agreement entered
into by Medley SLF on the date hereof, (the “Medley SLF Security Agreement”) or
such applicable party does not fulfill any of its material obligations in the
framework of any of them, the Trustee provides written notice to the Obligor to
remedy the breach and the Obligor fails to remedy such breach within seven (7)
Business Days (as defined in the Deed) from the date such notice of breach was
received by the Obligor (provided that to the extent such breach is subject to a
notice period under Section 10 of the Deed, as modified by the Amendment, such
notice periods shall run concurrently); or (3) any material representations of
the Obligor or Medley SLF in the Guaranty or the Medley SLF Guaranty, this
Agreement or the Medley SLF Security Agreement, as applicable, is not correct
when made, the Trustee provides notice to the Obligor to remedy the
misrepresentation, and the Obligor fails to remedy such misrepresentation within
fourteen (14) days from the date notice of such misrepresentation was received
by the Obligor (provided that to the extent such breach is subject to a notice
period under Section 10 of the Deed, as modified by the Amendment, such notice
periods shall run concurrently).

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

“Guaranty” means that certain Guaranty, dated as of the date hereof, between the
Obligor and the Trustee, as such Guaranty may be amended, restated, amended and
restated, extended, supplemented or otherwise modified from time to time.

 

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, binding guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including any binding
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or otherwise), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property and any financing lease having
substantially the same economic effect as any of the foregoing).

 

“Patent License” means any agreement, whether written or oral, providing for the
grant by or to the Obligor of any right under any Patent, including any right to
manufacture, use or sell any invention covered by a Patent.

 

“Patents” means (i) all letters patent of the United States or any other country
or any political subdivision thereof and all reissues and extensions thereof,
and (ii) all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part thereof.

 

D-3

 

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Secured Obligations” means: (a) the prompt and complete payment when due
(whether by acceleration or otherwise) of all monies guaranteed (including
interest and charges thereon) by the Obligor to the Trustee under and pursuant
to the Guaranty; and (b) any and all other liabilities and obligations of every
name and nature whatsoever of the Obligor to the Trustee under the Guaranty
and/or any other agreement or instrument executed and delivered pursuant thereto
(including, for the avoidance of doubt, the Company’s obligations pursuant to
the Deed and the Amendment guaranteed hereunder) whether such liabilities and
obligations be direct or indirect, absolute or contingent, now existing or
hereafter arising or acquired, due or to become due, whether for principal,
interest (including interest which, but for the filing of a petition in
bankruptcy with respect to the Obligor, would have accrued on any Secured
Obligation, whether or not a claim is allowed against the Obligor for such
interest in the related bankruptcy proceeding), fees, expenses, indemnification
or otherwise.

 

“Trademark License” means any agreement, whether written or oral, providing for
the grant by or to Obligor of any right to use any Trademark.

 

“Trademarks” means (a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any political
subdivision thereof, or otherwise and (b) all renewals thereof.

 

“Work” means any work that is subject to copyright protection pursuant to Title
17 of the United States Code.

 

2. Grant of Security Interest in the Collateral. To secure the prompt payment
and performance in full when due, whether by lapse of time, acceleration,
mandatory prepayment or otherwise, of the Secured Obligations, the Obligor
hereby grants, pledges and assigns to the Trustee, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of the Obligor in and to all of the following, whether now owned or
existing or owned, acquired, or arising hereafter (collectively, the
“Collateral”):

 

(a)all Accounts;

 

(b)all Chattel Paper;

 

(c)all Copyrights;

 

(d)all Copyright Licenses;

 

(e)all Deposit Accounts;

 

(f)all Documents;

 

D-4

 

 

(g)all Equipment;

 

(h)all Fixtures;

 

(i)all General Intangibles;

 

(j)all Instruments;

 

(k)all Inventory;

 

(l)all Investment Property;

 

(m)all Letter-of-Credit Rights;

 

(n)all Money;

 

(o)all Patents;

 

(p)all Patent Licenses;

 

(q)all Securities Accounts;

 

(r)all Software;

 

(s)all Supporting Obligations;

 

(t)all Trademarks;

 

(u)all Trademark Licenses; and

 

(v)all Accessions and all Proceeds of any and all of the foregoing.

 

The Obligor and the Trustee hereby acknowledge and agree that the security
interest created hereby in the Collateral constitutes continuing collateral
security for all of the Secured Obligations, whether now existing or hereafter
arising.

 

3. Representations and Warranties. The Obligor hereby represents and warrants to
the Trustee, that:

 

(a) Ownership. The Obligor is the legal and beneficial owner of the Collateral
and has the right to pledge, sell, assign or transfer the same.

 

(b) Security Interest/Priority. This Agreement creates a valid security interest
in favor of the Trustee in the Collateral and, when properly perfected by the
filing of a UCC financing statement, shall constitute a valid, perfected, first
priority security interest in such Collateral, to the extent such security
interest can be perfected by filing a financing statement under the UCC, free
and clear of all Liens. With respect to any Collateral consisting of a Deposit
Account or held in a Securities Account, upon execution and delivery by the
Obligor, the applicable depository bank or Securities Intermediary and the
Trustee of an agreement granting control to the Trustee over such Collateral (an
“Account Control Agreement”), the Trustee shall have a valid and perfected,
first priority security interest in such Collateral. Obligor has no Deposit
Accounts other than the Deposit Accounts for which an Account Control Agreement
in favor of Trustee has been executed and delivered by Obligor.

 

D-5

 

 

(c) Contracts; Agreements. Obligor has no material contracts, agreements or
licenses constituting Collateral which are non-assignable by their terms, or as
a matter of law, or which prevent the granting of a security interest therein,
except to the extent consent to the assignment and/or security interest, as
applicable, has been obtained and remains in effect.

 

(d) Changes in Structure; Tradenames; Changes in Legal Name. The Obligor has not
(i) been party to a merger, consolidation or other change in structure, (ii)
used any tradename, or (iii) changed its legal name, in each case, in the five
(5) years prior to the date hereof, except that the Obligor changed its name
from Medley SBIC, LP.

 

(e) All representations and warranties provided by the Obligor under the
Amendment are incorporated herein.

