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Item 1.01
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Entry into a Material Definitive Agreement.
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As previously announced,
on August 9, 2018, Sierra Income Corporation (
“Sierra”
), Medley Capital Corporation (
“MCC”
),
and Medley Management Inc. (
“Medley”
) jointly issued a press release announcing the execution of: (i) an
Agreement and Plan of Merger (the
“MCC Merger Agreement”
) by and between MCC and Sierra, pursuant to
which MCC will, on the terms and subject to the conditions set forth in the MCC Merger Agreement, merge with and into Sierra, with
Sierra as the surviving company in the merger (the
“MCC Merger”
); and (ii) an Agreement and Plan of Merger
(the
“MDLY Merger Agreement”
) by and among Medley, Sierra, and Sierra Management Inc., a wholly-owned
subsidiary of Sierra (
“Merger Sub”
), pursuant to which Medley will, on the terms and subject to the conditions
set forth in the MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving company in the merger
(the
“MDLY Merger”
). As a result of the foregoing, the investment management function relating to the
operation of Sierra, as the surviving company, will be internalized. A description of the MCC Merger Agreement is set forth
below and is qualified in its entirety by the full text of the MCC Merger Agreement, which is attached hereto as Exhibit 2.1. For
a description of the MDLY Merger Agreement and a copy of the MDLY Merger Agreement, please refer to the Current Report on Form
8-K filed by Sierra on August 15, 2018 and the Current Report on Form 8-K filed by Medley on August 15, 2018. Subject to certain
required approvals and other closing conditions, as described above, the parties anticipate that the MCC Merger and the MDLY Merger
will close in the fourth quarter of 2018 or the first quarter of 2019.
MCC Merger Agreement
Pursuant to the MCC
Merger Agreement, subject to certain conditions described therein, at closing, MCC will merge with and into Sierra, and the separate
corporate existence of MCC shall cease. Sierra shall be the surviving company in the MCC Merger and shall continue its existence
as a corporation under the laws of the State of Maryland. The MCC Merger will become effective at the time set forth in a certificate
of merger to be filed with the Secretary of State of the State of Delaware and articles of merger to be filed with the State Department
of Assessments and Taxation for the State of Maryland (the
“MCC Merger Effective Time”
). MCC’s
board of directors (the
“MCC Board”
), including a special committee of its independent directors, has
unanimously approved the MCC Merger Agreement and the transactions contemplated thereunder, including the MCC Merger, upon the
terms and subject to the conditions and limitations set forth in the MCC Merger Agreement, and resolved to submit the MCC Merger
Agreement and the matters described therein to the stockholders of MCC for their approval at a special meeting of MCC’s stockholders
(the
“MCC Stockholder Meeting”
).
In the MCC Merger,
each share of common stock, par value $0.001 per share, of MCC (
“MCC Common Stock”
), other than shares
of MCC Common Stock held by MCC, Sierra or their respective wholly-owned subsidiaries, will be exchanged for the right to receive
0.805 shares of common stock, par value $0.001 per share, of Sierra (
“Sierra Common Stock”
and such ratio,
the
“Exchange Ratio”
); provided that cash will be paid in lieu of fractional shares of Sierra Common
Stock issuable in the MCC Merger. It is intended that the MCC Merger shall constitute a “reorganization” within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the
“Code”
), and that the
MCC Merger Agreement shall constitute a “plan of reorganization” for such purposes.
If, between the date
of the MCC Merger Agreement and the MCC Merger Effective Time, the outstanding shares of Sierra Common Stock are increased, decreased,
changed into or exchanged for a different number or kind of shares or securities as a result of a reclassification, stock dividend,
stock split, reverse stock split, or other similar change (excluding sales of Sierra Common Stock, sales of Sierra equity-linked
securities, and issuance of Sierra Common Stock pursuant to Sierra’s dividend reinvestment plan or otherwise in lieu of a
portion of any cash dividend declared by Sierra), an appropriate and proportionate adjustment shall be made to the Exchange Ratio.
Pursuant to the MCC
Merger Agreement, the Sierra Board will review and approve an amendment and restatement of the charter of Sierra (the
“Sierra
Charter”
and, as so amended and restated, the
“Amended and Restated Charter”
), which Amended
and Restated Charter shall be reasonably acceptable to MCC’s board of directors (the
“MCC Board”
),
in order to remove terms inconsistent with, and to add terms advisable to reflect, the publicly traded nature of Sierra, as the
surviving company in the MCC Merger, following the MCC Merger Effective Time. Following such approval, the Sierra Board shall submit
the Amended and Restated Charter to the stockholders of Sierra for their approval at the special meeting of Sierra’s stockholders
being held to approve the MCC Merger Agreement and related matter (the
“Sierra Stockholder Meeting”
).
