Document:

Exhibit
10.1

 

BLUE
STAR FOODS CORP. | DIRECTOR SERVICE AGREEMENT

 

This
Director Service Agreement (the “Agreement”) is made and entered into as of March 25, 2021, by and between
Blue Star Foods Corp., a Delaware corporation (the “Company”), and _______________, an individual
(the “Director”).

 

I.
SERVICES

 

A.
Service on the Board of Directors. The Director has been selected for appointment as an Independent Director on the Company’s
Board of Directors (the “Board”), with his service to commence on April 12th, 2021 (the “Commencement
Date”), and to continue until the earlier of the date on which Director ceases to be a member of the Board for any reason
or the date of termination of this Agreement in accordance with Section V(B) hereof (such earlier date being the “Expiration
Date”). The Board shall consist of the Director and such other members as are nominated and elected pursuant to the
then-current Articles of Incorporation of the Company (the “Articles”).

 

B.
Director Services. Director’s services to the Company hereunder shall include service as a member of the Board to
direct the business of the Company in accordance with applicable law and the then-current Articles. Director shall devote such
time and attention to the business and affairs of the Company as is necessary to perform his duties as a Director in a faithful
and competent manner. Director shall comply with all laws, rules, and regulations applicable to the Company and its business.
Director shall further comply with all policies and codes of conduct which the Company shall reasonably determine are necessary
for the proper functioning of its business. As a member of the Company’s Board, Director will be expected to attend Board
meetings, which shall be convened as needed. In addition, from time to time, there may be telephonic meetings to address special
matters. In addition, the Board may establish committees for which it may delegate certain duties to you (all of the services
described in this Section I(B) to be referred to, collectively, as the “Director Services”).

 

II.
COMPENSATION

 

A.
Expense Reimbursement. The Director will pre-approve with the Company any expenses related to the Director Services rendered
by Director (including reasonable travel, and other out-of-pocket expenses). Once approved, the Company shall reimburse the Director
for all expenses due to it within 10 days of written receipt.

 

B.
Equity Fees to Director. The Company agrees to issue the Director a pro rata annual stock grant of $25,000.00 of shares
of the Company’s common stock, $.0001 par value per share (“Common Stock”) for each year’s service as
a Director. The number of shares of Common Stock to be issued shall be based on the closing sale price on the final trading day
of the calendar year and issued to the Director within the 10 calendar days of the new calendar year.

 

C.
Additional Equity Fees for Committee Chairmanships and Participation. As additional compensation for the Director’s
service as a chairman of a committee of the Board, or as a member of a committee of the Board, if applicable, the Director shall
receive an additional pro rata annual stock grant (a “Committee Grant”). The number of shares of Common Stock to be
issued shall be based on the closing sale price on the final trading day of the calendar year and issued to the Director within
the 10 calendar days of the new year.

 

    	1

     

    

 

	 	●	For
    service as chairman of the Audit Committee – a grant of $15,000 of Common Stock.
	 	●	For
    service as chairman of the Compensation Committee – a grant of $10,000 of Common Stock
	 	●	For
    service as chairman of the Nominating and Governance Committee – a grant of $7,500 of Common Stock.
	 	●	For
    service as a member of any of the committees above (as needed) – a grant of $5,000 of Common Stock.

 

D.
Stock Options. Immediately upon the Commencement Date, the Company will grant to the Director 100,000 stock options to
purchase shares of Common Stock, at an exercise price of $2.00 per share. The options shall vest and become exercisable by the
Director in equal monthly installments over the course of the Director’s service through the applicable calendar year. In
the event that the Director ceases to be a member of the Board prior to the end of a year of service, all unvested stock options
awarded hereunder shall be forfeited. The stock options granted to the Director shall be exercisable on a cash basis and have
a three (3) year maturity from the date of fully vesting after the Director’s service through the calendar year.

 

E.
Director and Officer Liability Insurance. The Company’s proposed director and officer liability insurance policy
shall provide Director with coverage for damages and losses incurred in connection with the Director Services.

 

III.
DUTIES OF DIRECTOR

 

A.
Fiduciary Duties. In fulfilling his responsibilities, Director shall be charged with a fiduciary duty to the Company and
all of its shareholders. Director shall be attentive and inform himself of all material facts regarding a decision before taking
action. In addition, Director’s actions shall be motivated solely by the best interests of the Company and its shareholders.