 

4. Covenants. The Obligor covenants that the Obligor shall execute and deliver
to the Trustee such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of existing
documents, as the Trustee may reasonably request) and do all such other things
as the Trustee may reasonably deem necessary or appropriate (i) to assure the
Trustee of the creation, perfection and priority of the security interests
hereunder, including (A) such instruments as the Trustee may from time to time
reasonably request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and assure the
Trustee of its rights and interests hereunder, and, in furtherance of the
foregoing, the Obligor hereby irrevocably makes, constitutes and appoints the
Trustee, its nominee or any other person whom the Trustee may designate, solely
upon the occurrence and during the continuance of a Default, as the Obligor’s
attorney in fact with full power and for the limited purpose to sign in the name
of the Obligor any financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Trustee’s reasonable discretion would be necessary or
appropriate in order to perfect and maintain perfection of the security
interests granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable until the payment in full of the Secured Obligations.
Obligor further covenants and agrees that it will not (i) open or maintain any
Deposit Account other than the Deposit Account(s) for which Obligor has executed
and delivered in favor of the Trustee an Account Control Agreement, or (ii)
pledge or undertake to pledge or grant any security interest or lien in any of
the Collateral to any third party (other than Non-Consensual Liens (as defined
in the Amendment) and liens to secure the Secured Obligations).

 

5. Authorization to File Financing Statements. The Obligor hereby authorizes
Trustee to prepare and file such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other instruments as
the Trustee may from time to time deem necessary or appropriate in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC (including authorization to describe the Collateral as “all personal
property”, “all assets” or words of similar meaning).

 

D-6

 

 

6. Remedies.

 

(a) General Remedies. Upon the occurrence and during the continuance of a
Default, the Trustee shall have, in addition to the rights and remedies provided
herein, in the Guaranty, in any other documents relating to the Secured
Obligations, or by Law (including levy of attachment, garnishment and the rights
and remedies set forth in the UCC of the jurisdiction applicable to the affected
Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
and remedies are asserted and regardless of whether the UCC applies to the
affected Collateral) at such place and time or times as are commercially
reasonable, to sell and deliver any or all Collateral held by or for it at
public or private sale, at any exchange or broker’s board or elsewhere, by one
or more contracts, in one or more parcels, for Money, upon credit or otherwise,
at such prices and upon such terms as are commercially reasonable (subject to
any and all mandatory legal requirements). The Obligor acknowledges that any
such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms that might have been obtained at a public sale.
Neither the Trustee’s compliance with applicable Law nor its disclaimer of
warranties relating to the Collateral shall be considered to adversely affect
the commercial reasonableness of any sale. To the extent the rights of notice
cannot be legally waived hereunder, the Obligor agrees that any requirement of
reasonable notice shall be met if such notice, specifying the place of any
public sale or the time after which any private sale is to be made, is
personally served on the Obligor at least ten (10) days before the time of sale
or other event giving rise to the requirement of such notice. The Trustee may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Trustee shall not be
obligated to make any sale or other disposition of the Collateral regardless of
notice having been given. To the extent permitted by applicable Law, the Trustee
may be a purchaser at any such sale. To the extent permitted by applicable Law,
the Obligor hereby waives all of its rights of redemption with respect to any
such sale. Subject to the provisions of applicable Law, the Trustee may postpone
or cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by Law, be made at the time and place to
which the sale was postponed, or the Trustee may further postpone such sale by
announcement made at such time and place.

 

(b) Deposit Accounts. On or prior to July 31, 2019, the Trustee will have a
blocked account control agreement on all of the Obligor’s Deposit Accounts. The
Obligor agrees that the Trustee may prevent withdrawals or other dispositions of
funds in Deposit Accounts, and the Trustee agrees that it will consent to
withdrawals from the Deposit Accounts for the purposes of (i) paying the
Obligor’s general expenses not in excess of USD 25,000 in any twelve-month
period (ii) making non-regularly scheduled redemption payments on the Notes (as
described and defined in the Deed) from amounts in the Deposit Account
representing full or partial principal payments or prepayments (“Principal
Paydowns”) and (iii) making regularly scheduled interest and principal payments
on the Notes (as described and defined in the Deed) from all amounts in the
Deposit Account other than Principal Paydowns.

 

(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence and during the continuance of a Default, the Trustee shall have the
right to enter and remain upon the premises of the Obligor without cost or
charge to the Trustee, and use the same, together with materials, supplies,
books and records of the Obligor for the purpose of collecting and liquidating
the Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise. In addition, upon the
occurrence and during the continuance of a Default, the Trustee may remove
Collateral, or any part thereof, from such premises and/or any records with
respect thereto, in order to effectively collect or liquidate such Collateral.

 

(d) Nonexclusive Nature of Remedies. Failure by the Trustee to exercise any
right, remedy or option under this Agreement, the Guaranty, any other document
relating to the Secured Obligations, or as provided by Law, or any delay by the
Trustee in exercising the same, shall not operate as a waiver of any such right,
remedy or option. No waiver hereunder shall be effective unless it is in
writing, signed by the party against whom such waiver is sought to be enforced
and then only to the extent specifically stated, which in the case of the
Trustee shall only be granted as provided herein. To the extent permitted by
Law, neither the Trustee, nor any party acting as attorney for the Trustee,
shall be liable hereunder for any acts or omissions or for any error of judgment
or mistake of fact or law other than their gross negligence or willful
misconduct hereunder, as determined by a court of competent jurisdiction by
final and non-appealable judgment. The rights and remedies of the Trustee under
this Agreement shall be cumulative and not exclusive of any other right or
remedy that the Trustee may have.

 

D-7

 

 

(e) Retention of Collateral. In addition to the rights and remedies hereunder,
the Trustee may, in compliance with Sections 9-620 and 9-621 of the UCC or
otherwise complying with the requirements of applicable Law of the relevant
jurisdiction, accept or retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Trustee shall have provided such notices,
however, the Trustee shall not be deemed to have accepted or retained any
Collateral in satisfaction of any Secured Obligations for any reason.

 

(f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Trustee is legally
entitled, the Obligor shall be liable for the deficiency, together with the
costs of collection and the fees, charges and disbursements of counsel. Any
surplus remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Obligor or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.