The Sierra Board will review and approve any amendments to, or amendments and restatements of, the bylaws of Sierra (the
“Sierra
Bylaws”
), which shall be reasonably acceptable to the MCC Board, in order to remove terms inconsistent with, and
to add terms advisable to reflect, the publicly traded nature of Sierra, as the surviving company in the MCC Merger, following
the MCC Merger Effective Time. The Sierra Bylaws, as in effect immediately prior to the MCC Merger Effective Time, shall remain
the bylaws of Sierra, as the surviving company, until thereafter amended in accordance with applicable law and the terms of such
bylaws.
Under the MCC Merger
Agreement, Sierra has agreed to take such actions as may be required by the Sierra Charter and Sierra Bylaws in order to appoint
the individuals to serve as directors of Sierra, as the surviving company in the MCC Merger, effective as of the MCC Merger Effective
Time, which individuals shall consist of the current independent directors of Sierra, one interested director of Sierra and two
independent directors of MCC. The identities of the individuals so appointed shall be reflected in the joint proxy statement/prospectus
to be provided to Sierra and MCC stockholders. The officers of Sierra, as the surviving company in the MCC Merger, shall be as
designated and appointed by the Sierra Board prior to the MCC Merger Effective Time.
The MCC Merger Agreement
contains: (a) representations and warranties from MCC to Sierra, including representations and warranties relating to, among others:
corporate organization, capitalization, corporate authority, absence of conflicts, third party and governmental consents and approvals,
reports and regulatory matters, financial statements, broker’s fees, absence of certain changes and events, legal proceedings,
taxes and tax returns, compliance with applicable law, material contracts, matters relating to MCC’s investments and MCC’s
ownership thereof, property, intellectual property, state takeover laws, the fairness opinion received by the special committee
of the MCC Board, MCC information to be provided for inclusion in the joint proxy statement/prospectus, insurance, environmental
matters, and MCC’s knowledge regarding reorganization and approval matters; (b) representations and warranties from Sierra
to MCC, including representations and warranties relating to, among others: corporate organization, capitalization, corporate authority,
absence of conflicts, third party and governmental consents and approvals, reports and regulatory matters, financial statements,
broker’s fees, absence of certain changes and events, legal proceedings, taxes and tax returns, compliance with applicable
law, material contracts, matters relating to Sierra’s investments and ownership thereof, property, intellectual property,
state takeover laws, the fairness opinion received by the special committee of the Sierra Board, Sierra information to be provided
for inclusion in the joint proxy statement/prospectus, insurance, environmental matters, and Sierra’s knowledge regarding
reorganization and approval matters; (c) covenants of MCC, including to the effect that, until the MCC Merger is completed, MCC
will, and will cause its subsidiaries to, conduct its business in the ordinary course, use commercially reasonable efforts to maintain
and preserve intact MCC’s business organization and advantageous relationships, retain its key officers and employees, take
no action that would be reasonably expected to adversely affect or materially delay the ability of MCC to obtain any required governmental
approvals or to perform its obligations under the MCC Merger Agreement and to consummate the MCC Merger, and to forbear from taking
certain material actions; (d) covenants of Sierra, including to the effect that, until the MCC Merger is completed, Sierra will,
and will cause its subsidiaries to, conduct its business in the ordinary course, use commercially reasonable efforts to maintain
and preserve intact Sierra’s business organization and advantageous relationships, retain its key officers and employees,
and take no action that would be reasonably expected to adversely affect or materially delay the ability of Sierra to obtain any
required governmental approvals or to perform its obligations under the MCC Merger Agreement and to consummate the MCC Merger,
and forbear from taking certain material actions; (e) mutual covenants to cooperate with each other and use their respective commercially
reasonable efforts to promptly prepare and file all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals and authorizations of all third parties and governmental
entities that are necessary or advisable to consummate the MCC Merger, including, among others, (i) filing a registration statement
on Form N-14 (the
“Form N-14 Registration Statement”
) with the Securities and Exchange Commission (the
“SEC”
) and mailing of a joint proxy statement/prospectus to solicit approval of MCC’s stockholders
and Sierra’s stockholders for the MCC Merger and related matters; (ii) if applicable, filing a notification and report form
with the U.S. Federal Trade Commission (the
“FTC”
) and the Antitrust Division of the U.S. Department
of Justice (the
“DOJ”
) as required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, amended