 

B.
Confidentiality. During the term of this Agreement, and for a period of one (1) year after the Expiration Date, Director
shall maintain in strict confidence all information he has obtained or shall obtain from the Company which the Company has designated
as “confidential” or which is, by its nature confidential, relating to the Company’s business, operations, properties,
assets, services, condition (financial or otherwise), liabilities, employee relations, customers, suppliers, prospects, technology,
or trade secrets, except to the extent such information (i) is in the public domain through no act or omission of the Company,
or (ii) is required to be disclosed by law or a valid order by a court or other governmental body (the “Confidential
Information”).

 

C.
Nondisclosure and Nonuse Obligations. Director will use the Confidential Information solely to perform the Director Services
for the benefit of the Company. Director will treat all Confidential Information of the Company with the same degree of care as
Director treats his own Confidential Information, and Director will use his best efforts to protect the Confidential Information.
Director will not use the Confidential Information for his own benefit or the benefit of any other person or entity, except as
may be specifically permitted in this Agreement. Director will immediately give notice to the Company of any unauthorized use
or disclosure by or through him, or of which he becomes aware, of the Confidential Information. Director agrees to assist the
Company in remedying any such unauthorized use or disclosure of the Confidential Information.

 

D.
Return of the Company Property. All materials furnished to Director by the Company, whether delivered to Director by the
Company or made by Director in the performance of Director Services under this Agreement (the “Company Property”)
are the sole and exclusive property of the Company. Director agrees to promptly deliver the original and any copies of the Company
Property to the Company at any time upon the Company’s request. Upon termination of this Agreement by either party for any
reason, Director agrees to promptly deliver to the Company or destroy, at the Company’s option, the original and any copies
of the Company Property. Director agrees to certify in writing that Director has so returned or destroyed all such the Company
Property.

 

    	2

     

    

 

 

IV.
COVENANTS OF DIRECTOR

 

A.
No Conflict of Interest. For so long as Director is a member of the Board, Director shall not be employed by, own, manage,
control or participate in the ownership, management, operation or control of any business entity that is directly competitive
with the Company or otherwise undertake any obligation inconsistent with the terms hereof, provided that Director may continue
Director’s current affiliations or other current relationships in existence on the date of this Agreement (collectively,
the “Current Affiliations”). This Agreement is subject to the current terms and agreements governing Director’s
relationship with the Current Affiliations, and nothing in this Agreement is intended to be or will be construed to inhibit or
limit any of Director’s obligations to the Current Affiliations. Director represents that nothing in this Agreement conflicts
with Director’s obligations to the Current Affiliations. A business entity shall be deemed to be “directly competitive
with the Company” for purpose of this Article IV only if and to the extent it engages in a business substantially similar
to the Company’s seafood crab meat and or RAS salmon businesses.

 

B.
Noninterference with Business. During the term of this Agreement, and for a period of one (1) year after the Expiration
Date, Director agrees not to interfere with the business of the Company in any manner. By way of example and not of limitation,
Director agrees not to solicit or induce any employee, independent contractor, customer, or supplier of the Company to terminate
or breach his or her employment, contractual or other relationship with the Company.

 

C.
Mutual Non-Disparagement. Director and the Company mutually agree to forbear from making, causing to be made, publishing,
ratifying, or endorsing any and all disparaging remarks, derogatory statements or comments made to any party with respect to either
of them. Further, the parties hereto agree to forbear from making any public or non-confidential statement with respect to any
claim or complain against either party without the mutual consent of each of them, to be given in advance of any such statement.

 

V.
TERM AND TERMINATION

 

A.
Term. This Agreement is effective on the Commencement Date and will continue for one calendar year. In the absence of any
agreement in writing to the contrary, this Agreement shall continue to renew for successive one (1) year terms on the first date
of the new calendar year. Upon each annual renewal, and in the absence of a written agreement to the contrary:

 

	 	 	1.	The
    Director shall receive Equity Fees to Director, set forth in Section II(B), Additional Equity Fees for Committee Chairmanships
    and Participation, set forth in Section II(C), and Stock Options, set forth in Section II(D).
	 	 	2.	The
    Director shall continue to be reimbursed for expenses as set forth in Section II(A).
	 	 	 	 