 

7. Rights of the Trustee.

 

(a) Power of Attorney. In addition to other powers of attorney contained herein,
the Obligor hereby designates and appoints the Trustee and each of its designees
or agents, as attorney- in-fact of Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuance of a Default:

 

(i) demand, collect, settle, compromise, adjust, and give discharges and
releases, all as the Trustee may reasonably determine;

 

(ii) commence and prosecute any actions at any court for the purposes of
collecting any Collateral and enforcing any other right in respect thereof;

 

(iii) defend, settle or compromise any action, suit or proceeding brought and,
in connection therewith, give such discharge or release as the Trustee may deem
reasonably appropriate;

 

(iv) receive and open mail addressed to the Obligor and endorse checks, notes,
drafts, acceptances, money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or storage of the goods
giving rise to the Collateral of the Obligor on behalf of and in the name of the
Obligor, or securing, or relating to such Collateral;

 

(v) sell, assign, transfer, make any agreement in respect of, or otherwise deal
with or exercise rights in respect of, any Collateral or the goods or services
that have given rise thereto, as fully and completely as though the Trustee were
the absolute owner thereof for all purposes;

 

(vi) adjust and settle claims under any insurance policy relating thereto;

 

D-8

 

 

(vii) execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, security and pledge agreements,
affidavits, notices and other agreements, instruments and documents that the
Trustee may determine necessary in order to perfect and maintain the security
interests and liens granted in this Agreement and in order to fully consummate
all of the transactions contemplated therein;

 

(viii) institute any foreclosure proceedings that the Trustee may deem
appropriate;

 

(ix) sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral;

 

(x) pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral;

 

(xi) direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Trustee or as the Trustee shall direct;

 

(xii) receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; and

 

(xiii) do and perform all such other acts and things as the Trustee may
reasonably deem to be necessary, proper or convenient in connection with the
Collateral.

 

This power of attorney is a power coupled with an interest and shall be
irrevocable until the termination of this Agreement. The Trustee shall be under
no duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Trustee in this
Agreement, and shall not be liable for any failure to do so or any delay in
doing so. The Trustee shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct as determined by a court of competent
jurisdiction by final and non-appealable judgment. This power of attorney is
conferred on the Trustee solely to protect, preserve and realize upon its
security interest in the Collateral.

 

(b) The Trustee’s Duty of Care. Other than the exercise of reasonable care to
assure the safe custody of the Collateral while being held by the Trustee
hereunder, the Trustee shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Obligor shall be
responsible for preservation of all rights in the Collateral, and the Trustee
shall be relieved of all responsibility for the Collateral upon surrendering it
or tendering the surrender of it to the Obligor. The Trustee shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Trustee shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect to any of
the Collateral. In the event of a public or private sale of Collateral pursuant
to Section 6 hereof, the Trustee shall have no responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Collateral, whether or not
the Trustee has or is deemed to have knowledge of such matters, or (ii) taking
any steps to clean, repair or otherwise prepare the Collateral for sale, except
as required by applicable Law.

 

D-9

 

 

8. Application of Proceeds. Upon the acceleration of the Secured Obligations
pursuant to Section 10 of the Deed, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Trustee or
any Secured Party in Money, will be applied in reduction of the Secured
Obligations.

 

9. Continuing Agreement.

 

(a) This Agreement shall remain in full force and effect until payment in full
of the Secured Obligations and the Trustee shall, upon the request and at the
expense of the Obligor, release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Obligor evidencing such termination.

 

(b) This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time any payment of the Secured
Obligations is rescinded or must otherwise be restored or returned by the
Trustee, in whole or in part, as a preference, fraudulent conveyance or
otherwise under any Debtor Relief Law, all as though such payment had not been
made; provided that in the event any such payment of all or any part of the
Secured Obligations is rescinded or must be restored or returned, all costs and
expenses (including any legal fees, charges and disbursements) incurred by the
Trustee in defending and enforcing such reinstatement shall be deemed to be
included as a part of the Secured Obligations.

 

10. Amendments; Waivers; Modifications, etc. This Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
without the consent of the parties hereto.

 

11. Successors in Interest. This Agreement shall be binding upon the Obligor,
its successors and assigns and shall inure, together with the rights and
remedies of the Trustee hereunder, to the benefit of the Trustee and its
successors and permitted assigns.

 

12. Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart. Delivery of an executed
counterpart of a signature page of this Agreement by fax transmission or e-mail
transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

13. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.

 

14. Governing Law; Submission to Jurisdiction; Waiver of Venue. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, PROVIDED HOWEVER, THAT THE DETERMINATION OF WHETHER A DEFAULT HAS
OCCURRED UNDER THE DEED SHALL BE GOVERNED BY ISRAELI LAW AS SET FORTH IN THE
DEED. ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THIS AGREEMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE OBLIGOR AND THE TRUSTEE
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE OBLIGOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER
DOCUMENT RELATED THERETO.

 

D-10

 

 

15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, THE GUARANTY, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 15 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY

 

16. Severability. If any provision of this Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

 

17. Entirety. This Agreement, the Deed, the Amendment, the Guaranty and the
other documents relating to the Secured Obligations represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, and any contemporaneous oral agreements and
understandings, if any.

 

[remainder of the page intentionally left blank; signature pages follow]

 

D-11

 

 

Each of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

 

OBLIGOR: MEDLEY SMALL BUSINESS FUND, LP   a Delaware limited partnership      
By:     Name: Brook Taube   Title: Authorized Representative

 

D-12

 

 

TRUSTEE:

 

Accepted and agreed to as of the date first above written.

 

MISHMERET TRUST COMPANY LTD.,

a [_____________________]

 

By:     Name:     Title:    

 

D-13

 

 

Annex E

 

Medley SLF Security Agreement

 

 

E-1

 

 

FINAL

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT, dated as of July 3, 2019 (this “Agreement”), is made
between MEDLEY SLF FUNDING I LLC, a Delaware limited liability company (the
“Obligor”) and MISHMERET TRUST COMPANY LTD. , a company limited by shares and
incorporated in in Israel under the Companies Law, 5759-1999 (the “Trustee” ).

 

RECITALS

 

WHEREAS, reference is made to that certain Deed of Trust, dated as of January
23, 2018 (as amended, restated, amended and restated, extended, supplemented or
otherwise modified from time to time, the “Deed”) between Medley Capital
Corporation, a business development company incorporated under the laws of the
State of Delaware (the “Company”) and the Trustee;

 

WHEREAS, further reference is made to that certain Amendment to Deed of Trust
(the “Amendment”), dated as of July 3, 2019 between the Company and the Trustee;
and

 

WHEREAS, this Agreement is required by the terms of the Amendment.

 

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1. Definitions.

 

(a) The following terms shall have the meanings set forth in the Uniform
Commercial Code of the State of New York (the “UCC”): Accession, Account,
Adverse Claim, Certificated Security, Chattel Paper, Consumer Goods, Deposit
Account, Document, Electronic Chattel Paper, Equipment, Financial Asset,
Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Company
Security, Investment Property, Letter-of-Credit Right, Money, Proceeds,
Securities Account, Securities Intermediary, Security, Security Entitlement,
Software, Supporting Obligation and Tangible Chattel Paper.

 

(b) As used herein, the following terms shall have the meanings set forth below:
“Collateral” has the meaning provided in Section 2 hereof.