(the
“HSR Act”
); and (iii) submitting an application to the Staff of the Division of Investment Management
of the SEC seeking an exemptive order from the SEC granting relief to Sierra, MCC and Medley from Sections 12(d)(3), 57(a) and
60 of the Investment Company Act of 1940, as amended (the
“Investment Company Act”
), and Rule 17d-1 thereunder
to the extent necessary to permit the MCC Merger and the MDLY Merger and to permit Sierra to operate as an internally managed business
development company following the MCC Merger Effective Time (the
“SEC Exemptive Relief”
), and (f) certain
other covenants, including covenants regarding access to information filing of required periodic reports, seeking MCC and Sierra
stockholder approval, limitations on the Sierra Board and the MCC Board changing their recommendation to their respective stockholders,
listing of Sierra Common Stock on the New York Stock Exchange (the
“NYSE”
) and the Tel Aviv Stock Exchange
(the
“TASE”
), post-closing indemnification of officers and directors of MCC, non-solicitation of competing
offers from third parties, taking steps necessary for existing indebtedness of MCC and Sierra to remain outstanding and/or be consolidated,
the cessation of MCC’s dividend reinvestment plan as it relates to the issuance of MCC Common Stock, the suspension of Sierra’s
stock repurchase program, and certain other covenants relating to state takeover statutes, outstanding litigation, waivers of or
amendments to the MDLY Merger Agreement and repayment of amounts owed to MCC’s investment adviser as of the MCC Merger Effective
Time.
The obligations of
the parties to complete the MCC Merger are subject to certain conditions, including: (a) the receipt of Sierra stockholder approval
and MCC stockholder approval; (b) the Form N-14 Registration Statement having been declared effective and no stop order suspending
the effectiveness of the Form N-14 Registration Statement shall have been issued or threatened; (c) the outstanding Sierra Common
Stock, and the Sierra Common Stock to be issued in the MCC Merger and in the MDLY Merger, shall be authorized for listing on the
NYSE, subject to official notice of issuance; (d) the SEC Exemptive Relief shall have been granted and be in full force and effect
as of the closing date; (e) MCC shall have obtained from the Small Business Administration (
“SBA”
) such
approvals as may be necessary for all the debentures issued by Medley SBIC LP, a wholly-owned subsidiary of MCC, to the SBA to
remain outstanding in accordance with their terms following the MCC Merger Effective Time; (f) Sierra shall have made or obtained
such filings and approvals as are required to be made or obtained under the securities or “Blue Sky” laws of various
states in connection with the issuance of the shares of Sierra Common Stock in the MCC Merger; (g) no order, injunction or decree
issued by any court or agency of competent jurisdiction or other law preventing or making illegal the consummation of the MCC Merger
or any of the other transactions contemplated by the MCC Merger Agreement shall be in effect; (h) any applicable waiting period
(and any extension thereof) applicable to the MCC Merger under the HSR Act shall have expired or been terminated; (i) each of the
conditions to closing under the MDLY Merger Agreement shall have been satisfied or appropriately waived, and the MDLY Merger shall
be consummated simultaneously with the MCC Merger; (j) Sierra and MCC Advisors LLC shall have executed and delivered a new investment
advisory agreement, to be effective as of the MCC Merger Effective Time, and such agreement shall have been approved by the Sierra
Board and received requisite Sierra stockholder approval, each in accordance with all applicable requirements of Section 15 of
the Investment Company Act; (k) each of Sierra and MCC shall have executed termination agreements terminating their respective
existing investment management agreements, effective as of the closing date; (l) Sierra or MCC, as the case may be, shall have
obtained certain third party consents and approvals relating to joint venture arrangements; (m) certain consents relating private
funds and managed accounts shall have been obtained by Medley in connection with the MDLY Merger Agreement; (n) the SEC shall have
confirmed in a manner reasonably acceptable to the parties that the equity of the surviving company in the MDLY Merger shall, following
the MDLY Merger, be treated as a portfolio investment of Sierra and reflected in Sierra’s consolidated financial statements
at fair value for accounting purposes, and that such surviving company’s financial results will not be consolidated into
the financial statements of Sierra; (o) there shall be no pending suit, action or proceeding by any governmental entity challenging
the MCC Merger and related transactions or seeking to impose significant restrictions on Sierra, as the surviving company; (p)
the parties shall have received a legal opinion from Eversheds (US) LLP (or such other counsel as may be reasonably satisfactory
to the parties) regarding qualification of the MCC Merger as a reorganization within the meaning of Section 368(a) of the Code;
and (q) Seth Taube shall have resigned from the Sierra Board.