	 	B.	Termination.
    This Agreement, and the Director Services provided hereunder, shall terminate:
	 	 	 	 
	 	 	1.	at
    any time upon thirty (30) days prior written notice by the Director of his resignation;
	 	 	2.	upon
    the close of any shareholder’s meeting for the election of directors, if the Director is not re-elected to the Board
    by the Company’s shareholders at such meeting;
	 	 	3.	automatically
    if, at any time, the Director becomes disqualified under the terms of the Articles; or
	 	 	4.	upon
    a determination by a majority of the Board (not including the Director), that:

 

    	3

     

    

 

	 	●	the
    Director has committed a breach a of any of Director’s obligations under this Agreement;
	 		 
	 	●	the
    Director is or has become prohibited by any law, regulation, or rule applicable to the Company from serving as a member of
    the Board;
	 	 	 
	 	●	the
    Director has become unable to perform his duties under this Agreement due to health reasons, disability, or being of unsound
    mind, unless the Company can accommodate the Director’s health impairment or disability without the Company incurring
    undue hardship;
	 	 	 
	 	●	the
    Director is guilty of any serious misconduct or serious neglect in the discharge of the Director’s duties hereunder;
	 	 	 
	 	●	the
    Director’s actions or omissions bring the name or reputation of the Company, or any of Company’s affiliates, subsidiaries,
    or parent (each a “Group Member”) into serious disrepute or prejudices the business interests of the Company or
    any Group Member; or
	 	 	 
	 	●	the
    Director is charged or convicted of any criminal offence other than an offence which, in the reasonable opinion of the Board,
    does not affect the Director’s position as a director (bearing in mind the nature of the duties in which the Director
    is engaged and the capacities in which the Director is engaged).

 

VI.
MISCELLANEOUS

 

A.
Assignment. Except as expressly permitted by this Agreement, neither party shall assign, delegate, or otherwise transfer
any of its rights or obligations under this Agreement without the prior written consent of the other party. Subject to the foregoing,
this Agreement will be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives,
successors, and assigns.

 

B.
No Waiver. The failure of any party to insist upon the strict observance and performance of the terms of this Agreement
shall not be deemed a waiver of other obligations hereunder, nor shall it be considered a future or continuing waiver of the same
terms.

 

C.
Notices. Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with
notice deemed given as indicated: (i) by personal delivery when delivered personally; (ii) by overnight courier upon written verification
of receipt; (iii) by e-mail or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (iv) by certified
or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the addresses set forth below
or such other address as either party may specify in writing.

 

To
the Company:

Mr.
John Keeler, Chairman & CEO

3000
NW 109th Avenue, Miami, Florida 33172 | United States

E-Mail:
jkeeler@bluestarfoods.com

 

To
Director:

____________________

____________________

____________________

E-Mail:___________________

 

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D.
Governing Law. This Agreement shall be governed in all respects by the laws of the State of Florida, without regard to
conflicts of law principles thereof.

 

E.
Severability. Should any provisions of this Agreement be held by a court of law to be illegal, invalid, or unenforceable,
the legality, validity, and enforceability of the remaining provisions of this Agreement shall not be affected or impaired thereby.

 

F.
Entire Agreement. This Agreement constitutes the entire agreement between the parties relating to this subject matter and
supersedes all prior or contemporaneous oral or written agreements concerning such subject matter. The terms of this Agreement
will govern all Director Services undertaken by Director for the Company. Nothing in this Agreement should be construed to interfere
with or otherwise restrict in any way the rights of the Company, its Board or shareholders from removing Director from the Board
or any committee in accordance with the provisions of applicable law. Furthermore, except as otherwise provided to other non-employee
Board members or required by law, the Company does not intend to afford Director any rights as an employee, including without
limitation, the right to further employment or any other benefits.

 

G.
Amendments. This Agreement may only be amended, modified, or changed by an agreement signed by the Company and Director.
The terms contained herein may not be altered, supplemented, or interpreted by any course of dealing or practices.