 

“Copyright License” means any written agreement, naming the Obligor as licensor,
granting any right under any Copyright.

 

“Copyrights” means (i) all copyrights registered in the United States in all
Works, now existing or hereafter created or acquired, all registrations and
recordings thereof, and all applications in connection therewith, including
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state thereof or
political subdivision thereof, and (ii) all renewals thereof.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect.

 

E-2

 

 

“Default” means any of the following: (1) the occurrence of any of the events
set forth in Section 10 of the Deed, as modified by Section 19 of the Amendment
with respect to the Company, Obligor or Medley Small Business Fund, LP (“MSBF”);
(2) the Obligor or MSBF is in fundamental breach of the terms of the Guaranty,
the guaranty agreement entered into by MSBF on the date hereof (the “MSBF
Guaranty”), this Agreement or the Security agreement entered into by MSBF on the
date hereof (the “MSBF Security Agreement”) or such applicable party does not
fulfill any of its material obligations in the framework of any of them, the
Trustee provides written notice to the Obligor to remedy the breach and the
Obligor fails to remedy such breach within seven (7) Business Days (as defined
in the Deed) from the date such notice of breach was received by the Obligor
(provided that to the extent such breach is subject to a notice period under
Section 10 of the Deed, as modified by the Amendment, such notice periods shall
run concurrently); or (3) any material representations of the Obligor or MSBF in
the Guaranty, the MSBF Guaranty, this Agreement or the MSBF Security Agreement,
as applicable, is not correct when made, the Trustee provides notice to the
Obligor to remedy the misrepresentation, and the Obligor fails to remedy such
misrepresentation within fourteen (14) days from the date notice of such
misrepresentation was received by the Obligor (provided that to the extent such
breach is subject to a notice period under Section 10 of the Deed, as modified
by the Amendment, such notice periods shall run concurrently).

 

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

 

“Guaranty” means that certain Guaranty, dated as of the date hereof, between the
Obligor and the Trustee, as such Guaranty may be amended, restated, amended and
restated, extended, supplemented or otherwise modified from time to time.

 

“Laws” means, collectively, all international, foreign, federal, state and local
statutes, treaties, rules, binding guidelines, regulations, ordinances, codes
and administrative or judicial precedents or authorities, including any binding
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or otherwise), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property and any financing lease having
substantially the same economic effect as any of the foregoing).

 

“Patent License” means any agreement, whether written or oral, providing for the
grant by or to the Obligor of any right under any Patent, including any right to
manufacture, use or sell any invention covered by a Patent.

 

“Patents” means (i) all letters patent of the United States or any other country
or any political subdivision thereof and all reissues and extensions thereof,
and (ii) all applications for letters patent of the United States or any other
country and all divisions, continuations and continuations-in-part thereof.

 

E-3

 

 

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

 

“Secured Obligations” means: (a) the prompt and complete payment when due
(whether by acceleration or otherwise) of all monies guaranteed (including
interest and charges thereon) by the Obligor to the Trustee under and pursuant
to the Guaranty; and (b) any and all other liabilities and obligations of every
name and nature whatsoever of the Obligor to the Trustee under the Guaranty
and/or any other agreement or instrument executed and delivered pursuant thereto
(including, for the avoidance of doubt, the Company’s obligations pursuant to
the Deed and the Amendment guaranteed hereunder) whether such liabilities and
obligations be direct or indirect, absolute or contingent, now existing or
hereafter arising or acquired, due or to become due, whether for principal,
interest (including interest which, but for the filing of a petition in
bankruptcy with respect to the Obligor, would have accrued on any Secured
Obligation, whether or not a claim is allowed against the Obligor for such
interest in the related bankruptcy proceeding), fees, expenses, indemnification
or otherwise.

 

“Trademark License” means any agreement, whether written or oral, providing for
the grant by or to Obligor of any right to use any Trademark.

 

“Trademarks” means (a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, service marks,
logos and other source or business identifiers, and the goodwill associated
therewith, now existing or hereafter adopted or acquired, all registrations and
recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of
the United States, any state thereof or any other country or any political
subdivision thereof, or otherwise and (b) all renewals thereof.

 

“Work” means any work that is subject to copyright protection pursuant to Title
17 of the United States Code.

 

2. Grant of Security Interest in the Collateral. To secure the prompt payment
and performance in full when due, whether by lapse of time, acceleration,
mandatory prepayment or otherwise, of the Secured Obligations, the Obligor
hereby grants, pledges and assigns to the Trustee, a continuing security
interest in, and a right to set off against, any and all right, title and
interest of the Obligor in and to all of the following, whether now owned or
existing or owned, acquired, or arising hereafter (collectively, the
“Collateral”):

 

(a)all Accounts;

 

(b)all Chattel Paper;

 

(c)all Copyrights;

 

(d)all Copyright Licenses;

 

(e)all Deposit Accounts;

 

(f)all Documents;

 

E-4

 

 

(g)all Equipment;

 

(h)all Fixtures;

 

(i)all General Intangibles;

 

(j)all Instruments;

 

(k)all Inventory;

 

(l)all Investment Property;

 

(m)all Letter-of-Credit Rights;

 

(n)all Money;

 

(o)all Patents;

 

(p)all Patent Licenses;

 

(q)all Securities Accounts;

 

(r)all Software;

 

(s)all Supporting Obligations;

 

(t)all Trademarks;

 

(u)all Trademark Licenses; and

 

(v)all Accessions and all Proceeds of any and all of the foregoing.

 

The Obligor and the Trustee hereby acknowledge and agree that the security
interest created hereby in the Collateral constitutes continuing collateral
security for all of the Secured Obligations, whether now existing or hereafter
arising.

 

3. Representations and Warranties. The Obligor hereby represents and warrants to
the Trustee, that:

 

(a) Ownership. The Obligor is the legal and beneficial owner of the Collateral
and has the right to pledge, sell, assign or transfer the same.

 

(b) Security Interest/Priority. This Agreement creates a valid security interest
in favor of the Trustee in the Collateral and, when properly perfected by the
filing of a UCC financing statement, shall constitute a valid, perfected, first
priority security interest in such Collateral, to the extent such security
interest can be perfected by filing a financing statement under the UCC, free
and clear of all Liens. With respect to any Collateral consisting of a Deposit
Account or held in a Securities Account, upon execution and delivery by the
Obligor, the applicable depository bank or Securities Intermediary and the
Trustee of an agreement granting control to the Trustee over such Collateral (an
“Account Control Agreement”), the Trustee shall have a valid and perfected,
first priority security interest in such Collateral. Obligor has no Deposit
Accounts other than the Deposit Accounts for which an Account Control Agreement
in favor of Trustee has been executed and delivered by Obligor.