In addition to the
foregoing mutual conditions to closing, (a) Sierra’s obligation to consummate the MCC Merger is further conditioned upon
(i) the accuracy of the representations and warranties of MCC (subject to the interpretive standards set forth in the MCC Merger
Agreement), (ii) the performance by MCC, in all material respects, of its covenants and obligations under the MCC Merger Agreement,
(iii) MCC shall have delivered to Sierra fully executed copies of all consents and approvals required in order to keep MCC’s
existing debt documents (and the amounts outstanding thereunder), other than those relating to MCC’s existing revolving credit
facility and term loan, in full force and effect in accordance with their terms as of the date of the MCC Merger Agreement without
any breach or violation thereof, and (iv) MCC shall have complied with its obligation to make a final dividend if necessary to
comply with applicable tax law, and (b) MCC’s obligation to consummate the MCC Merger is further conditioned upon (i) the
accuracy of the representations and warranties of Sierra (subject to the interpretive standards set forth in the MCC Merger Agreement),
(ii) the performance by Sierra, in all material respects (or, in the case of Sierra’s obligation to not amend or waive the
terms of the MDLY Merger Agreement in a manner adverse to the MCC stockholders, in all respects), of its covenants and obligations
under the MCC Merger Agreement, (iii) Sierra shall have suspended all share repurchase programs or offers to repurchase, and (iv)
Sierra shall (A) have taken all actions, and executed all documents, reasonably required of Sierra by MCC’s existing debt
documents, other than those relating to MCC’s existing revolving credit facility and term loan (which will be consolidated
with Sierra’s existing facility), in order to keep the MCC debt documents in full force and effect in accordance with their
terms as of the date of the MCC Merger Agreement without any breach or violation thereof and to keep amounts outstanding thereunder
immediately after the MCC Merger Effective Time; (B) entered into amended and restated loan documents and taken such other actions
as may be required in order to assume the obligations under the MCC revolving loan documents and the MCC term loan documents and
to keep such amounts outstanding as of the MCC Merger Effective Time; and (C) Sierra shall have taken all actions, and executed
all documents, reasonably required of Sierra in order to keep the indebtedness represented by Sierra’s debt documents outstanding
and the Sierra debt documents in full force and effect in accordance with their terms as of the date of the MCC Merger Agreement
without any breach or violation thereof.
Sierra and MCC have
the right to terminate the MCC Merger Agreement under certain circumstances, including (subject to certain limitations set forth
in the MCC Merger Agreement): (a) by mutual written agreement of each party; or (b) by either Sierra or MCC if: (i) any governmental
entity whose consent or approval is a condition to closing set forth in Section 8.1 of the MCC Merger Agreement has denied the
granting of any such consent or approval and such denial has become final and nonappealable, or any governmental entity of competent
jurisdiction shall have issued a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting
or making illegal the consummation of the transactions contemplated by the MCC Merger Agreement; (ii) the MCC Merger has not closed
on or prior to March 31, 2019; (iii) if the requisite approval of Sierra stockholders or MCC stockholders is not obtained at the
MCC Stockholder Meeting or Sierra Stockholder Meeting at which a vote on the MCC Merger and related transactions is taken; (iv)
if the MDLY Merger Agreement is terminated; or (v) there is a material breach of any covenant, agreement, representation or warranty
by the other party that is not cured prior to the date of the closing of the MCC Merger, subject to the notice period set forth
in the MCC Merger Agreement.
Sierra may also terminate
the MCC Merger Agreement in the event (i) the MCC Board has made an adverse recommendation change regarding approval of the MCC
Merger and other matters to be voted on by MCC stockholders, (ii) the MCC Board shall have approved or authorized MCC or any of
its subsidiaries to enter into an agreement with a third party relating to a merger or other acquisition transaction involving
MCC, or (iii) MCC fails to include the MCC Board recommendation in favor of the MCC Merger and related matters in the joint proxy
statement/prospectus. Sierra may also terminate the MCC Merger Agreement in the event that, in connection with the receipt by Sierra
of a “superior proposal” from a third party, the Sierra Board desires to change its recommendation of the MCC Merger
and related matters or desires to accept such superior proposal, in each case subject to certain procedural requirements set forth
in the MCC Merger Agreement.