 

H.
Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	Company:	Blue
    Star Foods Corp. 
	 	 	 
	 	By:	 
	 	Name:	John
Keeler
	 	Title:	Chairman
& CEO
	 	 	 
	Independent
    Director:	 	 
	 	 	 
	 	 
	 	Name:	

 

    	5ex_238496.htm

DESCRIPTION OF DEBT SECURITIES

 

The following description of Medley LLC (“we”, “us”, or the “Company”) debt securities is only a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to the indenture dated as of August 9, 2016, between us and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the first, second, third and fourth supplemental indentures (as supplemented, the “Indenture”), setting forth the terms and conditions of the Notes (as defined below). Copies of the Indenture, including each supplement to the Indenture, are incorporated as an exhibit to the Annual Report on Form 10-K (the “Form 10-K”) to which this Exhibit 4.6 is a part.

 

The Notes

 

General

 

2026 Notes

 

On August 9, 2016, we completed a registered public offering of $25.0 million of an aggregate principal amount of 6.875% senior notes due 2026 (the “2026 Notes”) at a public offering price of 100% of the principal amount. On October 18, 2016, we completed a public offering of an additional $28.6 million in aggregate principal amount of the 2026 Notes at a public offering price of $24.45 for each $25.00 principal amount of notes.

 

The 2026 Notes mature on August 15, 2026. The principal payable at maturity will be 100.0% of the aggregate principal amount. The interest rate of the 2026 Notes is 6.875% per year and is paid quarterly, in arrears, every February 15, May 15, August 15 and November 15, beginning November 15, 2016 and the regular record dates for interest payments are every February 1, May 1, August 1 and November 1. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment. The initial interest period was from and including August 9, 2016, to, but excluding, the initial interest payment date, and the subsequent interest periods are the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be.

 

2024 Notes

 

On January 18, 2017, we completed a registered public offering of $34.5 million of an aggregate principal amount of 7.25% senior notes due 2024 (the “2024 Notes” and, together with the 2026 Notes, the “Notes”) at a public offering price of 100% of the principal amount. On February 22, 2017, we completed a public offering of an additional $34.5 million in aggregate principal amount of the 2024 Notes at a public offering price of $25.25 for each $25.00 principal amount of notes.

 

The 2024 Notes mature on January 30, 2024. The principal payable at maturity will be 100.0% of the aggregate principal amount. The interest rate of the 2024 Notes is 7.25% per year and is paid quarterly, in arrears, every January 30, April 30, July 30 and October 30, beginning April 30, 2017 and the regular record dates for interest payments are every January 15, April 15, July 15 and October 15. If an interest payment date falls on a non-business day, the applicable interest payment will be made on the next business day and no additional interest will accrue as a result of such delayed payment. The initial interest period was from and including January 18, 2017, to, but excluding, the initial interest payment date, and the subsequent interest periods are the periods from and including an interest payment date to, but excluding, the next interest payment date or the stated maturity date, as the case may be.

 

The Notes are not be subject to any sinking fund provisions.

 

The Indenture does not limit the amount of debt (including secured debt) that may be issued by us or our subsidiaries under the indenture or otherwise. The Indenture does not contain any financial covenants and does not restrict us from paying dividends or issuing or repurchasing our other securities. Other than restrictions described under “— Merger, Consolidation or Sale of Assets” below, the Indenture does not contain any covenants or other provisions designed to afford holders of the Notes protection in the event of a highly leveraged transaction involving us or in the event of a decline in our credit rating, if any, as the result of a takeover, recapitalization, highly leveraged transaction or similar restructuring involving us that could adversely affect such holders.

 

We have the ability to issue Indenture securities with terms different from the Notes and, without the consent of the holders thereof, to reopen the Notes and issue additional Notes.

 

Optional Redemption

 

The 2026 Notes and the 2024 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after January 30, 2020 and August 15, 2019 and January 30, 2020, respectively, respectively, upon not less than 30 days nor more than 60 days written notice by mail prior to the date fixed for redemption thereof, at a redemption price equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to the date fixed for redemption.

 

Note holders may be prevented from exchanging or transferring the Notes when they are subject to redemption. In case any Notes are to be redeemed in part only, the redemption notice will provide that, upon surrender of such Note, such holder will receive, without a charge, a new Note or Notes of authorized denominations representing the principal amount of their remaining unredeemed Notes.