 

E-5

 

 

(c) Contracts; Agreements. Obligor has no material contracts, agreements or
licenses constituting Collateral which are non-assignable by their terms, or as
a matter of law, or which prevent the granting of a security interest therein,
except to the extent consent to the assignment and/or security interest, as
applicable, has been obtained and remains in effect.

 

(d) Changes in Structure; Tradenames; Changes in Legal Name. The Obligor has not
(i) been party to a merger, consolidation or other change in structure, (ii)
used any tradename, or (iii) changed its legal name, in each case, in the five
(5) years prior to the date hereof.

 

(e) All representations and warranties provided by the Obligor under the
Amendment are incorporated herein.

 

4. Covenants. The Obligor covenants that the Obligor shall execute and deliver
to the Trustee such agreements, assignments or instruments (including
affidavits, notices, reaffirmations and amendments and restatements of existing
documents, as the Trustee may reasonably request) and do all such other things
as the Trustee may reasonably deem necessary or appropriate (i) to assure the
Trustee of the creation, perfection and priority of the security interests
hereunder, including (A) such instruments as the Trustee may from time to time
reasonably request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, (ii) to consummate the
transactions contemplated hereby and (iii) to otherwise protect and assure the
Trustee of its rights and interests hereunder, and, in furtherance of the
foregoing, the Obligor hereby irrevocably makes, constitutes and appoints the
Trustee, its nominee or any other person whom the Trustee may designate, solely
upon the occurrence and during the continuance of a Default, as the Obligor’s
attorney in fact with full power and for the limited purpose to sign in the name
of the Obligor any financing statements, or amendments and supplements to
financing statements, renewal financing statements, notices or any similar
documents which in the Trustee’s reasonable discretion would be necessary or
appropriate in order to perfect and maintain perfection of the security
interests granted hereunder, such power, being coupled with an interest, being
and remaining irrevocable until the payment in full of the Secured Obligations.
Obligor further covenants and agrees that it will not (i) open or maintain any
Deposit Account other than the Deposit Account(s) for which Obligor has executed
and delivered in favor of the Trustee an Account Control Agreement, or (ii)
pledge or undertake to pledge or grant any security interest or lien in any of
the Collateral to any third party (other than Non-Consensual Liens (as defined
in the Amendment) and liens to secure the Secured Obligations).

 

5. Authorization to File Financing Statements. The Obligor hereby authorizes
Trustee to prepare and file such financing statements (including continuation
statements) or amendments thereof or supplements thereto or other instruments as
the Trustee may from time to time deem necessary or appropriate in order to
perfect and maintain the security interests granted hereunder in accordance with
the UCC (including authorization to describe the Collateral as “all personal
property”, “all assets” or words of similar meaning).

 

6. Remedies.

 

(a) General Remedies. Upon the occurrence and during the continuance of a
Default, the Trustee shall have, in addition to the rights and remedies provided
herein, in the Guaranty, in any other documents relating to the Secured
Obligations, or by Law (including levy of attachment, garnishment and the rights
and remedies set forth in the UCC of the jurisdiction applicable to the affected
Collateral), the rights and remedies of a secured party under the UCC
(regardless of whether the UCC is the law of the jurisdiction where the rights
and remedies are asserted and regardless of whether the UCC applies to the
affected Collateral) at such place and time or times as are commercially
reasonable, to sell and deliver any or all Collateral held by or for it at
public or private sale, at any exchange or broker’s board or elsewhere, by one
or more contracts, in one or more parcels, for Money, upon credit or otherwise,
at such prices and upon such terms as are commercially reasonable (subject to
any and all mandatory legal requirements). The Obligor acknowledges that any
such private sale may be at prices and on terms less favorable to the seller
than the prices and other terms that might have been obtained at a public sale.
Neither the Trustee’s compliance with applicable Law nor its disclaimer of
warranties relating to the Collateral shall be considered to adversely affect
the commercial reasonableness of any sale. To the extent the rights of notice
cannot be legally waived hereunder, the Obligor agrees that any requirement of
reasonable notice shall be met if such notice, specifying the place of any
public sale or the time after which any private sale is to be made, is
personally served on the Obligor at least ten (10) days before the time of sale
or other event giving rise to the requirement of such notice. The Trustee may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. The Trustee shall not be
obligated to make any sale or other disposition of the Collateral regardless of
notice having been given. To the extent permitted by applicable Law, the Trustee
may be a purchaser at any such sale. To the extent permitted by applicable Law,
the Obligor hereby waives all of its rights of redemption with respect to any
such sale. Subject to the provisions of applicable Law, the Trustee may postpone
or cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by Law, be made at the time and place to
which the sale was postponed, or the Trustee may further postpone such sale by
announcement made at such time and place.

 

E-6

 

 

(b) Deposit Accounts. On or prior to July 31, 2019, the Trustee will have a
blocked account control agreement on all of the Obligor’s Deposit Accounts. The
Obligor agrees that the Trustee may prevent withdrawals or other dispositions of
funds in Deposit Accounts, and the Trustee agrees that it will consent to
withdrawals from the Deposit Accounts for the purposes of (i) paying the
Obligor’s general expenses not in excess of USD 25,000 in any twelve-month
period (ii) making non-regularly scheduled redemption payments on the Notes (as
described and defined in the Deed) from amounts in the Deposit Account
representing full or partial principal payments or prepayments (“Principal
Paydowns”) and (iii) making regularly scheduled interest and principal payments
on the Notes (as described and defined in the Deed) from all amounts in the
Deposit Account other than Principal Paydowns.

 

(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence and during the continuance of a Default, the Trustee shall have the
right to enter and remain upon the premises of the Obligor without cost or
charge to the Trustee, and use the same, together with materials, supplies,
books and records of the Obligor for the purpose of collecting and liquidating
the Collateral, or for preparing for sale and conducting the sale of the
Collateral, whether by foreclosure, auction or otherwise. In addition, upon the
occurrence and during the continuance of a Default, the Trustee may remove
Collateral, or any part thereof, from such premises and/or any records with
respect thereto, in order to effectively collect or liquidate such Collateral.