MCC may also terminate
the MCC Merger Agreement if (i) the Sierra Board has made an adverse recommendation change regarding approval of the MCC Merger
and other matters to be voted on by Sierra stockholders, (ii) the Sierra Board shall have approved or authorized Sierra or any
of its subsidiaries to enter into an agreement with a third party relating to a merger or other acquisition transaction involving
Sierra, or (iii) Sierra fails to include the Sierra Board recommendation in favor of the MCC Merger and related matters in the
joint proxy statement/prospectus. MCC may also terminate the MCC Merger Agreement if, in connection with the receipt by MCC of
a “superior proposal” from a third party, the MCC Board desires to change its recommendation of the MCC Merger and
related matters or desires to accept such superior proposal, in each case subject to certain procedural requirements set forth
in the MCC Merger Agreement.
Under the Merger Agreement,
either party may be obligated to pay the other party a termination fee of $6,000,000 in cash (the
“MCC Merger Termination
Fee”
). Generally, those circumstances relate to a party’s right to terminate the MCC Merger Agreement in connection
with an “adverse recommendation change” by the Sierra Board or the MCC Board, as applicable, or the acceptance by Sierra
or MCC, as applicable, of a superior proposal. In no event will a party have an obligation to pay a MCC Merger Termination Fee
more than once.
The MCC Merger Agreement
contains representations and warranties that Sierra and MCC have made as of specific dates. Except for its status as a contractual
document that establishes and governs the legal relations among the parties with respect to the transactions described therein,
the MCC Merger Agreement is not intended to be a source of factual, business or operational information about the parties. The
representations and warranties contained in the MCC Merger Agreement were made only for purposes of those agreements and as of
specific dates, may be subject to a contractual standard of materiality different from what an investor or a stockholder might
view as material, may have been used for purposes of allocating risk between the respective parties rather than establishing matters
as facts, and may have been qualified by certain disclosures not reflected in the MCC Merger Agreement that were made to the other
party in connection with the negotiation of the MCC Merger Agreement and generally were solely for the benefit of the parties to
that agreement. Investors or stockholders should read the MCC Merger Agreement together with the other information concerning the
Company that it files in reports and statements with the SEC.
***********
No Offer or Solicitation
The information in
this communication is for informational purposes only and shall not constitute an offer to sell or the solicitation of an offer
to sell or the solicitation of an offer to buy any securities or the solicitation of any vote or approval in any jurisdiction pursuant
to or in connection with the proposed transactions or otherwise, nor shall there be any sale, issuance or transfer of securities
in any jurisdiction in contravention of applicable law. No offer of securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as amended.
Important Information and Where to Find It
In connection with
the proposed transactions, Sierra intends to file with the SEC and mail to its stockholders a Registration Statement on Form N-14
that will include a proxy statement and that also will constitute a prospectus of Sierra, and MCC and Medley intend to file with
the SEC and mail to their respective stockholders a proxy statement on Schedule 14A (collectively, the “
Joint Proxy
Statement/Prospectus
”). The definitive Joint Proxy Statement/Prospectus will be mailed to stockholders of Sierra,
MCC, and Medley, respectively. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION ABOUT SIERRA, MCC, AND MEDLEY, THE PROPOSED TRANSACTIONS AND RELATED MATTERS. When available, investors
and security holders will be able to obtain the Joint Proxy Statement/Prospectus and other documents filed with the SEC by Sierra,
MCC, and Medley, free of charge, from the SEC’s web site at www.sec.gov and from Sierra’s website (www.sierraincomecorp.com),
MCC’s website (www.medleycapitalcorp.com), or Medley’s website (www.mdly.com). Investors and security holders may also
obtain free copies of the Joint Proxy Statement/Prospectus and other documents filed with the SEC from Sierra, MCC, or Medley by
contacting Sam Anderson, Medley’s Investor Relations contact, at 212-759-0777.