 

If fewer than all of the Notes are to be redeemed, then, if the Notes are evidenced by one or more global notes, the Notes to be redeemed will be selected in accordance with the procedures of DTC, or, if the Notes are evidenced by notes in definitive, physical form, the trustee will select, not more than 60 days prior to the redemption date, the particular Notes or portions thereof for redemption from the outstanding Notes not previously called by such method as the trustee deems fair and appropriate. Notes may be selected for redemption in whole or in part in a minimum of $25 in principal amount and integral multiples of $25 in principal amount in excess thereof, provided that the remaining principal amount of any Note redeemed in part is $25 or an integral multiple of $25 in excess thereof.

 

In connection with any redemption of the Notes, any such redemption may, at the Company’s discretion, be subject to one or more conditions precedent, including any related equity offering, other financing or a change of control. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice shall state that, in the Company’s discretion, any of such conditions may be waived, the redemption date may be delayed until such time as any or all such conditions shall be satisfied, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied by the redemption date, or by the redemption date so delayed.

 

Payment and Paying Agents

 

We will pay interest to the person listed in the Trustee’s records as the owner of the Notes at the close of business on a particular day in advance of each due date for interest, even if that person no longer owns the Notes on the interest due date. That day, usually about two weeks in advance of the interest due date, is called the “record date.” Because we will pay all the interest for an interest period to the holders on the record date, holders buying and selling the Notes must work out between themselves the appropriate purchase price. The most common manner is to adjust the sales price of the Notes to prorate interest fairly between buyer and seller based on their respective ownership periods within the particular interest period. This prorated interest amount is called “accrued interest.”

 

Events of Default

 

You will have rights if an Event of Default occurs with respect to the Notes and the Event of Default is not cured, as described later in this subsection.

 

The term “Event of Default” with respect to the Notes means any of the following:

 

	 	
			●

				
			We do not pay the principal of any Note on its due date.

			

	 	
			●

				
			We do not pay interest on any Note when due, and such default is not cured within 30 days.

			

	 	
			●

				
			We remain in breach of any other covenant with respect to the Notes for 60 days after we receive a written notice of default stating we are in breach. The notice must be sent by either the Trustee or holders of at least 25% of the principal amount of the Notes.

			

	 	
			●

				
			We file for bankruptcy or certain other events of bankruptcy, insolvency or reorganization occur and, in the case of certain orders or decrees entered against us under any bankruptcy law, such order or decree remains undischarged or unstayed for a period of 60 days.

			

 

An Event of Default for the Notes does not necessarily constitute an Event of Default for any other series of debt securities issued under the same or any other indenture. The Trustee may withhold notice to the holders of the Notes of any default, except in the payment of principal, premium or interest, if it considers the withholding of notice to be in the best interests of the holders.

 

If an Event of Default has occurred and has not been cured, the Trustee or the holders of at least 50.0% in principal amount of the Notes may declare the entire principal amount of all the Notes to be due and immediately payable. This is called a declaration of acceleration of maturity. In certain circumstances, a declaration of acceleration of maturity may be canceled by the holders of a majority in principal amount of the Notes.

 

The Trustee is not required to take any action under the Indenture at the request of any holders unless the holders offer the Trustee protection reasonably satisfactory to it from expenses and liability (called an “indemnity”). If reasonable indemnity is provided, the holders of a majority in principal amount of the Notes may direct the time, method and place of conducting any lawsuit or other formal legal action seeking any remedy available to the Trustee. The Trustee may refuse to follow those directions in certain circumstances. No delay or omission in exercising any right or remedy will be treated as a waiver of that right, remedy or Event of Default.

 

Merger, Consolidation or Sale of Assets

 

Under the terms of the Indenture, we are generally permitted to consolidate or merge with another entity. We are also permitted to sell all or substantially all of our assets to another entity. However, we may not take any of these actions unless all the following conditions are met:

 

	 	
			●

				
			Where we merge out of existence or sell our assets, the resulting entity must agree to be legally responsible for our obligations under the Notes.

			

	 	
			●

				
			The merger or sale of assets must not cause a default on the debt securities and we must not already be in default (unless the merger or sale would cure the default). For purposes of this no-default test, a default would include an Event of Default that has occurred and has not been cured, as described under “Events of Default” above. A default for this purpose would also include any event that would be an Event of Default if the requirements for giving us notice of default or our default having to exist for a specified period of time were disregarded.

			

	 	
			●

				
			We must deliver certain certificates and documents to the Trustee.

			

 

Modification or Waiver

 

There are three types of changes we can make to the indenture and the Notes issued thereunder.