 

(d) Nonexclusive Nature of Remedies. Failure by the Trustee to exercise any
right, remedy or option under this Agreement, the Guaranty, any other document
relating to the Secured Obligations, or as provided by Law, or any delay by the
Trustee in exercising the same, shall not operate as a waiver of any such right,
remedy or option. No waiver hereunder shall be effective unless it is in
writing, signed by the party against whom such waiver is sought to be enforced
and then only to the extent specifically stated, which in the case of the
Trustee shall only be granted as provided herein. To the extent permitted by
Law, neither the Trustee, nor any party acting as attorney for the Trustee,
shall be liable hereunder for any acts or omissions or for any error of judgment
or mistake of fact or law other than their gross negligence or willful
misconduct hereunder, as determined by a court of competent jurisdiction by
final and non-appealable judgment. The rights and remedies of the Trustee under
this Agreement shall be cumulative and not exclusive of any other right or
remedy that the Trustee may have.

 

E-7

 

 

(e) Retention of Collateral. In addition to the rights and remedies hereunder,
the Trustee may, in compliance with Sections 9-620 and 9-621 of the UCC or
otherwise complying with the requirements of applicable Law of the relevant
jurisdiction, accept or retain the Collateral in satisfaction of the Secured
Obligations. Unless and until the Trustee shall have provided such notices,
however, the Trustee shall not be deemed to have accepted or retained any
Collateral in satisfaction of any Secured Obligations for any reason.

 

(f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Trustee is legally
entitled, the Obligor shall be liable for the deficiency, together with the
costs of collection and the fees, charges and disbursements of counsel. Any
surplus remaining after the full payment and satisfaction of the Secured
Obligations shall be returned to the Obligor or to whomsoever a court of
competent jurisdiction shall determine to be entitled thereto.

 

7.Rights of the Trustee.

 

(a) Power of Attorney. In addition to other powers of attorney contained herein,
the Obligor hereby designates and appoints the Trustee and each of its designees
or agents, as attorney- in-fact of Obligor, irrevocably and with power of
substitution, with authority to take any or all of the following actions upon
the occurrence and during the continuance of a Default:

 

(i) demand, collect, settle, compromise, adjust, and give discharges and
releases, all as the Trustee may reasonably determine;

 

(ii) commence and prosecute any actions at any court for the purposes of
collecting any Collateral and enforcing any other right in respect thereof;

 

(iii) defend, settle or compromise any action, suit or proceeding brought and,
in connection therewith, give such discharge or release as the Trustee may deem
reasonably appropriate;

 

(iv) receive and open mail addressed to the Obligor and endorse checks, notes,
drafts, acceptances, money orders, bills of lading, warehouse receipts or other
instruments or documents evidencing payment, shipment or storage of the goods
giving rise to the Collateral of the Obligor on behalf of and in the name of the
Obligor, or securing, or relating to such Collateral;

 

(v) sell, assign, transfer, make any agreement in respect of, or otherwise deal
with or exercise rights in respect of, any Collateral or the goods or services
that have given rise thereto, as fully and completely as though the Trustee were
the absolute owner thereof for all purposes;

 

(vi) adjust and settle claims under any insurance policy relating thereto;

 

E-8

 

 

(vii) execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, security and pledge agreements,
affidavits, notices and other agreements, instruments and documents that the
Trustee may determine necessary in order to perfect and maintain the security
interests and liens granted in this Agreement and in order to fully consummate
all of the transactions contemplated therein;

 

(viii) institute any foreclosure proceedings that the Trustee may deem
appropriate;

 

(ix) sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Collateral;

 

(x) pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral;

 

(xi) direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Trustee or as the Trustee shall direct;

 

(xii) receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; and

 

(xiii) do and perform all such other acts and things as the Trustee may
reasonably deem to be necessary, proper or convenient in connection with the
Collateral.

 

This power of attorney is a power coupled with an interest and shall be
irrevocable until the termination of this Agreement. The Trustee shall be under
no duty to exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the Trustee in this
Agreement, and shall not be liable for any failure to do so or any delay in
doing so. The Trustee shall not be liable for any act or omission or for any
error of judgment or any mistake of fact or law in its individual capacity or
its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct as determined by a court of competent
jurisdiction by final and non-appealable judgment. This power of attorney is
conferred on the Trustee solely to protect, preserve and realize upon its
security interest in the Collateral.

 

(b) The Trustee’s Duty of Care. Other than the exercise of reasonable care to
assure the safe custody of the Collateral while being held by the Trustee
hereunder, the Trustee shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Obligor shall be
responsible for preservation of all rights in the Collateral, and the Trustee
shall be relieved of all responsibility for the Collateral upon surrendering it
or tendering the surrender of it to the Obligor. The Trustee shall be deemed to
have exercised reasonable care in the custody and preservation of the Collateral
in its possession if the Collateral is accorded treatment substantially equal to
that which the Trustee accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being
understood that the Trustee shall not have responsibility for taking any
necessary steps to preserve rights against any parties with respect to any of
the Collateral. In the event of a public or private sale of Collateral pursuant
to Section 6 hereof, the Trustee shall have no responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relating to any Collateral, whether or not
the Trustee has or is deemed to have knowledge of such matters, or (ii) taking
any steps to clean, repair or otherwise prepare the Collateral for sale, except
as required by applicable Law.

 

E-9

 

 

8. Application of Proceeds. Upon the acceleration of the Secured Obligations
pursuant to Section 10 of the Deed, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the Trustee or
any Secured Party in Money, will be applied in reduction of the Secured
Obligations.

 

9. Continuing Agreement.

 

(a) This Agreement shall remain in full force and effect until the Designated
Date (as defined in the Guaranty). On the Designated Date, this Agreement and
the security interests in the Collateral created by this Agreement shall be
automatically terminated, and the Trustee shall, upon the request and at the
expense of the Obligor, release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements and/or
other documents reasonably requested by the Obligor evidencing such termination.

 

(b) This Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time any payment of the Secured
Obligations that is made on or prior to the Designated Date is rescinded or must
otherwise be restored or returned by the Trustee, in whole or in part, as a
preference, fraudulent conveyance or otherwise under any Debtor Relief Law, all
as though such payment had not been made; provided that in the event any such
payment of all or any part of the Secured Obligations is rescinded or must be
restored or returned, all costs and expenses (including any legal fees, charges
and disbursements) incurred by the Trustee in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.

 

10. Amendments; Waivers; Modifications, etc. This Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
without the consent of the parties hereto.

 

11. Successors in Interest. This Agreement shall be binding upon the Obligor,
its successors and assigns and shall inure, together with the rights and
remedies of the Trustee hereunder, to the benefit of the Trustee and its
successors and permitted assigns.

 

12. Counterparts. This Agreement may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. It shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart. Delivery of an executed
counterpart of a signature page of this Agreement by fax transmission or e-mail
transmission (e.g., “pdf” or “tif”) shall be effective as delivery of a manually
executed counterpart of this Agreement.