Participants in the Potential Solicitation
Sierra, MCC, and Medley
and their respective directors, executive officers, other members of their management, employees and other persons may be deemed
to be participants in the anticipated solicitation of proxies in connection with the proposed transactions. Information regarding
Sierra’s directors and executive officers is available in its definitive proxy statement for its 2018 annual meeting of stockholders
filed with the SEC on March 14, 2018 (the “
Sierra 2018 Proxy Statement
”). Information regarding MCC’s
directors and executive officers is available in its definitive proxy statement for its 2018 annual meeting of stockholders filed
with the SEC on December 21, 2017 (the “
MCC 2018 Proxy Statement
”). Information regarding Medley’s
directors and executive officers is available in its annual report for the year ended December 31, 2017 on Form 10-K filed with
the SEC on March 29, 2018 (the “
Medley 2017 10-K
”). To the extent holdings of securities by such directors
or executive officers have changed since the amounts disclosed in the Sierra 2018 Proxy Statement, the MCC 2018 Proxy Statement,
and the Medley 2017 Form 10-K, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed
by such directors or executive officers, as the case may be, with the SEC. More detailed information regarding the identity of
potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the Joint
Proxy Statement/Prospectus when such documents become available and in other relevant materials to be filed with the SEC.
These documents may be obtained free of charge from the sources indicated above.
Cautionary Statement Regarding Forward-Looking Statements
This communication
contains “forward-looking” statements as that term is defined in Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including
statements regarding the proposed transactions. Such forward-looking statements reflect current views with respect to future events
and financial performance, and each of Sierra, MCC and Medley may make related oral forward-looking statements on or following
the date hereof. Statements that include the words “should,” “would,” “expect,” “intend,”
“plan,” “believe,” “project,” “anticipate,” “seek,” “will,”
and similar statements of a future or forward-looking nature identify forward-looking statements in this material or similar oral
statements for purposes of the U.S. federal securities laws or otherwise. Because forward-looking statements, such as the date
that the parties expect the proposed transactions to be completed and the expectation that the proposed transactions will provide
improved liquidity for Sierra, MCC, and Medley stockholders and will be accretive to net investment income for both Sierra and
MCC, include risks and uncertainties, actual results may differ materially from those expressed or implied and include, but are
not limited to, those discussed in each of Sierra’s, MCC’s and Medley’s filings with the SEC, and (i) the satisfaction
or waiver of closing conditions relating to the proposed transactions described herein, including, but not limited to, the requisite
approvals of the stockholders of each of Sierra, MCC, and Medley; Sierra successfully taking all actions reasonably required with
respect to certain outstanding indebtedness of MCC and Medley to prevent any material adverse effect relating thereto; certain
required approvals of the SEC and the Small Business Administration, the necessary consents of certain third-party advisory clients
of Medley; and any applicable waiting period (and any extension thereof) applicable to the transactions under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, shall have expired or been terminated, (ii) the parties’ ability to successfully
consummate the proposed transactions, and the timing thereof, and (iii) the possibility that competing offers or acquisition proposals
related to the proposed transactions will be made and, if made, could be successful. Additional risks and uncertainties specific
to Sierra, MCC and Medley include, but are not limited to, (i) the costs and expenses that Sierra, MCC and Medley have, and may
incur, in connection with the proposed transactions (whether or not they are consummated), (ii) the impact that any litigation
relating to the proposed transactions may have on any of Sierra, MCC and Medley, (iii) that projections with respect to dividends
may prove to be incorrect, (iv) Sierra’s ability to invest our portfolio of cash in a timely manner following the closing
of the proposed transactions, (v) the market performance of the combined portfolio, (vi) the ability of portfolio companies to
pay interest and principal in the future; (vii) the ability of Medley to grow its fee earning assets under management; (viii) whether
Sierra, as the surviving company, will trade with more volume and perform better than MCC and Medley prior to the proposed transactions;
and (ix) negative effects of entering into the proposed transactions on the trading volume and market price of the MCC’s
or Medley’s common stock.
The foregoing review
of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements
that will be included in the Joint Proxy Statement/Prospectus relating to the proposed transactions, and in the “Risk Factors”
sections of each of Sierra’s, MCC’s and Medley’s most recent Annual Report on Form 10-K and most recent Quarterly
Report on Form 10-Q. The forward- looking statements in this press release represent Sierra’s, MCC’s and Medley’s
views as of the date of hereof. Sierra, MCC and Medley anticipate that subsequent events and developments will cause their views
to change. However, while they may elect to update these forward-looking statements at some point in the future, none of Sierra,
MCC or Medley have the current intention of doing so except to the extent required by applicable law. You should, therefore, not
rely on these forward-looking statements as representing Sierra’s, MCC’s or Medley’s views as of any date subsequent
to the date of this material.