 

Changes Requiring Note Holder Approval

 

First, there are changes that we cannot make to the Notes without approval from each affected holder. The following is a list of those types of changes:

 

	 	
			●

				
			change the stated maturity of the principal of or interest on the Notes;

			

	 	
			●

				
			reduce any amounts due on the Notes;

			

	 	
			●

				
			reduce the amount of principal payable upon acceleration of the maturity of a security following a default;

			

	 	
			●

				
			change the place or currency of payment on the Notes;

			

	 	
			●

				
			impair a Note holder’s right to sue for payment;

			

	 	
			●

				
			adversely affect any rights to convert or exchange any note in accordance with its terms;

			

	 	
			●

				
			reduce the percentage of holders of Notes whose consent is needed to modify or amend the indenture;

			

	 	
			●

				
			reduce the percentage of holders of Notes whose consent is needed to waive compliance with certain provisions of the indenture or to waive certain defaults; and

			

	 	
			●

				
			modify any other material aspect of the provisions of the indenture dealing with supplemental indentures, modification and waiver of past defaults, changes to the quorum or voting requirements or the waiver of certain covenants.

			

 

Changes Not Requiring Approval

 

The second type of change does not require any vote by the holders of the Notes. This type is limited to clarifications related to the Indenture, and certain other changes that would not adversely affect holders of the Notes in any material respect.

 

Changes Requiring Majority Approval

 

Any other change to the indenture and the Notes would require the following approval:

 

	 	
			●

				
			If the change affects only the Notes, it must be approved by the holders of a majority in principal amount of the Notes.

			

	 	
			●

				
			If the change affects more than one series of debt securities issued under the same indenture, it must be approved by the holders of a majority in principal amount of all of the series affected by the change, with all affected series voting together as one class for this purpose.

			

 

The holders of a majority in principal amount of a series of debt securities issued under the Indenture may waive our compliance with some of our covenants applicable to that series. However, we cannot obtain a waiver of a payment default or of any of the matters covered by the bullet points included above under “— Changes Requiring Note Holder Approval.”

 

Further Details Concerning Voting

 

When taking a vote, we will use the principal amount that would be due and payable on the voting date if the maturity of the Notes were accelerated to that date because of a default, to decide how much principal to attribute to the Notes.

 

The Notes will not be considered outstanding, and therefore not eligible to vote, if we have deposited or set aside in trust money for their payment or redemption. The Notes will also not be eligible to vote if they have been fully defeased as described later under “Defeasance — Full Defeasance.”

 

We will generally be entitled to set any day as a record date for the purpose of determining the holders of the Notes that are entitled to vote or take other action under the indenture. If we set a record date for a vote or other action to be taken by holders of the Notes, that vote or action may be taken only by persons who are holders of the Notes on the record date and must be taken within eleven months following the record date.

 

Defeasance

 

The following provisions will be applicable to the Notes.

 

Covenant Defeasance

 

Under applicable law, we can make the deposit described below and be released from some of the restrictive covenants in the Indenture (called “covenant defeasance”). In that event, a Note holder would lose the protection of those restrictive covenants but would gain the protection of having money and government securities set aside in trust to repay such holder’s Notes. In order to achieve covenant defeasance, the following conditions must be satisfied:

 

	 	
			●

				
			Since the Notes are denominated in U.S. dollars, we must deposit in trust for the benefit of all holders of the Notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the Notes on their due dates.

			

	 	
			●

				
			We must deliver to the Trustee a legal opinion of our counsel confirming that, under current U.S. federal income tax law, we may make the above deposit without causing a Note holder to be taxed on the Notes any differently than if we did not make the deposit and just repaid the Notes ourselves at maturity.

			

	 	
			●

				
			Defeasance must not result in a breach or violation of, or result in a default under, the indenture or any of our other material agreements or instruments.

			

	 	
			●

				
			No default or event of default with respect to the Notes shall have occurred and be continuing and no defaults or events of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days.

			

 

If we accomplish covenant defeasance, Note holders can still look to us for repayment of the Notes if there were a shortfall in the trust deposit or the Trustee is prevented from making payment. For example, if one of the remaining Events of Default occurred (such as our bankruptcy) and the Notes became immediately due and payable, there might be a shortfall. Depending on the event causing the default, Note holders may not be able to obtain payment of the shortfall.