 

13. Headings. The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or construction
of any provision of this Agreement.

 

14. Governing Law; Submission to Jurisdiction; Waiver of Venue. THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, PROVIDED HOWEVER, THAT THE DETERMINATION OF WHETHER A DEFAULT HAS
OCCURRED UNDER THE DEED SHALL BE GOVERNED BY ISRAELI LAW AS SET FORTH IN THE
DEED. ANY LEGAL ACTION OR PROCEEDING ARISING UNDER THIS AGREEMENT OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW
YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE OBLIGOR AND THE TRUSTEE
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. THE OBLIGOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER
DOCUMENT RELATED THERETO.

 

E-10

 

 

15. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO THIS AGREEMENT, THE GUARANTY, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 15 WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY

 

16. Severability. If any provision of this Agreement is determined to be
illegal, invalid or unenforceable, such provision shall be fully severable and
the remaining provisions shall remain in full force and effect and shall be
construed without giving effect to the illegal, invalid or unenforceable
provisions.

 

17. Entirety. This Agreement, the Deed, the Amendment, the Guaranty and the
other documents relating to the Secured Obligations represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, and any contemporaneous oral agreements and
understandings, if any.

 

[remainder of the page intentionally left blank; signature pages follow]

 

E-11

 

 

Each of the parties hereto has caused a counterpart of this Agreement to be duly
executed and delivered as of the date first above written.

 

OBLIGOR: MEDLEY SLF FUNDING I LLC,   a Delaware limited liability company      
  By:     Name: Brook Taube   Title: Authorized Representative

 

E-12

 

 

TRUSTEE:

Accepted and agreed to as of the date first above written. MISHMERET TRUST
COMPANY LTD.,

a [__________________]

 

By:     Name:     Title:    

 

E-13

 

 

Annex F

 

Medley SLF Assets

 

F-1

 

 

Annex F

 

Medley SLF Assets

 

Rolled Forward 3/31/19 Fair Market Value   3/31/19 Fair Market Value   Mark  
Issuer  Industry  Asset Description  Security Lien Position  Vintage   Internal
Rating   Maturity Date $6,100,000   $6,100,000    100.00   DataOnline Corp. 
High Tech Industries  First Lien Term Loan  First Lien   2018    1   07/31/2025
 4,363,040    3,727,040    99.16   Barry’s Bootcamp Holdings, LLC  Services :
Consumer  Revolving Credit Facility  First Lien   2017    1   7/14/2022
 5,061,750    5,061,750    100.00   Alpine SG, LLC  High Tech Industries  Term
Loan  First Lien   2017    2   11/16/2022  2,444,350    2,444,350    100.00  
Alpine SG, LLC  High Tech Industries  Delayed Draw Term Loan  First Lien 
 2017    2   11/16/2022  6,670,000    6,670,000    100.00   US Multifamily, LLC 
Banking, Finance, Insurance & Real Estate  First Lien Term Loans  First Lien 
 2014    2   6/17/2021                         Second               1,997,600  
 1,997,600    99.88   Starfish Holdco, LLC  High Tech Industries  Second Lien
Term Loans  Lien   2017    2   8/18/2025  3,184,596    3,184,596    100.00   L&S
Plumbing Partnership, Ltd.  Construction & Building  Term Loan  First Lien 
 2017    1   02/15/2022 $29,821,335   $29,185,335                               

 

F-2

 

 

Annex G

 

Form of Certificate re Transfer of Medley SLF Assets

 

G-1

 

 

Certificate re Transfer of Medley SLF Assets

 

This Certificate is delivered in connection with the Amendment to Deed of Trust
dated July [__], 2019 (the “Amendment”), between (1) Mishmeret Trust Company
Ltd. (the “Trustee”) and (2) Medley Capital Corporation (the “Company”), Medley
Small Business Fund, LP (“Medley Small Business Fund”) and Medley SLF Funding I
LLC (“Medley SLF”).

 

Capitalized terms used but not defined in this Certificate have the meanings
assigned to such terms in the Amendment.

 

The Company and Medley SLF hereby certify to the Trustee that the Medley SLF
Assets have been transferred to Medley SLF.

 

Dated: July [__], 2019.

 

  MEDLEY CAPITAL CORPORATION       By:     Name:   Title:       MEDLEY SLF
FUNDING I LLC       By:                 Name:   Title:

 

G-2

 

 

Annex H

 

Form of UCC Termination Statement

 

H-1

 

   

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UCC FINANCING STATEMENT AMENDMENT

FOLLOW INSTRUCTIONS

A. NAME & PHONE OF CONTACT AT FILER (optional)       B. E-MAIL CONTACT AT FILER
(optional)       C. SEND ACKNOWLEDGMENT TO:   (Name and Address)      

    Jacqueline Marenick, Paralegal
Eversheds Sutherland (US) LLP         999 Peachtree Street NE
Atlanta, GA 30309-3996                            

THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY

1a. INITIAL FINANCING STATEMENT FILE NUMBER

[file number], filed [mm/dd/yyyy]

 

1b. ☐ This FINANCING STATEMENT AMENDMENT is to be filed [for record] (or
recorded) in the REAL ESTATE RECORDS
Filer: attach Amendment Addendum (Form UCC3Ad) and provide Debtor’s name in item
13 

2. þTERMINATION: Effectiveness of the Financing Statement identified above is
terminated with respect to the security interest(s) of Secured Party authorizing
this Termination Statement

3. ☐ASSIGNMENT (full or partial): Provide name of Assignee in item 7a or 7b, and
address of Assignee in item 7c and name of Assignor in item 9 For partial
assignment, complete items 7 and 9 and also indicate affected collateral in item
8

4. ☐CONTINUATION: Effectiveness of the Financing Statement identified above with
respect to the security interest(s) of Secured Party authorizing this
Continuation Statement is continued for the additional period provided by
applicable law

5. ☐

PARTY INFORMATION CHANGE:

  Check one of these two boxes:   AND Check one of these three boxes to:      
This Change affects   ☐ Debtor or   ☐ Secured Party of  record   ☐ CHANGE name
and/or address: Complete item 6a or 6b; and item 7a or 7b and item 7c  

☐ ADD name: Complete item 7a or 7b, and item 7c

  ☐ DELETE name: Give record name to be deleted in item 6a or 6b

6.CURRENT RECORD INFORMATION: Complete for Party Information Change - provide
only one name (6a or 6b)

OR

6a. ORGANIZATION’S NAME

 

       

6b. INDIVIDUAL’S SURNAME

 

 

FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX

7.CHANGED OR ADDED INFORMATION: Complete for Assignment or Party Information
Change - provide only one name (7a or 7b) (use exact, full name; do not omit,
modify, or abbreviate any part of the Debtor’s name)

 

7a. ORGANIZATION’S NAME

 

 

OR

7b. INDIVIDUAL’S SURNAME

 

 

 

INDIVIDUAL’S FIRST PERSONAL NAME

 

 

 

INDIVIDUAL’S ADDITIONAL NAME(S)/INITIAL(S)

 

 

SUFFIX

7c.  

MAILING ADDRESS

 

 

CITY STATE POSTAL CODE COUNTRY

8. ☐ COLLATERAL CHANGE: Also check one of these four boxes: ☐ ADD collateral ☐
DELETE collateral ☐ RESTATE covered collateral ☐ ASSIGN collateral   Indicate
collateral:                                

9.

NAME OF SECURED PARTY OF RECORD AUTHORIZING THIS AMENDMENT: Provide only one
name (9a or 9b) (name of Assignor, if this is an Assignment)

If this is an Amendment authorized by a DEBTOR, check here ☐ and provide name of
authorizing Debtor

OR

9a. ORGANIZATION’S NAME

Mishmeret Trust Company Ltd.

 

9b. INDIVIDUAL’S SURNAME 

 

FIRST PERSONAL NAME ADDITIONAL NAME(S)/INITIAL(S) SUFFIX

10. OPTIONAL FILER REFERENCE DATA: Delaware Secretary of State/Medley SLF
Funding I LLC

 

FILING OFFICE COPY — UCC FINANCING STATEMENT AMENDMENT (Form UCC3) (Rev.
04/20/11)

 

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Annex I

 

Form of Officer’s Certificate

 

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Officer’s Certificate under Section 17.10 of Amendment to Deed of Trust

 

This Certificate is delivered pursuant to Section 17.10 of the Amendment to Deed
of Trust dated July [ ], 2019 (such amendment including the annexes attached
thereto - the “Amendment”), between (1) Mishmeret Trust Company Ltd. (the
“Trustee”) and (2) Medley Capital Corporation (the “Company”), Medley Small
Business Fund, LP (“Medley Small Business Fund”) and Medley SLF Funding I LLC
(“Medley SLF”). Capitalized terms used but not defined in this Certificate have
the meanings assigned to such terms in the Amendment.

 

The undersigned, in his capacity as a senior officer of each of the Company,
Medley Small Business Fund and Medley SLF hereby certifies to the Trustee as
follows:

 

(i)the resolutions required for the purpose of entering into the Amendment and
granting the security interests and liens and guarantees described therein have
been adopted;

 

(ii)there are no conflicting and/or contradictory undertakings on the part of
the Company or Medley Small Business Fund or Medley SLF in connection with
entering into the Amendment and granting the security interests and liens and
guarantees described therein; and

 

(iii)the laws of the United States are those applicable to the grant of the
security interests and liens and guarantees described in the Amendment.

 

Dated: July [__], 2019.

 

      Name:   As a senior officer of each of the Company, Medley Small Business
Fund and Medley SLF

 

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Annex J

 

Medley Small Business Fund Assets

 

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Annex J

 

Medley Small Business Fund Assets

 

Rolled Forward 3/31/19 Fair Market Value   3/31/19 Fair Market Value   Mark  
Issuer  Industry  Asset Description  Security Lien Position  Vintage  Internal
Rating  Maturity Date  7,565,253   $7,554,700    99.17   Barry's Bootcamp
Holdings, LLC  Services: Consumer  First Lien Term Loans  First Lien  2017  1 
7/14/2022  7,369,939    7,367,171    99.69   Black Angus Steakhouses, LLC 
Hotel, Gaming & Leisure  First Lien Term Loans  First Lien  2015  2  4/24/2020
 44,643    580,357    100.00   Black Angus Steakhouses, LLC (Revolver)  Hotel,
Gaming & Leisure  First Lien Term Loans  First Lien  2015  2  4/24/2020  -  
 -    100.00   Black Angus Steakhouses, LLC(Revolver Unfunded)  Hotel, Gaming &
Leisure  First Lien Term Loans  First Lien  2015  2  4/24/2020  1,070,887  
 1,070,887    100.00   Central States Dermatology Services, LLC  Healthcare &
Pharmaceuticals  First Lien Term Loans  First Lien  2017  2  4/20/2022
 406,298    406,298    100.00   Central States Dermatology Services, LLC (DDTL) 
Healthcare & Pharmaceuticals  First Lien Term Loans  First Lien  2017  2 
4/20/2022  10,793,200    10,885,188    98.12   FKI Security Group LLC  Capital
Equipment  First Lien Term Loans  First Lien  2015  3  3/30/2020  3,160,053  
 3,160,052    96.58   Impact Sales, LLC - Converted TL  Services: Business 
First Lien Term Loans  First Lien  2016  3  6/27/2023  9,155,771    9,155,771  
 96.58   Impact Sales, LLC - New DDTL  Services: Business  First Lien Term
Loans  First Lien  2016  3   6/27/2023  8,514,997    8,548,300    93.68  
InterFlex Acquisition Company, LLC  Containers, Packaging & Glass  First Lien
Term Loans  First Lien  2017  3  8/18/2022  304,735    304,735    100.00  
RateGain Technologies, Inc. (First Seller Note)  Hotel, Gaming & Leisure 
Unsecured Debt  Unsecured  2014  3  7/31/2020  304,735    304,735    100.00  
RateGain Technologies, Inc. (Second Seller Note)  Hotel, Gaming & Leisure 
Unsecured Debt  Unsecured  2014  3  7/31/2021  4,845,145    9,690,290  
 100.00   SFP Holding, Inc. (Converted TL)  Construction & Building  First Lien
Term Loans  First Lien  2017  2  9/1/2022  1,880,659    3,761,318    100.00  
SFP Holding, Inc. (DDTL)  Construction & Building  First Lien Term Loans  First
Lien  2017  2  9/1/2022  736,905    736,905    1.00   SFP Holding, Inc.
(Equity)  Construction & Building  Equity  Equity  20172        2,827,952  
 2,827,952    38.58   Ship Supply Acquisition Corporation  Services: Business 
First Lien Term Loans  First Lien  2015  5  7/31/2020  3,634,906    13,721,203  
 100.00   Walker Edison Furniture Company LLC  Consumer goods: Durable  First
Lien Term Loans  First Lien  2018  1  9/26/2024 $62,616,078                     
          

 

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