 

Full Defeasance

 

If there is a change in U.S. federal tax law, as described below, we can legally release ourselves from all payment and other obligations on the Notes of a particular series (called “full defeasance”) if the following conditions are satisfied in order for a Note holder to be repaid:

 

	 	
			●

				
			Since the Notes are in U.S. dollars, we must deposit in trust for the benefit of all holders of the Notes a combination of money and U.S. government or U.S. government agency notes or bonds that will generate enough cash to make interest, principal and any other payments on the Notes on their various due dates.

			

	 	
			●

				
			We must deliver to the Trustee a legal opinion confirming that there has been a change in current U.S. federal tax law or an IRS ruling that allows us to make the above deposit without causing a Note holder to be taxed on the Notes any differently than if we did not make the deposit and just repaid the Notes ourselves at maturity.

			

	 	
			●

				
			Defeasance must not result in a breach or violation of, or constitute a default under, the indenture or any of our other material agreements or instruments.

			

	 	
			●

				
			No default or event of default with respect to the Notes shall have occurred and be continuing and no defaults or events of default related to bankruptcy, insolvency or reorganization shall occur during the next 90 days.

			

 

If we ever did accomplish full defeasance, as described above, you would have to rely solely on the trust deposit for repayment of the Notes. Note holders could not look to us for repayment in the unlikely event of any shortfall. Conversely, the trust deposit would most likely be protected from claims of our lenders and other creditors if we ever became bankrupt or insolvent.

 

Other Covenants

 

In addition to any other covenants described in this prospectus, the following covenants shall apply to the Notes:

 

	 	
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			If, at any time, we or Medley Management Inc. are not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the SEC, we agree to furnish to holders of the Notes and the Trustee, for the period of time during which the Notes are outstanding, our audited annual consolidated financial statements, within 90 days of our fiscal year end, and unaudited interim consolidated financial statements, within 45 days of our fiscal quarter end (other than our fourth fiscal quarter). All such financial statements will be prepared, in all material respects, in accordance with applicable U.S. GAAP.

			

 

Resignation of Trustee

 

The Trustee may resign or be removed with respect to the Notes provided that a successor trustee is appointed to act with respect to the Notes. In the event that two or more persons are acting as trustee with respect to different series of indenture securities under the indenture, each of the trustees will be a trustee of a trust separate and apart from the trust administered by any other trustee.

 

Indenture Provisions — Ranking

 

The Notes are designated as Designated Senior Securities and, therefore, Designated Senior Indebtedness under the indenture. Designated Senior Indebtedness is defined in the Indenture as the principal of (and premium, if any) and unpaid interest on:

 

	 	
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			our indebtedness (including indebtedness of others guaranteed by us) whenever created, incurred, assumed or guaranteed, for money borrowed, that we have designated as “Designated Senior Indebtedness” for purposes of the indenture and in accordance with the terms of the indenture (including any indenture securities designated as Designated Senior Indebtedness), and

			

	 	
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			renewals, extensions, modifications and refinancings of any of this indebtedness.

			

 

As unsecured obligations of the Company designated as Designated Senior Indebtedness under the indenture, the Notes rank:

 

	 	
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			pari passu with our existing and future unsecured indebtedness;

			

 

	 	
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			senior to any of our future indebtedness that expressly provides it is subordinated to the Notes; and

			

	 	
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			effectively subordinated to all of our existing and future secured indebtedness (including the Senior Secured Credit Facilities and indebtedness that is initially unsecured to which we subsequently grant security), to the extent of the value of the assets securing such indebtedness; and

			

	 	
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			structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, under the Senior Secured Credit Facilities and the indebtedness of MOF I BDC LLC and Medley SBIC LP.

			

 

In the event of our bankruptcy, liquidation, reorganization or other winding up, our assets that secure secured debt will be available to pay obligations on the Notes only after all indebtedness under such secured debt has been repaid in full from such assets. We advise you that there may not be sufficient assets remaining to pay amounts due on any or all the Notes then outstanding.

 

Trustee, Paying Agent and Security Registrar

 

The trustee, paying agent and security registrar for the Notes is the Trustee.

 

 

 

Listing

 

The 2024 Notes are listed on the New York Stock Exchange under the trading symbol ‘‘MDLQ”. The 2026 Notes are listed on the New York Stock Exchange under the trading symbol “MDLX”.

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